Sunday, November 05, 2006

In Re Blackwater Security Consulting

The following is the presentation of facts from Judge Duncan's opinion in the decision of the U.S. Court of Appeals for the Fourth Circuit to deny Blackwater's appeal seeking to gain federal court jurisdiction over the wrongful death suit filed in North Carolina courts by the families of the four Blackwater employees killed in Fallujah on March 30, 2004. The complete opinion is available here [.pdf file].

Stephen S. Helvenston, Mike R. Teague, Jerko Gerald Zovko, and Wesley J.K. Batalona (collectively, "decedents") entered into independent contractor service agreements with Blackwater Security Consulting, L.L.C., and Blackwater Lodge and Training Center, Inc., (collectively, "Blackwater") to provide services in support of Blackwater’s contracts with third parties in need of security or logistical support. Blackwater assigned the decedents to support its venture with Regency Hotel and Hospital Company ("Regency") to provide security to ESS Support Services Worldwide, Eurest Support Services (Cyprus) International, Ltd. ("ESS"). ESS had an agreement to provide catering, build, and design support to the defense contractor firm Kellogg, Brown & Root, which, in turn, had arranged with the United States Armed Forces to provide services in support of its operations in Iraq.

According to the complaint, at the time the decedents entered into the independent contractor service agreements on or about March 25, 2004, Blackwater represented that certain precautionary measures would be taken with respect to the performance of their security functions in Iraq. For example, they were told that each mission would be handled by a team of no fewer than six members, including a driver, navigator, and rear gunner, and would be performed in armored vehicles; they would have at least twenty-one days prior to the start of a mission to become familiar with the area and routes to be traveled; and they would have an opportunity to do a pre-trip inspection of their anticipated route.

Instead, the complaint alleges, Blackwater failed to provide the decedents with the armored vehicles, equipment, personnel, weapons, maps, and other information that it had promised, or with the necessary lead time in which to familiarize themselves with the area. On March 30, 2004, the decedents’ supervisor, Justin McQuown, directed them to escort three ESS flatbed trucks carrying food supplies to a United States Army base known as Camp Ridgeway. Lacking the necessary personnel and logistical support, the decedents ultimately became lost in the city of Fallujah. Armed insurgents ambushed the convoy; murdered the decedents; and beat, burned, and dismembered their remains. Two of the mutilated bodies were hung from a bridge.

Richard Nordan, in his capacity as administrator for the decedents’ estates, sued Blackwater and McQuown (hereinafter referred to collectively as "Blackwater") in the Superior Court of Wake County, North Carolina, alleging causes of action for wrongful death and fraud under North Carolina tort law. Blackwater removed Nordan’s action to federal district court. It asserted that 28 U.S.C. § 1441(a) (2000) permitted removal both because the Defense Base Act ("DBA"), 42 U.S.C. §§ 1651-1654 (2000), completely preempted Nordan’s state-law claims, and because the issues in the case presented unique federal interests sufficient to create a federal question. Once in federal court, Blackwater moved to dismiss the case, arguing that the district court lacked subject matter jurisdiction because the DBA covered Nordan’s claims and, therefore, that Nordan could litigate his claims only before the Department of Labor, which decides DBA claims in the first instance.

The district court first considered whether Blackwater had met its burden of establishing federal removal jurisdiction. Nordan v. Blackwater Sec. Consulting, 382 F.Supp.2d 801, 806 (E.D.N.C. 2005). In concluding that Blackwater had not met this burden, the district court rejected both of Blackwater’s asserted bases for removal jurisdiction. The court reasoned that, because the DBA grants the Secretary of Labor exclusive original jurisdiction over DBA claims, the statute does not completely preempt state-law claims; the hallmark of complete preemption, the district court concluded, is the presence of original jurisdiction over the matter in federal district court. Id. at 807-10 (citing Lontz v. Tharp, 413 F.3d 435, 442-43 (4th Cir. 2005)). Further, the court determined that Blackwater’s assertion of removal jurisdiction by way of a unique federal interest in the adjudication of Nordan’s claims "assume[d] the very conclusion which [the] court lack[ed] jurisdiction to reach, namely that the decedents in this case are covered as employees under the DBA." Id. at 813. Finding no basis for removal, the district court concluded that it lacked subject matter jurisdiction and, citing 28 U.S.C. § 1447(c) (2000), [fn. 1] determined that it must remand the case. Nordan, 382 F.Supp.2d at 813-14. Although Blackwater encouraged the district court to remedy its lack of jurisdiction by dismissing the case rather than remanding it, the district court further concluded that it lacked the authority to dismiss. The court reasoned that federal district courts play no role in the adjudication or review of DBA claims [fn. 2] and, therefore, that it had no jurisdiction to decide whether the DBA applied to Nordan’s claims. Id. at 814. The district court thus remanded the case to state court without reaching the merits of Blackwater’s motion to dismiss.

[fn. 1] Section 1447(c) provides: "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. . . . The State court may thereupon proceed with such case."

[fn. 2] The district court incorrectly concluded that the federal district courts play no role in the adjudication of DBA claims. The federal district courts, followed by the federal courts of appeals and the United States Supreme Court, review DBA claims after they have been initially adjudicated in the Department of Labor. See 42 U.S.C. § 1653(b) (2000); see also Lee v. Boeing Co., Inc., 123 F.3d 801, 803-05 (4th Cir. 1997) (describing agency and judicial review of DBA claims).

Blackwater now seeks review, via both an ordinary appeal and a petition for a writ of mandamus. For the reasons that follow, we hold that we lack jurisdiction to hear the appeal and decline to issue a writ of mandamus. [fn. 3]

[fn. 3] Nordan moved to strike a portion of the record that Blackwater submitted on appeal. Because we dismiss the appeal and the petition for lackof jurisdiction, we deny this motion as moot.