Court Opinion

ID: 6103670
Source: CourtListenerOpinion
Date Created: 2022-01-14 18:01:08.97516+00
Date Added: 2024-06-11T08:53:39.509285
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

LENA CHILDS, an individual;              No. 20-56049
DONALD CHILDS, an individual; T.
CHILDS, a minor by and through her          D.C. No.
guardian ad litem, Lena Childs; A.       3:19-cv-02329-
CHILDS, a minor by and through her          JM-MDD
guardian ad litem, Lena Childs,
                 Plaintiffs-Appellees,
                                           OPINION
                  v.

SAN DIEGO FAMILY HOUSING LLC, a
California Limited Liability
Corporation; LINCOLN MILITARY
PROPERTY MANAGEMENT, LP, a
Delaware Limited Partnership,
              Defendants-Appellants,

                 and

INDEPTH CORPORATION, a California
Corporation; DOES, 1 through 25
inclusive,
                        Defendants.
2        CHILDS V. SAN DIEGO FAMILY HOUSING LLC

         Appeal from the United States District Court
            for the Southern District of California
          Jeffrey T. Miller, District Judge, Presiding

            Argued and Submitted August 31, 2021
                    Pasadena, California

                      Filed January 14, 2022

        Before: Sandra S. Ikuta, Mark J. Bennett, and
              Ryan D. Nelson, Circuit Judges.

                      Opinion by Judge Ikuta

                            SUMMARY*

                      Appellate Jurisdiction

    The panel dismissed, for lack of appellate jurisdiction,
defendants’ appeal from the district court’s order denying
their claim of derivative sovereign immunity in a tort suit
concerning military housing.

   The panel held that the district court’s order was not
immediately appealable under the collateral order doctrine,
under which an order that does not terminate the litigation is
nonetheless treated as final if it (1) conclusively determines
the disputed question, (2) resolves an important issue
completely separate from the merits of the action, and (3) is

    *
      This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
       CHILDS V. SAN DIEGO FAMILY HOUSING LLC               3

effectively unreviewable on appeal from a final judgment.
Joining the Fifth Circuit, the panel held that the first two
prongs were satisfied, but the denial of derivative sovereign
immunity was not effectively unreviewable on appeal from a
final judgment because denying an immediate appeal would
not imperil a substantial public interest. The panel held that
the public interest underlying derivative sovereign immunity
is extending the federal government’s immunity from
liability, in narrow circumstances, to government agents
carrying out the federal government’s directions, and this
interest could be vindicated after trial. The panel concluded
that Campbell-Ewald Co. v. Gomez, 577 U.S. 153 (2016), did
not undercut Ninth Circuit case law holding that federal
sovereign immunity and government contractor immunity
protect defendants from liability, rather than providing
immunity from suit.

                        COUNSEL

Don Willenburg (argued), Gordon & Rees Scully
Mansukhani LLP, Oakland, California; Kristin N. Reyna
Dehart and Matthew P. Nugent, Gordon & Rees Scully
Mansukhani LLP, San Diego, California; for Defendants-
Appellants.

Martin Nebrida Buchanan (argued), Law Offices of Martin N.
Buchanan, San Diego, California; Robert J. Fitzpatrick,
Fitzpatrick Law APC, San Diego, California, for Plaintiffs-
Appellees.
4      CHILDS V. SAN DIEGO FAMILY HOUSING LLC

Daniel Winik (argued) and H. Thomas Byron III, Appellate
Staff; Randy S. Grossman, Acting United States Attorney;
Brian M. Boynton, Acting Assistant Attorney General;
United States Department of Justice, Civil Division,
Washington, D.C.; for Amicus Curiae United States of
America.

                        OPINION

IKUTA, Circuit Judge:

    In this appeal, defendants claim they have derivative
sovereign immunity under Yearsley v. W.A. Ross
Construction Co., 309 U.S. 18 (1940), and therefore the
district court should have granted their motion to dismiss.
We hold that a district court order denying a claim of
derivative sovereign immunity is not immediately appealable
under the collateral order doctrine, see Cohen v. Beneficial
Indus. Loan Corp., 337 U.S. 541, 546 (1949), and therefore
dismiss the appeal for lack of appellate jurisdiction.

                             I

    Donald Childs and his family leased a house in military
family housing at Naval Amphibious Base Coronado near
San Diego while Childs was on active duty in the Navy. The
military housing was owned by San Diego Family Housing,
LLC, (SDFH), a public-private venture created by statute, in
which the United States Navy is a minority LLC member.
SDFH contracted with Lincoln Military Property
Management, L.P., (Lincoln) to provide property
management services.
         CHILDS V. SAN DIEGO FAMILY HOUSING LLC                           5

    Soon after moving in, the Childs family reported a series
of water-intrusion and mold problems in their home to SDFH
and Lincoln. SDFH, Lincoln, and InDepth, a mold
remediation company retained by Lincoln, were unable to
resolve the problem to the Childs family’s satisfaction. The
Childs family brought suit in California state court alleging
negligence and other state tort claims. SDFH and Lincoln
removed the case to federal court based on federal enclave
jurisdiction and other theories.

    Once in federal court, SDFH and Lincoln moved to
dismiss the complaint for lack of subject-matter jurisdiction.1
SDFH and Lincoln asserted they were government
contractors acting at the direction of the federal government,
and therefore had derivative sovereign immunity. See
Yearsley, 309 U.S. at 22. The Childs family opposed the
motion. So did the United States, which filed a statement of
interest in the case with the permission of the district court.

    The district court held that SDFH and Lincoln were not
entitled to derivative sovereign immunity under Yearsley and
denied the motion to dismiss. SDFH and Lincoln appealed
the order. The court entered a partial stay of proceedings
pending resolution of the appeal.

    1
      Rule 12(b)(1) of the Federal Rules of Civil Procedure provides:
“Every defense to a claim for relief in any pleading must be asserted in the
responsive pleading if one is required. But a party may assert the
following defenses by motion: (1) lack of subject-matter jurisdiction.”
Fed. R. Civ. P. 12(b)(1).
6      CHILDS V. SAN DIEGO FAMILY HOUSING LLC

                              II

    The question before us is whether we have appellate
jurisdiction under 28 U.S.C. § 1291 to hear the appeal of the
dismissal order. “[W]e have jurisdiction to determine
whether we have jurisdiction to hear the case.” Atl. Nat’l Tr.
LLC v. Mt. Hawley Ins. Co., 621 F.3d 931, 933 (9th Cir.
2010) (quoting Aguon-Schulte v. Guam Election Comm’n,
469 F.3d 1236, 1239 (9th Cir. 2006)).

                              A

    We “have jurisdiction of appeals from all final decisions
of the district courts of the United States.” 28 U.S.C. § 1291.
This means “that a party may not take an appeal under this
section until there has been a decision by the District Court
that ends the litigation on the merits and leaves nothing for
the court to do but execute the judgment.” Firestone Tire &
Rubber Co. v. Risjord, 449 U.S. 368, 373 (1981) (cleaned up).
Under the Supreme Court’s collateral order doctrine,
however, the term “final decisions” in § 1291 also includes “a
narrow class of decisions that do not terminate the litigation,
but must, in the interest of achieving a healthy legal system,
nonetheless be treated as final.” Digit. Equip. Corp. v.
Desktop Direct, Inc., 511 U.S. 863, 867 (1994) (cleaned up).
The Supreme Court has emphasized that this doctrine is
narrow, because otherwise the doctrine could “overpower the
substantial finality interests § 1291 is meant to further,”
including judicial efficiency. Will v. Hallock, 546 U.S. 345,
350 (2006).

   To fall within the narrow class of orders satisfying the
Supreme Court’s collateral order doctrine, an order must
(1) “conclusively determine the disputed question,”
        CHILDS V. SAN DIEGO FAMILY HOUSING LLC                   7

(2) “resolve an important issue completely separate from the
merits of the action,” and (3) “be effectively unreviewable on
appeal from a final judgment.” Id. at 349 (quoting P.R.
Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S.
139, 144 (1993)).2 When the Court determines that a type of
order is immediately appealable, that ruling is applicable to
all orders in that category. Van Cauwenberghe v. Biard,
486 U.S. 517, 529 (1988) (“In fashioning a rule of
appealability under § 1291, however, we look to categories of
cases, not to particular injustices.”); see also Carroll v.
United States, 354 U.S. 394, 405 (1957) (“Appeal rights
cannot depend on the facts of a particular case.”).

   Some categories of orders denying dismissal on the
ground of immunity from suit are immediately appealable
under the collateral order doctrine. This includes orders
denying motions to dismiss on the grounds of absolute
immunity, Nixon v. Fitzgerald, 457 U.S. 731, 742–43 (1982);
qualified immunity, Mitchell v. Forsyth, 472 U.S. 511, 530
(1985); a state’s Eleventh Amendment immunity, P.R.
Aqueduct, 506 U.S. at 144–45; and rights under the Double
Jeopardy Clause, Abney v. United States, 431 U.S. 651, 660
(1977).

   Despite its rulings in this line of cases, the Supreme Court
has declined to derive a rule that the denial of any type of
immunity from suit is immediately appealable. Hallock,
546 U.S. at 351. Such a rule would go too far, the Supreme
Court held, because “collateral order appeal would be a
matter of right whenever the Government lost a motion to
dismiss under the Tort Claims Act, or a federal officer lost

    2
      Because these three conditions were first set forth in Cohen,
337 U.S. at 546, this test is often referred to as the Cohen test.
8       CHILDS V. SAN DIEGO FAMILY HOUSING LLC

one on a Bivens action,” and “§ 1291 would fade out
whenever the Government or an official lost an early round.”
Id. at 353–54; see also Digit. Equip. Corp., 511 U.S. at 873
(explaining that the focus on a “right not to stand trial” is
misplaced because “virtually every right that could be
enforced appropriately by pretrial dismissal might loosely be
described as conferring a ‘right not to stand trial’”).
Therefore, Hallock held that the third prong of the collateral
order doctrine is satisfied only if denying an immediate
appeal and requiring the defendant to stand trial would
“imperil a substantial public interest,” such as “honoring the
separation of powers, preserving the efficiency of government
and the initiative of its officials, respecting a State’s dignitary
interests, and mitigating the government’s advantage over the
individual.” Id. at 352–53.

                                B

    Here, the order denying the motion to dismiss the Childs’
complaint was not one that “ends the litigation on the merits,”
and the district court did not certify its order for interlocutory
review under 28 U.S.C. § 1292(b). Therefore, we have
appellate jurisdiction over this order only if it qualifies as a
final order under the collateral order doctrine.

    The parties do not dispute that the first two prongs of the
collateral order doctrine are satisfied: the order in this case
conclusively determined the disputed question as to whether
the defendants were entitled to derivative sovereign immunity
under Yearsley, and that decision resolved an important issue
separate from the merits of the action. Therefore, we
consider the question whether the denial of derivative
sovereign immunity is “effectively unreviewable” on appeal
from a final judgment because such a denial would “imperil
       CHILDS V. SAN DIEGO FAMILY HOUSING LLC                  9

a substantial public interest” that meets the requirements in
Hallock. 546 U.S. at 353.

    To make this determination, we begin by identifying the
public interest in Yearsley. In Yearsley, plaintiffs sought
damages from a company whose construction of dikes in the
Missouri River “washed away” part of the plaintiffs’ land.
309 U.S. at 19. Because the company’s work “was all
authorized and directed by the Government of the United
States for the purpose of improving the navigation of this
navigable river,” and the government would be responsible
for providing the plaintiffs just compensation if the action
constituted a taking, Yearsley held “there is no ground for
holding [the government’s] agent liable who is simply acting
under the authority thus validly conferred.” Id. at 20–22. We
later held that the derivative sovereign immunity established
by Yearsley “is limited to cases in which a contractor ‘had no
discretion in the design process and completely followed
government specifications,’” and does not extend to “military
contractors exercising a discretionary governmental
function.” Cabalce v. Thomas E. Blanchard & Assocs., Inc.,
797 F.3d 720, 732 (9th Cir. 2015) (citing In re Hanford
Nuclear Rsrv. Litig., 534 F.3d 986, 1001 (9th Cir. 2008)).
Based on these precedents, the public interest underlying
derivative sovereign immunity is extending the federal
government’s immunity from liability, in narrow
circumstances, to government agents carrying out the federal
government’s directions.

     Having identified the public interest at stake, we next turn
to the question whether this public interest is a substantial one
that meets the standard in Hallock. Our inquiry is guided by
cases considering analogous claims of immunity. Although
we have not directly considered the applicability of the
10       CHILDS V. SAN DIEGO FAMILY HOUSING LLC

collateral order doctrine to the denial of claims of derivative
sovereign immunity under Yearsley, we have previously held
that the collateral order doctrine does not apply to orders
denying assertions of sovereign immunity of the federal
sovereign itself, see State of Alaska v. United States, 64 F.3d
1352, 1355 (9th Cir. 1995), or orders denying assertions of
the government contractor defense, Rodriguez v. Lockheed
Martin Corp., 627 F.3d 1259, 1262 (9th Cir. 2010). Because
both of these categories of claims are based on the sovereign
immunity of the federal government, much like derivative
sovereign immunity under Yearsley, we are guided by their
analysis of whether the interest at issue meets the third prong
of the collateral order doctrine.3

    In Alaska, we held that Congress has carved “such broad
exceptions” out of federal sovereign immunity by statute that
the United States effectively surrendered its right to be free
from suit in its own courts. 64 F.3d at 1356 & n.7 (citing
Pullman Constr. Indus., Inc. v. United States, 23 F.3d 1166,
1169 (7th Cir. 1994)). Therefore, “federal sovereign
immunity is not best characterized as a ‘right not to stand trial
altogether,’” but is “more accurately considered a right to
prevail at trial, i.e., a defense to payment of damages.” Id.
at 1355. We explained that the public interest in reviewing
the denial of federal sovereign immunity is not “weightier
than the societal interests advanced by the ordinary operation
of final judgment principles,” because the only hardship

     3
       Indeed, the government contractor defense and derivative sovereign
immunity both derived from Yearsley. See In re Hanford Nuclear Rsrv.
Litig., 534 F.3d at 1001 (holding that the Supreme Court “planted the
seeds of the government contractor defense” in Yearsley, before
expanding the doctrine in Boyle v. United Technologies Corp., 487 U.S.
500 (1988)).
       CHILDS V. SAN DIEGO FAMILY HOUSING LLC               11

imposed by postponing review is “the need to prepare for
trials.” Id. at 1356 (quoting Digit. Equip. Corp., 511 U.S.
at 879). We therefore concluded that “[t]he interest served
by federal sovereign immunity (the United States’ freedom
from paying damages without Congressional consent) may be
served equally well if review follows a final judgment on the
merits,” and therefore an order denying federal sovereign
immunity is not an immediately appealable collateral order.
Id. at 1355.

    Like derivative sovereign immunity, the government
contractor defense “shields contractors from tort liability in
state or federal actions where plaintiffs allege they sustained
injuries as a result of exposure to defective products or
equipment manufactured or supplied under a government
contract.” Rodriguez, 627 F.3d at 1265. Rodriguez held that
the government contractor defense provided “only a corollary
financial benefit flowing from the government’s sovereign
immunity.” Id. at 1266. Therefore, an order denying the
government contractor defense could be reviewed effectively
after final judgment and was not immediately appealable. Id.

     Our conclusion in Alaska that the interest served by
federal sovereign immunity (i.e., giving the government a
defense to payment of damages) “may be served equally well
if review follows a final judgment on the merits,” 64 F.3d
at 1355, is applicable to parties claiming derivative sovereign
immunity under Yearsley, see 309 U.S. at 19–20. And our
reasoning in Rodriguez that the interest served by the
government contractor immunity (i.e., giving contractors a
shield from financial liability) can be vindicated after trial,
see 627 F.3d at 1266, is also applicable to parties claiming
derivative sovereign immunity. Therefore, the reasoning of
Alaska and Rodriguez compels the conclusion that it would
12     CHILDS V. SAN DIEGO FAMILY HOUSING LLC

not “imperil a substantial public interest,” Hallock, 546 U.S.
at 353, to require a government contractor with derivative
sovereign immunity under Yearsley to stand trial. To the
contrary, immediate appellate review of such an order would
be “simply abbreviating litigation troublesome to
Government employees,” which the Supreme Court has held
is an insufficient basis to apply the collateral order doctrine.
Id.; see also Alaska, 64 F.3d at 1356.

    Because the denial of derivative sovereign immunity
under Yearsley is effectively reviewable after trial, the third
prong of the collateral order doctrine is not satisfied.
Therefore, we hold that the denial of a motion to dismiss on
the ground of derivative sovereign immunity under Yearsley
is not immediately appealable under the collateral order
doctrine. In reaching this conclusion, we join the Fifth
Circuit’s well-reasoned conclusion that the denial of
derivative sovereign immunity under Yearsley is not
immediately appealable. Martin v. Halliburton, 618 F.3d
476, 485 & n.14 (5th Cir. 2010).

    SDFH and Lincoln argue that our reasoning in Alaska and
Rodriguez has been undercut by the Supreme Court’s
decision in Campbell-Ewald Co. v. Gomez, 577 U.S. 153
(2016). In Campbell, the Supreme Court considered whether
a federal contractor who violated the Telephone Consumer
Protection Act by sending text messages to individuals who
had not agreed to receive them could claim derivative
sovereign immunity under Yearsley. See id. at 156. In the
course of holding that a party is not entitled to derivative
sovereign immunity if it violates both federal law and the
Government’s explicit instructions, the Court in passing
framed the question presented as whether a contractor was
“immune from suit” under Yearsley. Id. at 166. According
        CHILDS V. SAN DIEGO FAMILY HOUSING LLC                      13

to the defendants, this passing reference overrules the
reasoning in Alaska and Rodriguez that federal sovereign
immunity and government contractor immunity protected
defendants from liability, not immunity from suit.

     We disagree. The few brief references in Campbell-
Ewald—which merely restates the Supreme Court’s
longstanding classification of federal sovereign immunity as
immunity from suit, see, e.g., FDIC v. Meyer, 510 U.S. 471,
475 (1994)—have not “undercut the theory or reasoning
underlying” Alaska and Rodriguez “in such a way that the
cases are clearly irreconcilable,” Miller v. Gammie, 335 F.3d
889, 900 (9th Cir. 2003) (en banc). Unlike Campbell-Ewald,
which considered the scope of a government contractor’s
immunity, Alaska and Rodriguez analyzed whether the
interests at stake when a district court denies a motion to
dismiss based on a claim of federal sovereign immunity or
the government contractor defense are important enough to
merit an immediate appeal. This is exactly the inquiry
required by Hallock. Campbell-Ewald’s passing comments
do not impact our conclusions in Alaska and Rodriguez that
the interest in avoiding a judgment of damages is
insufficiently weighty to satisfy the third prong of the
collateral order doctrine. “[I]t is not mere avoidance of a
trial, but avoidance of a trial that would imperil a substantial
public interest, that counts when asking whether an order is
‘effectively’ unreviewable if review is to be left until later.”
Hallock, 546 U.S. at 353 (emphasis added) (quoting Coopers
& Lybrand v. Livesay, 437 U.S. 463, 468 (1978)).4

    4
      Because the third prong of the collateral order doctrine requires
consideration of whether being forced to stand trial would imperil a
substantial public interest, Hallock, 546 U.S. at 353, SDFH’s and
Lincoln’s reliance on Cunningham v. General Dynamics Information
14      CHILDS V. SAN DIEGO FAMILY HOUSING LLC

                                   III

    The district court’s order was not an immediately
appealable collateral order, and SDFH and Lincoln fail to
identify any other statutory basis that permits us to exercise
jurisdiction to hear the appeal. Therefore, we lack appellate
jurisdiction under 28 U.S.C. § 1291. See Cohen, 337 U.S.
at 545–47.

     DISMISSED.

Technology, Inc., 888 F.3d 640, 649–51 (4th Cir. 2018), is misplaced.
Although Cunningham stated that derivative sovereign immunity under
Yearsley provides immunity from suit, it did not address the distinct
question whether an order denying derivative sovereign immunity would
imperil a substantial public interest. For the same reason, SDFH and
Lincoln’s attempt to analogize derivative sovereign immunity to qualified
immunity fails, because the denial of qualified immunity would impact the
substantial public interest in inducing “officials to show reasonable
initiative when the relevant law is not ‘clearly established.’” Hallock,
546 U.S. at 353 (quoting Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982)).
By contrast, the denial of derivative sovereign immunity does not imperil
any similarly substantial public interest. See supra at 12.