Court Opinion

ID: 2827110
Source: CourtListenerOpinion
Date Created: 2015-08-13 17:02:40.577169+00
Date Added: 2024-06-11T12:34:08.781927
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

TERRANCE D. CABALCE, individually        No. 13-15256
and as Personal Representative of
the Estate of Bryan Dean Cabalce;            D.C. No.
GAIL S. CABALCE,                         1:12-cv-00373-
                 Plaintiffs-Appellees,      JMS-RLP

                  v.

THOMAS E. BLANCHARD &
ASSOCIATES, INC.; RICHARD BRATT;
HIDC SMALL BUSINESS STORAGE
LLC; HAWAIIAN ISLAND
DEVELOPMENT CO., INC.; HAWAIIAN
ISLAND HOMES LTD.; HAWAIIAN
ISLAND COMMERCIAL LTD.; FORD
ISLAND VENTURES, LLC,
                       Defendants,

                  v.

VSE CORPORATION,
  Defendant-Third-Party-Plaintiff–
                       Appellant,

                 and

DONALD ENTERPRISES, INC.; UNITED
STATES OF AMERICA,
           Third-Party-Defendants.
2                CABALCE V. VSE CORP.

CHARLIZE LEAHEY IRVINE,                  No. 13-15259
individually and as Personal
Representative of the Estate of              D.C. No.
Robert Leahey, deceased; CHARLES         1:12-cv-00391-
LEAHEY, JR., individually; JAMES            JMS-RLP
LEAHEY, individually; MICHAEL
LEAHEY, individually,
                 Plaintiffs-Appellees,

                  v.

THOMAS E. BLANCHARD &
ASSOCIATES, INC.; RICHARD BRATT;
HIDC SMALL BUSINESS STORAGE
LLC; HAWAIIAN ISLAND
DEVELOPMENT CO., INC.; HAWAIIAN
ISLAND HOMES LTD.; HAWAIIAN
ISLAND COMMERCIAL LTD.; FORD
ISLAND VENTURES, LLC,
                       Defendants,

                  v.

VSE CORPORATION,
  Defendant-Third-Party-Plaintiff–
                       Appellant,

                 and

DONALD ENTERPRISES, INC.; UNITED
STATES OF AMERICA,
           Third-Party-Defendants.
                 CABALCE V. VSE CORP.                      3

GEORGE JOSEPH KELII, individually         No. 13-15265
and as Co-Personal Representative
of the Estate of Justin Joseph Kellii,        D.C. No.
Deceased; PRISCILLA ANN KELII;            1:12-cv-00376-
DANIELLE THERESA BATTISTI,                   JMS-RLP
individually and as Co-Personal
Representative of the Estate of Justin
Joseph Kellii, Deceased; DEBORAH
ANN DULARTE, individually and as
Co-Personal Representative of the
Estate of Justin Joseph Kellii,
Deceased; DENISE MARIE KELLII
HIRANO; JOSHUA KELLII; JAYMEE
KELLII,
                  Plaintiffs-Appellees,

                  v.

THOMAS E. BLANCHARD &
ASSOCIATES, INC.; RICHARD BRATT;
HIDC SMALL BUSINESS STORAGE
LLC; HAWAIIAN ISLAND
DEVELOPMENT CO., INC.; HAWAIIAN
ISLAND HOMES LTD.; HAWAIIAN
ISLAND COMMERCIAL LTD.; FORD
ISLAND VENTURES, LLC,
                       Defendants,

                 and

VSE CORPORATION,
  Defendant-Third-Party-Plaintiff–
                       Appellant,
4                CABALCE V. VSE CORP.

                 and

DONALD ENTERPRISES, INC.; UNITED
STATES OF AMERICA,
           Third-Party-Defendants.

HEATHER FREEMAN, Individually,           No. 13-15266
and as Next Friend of Maleia Mika
Freeman, a minor, and as Personal            D.C. No.
Representative of the Estate of          1:12-cv-00377-
Robert Kevin Donor Freeman,                 JMS-RLP
Deceased; ROBERT FREEMAN; EMMA
FREEMAN; MARTIN WILLIAM
SPRANKLE, Individually, and as             OPINION
Personal Representative of the Estate
of Neil Benjamin Sprankle,
Deceased; UNHEE SEO,
                 Plaintiffs-Appellees,

                  v.

THOMAS E. BLANCHARD &
ASSOCIATES, INC.; RICHARD BRATT;
HIDC SMALL BUSINESS STORAGE
LLC; HAWAIIAN ISLAND
DEVELOPMENT CO., INC.; HAWAIIAN
ISLAND HOMES LTD.; HAWAIIAN
ISLAND COMMERCIAL LTD.; FORD
ISLAND VENTURES, LLC,
                       Defendants,
                CABALCE V. VSE CORP.                   5

                and

VSE CORPORATION,
  Defendant-Third-Party-Plaintiff–
                       Appellant,

                and

DONALD ENTERPRISES, INC.; UNITED
STATES OF AMERICA,
           Third-Party-Defendants.

     Appeals from the United States District Court
               for the District of Hawaii
     J. Michael Seabright, District Judge, Presiding

                Argued and Submitted
          October 7, 2014—Honolulu, Hawaii

                 Filed August 13, 2015

  Before: A. Wallace Tashima, Johnnie B. Rawlinson,
        and Richard R. Clifton, Circuit Judges.

             Opinion by Judge Rawlinson
6                    CABALCE V. VSE CORP.

                           SUMMARY*

                              Removal

    The panel affirmed the district court’s order remanding to
state court several actions that sought to impose liability on
VSE Corporation for a deadly explosion involving fireworks
that were seized by the federal government and which VSE
agreed to store and destroy.

    The plaintiffs, who were the families or representatives of
people killed by the explosion of fireworks, filed complaints
in Hawaii state court. VSE removed the four state court
actions to federal district court pursuant to 28 U.S.C.
§ 1442(a)(1). VSE maintained that removal was proper
because it acted “under the color of the United States”
pursuant to its contract with the federal government, and
because it had colorable federal defenses premised on
derivative sovereign immunity and the government contractor
defense.

    The panel held that VSE did not demonstrate by a
preponderance of the evidence the requisite casual nexus
between the plaintiffs’ claim and direction or control of the
project by a federal agency or official.

    The panel also held that federal officer removal was not
warranted because VSE failed to demonstrate that it had a
colorable federal defense to the plaintiffs’ claims. The panel
held that VSE, as a non-military contractor, was not able to

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                  CABALCE V. VSE CORP.                      7

assert a plausible government contractor defense. The panel
further held that VSE did not establish that the federal
government reviewed in detail the destruction plan that had
been independently devised by VSE and others. Finally, the
panel held that VSE was unable to satisfy the requirements
for derivative sovereign immunity because VSE did not
plausibly demonstrate that it completely lacked discretion in
independently devising the destruction plan.

                        COUNSEL

Kurt James Hamrock (argued), Raymond B. Biagini, Lisa
Norrett Himes, and Shannon Gibson Konn, McKenna Long
& Aldridge LLP, Washington, D.C., for Defendant-
Appellant.

Steven K. Hisaka (argued) and Gail Y. Cosgrove, Hisaka
Yoshida & Cosgrove, Honolulu, Hawaii; and Jan M.
Weinberg, Honolulu, Hawaii, for Plaintiffs-Appellees.

                         OPINION

RAWLINSON, Circuit Judge:

    Pursuant to a contract with the United States Department
of the Treasury, Appellant VSE Corporation (VSE) agreed to
store and destroy fireworks that had been seized by the
federal government. VSE challenges the district court’s order
remanding to state court several actions that sought to impose
liability on VSE for a deadly explosion involving the seized
fireworks. VSE contends that removal to federal court
pursuant to 28 U.S.C. § 1442 was proper because it acted
8                 CABALCE V. VSE CORP.

under the directions of a federal officer when it stored and
attempted to destroy the fireworks. VSE also argues that
VSE adequately asserted two colorable federal defenses – the
government contractor defense and derivative sovereign
immunity. We disagree, and affirm the district court’s order.

I. BACKGROUND

    This case stems from a deadly explosion involving seized
fireworks that were stored by VSE on behalf of the federal
government prior to the planned destruction of the fireworks.
VSE entered into a contract with the Treasury Executive
Office for Asset Forfeiture for the storage and disposal of
seized property. The contract specified that VSE “shall
provide all services, materials, supplies, supervision, labor,
and equipment, except that specified herein as Government-
furnished, to perform all property management and
disposition work . . .” VSE was responsible for the
disposition of seized property in accordance with instructions
“issued by the seizing or blocking agency. . . .” VSE was
required to “destroy General Property as prescribed and
directed by the responsible seizing or blocking agency
designated representative on the disposition order,” and to
comply with federal, state, and local laws and regulations
when destroying hazardous materials. Additionally, the
contract provided that “[a]ll destructions must be coordinated
and approved by the responsible seizing or blocking agency
designated representative. Failure to coordinate and obtain
prior approval of all destruction activity will result in
unallowable costs. . . .”

    The contract’s indemnity clause specified that:
                  CABALCE V. VSE CORP.                      9

       The Contractor is “an Independent
       Contractor” and shall obtain all necessary
       insurance to protect Project Personnel from
       liability arising out of the Contract. The
       Contractor hereby agrees to indemnify and
       hold the Government and its employees
       harmless in connection with any loss or
       liability from damage to or destruction of
       property, or from injuries to or death of
       persons (including the agents and employees
       of both parties) if such damage, destruction,
       injury, or death arises out of, or is caused by,
       performance of work under the Contract,
       unless such damage, destruction, injury, or
       death is caused solely by the active negligence
       of the Government or its employees. The
       Contractor agrees to include this clause,
       appropriately modified, in all subcontracts to
       be performed under the Contract.

With respect to safety precautions, the contract delineated
that:

       The Contractor shall be responsible for all
       damages to persons or property that occurs as
       a result of its, its subcontractors, or any of its
       or its or its [sic] subcontractor’s employee’s
       fault or negligence. The Contractor shall take
       proper safety and health precautions to protect
       the work, the workers, the public and property
       of others. The Contractor shall also be
       responsible for all materials delivered and
       work performed until completion and
       acceptance of the service.
10                 CABALCE V. VSE CORP.

    According to James Fallon (Fallon), a vice-president of
VSE, pursuant to the contract, VSE was storing fireworks that
had been seized by the federal government. The seizures,
referred to as the Haleamau and Chang seizures, were part of
a criminal case requiring maintenance of the fireworks as
evidence. Fallon related that the Haleamau seizure “consisted
of 1,370 cartons of fireworks” and that the Chang seizure
“consisted of a total of 296 cartons of fireworks. . . .”

    The seized fireworks were actually stored by Donaldson
Enterprises, Inc. (Donaldson), a subcontractor utilized by
VSE. Tragically, storage and destruction of the fireworks did
not proceed as planned. An explosion of fireworks in a
commercial storage facility resulted in the deaths of five
individuals.

    Terrance Cabalce, the father of Bryan Cabalce (Cabalce),
filed a complaint in Hawaii state court alleging that VSE was
liable for the death of his son. The complaint alleged that
Cabalce was employed by Donaldson, which was hired by
VSE to store, transport, dismantle, and dispose of the seized
fireworks. According to the complaint, VSE negligently
caused Cabalce’s death by failing to eliminate the dangers
associated with the fireworks; disposing of the fireworks in
the same area where the fireworks were stored; utilizing tools
and pumps that may have caused the ignition of the
fireworks; storing the fireworks in a confined area that was
susceptible to static electricity; and using diesel oil to
dismantle the fireworks. The complaint also alleged that
VSE’s dismantlement and transportation of the fireworks was
an ultra-hazardous activity and that VSE was liable “under
the theories of strict liability for breach of warranty, defective
design, conducting an ultra-hazardous activity, breach of
implied warranty of habitability, implied warranty of fitness
                   CABALCE V. VSE CORP.                       11

for a particular purpose, other applicable warranties,
respondeat superior, res ipsa loquitor, agency liability,
partnership liability, and/or otherwise.”

     Plaintiff Charlize Leahey Irvine (Irvine) filed a complaint
in Hawaii state court against VSE for the death of Robert
Leahey (Leahey), another Donaldson employee. According
to the complaint, Leahey was working in a storage unit leased
by Donaldson that contained “39 plastic wrapped pallets of
fireworks (1370 cartons containing 5480 fireworks”) and
“approximately 17–55 gallon barrels, some of which
contained diesel fuel oil and a mixture of other
combustible/explosive materials.” Irvine alleged that Leahey
and five other Donaldson employees were dismantling the
fireworks “by cutting open the casings of the fireworks with
a cutting tool similar to a scissors and mixing the gun powder
removed from the casings with the diesel fuel. The
employees used a small pump to move the diesel fuel from
full barrels of diesel fuel to the barrels containing gun
powder.” Irvine averred that, after the work was moved
inside the storage unit when it started to rain, an explosion
occurred that “was so great that debris was blown over 150
feet from the front doors of the storage unit. Three vehicles
parked outside of the storage unit caught fire and burned from
the intense heat and fire from the explosion.”

    Irvine alleged that VSE was negligent because VSE
should have known that the premises were unsafe; VSE failed
to adequately warn the employees about the dangerous
conditions; VSE did not properly supervise and manage the
Donaldson employees in storing and disposing of the seized
fireworks; and VSE did not devise appropriate safety
procedures. Irvine also asserted theories of strict liability and
the performance of ultra-hazardous activities associated with
12                 CABALCE V. VSE CORP.

storing, dismantling, handling, transporting, and disposing of
fireworks and explosives.

   The families or representatives of the estates for two other
Donaldson employees killed in the explosion, Robert
Freeman and Justin Joseph Kelii, filed similar complaints
against VSE in Hawaii state court.

    VSE removed all four state court actions to federal district
court pursuant to 28 U.S.C. § 1442(a)(1). VSE maintained
that removal was proper because it acted “under the color of
the United States” pursuant to its contract with the federal
government, and because it had colorable federal defenses
premised on derivative sovereign immunity and the
government contractor defense.

    In addition, VSE filed a third-party complaint against the
United States seeking contribution and equitable indemnity
under the Federal Tort Claims Act (Tort Claims Act). VSE
alleged that the United States “had a duty to disclose and
provide a warning as to the severe risk of harm posed by the
fireworks that it controlled, possessed and/or owned.” VSE
also asserted that the United States failed to warn VSE or
Donaldson “concerning the potential for catastrophic risk of
harm” related to the fireworks and that the United States
failed to exercise ordinary care when it consigned the
fireworks to VSE.

    The district court granted the United States’ motion to
dismiss VSE’s third-party complaint for lack of subject
matter jurisdiction. Applying the independent contractor
exception, the district court held that the United States was
not liable under the Tort Claims Act for the alleged negligent
                  CABALCE V. VSE CORP.                     13

acts committed by VSE and Donaldson in destroying the
fireworks. The district court determined:

       Neither the Complaints nor the Third-Party
       Complaints allege (and the record contains no
       such evidence) that any government employee
       or agency controlled or substantially
       supervised the day-to-day destruction of the
       fireworks. Rather, all indications are that
       Donaldson and VSE were performing under
       their respective contracts. No one disputes
       that Donaldson and VSE devised and prepared
       the destruction plans (both the plan that [the
       Bureau of Customs and Border Protection]
       approved on April 28, 2010, and the modified
       procedure discussed between Donaldson and
       VSE on March 28, 2011). And, indeed, the
       VSE prime contract specifically declares that
       VSE is an Independent Contractor and shall
       obtain all necessary insurance to protect
       Project Personnel from liability arising out of
       the Contract.

(citations, alteration, and internal quotation marks omitted)
(emphasis in the original). The district court observed that
“even assuming the VSE contract gave the government the
ability to enforce safety regulations, VSE or Donaldson
personnel were still not employees for purpose[s] of [Tort
Claims Act] liability.” (citation and internal quotation marks
omitted).

    The district court held that dismissal of the third-party
complaint against the United States was warranted under the
discretionary function exception to the Tort Claims Act,
14                CABALCE V. VSE CORP.

because the United States contractually assigned the
destruction of the fireworks to VSE and Donaldson. The
district court observed that “[t]he record is undisputed that
Donaldson . . . prepared the destruction plan for VSE, and
that VSE obtained government approval only after Donaldson
obtained the necessary permit. VSE and Donaldson provided
the government with detailed safety parameters as part of the
plan, not the other way around. . . .” The district court also
observed that Donaldson was licensed to handle “high
explosives.”

    The district court subsequently granted the plaintiffs’
motions to remand their cases to Hawaii state court. See
Cabalce v. VSE Corp., 922 F.Supp.2d 1113, 1115 (D. Haw.
2013). The district court noted that, in its prior order
dismissing VSE’s third-party complaint against the United
States, it determined that VSE was an independent contractor
under the Tort Claims Act. See id. at 1116. Consistent with
that determination, the district court concluded that VSE was
unable to demonstrate that it acted under the direct orders or
regulations of the federal government because VSE operated
as an independent contractor who devised and modified the
destruction plan in the absence of governmental supervision.
See id. at 1122–23. Because VSE functioned as an
independent contractor, the “independent contractor”
exception in the Tort Claims Act barred VSE’s claims against
the United States. See id. at 1116–17.

    The district court also rejected VSE’s assertion that
removal was proper based on the government contractor
defense and derivative sovereign immunity. See id. at
1123–29. The district court explained that the government
contractor defense was inapplicable because VSE was not
acting under direct orders or regulations of the federal
                     CABALCE V. VSE CORP.                            15

government and was unable to identify any precise
specifications precluding VSE’s ability to comply with its
duty to warn. See id. at 1123–25. The district court observed
that the broad discretion conferred upon VSE and Donaldson
in developing and implementing the destruction plan further
undermined a government contractor defense. See id. at
1124.

     The district court held that derivative sovereign immunity
did not extend to VSE because the defense was unavailable
to independent contractors who acted negligently. See id. at
1125–27. The district court rejected VSE’s argument that
derivative sovereign immunity applied because VSE was
strictly liable for its performance of the ultra-hazardous
activity of destroying the fireworks. See id. at 1126–28. The
district court determined that VSE’s strict liability argument
was unavailing because that defense required proof of an
agency relationship, which VSE lacked as an independent
contractor. See id. at 1128–29. The district court granted
VSE’s motion to stay its order remanding the actions to state
court pending appeal.

     VSE filed timely notices of appeal.

II. STANDARD OF REVIEW

    “We review de novo a district court’s decision to remand
a removed case and its determination that it lacks subject
matter jurisdiction. . . .” Lively v. Wild Oats Markets, Inc.,
456 F.3d 933, 938 (9th Cir. 2006) (citations omitted).1

 1
   Because this case was removed from state court pursuant to 28 U.S.C.
§ 1442, we have jurisdiction to review the order remanding the action to
state court. See 28 U.S.C. § 1447(d) (“ An order remanding a case to the
16                   CABALCE V. VSE CORP.

III.      DISCUSSION

       A. The Lack of a Causal Nexus Between the
          Plaintiffs’ Claims and a Federal Officer’s
          Directions

    VSE contends that removal was proper pursuant to
28 U.S.C. § 1442(a)(1) because there was a causal nexus
between the work it performed at the direction of the United
States and the plaintiffs’ claims. VSE maintains that the
United States contractually delegated authority to VSE and
that there was a causal connection between VSE’s
performance of federal duties and the plaintiffs’ claims.

       Pursuant to 28 U.S.C. § 1442(a)(1):

          (a) A civil action or criminal prosecution that
          is commenced in a State court and that is
          against or directed to any of the following
          may be removed by them to the district court
          of the United States for the district and
          division embracing the place wherein it is
          pending: (1) The United States or any agency
          thereof or any officer (or any person acting
          under that officer) of the United States or of
          any agency thereof, in an official or individual
          capacity, for or relating to any act under color
          of such office or on account of any right, title
          or authority claimed under any Act of

State court from which it was removed is not reviewable on appeal or
otherwise, except that an order remanding a case to the State court from
which it was removed pursuant to section 1442 or 1443 of this title shall
be reviewable by appeal or otherwise.”).
                     CABALCE V. VSE CORP.                            17

         Congress for the apprehension or punishment
         of criminals or the collection of the revenue.

    “[T]he federal officer removal statute authorizes removal
of a civil action brought against any person acting under an
officer of the United States for or relating to any act under
color of such office.” Leite v. Crane Co., 749 F.3d 1117,
1120 (9th Cir. 2014) (citation, footnote reference, and internal
quotation marks omitted). “To invoke the statute, [VSE]
must show that (1) it is a person within the meaning of the
statute, (2) a causal nexus exists between plaintiffs’ claims
and the actions [VSE] took pursuant to a federal officer’s
direction, and (3) it has a colorable federal defense to
plaintiffs’ claims.” Id. (citation and internal quotation marks
omitted).

    VSE faces a steep hurdle in demonstrating the requisite
causal nexus between the plaintiffs’ claims and a federal
officer’s direction because VSE did not challenge the district
court’s factual findings supporting its dismissal of VSE’s
third-party complaint against the United States.2 As the
Supreme Court has articulated:

         The relevant relationship is that of a private
         person “acting under” a federal “officer” or
         “agency.” In this context, the word “under”
         must refer to what has been described as a
         relationship that involves “acting in a certain
         capacity, considered in relation to one holding
         a superior position or office.”            That

 2
   VSE’s counsel represented before the district court that he would not
“argue with the law of the case” concerning the district court’s prior
finding that VSE did not act at the direction of the federal government.
18                 CABALCE V. VSE CORP.

       relationship typically involves “subjection,
       guidance, or control.”. . .

Watson v. Phillip Morris Cos., Inc., 551 U.S. 142, 151 (2007)
(citations omitted) (emphasis in the original). In dismissing
VSE’s third-party complaint, the district court determined
that “[n]either the Complaints nor the Third-Party Complaints
allege (and the record contains no such evidence) that any
government employee or agency controlled or substantially
supervised the day-to-day destruction of the fireworks. . . .”
The district court also concluded that “[t]he record is
undisputed that Donaldson . . . prepared the destruction plan
for VSE, and that VSE obtained government approval only
after Donaldson obtained the necessary permit. VSE and
Donaldson provided the government with detailed safety
parameters as part of the plan, not the other way around. . . .”

    Thus, a significant flaw in VSE’s argument that the
federal government directed its work is the lack of any
evidence of the requisite federal control or supervision over
the handling of the seized fireworks. See Leite, 749 F.3d at
1122 (articulating that the party invoking federal officer
removal “bears the burden of proving by a preponderance of
the evidence that the colorable federal defense and causal
nexus requirements for removal jurisdiction have been met”)
(citation and footnote reference omitted); see also Autery v.
United States, 424 F.3d 944, 956 (9th Cir. 2005) (“With a
12(b)(1) motion, a court may weigh the evidence to determine
whether it has jurisdiction. . . .”) (citation omitted). The
record is bereft of any factual support for VSE’s assertion that
its conduct was causally connected to the federal
government’s “subjection, guidance, or control.” Watson,
551 U.S. at 151. Notably missing is any evidence reflecting
that Donaldson and VSE operated under federal supervision
                  CABALCE V. VSE CORP.                      19

or control in developing the destruction plan itself. Rather,
“[t]he government was relying on the expertise of [VSE] and
not vice versa.” In re Hanford Nuclear Reservation Litig.,
534 F.3d 986, 1007 (9th Cir. 2008), as amended.

    VSE also relies extensively on its contractual duties to
handle, store, and destroy the seized fireworks. However, the
contract defines VSE’s duties in handling hazardous and
dangerous materials in general terms and VSE points to no
contractual provisions or specifications from a federal officer
relevant to its destruction of the seized fireworks. Moreover,
VSE’s reliance on contractual generalities to shield it from
liability completely excises provisions establishing the nature
of VSE’s contractual relationship with the federal
government. In particular, the contract unambiguously
provides:

       The Contractor is an Independent Contractor
       and shall obtain all necessary insurance to
       protect Project Personnel from liability arising
       out of the Contract. The Contractor hereby
       agrees to indemnify and hold the Government
       and its employees harmless in connection with
       any loss or liability from damage to or
       destruction of property, or from injuries to or
       death of persons (including the agents and
       employees of both parties) if such damage,
       destruction, injury, or death arises out of, or is
       caused by, performance of work under the
       Contract, unless such damage, destruction,
       injury, or death is caused solely by the active
       negligence of the Government or its
       employees. The Contractor agrees to include
       this clause, appropriately modified, in all
20                CABALCE V. VSE CORP.

       subcontracts to be performed under the
       Contract.

The contract provides with respect to safety precautions that:

       The Contractor shall be responsible for all
       damages to persons or property that occurs as
       a result of its, its subcontractors, or any of its
       or its or its [sic] subcontractor’s employee’s
       fault or negligence. The Contractor shall take
       proper safety and health precautions to protect
       the work, the workers, the public and property
       of others. The Contractor shall also be
       responsible for all materials delivered and
       work performed until completion and
       acceptance of the service.

VSE’s parsing of the contract in an attempt to support federal
officer removal is unavailing.

    Fundamentally, VSE challenges the district court’s
reliance on VSE’s status as an independent contractor.
Independent contractors may be afforded the benefits of
federal officer removal in theory, see Boyle v. United Tech.
Corp., 487 U.S. 500, 505 (1988), and the district court’s
analysis was not inconsistent with that theory. Rather than
holding that VSE was precluded as a matter of law from
seeking federal officer removal as an independent contractor,
the district court considered VSE’s independent contractor
status as a component of its analysis that VSE could not
demonstrate the requisite causal nexus for federal officer
removal. In particular, the district court referenced VSE’s
independent contractor status, other contract provisions, and
Donaldson’s and VSE’s independent development of the
                      CABALCE V. VSE CORP.                             21

destruction plan, to support its conclusion that “VSE and
Donaldson were not acting under direct orders or
comprehensive and detailed regulations of the government.”
Cabalce, 922 F.Supp.2d at 1122 (citation and internal
quotation marks omitted). Given the paucity of evidence
presented by VSE, the district court determined that VSE, as
an independent contractor, simply could not “exclude the
possibility that the removed action was based on acts or
conduct of VSE not justified by VSE’s federal duty.” Id. at
1123 (citation and alteration omitted). The district court
concluded that acts “occurr[ing] under the general auspices of
federal direction” were not acts of a government agency or
official. Id. at 1122–23. This conclusion was not erroneous.3

   3
      VSE contends that the district court in Anchorage v. Integrated
Concepts & Research Corp., No. 3:13-cv-00063-SLG, 2013 WL 6118485
(D. Alaska 2013) rejected the Cabalce district court’s holding that an
independent contractor is not eligible for federal officer removal.
However, the district court in Integrated Concepts merely observed that
“whether a federal contractor is termed an independent contractor is not
dispositive of section 1442 removal. The focus for this inquiry is instead
whether the contractor assisted or helped the government, and performed
duties that the government would otherwise have to perform. . . .” Id. at
*4 (internal quotation marks omitted). As discussed, the district court in
Cabalce did not simply label VSE an independent contractor and conclude
that VSE was thereby barred from seeking federal officer removal.
Instead, the district court considered VSE’s independent contractor status,
particularly given VSE’s contract-based assertions, as one component of
its analysis; and VSE’s failure to proffer any evidence that it operated
under the federal government’s guidance, control, and supervision as
another component of its analysis. See Cabalce, 922 F.Supp.2d at
1122–23.       Moreover, the district court in Integrated Concepts
distinguished Cabalce on the basis that, unlike in Integrated Concepts, the
government did not exercise extensive day-to-day control over the
contractors in Cabalce. See Integrated Concepts, 2013 WL 6118485, at
*4.
22                    CABALCE V. VSE CORP.

    Finally, VSE faults the district court for not following its
prior decision in Leite v. Crane Co., 868 F.Supp.2d 1023 (D.
Haw. 2012), which we recently affirmed. See Leite, 749 F.3d
at 1124. However, as reflected in our decision, Leite is
entirely distinguishable from the present appeal. The
defendant in Leite, a military contractor, was sued for failing
to warn about asbestos in military equipment. The contractor
demonstrated that federal officer removal was warranted by
producing extensive evidence of federal control, including
“detailed specifications governing the form and content of all
warnings that equipment manufacturers were required to
provide, both on the equipment itself and in accompanying
technical manuals.” Leite, 749 F.3d at 1123 (emphasis
added). Additionally, “the Navy was directly involved in
preparing the manuals, which included safety information
about equipment operation . . . [E]quipment manufacturers
could not include warnings beyond those specifically required
and approved by the Navy, and . . . the Navy’s specifications
did not require equipment manufacturers to include warnings
about asbestos hazards. . . .” Id. (emphasis added). In
contrast to the persuasive showing by the Defendant in Leite,
VSE failed to provide any evidence of federal control or
supervision over the planned destruction of the fireworks. If
anything, Leite bolsters our conclusion that VSE did not meet
its “burden of proving by a preponderance of the evidence
that the colorable federal defense and causal nexus
requirements for removal jurisdiction have been met.” Leite,
749 F.3d at 1122 (citation and footnote reference omitted).4

 4
  VSE’s reliance on Bennett v. MIS Corp., 607 F.3d 1076 (6th Cir. 2010)
and Isaacson v. Dow Chem. Co., 517 F.3d 129 (2d Cir. 2008) is
misplaced. Unlike VSE, the defendants in Bennett and Isaacson amply
demonstrated the requisite federal supervision, control, and direction. In
Bennett, a case involving mold remediation firms hired by the Federal
                      CABALCE V. VSE CORP.                             23

    B. Colorable Federal Defenses

    Even if VSE presented sufficient evidence of the causal
nexus between the plaintiffs’ claims and the actions of a
federal officer, VSE’s pursuit of federal officer removal
would still falter because it did not demonstrate the requisite
colorable federal defense. See Leite, 749 F.3d at 1120 (“To
invoke the statute, [VSE] must show that (1) it is a person
within the meaning of the statute, (2) a causal nexus exists
between plaintiffs’ claims and the actions [VSE] took
pursuant to a federal officer’s direction, and (3) it has a
colorable federal defense to plaintiffs’ claims.”) (citation and
internal quotation marks omitted) (emphasis added).

         1. Government Contractor Defense

    Relying on Boyle, VSE contends that federal officer
removal was proper because it asserted a colorable
government contractor defense. In Boyle, the Supreme Court
held that military contractors involved in the design of

Aviation Administration (FAA), “[t]he FAA contracts included precise
specifications” and “Federal officers closely monitored [the defendant’s]
work. Specifically, each contract designated a federal officer who directly
supervised each remediation. These on-site federal officers . . . were
prohibited from modifying or deviating from the FAA’s specifications
without first obtaining the signature of the Lead Contractor Officer . . .”
607 F.3d at 1082, 1087 (alteration, footnote reference, and internal
quotation marks omitted). In Isaacson, the federal government contracted
with several chemical companies to develop Agent Orange. See 517 F.3d
at 133. The Second Circuit held that federal officer removal was proper
because “the Government knew that Agent Orange contained dioxin, and
the Government controlled the method of formulation. The action that
Plaintiffs challenge, the production of dioxin, naturally would have
occurred during the performance of these government-specified
duties. . . .” Id. at 138.
24                    CABALCE V. VSE CORP.

military equipment should not be held liable for state law
claims. The Supreme Court articulated:

         Liability for design defects in military
         equipment cannot be imposed, pursuant to
         state law, when (1) the United States approved
         reasonably precise specifications; (2) the
         equipment conformed to those specifications;
         and (3) the supplier warned the United States
         about the dangers in the use of the equipment
         that were known to the supplier but not to the
         United States. . . .

Boyle, 487 U.S. at 512. As we have recognized, “[t]his
defense protects government contractors from tort liability
that arises as a result of the contractor’s compliance with the
specifications of a federal government contract.” Getz v.
Boeing Co., 654 F.3d 852, 860 (9th Cir. 2011) (citations,
alteration, and internal quotation marks omitted).

    “In the Ninth Circuit, however, [the government
contractor defense] is only available to contractors who
design and manufacture military equipment.” Snell v. Bell
Helicopter Textron, Inc., 107 F.3d 744, 746 n.1 (9th Cir.
1997) (citation omitted). This precedent renders the
government contractor defense unavailable to VSE, a non-
military contractor.5

 5
   VSE candidly acknowledges that “[t]his Court has not yet applied the
government contractor defense outside of military contracts . . .”
Nevertheless, VSE contends that it was entitled to invoke the government
contractor defense because it is plausible that the defense may apply
outside of the military context. For example, in Integrated Concepts, the
district court opined that “the government contractor defense could
plausibly be invoked by a contractor hired by a federal civilian agency to
                      CABALCE V. VSE CORP.                            25

    Even if applicable, VSE did not demonstrate by a
preponderance of the evidence a colorable government
contractor defense because “[t]he government’s approval of
a particular specification must be more than a cursory rubber
stamp approving the design.” Getz, 654 F.3d at 861 (citation
and internal quotation marks omitted). “Rather, approval
must result from a continuous exchange and back and forth
dialogue between the contractor and the government.” Id.
(citation and internal quotation marks omitted). “When the
government engages in a thorough review of the allegedly
defective design and takes an active role in testing and
implementing that design, [the] first element is met.” Id.
(citation omitted). As discussed, VSE failed to proffer any
evidence that the government approved “a particular
specification” for the fireworks’ destruction after “a
continuous exchange and back and forth dialogue between the
contractor and the government,” as opposed to “a cursory
rubber stamp.” Id.6

design and construct a local infrastructure project.” 2013 WL 6118485 at
*7 (footnote reference omitted). However, our binding precedent has not
reached a similar conclusion. See Snell, 107 F.3d at 746 n.1. Indeed, VSE
points to no authority permitting the panel to overrule its precedent
limiting the government contractor defense to military contractors. See
United States v. Hernandez-Estrada, 749 F.3d 1154, 1160 (9th Cir. 2014)
(en banc) (emphasizing that “[t]he three judge panel lack[s] the authority
to alter circuit law without an intervening Supreme Court or en banc
decision that was clearly irreconcilable with our circuit precedent”)
(citation omitted).
 6
   VSE insists that the district court improperly weighed the evidence and
made factual determinations in holding that VSE failed to present a
colorable government contractor defense. However, we have held in the
federal officer removal context that “[b]ecause plaintiffs have raised a
factual attack on [the defendant’s] jurisdictional allegations, [the
defendant] must support its allegations with competent proof.” Leite, 749
26                     CABALCE V. VSE CORP.

         2. Derivative Sovereign Immunity

   Relying on Yearsley v. W.A. Ross Constr. Co., 309 U.S.
18 (1940), VSE asserts that it is entitled to derivative
sovereign immunity because VSE performed delegated
governmental functions pursuant to its federal contract.

    In Yearsley, a company that built dikes on the Missouri
River pursuant to a federal contract was sued for “using large
boats with paddles and pumps to produce artificial erosion
[that] washed away a part of petitioners’ land. . . .” Id. at 19.
The Supreme Court observed that it was “undisputed that the
work which the contractor had done in the river bed was all
authorized and directed by the Government of the United
States for the purpose of improving the navigation of this
navigable river. . . .” Id. at 20 (internal quotation marks
omitted). The Supreme Court concluded that the company
was not liable because “if the authorized action in this
instance does constitute a taking of property for which there
must be just compensation under the Fifth Amendment, the
Government has impliedly promised to pay that
compensation and has afforded a remedy for its recovery by
a suit in the Court of Claims. . . .” Id. at 21 (citations
omitted). “It follows that as the Government in such a case
promises just compensation and provides a complete remedy,
action which constitutes the taking of property is within its
constitutional power and there is no ground for holding its

F.3d at 1122 (citation omitted). The defendant “bears the burden of
proving by a preponderance of the evidence that the colorable federal
defense and causal nexus requirements for removal jurisdiction have been
met.” Id. (citation and footnote reference omitted). Additionally, “if the
existence of jurisdiction turns on disputed factual issues, the district court
may resolve those factual disputes itself. . . .” Id. at 1121–22 (citations
omitted).
                  CABALCE V. VSE CORP.                      27

agent liable who is simply acting under the authority thus
validly conferred. The action of the agent is the act of the
government.” Id. at 21–22 (citation and internal quotation
marks omitted).

    We have held that derivative sovereign immunity, as
discussed in Yearsley, is limited to cases in which a
contractor “had no discretion in the design process and
completely followed government specifications.” In re
Hanford Nuclear Reservation Litig., 534 F.3d at 1001
(citation omitted). We clarified that “[n]othing in Yearsley
extended immunity to military contractors exercising a
discretionary governmental function.” Id. (citation omitted).
Even if we applied Yearsley, VSE would not benefit, because
the record does not reflect that VSE and Donaldson “had no
discretion” in devising the destruction plan for the fireworks.
Id. In fact, the record evinces a contrary conclusion. As the
district court aptly observed, it was undisputed that
Donaldson and VSE designed the destruction plan without
government control or supervision.

IV.    CONCLUSION

    The district court properly remanded the plaintiffs’
actions to state court. VSE did not demonstrate by a
preponderance of the evidence the requisite causal nexus
between the plaintiffs’ claims and direction or control of the
project by a federal agency or official. Indeed, VSE
presented no evidence reflecting that the destruction plan for
the fireworks was devised under the direction, supervision, or
control of a federal officer as required for federal officer
removal.
28                CABALCE V. VSE CORP.

    Additionally, federal officer removal was not warranted
because VSE failed to demonstrate that it had a colorable
federal defense to the plaintiffs’ claims. As a non-military
contractor, VSE was not able to assert a plausible government
contractor defense. Neither did VSE establish that the federal
government reviewed in detail the destruction plan that had
been independently devised by VSE and Donaldson. Finally,
VSE was unable to satisfy the requirements for derivative
sovereign immunity. Our precedent precludes that defense
because VSE did not plausibly demonstrate that it completely
lacked discretion in independently devising the destruction
plan.

    The judgment of the district court in each of these four
actions is AFFIRMED.