Court Opinion

ID: 4191888
Source: CourtListenerOpinion
Date Created: 2017-08-02 17:01:21.759809+00
Date Added: 2024-06-11T14:40:04.745535
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

LUCAS GONCALVES, a minor, by and         No. 15-55010
through his Guardian Ad Litem,
Tony Goncalves,                            D.C. No.
                  Plaintiff-Appellee,   3:14-cv-01774-
                                          GPC-BGS
                 v.

RADY CHILDREN’S HOSPITAL SAN               OPINION
DIEGO; DOES, 1 through 30,
Inclusive,
                       Defendants,

                and

BLUE CROSS & BLUE SHIELD OF
MASSACHUSETTS; ANTHEM BLUE
CROSS BLUE SHIELD OF NEW
HAMPSHIRE; BLUE CROSS OF
CALIFORNIA,
              Movants-Appellants.

      Appeal from the United States District Court
        for the Southern District of California
      Gonzalo P. Curiel, District Judge, Presiding

       Argued and Submitted November 7, 2016
                Pasadena, California
2       GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

                        Filed August 2, 2017

 Before: Kim McLane Wardlaw and Jay S. Bybee, Circuit
  Judges, and Robert Holmes Bell,* Senior District Judge.

                     Opinion by Judge Bell;
                    Dissent by Judge Wardlaw

                            SUMMARY**

                   Federal Court Jurisdiction

    The panel reversed the district court’s order remanding to
state court an action that had been removed to federal court
under the federal officer removal statute.

    Insurance companies asserted a lien against the plaintiff’s
putative future settlement proceeds in an ongoing California
state court medical negligence action. The plaintiff moved to
expunge the lien, which was asserted pursuant to a
subrogation clause in a Federal Employee Health Benefit Act
health insurance plan that the insurance companies
administered.

   The panel held that the insurance companies properly
removed the action to federal court under the federal officer

    *
     The Honorable Robert Holmes Bell, Senior United States District
Judge for the Western District of Michigan, sitting by designation.
    **
       This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.         3

removal statute, 28 U.S.C. § 1442(a)(1). The panel
concluded that the insurance companies were a “person”
within the meaning of the statute. Agreeing with the Eighth
Circuit, the panel held that the insurance companies’ actions
seeking subrogation from the plaintiff by pursuing a lien were
“actions under” a federal officer because the insurance
companies administered the FEHBA health insurance plan on
behalf of the Office of Personnel Management. The
insurance companies’ actions were causally connected to the
dispute over the validity of the lien. In addition, the
insurance companies had a colorable federal defense to the
plaintiff’s motion to expunge their lien—the defense that
California law is preempted by FEHBA’s express preemption
provision. Finally, the insurance companies’ motion to
expunge the lien was a “civil action” within the meaning of
the statute.

    The panel held that the probate exception to federal
jurisdiction did not apply. Agreeing with other circuits, the
panel held that following Marshall v. Marshall, 547 U.S. 293
(2006), the probate exception does not apply unless a federal
court is endeavoring to probate or annul a will, administer a
decedent’s estate, or assume in rem jurisdiction over property
that is in the custody of a probate court.

    The panel held that the prior exclusive jurisdiction
doctrine, prohibiting federal and state courts from
concurrently exercising jurisdiction over the same res, also
did not apply.

    Dissenting, Judge Wardlaw wrote that she would affirm
the district court’s remand order on the ground that the prior
exclusive jurisdiction doctrine barred the exercise of federal
jurisdiction. She wrote that both the state and the federal
4    GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

actions were at least quasi in rem because the plaintiff’s
settlement funds formed the basis of both actions.

                        COUNSEL

Anthony F. Shelley (argued) and Dawn E. Murphy-Johnson,
Miller & Chevalier Chartered, Washington, D.C., for
Movants-Appellants.

Victoria E. Fuller (argued) and David Niddrie, Niddrie
Addams Fuller LLP, San Diego, California; Amy R. Martel
and Cynthia R. Chihak, Cynthia Chihak & Associates, San
Diego, California; for Plaintiff-Appellee.

Steven M. Bronson, The Bronson Firm APC, San Diego,
California; David M. Arbogast, Arbogast Law, Playa Del
Rey, California; for Amicus Curiae Consumer Attorneys of
California.

                         OPINION

BELL, Senior District Judge:

    Blue Cross Blue Shield of Massachusetts, Anthem Blue
Cross Blue Shield of New Hampshire, and Blue Cross of
California (collectively, “the Blues”) asserted a lien against
Lucas Goncalves’s putative future settlement proceeds in an
ongoing medical negligence action in California Superior
Court to satisfy a subrogation clause in a Federal Employee
Health Benefit Act (“FEHBA”) health insurance plan that the
Blues administer. When Goncalves asked the Superior Court
to expunge the lien, the Blues removed the action to federal
        GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.               5

court under the federal officer removal statute. See 28 U.S.C.
§ 1442(a)(1). The district court held that the probate
exception precluded federal court jurisdiction and remanded
the action back to state court.

    The sole issue on appeal is whether Goncalves’s motion
to expunge the Blues’ subrogation lien is properly in state or
federal court. We have jurisdiction to review the remand
order under 28 U.S.C. § 1447(d), see Cabalce v. Thomas E.
Blanchard & Assocs., Inc., 797 F.3d 720, 727 n.1 (9th Cir.
2015), and, holding that the action was properly in federal
court, we reverse.

                                   I

   Shortly after he was born in October 2007, Lucas
Goncalves was transferred to Rady Children’s Hospital of
San Diego. While receiving treatment at Rady Children’s
Hospital, Goncalves suffered internal injuries from alleged
medical negligence.

    Goncalves was covered by his father’s FEHBA health
insurance plan administered by the Blues on behalf of the
U.S. Office of Personnel Management (“OPM”). Pursuant to
the plan’s coverage, the Blues paid $459,483.57 for
Goncalves’s medical treatment in connection with his alleged
negligently afflicted injuries from Rady Children’s Hospital.
The plan has a subrogation clause,1 allowing the Blues to
recover from Goncalves any monies he receives to reimburse

    1
      We refer to “the plan” even when we mean portions of the contract
between OPM and the Blues because the contract is incorporated by
reference in the plan.
6   GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

the Blues for any benefits paid under the plan. In relevant
part, the plan states:

             (a) The [Blues’] subrogation rights,
       procedures and policies, including recovery
       rights, shall be in accordance with the
       provisions of the agreed upon brochure text
       . . . . [The Blues], in [their] discretion, shall
       have the right to file suit in federal court to
       enforce those rights.

           ....

           (c) . . . The obligation of the [Blues] to
       recover amounts through subrogation is
       limited to making a reasonable effort to seek
       recovery of amounts to which it is entitled to
       recover in cases which are brought to [their]
       attention. . . .

          (d) The [Blues] may also recover directly
       from [Goncalves] all amounts received by
       [Goncalves] by suit, settlement, or otherwise
       from any third party or its insurer . . . for
       benefits which have been paid under this
       contract.

           (e) [Goncalves] shall take such action,
       furnish such information and assistance, and
       execute such papers as the [Blues] or [their]
       representatives believe[] are necessary to
       facilitate enforcement of [their] rights, and
       shall take no action which would prejudice the
       interests of the [Blues] to subrogation.
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.          7

           (f) . . . [A]ll Participating Plans shall
       subrogate under a single, nation-wide policy
       to ensure equitable and consistent treatment
       for all Members under the contract.

    In February 2011, Goncalves, through a guardien ad
litem, filed a state-court action alleging medical malpractice
against Rady Children’s Hospital and other defendants. In
November 2013, the Blues placed a lien of $459,483.57 on
any funds Goncalves receives from the suit to recover earlier
benefits paid by the Blues under the plan. In April 2014, the
California Superior Court approved a settlement between
Goncalves and the non-Rady Children’s Hospital defendants,
leaving Rady Children’s Hospital as the sole defendant.
Sometime in June 2014, Goncalves and Rady Children’s
Hospital entered into a settlement agreement; because
Goncalves is a minor, the California Probate Code requires
the Superior Court’s approval of any settlement. See, e.g.,
Cal. Prob. Code §§ 3500(b), 3600; Schultz v. Harney, 33 Cal.
Rptr. 2d 276, 278 (Ct. App. 1994).

    In July 2014, Goncalves filed a motion in state court to
expunge the Blues’ lien on the ground that the Blues’ “claims
of lien are subject to the anti-subrogation provision . . . and
are therefore unenforceable” because “FEBHA [sic] does not
preempt state anti-subrogation laws.” The Blues removed
this action under the federal officer removal statute,
28 U.S.C. § 1442(a)(1), to the U.S. District Court for the
Southern District of California. Goncalves asked the district
court to remand the case to state court on, inter alia, two
grounds: (1) the Blues could not remove the case under
§ 1442(a)(1) and (2), even if removal was otherwise proper,
the probate exception barred federal jurisdiction. The district
court held that the Blues had acted pursuant to a federal
8    GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

officer’s direction and could remove the case pursuant to
§ 1442(a)(1). The district court, however, agreed with
Goncalves that any exercise of federal jurisdiction would
interfere with the probate proceedings in California. The
district court remanded the case back to state court.

    The Blues filed this appeal, arguing that the district court
erred because the probate exception did not bar federal
jurisdiction. In response, Goncalves continues to argue that
the probate exception bars federal jurisdiction, but argues
alternatively that even if it does not, the action was not
properly removed under § 1442(a)(1).             We ordered
supplemental briefing as to whether the prior exclusive
jurisdiction doctrine barred federal court jurisdiction; the
Blues contend that it does not, and Goncalves contends that
it does.

                               II

    We address first whether the Blues properly removed the
action to federal court under 28 U.S.C. § 1442(a)(1). We
then address whether either the probate exception or the prior
exclusive jurisdiction doctrine bars the exercise of federal
jurisdiction.

A. The Action Is Removable Under the Federal Officer
   Removal Statute

    The federal officer removal statute provides, in relevant
part:

            (a) A civil action . . . that is commenced in
        a State court and that is against or directed to
        [the following] may be removed by them to
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.          9

       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 . . . .

28 U.S.C. § 1442 (emphasis added). The statute defines a
“civil action” to “include any proceeding (whether or not
ancillary to another proceeding) to the extent that in such
proceeding a judicial order . . . is sought or issued.” Id.
§ 1442(d)(1).

    The purpose of the federal officer removal statute is “to
ensure a federal forum in any case where a federal official is
entitled to raise a defense arising out of his duties.” Arizona
v. Manypenny, 451 U.S. 232, 241 (1981). The right of
removal is “absolute for conduct performed under color of
federal office,” and the “policy favoring removal ‘should not
be frustrated by a narrow, grudging interpretation of
§ 1442(a)(1).’” Id. at 242 (quoting Willingham v. Morgan,
395 U.S. 402, 407 (1969)).

    An entity seeking removal under § 1442(a)(1) bears the
burden of showing “that (a) it is a ‘person’ within the
meaning of the statute; (b) there is a causal nexus between its
actions, taken pursuant to a federal officer’s directions, and
plaintiff’s claims; and (c) it can assert a ‘colorable federal
defense.’” Durham v. Lockheed Martin Corp., 445 F.3d
10    GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

1247, 1251 (9th Cir. 2006) (quoting Jefferson Cty. v. Acker,
527 U.S. 423, 431 (1999)). We address each of these three
prongs in turn, followed by another consideration raised by
the rare procedural posture of this action. Throughout our
analysis, we pay heed to our duty to “interpret Section 1442
broadly in favor of removal.” Id. at 1252.

     1. “Person” under § 1442(a)(1)

    The Blues and Goncalves do not dispute that the Blues are
a “person” within the meaning of § 1442(a)(1). Nonetheless,
we must assure ourselves of our own jurisdiction. The courts
of appeals have uniformly held that corporations are
“person[s]” under § 1442(a)(1). See In re Commonwealth’s
Motion to Appoint Counsel Against or Directed to Def. Ass’n
of Phila., 790 F.3d 457, 467–68 (3d Cir. 2015) (holding that
§ 1442(a)(1)’s use of the term “person” includes
corporations); Bennett v. MIS Corp., 607 F.3d 1076, 1085
(6th Cir. 2010) (same); Isaacson v. Dow Chem. Co., 517 F.3d
129, 135–36 (2d Cir. 2008) (same). We agree and, therefore,
the Blues have satisfied the first requirement for removal
under § 1442(a)(1). See 1 U.S.C. § 1 (defining “person” to
include, unless the context indicates otherwise, “corporations,
companies, associations, firms, partnerships, societies, and
joint stock companies, as well as individuals”); see also
Watson v. Phillip Morris Cos., 551 U.S. 142, 152–54, 157
(2007) (using the term “private person” and “company”
interchangeably in the context of § 1442(a)(1), but holding
that the defendant-company could not remove the action);
Leite v. Crane Co., 749 F.3d 1117, 1122 n.4, 1124 (9th Cir.
2014) (citing Watson, 551 U.S. at 152–53; and Isaacson,
517 F.3d at 135–36); Jacks v. Meridian Res. Co., LLC,
701 F.3d 1224, 1230 n.3 (8th Cir. 2012) (citing Watson,
551 U.S. at 152–53).
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.          11

    2. Causal nexus to actions performed under federal
       officers

    The Blues must also show (1) that their actions seeking
subrogation from Goncalves by pursuing a lien are “actions
under” a federal officer and (2) that those actions are causally
connected to the dispute over the validity of the lien. See
Durham, 445 F.3d at 1251. The “actions” for purposes of this
case are the Blues’ choice to pursue a subrogation claim
against Goncalves and their placing a lien on the potential
settlement proceeds in state court.

    We will start with the second prong first because the
“hurdle erected by [the causal-connection] requirement is
quite low.” Isaacson, 517 F.3d at 137; see also Maryland v.
Soper, 270 U.S. 9, 33 (1926) (“[T]he statute does not require
that the prosecution must be for the very acts which the
officer admits to have been done by him under federal
authority. It is enough that his acts or his presence at the
place in performance of his official duty constitute the basis,
though mistaken or false, of the state prosecution.”). The
Blues need show only that the challenged acts “occurred
because of what they were asked to do by the Government.”
Isaacson, 517 F.3d at 137. Here, OPM asked the Blues to
administer the plan and to make “reasonable efforts” to
pursue known subrogation claims. This meets the low bar
that the causal-connection prong requires. The “very act” that
forms the basis for challenging the lien—seeking
subrogation—“is an act that [the Blues] contend[] [they]
performed under the direction of [federal officers].” Leite,
749 F.3d at 1124. Indeed, in an analogous case involving a
challenge to a subrogation claim, the Eighth Circuit held that
this requirement was “unquestionably” met. See Jacks,
701 F.3d at 1230 n.3.
12   GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

    The only real question for this prong is whether, when
seeking subrogation, the Blues “acted under” a federal
officer. Although the federal officer removal statute is not
limitless, “[t]he words ‘acting under’ are broad,” and the
Supreme Court “has made clear that the statute must be
‘liberally construed.’” Watson, 551 U.S. at 147 (quoting
Colorado v. Symes, 286 U.S. 510, 517 (1932)). For a private
entity to be “acting under” a federal officer, the private entity
must be involved in “an effort to assist, or to help carry out,
the duties or tasks of the federal superior.” Id. at 152. The
“relationship typically involves ‘subjection, guidance, or
control,’” but it must go beyond simply complying with the
law, even if the laws are “highly detailed” and thus leave the
entity “highly regulated.” Id. at 151–53 (citation omitted).
Thus, “[t]he assistance that private contractors provide
federal officers [must go] beyond simple compliance with the
law and help[] officers fulfill other basic governmental
tasks.” Id. at 153.

    Goncalves argues that, in order for a private contractor to
qualify for federal removal under § 1442(a)(1), the contractor
must have an “unusually close” relationship to the federal
government. See id. (noting that lower courts have held that
government contractors fall within the terms of the federal
officer removal statute when the relationship is “an unusually
close one involving detailed regulation, monitoring, and
supervision” (citing Winters v. Diamond Shamrock Chem.
Co., 149 F.3d 387 (5th Cir. 1998))). But this statement in
Watson appears to be descriptive—an attempt to define what
the lower courts were doing—not a command to the lower
courts to follow a certain test. But see Jacks, 701 F.3d at
1231 (applying the test stated in Watson without analyzing
whether it was obligated to do so). We need not decide
whether Watson requires the “unusually close” relationship
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.         13

test for governmental contractors because we hold that, even
assuming this test applies, the Blues “acted under” a federal
officer in pursuing subrogation. Cf. In re Nat’l Sec. Agency
Telecomms. Records Litig., 483 F. Supp. 2d 934, 944 (N.D.
Cal. 2007) (declining to use the standard).

     In order to determine whether the Blues “acted under” a
federal officer in filing a subrogation lien, we need to
understand how the Blues’ FEHBA plan operates and their
association with the relevant federal officer, OPM. In
FEHBA, Congress “establishe[d] a comprehensive program
of health insurance for federal employees.” Empire
Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 682
(2006). Congress envisioned the creation of a system
whereby “OPM is ‘responsible for the overall administration
of the program while sharing the day-to-day operating
responsibility with the employing agencies and the insurance
carriers.’” Houston Cmty. Hosp. v. Blue Cross & Blue Shield
of Tex., Inc., 481 F.3d 265, 271 (5th Cir. 2007) (quoting H.R.
Rep. No. 86-957, at 2 (1959)). FEHBA “authorized [OPM]
to contract with private carriers for federal employees’ health
insurance” and gave OPM “broad administrative and
rulemaking authority over the program.” Coventry Health
Care of Mo., Inc. v. Nevils, 137 S. Ct. 1190, 1194–95 (2017)
(citing 5 U.S.C. §§ 8901–13). FEHBA further states that
OPM’s contracts with carriers “shall contain a detailed
statement of benefits offered and shall include such
maximums, limitations, exclusions, and other definitions of
benefits as [OPM] considers necessary or desirable.”
McVeigh, 547 U.S. at 684 (alteration in original) (quoting
5 U.S.C. § 8902(a)). “OPM has direct and extensive control
over these benefits contracts under the FEHBA.” Jacks,
701 F.3d at 1233.
14   GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

     The government pays about seventy-five percent of the
premiums, and the enrollee pays the remainder. See 5 U.S.C.
§ 8906(b). These premiums are all deposited into a special
fund in the U.S. Treasury from which the carriers withdraw
money to pay benefits. See id. § 8909(a); McVeigh, 547 U.S.
at 703 (Breyer, J., dissenting). But OPM, not the carrier,
owns the funds. At the end of the year, OPM decides how to
use any surplus in the fund. McVeigh, 547 U.S. at 703
(Breyer, J., dissenting). “The carrier is not at risk. Rather, it
earns a profit, not from any difference between plan
premiums and the cost of benefits, but from a negotiated
service charge that the federal agency pays directly.” Id. A
carrier is not acting as an insurer so much as it is acting as a
claims processor, serving as the government’s agent while the
government takes the place of the typical health insurer in
hedging bets. “The private carrier’s only role in this scheme
is to administer the health benefits plan for the federal agency
in exchange for a fixed service charge.” Id.

    In fact, when a dispute arises between the carrier and an
enrollee over the extent of coverage, it is OPM, not the
carrier, that resolves the issue. See 5 C.F.R. § 890.105(a).
And if an enrollee’s coverage is wrongfully denied, the
enrollee can bring a suit against both OPM and the Blues.
See, e.g., Skoller v. BlueCross-Blue Shield of Greater N.Y.,
584 F. Supp. 288, 289 (S.D.N.Y. 1984).

    Of specific importance to this case, the contracts that
OPM negotiates with private carriers, such as the one here,
provide for both reimbursement and subrogation, which we
will collectively refer to as “subrogation.” Nevils, 137 S. Ct.
at 1194. In general, subrogation means that “if another
person causes an employee to suffer an injury, and the Plan
pays benefits for that injury, the employee must agree that the
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.         15

Plan is entitled to be reimbursed for its benefit payments.”
Bell v. Blue Cross & Blue Shield, 823 F.3d 1198, 1200 (8th
Cir. 2016), cert. denied, 2017 WL 1427587 (U.S. Apr. 24,
2017).     Subrogation has a “long history of federal
involvement.” Nevils, 137 S. Ct. at 1198 (citation omitted).
Indeed, “strong and ‘distinctly federal interests are
involved.’” Id. (quoting McVeigh, 547 U.S. at 696). In 2014,
for instance, FEHBA carriers received roughly $126 million
in subrogation recoveries, which “translate to premium cost
savings for the federal government and [FEHBA] enrollees”
because the recoveries go directly to the special U.S.
Treasury fund. Id. (alteration in original) (citation omitted);
see also Bell, 823 F.3d at 1202 (“The scope of a federal
employee’s reimbursement obligations has a significant
impact on the federal treasury and on premiums or benefits
for other employees.”). In light of the importance of
subrogation recoveries, OPM has “obligated the carrier[s] to
make ‘a reasonable effort’ to” pursue subrogation claims.
McVeigh, 547 U.S. at 683 (citation omitted). Indeed, OPM
has evidenced a special interest in ensuring that carriers
pursue subrogation claims. In a letter to carriers, after
reiterating that the carriers “are required to seek
reimbursement and/or subrogation recoveries in accordance
with the contract,” OPM explains that it construes federal law
to mean that FEHBA “preempts state laws prohibiting or
limiting subrogation and reimbursement. As a result, FEHB
Program carriers are entitled to receive these recoveries
regardless of state law.” Not only does OPM receive the
proceeds of subrogation claims, but it also advises carriers on
how to avoid legal obstacles in pursuit of them.

   Looking at FEHBA as a whole, it is clear that by pursuing
subrogation claims, the Blues go well “beyond simple
compliance with the law and help[] officers fulfill other basic
16   GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

governmental tasks.” Watson, 551 U.S. at 153. OPM needs
someone to make reasonable efforts to pursue subrogation
claims and decide when filing suit in federal court is a wise
decision—and the government has delegated that
responsibility to the carriers to act “on the Government
agency’s behalf.”         Id. at 156.       In light of the
interconnectedness between OPM and the Blues, the Blues’
obligation to pursue subrogation claims, and the vital federal
interest in the pursuit of subrogation claims, we hold that the
Blues “act under” a federal officer when they pursue
subrogation claims.

     Our holding accords with the only other circuit court to
address whether a FEHBA program carrier “acts under” a
federal officer for purposes of § 1442(a)(1) when pursuing a
subrogation claim. Jacks, 701 F.3d at 1234. In holding that
the carrier and OPM were “unusually close,” the Eighth
Circuit emphasized that the carriers have been “delegated
particular authority by OPM” and are “subject to OPM
oversight, uniquely operate[] with the United States Treasury,
submit[] to OPM’s regulatory requirements, and ultimately
answer[] to federal officers.” Id. Moreover, the court noted
that if OPM is unsatisfied with a carrier, it can, “at all times,”
“withdraw approval of that carrier or terminate its contract.”
Id. (citing 5 C.F.R. § 890.204). Therefore, the Eighth Circuit,
using reasoning analogous to our own, held that the carrier
was “acting under” a federal officer when pursuing a
subrogation claim.

   Goncalves makes two arguments against finding that the
Blues “acted under” a federal officer when pursuing
subrogation. First, citing Van Horn v. Arkansas Blue Cross
& Blue Shield, 629 F. Supp. 2d 905 (E.D. Ark. 2007),
Goncalves argues that the fact that the Blues have “discretion
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.            17

. . . to file suit in federal court in order to enforce
[subrogation] rights” precludes us from holding that the Blues
“act under” a federal officer when they pursue subrogation
claims. Indeed, in Van Horn the district court held that the
carrier did not “act under” a federal officer when pursuing a
subrogation claim because the plan stated that the carrier, “in
its discretion, shall have the right to file suit in federal court
in order to enforce [its subrogation] rights.” Id. at 914–15.
Goncalves points out that the plan here uses the exact same
language as the plan in Van Horn: “[The Blues], in [their]
discretion, shall have the right to file suit in federal court in
order to enforce those rights.” So because the Blues have
discretion to act in this one corner of the plan, when they do
so they cannot be “acting under” a federal officer.

    The Eighth Circuit explicitly rejected Van Horn, and we
do as well. Jacks, 701 F.3d at 1233 (“That the Plan allows
the carrier the discretion to pursue subrogation does not
foreclose the application of the federal officer removal
statute.”). The Eleventh Circuit, in an unpublished opinion,
has rejected a similar argument. See Anesthesiology Assocs.
of Tallahassee, FL, P.A. v. Blue Cross Blue Shield of Fla.,
Inc., No. 03-15664, 2005 WL 6717869, at *2 (11th Cir. Mar.
18, 2005) (per curiam) (holding that a FEHBA carrier “acted
under” a federal officer even when exercising “the option of
reimbursing the participant, rather than the provider”
(emphasis added)). Nowhere have we found support for the
proposition that only non-discretionary choices qualify for
removal under § 1442(a)(1). Simply put, just because the
Blues are vested with discretion does not mean that they are
not “involve[d] in an effort to assist, or to help carry out, the
duties or tasks of the federal superior.” Watson, 551 U.S. at
152. The “task” here is the administration of a health
insurance program for federal employees, and seeking
18   GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

subrogration assists in that effort regardless of whether the
Blues have some discretion in completing that task.

    But even if the exercise of discretion were fatal to a
finding of “acting under,” it is not clear that the Blues have
done anything in this case that can be characterized as
discretionary. As we have discussed, the Blues are obligated
to make a “reasonable effort” to pursue subrogation claims.
Discretion comes into play only when the Blues decide
whether to assert their subrogation rights “in federal court.”
The relevant action here for purposes of deciding the “acting
under” question is not the Blues’ choice to remove the case
to federal court, which might well fall under the discretionary
clause, but rather their filing of a lien in state court. When
they filed the lien, the Blues were simply complying with
their obligation to OPM to use “reasonable efforts” to pursue
subrogation claims. The discretionary clause of the plan does
not even apply to this case.

    Goncalves also argues that OPM’s oversight and
regulatory requirements do not bestow federal officer status
onto the Blues because simple compliance with the law is not
sufficient to place a private party within the scope of “acting
under.” See Watson, 551 U.S. at 152–53 (holding that “the
help or assistance necessary to bring a private person within
the scope of the statute does not include simply complying
with the law”). The requirements and contractual obligations
bestowed on the Blues by OPM are, however, a far cry from
the laws and regulations that the Supreme Court was referring
to in Watson when it held that being a federally regulated
entity did not mean that the entity “acts under” federal
officers. Watson gave some examples of the activities that
are more properly characterized as complying with the law
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.        19

than as “acting under” a federal officer by “helping” or
“assisting”:

       Taxpayers who fill out complex federal tax
       forms, airline passengers who obey federal
       regulations prohibiting smoking, for that
       matter well-behaved federal prisoners, all
       “help” or “assist” federal law enforcement
       authorities in some sense of those words. But
       that is not the sense of “help” or “assist” that
       can bring a private action within the scope of
       this statute.

Id. at 152. We too would describe the actions of these
taxpayers, passengers, and prisoners as “compliance with the
law (or acquiescence to an order), not as ‘acting under’ a
federal official who is giving an order or enforcing the law.”
Id. So to the extent that the Blues treat the sexes equally in
employment, see 42 U.S.C. § 2000e-2, grant coverage
irrespective of preexisting conditions, see 42 U.S.C. § 300gg-
3, and follow every other generally applicable federal law,
rule, and regulation, they are not “acting under” a federal
officer. But that is not what the Blues are doing when they
contract with OPM to be subject to extensive oversight in
accordance with FEHBA and to use “reasonable efforts” to
pursue subrogation claims on behalf of OPM. See Jacks,
701 F.3d at 1234 (rejecting arguments similar to those raised
by Goncalves); see also Issacson, 517 F.3d at 137
(distinguishing between entities that “contracted with the
Government” and entities that were “simply regulated by
federal law”). The relationship between OPM and the Blues
is well beyond “the usual regulator/regulated relationship.”
Watson, 551 U.S. at 157. Watson does not counsel against
removal here.
20       GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

    Although at first glance it may appear that the Blues are
operating as private insurance companies divorced from
federal officers, a review of OPM’s oversight and directives,
FEHBA’s comprehensive federal program, and the Blues’
role in it belies that contention. We join the Eighth Circuit in
holding that FEHBA carriers are “acting under” federal
officers for the purposes of 28 U.S.C. § 1442(a)(1) when
pursuing subrogation claims.2

     3. Colorable federal defense

    The Blues argue that they have several colorable federal
defenses to Goncalves’s motion to expunge their lien:
(1) California law is preempted by FEHBA’s express
preemption provision under 5 U.S.C. § 8902(m)(1);
(2) sovereign immunity; and (3) Goncalves’s state-law
allegations are displaced by federal common law. While the
Blues and Goncalves vigorously argue over each of these
three defenses, we need find but one colorable defense to
satisfy this prong.

    Recent Supreme Court precedent has made our task easy.
This Term, in Nevils, 137 S. Ct. 1190, the Supreme Court
held that § 8902(m)(1) preempts state anti-subrogration laws
by virtue of the fact that the “carrier’s very provision of
benefits triggers the right to payment,” and all that is required

     2
      We also note that a number of federal courts have determined that
Medicare Part B carriers contracting with the U.S. Department of Health
and Human Services “act under” a federal officer. See, e.g., Midland
Psychiatric Assocs., Inc. v. United States, 145 F.3d 1000, 1004–05 (8th
Cir. 1998); Bodimetric Health Servs., Inc. v. Aetna Life & Cas., 903 F.2d
480, 487–88 (7th Cir. 1990); Grp. Health Inc. v. Blue Cross Ass’n,
793 F.2d 491, 493 (2d Cir. 1986); Peterson v. Blue Cross/Blue Shield,
508 F.2d 55, 57–58 (5th Cir. 1975).
        GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.                21

for preemption is for the action to “relate to” that right to
repayment, which is met in the subrogation-claim context. Id.
at 1197–98. In light of Nevils, we have little trouble
concluding that the Blues’ assertion that § 8902(m)(1)
preempts any state law supporting Goncalves’s motion to
expunge the lien is a colorable federal defense.

    4. A “civil action” that is “against or directed to” the
       Blues

     Goncalves argues that removal was improper because
there is no “civil action . . . commenced in a State court . . .
against or directed to” the Blues. 28 U.S.C. § 1442(a). The
civil action, in Goncalves’s view, is the medical negligence
action he filed against Rady Children’s Hospital, which he
argues was not “against” or “directed to” the Blues—they
were not defendants or parties nor did they seek to intervene
or were they going to incur any obligations as a result of the
litigation. If that were the end of the story, Goncalves might
well be right that the Blues could not remove the action.3 But
the Blues then placed a lien on the proceeds of the action, and
Goncalves moved to expunge the lien on the ground that it
violated California’s anti-subrogation law. See Cal. Civ.
Code § 3333.1. We hold that the Blues’ motion to expunge
the lien is a “civil action . . . commenced in a State court . . .
against or directed to” the Blues.

    3
       We do not mean to foreclose the possibility that the medical
negligence action against Rady Children’s Hospital (and other defendants)
could have been “directed to” the Blues within the meaning of the statute.
Rather, we need not address the question because it was the motion to
quash the lien, not the alleged medical negligence, that formed the basis
for the Blues’ removal.
22       GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

    The statutory history of § 1442 is instructive. For decades
following the federal officer removal statute’s codification at
28 U.S.C. § 1442, it has provided that a “civil action”—a
term which was previously undefined—“commenced . . .
against” any officer of the United States, or person acting
thereunder, “sued in an official or individual capacity for any
act under color of” federal office may remove the action to
federal court. 28 U.S.C. § 1442 (2006) (emphases added).
But in 2011, Congress passed the Removal Clarification Act
to amend § 1442 because Congress felt that the courts were
construing the statute too narrowly. Pub. L. No. 112-51, 125
Stat. 545; see H.R. Rep. No. 112-17(I) (2011); In re
Commonwealth’s Motion, 790 F.3d at 467 (noting that the
amendments “intended to broaden the universe of acts that
enable Federal officers to remove to Federal court” (citation
omitted)).4 Congress expanded the language to allow
removal of a “civil action . . . that is against or directed to” a
federal officer “for or related to any act under color of
[federal] office,” 28 U.S.C. § 1442(a) (emphases
added)—removing altogether the requirement that the officer
be “sued.” Congress also provided a definition for the term
“civil action” used in § 1442(a) and placed a limitation on the
content of the removed proceedings:

           The term[] “civil action” . . . include[s] any
           proceeding (whether or not ancillary to
           another proceeding) to the extent that in such
           proceeding a judicial order, including a
           subpoena for testimony or documents, is

     4
       Barely a year later, Congress re-ordered § 1442. See National
Defense Authorization Act of Fiscal Year 2013, Pub. L. No. 112-239, tit.
X, subtit. G, § 1087, 126 Stat. 1632, 1969–70. For simplicity, we will
refer to the subsections in the current version.
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.        23

       sought or issued. If removal is sought for a
       proceeding described in the previous sentence,
       and there is no other basis for removal, only
       that proceeding may be removed to the district
       court.

Id. § 1442(d)(1).

    We think the motion to expunge the Blues’ lien comes
comfortably within the new, expanded statute. Goncalves’s
motion to expunge the lien is a proceeding in which “a
judicial order . . . is sought.” Id. To be sure, Goncalves’s
motion to expunge the lien is ancillary to the core proceeding
for medical negligence, but the statute tells us that does not
matter. See id. § 1442(d)(1) (“whether or not ancillary to
another proceeding”). And there is no serious argument that
the motion to expunge the Blues’ lien is not “against or
directed to” the Blues.

    Goncalves points to court decisions where other circuits
have held that a state court summons of a federal officer in a
wage garnishment action is not a “civil action” that could be
removed to federal court. See, e.g., Murray v. Murray,
621 F.2d 103, 106–07 (5th Cir. 1980). For several reasons,
these cases are not persuasive. First, these decisions were
rendered under the prior version of § 1442. Second, we
expressly rejected these cases in Nationwide Investors v.
Miller, 793 F.2d 1044, 1046 (9th Cir. 1986). Third, the
reasoning of those cases is wrong. As we explained in
Nationwide Investors, they barred removal of garnishment
cases because the “United States is a mere stakeholder whose
substantive obligations [to pay the wages] remain the same”
regardless of to whom the United States has to pay or from
which court, state or federal, payment is ordered. Id. Even
24    GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

if we were otherwise inclined to follow the old garnishment
cases such as Murray, the Blues are not a “mere stakeholder”
in interpleader. Rather, they either get a lien on behalf of
OPM or they do not get a lien, and the lien has real value to
OPM.

     Finally, we will observe that any other result would make
the availability of a federal forum dependent on the manner
in which an enrollee chooses to challenge a subrogation lien.
If done in an independent action, then the carrier is entitled to
remove the action to federal court. See Jacks, 701 F.3d at
1228 (allowing removal of an enrollee’s suit against a carrier
for violation of anti-subrogation laws in placing a subrogation
lien). But, as Goncalves would have it, if the enrollee
challenges the subrogation lien in a forum where the
subrogation lien is ancillary to other claims, then the carrier
would not be able to avail itself of a federal forum. We
decline to create an incentive for forum shopping, especially
in light of OPM’s contracted-for desire to have subrogation
claims treated “under a single, nation-wide policy to ensure
equitable and consistent treatment for all Members under the
contract.” Cf. Nevils, 137 S. Ct. at 1197 (“Strong and
‘distinctly federal interests are involved’ in uniform
administration of [FEHBA], free from state interference,
particularly in regard to coverage, benefits, and payments.”
(citation omitted)).

B. State Court Proceedings Do Not Preclude Federal
   Jurisdiction

     1. The probate exception

   The probate exception to federal jurisdiction reserves
probate matters to state probate courts and precludes federal
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.           25

courts from disposing of property in the custody of a state
court. Marshall v. Marshall, 547 U.S. 293, 311 (2006). But
it does not bar “federal courts from adjudicating matters
outside those confines and otherwise within federal
jurisdiction.” Id. at 311–12. Federal courts have jurisdiction
to entertain suits to determine the “rights of creditors,
legatees, heirs, and other claimants against a decedent’s
estate, ‘so long as the federal court does not interfere with the
probate proceedings.’” Id. at 311 (quoting Markham v.
Allen, 326 U.S. 490, 494 (1946)); see also Ashton v.
Josephine Bay Paul & C. Michael Paul Found., Inc.,
918 F.2d 1065, 1072 (2d Cir. 1990) (holding that a federal
court may adjudicate rights to property in an estate so long as
it does not interfere with the state court’s possession).

    Prior to the Supreme Court’s decision in Marshall v.
Marshall, we followed a test from the Second Circuit for
determining whether the probate exception precluded
jurisdiction. Moser v. Pollin, 294 F.3d 335 (2d Cir. 2002).
See In re Marshall, 392 F.3d 1118, 1132–33 (9th Cir. 2004),
rev’d sub nom. Marshall v. Marshall, 547 U.S. 293. Under
In re Marshall’s adoption of Moser, we (along with other
circuits) used a two-part inquiry to determine whether an
action was so “probate related” that we could not exercise
jurisdiction:

        The first part of the inquiry focuses on the
        question whether the matter is purely probate
        in nature, in that the federal court is being
        asked directly to probate a will or administer
        an estate. As the Moser court noted “since
        few practitioners would be so misdirected as
        to seek, for example, letters testamentary or
        letters of administration from a federal judge,”
26   GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

       the answer to this question is almost always
       “No.” The second part of the inquiry focuses
       on whether the matter is probate related by
       determining whether, by exercising
       jurisdiction over the matter, the federal court
       would: (1) interfere with the probate
       proceedings; (2) assume general jurisdiction
       of the probate; or (3) assume control over
       property in custody of the state court. If the
       answer to any of these questions is yes, then
       the probate exception applies.
392 F.3d at 1133 (footnote omitted) (citations omitted).

    But in Marshall, the Supreme Court explained that our
endeavors to classify actions as “interfer[ing] with probate
proceedings” led to expansive, and erroneous, applications of
the probate exception. 547 U.S. at 311. Indeed, the Court
admonished the courts of appeals for applying this “exception
of distinctly limited scope” to “a range of matters well
beyond probate of a will or administration of a decedent’s
estate.” Id. at 310–11. Recognizing that the Court itself was
partly to blame for the overly broad application of the probate
exception because its previous elucidations were not
“model[s] of clear statement,” the Court provided a
straightforward explanation of the probate exception:

       [T]he probate exception reserves to state
       probate courts the probate or annulment of a
       will and the administration of a decedent’s
       estate; it also precludes federal courts from
       endeavoring to dispose of property that is in
       the custody of a state probate court.
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.          27

Id. at 311–12.

    Based on this clear directive, several courts of appeals
have come to a simple conclusion, with which we agree,
about the scope of the probate exception: “It is clear after
Marshall that unless a federal court is endeavoring to
(1) probate or annul a will, (2) administer a decedent’s estate,
or (3) assume in rem jurisdiction over property that is in the
custody of the probate court, the probate exception does not
apply.” Three Keys Ltd. v. SR Util. Holding Co., 540 F.3d
220, 227 (3d Cir. 2008); accord Chevalier v. Estate of
Barnhart, 803 F.3d 789, 801 (6th Cir. 2015); Lee Graham
Shopping Ctr., LLC v. Estate of Kirsch, 777 F.3d 678, 680–81
(4th Cir. 2015); Curtis v. Brunsting, 704 F.3d 406, 409 (5th
Cir. 2013); see also Lefkowitz v. Bank of N.Y., 528 F.3d 102,
106–07 (2d Cir. 2007) (“Following Marshall we must now
hold that so long as a plaintiff is not seeking to have the
federal court administer a probate matter or exercise control
over a res in the custody of a state court, if jurisdiction
otherwise lies, then the federal court may, indeed must,
exercise it.”). It is not clear that the Supreme Court’s test in
Marshall v. Marshall and our multi-step, multi-factor test in
in re Marshall are “clearly irreconcilable,” Miller v. Gammie,
335 F.3d 889 (9th Cir. 2003) (en banc), but Marshall surely
represents a restatement and a refinement of the test we had
previously followed. We need not go so far as to announce
that Marshall overruled the prior test, but we will accept the
reformulation adopted by the other circuits as a refinement.
See Lefkowitz, 528 F.3d at 106 (recognizing that Moser’s test
was “overly-broad and has now been superseded by
Marshall’s limitation of the exception”).

   In sum, the probate exception prevents a federal court
from probating a will, administering a decedent’s estate, or
28   GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

disposing of property in the custody of a state probate court.
Neither the Blues nor Goncalves contests that neither of the
first two exceptions applies here. Even though the Superior
Court’s authority to supervise Goncalves’s settlement derives
from the California Probate Code, there is nothing in this case
that sounds in probate. There is no will or estate—indeed,
there is no decedent. And we do not believe that the probate
exception to federal jurisdiction can rest on the ways in which
California chooses to organize its code; placing the provisions
governing the compromises of a minor’s claim in the
California Probate Code does not make the proceeding
probate. See Marshall, 547 U.S. at 314 (“[T]he jurisdiction
of the federal courts, ‘having existed from the beginning of
the Federal government, [can]not be impaired by subsequent
state legislation creating courts of probate.’” (citation
omitted)); cf. id. at 311 (admonishing federal courts for
expanding the probate exception “to block federal jurisdiction
over a range of matters well beyond probate of a will or
administration of a decedent’s estate”).

    The question remaining for us is whether a federal court
would need to “dispose of property that is in the custody of a
state probate court.” Id. at 312. But Marshall tells us that
this aspect of its enunciation of the probate exception is
simply “a reiteration of the general principle that, when one
court is exercising in rem jurisdiction over a res, a second
court will not assume in rem jurisdiction over the same res.”
Id. at 311. Or in other words, it has little to do with probate;
rather, it is an application of the prior exclusive jurisdiction
doctrine. See Chapman v. Deutsche Bank Nat’l Tr. Co.,
651 F.3d 1039, 1043 (9th Cir. 2011) (using the quotation
from Marshall to define the prior exclusive jurisdiction
doctrine).
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.         29

    Because the prior exclusive jurisdiction doctrine is a
mandatory rule applicable not just in matters with a
relationship to probate but in all cases, see id., we do not
think it does anyone any favors to discuss it within the
confines of the probate exception. Therefore, we will next
turn to the prior exclusive jurisdiction doctrine outside the
intellectual confines of the probate exception.

   2. The prior exclusive jurisdiction doctrine

    The prior exclusive jurisdiction doctrine is a “mandatory
jurisdictional limitation” that prohibits federal and state
courts from concurrently exercising jurisdiction over the
same res. Chapman, 651 F.3d at 1043 (quoting State Eng’r
v. S. Fork Band of Te-Maok Tribe of W. Shoshone Indians,
339 F.3d 804, 810 (9th Cir. 2003)). The question whether the
prior exclusive jurisdiction doctrine applies turns on what,
precisely, is at issue in the state and federal court
proceedings. If both courts exercise either in rem or quasi in
rem jurisdiction, then the courts may be simultaneously
exercising jurisdiction over the same property, in which case
the prior exclusive jurisdiction doctrine applies and the
district court is precluded from exercising jurisdiction over
the res. See Kline v. Burke Constr. Co., 260 U.S. 226, 229
(1922). Here, we must first determine whether, in ruling on
the validity of the Blues’ lien, the district court would
exercise in rem or quasi in rem jurisdiction over a res. And
if it would, we must determine whether the California
Superior Court has exercised in rem or quasi in rem
jurisdiction over the same res.

    The prior exclusive jurisdiction doctrine is not restricted
to cases where the property has been “actually seized under
judicial process before a second suit is instituted. It applies
30   GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

as well where suits are brought to marshal assets, administer
trusts, or liquidate estates, and in suits of a similar nature,
where, to give effect to its jurisdiction, the court must control
the property.” United States v. Bank of N.Y. & Tr. Co.,
296 U.S. 463, 477 (1936). But where a judgment is “strictly
in personam . . . both a state court and a federal court having
concurrent jurisdiction may proceed with the litigation.”
Penn Gen. Cas. Co. v. Pennsylvania ex rel. Schnader,
294 U.S. 189, 195 (1935). In other words, the federal court
“may not ‘seize and control the property which is in the
possession of the state court.’” Fischer v. Am. United Life
Ins. Co., 314 U.S. 549, 554 (1942) (citation omitted). “Short
of that, however, the federal court may go.” Id. at 554–55.

    An action is in rem when it “determine[s] interests in
specific property as against the whole world.” State Eng’r,
339 F.3d at 811 (quoting In Rem, BLACK’S LAW DICTIONARY
(6th ed. 1990)). “Under California law, a suit proceeds in
rem [only] where property is ‘seized and sought to be held for
the satisfaction of an asserted charge against property without
regard to the title of individual claimants to the property.’”
Hanover Ins. Co. v. Fremont Bank, 68 F. Supp. 3d 1085,
1109 (N.D. Cal. 2014) (quoting Lee v. Silva, 240 P. 1015,
1016 (Cal. 1925)). An action is quasi in rem when it is
brought “against the defendant[s] personally” but “the
[parties’] interest[s] in the property . . . serve[] as the basis of
the jurisdiction.” State Eng’r, 339 F.3d at 811 (alterations in
original) (quoting Quasi In Rem, BLACK’S LAW DICTIONARY
(6th ed. 1990)).

    “On the other hand, where a party initiates an action
merely to ‘determine the personal rights and obligations of
the [parties],’ the court asserts in personam jurisdiction.”
Hanover Ins. Co., 68 F. Supp. 3d at 1109 (quoting Pennoyer
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.            31

v. Neff, 95 U.S. 714, 727 (1877)); see also In Personam,
BLACK’S LAW DICTIONARY (10th ed. 2014) (defining an
action in personam as one “brought against a person” that
“can be enforced against all the property of the judgment-
debtor”). A federal court “may proceed to judgment in
personam, adjudicating rights in the res and leaving the in
personam judgment to bind as res judicata the court having
jurisdiction of the res.” Jackson v. U.S. Nat’l Bank, 153 F.
Supp 104, 110 (D. Or. 1957).

     Although the Blues have removed the proceeding to
expunge the lien, they seek the district court’s determination
of their rights, not enforcement of the lien. The Blues are
seeking “merely to establish . . . a right to share in [the
settlement funds].” Bank of N.Y., 296 U.S. at 478. It is well
settled that such actions are properly classified as in
personam. See Princess Lida of Thurn & Taxis v. Thompson,
305 U.S. 456, 466 (1939) (“[T]he principle . . . that the court
first assuming jurisdiction over property may maintain and
exercise that jurisdiction to the exclusion of the other . . . has
no application to a case in a federal court based upon
diversity of citizenship, wherein the plaintiff seeks merely an
adjudication of his right of his interest as a basis of a claim
against a fund in the possession of a state court.”);
Commonwealth Tr. Co. of Pittsburgh v. Bradford, 297 U.S.
613, 619 (1936) (holding that a determination of rights to
trust funds was not in rem because it sought “only to establish
rights” rather than to “deal with the property and other
distribution”).

    The gravamen of the complaint is clear: the Blues seek to
vindicate their subrogation rights. They are not asking the
district court to take any of the settlement funds from the state
court’s control. Nor would the district court’s determination
32   GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

necessarily involve a disturbance of possession or control of
the settlement. Fischer, 314 U.S. at 554. Since the Blues
seek only a determination of their rights, the action in federal
court is an in personam action, not an action in rem or quasi
in rem. Thus, the doctrine of prior exclusive jurisdiction does
not apply. Because the Superior Court’s jurisdiction over the
minor’s compromise is not “so exclusive as to bar an
adjudication by the federal court of the rights of a claimant to
the res or the quantum of his interest in it,” id. at 555, the
district court improperly remanded the case to the state court.

    At the time that the Blues removed the case to federal
court, the Superior Court had not exercised in rem or quasi in
rem jurisdiction, either. Instead, the Superior Court was
deciding whether to approve the settlement in the first place.
See Cal. Prob. Code § 3600; Pearson v. Superior Court,
136 Cal. Rptr. 3d 455, 457 (Ct. App. 2012) (“An agreement
to settle or compromise a claim made by a minor ‘is valid
only after it has been approved, upon the filing of a petition,
by the superior court . . . .’” (alteration in original) (quoting
Cal. Prob. Code § 3500(b))). The court had not “taken
possession of property,” Sexton v. NDEX W., LLC, 713 F.3d
533, 536 (9th Cir. 2013), nor did it have “custody,” Marshall,
547 U.S. at 312, over the potential settlement money. In fact,
it had not taken possession, custody, or control of any
property. The property was held by Goncalves’s attorney in
a trust account pending the resolution of this litigation.

   Although the Superior Court must issue an order
“authorizing and directing” the payment of reasonable
expenses, “including reimbursement to a parent, guardian,
conservator, costs, and attorney’s fees,” Cal. Prob. Code
§ 3601(a), and may order that the money be paid into a
special-needs trust, id. § 3602, the court did not have custody
        GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.                  33

of the settlement itself, and there is no apparent reason why
it should seize the settlement. Even if the Superior Court
were to obtain in rem jurisdiction over an approved
settlement agreement through the probate code, that would
occur only after the Superior Court approves of the
settlement. See id. § 3600 (noting that the chapter applies
only after the court approves of the compromise). Thus, the
Superior Court had not exercised in rem or quasi in rem
jurisdiction over the potential proceeds of the yet-to-be-
approved settlement.

    Goncalves asserts that the removal of the Blues’ lien
claim made the settlement proceeds the res or subject matter
of the action and bestowed jurisdiction over the res upon the
district court. That is incorrect. Goncalves cites Alyeska
Pipeline Service Co. v. Vessel Bay Ridge, 703 F.2d 381, 394
(9th Cir. 1983), but that case is inapposite. Alyeska Pipeline
dealt with the enforcement of a lien, not a determination of
rights. In fact, all of the case law that Goncalves relies upon
to classify this as an in rem proceeding involves lien-
enforcement proceedings.5

    5
      Goncalves argues that the Blues removal action seeks the same relief
requested in state court—enforcement of their subrogation rights against
proceeds from the settlement. The Blues contend that they are seeking a
rights determination from the district court, not enforcement of the lien.
The courts have long held that a lien enforcement proceeding is different
from a proceeding in which the validity of a lien is determined. See, e.g.,
In re Williams’ Estate, 156 F. 934, 939 (9th Cir. 1907) (distinguishing
between proceedings to determine “the validity of the lienholder’s
contract” and “his remedy to enforce his rights”); Connolly Dev., Inc. v.
Superior Court, 553 P.2d 637, 650 (Cal. 1976) (distinguishing between a
suit to “enforce [a] lien” and a “suit for declaratory relief” as to the
validity of the lien); Mojtahedi v. Vargas, 176 Cal. Rptr. 3d 313, 316 (Ct.
App. 2014) (holding that an “attorney’s lien is only enforceable after the
attorney adjudicates the value and validity of the lien in a separate action
34    GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

    Goncalves also argues that, at the very least, the state
court action is quasi in rem because the parties’ interests in
the property serve as the basis for jurisdiction. See State
Eng’r, 339 F.3d at 811. But this is also incorrect. It is the
state court’s supervisory role that forms the basis of its
jurisdiction. Part of that supervisory role is to ensure that the
settlement funds are disbursed to parties with rights to the
funds, but that function is not essential to the exercise of the
court’s jurisdiction. Cf. Bank of N.Y., 296 U.S. at 477 (noting
that “[c]ontrol of the funds was essential to the exercise of the
court’s jurisdiction to protect the rights of claimants” in quasi
in rem proceedings).

     Practically, the Blues are asking the district court, under
the terms of their federally approved contract, to determine
rights to a settlement that they claim is contractually theirs.
If the district court adjudicates the lien against Goncalves’s
settlement fund, it will not interfere with the Superior Court’s
possession of property for the purposes of lien enforcement.
We conclude that the prior exclusive jurisdiction doctrine
does not bar the district court’s determination of the Blues’
subrogation rights.

                                    III

    In administering the FEHBA plan by pursuing
subrogation against Goncalves, the Blues “acted under” a
federal officer for purposes of the federal officer removal
statute, and thus the action was properly removed to federal
court. See 28 U.S.C. § 1442(a)(1). Because neither the

against his client”). Based on the district court record, it appears that the
Blues are seeking only a determination of the validity of their subrogation
rights.
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.         35

probate exception to federal jurisdiction nor the prior
exclusive jurisdiction doctrine precludes federal jurisdiction,
the action should not have been remanded back to state court.

   REVERSED and REMANDED.

WARDLAW, Circuit Judge, dissenting:

    I respectfully disagree with the majority’s holding that a
federal court may exercise jurisdiction over Goncalves’s
motion to expunge the Blues’ lien, and I would affirm the
district court’s order remanding the motion to the California
Superior Court. We need not even reach the complicated
question whether the action was properly removed under the
Federal Officer Removal Statute. Whether or not it was, the
“prior exclusive jurisdiction” doctrine bars the exercise of
federal jurisdiction here.

                              I.

    To understand the proceedings in this case—and why they
implicate the prior exclusive jurisdiction doctrine—it is
necessary to understand the State of California’s framework
for approving the settlement of a minor’s legal claim. I
discuss that framework first, and then describe the
proceedings in this case in the California and federal courts.

A. California’s Requirements for Settling a Minor’s Legal
   Claim.

   To protect the interests of minors, California courts are
required to approve the settlement of a minor’s legal claim,
36   GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

as well as the payment of any expenses out of the settlement
proceeds. See Cal. Civ. Proc. Code § 372; Cal. Prob. Code
§§ 3500(b), 3600–05, 3610–13; Cal. Rules of Court
7.950–7.955. After the parties have reached an agreement to
settle, a California Superior Court must conduct a “liability
analysis” to “determine if [the] settlement is reasonable.”
Espericueta v. Shewry, 164 Cal. App. 4th 615, 627 (2008). If
it is, the court must then determine what “reasonable
expenses” should be paid out of the settlement proceeds. Cal.
Prob. Code § 3601. This includes determining how much
money should be paid to parties asserting liens on the
settlement funds. See Goldberg v. Superior Court, 23 Cal.
App. 4th 1378, 1383 (1994). The court has “broad power” to
determine which parties should be paid and how much they
should be paid. Id. at 1382. After it has made its
determination, the court enters an order “authorizing and
directing” disbursement of the funds. Cal. Prob. Code
§ 3601.

    Though that is all a court is required to do during the
settlement approval process, it may also take additional steps
to administer the funds. For example, a court may order that
the settlement funds be deposited in an insured account, id.
§ 3602(c)(1), used to purchase an annuity, id., or delivered to
a custodian, id. § 3602(c)(2). The court may also order the
transfer of the funds into a “special needs trust”—a unique
form of trust for disabled minors. Id. §§ 3602(d), 3604(a)(1);
see also 14 B.E. Witkin et al., Summary of California Law:
Wills § 1072 (10th ed. 2005).
        GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.               37

B. The Settlement Approval Proceedings in Goncalves’s
   Medical Malpractice Case.

    In 2011, Goncalves filed a medical malpractice action in
the Superior Court of California, County of San Diego,
against Rady Children’s Hospital and three other defendants.1
Register of Actions at 1, Goncalves v. Rady Children’s
Hospital San Diego, No. 37-2011-00085051-CU-MM-CTL
(Cal. Super. Ct. filed 2011).

    In 2014, Goncalves reached settlement agreements with
the three non-Rady Children’s Hospital defendants. Id. at
114, 117–19, 121, 124, 137, 142. The San Diego Superior
Court found the settlements reasonable and approved them.
Id. at 121. Pursuant to its settlement-approval powers, the
court ordered a payment of fees to Goncalves’s attorney.
Petition to Approve Compromise of Claim at 7 (Register of
Actions 156), Goncalves v. Rady Children’s Hospital San
Diego, No. 37-2011-00085051-CU-MM-CTL (Cal. Super. Ct.
filed 2011). In addition, it ordered that $492,501.69 of the
settlement funds be held in trust by Goncalves’s attorney. Id.
Att. 13b(5). It did so because various nonparties, including
the Blues, had asserted liens on Goncalves’s settlement
proceeds (the “Lien Litigation”), and the amounts that would
be paid on the liens had not yet been resolved. Id.

    1
      Many of the facts in this section come from state-court documents
that were not included in the parties’ original excerpts of record.
However, “[i]t is well established that we may take judicial notice of
judicial proceedings in other courts,” and the majority should have done
so here. See Rosales-Martinez v. Palmer, 753 F.3d 890, 894 (9th Cir.
2014); see also Fed. R. Evid. 201(b)–(d).
38   GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

     In 2015, Goncalves reached an agreement to settle his
claim against Rady Children’s Hospital for $800,000. Order
Approving Compromise of Claim at 2 (Register of Actions
159), Goncalves v. Rady Children’s Hospital San Diego, No.
37-2011-00085051-CU-MM-CTL (Cal. Super. Ct. filed
2011). The San Diego Superior Court approved the
settlement. Id. at 4. It then took a number of additional
administrative steps. It directed a payment to Goncalves’s
attorneys for fees and expenses. Id. at 2. It ordered that a
portion of the funds be placed in a special needs trust, and
that another portion be used to purchase an annuity. Id. Att.
7c2b; Petition to Approve Compromise of Claim, supra, at 9.
Further, the court ordered Goncalves’s attorney to hold
$39,351.82 of the funds “until the resolution of the Lien
litigation”; that money was in addition to $420,131.75 still
remaining in the trust account.           Order Approving
Compromise of Claim, supra, at 2. Goncalves’s attorney
agreed to release the funds only if “expressly authorized by
th[e] court.” Petition to Approve Compromise of Claim,
supra, at 10. Any funds remaining after the lien payments
were made would be “transferred to the special needs trust.”
Id.

    After the San Diego Superior Court had disbursed the
funds from the first three settlements and directed a portion
into the trust account—but before the settlement with Rady
Children’s Hospital—Goncalves filed a motion with the court
requesting that it expunge the lien asserted by the Blues. The
court scheduled a hearing on the motion. Minute Order
(Register of Actions 140), Goncalves v. Rady Children’s
Hospital San Diego, No. 37-2011-00085051-CU-MM-CTL
(Cal. Super. Ct. filed 2011). Before it could determine
whether the Blues would be paid on their lien, and to what
extent, the Blues removed the motion to federal court.
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.         39

Goncalves nevertheless proceeded in state court to settle his
remaining claim against Rady Children’s Hospital and
resolve other liens asserted on his settlement proceeds. The
San Diego Superior Court also disbursed the additional funds
from the final settlement and ordered that some be placed in
the trust account. The San Diego Superior Court continues to
exercise jurisdiction over the case so that it can issue future
orders regarding the Blues’ lien and the remaining funds in
the trust account. Application for an Order Setting Aside
Dismissal (ROA 166), Goncalves v. Rady Children’s
Hospital San Diego, No. 37-2011-00085051-CU-MM-CTL
(Cal. Super. Ct. filed 2011); Minute Order (ROA 168),
Goncalves v. Rady Children’s Hospital San Diego, No. 37-
2011-00085051-CU-MM-CTL (Cal. Super. Ct. filed 2011).

                              II.

    The prior exclusive jurisdiction doctrine is a “mandatory”
limitation on federal jurisdiction. Chapman v. Deutsche Bank
Nat’l Tr. Co., 651 F.3d 1039, 1043 (9th Cir. 2011) (quoting
State Eng’r v. S. Fork Band of Te-Maok Tribe of W. Shoshone
Indians, 339 F.3d 804, 810 (9th Cir. 2003)). A federal court
may not exercise control over property that is already under
the control of a state court. Id. at 1043–44. In other words,
it may not hear an in rem or quasi in rem action involving
property that is part of an in rem or quasi in rem action in
state court. Id. To determine whether the prior exclusive
jurisdiction doctrine applies, we must determine the nature of
the relevant state and federal actions. If they are both in rem
or quasi in rem, and if the state court was the first to assert
jurisdiction over the property, then the federal court may not
proceed. Id.
40   GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

    What matters for our inquiry is whether the state and
federal actions are either in rem or quasi in rem, rather than
in personam. We need not make the narrower distinction
between in rem and quasi in rem. As the Supreme Court has
explained, an action is at least quasi in rem where, “to give
effect to its jurisdiction, [a] court must control the property.”
United States v. Bank of N.Y. & Tr. Co., 296 U.S. 463, 477
(1936). Put another way, an action is at least quasi in rem
where “it is the [parties’] interest[s] in the property that
serve[] as the basis of the jurisdiction.” State Eng’r, 339 F.3d
at 811 (alterations in original) (quoting Black’s Law
Dictionary 1245 (6th ed. 1990)). The relief sought in a quasi
in rem or in rem action is possession of specific property. See
Bank of N.Y., 296 U.S. at 478.

    If an action is not in rem or quasi in rem, then it is in
personam. An in personam action is one brought against a
defendant personally that does not require the court to control
property. See id. at 478. The relief sought in an in personam
action is a judgment that “can be enforced against all the
property of the judgment-debtor.” Action, Black’s Law
Dictionary (10th ed. 2014) (emphasis added).

    We do not rely on “formalistic distinction[s]” when
labeling an action in rem, quasi in rem, or in personam. State
Eng’r, 339 F.3d at 810. Rather, we “look behind the form of
the action” to determine the “nature” of the case. Id. at
810–11 (internal quotation marks omitted). For example,
even if an action appears on the face of the complaint to be in
personam, we may nevertheless find that it is in rem or quasi
in rem. Id.

   State Engineer provides an example of the proper
analysis. That case involved contempt proceedings that had
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.           41

been removed to federal court. Id. at 808. Nevada initiated
the proceedings against the defendant for allegedly failing to
comply with a court decree allocating water rights in the
Humboldt River. Id. A contempt action is “brought only
‘against the defendant[s] personally’” and is typically styled
as an in personam action. Id. at 810–11 (alteration in
original) (quoting Black’s Law Dictionary 1245 (6th ed.
1990)). However, we concluded in State Engineer that even
though the action was styled as an in personam proceeding,
that “formalistic distinction made not the least bit difference.”
Id. We looked “behind the form of the action to the
gravamen of [the] complaint and the nature of the right sued
on.” Id. at 810 (internal quotation marks omitted). We
concluded that there could be no serious dispute that Nevada
had brought the contempt action to, in effect, force
compliance with the decree over a res—the Humboldt River.
Id. at 811. We therefore held that the action was quasi in
rem, because the federal court could not hear the case without
displacing the state court as the adjudicator of water rights in
the Humboldt River. Id.; see also Bank of N.Y., 296 U.S. at
478 (finding that an action was at least quasi in rem where it
could not be adjudicated “without disturbing the control of
the state court” over property).

                              III.

    The settlement approval proceedings in California
Superior Court are, at minimum, quasi in rem. Goncalves
settled with all of the medical malpractice defendants and the
Superior Court approved the settlements. See Register of
Actions, supra, at 121, 159. Consequently, the defendants
paid out the settlement funds, triggering the Superior Court’s
duty to disburse the money appropriately.
42   GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

    The Superior Court has exercised significant control over
the settlement funds, rendering the settlement approval
proceedings at least quasi in rem. At stake in those
proceedings is not a personal judgment against any party;
rather, the court is adjudicating various parties’ rights to the
settlement proceeds. The court has ordered payment to
Goncalves’s attorneys for fees and expenses. It has ordered
the purchase of an annuity and that a portion of the funds be
transferred into a special needs trust. Further, it directed
almost $500,000 into a client trust account pending resolution
of nonparty lien claims. Moreover, the court continues to
exercise jurisdiction over the remaining funds in that account.
Goncalves’s attorney cannot distribute the funds without the
court’s permission.

    The majority makes much of the fact that the remaining
settlement funds that could be distributed to the Blues are
being held by Goncalves’s attorney rather than by the
Superior Court itself. But the Supreme Court has explained
that an action can be quasi in rem even when the property has
not been “actually seized under judicial process.” Bank of
N.Y., 296 U.S. at 477. Indeed, the Court has found
proceedings to be quasi in rem where funds were being held
by a trust company pending direction from the court. Id. at
476–77. Goncalves’s attorney is holding almost $500,000 in
a trust account waiting for the San Diego Superior Court’s
orders to disburse the funds and to whom. Therefore, it is the
Superior Court that effectively controls the funds. The
majority’s argument is at odds with precedent as well as the
functional analysis required by the prior exclusive jurisdiction
doctrine. Further, it is at odds with the Blues’ litigation
position—the Blues recognized in district court that the
settlement funds constitute a “res that’s currently in [the San
Diego Superior Court’s] possession.”
     GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.         43

    Contrary to the majority’s assertion, see Maj. Op. 33, the
San Diego Superior Court exercised control over Goncalves’s
settlement funds before the Blues removed the lien-
expungement motion to federal court. The state court
obtained jurisdiction over the settlement proceeds when it
approved the initial three settlements on April 9, 2014 and
began disbursing funds. Register of Actions, supra, at 121.
The Blues removed the lien-expungement action to federal
court on July 28, 2014. A portion of the funds from the initial
settlements were deposited into the trust account held by
Goncalves’s attorney and continue to remain there, pending
direction from the San Diego Superior Court.

                             IV.

    The lien-expungement motion removed by the Blues is
quasi in rem. The action arose during the San Diego Superior
Court’s administration of Goncalves’s settlement funds. The
court was required by state law to determine which parties
would be paid out of the settlement proceeds, and how much,
and accordingly, to order payment. See Cal. Prob. Code
§ 3601. Before the court could order any payments to the
Blues, however, Goncalves moved to expunge the Blues’
lien. In his motion, Goncalves invoked the court’s
jurisdiction under California Probate Code § 3601, which
grants the court the duty to approve and order expenses.
Motion for an Order Expunging Blue Cross/Blue Shield’s
Lien at 3–4, Goncalves v. Rady Children’s Hospital San
Diego, No. 37-2011-00085051-CU-MM-CTL (Cal. Super. Ct.
filed 2011). The Blues then removed the motion to federal
court.

   The jurisdictional basis of the removed motion is the San
Diego Superior Court’s power to control the settlement funds
44   GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.

and to order payment of expenses. Goncalves explained in
his motion that he filed it in San Diego Superior Court
specifically because of that court’s control over his settlement
funds under California Probate Code § 3601. Therefore,
adjudicating the removed motion would necessarily require
the federal court to control the settlement funds. What
Goncalves sought—and what the Blues oppose—is an order
directing payment of the remaining settlement funds to
Goncalves’s trust instead of the Blues.

     The majority appears to construe the removed action as
one for declaratory relief. It asserts that the Blues want only
a declaration of their rights in the settlement funds. But the
Blues never even filed a declaratory relief action. Rather,
they removed a motion from state court concerning the
disbursal of Goncalves’s settlement funds. Therefore,
looking to “the gravamen” of the motion and the “nature of
the right sued on,” State Eng’r, 339 F.3d at 810, the motion
is for lien enforcement and not for declaratory relief, contrary
to the majority’s characterization. And actions for lien
enforcement are in rem. See Cent. Bank v. Superior Court,
30 Cal. App. 3d 913, 917 (1973) (“An action to foreclose a
mechanics’ lien . . . is an in rem action . . . .”). We cannot
recharacterize the removed action simply because “[t]he
Blues contend” in their briefing that all they want from the
district court is “a rights determination.” See Maj. Op. at
33–34 n.5.

                               V.

    Goncalves’s settlement funds form the basis of both the
state and federal actions. Therefore, both actions are at least
quasi in rem. Under the prior exclusive jurisdiction doctrine,
only the court that first asserted jurisdiction over the property
    GONCALVES V. BLUE CROSS & BLUE SHIELD OF MASS.     45

may proceed. The San Diego Superior Court was the first
court to exercise jurisdiction over Goncalves’s settlement
funds. Therefore, it should be the only court to proceed.

   I respectfully dissent.