Court Opinion

ID: 3065205
Source: CourtListenerOpinion
Date Created: 2015-10-14 22:29:44.155666+00
Date Added: 2024-06-11T11:49:44.111843
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

MEDICAL DEVELOPMENT                     
INTERNATIONAL, a Delaware
corporation,
                Plaintiff-Appellant,
                                             No. 08-15759
                v.
CALIFORNIA DEPARTMENT OF                      D.C. No.
                                            2:07-CV-02199-
CORRECTIONS AND REHABILITATION;                WBS-EFB
ROBERT SILLEN, individually and as
Receiver; J. CLARK KELSO,
Receiver,
             Defendants-Appellees.
                                        

MARCIANO PLATA,                         
                           Plaintiff,
                and
MEDICAL DEVELOPMENT
INTERNATIONAL, a Delaware
corporation,
                                             No. 08-16858
              Petitioner-Appellant,
                                               D.C. No.
                v.
                                           3:01-CV-01351-
ARNOLD SCHWARZENEGGER,                           TEH
Governor,
                                               OPINION
                        Defendant,
               and
CALIFORNIA DEPARTMENT OF
CORRECTIONS AND REHABILITATION;
J. CLARK KELSO, Receiver,
             Defendants-Appellees.
                                        
                            14719
14720           MEDICAL DEVELOPMENT v. CDCR
         Appeal from the United States District Court
            for the Eastern District of California
         William B. Shubb, District Judge, Presiding

         Appeal from the United States District Court
             for the Northern District of California
        Thelton E. Henderson, District Judge, Presiding

                     Argued and Submitted
           July 16, 2009—San Francisco, California

                    Filed October 30, 2009

    Before: Barry G. Silverman, Richard R. Clifton, and
            Milan D. Smith, Jr., Circuit Judges.

                  Opinion by Judge Clifton
                  MEDICAL DEVELOPMENT v. CDCR                       14723

                              COUNSEL

Bennett J. Lee (argued) and Garrett E. Dillon, Watt, Tieder,
Hoffar & Fitzgerald, LLP, San Francisco, California, for the
appellant.

Michelle M. Mitchell (argued), Deputy Attorney General,
Sacramento, California, for appellee California Department of
Corrections and Rehabilitation; Martin H. Dodd (argued),
Futterman & Dupree LLP, San Francisco, California, for the
appellee J. Clark Kelso, as Receiver; John W. Fowler, Berge-
son, LLP, San Jose, California, for appellee Robert Sillen.

                              OPINION

CLIFTON, Circuit Judge:

   A receiver appointed by a federal district court currently
oversees the delivery of medical care to prisoners incarcerated
by the California Department of Corrections and Rehabilita-
tion (CDCR). Medical Development International (MDI) pro-
vided medical services for two of CDCR’s prisons, without a
finalized contract. The Receiver1 terminated MDI’s services.

  1
    CDCR has had two receivers: Robert Sillen and J. Clark Kelso. We
refer to both collectively as “the Receiver,” except where their respective
identities are pertinent to the discussion.
14724           MEDICAL DEVELOPMENT v. CDCR
MDI was not paid for much of its work and filed suit against
the Receiver and CDCR. MDI’s claim has been before two
different federal district courts, but MDI did not obtain relief
from either of them. Appeals have been taken by MDI from
both and have been consolidated before us.

   The primary question presented to us is whether the
Receiver is immune from suit for MDI’s claim. We conclude
that in the circumstances presented here the Receiver may be
sued in his official capacity and he is not covered by judicial
immunity. We also conclude that the federal district court had
subject matter jurisdiction over MDI’s lawsuit after it was
removed from state court, and that MDI was not required to
obtain permission from the court that appointed the Receiver
prior to filing suit against him, under 28 U.S.C. § 959(a). As
a result, we affirm in part and vacate in part the orders that
are the subject of this appeal, and we remand for further pro-
ceedings.

I.   Background

   In June 2005, the U.S. District Court for the Northern Dis-
trict of California established a receivership to take control of
the delivery of medical services to all California state prison-
ers confined by CDCR. Plata v. Schwarzenegger, No. C01-
1351 TEH, 2005 WL 2932253, at *1 (N.D. Cal. Oct. 3, 2005).
The court explained that “[i]t is clear . . . that [an] unconscio-
nable degree of suffering and death is sure to continue if the
system is not dramatically overhauled,” id., and determined
that the only solution to the systemic failures that had led to
these problems was “the drastic but necessary remedy of a
Receivership.” Id. at *1; see also id. at *23-33.

   The court charged the Receiver with “provid[ing] leader-
ship and executive management” to CDCR, “with the goals of
restructuring day-to-day operations and developing, imple-
menting, and validating a new, sustainable system.” In partic-
ular, it assigned the Receiver the “duty to control, oversee,
                MEDICAL DEVELOPMENT v. CDCR               14725
supervise, and direct all administrative, personnel, financial,
accounting, contractual, legal, and other operational functions
of the medical delivery component of the CDCR,” and
equipped the Receiver with all powers vested by law in the
Secretary of the CDCR as they relate to the above functions.

   Shortly thereafter, the Northern District entered another
order relating specifically to contracts for medical services
entered into by CDCR. It did so because the court perceived
what it described as “yet another chilling example of the
inability of the CDCR to competently perform the basic func-
tions necessary to deliver constitutionally adequate medical
health care.” CDCR contracts with third parties for most of
the medical care it provides to inmates, but, the court
explained, in doing so CDCR had failed to competitively bid
the contracts, had used flawed negotiating practices, had
agreed to excessive rates of compensation, and had failed to
secure necessary approvals. To make matters worse, the court
concluded that CDCR’s response to the failures was simply to
stick its “head[ ] in the sand,” causing “the . . . process for
negotiating, processing, renewing, and payment of medical
contracts [to] collapse[ ].”

    To address this problem, the Northern District ordered
CDCR to develop new processes for entering into and manag-
ing medical contracts. It also ordered CDCR to “pay all cur-
rent outstanding, valid, and CDCR-approved medical invoices
. . . within 60 days” and authorized CDCR to enter into con-
tracts without competitive bidding while it developed the new
processes.

   In that context, CDCR entered into a relationship with
MDI. MDI is an administrator of prison health care systems,
headquartered in Florida, providing “services designed to
facilitate the timely and cost-effective delivery of health care
to incarcerated persons.” CDCR sought MDI’s services as
part of a pilot program in two facilities, the California State
Penitentiary, Los Angeles, and the California Correctional
14726           MEDICAL DEVELOPMENT v. CDCR
Institution in Tehachapi. Specifically, it was proposed that
MDI would (1) enter into agreements with physicians and
hospitals, (2) assist prison staff in locating medical specialists,
(3) implement a centralized system for scheduling and track-
ing inpatient and outpatient care, and (4) create a centralized
billing system for payment claims by health-care providers.

   After months of negotiation the parties still had not final-
ized a contract. Nonetheless, CDCR permitted MDI to begin
working in the two institutions, purportedly in reliance on the
Northern District’s orders described above.

   Sometime after that, CDCR staff began to worry that
because MDI was not licensed to practice medicine in Cali-
fornia, MDI might be violating California’s prohibition on the
corporate practice of medicine. As a result of that concern, in
January 2007 the Receiver ordered CDCR to stop all pay-
ments on MDI’s invoices. At a meeting with MDI representa-
tives, the Receiver indicated that MDI would be paid only if
it was determined that MDI was lawfully providing services
in California. In the meantime, MDI was instructed to con-
tinue working in the two institutions. Despite efforts by MDI
to show that its services were lawful, the Receiver ended the
relationship on April 7, 2007, and expelled MDI from the two
institutions.

   MDI filed suit in Sacramento County Superior Court
against the Receiver and CDCR. Pursuant to 28 U.S.C.
§ 1442, the Receiver removed MDI’s lawsuit to the U.S. Dis-
trict Court for the Eastern District of California.

   The Receiver and CDCR then moved the court to dismiss
the complaint for lack of subject matter jurisdiction. The East-
ern District granted the motion and dismissed the action. The
court, citing Barton v. Barbour, 104 U.S. 126, 127 (1881),
explained that “[t]he United States Supreme Court has held
that federal common law bars suits against receivers in courts
other than the court charged with the administration of the
                MEDICAL DEVELOPMENT v. CDCR                 14727
estate” unless the suit is approved by the appointing court.
Based on reasoning that will be described in greater detail
below, the court rejected MDI’s argument that the bar did not
apply to this action because it fit within a statutory exception
codified at 28 U.S.C. § 959(a). Because approval of the law-
suit by the court that appointed the Receiver, the Northern
District, had not been obtained, the action against the
Receiver was dismissed.

   The motion to dismiss as to CDCR was granted as well.
The Eastern District noted that “[t]he bulk of [MDI]’s allega-
tions against the CDCR arise from the CDCR’s compliance
with [the Receiver]’s orders.” Because of this, the court con-
cluded that “due to the significant overlap in [MDI]’s allega-
tions, the interests of judicial economy also support the
accompanying dismissal of [MDI]’s causes of action with
respect to the CDCR.” Accordingly, the court dismissed the
action as to both the Receiver and CDCR.

   MDI appealed to this court, but the appeal was stayed by
a stipulation of the parties to allow MDI to seek leave from
the Northern District to sue the Receiver. MDI sought such
leave, but the Northern District denied the request. It held that
MDI failed to set forth a prima facie case because “the
Receiver would be immune from MDI’s suit.” It explained
that “a receiver is absolutely immune from suit for functions
‘intimately connected with his receivership duties.’ ” (quoting
New Alaska Dev. Corp. v. Guetschow, 869 F.2d 1298, 1304
(9th Cir. 1989)). Since the court had charged the Receiver
with the “duty to control, oversee, supervise, and direct all . . .
contractual . . . functions,” and MDI was suing the Receiver
for “terminating whatever quasi-contractual relationship may
have existed when he suspected illegality,” MDI was chal-
lenging the Receiver’s conduct in performing the very duties
the court had set up the receivership to perform.

  MDI then filed a motion for clarification. The motion
explained that MDI intended to file a state court lawsuit
14728           MEDICAL DEVELOPMENT v. CDCR
against CDCR alone and sought guidance as to whether the
court also intended its earlier order to rule on CDCR’s immu-
nity. The Northern District declined to provide such guidance.
It stated that MDI had not sought leave to sue CDCR in state
court, only the Receiver, “and there is no requirement that
such leave [to sue CDCR] be obtained.” Because there was no
pending case between MDI and CDCR, “MDI essentially
[sought] an order deciding whether an immunity defense, if
raised . . ., would succeed,” a decision the court held would
be an unconstitutional advisory opinion. MDI appealed the
Northern District’s order.

   In addition, MDI also filed a complaint against CDCR, and
20 Does, in Sacramento County Superior Court, not naming
the Receiver as a defendant. The complaint stated seven
causes of action: (1) breach of contract, (2) wrongful termina-
tion of contract, (3) promissory estoppel, (4) quantum
meruit/unjust enrichment, (5) assumpsit, (6) account stated,
and (7) violations of California’s Prompt Payment Act. The
state court stayed the proceedings pending this appeal.

  The appeals by MDI from the Eastern District and the
Northern District decisions described above were consoli-
dated.

II.     Discussion

   On appeal MDI raises three main issues: (1) whether the
Eastern District erred in exercising removal jurisdiction; (2)
whether MDI’s lawsuit fits within the statutory exception to
the bar on suing a receiver without permission from the
appointing court; and (3) whether the Receiver is absolutely
immune from MDI’s claim. Each issue is addressed in turn.

  A.     Removal

  MDI asserts that the Receiver’s removal of MDI’s state
court complaint was invalid. We disagree.
                MEDICAL DEVELOPMENT v. CDCR                 14729
   [1] It appears that MDI is raising this issue for the first time
on appeal. After the notice of removal was served, MDI did
not move in the Eastern District to remand the action to state
court. As a result, the only grievance it can raise is lack of
subject matter jurisdiction. See 28 U.S.C. § 1447(c) (“A
motion to remand the case on the basis of any defect other
than lack of subject matter jurisdiction must be made within
30 days after the filing of the notice of removal . . . .”).

   [2] The relevant statute authorizing the removal, 28 U.S.C.
§ 1442(a), reads:

    A civil action . . . in a State court against any of the
    following may be removed by them to the district
    court of the United States . . . : (1) . . . any officer
    (or any person acting under that officer) of the
    United States . . . sued in an official or individual
    capacity for any act under color of such office or on
    account of any right, title or authority claimed under
    any Act of Congress[;] . . . (3) Any officer of the
    courts of the United States, for any act under color
    of office or in the performance of his duties . . . .

It is obvious that the requirement for removal under the stat-
ute is met. “[A] receiver is an officer of the courts of the
United States . . . .” Ely Valley Mines, Inc. v. Hartford Acci-
dent & Indem. Co., 644 F.2d 1310, 1312 (9th Cir. 1981). “The
requirement of ‘any act under color of such office’ has been
construed as requiring a causal connection between the
charged conduct and the official authority.” Id. at 1313. That
connection is established where the challenged conduct
involves actions “entrusted” to the receiver “in his capacity as
receiver.” Gay v. Ruff, 292 U.S. 25, 33, 39 (1934). Because
MDI has conceded that it is suing the Receiver over the per-
formance of his court-appointed duties, the nexus is present.
See Arizona v. Manypenny, 451 U.S. 232, 242 (1981)
(explaining that “the right of removal” created by § 1442(a)
“is absolute for conduct performed under color of federal
14730           MEDICAL DEVELOPMENT v. CDCR
office, and . . . the policy favoring removal should not be frus-
trated by a narrow, grudging interpretation of § 1442(a)(1)”
(internal quotation marks omitted)). Thus, we affirm the East-
ern District’s exercise of jurisdiction.

  B.    The Barton Rule and 28 U.S.C. § 959(a)

  MDI also argues that the Eastern District erred in dismiss-
ing its suit. MDI asserts that it was not required to obtain per-
mission from the Northern District to sue the Receiver
because its action fits within the statutory exception to the
general rule requiring an appointing court’s permission before
suing a receiver in another jurisdiction. We agree.

   We review jurisdictional questions de novo. See McGuire
v. United States, 550 F.3d 903, 908 (9th Cir. 2008).

   [3] The requirement that a party obtain leave from the
appointing court before suing a receiver in another venue “is
long-standing.” See Curry v. Castillo (In re Castillo), 297
F.3d 940, 945 (9th Cir. 2002). The rule was first announced
128 years ago in Barton v. Barbour. The Supreme Court held
that when a plaintiff sues a receiver outside of and without the
permission of the appointing court, the non-appointing court
is without jurisdiction to entertain the suit. Barton, 104 U.S.
at 131. As the Court succinctly explained in a later decision:
“When a court exercising jurisdiction in equity appoints a
receiver of all the property of a corporation, the court assumes
the administration of the estate. The possession of the receiver
is the possession of the court . . . .” Porter v. Sabin, 149 U.S.
473, 479 (1893). “It is for that court,” therefore, “to decide
whether it will determine for itself all claims of or against the
receiver, or will allow them to be litigated elsewhere.” Id.; see
also Barton, 104 U.S. at 136.

  [4] There is a statutory exception to the Barton rule. The
exception was enacted by Congress to address a concern
expressed in a dissent to Barton filed by Justice Miller. See
                MEDICAL DEVELOPMENT v. CDCR               14731
Diners Club, Inc. v. Bumb, 421 F.2d 396, 398-99 (9th Cir.
1970) (explaining that because the original § 959 was enacted
shortly after Barton, and given the content of Justice Miller’s
dissent, it is clear that the purpose of § 959 was to enact the
dissent into law). Justice Miller wrote that he agreed with the
majority to the extent that its rule was limited to receivers
“appointed to wind up a defunct corporation.” Barton, 104
U.S. at 138. But where the rule was extended to a suit that
would not “interfere with the actual possession of property
which the receiver holds,” such a rule requiring permission
from the appointing court before an action could be brought
against a receiver in a different court was “unsupported by
authority and unsound in principle.” Id. at 141 (internal quota-
tion marks omitted). The exception, currently codified at 28
U.S.C. § 959(a), reads: “Trustees, receivers or managers of
any property, including debtors in possession, may be sued,
without leave of the court appointing them, with respect to
any of their acts or transactions in carrying on business con-
nected with such property.”

   Our cases analyzing the interplay between the Barton rule
and § 959(a) have most often involved bankruptcy trustees,
and “the policies underlying the Barton doctrine apply with
greater force to bankruptcy proceedings than to other proceed-
ings involving receivers.” Beck v. Fort James Corp. (In re
Crown Vantage, Inc.), 421 F.3d 963, 971 (9th Cir. 2005).
Moreover, many of these cases have dealt with a liquidating
trustee, see, e.g., id. at 968, a circumstance in which the Bar-
ton majority and Justice Miller agreed that the Barton rule
should apply, see Barton, 104 U.S. at 131, 138.

   [5] This case does not fit that pattern, however. The
Receiver was not appointed to wind up or reorganize, in a
bankruptcy sense, CDCR’s operations. CDCR was and is an
ongoing entity, continuing to operate. The Northern District
assigned the Receiver “all powers vested by law in the Secre-
tary of the CDCR as they relate to the administration, control,
management, operation, and financing of the California prison
14732           MEDICAL DEVELOPMENT v. CDCR
medical health care system.” Thus, in short, the Receiver was
the chief executive officer of the medical division of CDCR,
a basic part of whose operation includes contracting with and
managing those responsible for providing medical care to
prisoners, such as MDI. See Diners Club, 421 F.2d at 397-98
(explaining that appellant’s suit, for breach of contract due to
a trustee’s alleged negligent employment of an untrustworthy
employee, “clearly was in respect of the Trustee’s transac-
tions in carrying on the debtor’s business”). We have said that
§ 959(a) “applies only if the . . . officer is actually operating
the business, and only to ‘acts or transactions in conducting
the debtor’s business in the ordinary sense of the words or in
pursuing that business as an operating enterprise.’ ” In re
Crown Vantage, 421 F.3d at 971-72 (quoting Muratore v.
Darr, 375 F.3d 140, 144 (1st Cir. 2004)). MDI is challenging
the Receiver’s conduct in operating CDCR’s “business” in an
ongoing or usual manner, as distinguished from actions taken
in winding up an enterprise or supervising a bankruptcy reor-
ganization. We conclude that this case fits that category of an
ongoing, operating enterprise.

   In granting the motion to dismiss the Receiver, the Eastern
District cited In re Crown Vantage, 421 F.3d at 971-72, and
wrote that “[d]espite its seemingly expansive language,
§ 959(a) is rarely employed and—when actually utilized by
courts—even more narrowly applied.” In the court’s analysis,
“the relatively small handful of cases interpreting § 959(a)
restrict its application to instances where a receiver . . . has
been sued in his/her capacity as an employer, or for torts com-
mitted by agents of the estate/business in receivership during
the course of routine or day-to-day operations distinct from
the receiver’s official responsibilities.” The Eastern District
reasoned:

    [u]nlike the cases where leave was not required,
    [MDI]’s causes of action against [the Receiver] do
    not arise from tortious conduct or negligent acts pur-
    suant to day-to-day, routine, or ordinary business
                    MEDICAL DEVELOPMENT v. CDCR                      14733
       operations unrelated to his official responsibilities.
       Rather, [MDI] challenges the very core of [the
       Receiver]’s authority and administration of the
       CDCR medical services system—i.e., duties explic-
       itly prescribed in [the Northern District]’s creation of
       the receivership.

   This is a misreading of In re Crown Vantage and of MDI’s
claim. While we remarked in In re Crown Vantage that “[t]he
few examples of suits that have been allowed under § 959(a)
include a wrongful death action filed against an operating rail-
road trustee and suits for wrongful use of another’s property,”
this was a summary of successful § 959(a) suits, not a restric-
tion on them. 421 F.3d at 972. Similarly, MDI does not chal-
lenge the authority of the Receiver over CDCR, only what
happened in his day-to-day exercise of that authority.

   An examination of one of the cases cited in In re Crown
Vantage illustrates the applicability of § 959(a) here. In
Thompson v. Texas Mexican Railroad Company, the Supreme
Court explained that a lawsuit brought by one railroad against
another and against the latter railroad’s bankruptcy reorgani-
zation trustee, the essence of which was to get a more favor-
able rental payment for use of its tracks, qualified for the
exemption under the statute that was the predecessor to
§ 959(a).2 328 U.S. 134, 136-37, 140-41 (1946). In reaching
this conclusion, the Court reasoned that:
  2
   As described in Thompson, that statute read:
      Every receiver or manager of any property appointed by any
      court of the United States may be sued in respect of any act or
      transaction of his in carrying on the business connected with such
      property, without the previous leave of the court in which such
      receiver or manager was appointed; but such suit shall be subject
      to the general equity jurisdiction of the court in which such man-
      ager or receiver was appointed so far as the same may be neces-
      sary to the ends of justice.
328 U.S. at 138 n.3 (internal quotation marks omitted).
14734           MEDICAL DEVELOPMENT v. CDCR
    Operation of the trains is plainly a part of the trust-
    ee’s functions. Claims which arise from their
    operation—whether grade crossing claims as in
    McNulta v. Lochridge, [141 U.S. 327 (1891)], or
    claims for the use of the tracks of another as in the
    present case—are claims based on acts of the trustee
    in conducting the business. Hence this suit, so far as
    it involves only a money claim against the estate for
    acts of the trustee in operating trains over respon-
    dent’s tracks, could be maintained in the state courts
    against the trustee.

Id. at 138.

   [6] The reach of § 959(a) is not limited to only those torts
identified in In re Crown Vantage. The Supreme Court spoke
of “claims” broadly, and we see no meaningful distinction
between MDI’s contract law claim and the torts cited in
Thompson. See also McNulta, 141 U.S. at 332 (“As the right
given by the statute to sue for the acts and transactions of the
receivership is unlimited, we cannot say that it should be
restricted to causes of action arising from the conduct of the
receiver against whom the suit is brought or his agents.”).
MDI’s action does not seek to challenge the Receiver’s
appointment or his authority over CDCR. MDI just wants to
get paid. We conclude, therefore, that MDI’s contract law
causes of action fit within the statutory exception to Barton,
and the lawsuit should not have been dismissed on the ground
that the Northern District had not authorized its filing.

  [7] The Eastern District has jurisdiction over MDI’s suit
against the Receiver and CDCR to the extent that it seeks an
amount due under a contract. We note that this determination
does not preclude the Eastern District from seeking to coordi-
nate the matter in some fashion with the Northern District or
even from transferring it to the Northern District, if otherwise
appropriate. There may be good reason for involving the
Northern District, but that does not mean that the case filed
                MEDICAL DEVELOPMENT v. CDCR                14735
in the Eastern District should be dismissed for lack of juris-
diction.

  C.   Immunity

   MDI further argues that the Northern District erred in con-
cluding that the Receiver is absolutely immune from MDI’s
claim. We agree.

  We review the Northern District’s conclusions of law
regarding the Receiver’s immunity de novo, while its findings
of fact are reviewed for clear error. See In re Castillo, 297
F.3d at 946.

   At the outset, we note that while it appears that MDI at one
time sued the original receiver, Robert Sillen, in his individual
capacity, it is currently suing the Receiver only in his official
capacity, which presumably means only the current receiver,
J. Clark Kelso. On appeal MDI has argued only that the
Receiver is not entitled to immunity when sued in an official
capacity. Indeed, the Receiver cannot be sued in his individ-
ual capacity for acts like those at issue here. “Actions against
the receiver are in law actions against the receivership or the
funds in the hands of the receiver, and his contracts, malfea-
sances, negligences, and liabilities are official, and not per-
sonal, and judgments against him as a receiver are payable
only from the funds in his hands.” See McNulta, 141 U.S. at
332 (emphasis added). The personal liability of either Sillen
or Kelso is not at issue, and MDI cannot recover from either
of them personally. Liability of the Receiver in his official
capacity means, as a practical matter, payment can be
obtained only from the funds of CDCR, as controlled by the
Receiver.

   We also note that we must take MDI’s allegations as true
at this stage of the litigation. See, e.g., Erickson v. Pardus,
551 U.S. 89, 94 (2007). There has been no factual adjudica-
tion. MDI alleges that it provided medical administrative ser-
14736             MEDICAL DEVELOPMENT v. CDCR
vices to CDCR, that it did so properly under California law,
that the Receiver directed that MDI not be paid, and that as
a result MDI has not received payment or reimbursement for
those services and the expenses it bore, including the costs of
MDI’s payments to the doctors and hospitals which directly
provided the actual medical services. As far as we know,
MDI’s allegations may be true. At this point we have to
assume as much.

   Yet both the Receiver and CDCR have taken the position
that MDI cannot pursue its claims against them in court
because they are immune. The Receiver’s immunity argument
is that he is entitled to the same immunity as the Northern
District court itself. He asserts that he is entitled to derivative
absolute judicial immunity because the Northern District gave
him power over contracting within CDCR’s medical care sys-
tem and his dealings with MDI were taken within this author-
ity.

   CDCR has similarly argued for full immunity. Before the
Eastern District, CDCR successfully argued that it should be
dismissed from MDI’s action because the Receiver was dis-
missed and the claim against CDCR arose from CDCR’s
compliance with the Receiver’s order. Before the Northern
District, CDCR argued that it functioned as the Receiver’s
staff and was thus entitled to the same immunities conferred
upon the Receiver. CDCR has apparently presented the same
arguments before the state court in MDI’s most recent law-
suit, which did not name the Receiver as a defendant. In par-
ticular, CDCR has argued to the state court that CDCR was
ordered by the Receiver not to pay MDI’s bills and that it can-
not be held liable in state court for obeying the instructions of
the Receiver appointed by the federal district court.3
  3
   That argument was, at least initially, favorably received by the state
court. That court issued a tentative ruling in which it proposed to grant
CDCR’s motion to dismiss on that ground. The tentative ruling explained:
                  MEDICAL DEVELOPMENT v. CDCR                       14737
   The result which the Receiver and CDCR advocate is
untenable. A receivership does not create a liability-free zone
for the business or organization that is the subject of the
receivership. If MDI has a valid claim, something we have to
assume at this point, it cannot be left out in the cold with
nowhere to turn.

   At some level, the Receiver appears to understand this. His
answering brief states that he “has never contended, and does
not contend, that if he or an agent of the Receivership
breaches a lawful contract with the Receivership, the Receiv-
ership has no liability.” As a practical matter, though, that is
precisely the position he has taken. He has suggested to us
that recourse might be available against CDCR in state court,
stating in the same brief that “[w]hether CDCR should be
required to respond in damages because its officials facilitated
MDI’s incursion into the state prisons is a separate question
for the state courts, not this Court, to answer.” Yet while the
Receiver points to CDCR, CDCR points to the Receiver.
CDCR told the state court that the Receiver ordered it not to
pay MDI and that, as a result, the state court cannot hold
CDCR liable. CDCR succeeded in obtaining dismissal from
the Eastern District lawsuit with a similar argument, without
objection from the Receiver. That Catch-22 gambit cannot
succeed.

    The failure to pay for services rendered, was based on the order
    of the federal court appointed Receiver . . . . Defendant CDCR
    cannot pay for services rendered in violation of the order of the
    Court appointed Receiver, as the CDCR was ordered by the fed-
    eral court to fully cooperate with the Receiver in the discharge of
    his duties, which order makes the CDCR subject to contempt pro-
    ceedings if it impedes the Receiver. As the Receiver ordered
    CDCR not to pay MDI’s bills, CDCR is unable to pay MDI.
The state court ultimately elected not to enter an order to that effect,
instead staying the action pending the resolution of this appeal.
14738           MEDICAL DEVELOPMENT v. CDCR
   Assuming that MDI has a valid claim, some courthouse
door should be open to it. It would be possible to let claims
against CDCR simply proceed against CDCR, presumably in
state court, without directly involving the Receiver or requir-
ing him to be named as a party. Indeed, we have been
informed that some legal actions, such as individual suits by
prisoners complaining about medical services provided to
them, have been treated that way. Any award against the
Receiver in his official capacity would be paid from CDCR
funds, anyway, so the end result of an action in state court
would be the same.

   [8] But the position taken by CDCR rules out that route for
MDI’s claim. The Receiver holds “all powers vested by law
in the Secretary of the CDCR as they relate to the administra-
tion, control, management, operation, and financing of the
California prison medical health care system.” That necessar-
ily includes the power to control CDCR with regard to paying
MDI. CDCR has asserted that it refused to pay MDI on
instructions from the Receiver and that as a result the state
court cannot order such payment. The Receiver cannot shrug
off responsibility either for CDCR’s refusal to pay MDI or for
the position CDCR has taken in litigation on that subject. The
Receiver is an appropriate target for MDI’s claim.

   [9] Nor is the Receiver immune, in an official capacity,
from a claim such as this simply because he was appointed by
a court. The federal statute discussed above in connection
with the purported requirement that the appointing court
approve any action against a receiver, 28 U.S.C. § 959(a),
plainly contemplated that a receiver would be subject to suit,
despite the fact that, by definition, the receiver was appointed
to the position by a court acting in its judicial capacity. So,
too, did the Supreme Court in its decisions treating a receiver
as an embodiment of the company or enterprise he was
appointed to oversee and recognizing that he might be sued in
place of the company. See McNulta, 141 U.S. at 331-32 (“If
actions were brought against the receivership generally, or
                   MEDICAL DEVELOPMENT v. CDCR                       14739
against the corporation by name, ‘in the hands of’ or ‘in the
possession of’ a receiver, without stating the name of the indi-
vidual, it would more accurately represent the character or
status of the defendant.”), id. at 332 (“Actions against the
receiver are in law actions against the receivership . . . . As
the right given by the statute to sue for the acts and transac-
tions of the receivership is unlimited, we cannot say that it
should be restricted to causes of action arising from the con-
duct of the receiver against whom the suit is brought or his
agents.”); see also Thompson, 328 U.S. at 138 (explaining
that a suit against a trustee for operation of the estate’s trains
could be maintained against the trustee under § 959(a)’s pre-
decessor statute); Atl. Trust Co. v. Chapman, 208 U.S. 360,
370 (1908) (“Immediately upon . . . appointment and . . . qual-
ification of the receiver, the property passed into the custody
of the law, and thenceforward its administration was wholly
under the control of the court by its officer or creature, the
receiver.”).

   [10] Based on the order of the Northern District, the
Receiver took charge of CDCR and all of its assets. In this
position he has managed CDCR as an ongoing enterprise. He
is not automatically entitled to immunity when sued, under
§ 959(a), for acts taken in operating CDCR in a usual manner.
MDI’s claim does not challenge his authority as a Receiver,
nor does it seek to recover for any act for which specific
instructions were received from the court.4 The Northern Dis-
trict could not simply declare CDCR immune from legal obli-
gations. Neither could it assign plenary power to the Receiver
to refuse to permit CDCR to pay its legal obligations. Judicial
immunity does not extend to everything a receiver may do in
  4
    As we have remarked before in a somewhat similar situation, “We . . .
find noteworthy that [the Receiver] did not argue before the district court,
or in his brief before this court, that he sought instruction or guidance or
even brought the precise legal question to the attention of the [Northern
District] court.” United States v. Hemmen, 51 F.3d 883, 891 (9th Cir.
1995).
14740           MEDICAL DEVELOPMENT v. CDCR
the course of performing his responsibilities or to every kind
of lawsuit that might be filed against a receiver in an official
capacity. See Forrester v. White, 484 U.S. 219, 229-30 (1988)
(holding that a judge’s discharge of a probation officer was an
administrative action that did not allow for absolute immu-
nity); United States v. Hemmen, 51 F.3d 883, 891-92 (9th Cir.
1995) (holding that a bankruptcy trustee is not entitled to judi-
cial immunity for failing to honor an IRS levy).

   [11] The authorities cited by the Northern District in sup-
port of its contrary conclusion are distinguishable because
they deal with a different kind of challenge. In New Alaska
Development Corporation v. Guetschow, for example, the
receiver was sued by those whose property was the subject of
the receivership. 869 F.2d at 1299; see also Mullis v. U.S.
Bankr. Court, 828 F.2d 1385, 1386-87 (9th Cir. 1987)
(involving a bankruptcy trustee but otherwise presenting the
same situation). In such a case the plaintiffs were effectively
challenging the appointment itself and the receiver’s authority
to act generally. See New Alaska Dev. Corp., 869 F.2d at
1300-05; Mullis, 828 F.2d at 1390-91; see also Balser v.
Dep’t of Justice, 327 F.3d 903, 910 (9th Cir. 2003) (“[I]t is
important to note that most of the acts that the Balsers allege
were unlawful . . . were approved by the bankruptcy court.”).
In contrast, here, where MDI is seeking damages for the
Receiver’s refusal to pay for services MDI performed under
contract with CDCR, MDI is doing no more than challenging
the Receiver’s specific actions in operating CDCR as an
ongoing enterprise. A receiver is not immune in his official
capacity from such a claim.

III.    Conclusion

   [12] We affirm the Eastern District’s exercise of jurisdic-
tion over MDI’s suit after the Receiver removed the case
under 28 U.S.C. § 1442(a). We reverse, however, the Eastern
District’s dismissal of that action based on its holding that the
statutory exception to the Barton rule does not apply. Section
               MEDICAL DEVELOPMENT v. CDCR               14741
959(a) encompasses a contract law claim like that brought
against the Receiver and CDCR by MDI. We also reverse the
Northern District’s holding that the Receiver has absolute
immunity when sued in his official capacity.

   We remand the action previously pending in the Eastern
District back to that district court. In doing so, though, we
note that nothing in this opinion prevents the Eastern District
from coordinating with or, if appropriate, transferring the
action to the Northern District.

   AFFIRMED in part; VACATED in part; REMANDED
to the U.S. District Court for the Eastern District of Cali-
fornia.