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Iraqi plaintiffs in Blackwater case may get trial in Wake County

By PAUL THARP, Staff Writer

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Foreign plaintiffs suing the N.C.-based company formerly known as Blackwater Security Consulting are prepared to return to Wake County Superior Court after a federal judge remanded the case from the U.S. District Court for the Eastern District of North Carolina.

Remand of Brady v. Xe Services LLC (Lawyers Weekly No. 11-02-0115, 9 pp.) to Wake County, at least as Charlotte attorney Gary Mauney sees it, is a victory.

Mauney represents a number of foreign plaintiffs who were injured and the estates of others killed on Sept. 16, 2007, when Blackwater contractors who were performing a support mission for the Department of State “fired upon, killed, and seriously injured a group of civilians” in Baghdad, according to the remand order.

The plaintiffs brought suit against Blackwater – now known as Xe – and a number of corporate and individual defendants for wrongful death, negligence and other causes of action in Wake County in September 2009. The defendants then removed the action to federal court.

Normally cases are removed to federal court on the bases of diversity or federal question jurisdiction. But in Brady, removal was premised on the rarely used federal-officer jurisdiction.

The Xe defendants argued that since they were tasked with security-based assignments on behalf of the State Department that had traditionally been undertaken by government employees, they were acting as federal officers under applicable statutes.

The court has not determined whether Xe met the standard for federal-officer jurisdiction. In order to remove the case, they had only to demonstrate that they had a “colorable” argument.

Once the case had been removed, the defendants brought motions to dismiss the suit, citing various grounds for dismissal, including that the plaintiffs lacked standing.

“Standing,” U.S. District Judge Terrence W. Boyle wrote in his remand order, “has two distinct components: [the Constitution’s] Article III case-controversy requirement and prudential limitations imposed by courts.”

One established prudential standing doctrine “precludes nonresident aliens from suing in United States courts for injuries sustained outside the United States,” Boyle added.

The nonresident aliens in Brady, Judge Boyle concluded, “do not fall within any of the exceptions to the prudential bar on nonresident-alien standing. Plaintiffs are citizens and residents of Iraq suing for damages purportedly sustained in Iraq.”

Their claims are “governed not by any United States statute, but instead by Iraqi tort law,” he noted.

        Boyle also noted that the plaintiffs had no contact with the United States except with interactions with private citizens.

                Mauney said federal courts regularly interpret and apply substantive state law. Regarding the standing of the Brady plaintiffs to sue, he wrote in a case filing that “North Carolina law has long provided nonresident foreign plaintiffs with access to its courts. An alien friend, either resident or nonresident, may maintain a suit in the North Carolina courts without any special statutory authority; such was the rule of the early common law, and such is the rule today.”

But, Judge Boyle wrote, “North Carolina’s permissive policy … does not, itself, confer standing on those same plaintiffs in federal court. It is settled law that state standing rules, like the ones invoked by plaintiffs, do not apply in federal court.”

Without standing, Boyle concluded, the federal court lacked subject-matter jurisdiction over the plaintiffs’ claims. Because the court lacked subject-matter jurisdiction, it granted the defendants’ Rule 12(b)(1) motion to dismiss.

But the dismissal did not end the case.

“We didn’t bring any claims in federal court,” Mauney said. “We were in federal court based purely on the defendants’ removal and defenses they raised under federal statutes.”

Judge Boyle wrote that a federal court that determines “it lacks subject-matter jurisdiction over a case that originated in state court and was removed to federal court … is bound by law to remand the case to the state court where the action originated.”

So Judge Boyle remanded the case to Wake County.

“That’s where it ought to be heard,” said Mauney. “Our claims are wrongful death claims brought under North Carolina or Iraqi law. Those claims should be heard in state court.”

Mauney explained that aside from common law precedent providing nonresident foreign plaintiffs access to North Carolina courts, G.S. § 1A-1, Rule 44.1 gives trial courts the discretion to consider  foreign law, as long as the party intending to use foreign law provides reasonable written notice of its intent to do so, “which we have done in this case.”

He added that North Carolina courts frequently apply foreign law in contract disputes and other commercial matters that involve foreign corporations.

“The rules don’t change just because we’re dealing with foreign individuals as opposed to corporations. I’m not stipulating that foreign law has to apply. If the court finds that it is unjust to apply foreign law, then it is free on policy grounds to apply an analogous state law,” Mauney said.

But the state trial court may not have to decide between foreign and state law in Brady.

The defendants filed on Jan. 28 an emergency motion for reconsideration of Judge Boyle’s remand order, or alternatively, to vacate or stay the remand while the motion is pending

In the motion, the defendants argued that when, “as here, a case is removed under [28 U.S.C. § 1442(a)(1)], [the] plaintiffs’ lack of standing requires dismissal, not remand.”

Mauney wrote in opposition to the defendants’ motion to reconsider that the emergency motion is “baseless” and subject to summary dismissal by the court. 

The In re: Lowe, 102 F.3d 731 (4th Cir. 1996) case, Mauney wrote in a memorandum,  “bars reconsideration of remand orders premised on subject-matter jurisdiction. In deciding whether to remand, the district court has one shot, right or wrong.”

Judge Boyle has set a hearing on the defendants’ motion to reconsider for Feb. 16.



Opinion Brief


Case name: Brady, et al. v. Xe Services LLC, et al.

Court: E.D.N.C.

Judge: Judge Terrence W. Boyle

Date: Jan. 25, 2011

Plaintiff’s attorney: Paul R. Dickinson Jr., Gary V. Mauney (Charlotte), Brooke N. Albert and James A. Roberts III (Raleigh), all of Lewis & Roberts

Defendants’ attorneys: Mary K. Mandeville (Charlotte) and Andrew J. Pincus (Washington, D.C.) of Mayer Brown; Peter H. White of Schulte Roth & Zabel, (Washington, D.C.); Paul K. Sun Jr. of Ellis & Winters, (Raleigh); Keith Harrison Johnson of Poyner Spruill, (Raleigh).

Issue: Do foreign plaintiffs have standing to sue domestic defendants where the domestic defendants were employed overseas as security contractors and allegedly injured or killed the plaintiffs in the course of security operations in a foreign country?

Holding: No, the prudential standing doctrine precludes nonresident aliens from suing in U.S. courts for injuries sustained outside the country, and the plaintiffs do not fall within any of the exceptions to the prudential bar on nonresident alien standing. The case is remanded to Wake County Superior Court, where it was filed.

Opinion digest: See Page 22

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