[00:00:00] Speaker 00: Good morning. [00:00:01] Speaker 00: May it please the court, Gretchen Nelson on behalf of the plaintiffs and the appellants. [00:00:07] Speaker 00: I think it's fair to say that the facts of this case are known to many in this courtroom irrespective of this lawsuit. [00:00:18] Speaker 00: This case arises out of a fire on the Conception, a dive boat that was off the shore of Santa Barbara near the Channel Islands that burned [00:00:29] Speaker 00: with 39 people on board, killing 34 and injuring one. [00:00:36] Speaker 00: And as often occurs after a tragedy like this, changes were implemented. [00:00:42] Speaker 00: Those changes were done through Congress, changes that were statutory as well as regulatory. [00:00:51] Speaker 00: Those are not at issue here today, but there's another change that we believe [00:00:58] Speaker 00: is critical for this court to consider. [00:01:00] Speaker 00: The families of the victims filed lawsuits against the government under the Suits and Admiralty Act, a statute enacted by Congress in 1920 and amended in 1960. [00:01:16] Speaker 00: That statute is essentially Congress's recognition that it is going to waive immunity [00:01:27] Speaker 00: without exception for lawsuits that may be brought against the United States as well as lawsuits that the United States can bring. [00:01:38] Speaker 00: It's a statute that is the essential sue and be sued statute. [00:01:44] Speaker 00: There is no language in the Suits and Admiralty Act carving out an exception for discretionary functions. [00:01:53] Speaker 00: And in fact, the Federal Tort Claims Act, which does include the discretionary function exception, excludes lawsuits brought under the Suits and Admiralty Act. [00:02:13] Speaker 00: The language of the Suits and Admiralty Act is very simple. [00:02:18] Speaker 00: In a case in which if a vessel were privately owned or operated, [00:02:23] Speaker 00: or if cargo were privately owned or possessed, or if a private person or property were involved, a civil action in admiralty could be maintained, a civil action in admiralty, in personam, may be brought against the United States. [00:02:42] Speaker 00: Or, and I think this is significant, a federally owned corporation. [00:02:49] Speaker 00: So under the SIAA, Congress made very clear, we're not going to carve out an exception, and we're going to make it apply not just to the United States, but to any federally owned corporation, the same type of corporation that was in issue in the Thacker case issued by the United States Supreme Court in 2019. [00:03:14] Speaker 00: There, the court held [00:03:18] Speaker 00: that the Tennessee Valley Authority Act, another sue and be sued act, which did not carve out an exception for discretionary function. [00:03:28] Speaker 00: And the Supreme Court said, after the district court and the court of appeal read the discretionary function exception into that act, that that was wrong. [00:03:40] Speaker 00: There is no basis for implying the discretionary function exception into a statute [00:03:48] Speaker 00: either like the Tennessee Valley Authority Act or the Suits and Admiralty Act, where Congress never intended it in the first place. [00:03:58] Speaker 00: As this Court is well aware, the starting point for the interpretation of a statute is the text. [00:04:07] Speaker 00: And we read that text with giving respect to what Congress intended when they wrote it. [00:04:15] Speaker 00: There are historically many significant aspects of the Suits and Admiralty Act that were different from the TVA Act, among them the fact that the Federal Tort Claims Act was enacted in the 1940s. [00:04:32] Speaker 00: And as I mentioned earlier, the Suits and Admiralty Act was enacted in 1920. [00:04:37] Speaker 00: Congress decided to amend the Suits and Admiralty Act in 1960, 14 years later, and never [00:04:45] Speaker 00: incorporated an exception for discretionary function. [00:04:48] Speaker 04: Counsel, so what's your response to the argument that, well, factor is different because that does involve a private, a federally owned corporation versus here in this case, which is the federal government? [00:04:59] Speaker 00: The fact that the TVA was a federally owned corporation is meaningless. [00:05:03] Speaker 00: It doesn't make any difference to the facts and the interpretation that the court has to address. [00:05:10] Speaker 00: The SIA did not carve out an exception. [00:05:13] Speaker 00: And the United States Supreme Court in Thacker said, we don't read that into it. [00:05:18] Speaker 00: Congress, if it wants to waive immunity without exception, has the right to do that. [00:05:26] Speaker 00: quasi-corporate entity in the TVA is meaningless. [00:05:30] Speaker 00: Among other things, as I just mentioned, the Suits and Admiralty Act itself makes clear that it applies, with that exception, both to the United States as well as to any federally owned corporation. [00:05:43] Speaker 04: Yeah, the argument is almost stronger in the SIAA because it's very clear, whereas in the TVA, it's sue and be sued, which requires some interpretation, right? [00:05:52] Speaker 04: And it has implied exceptions and things of that nature. [00:05:55] Speaker 02: That's correct. [00:05:56] Speaker 02: And the Thacker itself reflects a distinction because Thacker didn't conclude that there could be no discretionary function exception. [00:06:09] Speaker 02: And indeed, it appeared to recognize the possibility when it's in connection with governmental activities of a kind not typically carried out by private parties. [00:06:22] Speaker 02: And so the decision was ultimately to remand [00:06:26] Speaker 02: to the lower courts to figure out whether this was the TVA in the same capacity as a private corporation supplying electricity or functioning as a governmental agency. [00:06:41] Speaker 02: And I think the distinction is relevant here. [00:06:45] Speaker 02: In this case, what's alleged to be the deficient action of the Coast Guard [00:06:52] Speaker 02: isn't its actions as a private vendor. [00:06:55] Speaker 02: It wasn't running the boat. [00:06:58] Speaker 02: It's its actions as a regulator. [00:07:01] Speaker 02: So I'm not sure I understand how Thacker doesn't maintain the same kind of distinction that's been asserted by the government here. [00:07:09] Speaker 00: Because, Your Honor, in Thacker, what the court made very clear is trying to import the discretionary function exemption, which is broader [00:07:20] Speaker 00: than what the court in Thacker undertook to review ultimately and remanded to the district court for further consideration. [00:07:31] Speaker 00: The discretionary function exception captures so much and I think this court has probably grappled with any number of cases under the FTCA where it addresses that. [00:07:44] Speaker 00: All the court in Thacker said, [00:07:46] Speaker 00: is that under separation of powers principles and under a strict textual reading of the statute, you cannot read discretionary function exception into it. [00:07:57] Speaker 00: What the court ultimately came around to in Thacker is a recognition that the federal housing authority and Burt case that was a US Supreme Court case from some years before recognizes that in certain instances, [00:08:16] Speaker 00: that where, for example, there may be an implied exception that can be considered in circumstances where there is a, quote, clear showing of a grave impediment into governmental function. [00:08:42] Speaker 00: That is far different from the discretionary function exception that is written into the Federal Tort Claims Act. [00:08:50] Speaker 00: And I think the significance is important for this court because we never should be getting to the question here of whether the Coast Guard is given a pass for its regulatory failures in this case under the DFE. [00:09:09] Speaker 00: Whether or not on remand, [00:09:11] Speaker 00: The district court should consider the question of whether or not there is a clear showing of a grave undermining of governmental functions is a different standard than what we are presented here today with the DFA. [00:09:29] Speaker 02: You acknowledge that what the Coast Guard is being, you're attempting to hold the Coast Guard liable for was activities in the form of [00:09:39] Speaker 02: of government activity, of regulatory activity, as distinguished from being the operator of a ferry, for example. [00:09:46] Speaker 00: Yes, absolutely, Your Honor. [00:09:48] Speaker 00: There is no question about that. [00:09:49] Speaker 02: I'm not sure I understand how, I mean, it may well be that the separation of powers, articulation, results in something that's not exactly equivalent to the discretionary function exception. [00:10:02] Speaker 02: But I don't understand how Thacker removes the discretionary function [00:10:08] Speaker 02: exception intended to protect the government as regulator from the equation. [00:10:17] Speaker 00: The issue becomes simply the language of the statutes. [00:10:23] Speaker 00: The federal tort claims statute and graphs in it express language for discretionary functions. [00:10:31] Speaker 00: That language has been interpreted by this court in any number of cases. [00:10:37] Speaker 00: The Thacker [00:10:38] Speaker 00: opinion and in that opinion the Supreme Court made very clear you can't take that language that provision that element of a statute and take it and put it over into the suits of the TVA act where it never existed so that all of the body of law that has developed under the discretionary function exception would not apply [00:11:08] Speaker 00: All the court in Thacker said is that separation of powers will not permit it. [00:11:16] Speaker 00: Textual, strict reading of the text of the statute will not permit it. [00:11:23] Speaker 00: And in the event that there is some concern that there may be some grave interference with governmental function, the courts could look to an implied exception from the Burr case. [00:11:38] Speaker 04: I'm curious, the way I read Thacker is that that borrower only comes to play when you're using the specific language of sue and be sued, because this court has recognized a be sued clause might contain implied exceptions. [00:11:52] Speaker 04: In this case, we don't have a sue and be sued clause. [00:11:54] Speaker 04: We just have a very broad waiver of sovereign immunity. [00:11:58] Speaker 04: So the way I read Thacker is that all of that discussion is irrelevant to this case. [00:12:03] Speaker 00: I would agree with the court. [00:12:05] Speaker 00: I think that [00:12:07] Speaker 00: It is fair to say that there are concerns that can be expressed, and Judge Clifton has eloquently expressed them. [00:12:16] Speaker 00: The government is performing a regulatory function when it is inspecting vessels. [00:12:21] Speaker 00: That regulatory function is mandated by statute, as well as regulations. [00:12:26] Speaker 00: And there can be, viscerally, as well as a well-expected concern that [00:12:36] Speaker 00: second-guessing the government may not be appropriate. [00:12:41] Speaker 00: And setting aside the validity or the invalidity of that, the point, Judge Bumate, that you're saying is correct. [00:12:49] Speaker 00: You look at what the statute is. [00:12:51] Speaker 00: If Congress in 1920 and in 1960 decided they were waiving immunity across the board, our job, your job, [00:13:04] Speaker 00: is to read that as it is written. [00:13:07] Speaker 00: And as it is written, it makes clear there's not an exception. [00:13:13] Speaker 00: There's not an exception certainly for discretionary function. [00:13:19] Speaker 00: And while you may want to graft on some sort of implied exception to countenance what might be concerns over imposing liability on the government, the best you can do potentially [00:13:33] Speaker 00: would be, as the dissent Judge Ludig and McMillan said, you can address this under a political question doctrine. [00:13:45] Speaker 00: You could address it in that context and say, okay, in this particular case, this case [00:13:52] Speaker 00: We're not going to address as judges because we do not have the ability to because it really imposes questions that really are decided more by the executive and the congressional branches. [00:14:07] Speaker 00: That's one way to handle it. [00:14:11] Speaker 00: The other way is to potentially expand the BRRR, which in the BRRR case, that was the Federal Housing Authority, which again was a quasi-corporate [00:14:21] Speaker 00: entity or quasi-governmental entity, corporate entity, and take that implied restriction. [00:14:31] Speaker 00: But that implied restriction is a high bar, as Justice Kagan stated in Thacker. [00:14:39] Speaker 00: And certainly, I don't believe that has been met here, but even at a minimum, the case should be remanded to the district court for further proceedings. [00:14:51] Speaker 00: I know my time is short, and I would like to turn briefly to the question of the issue of the discretionary function exception, which was applied by the court in dismissing the case. [00:15:08] Speaker 00: And in this case, we believe very strongly that the actions of the government did not fall within any exception. [00:15:17] Speaker 00: There were a multitude of statutory mandates [00:15:20] Speaker 00: that are all outlined in our briefs and in the government's brief. [00:15:24] Speaker 00: There were a multitude of regulations, regulations addressing things like plastic trash cans, which, as the record reflects, was the source of the fire that the government proved in the criminal case against Captain Boylan. [00:15:41] Speaker 00: There were plastic chairs that should not have been there, and there were electrical deformities. [00:15:50] Speaker 00: What the Coast Guard, and I understand this, this is a case like no other. [00:16:00] Speaker 00: And there is no person out there that wants to be the person accepting responsibility for what happened. [00:16:07] Speaker 00: The Coast Guard's concerns, the Coast Guard's defense of their inspectors can be understood in that context. [00:16:16] Speaker 00: But when you go back to what the statutes say, [00:16:19] Speaker 00: and what the regulations say, the Coast Guard failed and the case should not have been dismissed under the DFE. [00:16:29] Speaker 00: That doesn't mean that at the end of the day the Coast Guard will be found liable. [00:16:37] Speaker 00: It simply means that there will be a trial on all of the issues and a court finding as to whether or not the Coast Guard failed. [00:16:48] Speaker 00: And with that, if I could reserve time for rebuttal. [00:16:51] Speaker 03: We'll give you the time you've got right there, a little over three minutes. [00:16:53] Speaker 03: Thank you, counsel. [00:16:54] Speaker 00: Thank you, your honor. [00:17:11] Speaker 01: May it please the court? [00:17:12] Speaker 01: Jill Rosa representing the United States. [00:17:16] Speaker 01: The district court correctly ruled that the challenge conduct falls within the discretionary function exception. [00:17:22] Speaker 01: The United States has not waived its sovereign immunity for this action, and the court lacked subject matter jurisdiction. [00:17:29] Speaker 01: We ask that the court affirm. [00:17:31] Speaker 01: I'd like to address both prongs of the discretionary function exception. [00:17:35] Speaker 01: I'd also like to give a brief overview of the Coast Guard's Marine Safety Program. [00:17:41] Speaker 01: The Coast Guard and its predecessor agencies have spent 180 years [00:17:46] Speaker 01: designing and implementing a marine safety program. [00:17:49] Speaker 01: They have a limited number of inspectors. [00:17:53] Speaker 01: With that limited number of inspectors, they oversee a very large industry. [00:17:57] Speaker 01: They're overseeing a multi-billion-dollar industry. [00:18:00] Speaker 01: They inspect not just small passenger vessels, like in this case, but also cargo ships, large oil tankers, cruise ships, and the overarching principle of the marine safety program. [00:18:14] Speaker 01: is that the burden of compliance always remains on the owner and operator of the vessel. [00:18:20] Speaker 01: The owner and the operator of the vessel must comply with the minimum safety standards and the regulations, must comply with the terms of the certificate of inspection that allows them to operate. [00:18:32] Speaker 01: And why is it like this? [00:18:34] Speaker 01: Because the owner and operator is on that vessel every day. [00:18:38] Speaker 01: They are sailing the vessel. [00:18:39] Speaker 01: They're using it. [00:18:40] Speaker 01: They're seeing what's working, what's breaking. [00:18:43] Speaker 01: They are there every day. [00:18:44] Speaker 01: The Coast Guard is there for once a year for an annual inspection, maybe twice a year if there's a hull inspection. [00:18:51] Speaker 01: So the Coast Guard's visiting for a few hours once a year, getting a snapshot in time of the condition of this vessel on this particular day, while the owner and operator must maintain compliance at all times. [00:19:05] Speaker 01: So looking at the first prong of the exception, the question for the court to address is whether there is a mandate so specific [00:19:12] Speaker 01: that the Coast Guard had no option but to adhere to it? [00:19:16] Speaker 01: And the answer is no. [00:19:18] Speaker 01: And the way you can look at this is you look at the statute, you look at the regulations, you look at the published manual in this case. [00:19:25] Speaker 01: The statute is in Chapter 33 of the shipping code 46 USC. [00:19:30] Speaker 01: It's very broadly worded telling the Coast Guard, go and create a marine safety program, create minimum safety standards, inspect for it. [00:19:40] Speaker 01: and that the owners and operators must comply with those standards. [00:19:43] Speaker 01: It's creating this program. [00:19:45] Speaker 01: Then you look at the regulations there. [00:19:47] Speaker 01: If you read them as a whole, especially under subchapter T, telling the owner and operator how this program is going to work. [00:19:54] Speaker 01: You're going to have an inspected vessel. [00:19:55] Speaker 01: We are going to inspect you. [00:19:57] Speaker 01: You have to call and schedule it. [00:19:59] Speaker 01: We will come and we will check. [00:20:01] Speaker 01: Here's the way you can appeal if you disagree with what we tell you. [00:20:04] Speaker 01: It kind of lays out how the whole program is going to work. [00:20:07] Speaker 01: And then it goes on to list [00:20:09] Speaker 01: hundreds or thousands of these minimum safety standards that the vessel has to comply with. [00:20:14] Speaker 04: So Council, I think you have a good argument there, but that's only relevant if the discretionary function exception applies, correct? [00:20:26] Speaker 01: What is only relevant if the discretionary function exception? [00:20:29] Speaker 04: Whether or not the regulations provide a mandatory regime to the Coast Guard or to the owners and operators of the boats. [00:20:39] Speaker 01: Correct. [00:20:40] Speaker 04: So first we have to decide whether or not the discretionary function exception applies. [00:20:45] Speaker 01: Yes. [00:20:45] Speaker 01: Would you like me to address the thacker? [00:20:46] Speaker 04: Yes, please. [00:20:47] Speaker 01: OK. [00:20:49] Speaker 01: I've been thinking about this a little bit since we filed the briefs. [00:20:51] Speaker 01: And they didn't raise this issue below. [00:20:54] Speaker 01: And I know your honors are far more qualified than I am to decide if you want to address an issue that was not raised below. [00:21:00] Speaker 01: But I point out that this is a very large litigation. [00:21:03] Speaker 01: There are many parties. [00:21:05] Speaker 01: in related cases. [00:21:07] Speaker 01: There's a criminal case. [00:21:08] Speaker 01: There are two cases in federal district court. [00:21:10] Speaker 01: There's a case in state court with 70 defendants. [00:21:13] Speaker 01: And the district judge has the job of creating a case management plan that addresses this large [00:21:20] Speaker 01: multi-party tragic accident lawsuit. [00:21:24] Speaker 01: And what happened was this case was stayed for a while because of the criminal case. [00:21:29] Speaker 01: And the district judge wanted to move it along, so he issued a limited removal of part of the state only to allow the discretionary function exception issue to be resolved. [00:21:39] Speaker 01: So he lifted the state for that issue. [00:21:41] Speaker 01: We did seven months of discovery. [00:21:43] Speaker 01: We briefed this issue. [00:21:44] Speaker 01: It's been a year and a half now focused only on that issue. [00:21:48] Speaker 01: And the reason I question whether you want to address it is because I wonder if the district court's case management plan might have been different if he had known they were going to raise the argument that this whole doctrine of discretionary function should be tossed out. [00:22:03] Speaker 01: Perhaps he would have asked for additional theories to be raised by the government. [00:22:07] Speaker 01: Perhaps he wouldn't have opened it to so much discovery. [00:22:10] Speaker 01: I don't know, but it seems, I don't know if it's the right word, but slightly disrespectful for him to spend all this time [00:22:17] Speaker 01: adjudicating this case and managing this case as complex litigation than for a new argument to come in at this point. [00:22:24] Speaker 01: So one ground for you not to even deal with this is it was not raised below. [00:22:29] Speaker 01: And I do think it's unusual for it to be considered at this point because it's such a dramatic argument. [00:22:35] Speaker 01: And it was available to them before. [00:22:36] Speaker 01: Thacker is not a new case. [00:22:38] Speaker 01: Thacker has been around since 2019. [00:22:41] Speaker 01: So they could have raised this argument below. [00:22:43] Speaker 01: It might have affected the course of litigation. [00:22:45] Speaker 01: But I would also say that Earl's case is good law in this circuit. [00:22:49] Speaker 04: Just a response to your waiver argument. [00:22:51] Speaker 04: It is a jurisdictional question, right? [00:22:53] Speaker 04: And so shouldn't we, aren't we always obligated to consider the jurisdictional questions? [00:22:59] Speaker 01: You do. [00:23:00] Speaker 01: It's a jurisdictional question. [00:23:01] Speaker 01: You do have that discretion if you wish to look at it. [00:23:04] Speaker 01: I'm just pointing out another grounds for why. [00:23:08] Speaker 03: But to be clear, it's not an Article III jurisdictional question. [00:23:11] Speaker 03: correct it's not it doesn't go to the power of this court to hear the case is whether it's more of a statutory jurisdiction question correct which we don't just with this work we're talking about the jurisdiction that were determined court said means lots of different things that's right but continue so you were mentioning the roles case that's what i was going to ask about so we've got our roles for all says it applies you've got factor you know i can see why they think factor and are also not exactly [00:23:39] Speaker 03: They're not quite on the same page. [00:23:43] Speaker 03: Tell me why Thacker is not clearly irreconcilable with Earls, because in my mind, that's what this case turns on, is if Earls is good law, I think you win. [00:23:54] Speaker 03: If Earls is bad law, well, then it's tough. [00:23:58] Speaker 01: And Earls is the law of the circuit. [00:24:00] Speaker 01: Earls is the law. [00:24:02] Speaker 01: The Earls finding is the law of the whole country, of every circuit to have looked at this. [00:24:06] Speaker 01: It's unanimous at this point. [00:24:08] Speaker 01: So this would be creating a circuit split. [00:24:10] Speaker 01: Should the court choose differently from every other circuit to look at it so far? [00:24:15] Speaker 01: When in the Thacker case, I turn to the final page of the Thacker case. [00:24:20] Speaker 01: That's 139, Supreme Court Reporter 144. [00:24:24] Speaker 01: And the court concludes, only if the conduct at issue is governmental might the court decide that an implied limit on the sue and be sue clause bars the suit. [00:24:34] Speaker 01: So first of all, the Coast Guard is not a sue and be sue. [00:24:37] Speaker 01: entity. [00:24:38] Speaker 01: It is like the opposite of a sue and be sued entity. [00:24:40] Speaker 04: That's what makes Thacker even more on point than Thacker, if that's possible, because the TVPA had a sue and be sued language, which everyone recognized has implied exceptions, whereas the SIAA is as clear as day that there is no exceptions. [00:24:58] Speaker 04: So why shouldn't we just apply the text, which is what Thacker is telling us to do? [00:25:04] Speaker 01: Every court to address this has done so, Your Honor, and it gets into, I believe, most of the courts. [00:25:09] Speaker 04: But before Thacker, not post-Thacker, right? [00:25:12] Speaker 04: And the 11th Circuit just said that they should consider revisiting their president post-Thacker. [00:25:19] Speaker 01: So post-Thacker, Your Honor, I would say looking at that sentence and what the Supreme Court said, what we're talking about in this case is a governmental function. [00:25:27] Speaker 01: We are talking about, as the court said, in Bayard Airlines. [00:25:31] Speaker 01: The United States acting as a regulatory body, regulating the conduct of private individuals. [00:25:37] Speaker 01: And in Varig Airlines, which is remarkably on point, the Supreme Court said, again, it was in the FTCA, but they said this is governmental conduct of the type that the United States has not waived its sovereign immunity. [00:25:49] Speaker 01: This case is exactly like Varig Airlines. [00:25:51] Speaker 01: So when you look at that case. [00:25:53] Speaker 04: What was the language in that case? [00:25:57] Speaker 01: Yes, that was an FTCA case. [00:25:59] Speaker 04: Oh, so there was statutory command for a discretionary waiver, correct? [00:26:05] Speaker 01: Yes, under the FTCA 26 ADA. [00:26:08] Speaker 01: But when you look at the Thacker case, they're talking about to consider whether it was governmental conduct. [00:26:13] Speaker 01: So there was an electric utility. [00:26:15] Speaker 01: They were not doing governmental work at the time. [00:26:18] Speaker 01: This case is very different in the fact that, in terms of the language of air airlines, the Coast Guard was regulating the conduct of private individuals. [00:26:26] Speaker 01: They were creating this marine safety program. [00:26:29] Speaker 01: They are educating mariners. [00:26:31] Speaker 01: They are licensing mariners. [00:26:32] Speaker 01: They are creating minimum safety standards. [00:26:34] Speaker 01: They are inspecting for compliance with those standards. [00:26:37] Speaker 01: This is the type of governmental function that Embarg Airlines said the discretionary function exception would apply. [00:26:45] Speaker 04: What you're arguing, my view is that all that discussion of burr and that type of grave interference with the government, it only applies when there is a sue and be sued clause, not when there's an express waiver of sovereign immunity. [00:27:00] Speaker 01: That seems correct to me, Your Honor. [00:27:04] Speaker 03: Okay. [00:27:04] Speaker 03: Counsel, let me ask you this. [00:27:05] Speaker 03: Since Thacker was decided, [00:27:08] Speaker 03: Are you aware of any cases other than the district court in the 11th Circuit that Judge Bumutage has referenced? [00:27:14] Speaker 03: Are you aware of any published decisions that have really talked about this issue? [00:27:19] Speaker 01: With respect to the Suits and Ambulance Act? [00:27:21] Speaker 03: Yes. [00:27:22] Speaker 01: Only this case in the 11th Circuit Jones versus something where someone struck a duck blind. [00:27:30] Speaker 03: Right, right, right. [00:27:30] Speaker 03: That's the 11th Circuit case that [00:27:33] Speaker 03: Chief Judge Pryor, it's a very odd procedural position, but he issued a statement basically saying we may not want to take a look at this again. [00:27:41] Speaker 03: Other than that case, are you aware of any cases that deal with this issue? [00:27:46] Speaker 03: No, Your Honor. [00:27:48] Speaker 03: As far as you know, it hasn't come up. [00:27:49] Speaker 01: It has not come up, and it would be my office that would handle it, so I know there are no more. [00:27:53] Speaker 01: You would know. [00:27:54] Speaker 01: Okay, fair enough. [00:28:00] Speaker 01: So I would like to, I guess, finish concluding prong one and then prong two, unless there are other questions on the Thacker issue. [00:28:08] Speaker 01: All right, finally, with respect to prong one, when we were looking at whether there was a specific mandate, we look at the statute, we look at the regulations, we look at the manual. [00:28:17] Speaker 01: None of these place a binding mandate on the inspector, in this case, to have inspected any particular item, identified any particular item as a violation of the minimum safety standards. [00:28:30] Speaker 01: in the regulation. [00:28:31] Speaker 01: I would direct, Your Honors, to the Marine Safety Manual. [00:28:35] Speaker 01: In particular, that is the guide that the inspectors use. [00:28:38] Speaker 01: And you see in their guide, for example, page 580 of the record, the guide gives the inspectors great latitude. [00:28:45] Speaker 01: So the way the Coast Guard developed this program is to take inspectors and send them to inspector school. [00:28:52] Speaker 01: They do on-the-job training. [00:28:54] Speaker 01: They do an apprenticeship program. [00:28:56] Speaker 01: And then they become fully qualified to inspect. [00:28:59] Speaker 01: a wide variety of vessels, then the Coast Guard vests them with judgment to use their judgment, use their discretion to go and inspect vessels and look for what's happening on those vessels. [00:29:09] Speaker 01: And it's not a situation where they have a rote checklist to apply. [00:29:13] Speaker 01: They are expected to use their discretion and trained to use their discretion. [00:29:17] Speaker 01: I would also like to point out with respect to prong one, the complaint itself alleges that the Coast Guard abused its discretion in paragraph 132 [00:29:27] Speaker 01: So this district judge did a very careful job. [00:29:30] Speaker 01: He did allow seven months of discovery, but there is actually a facial allegation that the Coast Guard had discretion to issue the certificate at issue here. [00:29:38] Speaker 01: And I would like to point out the certificate and make sure the court has looked at the certificate of inspection, because that's the certificate that plaintiffs are saying this chief warrant officer should not have renewed, should not have issued to them. [00:29:51] Speaker 01: The certificate of inspection can be found at page 627 of the record. [00:29:57] Speaker 01: And I wanted to point out to the court that on the face of the certificate of inspection, which the master was required to have posted and visible at all times on the vessel, the certificate of inspection says that this vessel is good for use as long as the master posts a roving night watch when the bunks are occupied on the vessel. [00:30:18] Speaker 01: And in this case, the master did not do that, but that was one of the terms of the certificate that the Coast Guard issued to him. [00:30:27] Speaker 01: Turning to the second prong of the analysis is the policy prong. [00:30:32] Speaker 01: The court is making an objective, not a subjective, analysis. [00:30:36] Speaker 01: As the Gobert case said, the Supreme Court, you're looking at whether the conduct is susceptible to policy analysis. [00:30:43] Speaker 01: We're not looking at this actual conduct. [00:30:45] Speaker 01: We're looking at the type of conduct, the nature of the conduct. [00:30:49] Speaker 01: Is it policy-type conduct? [00:30:51] Speaker 01: We're not getting inside this inspector's mind on what he was doing that day. [00:30:55] Speaker 01: Was he actually balancing policy? [00:30:56] Speaker 01: No, we're looking [00:30:57] Speaker 01: in general and an objective level. [00:30:59] Speaker 01: The United States is entitled to a presumption on the second prong because we passed the first prong. [00:31:05] Speaker 01: Because Congress gave the Coast Guard this discretion, because Coast Guard gave the individual inspectors this discretion, we can presume that that was based on policy needs and therefore we have a presumption to pass this. [00:31:17] Speaker 01: And again, I would urge the Court to look at Varig Airlines. [00:31:21] Speaker 01: That case is remarkably on point with this one in terms of the aviation inspection program, which was mirrored off of [00:31:27] Speaker 01: the maritime safety program when it was first developed. [00:31:30] Speaker 01: So you see a lot of similarities between the aviation safety program and the marine safety program. [00:31:36] Speaker 01: And that case was also allegedly a fire in a trash can that they alleged that the agency should have inspected and should have noticed. [00:31:44] Speaker 01: And the Supreme Court said that this is exactly the type of conduct that is subject to sovereign immunity, that we have not waived our sovereign immunity for this. [00:31:52] Speaker 01: We draw the line here. [00:31:53] Speaker 01: This situation of regulating the conduct of private parties is exactly the discretionary conduct at issue. [00:32:00] Speaker 01: Two other cases I'd like to point out to the court that are very similar. [00:32:05] Speaker 01: The Cassins case from the Seventh Circuit was a very similar inspection of a vessel. [00:32:11] Speaker 01: And in that case, the plaintiff said that the Coast Guard inspector missed seeing a handrail. [00:32:17] Speaker 01: On a stairwell how could he not see it the handrail would have been there or not there when he went up and down those stairs it was just negligence of that inspector to miss that handrail and the Seventh Circuit said no this is discretionary conduct the inspector had discretion whether or not to inspect that handrail and decide whether it was in or out of compliance. [00:32:36] Speaker 04: That was my question. [00:32:38] Speaker 04: Is the argument that because it's an inspection and there's no direct command to look at every waste receptacle that that's why it's discretionary? [00:32:48] Speaker 04: Because the inspector can decide whether or not to look at this receptacle or not. [00:32:54] Speaker 04: Is that the basic discretion used here? [00:32:57] Speaker 01: It is, exactly. [00:32:58] Speaker 01: They have discretion to [00:33:00] Speaker 01: You know, they are trained, they are trained in what is most important and what they want to focus on, but each vessel is different. [00:33:06] Speaker 01: And they know these operators and, you know, these are very experienced inspectors. [00:33:09] Speaker 01: He can go out there and he knows this operator. [00:33:12] Speaker 01: He knows what issues have been coming up recently. [00:33:14] Speaker 01: He can decide I'm going to focus on the bilge pump this time and I'm going to really inspect that. [00:33:18] Speaker 01: Or he can decide this time I'm going to focus on the cable. [00:33:21] Speaker 01: You know, he has the discretion based on what he sees in front of him, what he's trained to do to focus on what he wants to focus on in that inspection. [00:33:29] Speaker 01: to promote the Marine Safety Program. [00:33:31] Speaker 01: That is exactly it. [00:33:35] Speaker 01: And I would also like to point out that this program, it's a partnership. [00:33:39] Speaker 01: They rely on the industry. [00:33:42] Speaker 01: The Licensed Master Mariner is required to report to the Coast Guard if he sees something wrong. [00:33:47] Speaker 01: He's there for the inspection. [00:33:49] Speaker 01: He can say we're not complying with code. [00:33:51] Speaker 01: He can say this is out of code. [00:33:53] Speaker 01: He's there and they are required at all times to tell the Coast Guard when they are out of compliance. [00:33:58] Speaker 01: So it's not like a game of gotcha by this inspector. [00:34:01] Speaker 01: He's there with the owners and operators looking around the vessel trying to see what needs to be done and what needs to be fixed. [00:34:08] Speaker 01: He has discretion to figure out what leeway he's going to give them to fix a problem if they spot one. [00:34:13] Speaker 01: Let's say he says that trash can needs to be replaced. [00:34:16] Speaker 01: Do it within the next year. [00:34:17] Speaker 01: You know, it doesn't have to be a no sale order automatically. [00:34:20] Speaker 01: There's just a lot of judgment discretion given to the Coast Guard to work with these people. [00:34:27] Speaker 01: It's 46 USC 3315 is the statute that places a mandate on the master of this vessel to disclose when the vessel's out of compliance. [00:34:37] Speaker 01: And that is just a critical part of the Marine Safety Program that the owner and operator has the burden of compliance and also has to participate in the Marine Safety Program. [00:34:48] Speaker 01: And if there are no other questions, I will conclude. [00:34:50] Speaker 01: To conclude, this case is a classic discretionary function scenario. [00:34:56] Speaker 01: And the district court correctly dismiss this action and we would request that this court affirm. [00:35:01] Speaker 03: Thank you, counsel. [00:35:18] Speaker 00: Thank you, your honors. [00:35:20] Speaker 00: I'd like to just briefly return to the question that [00:35:27] Speaker 00: I believe is the critical question, and that is whether or not the discretionary function exception should be imported into the Suits and Admiralty Act. [00:35:38] Speaker 00: And the points that were made by my very esteemed colleague, which related largely to a waiver argument, [00:35:48] Speaker 00: I think are inapt. [00:35:52] Speaker 00: This is an issue of subject matter jurisdiction. [00:35:54] Speaker 00: This Court is well aware that there can be no waiver of that. [00:35:58] Speaker 00: Issues of subject matter jurisdiction can be raised by the Court, can be raised on appeal, can be raised in the U.S. [00:36:05] Speaker 00: Supreme Court for the first time. [00:36:07] Speaker 00: In addition, the issue of Thacker is really an issue of an argument. [00:36:13] Speaker 00: It's not an issue. [00:36:14] Speaker 00: The question of whether the discretionary function exception applied in this case was addressed in the district court, ad nauseam, at length. [00:36:25] Speaker 00: And ultimately, the court ruled that the case should be dismissed for lack of subject matter jurisdiction. [00:36:32] Speaker 00: The fact that we are arguing Thacker in this court is of no moment that that particular case was not raised in the lower court, because it is an argument [00:36:43] Speaker 00: and arguments are preserved, it is issues that can be waived. [00:36:47] Speaker 00: So there are any number of reasons we've outlined them that there was no waiver here. [00:36:52] Speaker 00: There may also be some concern that this panel not address the question of Thacker in the context of Earls, as my colleague has pointed out. [00:37:03] Speaker 00: Earls is good law. [00:37:05] Speaker 00: That is correct, except where there is intervening higher authority that undermines or cannot be reconciled with the case that's before this court. [00:37:17] Speaker 00: I do not see how there can be any reconciliation between Earls and Thacker. [00:37:27] Speaker 00: The distinction that one is a sue and be sued statute as opposed to a statute that says the government can be sued [00:37:34] Speaker 00: and the government can sue in language that may come from the 1920s. [00:37:41] Speaker 00: The fact that this case addresses issues that are not related to a federally owned corporation are indistinguishable and not important to the ultimate question that the Supreme Court took up and has been taking up more and more, which is the strict textual [00:38:04] Speaker 00: adherence to what Congress wrote. [00:38:07] Speaker 00: And in this case, there can be no dispute, Congress in 1920 and again in 1960, 14 years after the FTC Act was implemented, chose not to carve out any exception for anything in the SIAA. [00:38:27] Speaker 00: And for that reason, you cannot, you can't make the argument that it's based on separation of powers. [00:38:34] Speaker 00: I would urge the court to consider the McMellan case from the Fourth Circuit. [00:38:38] Speaker 00: That is the most recent case addressing whether or not the DFE should be imported into the SIAA. [00:38:46] Speaker 00: That's an unbanked decision. [00:38:48] Speaker 00: The Fourth Circuit ultimately concluded they would apply the DFE to the SIAA over very vigorous dissent. [00:38:58] Speaker 00: And ironically, in that case, [00:39:01] Speaker 00: In the majority opinion, the court expressly held there is no carve out from the text of the SIAA for the DFE. [00:39:11] Speaker 00: The only way the court could get there was through an analysis under the separation of powers. [00:39:18] Speaker 00: And in Thacker, the Supreme Court made very clear that argument will not hold. [00:39:27] Speaker 00: As the court said, [00:39:30] Speaker 00: The court is wrong to think, the government is wrong to think that waiving the TVA's immunity from suits based on discretionary functions would offend the separation of powers. [00:39:47] Speaker 00: As the court explained in Burr, the scope of immunity that federal corporations enjoy is up to Congress. [00:39:55] Speaker 00: The body has the full power to endow [00:39:58] Speaker 00: such entity with the government's immunity from suit. [00:40:02] Speaker 00: And equally, it has the power to waive that immunity. [00:40:08] Speaker 00: And that is what Congress did in 1920 and again in 1960 in the SIAA. [00:40:15] Speaker 00: I would urge that the court hold that the DFE does not apply in this case and remand the case to the district court. [00:40:23] Speaker 00: Thank you. [00:40:24] Speaker 03: Thank you, counsel. [00:40:25] Speaker 03: Thanks to both of you for your briefing and argument. [00:40:28] Speaker 03: In an important case, this matter is submitted and we'll move on to the final case for today.