In re Fema Trailer Formaldehyde Prods. Liab. Litig. 

Decision Date23 January 2012
Docket Number10–30945.,Nos. 10–30921,s. 10–30921
Citation668 F.3d 281
PartiesIn re FEMA TRAILER FORMALDEHYDE PRODUCTS LIABILITY LITIGATION (MISSISSIPPI PLAINTIFFS).In re FEMA Trailer Formaldehyde Products Liability Litigation (Alabama Plaintiffs).
CourtU.S. Court of Appeals — Fifth Circuit

OPINION TEXT STARTS HERE

Gerald Edward Meunier, Justin I. Woods, Gainsburgh, Benjamin, David, Meunier & Warshauer, L.L.C., New Orleans, LA, Charles Edward Gibson, IV (argued), Hawkins, Stracener & Gibson, P.L.L.C., Bay Saint Louis, MS, for PlaintiffsAppellants.

Adam Michael Dinnell, Trail Atty. (argued), U.S. Dept. of Justice, Dept. of Environmental Torts, John Adam Bain, Sr. Trial Atty., U.S. Dept. of Justice, Civ. Div., Henry Thomas Miller, Sr. Trial Counsel, U.S. Dept. of Justice, Torts Branch Civ. Div., Washington, DC, for DefendantAppellee.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before HIGGINBOTHAM, STEWART and HAYNES, Circuit Judges.

CARL E. STEWART, Circuit Judge:

PlaintiffsAppellants (Appellants)1 brought this Federal Tort Claims Act (“FTCA”), 28 U.S.C. §§ 2671– 2680, action against the United States (“the Government”) for injuries allegedly related to their exposure to elevated levels of formaldehyde contained in the component materials of the Emergency Housing Units (“EHUs”) provided to them by the Federal Emergency Management Agency (“FEMA”) after Hurricanes Katrina and Rita. The district court dismissed Appellants' claims for lack of subject matter jurisdiction. We AFFIRM.

I.

In 2005, Hurricanes Katrina and Rita destroyed the homes of thousands of residents along the Gulf Coast.2 Over the months and years following the hurricanes, displaced residents returned to find a shortage of alternative housing. Pursuant to 42 U.S.C. § 5170, the President of the United States declared the occurrence a major disaster. In response to the disaster, FEMA was directed to provide assistance to the disaster victims. 42 U.S.C. § 5174(b)(1).

Shortly thereafter, FEMA activated its Individual and Household Assistance Program and, from September 2005 through May 1, 2009, the agency supplied disaster victims with EHUs, at no cost, to use as temporary shelter. The EHUs were taken from FEMA's preexisting inventory, which had been purchased from public retailers as well as manufacturers. The EHUs were small, portable, and usually placed at the disaster victims' home sites. The trailers were installed by Government contractors who placed the units on blocks or piers, anchored them to the ground using straps or bolts, and connected them to public sewer and water lines. To obtain use of an EHU, the person seeking assistance would complete and sign an application acknowledging that he was requesting an EHU to use as shelter because he was currently unable to live in his own residence due to the disaster. The EHU applications indicated that the units were intended for temporary use and that applicants were required to accept alternative housing options as they became available.

In March 2006, FEMA began receiving complaints from EHU occupants regarding formaldehyde odors inside of the units and continued receiving complaints during the following months. Formaldehyde is a chemical substance commonly found in many construction materials such as plywood, particle board, home furnishing, fabrics, and other household products. According to the Center for Disease Control—Agency for Toxic Substances and Disease Registry (CDC–ATSDR), elevated and high levels of formaldehyde can act as an irritant and lead to other health problems.

In March 2006, when FEMA began receiving formaldehyde complaints, it encouraged shelter occupants to ventilate their EHUs by opening the doors and windows. In June 2006, FEMA prepared an informational brochure informing EHU occupants of the dangers of formaldehyde exposure, encouraging them to ventilate their units, and urging them to seek medical help if they developed health problems related to formaldehyde. The brochures were distributed between July and September 2006.

In September 2006, FEMA began working with the Environmental Protection Agency (“EPA”) which tested the EHUs for formaldehyde and developed mitigation techniques. Over the next year, FEMA received approximately 200 formaldehyde complaints from EHU occupants. In July 2007, FEMA distributed another informational brochure to EHU occupants, set up a hotline and a dedicated call center to field formaldehyde complaints from occupants, and continued to assist occupants in locating alternative housing. FEMA subsequently entered into an agreement with the CDC to conduct additional testing, the findings of which were compiled in a third informational brochure and distributed to EHU occupants in early 2008. On May 1, 2009, the Government officially ended efforts to provide EHUs to disaster victims from Hurricanes Katrina and Rita.

Appellants are individuals who resided in the EHUs in Mississippi and Alabama. The Mississippi and Alabama appellants each sued more than 100 entities, including the Government. In October 2007, the United States Judicial Panel on Multidistrict Litigation (“MDL”) created MDL No. 07–1873 ( In re: FEMA Trailer Formaldehyde Products Liability Litigation )3 and assigned the litigation to the United States District Court for the Eastern District of Louisiana. In March 2008, in accordance with the district court's order, Appellants filed a consolidated master complaint containing class allegations and naming as defendants various private manufacturers and contractors as well as the Government. All actions centralized in the MDL share factual questions relating to allegations that the EHUs provided by FEMA in response to Hurricanes Katrina and Rita contained materials which emit dangerous levels of formaldehyde.

Appellants allege that, for the period of time between March and June 2006, FEMA caused them harm by placing litigation concerns ahead of the safety of EHU occupants by exposing them to trailers FEMA knew to contain dangerous levels of formaldehyde, without warning occupants of the dangerous nature of the units or remedying the dangerous nature of the units.

In support of this contention, Appellants assert that, in spite of being notified on numerous occasions of complaints by EHU residents regarding formaldehyde emissions during March through June of 2006, FEMA persisted in not responding to these concerns. According to Appellants, FEMA's lack of a response was part of a deliberate effort to avoid liability for future formaldehyde exposure claims and litigation. Appellants further allege that FEMA ignored and manipulated the concerns of federal scientists in an attempt to avoid negative publicity and legal liability.

In May 2008, the Government moved to dismiss Appellants' FTCA claims for lack of subject-matter jurisdiction, or in the alternative for summary judgment, based on the FTCA's discretionary function exception. In October 2008, the district court found that all of the Government's conduct at issue was discretionary, but that some of its actions may not have been grounded in social, economic, or political policy. Therefore, it held that a genuine issue of material fact remained as to whether, during an identifiable period of time, FEMA's response to the issue of formaldehyde in the EHUs was insufficient or delayed due to self-interest or liability concerns.

In May 2009, the Government filed a second motion to dismiss Appellants' claims for lack of subject-matter jurisdiction, or in the alternative for summary judgment, based on the FTCA's discretionary function exception. In August 2009, the district court denied this motion and reaffirmed that the FTCA's discretionary function exception may not apply to some or all of Appellants' claims, the determination of which would be driven by the facts of each individual case.

The district court then denied class certification and scheduled a series of bellwether trials, but none of the FTCA claims brought by the bellwether plaintiffs against the Government advanced to the trial stage. In October 2009, Appellants filed a supplemental administrative master complaint for the purpose of presenting to the district court an updated “procedural vehicle for the disposition of common issues.”

In November 2009, the Government moved under Rule 12(b)(1) to dismiss Appellants' FTCA claims for lack of subject-matter jurisdiction on the grounds of no analogous private liability under the Mississippi and Alabama emergency statutes, Mississippi Emergency Management Law (“MEML”), Miss.Code § 33–15–21(b) and Alabama Emergency Management Act (“AEMA”), Ala.Code § 31–9–17. See Fed.R.Civ.P. 12(b)(1); 28 U.S.C. §§ 1346(b)(1), 2674. After concluding that the aforementioned emergency statutes would bar suit against a “private person under similar circumstances,” the district court granted the Government's motion and dismissed Appellants' FTCA claims.

In August 2010, the district court entered a final, appealable judgment under Fed.R.Civ.P. 54(b) dismissing Appellants' remaining FTCA claims. This appeal ensued.

II.

A Rule 12(b)(1) motion to dismiss challenges the subject-matter jurisdiction of the federal court. See Fed.R.Civ.P. 12(b)(1). A district court's determination of subject-matter jurisdiction is generally reviewed de novo. Williams v. Wynne, 533 F.3d 360, 364–65 (5th Cir.2008). Plaintiffs bear the burden of establishing subject-matter jurisdiction. Castro v. United States, 560 F.3d 381, 386 (5th Cir.2009), vacated on other grounds, 608 F.3d 266 (5th Cir.2010).

Federal courts are courts of limited jurisdiction; without jurisdiction conferred by statute, they lack the power to adjudicate claims. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); Stockman v. Fed. Election Comm'n, 138 F.3d 144, 151 (5th Cir.1998). Under Rule 12(b)(1), a claim is “properly dismissed for lack of subject-matter jurisdiction when the court lacks the...

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