C.Y., a minor, by and through his Guardian ad Litem, BRIDGET YOUNG v. SUTTER MEDICAL GROUP, et al.; SUTTER VALLEY HOSPITALS dba SUTTER DAVIS HOSPITAL v. THE UNITED STATES

Opinion

----oo0oo---- C.Y., a minor, by and through No. 2:25-cv-1351 WBS JDP his Guardian ad Litem, BRIDGET Plaintiff, MEMORANDUM AND ORDER RE: CROSS-DEFENDANT’S MOTION TO v. DISMISS SUTTER MEDICAL GROUP, et al., Defendants. SUTTER VALLEY HOSPITALS dba

Cross-Complainant, v. THE UNITED STATES, Cross-Defendant.

----oo0oo---- Plaintiff C.Y. originally filed this medical malpractice action in Sacramento County Superior Court on March 21, 2024, against several Sutter entities, including Sutter Davis Hospital (“Sutter”), the cross-complainant in this motion; Catherine Ann McGovern (a midwife); and various other medical employees, in connection with alleged negligence during his prenatal care and delivery. (Declaration of Kelli L. Taylor (“Taylor Decl.”), Docket No. 11-2 ¶ 2.; Docket No. 11-1 at 2.) On February 21, 2025, the United States determined that McGovern was acting within the scope of her deemed federal employment pursuant to the Federally Supported Health Centers Assistance Act, 42 U.S.C. § 233. (Taylor Decl. ¶ 5.; Docket No. 11-2 at 19.) Plaintiff then voluntarily dismissed McGovern on February 25, 2025, because he had not exhausted the requisite administrative remedies to sue her, and the deadline to do so had long since passed. (Taylor Decl. ¶ 6.) Sutter was informed of plaintiff’s reason for dismissing McGovern and that the decision that McGovern was acting within the scope of her employment by the United States would apply to future claims in the action. (Docket No. 11-1 at 2; Taylor Decl. ¶ 8.) Nevertheless, on March 5, 2025, Sutter filed a cross- complaint for indemnity and contribution against McGovern. (Taylor Decl. ¶ 7.)1 As McGovern had been certified as a federal 1 Sutter’s indemnity and contribution claims sound in tort and thus fall within the scope of the Federal Tort Claims Act (“FTCA”). See Lockheed Aircraft Corp. v. United States, 460 U.S. 190, 198 (1993) (stating that the FTCA “permits an indemnity action against the United States ‘in the same manner and to the same extent’ that the action would lie against ‘a private individual under like circumstances’”) (quoting 28 U.S.C. § 2674). Typically, before bringing such claims against the United States, the claimant must have first presented the claim to the appropriate federal agency, and either that claim must employee, the United States removed the case on April 13, 2025, pursuant to 42 U.S.C. § 233(c), and was automatically substituted for McGovern. (Docket No. 1 at 2.) The United States now moves to dismiss Sutter’s crossclaim for lack of subject matter jurisdiction, based on the derivative jurisdiction doctrine. (Docket No. 11-1.) I. Derivative Jurisdiction The doctrine of derivative jurisdiction was first recognized over a century ago; its premise is that “[i]f the state court lacks jurisdiction over the subject-matter or of the parties [upon removal], the federal court acquires none, although it might in a like suit originally brought there have had jurisdiction.” Lambert Run Coal Co. v. Baltimore & O.R. Co., 258 U.S. 377, 382 (1922). Put another way, “this doctrine of derivative jurisdiction is premised on the legal fiction that a case filed in state court over which that court lacks jurisdiction is void from its very beginning, and a federal court therefore has no jurisdiction to acquire over the case via removal.” Rubie’s LLC v. First American Title Company, No. 118-

have been denied or the agency must have made no final disposition of it within six months. See 28 U.S.C. § 1375. However, U.S.C. § 2675(a) exempts from the exhaustion requirement “such claims as may be asserted under the Federal Rules of Civil Procedure by third party complaint, cross-claim, or counterclaim.” 28 U.S.C. § 2675(a); see also Tomlin v. Pease, No. CIV.A. 14-202, 2014 WL 1340624 (E.D. Pa. Apr. 4, 2014) (“[T]hird party complaints brought under the FTCA are regularly maintained against the United States in federal court, though no party has filed an administrative complaint.”) (collecting cases). Both parties appear to recognize this exception and agree that Sutter was not required to bring an administrative claim before filing its cross-complaint. (Docket Nos. 11-1 at 6- 7; 12 at 3.) cv-01502 DAD SKO, 2018 WL 6419674, at *4 (E.D. Cal. Dec. 6, 2018). It is hard to understand what may have prompted the Supreme Court to create this doctrine. There was no mention of it in any of the removal statutes, nor was it contained in any other Act of Congress to this court’s knowledge. It is even harder to understand what useful purpose it was perceived to serve. As Judge Drozd so astutely observed in Rubie’s LLC, “it makes little sense to dismiss a case for lack of jurisdiction because it was removed to the federal court that has exclusive jurisdiction.” id. at *3 (noting the “strong reasons” for abolishing the doctrine and collecting cases); see also Abeywardene v. Tulino, No. CV 24-2353 (SLS), 2025 WL 1380427, at *3 (D.D.C. May 12, 2025) (“[T]his doctrine is counterintuitive and difficult to explain as a matter of first principles.”) (collecting cases). Adding to this paradox is Congress’ continued adherence to this antiquated doctrine. Specifically, after Congress abolished derivative jurisdiction in 1986 as applied to removals under 28 U.S.C. § 1441(e), it seemingly went out of its way in 2002 to provide that only actions removed “under this section” would be exempt from derivative jurisdiction. See 28 U.S.C. § 1441(f). Nevertheless, this court must agree with Judge Drozd that “it appears the doctrine of derivative jurisdiction remains the law of this Circuit . . . any prior criticisms notwithstanding.” Rubie’s, 2018 WL 6419674, at *3 (collecting cases); see also Spruill v. Gervais, 693 F. Supp. 3d 1190, 1194- 95 (D.N.M. 2023) (observing that “[t]he majority of circuits to consider the continuing vitality of the derivative jurisdiction doctrine have concluded that the federal courts’ jurisdiction remains derivative of state courts’ jurisdiction for cases removed under statutes other than § 1441.”) II. Derivative Jurisdiction and 28 U.S.C § 233(c) Removals Further complicating matters, both parties point out that this court has previously observed that “[a]pplication of the derivative jurisdiction doctrine to cases removed pursuant to § 233(c) or the analogous removal provision of the Westfall Act, 28 U.S.C. § 2679(d)(2) is more questionable,” because Section 233(c) provides that “upon certification . . . the action ‘shall be removed . . . to the district court . . . and the proceeding deemed a tort action brought against the United States.’” E.R. ex rel. Young v. Sutter Davis Hosp., No. CIV. 2:14-2053 WBS, 2014 WL 7239675, at *3 (E.D. Cal. Dec. 16, 2014)(citing 42 U.S.C. § 233(c)). In other words, Section 233(c) provides a removal trigger -- certification of a federal employee -- which would be a nullity “if all actions so removed were dismissed for lack of subject matter jurisdiction.” Nye v. Hilo Med. Ctr., No. CIV.09- 00220-JMS-KSC, 2010 WL 931926, at *5 (D. Haw. Mar. 11, 2020). At oral argument, Sutter insisted that this provision obviates the derivative jurisdiction doctrine, because Section 233’s language effectively creates federal jurisdiction upon removal. In response, the United States argues that Section 233(c) is merely a mechanism for removal that does not confer federal jurisdiction, illustrating by example a case removed pursuant to the provision that was then dismissed for lack of jurisdiction. See L.T. el al. v. United States, 2:21-cv-1564 WBS JDP, 2021 WL 4594688 (E.D. Cal. Oct. 6, 2021). In its brief, the United States further takes the position that for Section 233 removals, “dismissal would only result when a scoping decision had already been made in the case, as happened here.” (Docket No. 21 at 4.) It primarily cites two cases to support this proposition: Barnaby v. Quintos, 410 F. Supp. 2d 142 (S.D.N.Y. 2005), and A.Q.C. v. Bronx-Lebanon Hosp. Ctr., No. 11-cv-2656 NRB, 2012 WL 170902 (S.D.N.Y. Jan. 20, 2012). This court analyzed these cases nearly a decade ago, the last time it dealt with this issue, in E.R., 2014 WL 7239675. The E.R. decision found Barnaby and A.Q.C. distinguishable because the scoping decisions in those cases “involved the same claims by the same plaintiffs for the same conduct by the same federal employee defendants,” whereas the certification at issue in E.R. concerned a separate case entirely. Id. This court saw no reason to “extend the effect of an employment certification beyond the claims for which it was issued,” and as that effect did not apply to the claim in the subsequent case, the state court had jurisdiction over it. Id. at *6. The specifics of this case are different. Though plaintiff dismissed McGovern after she had been certified as a federal employee, the action continued, and the certification remained in effect. See Dellinger v. Richards, No. 1:18-cv- 02119, 2019 WL 4273878, at *4 (M.D. Pa. Sept. 10, 2019) (dismissing FTCA case based on derivative jurisdiction where “certification had already been issued in the same case”). Sutter was aware of this and would have understood that McGovern was a federal employee for purposes of their case, and thus the exclusive remedy as to her was a complaint filed against the United States in federal court. See A.Q.C., 2012 WL 170902, at *5 (“[T]he U.S. Attorney had certified that Dr. Castillo was a federal employee . . . [thus] it was clear that [he] was a federal employee for purposes of any third-party claim that would be filed against him.”). The timeline of this case also distinguishes it from Nye -- a case on which Sutter heavily relies -- because, as Sutter itself admits, Nye involved “a third-party complaint against other providers who were later deemed employees of the United States.” (Docket No. 12 at 3 (emphasis added).) As in A.Q.C. and Barnaby, a certification was not active when the complaint in Nye was filed, and the state court thus had jurisdiction over it. In light of the distinct circumstances of this case, the court finds that the derivative jurisdiction doctrine is applicable. This was not a situation where certification was “a mere possibility,” but a “certainty,” because it had in fact occurred and its legal consequence was evident. Id. at *5; see also Dellinger, 2019 WL 4273878. Thus, unlike E.R., the court need not extend the effect of that certification “beyond the claim[] for which it was issued,” because the scoped claim remains pending. See E.R., 2014 WL 7239675, at *6 (noting that scoping decision at issue no longer had effect because the action for which it was made had concluded). Applying the derivative jurisdiction doctrine here honors the meaning of a scope certification, which precluded Sutter from bootstrapping the action into federal court through an improperly filed cross- complaint in state court. The state court thus never had jurisdiction over Sutter’s cross-complaint, and “because the state trial court never had jurisdiction . . . the federal court acquire[d] none.” High Lonesome Ranch, LLC v. Bd. Of Cnty. Commissioners for Cnty. of Garfield, 61 F. 4th 1225, 1240 (10th Cir. 2023) (internal citations and quotation marks omitted). III. Policy Concerns Sutter also raises several policy concerns that it argues weigh in favor of exercising jurisdiction. It first asserts, citing Brownback v. King, 592 U.S. 209, 218 (2021), that “a federal court always has jurisdiction to determine its own jurisdiction,” and thus that “this Court can exercise jurisdiction” if it chooses. (Docket No. 12 at 9.) It then argues that “plaintiff wants the United States in the case”; that “the United States unreasonably delayed filing the scope certification”; that “the United States is a necessary party”; and that dismissal would “run[] afoul of the principle of judicial economy.” (Id. at 9-13.) None of these arguments are persuasive. “Federal courts are of limited jurisdiction that possess only that power authorized by Constitution and statutes,” and their ability to determine whether they have jurisdiction does not imply that they can create jurisdiction where none exists. Kokonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Moreover, a party “cannot be deemed necessary if the court lacks subject matter jurisdiction over the entire action.” Crisp v. U.S., 966 F. Supp. 973, 976 (E.D. Cal. 1997) (Wanger, J.) (citing Hughes v. United States, 953 F. 2d 531, 541 (9th Cir. 1992)). As to judicial economy, the court acknowledges that its agreement with the government’s interpretation of the derivative jurisdiction doctrine does not produce the most practical outcome, in that Sutter must now sever its claims and potentially pursue separate actions. This court is nevertheless bound by the constitutional and statutory parameters of its limited jurisdiction, which cannot be manufactured for convenience. Sutter cites no legal or other authority supporting its remaining arguments; in any case, none these arguments overcome this court’s obligation to abide by its jurisdictional limitations. Sutter’s cross-complaint for indemnity must accordingly be dismissed. If Sutter is ultimately found liable on any of plaintiff’s claims against it, it will then be free to pursue a claim against the United States under the FTCA for indemnity and contribution after it has exhausted its administrative remedies. IV. Interlocutory Appeal The court discussed with the parties at oral argument the possibility of an interlocutory appeal. Though neither party has moved for certification of interlocutory appeal, “[a] district court may certify an order sua sponte.” Primerica Life Insurance Company v. Starr, No. 5:22-cv-00212-JWH-KK, 2023 WL 3432207 (C.D. Cal. Apr. 3, 2023). If any party wishes to pursue such an appeal, it may do so if the court concludes that an order “(1) involves a controlling question of law as to which (2) there is substantial ground for difference of opinion and that (3) an immediate appeal from the order may materially advance the outcome of the litigation.” Adams v. County of Sacramento, No. 2:22-cv-01499 WBS KJN, 2023 WL 3413672, at *1 (E.D. Cal. May 12, 2023) (citing 28 U.S.C. § 1292(b)). As to the first factor, a question of law is controlling if “resolution of the issue on appeal could materially affect the outcome of litigation in the district court” and it is not collateral to the major issues of the case. Adams, 2023 WL 3413672, at *1 (citing In re Cement Antitrust Litig., 673 F. 2d 1020, 1026 (9th Cir. 1982)). The question of law raised here is whether the derivative jurisdiction doctrine applies to cases removed under Section 233(c) after a scoping decision has been made in the case. If this question were to be decided in Sutter’s favor, plaintiff’s claim against Sutter and Sutter’s cross-complaint against the United States would be resolved in a single action in this court. An immediate appeal could thus affect the outcome of the case, as it would determine whether those claims need be heard in the same or separate actions. See Adams, 2023 WL 3413672, at *1 (concluding that the first factor was satisfied because resolving the issue in plaintiff’s favor would allow her to proceed with her claim). Second, to determine whether a substantial ground for difference of opinion exists, the court “must examine to what extent the controlling law is unclear.” Adams, 2023 WL 3413672, at *1 (citation omitted). As noted above, courts have repeatedly expressed unease with the derivative jurisdiction doctrine, and the Ninth Circuit has not squarely addressed its applicability to Section 233(c) removals. In light of the uncertainty surrounding this doctrine, the court finds there is a substantial ground for difference of opinion on the question at issue. 28 U.S.C. § 1292(b). Third, courts have held that resolving an issue “materially advances the termination of litigation if it facilitates disposition of the action by getting a final decision on a controlling legal issue,” which would promote judicial economy by “sav[ing] the courts and litigants unnecessary trouble and expense.” Adams, 2023 WL 3413672, at *2 (citation omitted). As in Adams, an immediate appeal could avoid the need for two separate trials, in that the result of an appeal from this order could avoid the need for conducting a separate trial on Sutter’s claim against the United States after the conclusion of this action. Because the factors for an interlocutory appeal are satisfied here, if counsel for Sutter so requests, the court would find it appropriate to stay this order and certify it for such an appeal. IT IS THEREFORE ORDERED that cross-defendant United States’ motion to dismiss (Docket No. 11) be, and the same hereby is, GRANTED, and Sutter’s cross-complaint against the United States is hereby DISMISSED. This Order is hereby CERTIFIED for immediate interlocutory appeal, and this action is hereby STAYED pending the outcome of such an appeal. If no application is made to the United States Court of Appeals to the Ninth Circuit to accept the interlocutory appeal within ten (10) days as set forth in § 1292(b), or if the Ninth Circuit should deny any such eee NI OS OE IEE EEE mR IIE OI EIR IE OSE EIRENE

application, the stay will automatically be lifted. If the Ninth Circuit accepts any such application, the parties shall file a joint status report with this court within fourteen days after resolution of the interlocutory appeal. Dated: January 8, 2026 tte a □ ak. UNITED STATES DISTRICT JUDGE 12