New SD, Inc. v. Rockwell International Corp.

This is an action for breach of a subcontract by New SD, Inc., dba BEI Systron Donner Company, (Systron) against Rockwell Int’l Corp., which had the prime contract with the Air Force for development of military hardware. The parties are non-diverse. The action was filed in state court; Rockwell removed on the footing that federal law controls; and the district court declined to remand under authority of American Pipe & Steel Corp. v. Firestone Tire & Rubber Co., 292 F.2d 640 (9th Cir.1961). Systron took an interlocutory appeal, and we affirm.

I

Rockwell contracted with the Air Force to develop a space-based anti-ballistic missile called a SCIT as part of the Strategic Defense Initiative. In turn, it subcontracted with Systron to design, fabricate and deliver a navigational component known as an inertial measurement unit.

Without being required to, the parties to the subcontract included language adopted from government procurement regulations, including a DX-AZ priority rating and Federal Acquisition Regulation 52.249-6, which provides that when a prime contractor receives a notice of termination from the government, the prime is to assign its rights and interests under the…