In 1988, the U.S. Supreme Court articulated what has come to be known as the “government contractor defense,” sometimes referred to as the “military contractor defense,” in Boyle v. United Technologies Corp., 487 U.S. 500 (1988), in which the estate of a serviceman killed in a helicopter crash sought to recover from the aircraft’s manufacturer for a design defect. The government contractor defense derives from the government’s sovereign and discretionary function immunity, which has been extended to military contractors based on the “uniquely federal interests . . . in getting the Government’s work done” with respect to ensuring military readiness, thereby displacing state product liability law. Id. at 504–5. In order for the defense to apply, the government must have participated in formulating the product specifications, the product must conform to the specifications, and the manufacturer must have warned the government of dangers known to it but not the government.
The first generation of government contractor defense jurisprudence addressed mostly military aircraft and other equipment, as well as applying the defense to the manufacturer of the Vietnam-era tactical herbicide Agent Orange. A second generation of case law has since evolved in this area, addressing the scope of protection afforded to contractors who provided services to the military, rather than materiel or other goods—for example, services by contractors accompanying the forces for military convoys and base operations, including the so-called “burn pits” that have generated multiple toxic tort claims. Similar to the “reasonably precise specifications” element of the government contractor defense for materiel and goods, protection for service contractors will turn on the degree of control exercised by the military over the contractor.
Another issue has been the use of the government contractor defense to secure removal of personal injury suits to federal court based on federal officer removal principles, where, regardless of the ultimate merits of the defense, a defendant at least has the benefit of litigating in federal, rather than state, court. This issue has frequently arisen in cases arising out of alleged asbestos exposure during naval shipbuilding. In this context, even after Congress broadened the scope of the federal removal statute concerning federal officer removal, the Fifth Circuit recently reaffirmed that notwithstanding the amendment, to sustain removal it was still necessary to show a “causal nexus” between the conduct purportedly under color of federal office and the plaintiff’s claims. See Latiolais v. Huntington Ingalls, Inc., 918 F.3d 406, 410–11 (5th Cir. 2019).
The boundaries of the government contractor defense continue to be tested, for example, in connection with commercial goods sold to the military or cases involving environmental contamination or exposure to wastes generated in the course of manufacturing military materiel (or commercial product supplied to the military). In 2018, the Ninth Circuit rejected federal officer removal to Monsanto, manufacturer of polychlorinated biphenyl (PCB), in Washington State’s action against it for PCB-related contamination. See Washington v. Monsanto Co., 738 F. App’x 554 (9th Cir. 2018).
The current wave of litigation involving aqueous firefighting foam presents some similar circumstances for asserting the government contractor defense, i.e., it was a product commonly used by the military, with many claims arising out of use and alleged contamination at and around military bases, but it was used in nonmilitary contexts as well.
Boyle and First-Generation Government
Contractor Defense Cases
Recapping the seminal case, Boyle arose out of the death of a U.S. Marine helicopter pilot, who drowned when his aircraft crashed off the coast of Virginia Beach, Virginia, and he could not escape from it despite surviving the impact. 487 U.S. at 502. The Marine’s estate brought a tort action against the helicopter’s manufacturer, United Technologies Corp., alleging, pertinent to the government contractor defense issue, that the manufacturer had defectively designed the emergency escape system with a hatch that opened outward instead of inward and was ineffective when the aircraft became submerged as in the incident at suit. Id. at 503.
The estate prevailed in the district court; a jury awarded damages and the court denied the manufacturer’s motion for judgment notwithstanding the verdict. Id. The U.S. Court of Appeals for the Fourth Circuit reversed on the design defect theory, concluding that the manufacturer could not be held liable under the defective design theory because “it satisfied the requirements of the ‘military contractor defense.’” Id. According to the Fourth Circuit, those requirements included that
1) the United States is immune from liability; 2) the United States approved reasonably precise specifications for the equipment; 3) the equipment conformed to those specifications; and 4) the supplier warned the United States about dangers in the use of the equipment that were known to the supplier but not to the United States.
The U.S. Supreme Court granted certiorari to consider the estate’s contentions that “there is no justification in federal law for shielding Government contractors from liability for design defects in military equipment,” and that even if the defense did exist, the circuit court erred in articulating its elements, and the estate was entitled to a jury determination as to the satisfaction of the defense’s prerequisites. 487 U.S. at 503–4. A five-to-four Court established the government contractor defense as a matter of federal common law. Id. at 512.
Justice Scalia, writing for the majority, initially recognized that despite the lack of a clear statutory prescription to preempt state product liability law or a “direct conflict between federal and state law” in the application of the government contractor defense, in areas “involving ‘uniquely federal interests’ . . . so-called ‘federal common law’” could supplant state law. Id. at 504. The majority observed that a pair of “uniquely federal interests” was implicated; first, the “obligations to and rights of the United States under its contracts are governed exclusively by federal law,” and, second, “of peculiarly federal concern, warranting the displacement of state law, is the civil liability of federal officers for actions taken in the course of their duty.” Id. at 504–5. With respect to the latter, the majority reasoned that while “[t]he present case involves an independent contractor performing its obligation under a procurement contract, rather than an official performing his duty as a federal employee . . . there is obviously implicated the same interest in getting the Government’s work done.” Id. at 505.
[I]t is plain that the Federal Government’s interest in the procurement of equipment is implicated by suits such as the present one—even though the dispute is one between private parties . . . The imposition of liability on Government contractors will directly affect the terms of Government contracts; either the contractor will decline to manufacture the design specified by the Government, or it will raise its price. Either way, the interests of the United States will be directly affected.
Id. at 506–7.
Finding that the case, and the imposition of a government contractor defense, involved an area of uniquely federal interests, the Court held that there existed a “‘significant conflict’ . . . between an identifiable federal policy or interest and the operation of state law” or a frustration of the “‘specific objectives’ of federal legislation” that would warrant the displacement of state law by establishing the federal common-law defense. Id. at 507.
We think that the selection of the appropriate design for military equipment to be used by our Armed Forces is assuredly a discretionary function within the meaning of this provision. It often involves not merely engineering analysis but judgment as to the balancing of many technical, military, and even social considerations, including specifically the trade-off between greater safety and greater combat effectiveness. And we are further of the view that permitting “second-guessing” of these judgments . . . through state tort suits against contractors would produce the same effect sought to be avoided by the FTCA exemption.
Id. at 511.
Contractor liability under these circumstances was also an end run around the government’s immunity from suit over military injuries.
The financial burden of judgments against the contractors would ultimately be passed through, substantially if not totally, to the United States itself, since defense contractors will predictably raise their prices to cover, or to insure against, contingent liability for the Government-ordered designs. To put the point differently: It makes little sense to insulate the Government against financial liability for the judgment that a particular feature of military equipment is necessary when the Government produces the equipment itself, but not when it contracts for the production. In sum, we are of the view that state law which holds Government contractors liable for design defects in military equipment does in some circumstances present a “significant conflict” with federal policy and must be displaced.
Id. at 511–12.
Accordingly, the Court adopted a three-prong test for the applicability of the government contractor defense, eliminating the first element of the Fourth Circuit’s standard noted above, such that “liability for design defects in military equipment cannot be imposed, pursuant to state law, when: (1) the United States approved reasonably precise specifications; (2) the equipment conformed to those specifications; and (3) the supplier warned the United States about the dangers in the use of the equipment that were known to the supplier but not to the United States.” Id. at 512. The first two prongs ensure that the defense is conterminous with the government’s discretionary function immunity, consistent with the underlying rationale for the defense, and the third prong avoids a manufacturer’s withholding its knowledge of risks from the government by forfeiting the defense under such circumstances. Id. at 512–13.
The initial generation of post-Boyle cases applying the government contractor defense to exonerate private contractors mostly involved other aircraft and military equipment. See, e.g., Kerstetter v. Pac. Sci. Co., 210 F.3d 431 (5th Cir. 2000) (aircraft pilot restraint system); Tate v. Boeing Helicopters, 140 F.3d 654 (6th Cir. 1998) (helicopter cargo hook system); Emory v. McDonnell Douglas Corp., 148 F.3d 347 (4th Cir. 1998) (aircraft flight control system); Oliver v. Oshkosh Truck Corp., 96 F.3d 992 (7th Cir. 1996) (motor vehicle fuel tank); In re Air Disaster at Ramstein Air Base (Perez v. Lockheed Corp.), 81 F.3d 570 (5th Cir.), amended, 88 F.3d 340 (5th Cir. 1996) (aircraft thrust reverser); Butler v. Ingalls Shipbuilding, 89 F.3d 582 (9th Cir. 1996) (naval vessel ladder); Dean v. Sikorsky Aircraft, 16 F.3d 1219 (6th Cir. 1994) (table) (helicopter cockpit/night vision goggles); Landgraf v. McDonnell Douglas Helicopter Co., 993 F.2d 558 (6th Cir. 1993) (helicopter rotor blade); Lewis v. Babock Indus., Inc., 985 F.2d 83 (2d Cir. 1993) (aircraft ejector seat); Darling v. Boeing Co., 935 F.2d 269 (table), 1991 U.S. App. LEXIS 13093 (6th Cir. 1991) (aircraft autopilot system); Skyline Air Serv., Inc. v. G.L. Capps Co., 916 F.2d 977 (5th Cir. 1990) (crash of military surplus helicopter being used for civilian purposes); Maguire v. Hughes Aircraft Corp., 912 F.2d 67 (3d Cir. 1990) (helicopter engine/ball bearing); Guerinot v. Rockwell Int’l Corp., 923 F.2d 862 (9th Cir. 1990) (table) (aircraft ejector seat); Kleemann v. McDonnell Douglas Corp., 890 F.2d 698 (4th Cir. 1989) (aircraft landing gear); Smith v. Xerox Corp., 866 F.2d 135 (5th Cir. 1989) (shoulder-mounted weapon simulator); Harduvel v. Gen. Dynamics Corp., 878 F.2d 1311 (8th Cir. 1989) (aircraft electrical failure/wire chafing); Hill v. Raytheon Aircraft Co., 470 F. Supp. 2d 1214 (D. Kan. 2006) (aircraft de-icing system); Quiles v. Sikorsky Aircraft, 84 F. Supp. 2d 154 (D. Mass. 1999) (helicopter rotor tip cap); Galik v. Lockheed Shipbuilding Co., 727 F. Supp. 1433 (S.D. Ala. 1989) (pilothouse handrails); Nicholson v. United Techs. Corp., 697 F. Supp. 598 (D. Conn. 1988) (helicopter landing gear); Zinck v. ITT Corp., 690 F. Supp. 1331 (S.D.N.Y. 1988) (night vision goggles).
Another significant landmark in the first generation of the government contractor defense was its application to claims alleging toxic exposure to the Vietnam War tactical herbicide known as “Agent Orange.” See In re Agent Orange Prod. Liab. Litig., 304 F. Supp. 2d 404 (E.D.N.Y. 2004), aff’d, 517 F.3d 76 (2d Cir. 2008). See also In re Agent Orange Prod. Liab. Litig., 611 F. Supp. 1223, 1263 (E.D.N.Y. 1985) (prior to Boyle, applying government contractor defense as to opt-out members of original veterans class), aff’d, 818 F.2d 187 (2d Cir. 1987); Miller v. Diamond Shamrock Co., 275 F.3d 414 (5th Cir. 2001) (rejecting claims of Agent Orange exposure by civilian employees involved in maintenance of aircraft previously used for spray missions). Cf. Morgan v. Brush Wellman, Inc., 165 F. Supp. 2d 704 (E.D. Tenn. 2001) (applying government contractor defense to claims relating to beryllium exposure in manufacturing nuclear weapons component parts).
The Agent Orange cases addressed two significant government contractor defense issues: first, the counterargument that the defense does not apply where the materiel or goods procured by the government amount to an “off-the-shelf” purchase; and, second, the scope of “risks” that the manufacturer must disclose to the government.
In Agent Orange, the Second Circuit acknowledged that the defense does not apply where the government buys a product “off-the-shelf” or “as is,” but the court concluded this was not the case with respect to Agent Orange, even though the tactical herbicide contained two active ingredients that were also used in commercially available formulations. First, as a factual matter, the herbicides were not commercially available in the concentrations mandated by the Agent Orange specifications and thus were not “off-the-shelf” products. 517 F.3d at 90. Second, as a legal principle, the mere fact that the end product supplied to the government consisted of commercially available components did not render it an off-the-shelf product. Rather, as the Second Circuit explained, the pertinent inquiry is whether the government was the “agent of decision” regarding the composition of the product. Id. at 91. In sum, while part of the decision-making process might involve the government’s “reliance on [the] manufacturers’ expertise in making a fully informed decision on what to order,” where the government “independently and meaningfully reviews the specifications” and “approves” them, the specifications will be the government’s for purpose of the government contractor defense. Id.
As to the third prong of the government contactor defense, relating to the contractor’s knowledge of risks unknown to the government, the Second Circuit held that this prong is satisfied where the contractor “fully informed the government about hazards related to the government’s exercise of discretion that were ‘substantial enough to influence the military decision’ made.” Id. at 99. The court more fully explained this as follows:
We therefore do not think that the Boyle Court meant that a defendant seeking the protection of the defense was required to demonstrate that it had shared all known hazards with the government, irrespective of whether those hazards allegedly not conveyed would have had an impact on the government’s exercise of discretion about the design defect alleged. It would be impractical to require that a manufacturer compile and present to the government in advance a list of each and every risk associated with a product it is producing for the government. The operation of a tank or a transport plane—more so the manufacture and use of a chemical agent—involves, at the extremities, virtually limitless risks. Even if it were possible to generate such complete lists, their comprehensiveness would overwhelm government decision makers with largely irrelevant data, extending the time and costs associated with federal contracting and obscuring those risks most likely to have an impact on contracting decisions. A rule that required full disclosure of all possible risks to anyone would be contrary to Boyle’s underlying rationale of protecting the federal interest in “getting the Government’s work done.”
Id. at 98–99 (quoting Boyle, 487 U.S. at 505).
The record established “that the defendants did not fail to inform the government of known dangers at the time of Agent Orange’s production of the type that would have had an impact on the military’s discretionary decision regarding Agent Orange’s toxicity.” Id. at 98. In this regard, the court acknowledged that the manufacturers had some knowledge of health risks for workplace exposure during the manufacture of Agent Orange (chloracne or liver damage). The court found, however, that the government possessed the same knowledge, and, moreover, that there was no showing that the manufacturers “had knowledge of a danger that might have influenced the military’s conclusion that ‘operational use’ of Agent Orange posed ‘no health hazard . . . to men or domestic animals.’” Id. at 101 (emphasis added). Thus, in sum, the record did not reveal that the manufacturers possessed some “never-disclosed knowledge of a sort that might have influenced the government’s decision-making process regarding Agent Orange as it was used in Vietnam.” Id. at 101–2 (emphasis added).
Protection Afforded Military Service Contractors
A next generation of tort liability standards for military/government contractors arose in connection with the application of the foregoing principles to service contractors—in particular, contractors accompanying military components as part of what is known as the “Total Force” concept and under Logistics Civil Augmentation Program contracts. In Iraq and Afghanistan, private contractors employed more than 100,000 personnel in a variety of support capacities. Various tort cases have arisen from operations such as base maintenance and security and planning for military convoys, as well as lengthy litigation with respect to translation services associated with interrogations at the Abu Ghraib prison.
A prime example of the case law that has evolved in this area is the Fourth Circuit’s 2018 ruling in toxic tort litigation over “burn pits” used for waste disposal at forward operating bases, which are alleged to have caused toxic exposures via air and water. In re KBR Inc. Burn Pit Litig., 893 F.3d 241 (4th Cir. 2018), cert. denied, 139 S. Ct. 916 (2019). The court concluded that the claims against the contractor were non-justiciable under the political question doctrine. The rationale and factors looked to by the court are essentially the Boyle elements customized to apply to services, rather than goods.
In sum, the Fourth Circuit’s standard provides that claims arising out of a military contractor’s conduct are non-justiciable “if either: (1) the military exercised direct control over the contractor, or (2) ‘national defense interests were closely intertwined with the military’s decisions regarding [the contractor’s] conduct.’” Id. at 260 (quoting Taylor v. Kellogg, Brown & Root Servs., 658 F.3d 402, 411 (4th Cir. 2011). The first prong is analogous to the reasonably precise specifications of the Boyle test.
To show “direct control,” the military’s control over the government contractor must be “plenary” and “actual.” The Fourth Circuit describes “plenary” control as “the military clearly [choosing] how to carry out [the contractor’s activities], rather than giving the contractor discretion to determine the manner in which the contractual duties would be performed.” Id.
To illustrate this distinction, the Fourth Circuit held that a contractor’s actions related to a military convoy were under plenary control, but certain base maintenance operations were not. The military’s control over a convoy was plenary because “the military decided the particular date and time for the convoy’s departure; the speed at which the convoy was to travel; the decision to travel along a particular route . . . ; how much fuel was to be transported; the number of trucks necessary for the task; the speed at which the vehicles would travel; the distance to be maintained between vehicles; and the security measures that were to be taken.” Id. (citing Carmichael v. Kellogg, Brown & Root Servs., 572 F.3d 1271, 1281 (11th Cir. 2009)). But the military’s control was not plenary over the contractor’s repairing or installing base equipment, as the military “merely provide[d] the contractor with general guidelines that [could] be satisfied at the contractor’s discretion,” as evidenced by factors such as assignment of all responsibility for safety and supervision to the contractor, “the lack of detailed instructions in the work orders,” and “the lack of military involvement in completing authorized work orders.” Id. at 260–61 (citing Harris v. Kellogg, Brown & Root Servs., 724 F.3d 458, 467 (3d Cir. 2013) (negligent installation of water pump leading to electrocution in shower)).
Regarding the element of “actual” control, the Fourth Circuit observed that the operation of the burn pits did not involve “merely on-paper military control” without an “actual command presence.” Instead, “the military exercised extensive control and oversight over KBR’s burn pit operations and water services,” as evidenced by the military’s interface with the contractor on a regular basis and that “the military continuously and meticulously evaluated whether KBR was meeting the commanders’ intent.” Id. at 261–62.
This holding parallels the reasonably precise specifications element of the government contractor defense, in which the courts have withheld immunity where the government merely “rubber-stamps” the contractor’s design; rather, it must be shown that the government approved the design specifications at issue.
Because the Fourth Circuit found the plenary and actual elements and direct control to be satisfied, the court did not consider whether national defense interests were intertwined with decisions concerning the contractor’s conduct thereby satisfying the second element. The Fourth Circuit also did not reach, and vacated as a ground for dismissal, a broad application of the “combatant activities” exception to the waiver of immunity under the Federal Tort Claims Act.
Federal Officer Removal
In addition to the ultimate protection that might be afforded under the government contractor defense, the defense provides a tactic to relieve a defendant of disadvantages of proceeding in state court by virtue of federal officer removal under 28 U.S.C. § 1442.
To raise the government contractor defense as a basis for removal, the defense must be “colorable,” but there are “few limitations on what qualifies as a colorable federal defense” and “[t]o be ‘colorable,’ the defense need not be ‘clearly sustainable.’” Isaacson v. Dow Chem. Co., 517 F.3d 129, 138–39 (2d Cir. 2008); see Guarisco v. Boh Bros. Constr. Co., LLC, 2019 U.S. Dist. LEXIS 58206, at *17–18 (E.D. La. Apr. 4, 2019) (“The defendant is not required ‘to win his case before he can have it removed.’ . . . A non-colorable federal defense is one that is ‘immaterial and made solely for the purpose of obtaining jurisdiction or that is wholly insubstantial and frivolous.’” [citations omitted]). But see Watson v. Phillip Morris Cos., Inc., 551 U.S. 142, 145 (2007) (“[T]he fact that a federal regulatory agency directs, supervises, and monitors a company’s activities in considerable detail” does not permit removal).
Federal officer removal has long been an issue in personal injury suits alleging asbestos exposure that occurred during naval shipbuilding and renovation. Akin to the reasonably precise specifications and plenary and actual control elements of the contractor defenses discussed above, removal would turn on the degree of control exercised by the military over the operations and the content of the specifications with regard to safety warnings. These factors would determine whether the contractor was “acting under” the direction of a federal officer and whether there was a “causal nexus” between the claims and those directed acts.
In 2011, the federal officer removal statute was amended to permit removal by “[t]he United States or any agency thereof or any officer (or any person acting under that officer) of the United States or of any agency thereof, in an official or individual capacity, for or relating to any act under color of such office.” 28 U.S.C. § 1442(a)(1) (emphasis added). The additional “relating to” language would appear to broaden the circumstances under which actions would be removable.
The Fifth Circuit recently considered this issue in Latiolais v. Huntington Ingalls, Inc., 918 F.3d 406 (5th Cir. 2019). While the court acknowledged that the text of the amendment made the circumstances for removal more comprehensive, that the contractor’s work “clearly related to the federal government’s directive to employ asbestos insulation,” and that federal venue should be preserved “[u]nder the ‘relating to’ test,” it maintained the “causal nexus” standard to determine federal officer removal for claims sounding in negligence. In that regard, because the contractor could not show navy specifications that prohibited the contractor from adopting any safety measures of its choosing or that navy inspectors monitored or enforced safety requirements, there was not a causal nexus between the plaintiff’s claims and the contractor’s alleged failures in those regards.
Similar reasoning has been applied to reject federal officer removal of claims alleging contamination arising out of the manufacturing of war materiel that is itself protected under government contractor defense principles. See Anderson v. Hackett, 646 F. Supp. 2d 1041, 1051–52 (S.D. Ill. 2009) (“[Plaintiffs] assert that the Monsanto Defendants produced, stored and disposed of their products in a shoddy manner that resulted in leaks and spills of hazardous substances . . . Defendants have pointed to no federal interest that is implicated by requiring them to handle and dispose of their products with care. Nor have they articulated any government requirement that prevented them from doing so. Accordingly, the Monsanto Defendants do not present a colorable government contractor defense.”).
Courts have also considered the government contractor defense in the context of government procurement of otherwise commercially available goods. For example, the Ninth Circuit rejected an attempt by PCB manufacturer Monsanto to remove the State of Washington’s environmental contamination claims. Washington v. Monsanto Co., 738 F. App’x 554 (9th Cir. 2018). Monsanto urged that it was compelled by the federal government to produce and supply PCBs during the World War II era, including the government’s sponsorship of an expansion of Monsanto’s facilities and two specific government directives under the Defense Production Act. The court rejected federal officer removal, finding the evidence
shows only that the federal government purchased off-the-shelf PCB products from Monsanto and recommended the use of PCBs as a component in defense specifications. It does not show that the federal government supervised Monsanto’s manufacture of PCBs or directed Monsanto to produce PCBs in a particular manner. . . . The letters do not show ongoing federal supervision in the manufacture or production of PCBs.
As far as what is next for the government contractor defense, first, we foresee other challenges and resistance to the “relating to” test for federal officer removal. Much will depend on whether the en banc Fifth Circuit revisits its prior precedent in the Latiolais appeal. Second, the aqueous firefighting foam cases present some of the more difficult issues highlighted above, particularly on facts that seem to combine military procurement with commercial usage.
Paul V. Majkowski is with Rivkin Radler LLP in New York, New York.
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