Jungle to Desert: Defending the Government Contractor

The federal government enjoys sovereign immunity from tort claims arising from its discretionary actions. Contractors acting at the government's behest are similarly protected through the preemption of certain state law claims by what have become known as the “government contractor defense” and the “combatant activities exception” to the Federal Tort Claims Act, 28 U.S.C. ' 2671, et seq. (“FTCA”). The object of the government contractor defense is to “'prevent the contractor from being held liable when the government is actually at fault.'” In re World Trade Ctr. Disaster Site Litig., 456 F. Supp. 2d 520, 560 (S.D.N.Y. 2006) (quoting Trevino v. General Dynamics Corp., 865 F.2d 1474, 1478 (5th Cir. 1989)). Put simply, a contractor avoids liability when it can successfully claim that “[t]he Government made me do it.” In re Joint Eastern and Southern District New York Asbestos Lit. (Grispo v. Molly-Picher Industries, Inc.), 897 F.2d 626, 632 (2nd Cir. 1990) (“Grispo“). Similarly, the combatant activities exception to the FTCA protects government contractors that supply products or services that are implicated in claims arising directly from military action. See, e.g., United States v. Johnson, 170 F.2d 767 (9th Cir. 1948). These defenses are available to a contractor when the imposition of tort liability would “significantly conflict” with a “uniquely federal interest.” Boyle, 487 U.S. at 507 (quotations omitted). When contemplating the applicability of the government contractor or combatant activities defenses, counsel must focus on the nature and extent of the government's involvement in the conduct giving rise to the claim, whether in establishing specifications for the contractor's equipment or in directing the contractor's services in support of hostile military action. If the government exercised its discretion over the performance of the contract, one of these defenses will likely dispose of the claim.

The Government Contractor Defense: Boyle v. United Technologies Corp.

The government contractor defense was first articulated by the United States Supreme Court in Boyle v. United Technologies Corp., 487 U.S. 500 (1988), and emanates from the FTCA. See Boyle, 487 U.S. at 511; Densberger v. United Technologies Corp., 297 F.3d 66, 75 (2nd Cir. 2002). In Boyle, the Supreme Court relied on the FTCA in determining that protection for discretionary action taken by federal agencies and employees implies similar protection for government contractors. Boyle, 487 U.S. at 511-512. In Section 2674 of the FTCA, Congress waived the government's sovereign immunity by allowing the recovery of tort damages against the United States “in the same manner and to the same extent as a private individual under like circumstances ' .” Congress carved out an exception to this waiver of immunity in section 2680(a), however, for any claim based upon “the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused.” Boyle extends an analogous protection to government contractors by preempting state tort law claims when they conflict with a significant federal interest.

The Boyle case was filed on behalf of a Marine helicopter pilot who died in a helicopter crash. His estate alleged that the helicopter's escape hatch was defectively designed. The Supreme Court affirmed reversal of a jury verdict in favor of plaintiff, holding that the helicopter manufacturer was protected from liability based on the government contractor defense. The Boyle Court found that the government's selection of an appropriate design for equipment to be used by the military was a discretionary function within the meaning of the FTCA. Boyle reasoned that such a decision involved not merely engineering assessments but judgment as to the balancing of military, technical, and even social considerations, including the trade-off between combat effectiveness and greater safety.

Boyle recognized that it made “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.” 487 U.S. at 512. Ultimately, Boyle held that state tort law which would hold government contractors liable for design defects in military equipment presented a “significant conflict” with federal policy and, therefore, must be displaced. Id. With these words, the Supreme Court firmly established the fundamentals of the government contractor defense ' that the “uniquely federal interest” of “getting the Government's work done” warrants protecting government contractors from state tort law. Boyle, 487 U.S. at 505 (internal quotes omitted).

The government contractor preemption established in Boyle has limits. It is restricted to instances where: “(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.” 487 U.S. at 512. The first two conditions assure that a questioned design, or lack thereof, was considered within the discretionary function of a government official, and not solely by the contractor. The third condition ensures that manufacturers do not withhold knowledge of risks that are relevant to the government official's exercise of discretion.

Failure-to-Warn: Grispo v. Molly-Picher Industries, Inc.

Although first applied to pure design defect claims, the government contractor defense has since been extended to failure-to-warn claims, e.g., Grispo, 897 F.2d 626 (2nd Cir. 1990). A government contractor is entitled to immunity from a state law failure-to-warn claim if it establishes: 1) government control over the nature of the product warnings; 2) the contractor's compliance with the government's directions; and 3) the contractor's communication to the government of all product dangers known to it but not known to the government. Grispo, 897 F.2d at 630 n. 4; Densberger, 297 F.3d at 75, n. 11. As the Second Circuit explained in Grispo:

[w]hen a federal contract and state tort law give contrary messages as to the nature and content of required product warnings, they cause the sort of conflict Boyle found so detrimental to the federal interest in regulating the liabilities of military contractors. Just as with conflicting federal and state design requirements, the existence of conflicting federal and state warning requirements can undermine the Government's ability to control military procurement. 897 F.2d at 626.

The defense thus shields a government contractor from tort liability for an alleged failure-to-warn in those circumstances where “the government controlled which warnings the contractor was allowed to provide to those users, and thereby precluded the warnings at issue from being given.” Densberger, 297 F.3d at 75. III.

Recent Refinements: In Re Agent Orange

The Second Circuit recently honed its analysis of the nature of the government involvement implicated by the government contractor defense in In re “Agent Orange” Prod. Liab. Litig., 517 F.3d 76 (2nd Cir. 2008), cert. denied, No. 08-461 (U.S. March 2, 2009), and cert. denied, No. 08-460 (U.S. March 2, 2009) (“Agent Orange“). At issue in Agent Orange was whether summary judgment was properly granted in favor of the defendant manufacturers of Agent Orange and other chemicals on design defect claims. Plaintiffs sought recovery for personal injuries allegedly caused by exposure to the chemicals during military operations. Plaintiffs argued that the defendants had failed to show the government approved reasonably precise specifications for the allegedly defective chemicals. The Second Circuit disagreed.

Agent Orange was one of several herbicides used by the United States during the Vietnam war in connection with “Operation Ranch Hand,” the code name for the military's efforts to defoliate forests and mangroves as a tactic for decreasing the enemy armed forces' food supply and protective cover. The government purchased the defoliants from the defendants, whose contracts were subject to various government directives and regulations under the Defense Production Act of 1950. The defendants were able to procure equipment and otherwise scarce materials necessary to produce Agent Orange because the United States considered its delivery an essential part of the prosecution of the war. Plaintiffs claimed that Agent Orange was designed defectively because it contained dioxin, a by-product of the manufacturing process, which allegedly caused their injuries. The dioxin played no role in the function or effectiveness of Agent Orange, and plaintiffs argued that the defendants could have used a production method that would have eliminated it.

Plaintiffs asserted that the government exercised no discretionary authority in creating the specifications of Agent Orange, which was essentially an “off-the-shelf” product. Although the Second Circuit agreed that, “where the government is merely an incidental purchaser, the seller was not following the government's discretionary procurement decisions,” it found that plaintiffs misconceived “the nature of the government involvement necessary to invoke the contractor defense.” Agent Orange, 517 F.3d at 90-91. The court noted that “it is necessary only that the government approve, rather than create, the specifications,” and that the government “exercises adequate discretion over the contract specifications to invoke the [government contractor] defense if it independently and meaningfully reviews the specifications such that the government remains the agent of decision.” Id. at 91. The court found that the government was plainly the “agent of decision,” and that no reasonable jury could find that the government exercised insufficient discretion for it to have been said to have “approved” the specifications for the herbicides. Id. at 92.

The Second Circuit also noted that, where a “contractor could comply with both its contractual obligations and the state-prescribed duty of care, displacement generally would not be warranted, and state law would apply.” Id. at 93. The court emphasized that the first Boyle requirement was designed precisely to ensure that a state law conflict existed. Indeed, the court observed that “answering the question whether the government approved reasonably precise specifications for the design feature in question necessarily answers the question whether the federal contract conflicts with state law.” Id.

In Agent Orange, the manufacturers were aware of the dioxin by-product in the defoliating products and the harm it could cause to production workers during manufacture. The government had also evaluated the effects of the by-product, not in the manufacture of the product, but in its actual use. The third element of the government contractor defense requires that the defendant communicate all product dangers known to it, but not known to the government. Boyle, 487 U.S. at 512. Before Agent Orange, the Second Circuit noted that “neither [it] nor the Supreme Court ha[d] been called upon to decide, post-Boyle, what constitutes 'knowledge' of a 'danger' that would trigger a duty to inform as to the 'equipment being ordered'” by the government. Agent Orange, 517 F.3d at 98. Despite the defendants' knowledge of certain hazards relating to Agent Orange, the Second Circuit held that they “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. The Second Circuit further concluded that Boyle does not require a defendant 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. ' 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.” 517 F.3d at 98-99 (quoting Boyle, 487 U.S. at 505) (emphasis in original).

The Second Circuit concluded that, when the government reorders a product with knowledge of its alleged defect, the government has, in fact, approved reasonably precise specifications for that product such that the manufacturer qualifies for the government contractor defense for any defects in the design of that product. See also Lewis v. Babcock Industries, Inc., 985 F.2d 83, 88 (2nd Cir. 1993). The Agent Orange court found that the government had made an express determination that Agent Orange posed no unacceptable hazard for the wartime use for which it was intended, and that the product should continue to be manufactured and supplied to it. Ultimately, the Agent Orange case held that any alleged state law rules to the contrary must be displaced, noting that “[c]onsiderations of the validity of [military] objectives and the reasons for which the military seeks them are far beyond the competence of this Court.” Agent Orange, 517 F.3d at 102.

On Oct. 6, 2008, certain Agent Orange plaintiffs filed petitions for a writ of certiorari in the United States Supreme Court, asserting that the Second Circuit's decision in Agent Orange conflicts with the application of Boyle in other Circuit Courts of Appeals ' among other things, in the meaning of “reasonably precise specifications” and in the breadth of the requirement that government contractors inform the government of safety and health information known to the contractor. See Petition for Writ of Certiorari, Stephenson v. Dow Chem. Co., 2008 WL 4525352, No. 08-461 (U.S. October 6, 2008). Certiorari was denied by the Court on March 2, 2009. See Stephenson v. Dow Chem. Co., No. 08-461 (U.S. March 2, 2009).

The Combatant Activities Exception

The government contractor defense has typically arisen in cases involving allegedly defective military equipment. However, there is also a “combatant activities exception” to the waiver of sovereign immunity under the FTCA, which bars suit against the United States for “[a]ny claim arising out of the combatant activities of the military or naval forces, or the Coast Guard, during the time of war.” 28 U.S.C. ' 2680(j). This defense has been extended to government contractors that have supplied products or services to the government, which were then implicated in claims arising from combatant activities. As a threshold matter, the contractors must have been engaged in “activities both necessary to and in direct connection with actual hostilities.” Johnson, supra, 170 F.2d at 770. The purpose of the defense “is to recognize that, during wartime encounters, no duty of reasonable care is owed to those against whom force is directed as a result of authorized military action.” Koohi v. United States, 976 F.2d 1328, 1337 (9th Cir. 1992), cert. denied, 508 U.S. 960 (1993).

Koohi arose from hostilities between the United States and Iran during the Iran-Iraq war in the 1980s. During that conflict, the U.S. Navy sometimes engaged Iranian naval forces in order to protect shipping in the Persian Gulf. In the aftermath of one such engagement, an unidentified civilian airliner took off from an Iranian air base in the vicinity of the USS Vincennes. The crew of the Vincennes mistook the airliner for an Iranian military aircraft and shot it down, killing all of the passengers. Some of the heirs of deceased passengers sued the United States, the Navy, and certain government contractors. The Ninth Circuit affirmed dismissal of the claims against the governmental defendants because they were immune from suit. Koohi, 976 F.2d at 1333.

As to the government contractors, plaintiffs asserted that a design defect in the Aegis air defense system contributed to the misidentification of the airliner as a military aircraft. Citing Boyle and the combatant activities exception to the FTCA, the Ninth Circuit affirmed dismissal of these claims, holding that they were preempted. The court noted that one purpose of the combatant activities exception “is to recognize that during wartime encounters no duty of reasonable care is owed to those against whom force is directed as a result of authorized military action.” Koohi, 976 F.2d at 1337.

More recently, the combatant activities exception was invoked by government contractors against claims arising not from products, but from services they provided in Iraq. In Ibrahim v. Titan Corp., 556 F. Supp. 2d 1 (D.D.C. 2007), plaintiffs alleged that they were tortured or otherwise mistreated while detained by United States military forces at Abu Ghraib and other prisons in Iraq. The plaintiffs brought suit for claims including wrongful death, assault and battery, and intentional infliction of emotional distress against the government contractors who provided the prison interpreters and interrogators. The court found that the FTCA's combatant activities exception protected one contractor, but not the other, based upon the character of governmental supervision of their respective activities.

Ibrahim was among the first cases to address the “tortious acts or omissions of civilian contractors in the course of rendering services, during 'wartime encounters.'” See Ibrahim, 556 F. Supp. 2d at 3. According to Ibrahim, “the degree of operational control exercised by the military over contract employees is dispositive.” Id. at 5. When the government allows the contractor to manage and oversee their employees' job performance on the battlefield, “no federal interest supports relieving those contractors of their state law obligations to select, train, and supervise their employees properly.” Id.

In the case of the first defendant, the military gave all orders that determined how the defendant's translators performed their duties, and those duties were performed under the direct command and exclusive operational control of military personnel. In the case of the second, however, the defendant's own employees supervised its interrogators, and the defendant was required to report abuse, not only to the military chain of command, but also up through its own company ranks. Further, the second defendant's supervisors had the authority to direct its interrogators not to carry out an interrogation plan that was inconsistent with its policies. Though both defendants met the threshold requirement of “direct connection with actual hostilities,” only one defendant was able to establish that its employees were “under the direct command and exclusive operational control of the military chain of command.” Id. at 4. This was the dispositive question.

Citing Hudgens v. Bell Helicopters, 328 F.3d 1329, 1345 (11th Cir. 2003), Ibrahim succinctly concluded that “preemption does not depend on what type of contract the defendant had with the military (i.e., one for goods or one for services),” but instead, “whether subjecting a contractor to liability under state tort law would create a significant conflict with a unique federal interest.” Ibrahim, 556 F. Supp. 2d at 4.

Conclusion

The key factor in succeeding with either the government contractor defense or the combatant activities exception is the ability to establish that the government exercised its discretion over the manner in which the contract was performed. As the above cases demonstrate, these defenses are invaluable tools in defending a broad range of claims against government contractors.

Marc Crowley is Counsel in Day Pitney's Morrison, NJ office. He practices in the areas of product liability and mass tort defense, shareholder and securitieslitigation, and general commercial matters in the federal and state courts of New York and New Jersey. Nexus Sea practices in the areas of product liability, tort litigation, and general commercial litigation matters in the federal and state courts of New Jersey. Sea regularly defends manufacturers against personal injury and wrongful death suits.

The federal government enjoys sovereign immunity from tort claims arising from its discretionary actions. Contractors acting at the government's behest are similarly protected through the preemption of certain state law claims by what have become known as the “government contractor defense” and the “combatant activities exception” to the Federal Tort Claims Act, 28 U.S.C. ' 2671, et seq. (“FTCA”). The object of the government contractor defense is to “'prevent the contractor from being held liable when the government is actually at fault.'” In re World Trade Ctr. Disaster Site Litig. , 456 F. Supp. 2d 520, 560 (S.D.N.Y. 2006) (quoting T revino v. General Dynamics Corp. , 865 F.2d 1474, 1478 (5th Cir. 1989)). Put simply, a contractor avoids liability when it can successfully claim that “[t]he Government made me do it.” In re Joint Eastern and Southern District New York Asbestos Lit. (Grispo v. Molly-Picher Industries, Inc.), 897 F.2d 626, 632 (2nd Cir. 1990) (“Grispo“). Similarly, the combatant activities exception to the FTCA protects government contractors that supply products or services that are implicated in claims arising directly from military action. See, e.g., United States v. Johnson , 170 F.2d 767 (9th Cir. 1948). These defenses are available to a contractor when the imposition of tort liability would “significantly conflict” with a “uniquely federal interest.” Boyle, 487 U.S. at 507 (quotations omitted). When contemplating the applicability of the government contractor or combatant activities defenses, counsel must focus on the nature and extent of the government's involvement in the conduct giving rise to the claim, whether in establishing specifications for the contractor's equipment or in directing the contractor's services in support of hostile military action. If the government exercised its discretion over the performance of the contract, one of these defenses will likely dispose of the claim.

The Government Contractor Defense: Boyle v. United Technologies Corp .

The government contractor defense was first articulated by the United States Supreme Court in Boyle v. United Technologies Corp. , 487 U.S. 500 (1988), and emanates from the FTCA. See Boyle, 487 U.S. at 511; Densberger v. United Technologies Corp. , 297 F.3d 66, 75 (2nd Cir. 2002). In Boyle, the Supreme Court relied on the FTCA in determining that protection for discretionary action taken by federal agencies and employees implies similar protection for government contractors. Boyle, 487 U.S. at 511-512. In Section 2674 of the FTCA, Congress waived the government's sovereign immunity by allowing the recovery of tort damages against the United States “in the same manner and to the same extent as a private individual under like circumstances ' .” Congress carved out an exception to this waiver of immunity in section 2680(a), however, for any claim based upon “the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused.” Boyle extends an analogous protection to government contractors by preempting state tort law claims when they conflict with a significant federal interest.

The Boyle case was filed on behalf of a Marine helicopter pilot who died in a helicopter crash. His estate alleged that the helicopter's escape hatch was defectively designed. The Supreme Court affirmed reversal of a jury verdict in favor of plaintiff, holding that the helicopter manufacturer was protected from liability based on the government contractor defense. The Boyle Court found that the government's selection of an appropriate design for equipment to be used by the military was a discretionary function within the meaning of the FTCA. Boyle reasoned that such a decision involved not merely engineering assessments but judgment as to the balancing of military, technical, and even social considerations, including the trade-off between combat effectiveness and greater safety.

Boyle recognized that it made “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.” 487 U.S. at 512. Ultimately, Boyle held that state tort law which would hold government contractors liable for design defects in military equipment presented a “significant conflict” with federal policy and, therefore, must be displaced. Id. With these words, the Supreme Court firmly established the fundamentals of the government contractor defense ' that the “uniquely federal interest” of “getting the Government's work done” warrants protecting government contractors from state tort law. Boyle, 487 U.S. at 505 (internal quotes omitted).

The government contractor preemption established in Boyle has limits. It is restricted to instances where: “(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.” 487 U.S. at 512. The first two conditions assure that a questioned design, or lack thereof, was considered within the discretionary function of a government official, and not solely by the contractor. The third condition ensures that manufacturers do not withhold knowledge of risks that are relevant to the government official's exercise of discretion.

Failure-to-Warn: Grispo v. Molly-Picher Industries, Inc.

Although first applied to pure design defect claims, the government contractor defense has since been extended to failure-to-warn claims, e.g., Grispo, 897 F.2d 626 (2nd Cir. 1990). A government contractor is entitled to immunity from a state law failure-to-warn claim if it establishes: 1) government control over the nature of the product warnings; 2) the contractor's compliance with the government's directions; and 3) the contractor's communication to the government of all product dangers known to it but not known to the government. Grispo, 897 F.2d at 630 n. 4; Densberger, 297 F.3d at 75, n. 11. As the Second Circuit explained in Grispo:

[w]hen a federal contract and state tort law give contrary messages as to the nature and content of required product warnings, they cause the sort of conflict Boyle found so detrimental to the federal interest in regulating the liabilities of military contractors. Just as with conflicting federal and state design requirements, the existence of conflicting federal and state warning requirements can undermine the Government's ability to control military procurement. 897 F.2d at 626.

The defense thus shields a government contractor from tort liability for an alleged failure-to-warn in those circumstances where “the government controlled which warnings the contractor was allowed to provide to those users, and thereby precluded the warnings at issue from being given.” Densberger, 297 F.3d at 75. III.

Recent Refinements: In Re Agent Orange

The Second Circuit recently honed its analysis of the nature of the government involvement implicated by the government contractor defense in In re “Agent Orange” Prod. Liab. Litig., 517 F.3d 76 (2nd Cir. 2008), cert. denied, No. 08-461 (U.S. March 2, 2009), and cert. denied, No. 08-460 (U.S. March 2, 2009) (“Agent Orange“). At issue in Agent Orange was whether summary judgment was properly granted in favor of the defendant manufacturers of Agent Orange and other chemicals on design defect claims. Plaintiffs sought recovery for personal injuries allegedly caused by exposure to the chemicals during military operations. Plaintiffs argued that the defendants had failed to show the government approved reasonably precise specifications for the allegedly defective chemicals. The Second Circuit disagreed.

Agent Orange was one of several herbicides used by the United States during the Vietnam war in connection with “Operation Ranch Hand,” the code name for the military's efforts to defoliate forests and mangroves as a tactic for decreasing the enemy armed forces' food supply and protective cover. The government purchased the defoliants from the defendants, whose contracts were subject to various government directives and regulations under the Defense Production Act of 1950. The defendants were able to procure equipment and otherwise scarce materials necessary to produce Agent Orange because the United States considered its delivery an essential part of the prosecution of the war. Plaintiffs claimed that Agent Orange was designed defectively because it contained dioxin, a by-product of the manufacturing process, which allegedly caused their injuries. The dioxin played no role in the function or effectiveness of Agent Orange, and plaintiffs argued that the defendants could have used a production method that would have eliminated it.

Plaintiffs asserted that the government exercised no discretionary authority in creating the specifications of Agent Orange, which was essentially an “off-the-shelf” product. Although the Second Circuit agreed that, “where the government is merely an incidental purchaser, the seller was not following the government's discretionary procurement decisions,” it found that plaintiffs misconceived “the nature of the government involvement necessary to invoke the contractor defense.” Agent Orange, 517 F.3d at 90-91. The court noted that “it is necessary only that the government approve, rather than create, the specifications,” and that the government “exercises adequate discretion over the contract specifications to invoke the [government contractor] defense if it independently and meaningfully reviews the specifications such that the government remains the agent of decision.” Id. at 91. The court found that the government was plainly the “agent of decision,” and that no reasonable jury could find that the government exercised insufficient discretion for it to have been said to have “approved” the specifications for the herbicides. Id. at 92.

The Second Circuit also noted that, where a “contractor could comply with both its contractual obligations and the state-prescribed duty of care, displacement generally would not be warranted, and state law would apply.” Id. at 93. The court emphasized that the first Boyle requirement was designed precisely to ensure that a state law conflict existed. Indeed, the court observed that “answering the question whether the government approved reasonably precise specifications for the design feature in question necessarily answers the question whether the federal contract conflicts with state law.” Id.

In Agent Orange, the manufacturers were aware of the dioxin by-product in the defoliating products and the harm it could cause to production workers during manufacture. The government had also evaluated the effects of the by-product, not in the manufacture of the product, but in its actual use. The third element of the government contractor defense requires that the defendant communicate all product dangers known to it, but not known to the government. Boyle, 487 U.S. at 512. Before Agent Orange, the Second Circuit noted that “neither [it] nor the Supreme Court ha[d] been called upon to decide, post-Boyle, what constitutes 'knowledge' of a 'danger' that would trigger a duty to inform as to the 'equipment being ordered'” by the government. Agent Orange, 517 F.3d at 98. Despite the defendants' knowledge of certain hazards relating to Agent Orange, the Second Circuit held that they “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. The Second Circuit further concluded that Boyle does not require a defendant 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. ' 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.” 517 F.3d at 98-99 (quoting Boyle, 487 U.S. at 505) (emphasis in original).

The Second Circuit concluded that, when the government reorders a product with knowledge of its alleged defect, the government has, in fact, approved reasonably precise specifications for that product such that the manufacturer qualifies for the government contractor defense for any defects in the design of that product. See also Lewis v. Babcock Industries, Inc. , 985 F.2d 83, 88 (2nd Cir. 1993). The Agent Orange court found that the government had made an express determination that Agent Orange posed no unacceptable hazard for the wartime use for which it was intended, and that the product should continue to be manufactured and supplied to it. Ultimately, the Agent Orange case held that any alleged state law rules to the contrary must be displaced, noting that “[c]onsiderations of the validity of [military] objectives and the reasons for which the military seeks them are far beyond the competence of this Court.” Agent Orange, 517 F.3d at 102.

On Oct. 6, 2008, certain Agent Orange plaintiffs filed petitions for a writ of certiorari in the United States Supreme Court, asserting that the Second Circuit's decision in Agent Orange conflicts with the application of Boyle in other Circuit Courts of Appeals ' among other things, in the meaning of “reasonably precise specifications” and in the breadth of the requirement that government contractors inform the government of safety and health information known to the contractor. See Petition for Writ of Certiorari, Stephenson v. Dow Chem. Co., 2008 WL 4525352, No. 08-461 (U.S. October 6, 2008). Certiorari was denied by the Court on March 2, 2009. See Stephenson v. Dow Chem. Co., No. 08-461 (U.S. March 2, 2009).

The Combatant Activities Exception

The government contractor defense has typically arisen in cases involving allegedly defective military equipment. However, there is also a “combatant activities exception” to the waiver of sovereign immunity under the FTCA, which bars suit against the United States for “[a]ny claim arising out of the combatant activities of the military or naval forces, or the Coast Guard, during the time of war.” 28 U.S.C. ' 2680(j). This defense has been extended to government contractors that have supplied products or services to the government, which were then implicated in claims arising from combatant activities. As a threshold matter, the contractors must have been engaged in “activities both necessary to and in direct connection with actual hostilities.” Johnson, supra, 170 F.2d at 770. The purpose of the defense “is to recognize that, during wartime encounters, no duty of reasonable care is owed to those against whom force is directed as a result of authorized military action.” Koohi v. United States , 976 F.2d 1328, 1337 (9th Cir. 1992), cert. denied, 508 U.S. 960 (1993).

Koohi arose from hostilities between the United States and Iran during the Iran-Iraq war in the 1980s. During that conflict, the U.S. Navy sometimes engaged Iranian naval forces in order to protect shipping in the Persian Gulf. In the aftermath of one such engagement, an unidentified civilian airliner took off from an Iranian air base in the vicinity of the USS Vincennes. The crew of the Vincennes mistook the airliner for an Iranian military aircraft and shot it down, killing all of the passengers. Some of the heirs of deceased passengers sued the United States, the Navy, and certain government contractors. The Ninth Circuit affirmed dismissal of the claims against the governmental defendants because they were immune from suit. Koohi, 976 F.2d at 1333.

As to the government contractors, plaintiffs asserted that a design defect in the Aegis air defense system contributed to the misidentification of the airliner as a military aircraft. Citing Boyle and the combatant activities exception to the FTCA, the Ninth Circuit affirmed dismissal of these claims, holding that they were preempted. The court noted that one purpose of the combatant activities exception “is to recognize that during wartime encounters no duty of reasonable care is owed to those against whom force is directed as a result of authorized military action.” Koohi, 976 F.2d at 1337.

More recently, the combatant activities exception was invoked by government contractors against claims arising not from products, but from services they provided in Iraq. In Ibrahim v. Titan Corp. , 556 F. Supp. 2d 1 (D.D.C. 2007), plaintiffs alleged that they were tortured or otherwise mistreated while detained by United States military forces at Abu Ghraib and other prisons in Iraq. The plaintiffs brought suit for claims including wrongful death, assault and battery, and intentional infliction of emotional distress against the government contractors who provided the prison interpreters and interrogators. The court found that the FTCA's combatant activities exception protected one contractor, but not the other, based upon the character of governmental supervision of their respective activities.

Ibrahim was among the first cases to address the “tortious acts or omissions of civilian contractors in the course of rendering services, during 'wartime encounters.'” See Ibrahim, 556 F. Supp. 2d at 3. According to Ibrahim, “the degree of operational control exercised by the military over contract employees is dispositive.” Id. at 5. When the government allows the contractor to manage and oversee their employees' job performance on the battlefield, “no federal interest supports relieving those contractors of their state law obligations to select, train, and supervise their employees properly.” Id.

In the case of the first defendant, the military gave all orders that determined how the defendant's translators performed their duties, and those duties were performed under the direct command and exclusive operational control of military personnel. In the case of the second, however, the defendant's own employees supervised its interrogators, and the defendant was required to report abuse, not only to the military chain of command, but also up through its own company ranks. Further, the second defendant's supervisors had the authority to direct its interrogators not to carry out an interrogation plan that was inconsistent with its policies. Though both defendants met the threshold requirement of “direct connection with actual hostilities,” only one defendant was able to establish that its employees were “under the direct command and exclusive operational control of the military chain of command.” Id. at 4. This was the dispositive question.

Citing Hudgens v. Bell Helicopters , 328 F.3d 1329, 1345 (11th Cir. 2003), Ibrahim succinctly concluded that “preemption does not depend on what type of contract the defendant had with the military ( i.e. , one for goods or one for services),” but instead, “whether subjecting a contractor to liability under state tort law would create a significant conflict with a unique federal interest.” Ibrahim , 556 F. Supp. 2d at 4.

Conclusion

The key factor in succeeding with either the government contractor defense or the combatant activities exception is the ability to establish that the government exercised its discretion over the manner in which the contract was performed. As the above cases demonstrate, these defenses are invaluable tools in defending a broad range of claims against government contractors.

Marc Crowley is Counsel in Day Pitney's Morrison, NJ office. He practices in the areas of product liability and mass tort defense, shareholder and securitieslitigation, and general commercial matters in the federal and state courts of New York and New Jersey. Nexus Sea practices in the areas of product liability, tort litigation, and general commercial litigation matters in the federal and state courts of New Jersey. Sea regularly defends manufacturers against personal injury and wrongful death suits.