Going on the Offense with the Government
Contractor Defense
Denny Shupe and Tracey Dolin1
Schnader Harrison Segal & Lewis LLP
Philadelphia, PA
[email protected]
In defending government contractors,
an important defense that counsel
must consider from day one is the
government contractor defense. It is
well established that the government
contractor defense may grant immunity to contractors who provide equipment to the United States federal
government on the theory that a contractor should not be liable for providing a product pursuant to government
directives. Successfully applied, it is
an invaluable tool for defendants to go
on the offensive and, in the right case,
obtain summary judgment. Although
the government contractor defense
historically has been used by manufacturers, it more recently has been
applied to grant immunity to companies providing services pursuant to
contracts with the federal government.
The government contractor defense
was espoused by the Supreme Court
in Boyle v. United Technologies Corp.2
In Boyle, the Supreme Court recognized that there are areas that involve
“uniquely federal interests” and held
that performance under a federal procurement contract implicates such an
interest. The Court stated that, in order to displace state law, a “significant
conflict” must exist between an identifiable federal policy or interest and
the operation of state law. In Boyle,
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the Court found that the state-imposed duty of care was precisely contrary to the duty imposed by the
government contract and, therefore, a
“significant conflict” existed that warranted the displacement of state law.3
To decide whether a “significant
conflict” that would displace state law
exists, the Supreme Court outlined a
three-prong test to determine whether
a judgment against the contractor
would threaten a discretionary function of the federal government.4 The
Court reasoned that government contractors are immunized from liability
when (1) the government approved
reasonably precise specifications; (2)
the equipment conformed to those
specifications; and (3) the contractor
warned the government about the
dangers in the use of the equipment
that were known to the contractor but
not to the government.
Because most cases applying the
government contractor defense deal
with procurement contracts, application of the Boyle test typically focuses
on design defects. As discussed below,
recent case law has shown some courts
narrowly interpreting the defense in
the nature of the strict proofs required
to show the government approved reasonably precise specifications, and
that the contractor warned of the dangers known to it but not the government. A more recent and important
development has involved application
of the Boyle test in the context of service contracts.
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With respect to the first prong of
the Boyle test, government approval of
reasonably precise specifications, the
key inquiry is whether the government exercised discretion over the particular design feature in question.
Documents such as initial design and
procurement specifications, drawings,
blueprints and mock-ups that were
exchanged between the government
and the contractor should be obtained. What the courts look for is a
“continuous back-and-forth” discussion between the contractor and the
government. It is not enough that the
government signed-off or initialed the
bottom of the specifications. Rather,
the government must have had a considerable amount of substantive input
and not have delegated critical design
decisions to the private contractor.
This does not mean that the contractor cannot actively participate in the
design process. It means that the government cannot merely “rubberstamp” the contractor’s work.
The second prong of the Boyle test,
conformance to the government’s
specifications, is closely related to the
first. Proof of conformance to the
government’s specifications also is evidence that it was the government, not
the contractor, that exercised discretion over the feature at issue. Deviation during the manufacturing process
from the government’s specifications
could mean that the contractor exercised discretion in the manufacturing
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of the equipment, or that it introduced a manufacturing defect.
An argument that has been raised
is whether the government contractor
defense applies to manufacturing defects as opposed to design defects.5
The defense applies if the plaintiff alleges that all of the pieces of equipment contained the same
manufacturing defect and the equipment was manufactured according to
the government’s specifications. It
does not apply, however, where a particular piece of equipment was made
improperly (contrary to government
specifications), or where there was
“shoddy workmanship.” In those circumstances, the government did not
exercise discretion and the contractor
is not protected.
The third prong of the government
contractor defense requires that the
contractor warn the government
about the dangers of the equipment
that were known to the contractor but
not to the government. This prong is
required to encourage contractors to
share information with the government. One way to prove this prong is
to provide clear evidence that the contractor warned the government about
the particular defect at issue and the
government chose not to alter the design. Another way is to argue that the
contractor was no more aware of the
danger than was the government. In
Oliver v. Oshkosh Truck Corp.,6 the
contractor successfully argued that it
was not “more aware” of any danger
associated with the configuration of
the fuel tanks and exhaust system
than was the Marine Corps.7
In addition to design defect claims,
many plaintiffs bring failure-to-warn
claims to which the government contractor defense may apply. In Oliver,
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the Seventh Circuit held that a “defendant may not defeat a state failureto-warn claim simply by establishing
the elements of the government contractor defense with respect to a
plaintiff ’s design claim.”8 The court
found that failure-to-warn claims differed practically as well as theoretically from design claims, but applied
the Boyle test to the failure-to-warn
claims because similar policy considerations controlled both the design defect and failure-to-warn situations.
The Oliver court held that summary
judgment was properly granted because Oshkosh met the first prong by
proving that the Marine Corps imposed “reasonably precise specifications” with respect to the warnings,
and met the second prong by complying with the Marine Corps’ warnings.
Interestingly, even though the Oliver
court stated that failure-to-warn
claims were different from design defect claims, the court relied on the
proof submitted for the design defect
claim under the third prong to support a finding that Oshkosh did not
fail to warn the Marine Corps of any
dangers in the use of the equipment
that were known to Oshkosh but not
to the Marine Corps.
Although the government contractor defense has been primarily used
with procurement contracts, recent
cases such as Arnhold v. McDonnell
Douglas Corp.,9 and Hudgens v. Bell
Helicopters/Textron10 extended the application of the defense to service contracts.
In Arhnold, a landowner brought a
claim against McDonnell Douglas for
property damage to his building
caused by sonic booms from military
aircraft owned by or under the control
of McDonnell Douglas. McDonnell
Douglas moved for summary judgSkywritings
ment on the ground that it was entitled to immunity under the government contractor defense. The plaintiff
argued that Boyle did not extend to
government service contracts.
The trial court disagreed and said
that not only does Boyle extend to
government service contracts, but that
the Supreme Court’s decision in Boyle
relied heavily on Yearsley v. W.A. Ross
Construction Co.,11 which held that a
contractor who had constructed dikes
pursuant to a contract with the federal government could not be held liable for damages under state law if he
was performing according to the will
of the federal government. Indeed,
Justice Scalia writing for the majority
in Boyle stated that “[t]he federal interest justifying [the holding in
Yearsley] surely exists as much in procurement contracts as in performance contracts; we see no basis for a distinction.”12
In Arnhold, the court modified the
Boyle test to require that the contractor show: (1) reasonably precise flight
procedures and government approval
of the procedures; (2) that the procedures it actually employed conformed
to those specifications; and (3) that it
warned the government about dangers
in the flight procedures that were
known to the contractor but not to
the United States.
In Hudgens, DynCorp was under
contract with the Army to maintain a
fleet of UH-1 or “Huey” helicopters at
the Army’s base in Fort Rucker, Alabama. On May 1, 1999, plaintiffs
were piloting one of the Huey helicopters when the tail fin separated
from the aircraft resulting in a crash.
Plaintiffs claimed that DynCorp was
negligent under Alabama law for failing to properly maintain the helicopter by not following either the FAA’s
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airworthiness directive (providing that
operators inspect a modified fin spar
for cracks at least once during each
subsequent eight hours of flight time,
using a bright light and a 10X magnifying glass) or Bell Helicopter’s “Military Alert Bulletin” (recommending
“tap hammer” and fluorescent dye
penetrant inspections within 25 flight
hours of the bulletin’s receipt and at
180-day intervals thereafter).
The trial court granted summary
judgment finding that the government contractor defense applied to
service contracts and that the defendant met all three prongs of the Boyle
test as a matter of law.13 The Eleventh
Circuit affirmed the ruling of the trial
court, stating, “…the government
contractor defense recognized in Boyle
is applicable to the service contract
between the Army and DynCorp.” In
so holding, the Eleventh Circuit
modified the Boyle test to require that
defendant show: (1) the United States
approved reasonably precise maintenance procedures; (2) DynCorp’s performance of maintenance conformed
to those procedures; and (3)
DynCorp warned the United States
about the dangers in reliance on the
procedures that were known to
DynCorp but not to the United
States.
The Court found that DynCorp
passed the Boyle test by presenting
evidence that: (1) the Army’s maintenance guidelines constituted a comprehensive regime that DynCorp was
not expected to supplement through
any procedures other than those specifically set forth, and that the precautions advised by the FAA and Bell had
been affirmatively and deliberately
omitted by the Army from the prescribed maintenance procedures; (2)
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DynCorp was not expected to conform to the FAA and Bell procedures,
and there was no crack visible to the
naked eye during the pertinent time
that mechanics following Army procedures should have looked at the relevant portion of the fin spar; and (3)
the Army was well aware of the danger
described in the FAA directive and
Bell bulletin regarding inspection of
the fin spar and that the Army decided not to implement the precautions (this prong was conceded to by
the plaintiffs as having been met by
DynCorp).
As with the decisions regarding
procurement contracts, the key factor
in the Arhnold and Hudgens cases is
that the government retained discretion regarding the danger at issue.
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When planning your defense strategy, one of the first things to explore is application of the
government contractor defense.
Whether for procurement contracts
or service contracts, the government
contractor defense provides an invaluable summary judgment tool
where the factual circumstances exist for its application. However, its
application is very document intensive, will normally involve the need
for supportive deposition testimony, is applied narrowly and only
when all three Boyle factors are met.
Therefore, a good practice is to obtain all documents and correspondence between the contractor and
the government very early on in the
litigation and to inquire of the key
players about the circumstances addressed in the documents. The goal
is to present documents and testimony that show that the government maintained discretion over
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the allegedly defective part or procedure in question.
1
Mr. Shupe, a retired Air Force pilot, is Chair
of the Aviation Group at Schnader Harrison
Segal & Lewis LLP and Vice Chair of DRI’s
Aerospace Law Committee. Ms. Dolin is a
member of Schnader’s Aviation Group, and both
are resident in the firm’s Philadelphia office.
2
487 U.S. 500 (1988).
3
Such conflict with state law is not automatic.
For example, a government officer who orders, by model number, a quantity of stock
helicopters that happen to contain a particular feature was viewed by the Supreme Court
in Boyle not to have any significant interest in
that feature and, therefore, there was no conflict with state law.
4
“After Boyle, the discretionary function exception to the Federal Claims Tort Act indicates
the scope of the government contractor defense.” Carley v. Wheeled Coach, 991 F.2d
1117, 1122 (3d Cir. 1993).
5
See, e.g., Harduvel v. General Dynamics Corp.,
878 F.2d 1311, 1317-18 (11th Cir. 1989)
6
96 F.3d 992, 1001 (7th Cir. 1996).
7
See also Miller v. Honeywell Int’l Inc., 2002 U.S.
Dist. LEXIS 20474, at *65 (S.D. Ind. Sept.
30, 2002) (finding defendant met its prima
facie burden under the third prong of the
Boyle test by showing that the Army engineers
were fully aware of the dangers of leaving the
“old magnetic plugs” in place), aff ’d, 2004
U.S. App. LEXIS 15261 (7th Cir. July 21,
2004), petit. for cert. dismissed, 2005 U.S.
LEXIS 1 (U.S. Jan. 3, 2005). But see Carley v.
Wheeled Coach, 991 F.2d 1117, 1126 (3d Cir.
1993) (finding that defendant did not establish that the government was well aware of
the roll-over propensities of vehicles with
high centers of gravity).
8
96 F.3d 992, 1003 (7th Cir. 1996).
9
992 S.W.2d 346, (Ct. App. Mo. 1999).
10
328 F.3d 1329 (11th Cir. 2003).
11
309 U.S. 18 (1940).
12
Boyle, 487 U.S. at 506.
13
There were two actions that were not consolidated. However, both judges granted
summary judgment on the grounds that the
government contractor defense applied.
14
Mr. Shupe, a retired Air Force pilot, is Chair
of the Aviation Group at Schnader Harrison
Segal & Lewis LLP and Vice Chair of DRI’s
Aerospace Law Committee. Ms. Dolin is a
member of Schnader’s Aviation Group, and both
are resident in the firm’s Philadelphia office.
15
487 U.S. 500 (1988).
16
Such conflict with state law is not automatic.
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For example, a government officer who orders, by model number, a quantity of stock
helicopters that happen to contain a particular feature was viewed by the Supreme Court
in Boyle not to have any significant interest in
that feature and, therefore, there was no conflict with state law.
17
“After Boyle, the discretionary function exception to the Federal Claims Tort Act indicates
the scope of the government contractor defense.” Carley v. Wheeled Coach, 991 F.2d
1117, 1122 (3d Cir. 1993).
18
See, e.g., Harduvel v. General Dynamics Corp.,
878 F.2d 1311, 1317-18 (11th Cir. 1989)
19
96 F.3d 992, 1001 (7th Cir. 1996).
20
See also Miller v. Honeywell Int’l Inc., 2002
U.S. Dist. LEXIS 20474, at *65 (S.D. Ind.
Sept. 30, 2002) (finding defendant met its
prima facie burden under the third prong of
the Boyle test by showing that the Army engineers were fully aware of the dangers of leaving the “old magnetic plugs” in place), aff ’d,
2004 U.S. App. LEXIS 15261 (7th Cir. July
21, 2004), petit. for cert. dismissed, 2005 U.S.
LEXIS 1 (U.S. Jan. 3, 2005). But see Carley v.
Wheeled Coach, 991 F.2d 1117, 1126 (3d Cir.
1993) (finding that defendant did not establish that the government was well aware of
the roll-over propensities of vehicles with
high centers of gravity).
21
96 F.3d 992, 1003 (7th Cir. 1996).
22
992 S.W.2d 346, (Ct. App. Mo. 1999).
23
328 F.3d 1329 (11th Cir. 2003).
24
309 U.S. 18 (1940).
25
Boyle, 487 U.S. at 506.
26
There were two actions that were not consolidated. However, both judges granted
summary judgment on the grounds that the
government contractor defense applied.
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