An important question in contracting out is always how the contractors’ legal regime differs from the government’s. There are accountability mechanisms in the private sector, but they generally differ from the ones available in the public sector; similarly, the availability of money damages can sometimes change dramatically when a service is contracted out.
A previous post discussed contractors’ immunity in civil rights lawsuits for violations of constitutional rights: sometimes (as in the recent case of Filarsky v. Delia) they have the same “qualified immunity” as government employees, sometimes (as with private prison guards) they don’t. This post discusses a related issue: to what extent contractors can benefit from the government’s sovereign immunity in tort lawsuits. The answer here is similar: sometimes the government’s sovereign immunity is extended to the contractors, sometimes it isn’t. The classic case for immunity is Boyle v. United Technologies Corp. (1988); while such immunity might often make good policy sense, the legal theory used to get there is somewhat sloppy. Several recent cases involving military contractors, including a district court case from March 2013, are distinguishable from Boyle and tend to come out the other way, against immunity.
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Lieutenant David Boyle’s helicopter crashed during a training exercise off the coast of Virginia Beach, Virginia. Boyle drowned because the helicopter’s escape hatch opened outward and therefore couldn’t be opened underwater. Boyle’s father brought a tort suit against United Technologies Corp., the helicopter manufacturer, arguing (among other things) that the escape system’s outward-opening design was defective.
As an initial matter, two things are clear about this private lawsuit between an individual and a private corporation.
First, if the government had built the helicopter itself, this case couldn’t go forward. Because of sovereign immunity, the basic rule is that you can’t sue the United States for money damages. Fortunately for tort plaintiffs, Congress partially waived the federal government’s sovereign immunity in 1946 with the Federal Tort Claims Act (FTCA). The FTCA allows the United States to be sued under state tort law as though it were a private individual, which potentially allows for evenhanded tort treatment as between the public and private sectors. But the FTCA has a number of broad exceptions to the waiver of sovereign immunity (i.e., no-liability rules). One of the biggest exceptions is the “discretionary function exception”: if the government injured you as the result of a discretionary decision, that is, a decision requiring some policy analysis or balancing of costs and benefits, then it’s not liable, even though the discretionary nature of a decision is of course no defense in a private tort suit. There are various other exceptions to liability: for the negligent transmission of the mail; for the detention of goods by customs or law enforcement officers; for a number of intentional torts like battery, libel, or fraud; for claims arising in foreign countries; for claims arising out of combatant activities (remember this one for later); and so on.
The combatant activities exception wouldn’t apply here, since Boyle was merely training in Virginia. But the discretionary function exception would, since the design of an escape hatch involves policy tradeoffs: making an inward-opening hatch might make it easier to escape after a water landing, but it would also limit how much one could store in the cabin without interfering with the hatch, and could even make escape harder if internal items had moved around and were jammed against the hatch.
Second, if United Technologies had designed the helicopter for anyone but the U.S. military, this tort case could easily proceed under Virginia law. Juries second-guess product design decisions all the time, from the safety features of cars to the temperature of coffee. So any bar to the suit would have to attach dispositive significance to the helicopter’s having been designed for the government, in some sense extending the government’s immunity to the contractor.
And this is indeed what the Supreme Court did: in Boyle v. United Technologies Corp. (1988), in an opinion authored by Justice Scalia, it recognized the “military contractor defense.” In general, Scalia wrote, state law isn’t preempted absent some direct conflict with federal law. But this is a case involving “uniquely federal interests,” since any liability for the contractor will either make the product unavailable for the federal government or increase its price. Moreover, that sort of escape hatch was part of the government’s specifications for the helicopter, so Boyle’s claimed tort duty was “precisely contrary to the duty imposed by the Government contract.” So the conflict between state law and federal interests is potentially significant here. That Congress immunized the government’s discretionary decisions through the FTCA’s discretionary function exception strongly suggests that contractors carrying out the same specifications should benefit from the same immunity. The Court constructed a three-part test for whether the conflict is significant enough to warrant extending the government’s immunity to contractors: “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.”
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The result in Boyle makes good policy sense (why treat in-house and contracted-out manufacturing asymmetrically when the basis for liability is a feature specifically demanded by the government?), but its legal reasoning is shaky. Even Justice Scalia, its author, reportedly regrets it.
The most questionable aspect is pinning government contractor immunity on the FTCA’s discretionary function exception—the idea that contractors should be immune when implementing the government’s discretionary decisions because the FTCA immunizes such decisions when the government itself implements them. If that’s the basis for government contractor immunity, then it must have started in 1946; the enactment of the FTCA must have created a contractor immunity where none existed before. But the trouble with this theory is that the government has always been immune for such decisions, from 1789 all the way down to the present; the FTCA didn’t change that. The FTCA was a partial waiver of sovereign immunity, so it only expanded the government’s liability. Congress didn’t want to expand liability to the utmost limit, so it carved out exceptions to the waiver, like the discretionary function exception; but all these exceptions do is retain sovereign immunity where it had already existed. So it’s strange to argue that a private-sector immunity was created by the retention of a pre-existing government immunity in a statute that otherwise expanded government liability.
One alternate solution would be to assert that government contractor immunity doesn’t depend on the FTCA, and therefore presumably would have existed (even if it was unrecognized) long before 1946. And this might make good policy sense, at least when (as the Boyle immunity has it) the government specifically asked for the offending feature. But this wasn’t the Supreme Court’s theory in Boyle. Perhaps it should have been—though one should also keep in mind that the further one extends sovereign immunity, the less compensation is available for tort victims like David Boyle and his family.
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But whether or not the reasoning of Boyle is shaky, it’s the law, and lower courts have applied it and even extended it in various ways.
For instance, during the Iran-Iraq War, the United States military intervened to protect Kuwaiti tankers from Iranian attacks; in 1988, as part of this intervention, a U.S. naval cruiser with the computerized Aegis air defense system accidentally shot down a civilian Iranian aircraft. The victims’ heirs sued both the government and the defense contractors who made the Aegis system. In Koohi v. United States (1992), Judge Reinhardt of the Ninth Circuit ruled in favor of the government, holding that its sovereign immunity had not been waived under the FTCA or other statutes (recall the FTCA’s combatant activities exception noted above, though the exception for claims arising in foreign countries would have done just as well). But he also ruled in favor of the defense contractors on a Boyle-like theory. While Boyle itself focused on one FTCA exception, the discretionary activities exception, Koohi focused on a different one, the same combatant activities exception that it had relied on for the claims against the government directly. The Ninth Circuit held that this exception implied a corresponding immunity for the defense contractors: “The reason, we believe, is 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.”
Note that here, too, the reasoning is sloppy, even if the result makes policy sense. The combatant activities exception would have protected the government even if the claim had been brought by an American soldier wounded while operating the weapon, so the theory of a Boyle-style, FTCA-based contractor immunity here can’t be based specifically on the lack of a duty of care to the targets of U.S. military action. Better to have let the case against the contractors proceed, as it might have if the plaintiff were a U.S. serviceman (this hypothetical is discussed further below), and have the contractors win on the merits in this case based on the lack of a duty of care to these plaintiffs.
Or consider Saleh v. Titan Corp. (2009), a D.C. Circuit case brought by victims of mistreatment at the Abu Ghraib prison in Iraq against private contractors who provided interpretation and interrogation services. Here, Judge Silberman followed the reasoning of Boyle and looked to the same FTCA exception relied on in Koohi: the combatant activities exception. Judge Silberman’s view of the exception’s purposes were broader, and perhaps more defensible, than Judge Reinhardt’s: “the policy embodied by the combatant activities exception is simply the elimination of tort from the battlefield, both to preempt state or foreign regulation of federal wartime conduct and to free military commanders from the doubts and uncertainty inherent in potential subjection to civil suit. And the[se] policies . . . are equally implicated whether the alleged tortfeasor is a soldier or a contractor engaging in combatant activities at the behest of the military and under the military’s control.”
Just as Boyle had formulated a three-part test for contractor immunity from tort liability for design defects, Saleh formulated its own test: “During wartime, where a private service contractor is integrated into combatant activities over which the military retains command authority, a tort claim arising out of the contractor’s engagement in such activities shall be preempted.” (Judge Silberman also held that, even without Boyle, there would be preemption anyway, merely based on state-law intrusion into the foreign-affairs subject matter.)
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Does contractor immunity under Boyle have any limits? Perhaps.
Recall the hypothetical above, during the discussion of Koohi, of the U.S. serviceman injured by a defect in the weapon he was using. In fact, this is no hypothetical. The families of Marines killed by friendly fire in combat during Operation Desert Storm in 1991 sued Hughes Aircraft Co., charging that the missile deviated from its target and hit them because of a manufacturing defect. In Bentzlin v. Hughes Aircraft Co. (1993), a district judge in California held that this lawsuit was preempted by an extension of Boyle, relying on both the discretionary function exception and the combatant activities exception.
The discretionary function exception theory in Bentzlin was very specific: tort suits for high-tech weapons, meaning technologically sophisticated weapons with no civilian counterparts, had to be preempted because of the need to keep their design and capabilities secret. True, Bentzlin involved manufacturing defects, which are by their nature always unintentional, so in that respect it differed from Boyle, where the plaintiffs were attacking an intentional design decision; how, then, could the discretionary function exception be implicated? But the district court reasoned that in the military procurement context, even manufacturing defects might arise from specific government commands to use particular time- or cost-saving procedures that could increase the probability of error—so even manufacturing defects can result from the government’s discretionary choices.
The combatant activities exception theory was more general, and unrelated to the technical sophistication of the weapons. In part, the district judge reasoned by analogy to Koohi; in part, he relied on additional concerns, like the interest in wartime secrecy and in avoiding the hassle of accumulating evidence and testimony for litigation on the battlefield.
So Bentzlin is a case where Boyle was extended to a lawsuit by a U.S. serviceman against a weapons manufacturer for injuries suffered abroad as a result of manufacturing defects. On the other hand, a very recent case has come out the other way on similar facts.
In 2010, Sean McMahon was injured when he test-fired an M2 .50 caliber Browning machine gun at Forward Operating Base Kunduz in Afghanistan. He sued General Dynamics Corp., the maker of the machine gun, alleging manufacturing defects. In March 2013, in McMahon v. General Dynamics Corp., a district judge in New Jersey allowed the case to go forward. (Actually, he dismissed the complaint for being insufficiently pleaded, but allowed McMahon to file an amended complaint.) The district judge critiqued the reasoning of Koohi, and particularly critiqued the reasoning and applicability of Bentzlin, pointing out, among other things, that concerns over secrecy weren’t relevant to a lawsuit over the very old and well-understood M2, and that (unlike in Bentzlin) the government hadn’t even intervened in this case to protect secrecy.
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Thus, despite Bentzlin (which, being a district court case, has no precedential effect), it’s not at all clear that government contractor immunity plays a significant role outside Boyle’s specific context of design defect claims for features the government had asked for, or Koohi’s specific context of tort claims by the intended target of a weapon. Various recent district court cases aside from McMahon have similarly distinguished Koohi and Bentzlin and allowed tort cases to go forward against military contractors; in addition to McMahon, there have been at least four since 2005.
Of course, subjecting contractors to a stricter legal regime than the government may artificially increase the cost of privatization and introduce an in-house bias, but on the other hand, the government has other accountability mechanisms that are lacking for the private sector, especially in the military context. The district judge in McMahon warned that “[t]he combatant activities exception, cut loose from its rationale, threatens to metamorphose into a near-absolute immunity for contractors.” Perhaps tort law has no useful role to play in cases like Boyle where the government specifically asked for a feature, but when a contractor has sloppy manufacturing practices (as perhaps in Koohi or Bentzlin), or interrogates aggressively beyond what the government requested (as perhaps in Saleh), maybe immunity has gone too far.
Alexander "Sasha" Volokh is an associate professor of law at Emory Law School.