Shaw v. Grumman Aerospace Corp., 84-5803

• Citation: 778 F.2d 736
• Decision Date: 19 December 1985
• Docket Number: No. 84-5803,84-5803
• Parties: , Prod.Liab.Rep.(CCH)P 10,901 Edwin Lees SHAW, as personal representative of the Estate of Gary Scott Shaw, Deceased, Plaintiff-Appellee, v. GRUMMAN AEROSPACE CORPORATION, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 736

778 F.2d 736

54 USLW 2350, Prod.Liab.Rep.(CCH)P 10,901

Edwin Lees SHAW, as personal representative of the Estate of Gary Scott Shaw, Deceased, Plaintiff-Appellee, v. GRUMMAN AEROSPACE CORPORATION, Defendant-Appellant.

No. 84-5803.

United States Court of Appeals, Eleventh Circuit.

Dec. 19, 1985.

James E. Tribble, Blackwell, Walker, Gray, Powers, Flick, & Hoehl, Stephen O'Day, Hurt, Richardson, Garner, Todd & Cadenhead, Paul M. Talmadge, Jr., A. Paul Cadenhead, Atlanta, Ga., Frank J. Chiarchiaro, Mendes & Mount, New York City, James M. FitzSimons, Mendes & Mount, Beverly Hills, Cal., for defendants-appellants.

Joel D. Eaton, Miami, Fla., for plaintiff-appellee.

Charles M. Shaffer, Jr., King & Spalding, Atlanta, Ga., Jane E. Jordan, L. Joseph Loveland, Jr., Gary J. Toman, for amicus.

Appeal from the United States District Court for the Southern District of Florida.

Before FAY and JOHNSON, Circuit Judges, and HOFFMAN ^*, District Judge.

JOHNSON, Circuit Judge:

This case requires this Circuit to decide for the first time whether the so-called "military contractor defense" is available to shield a private defense contractor from liability to a serviceman killed as a result of an alleged design defect in the contractor's product. We hold that this Circuit will recognize such a defense, but we frame that defense and the rationales behind it somewhat differently from other circuits that have considered this question. Our analysis of the instant case under the terms of this defense leads us to AFFIRM the decision of the court below.

Facts And Proceedings Below

On December 12, 1979, at about 4 a.m., Navy Lt. J.G. Gary S. Shaw was killed when the plane he piloted, a Grumman A-6 (in its "tanker" version, the KA-6D), crashed into the ocean 100 miles off the coast of San Diego just two or three seconds after it was launched from the aircraft carrier Constellation. Although they recovered neither the body nor the wreckage, Navy investigators concluded that the most likely cause of the crash was the loss or failure of a bolt in the "stabilizer actuation system" or "longitudinal flight control system" ¹ of the aircraft, which instantly sent the plane out of control on launch. The A-6 carries no device to warn of such a failure and no back-up system to take over if this sort of breakdown occurs. Investigators ruled out pilot error as a cause of the accident.

The A-6 is the mainstay of the carrier-based Naval air attack fleet. Since Grumman Aerospace began to manufacture this plane for the Navy in the 1960's, six other accidents involving longitudinal flight control failures have occurred. Grumman advised the Navy to address this problem by installing so-called "self-retaining bolts" ² in the stabilizer system. This the Navy did in 1978, after a delay of some years for "fiscal reasons." Lt. J.G. Shaw's plane apparently crashed with one of the new bolts in place.

Edwin Lees Shaw, father of Lt. J.G. Shaw and personal representative of his estate, filed this wrongful death action on October 16, 1981, under the Death on the High Seas Act, 46 U.S.C.A. Sec. 761, et seq., and federal admiralty law alleging strict liability, negligence and breach of warranty against Grumman Aerospace. Shaw claimed that Grumman's A-6 design was defective because it failed to include any warning or back-up systems in the foreseeable event of a stabilizer control failure. In answer, Grumman asserted, inter alia, its immunity from suit under the "government contractor defense."

After a non-jury trial, the United States District Court for the Southern District of Florida, Aronovitz, J., entered judgment for plaintiff Shaw and awarded damages of $840,556.75 against Grumman, 593 F.Supp. 1066 (1984). In reaching its decision, the lower court recognized the form of the government contractor defense set out by the Ninth Circuit in McKay v. Rockwell International Corp., 704 F.2d 444 (9th Cir.1983), cert. denied, 464 U.S. 1043, 104 S.Ct. 711, 79 L.Ed.2d 175 (1984), but found that Grumman did not prove the elements of that defense.

The Military Contractor Defense

The Supreme Court has not addressed the issue of immunity from liability for military contractors who design products for government use. Four circuits have recognized varying forms of a military contractor defense. ³ See Bynum v. FMC Corp., 770 F.2d 556, 561-62 (5th Cir.1985); Tillett v. J.I. Case Co., 756 F.2d 591, 596-598 (7th Cir.1985); Koutsoubos v. Boeing Vertol, 755 F.2d 352, 354-355 (3d Cir.1985); McKay, 704 F.2d at 448-451. Two other related defenses, which we refer to here as the "contract specifications defense" and the "government agency defense," have appeared from time to time in this Circuit. Discussion of these theories and the relationship among them has been frequent in recent years, but not invariably helpful. See generally, Bynum; Johnston v. United States, 568 F.Supp. 351 (D.Kan.1983).

Traditional Defenses

The three defenses above are based on different theories of liability and require different elements of proof.

The "contract specifications defense" is in fact not, as the Bynum court points out, strictly speaking a defense at all. Bynum, at 560. When a contractor manufactures products to the order of another party, be that party the government or a private entity, he or she is simply not held to the same standard of care as an actual designer. Thus, the contractor will not be liable for damages caused by the product's design unless the specifications provided on order were so clearly defective and dangerous that a reasonably prudent contractor "would realize that there was a grave chance that his product would be dangerously unsafe." Restatement (Second) of Torts Sec. 404 comment a. (1965). See also Bynum, at 560; Johnston, 568 F.Supp. at 354. This higher threshold of fault for a contractor is obviously available only where fault is at issue--that is, in a suit brought under negligence theory. Accordingly, the former Fifth Circuit rejected such a claim in a strict liability action. Challoner v. Day & Zimmermann, Inc., 512 F.2d 77 (5th Cir.1975), vacated on other grounds, 423 U.S. 3, 96 S.Ct. 167, 46 L.Ed.2d 3 (1975), remanded, 546 F.2d 26 (5th Cir.1977). ⁴

The contract specifications "defense" is not asserted in this case, so we do not consider its application. In suits involving military suppliers who participate in--and thus have knowledge of--product design, as in this action, it is in any event unlikely to be available.

A second and analytically distinct defense is the "government agency defense." It grows out of the Supreme Court's decision in Yearsley v. W.A. Ross Construction Co., 309 U.S. 18, 60 S.Ct. 413, 84 L.Ed. 554 (1940), in which the Court absolved from liability a contractor who, at the request of the government, built dikes in the Missouri River and accidentally washed away part of petitioners' land. The Yearsley court apparently regarded this contractor as "an agent or officer of the government," acting on the government's behalf. Id. at 21, 60 S.Ct. at 414. Since "[t]he action of the agent is 'the act of the government,' " id. at 22, 60 S.Ct. at 415, the contractor could be deemed to share in federal sovereign immunity. Although such immunity has been waived in many cases, where injuries to military personnel incident to service result from defective product design, the government may not be sued for damages under the Feres doctrine. See Feres v. United States, 340 U.S. 135 71 S.Ct. 153, 95 L.Ed. 152 (1950); Stencel Aero Engineering Corp. v. United States, 431 U.S. 666, 97 S.Ct. 2054, 52 L.Ed.2d 665 (1977). ⁵

This defense is rarely invoked, and its elements are nowhere clearly stated. To evaluate a Yearsley claim in the military contractor context, a court would appear to be obliged to take three steps. First, it would apply the Feres doctrine to determine whether the government itself could be sued in that situation. If not, the court would then invoke a second body of doctrine, the law of principal and agent, to inquire whether the contractor actually acted as an agent of the government. Precedent in this Court makes it clear that, at least in manufacturing defect cases arising in a military setting, a firm must be more than simply an independent contractor to be regarded as the government's agent. In Whitaker v. Harvell-Kilgore Corp., 418 F.2d 1010, 1013-1015 (5th Cir.1969), the former Fifth Circuit rejected the sovereign immunity claim of such a contractor that manufactured a defective grenade. Finally, if the contractor proved agency status, the court would inquire whether the agent acted within the course and scope of its duties.

We decline appellant's invitation to consider its defense under Yearsley, though we note that the Whitaker reasoning would in any case logically control in design as well as manufacturing defect cases. The agency/sovereign immunity theory was neither presented fully to nor ruled on by the court below.

The Military Contractor Defense

We now consider the "military contractor defense" asserted in this case. As that defense is recognized in this Circuit, it is neither the same as, nor does it grow out of, either of the other two theories--contrary to the conviction of many. See Bynum, at 561 (the government contractor defense "is essentially an amalgamation of the two traditional defenses [contract specifications and Yearsley ]"); McKay, 704 F.2d at 448 ("[t]his rule was first articulated by the Supreme Court in Yearsley...."). The military contractor defense is available in certain situations not because a contractor is appropriately held to a reduced standard of care, nor because it is cloaked with sovereign immunity, but because traditional separation of powers doctrine compels the defense. Judge Pratt put this point succinctly in In re "Agent Orange" Product Liability Litigation, 534 F.Supp. 1046, 1054 n. 1 (E.D.N.Y.1982):

The purpose of a government contract defense ... is to permit the government...