Bailey v. McDonnell Douglas Corp.

• Decision Date: 29 April 1993
• Docket Number: No. 92-2184,92-2184
• Citation: 989 F.2d 794
• Parties: Penny BAILEY, Individually and as Next Friend of Elizabeth Bailey and Bryan Bailey, Minors, and as Personal Representative of the Estate of John Bailey, Deceased, et al., Plaintiffs-Appellants, v. McDONNELL DOUGLAS CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 794

989 F.2d 794

61 USLW 2669

Penny BAILEY, Individually and as Next Friend of Elizabeth Bailey and Bryan Bailey, Minors, and as Personal Representative of the Estate of John Bailey, Deceased, et al Plaintiffs-Appellants, v. McDONNELL DOUGLAS CORPORATION, Defendant-Appellee.

No. 92-2184.

United States Court of Appeals Fifth Circuit.

April 29, 1993.

Rehearing and Rehearing En Banc Denied June 1, 1993.

David R. Weiner, Tab Mitchell, Dallas, TX, for plaintiffs-appellants.

Larry F. York, John H. McLeod, Baker & Botts, Austin, TX, Terrence J. O'Toole, Thomas C. Walsh, W. James Nabholz, Bryan Cave, McPheters & McRoberts, St. Louis, MO, for defendant-appellee.

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

Before DUHE and BARKSDALE, Circuit Judges, and HUNTER, Senior District Judge. ¹

BARKSDALE, Circuit Judge:

At issue in this second appeal of this Texas product liability action is the effect of the government contractor defense, as formulated in Boyle v. United Technologies Corp., 487 U.S. 500, 108 S.Ct. 2510, 101 L.Ed.2d 442 (1988), when claims of both manufacturing and design defects are asserted. Penny Bailey appeals the summary judgment awarded McDonnell Douglas (M-D) in her wrongful death action concerning an M-D aircraft. Following summary judgment for M-D based on the government contractor defense, an appeal to this court, and remand for clarification of the summary judgment order, the district court amended that order to include Bailey's manufacturing defect claim, as well as her design defect claim. We REVERSE as to the former.

I.

Air Force Major John M. Bailey was killed in 1987 when his aircraft, an F-4D "Phantom II" twin-engine jet fighter manufactured by M-D ², crashed during a "pitch-out" landing approach to Carswell Air Force Base, near Fort Worth. ³

In February 1988, Penny Bailey, Major Bailey's wife, sued M-D under Texas law for wrongful death, claiming strict liability for, and negligence in, the design, manufacture, and sale of a defective product, and the failure to warn of dangers associated with that product. Throughout the litigation, it was undisputed that the crash was caused, at least in part, by a failure in the bellows assembly in the aircraft's longitudinal feel trim system, which relates to control of the aircraft's "pitch", or nose up/nose down movement. ⁴ Bailey's theory of liability was that a defect in the metallurgic content of the bellows canister caused a loss of bellows pressure during the flight; that Major Bailey's response to the resulting "heavy stick" sensation was to "over control" the aircraft with a number of rapid movements on the control stick; and that the rapid stick inputs caused the controls to "lock" with the plane in a nose-down position. The alleged tendency of the controls to lock formed the basis of the design defect claim, and the alleged metallurgic defect in the bellows canister formed the basis of the manufacturing defect claim. M-D denied that the controls had locked, and asserted that the bellows failure was caused by careless maintenance of the system by Air Force personnel, not by any product defect.

In November 1989, after extensive discovery, M-D moved for summary judgment, contending that the basis of Bailey's theory of liability had eroded when the two Air Force investigators who had studied the remains of the flight control system recanted their "imprecise" use of the term "lock" in their report to describe what happened to the controls. Bailey contested this, and also presented the affidavit of her expert, Dr. Paul Packman, who articulated the theory of manufacturing defect, based upon his observation of an unusual crack in the remains of the bellows canister. Although, as noted, the complaint contained a manufacturing defect claim, this was the first time that the manufacturing defect theory was articulated.

M-D moved to strike Dr. Packman's affidavit, contending that it untimely introduced a new theory of liability. While that motion was pending, Dr. Packman retreated from his position, at least somewhat, when the results of a metallurgic examination of the bellows components conflicted with his theory. ⁵ Ultimately, in August 1990, the district court denied M-D's motion to strike the affidavit, and also denied summary judgment, citing a genuine issue of material fact.

Shortly before those rulings, M-D filed a second motion for summary judgment (which eventually gave rise to this appeal), relying on the government contractor defense. In its supporting memorandum, it discussed only the control system's alleged tendency to lock, although, as noted, the metallurgic defect theory had already surfaced. Likewise, despite M-D's prayer that all claims be dismissed with prejudice, Bailey made no mention of the metallurgic defect theory in opposing the motion. In response, Bailey did, however, incorporate, inter alia, the discovery materials and affidavits in the record. In January 1991, the district court granted the motion and dismissed the case.

Bailey appealed, conceding that her design defect claim was properly dismissed, but contending that her manufacturing defect claim was not. ⁶ In late 1991, our court affirmed summary judgment on the government contractor defense and the design defect claim, but vacated and remanded for further consideration of the manufacturing defect issue, stating that it was unclear whether the district court had intended to dismiss that claim. Bailey v. McDonnell Douglas Corp., 947 F.2d 1486 (5th Cir. Oct. 21, 1991) (unpublished).

In January 1992, the district court heard oral argument, then amended its prior order to include that claim in the summary judgment. This appeal springs from that order.

II.

The government contractor defense, as formulated in 1988 by the Supreme Court in Boyle, generally immunizes government contractors from civil liability arising out of the performance of federal procurement contracts. 487 U.S. at 505-06, 108 S.Ct. at 2515. It is a federal common law doctrine whereby state law is preempted in certain situations because it presents a "significant conflict" with identifiable federal interests. Id. at 507, 108 S.Ct. at 2516. Specifically, it is designed to protect the exercise of discretion by government officers in "the selection of the appropriate design for military equipment to be used by our Armed Forces". Id. at 511, 108 S.Ct. at 2518.

The defense stems from the immunity enjoyed by the United States from claims based on the performance of so-called "discretionary functions", pursuant to the Federal Tort Claims Act (FTCA), 28 U.S.C. § 2680(a). ⁷ Boyle, 487 U.S. at 511, 108 S.Ct. at 2518. The rationale behind the defense is that, in its absence, the financial burden of liability judgments against government contractors ultimately would be passed through to the United States. Id. at 511-12, 108 S.Ct. at 2518. As noted in Boyle: "It makes little sense to insulate the Government against financial liability for the [discretionary decision] that a particular feature of military equipment is necessary when the Government produces the equipment itself, but not when it contracts for the production." Id. at 512, 108 S.Ct. at 2518.

In order to effectuate this objective, Boyle provides that "[l]iability 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. (emphasis added). "The first two of these conditions assure that the suit is within the area where the policy of the 'discretionary function' would be frustrated--i.e., they assure that the design feature in question was considered by a Government officer, and not merely by the contractor itself." Id. "The third condition is necessary because, in its absence, the displacement of state tort law would create some incentive for the manufacturer to withhold knowledge of risks, since conveying that knowledge might disrupt the contract but withholding it would produce no liability." Id.

Of Boyle's three conditions, in issue is the second--conformity with government specifications. As noted, the district court previously held, and our court affirmed, that M-D was entitled to invoke the defense with respect to Bailey's design defect claim, which was based on the control system's alleged tendency to lock. This holding included a finding that the feel trim system, including any tendency to lock, conformed to the government's specifications (Boyle's second condition). On remand, M-D contended that this finding of conformity on the design defect claim compelled a like ruling on the manufacturing defect claim. Bailey countered by contending first, that the Packman affidavit established a material fact issue as to a manufacturing defect ⁸; and second, that, in any event, because the government contractor defense applies only to design defect claims, the summary judgment motion did not implicate the manufacturing defect claim.

In ruling, the district court stated that Bailey "fail[ed] ... to articulate the precise nature of the manufacturing defect", and that her only "theory of the case [was] that a defect in the design of the feel trim system ... caused the ... lock and that this occurrence" caused the crash. It then agreed with M-D, and reasoned that its prior finding that "the aircraft conformed to those specifications" necessarily precluded the existence of a manufacturing defect. It concluded:

Because the Court previously determined, and the Court of Appeals affirmed, that no fact questions exist concerning whether the plane conformed to the Government's design specifications, the Court is of the opinion that the manufacturing defect question has been resolved. As stated by the ...