Brown v. Caterpillar Tractor Co.

• Citation: 696 F.2d 246
• Decision Date: 28 December 1982
• Docket Number: No. 81-2479,81-2479
• Parties: Robert Allen BROWN and Lola V. Brown, Appellants, v. CATERPILLAR TRACTOR COMPANY, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 246

696 F.2d 246

Robert Allen BROWN and Lola V. Brown, Appellants, v. CATERPILLAR TRACTOR COMPANY, Appellee.

No. 81-2479.

United States Court of Appeals, Third Circuit.

Argued April 2, 1982.

Decided Dec. 28, 1982.

John M. Tighe (argued), Tarasi & Tighe, Pittsburgh, Pa., for appellants.

Edward A. McFarland (argued), Robert S. Grigsby, Carl E. Harvison, Thomson, Rhodes & Grigsby, Pittsburgh, Pa., for appellee.

Before GIBBONS, SLOVITER and BECKER, Circuit Judges.

OPINION OF THE COURT

BECKER, Circuit Judge.

I. Introduction

While on weekend duty, United States Army reservist Robert Brown sustained injuries that he alleges were caused by the defective design of a tractor-bulldozer manufactured by Caterpillar Tractor Company ("Caterpillar") for the Department of the Army. ¹ Brown was seated in the passenger seat of the bulldozer as it was clearing some land when a felled tree came over the bulldozer's blade and struck him. Claiming that he would not have been injured had the bulldozer been equipped with a protective structure around the passenger seat, Brown sued Caterpillar under Pennsylvania law on theories of negligence, breach of express and implied warranties, and strict liability. Caterpillar moved for summary judgment, arguing that the bulldozer was not defective as a matter of law, and that the company was insulated from suit under the "government contractor defense" because it had built the bulldozer to government specifications. In an opinion containing certain findings of fact, the district court agreed with both of Caterpillar's contentions and granted summary judgment.

Brown's appeal from summary judgment requires us to determine whether the record contains any genuine issues of material fact regarding either of Caterpillar's two contentions: (1) the absence of a defect in the bulldozer; and (2) the sufficiency of Caterpillar's compliance with the terms of the government contract and specifications. After scrutinizing the record, we conclude that there are genuine issues of material fact bearing on the validity of both contentions, and we therefore must reverse the grant of summary judgment and remand for further proceedings. We do so, however, only after addressing two threshold legal issues: (1) whether state or federal law governs this suit; and (2) the anatomy and scope of the government contractor defense under the applicable law. We conclude that state law, in this case Pennsylvania law, governs Brown's suit; that the government contractor defense exists in Pennsylvania; and that the defense is available against all of Brown's claims.

II. The Choice Between Federal and State Law

Although the parties litigated this case under Pennsylvania law before the trial court, the question arose at oral argument in this Court whether Feres v. United States, 340 U.S. 135, 71 S.Ct. 153, 95 L.Ed. 152 (1950), and Stencel Aero Engineering Corp. v. United States, 431 U.S. 666, 97 S.Ct. 2054, 52 L.Ed.2d 665 (1977), require the application of federal law. ² Because the parties had not previously addressed this issue, we requested that they do so in supplemental briefs. After careful review of the arguments advanced in those supplemental briefs, we conclude that there is no merit to Caterpillar's contention that federal law governs the adjudication of this dispute.

In Feres, the Supreme Court held that the United States cannot be held liable under the Federal Tort Claims Act for injuries to a serviceman if the injuries "arise out of or are in the course of activity incident to service." 340 U.S. at 146, 71 S.Ct. at 159. ³ Although the Act incorporates state-created causes of action by reference, the Court found such incorporation inappropriate in the military context. In Stencel Aero, the Court explained the considerations that underlay its decision in Feres:

First, the relationship between the Government and members of its Armed Forces is " 'distinctively federal in character' " ...; it would make little sense to have the Government's liability to members of the Armed Services dependent on the fortuity of where the soldier happened to be stationed at the time of the injury. Second, the Veterans' Benefits Act establishes, as a substitute for tort liability, a statutory 'no fault' compensation scheme which provides generous pensions to injured servicemen, without regard to any negligence attributable to the Government.

431 U.S. at 671, 97 S.Ct. at 2057 (citations omitted). The Stencel Aero Court added that the Government's immunity from suit for injuries sustained in conjunction with military service was further justified by " '[t]he peculiar and special relationship of the soldier to his superiors, the effects of the maintenance of such suits on discipline, and the extreme results that might obtain if suits under the Tort Claims Act were allowed for negligent orders given or negligent acts committed in the course of military duty.' " Id. at 671-72, 97 S.Ct. at 2057-2058 (quoting United States v. Brown, 348 U.S. 110, 112, 75 S.Ct. 141, 145, 99 L.Ed. 139 (1954)).

Relying upon this reading of Feres, the Court in Stencel Aero decided that the United States could not be sued under the Federal Tort Claims Act by a contractor seeking indemnification for damages paid by it to a member of the Armed Forces injured in the course of military service. First, the Court determined that "[t]he relationship between the Government and its suppliers of ordnance is certainly no less 'distinctively federal in character' than the relationship between the Government and its soldiers." Id. 431 U.S. at 672, 97 S.Ct. at 2058. "If, as the Court held in Feres, it makes no sense to permit the fortuity of the situs of the alleged negligence to affect the liability of the Government to a serviceman ..., it makes equally little sense to permit that situs to affect the Government's liability to a Government contractor for the identical injury." Id. Second, the Court concluded,

it seems quite clear that where the case concerns an injury sustained by a soldier while on duty, the effect of the action upon military discipline is identical whether the suit is brought by the soldier directly or by a third party. The litigation would take virtually the identical form in either case, and at issue would be the degree of fault, if any, on the part of the Government's agents and the effect upon the serviceman's safety. The trial would, in either case, involve second-guessing military orders, and would often require members of the Armed Services to testify in court as to each other's decisions and actions. This factor, too, weighs against permitting any recovery by petitioner against the United States.

Id. at 673, 97 S.Ct. at 2058. ⁴

The underpinnings of Feres and Stencel Aero do not justify the application of federal law in this case. Although it may not make sense to permit the fortuity of the situs of the alleged misfeasance to affect the government's liability, the same cannot be said of the liability of a government contractor to a serviceman. Manufacturers who market their products throughout the nation regularly face the possibility that they will be subjected to different standards of liability in different jurisdictions. Second, a suit by a serviceman against a government contractor presents no danger of circumventing the limitations on governmental liability contained in the Veteran's Benefits Act. Third, because such suits generally do not necessitate the second-guessing of military decisions envisioned in Feres and Stencel Aero, they do not pose the same threat to military discipline as do suits against the Government.

In addition, Caterpillar has raised no argument suggesting that the application of state law would pose a threat to an identifiable federal policy, nor has it cited any decision that has so held. Indeed, although a substantial number of suits have been brought by servicemen against military suppliers, in no case has federal law displaced state law, ⁵ and the courts of appeals in three circuits have explicitly held that state law governs such suits. ⁶ We agree: Pennsylvania law, not federal law, governs the case at bar.

III. The Government Contractor Defense

The decision to apply Pennsylvania law does not end our inquiry, for the status of the government contractor defense in Pennsylvania is far from clear. Caterpillar submits that compliance with the specifications of a government contract constitutes a complete defense, regardless of the theory on which the action is brought. Brown, however, questions the continued vitality of the government contractor defense in Pennsylvania. In particular, Brown argues that the defense is not available in an action based on strict liability or breach of warranty; alternatively, Brown contends that the defense insulates a contractor from liability only if the contractor demonstrates that it was compelled by the government to comply with the specifications responsible for causing the injuries.

As Judge Adams remarked in Becker v. Interstate Properties, 569 F.2d 1203, 1204 (3d Cir.1977), cert. denied, 436 U.S. 906, 98 S.Ct. 2237, 56 L.Ed.2d 404 (1978), "[t]he task of a federal court sitting in diversity is frequently not an easy one, for it must forsake its realm of expertise and assume the aspect of a court of the forum state." For a number of reasons, we are at a particular disadvantage in this case. First, although it appears that Pennsylvania courts have recognized the government contractor defense in negligence actions, they have never addressed its applicability in the contexts of strict liability and breach of warranty. Second, there have been significant changes in the direction of Pennsylvania tort law since the Pennsylvania Supreme Court first announced the availability of the government contractor defense. Finally, the limited number of situations in which the Pennsylvania courts have examined the government contractor defense have not sufficiently defined its...