Carley v. Coach

• Decision Date: 16 April 1993
• Docket Number: No. 92-7208,92-7208
• Parties: MARY CARLEY, Appellant v. WHEELED COACH
• Court: U.S. Court of Appeals — Third Circuit

28 V.I. 310

MARY CARLEY, Appellant v. WHEELED COACH

No. 92-7208

United States Court of Appeals for the Third Circuit

April 16, 1993

[991 F.2d 1117]

Defendant's appeal of grant of summary judgment in personal injury case, where issue was whether manufacturer of a nonmilitary product could assert the government contractor defense. The Third Circuit, Cowen, J., found that it could, under federal common law.

[Headnotes Classified to Virgin Islands Digest]

[COPYRIGHT MATERIAL OMITTED]

THOMAS ALKON (Argued) (ALKON & RHEA), Christiansted, St. Croix, for appellant

R. ERIC MOORE (Argued), Christiansted, St. Croix, for appellee

BEFORE: BECKER, COWEN and ROTH, Circuit Judges

OPINION OF THE COURT

COWEN, Circuit Judge

Plaintiff Mary Carley appeals the grant of summary judgment dismissing her claim for personal injuries caused by an alleged design defect in an ambulance manufactured by defendant Wheeled Coach Industries, Inc. ("Wheeled Coach"). The issue in this appeal is whether the manufacturer of a nonmilitary product may assert the government contractor defense, recognized in Boyle v. United Technologies Corp., 487 U.S. 500, 108 S. Ct. 2510 (1988), in a strict products liability action based on a design defect. We conclude that the government contractor defense is available to nonmilitary contractors under federal common law. However, because Wheeled Coach failed to prove that it warned the United States government of dangers in its ambulance known to Wheeled Coach but not to the government, we will reverse the grant of summary judgment and remand for trial.

I.

Plaintiff Mary Carley is an emergency medical technician employed by the Virgin Islands Department of Health at St. Croix Hospital. On September 2, 1988, she was on duty and riding as a passenger in a 1987 Ford E-350 Type II 6.9 liter diesel-powered ambulance manufactured by Wheeled Coach, a Florida corporation. While the ambulance was en route to the scene of an emergency, an automobile failed to properly yield the right-of-way. The ambulance made an evasive maneuver and flipped over. Carley suffered injuries to her knee and back, including a herniated disk. A police officer who witnessed the accident reported that the ambulance was driven in a reasonable and safe manner for an emergency situation.

The ambulance was manufactured by Wheeled Coach pursuant to a contract (No. GS-OOF-89100) with the United States General Services Administration ("GSA"). The GSA solicited bids for the manufacture of the ambulance in compliance with the FederalSpecification for Ambulance KKK-A-1822B, dated June 1, 1985, which was incorporated into the contract. After Wheeled Coach completed the ambulance, a GSA quality assurance inspector examined it, concluded that it complied with contract specifications, and released it for shipment.

On April 4, 1989, Carley filed suit against Wheeled Coach in the District Court of the Virgin Islands (Civ. No. 89-94), alleging strict products liability and breach of warranty arising from the manufacture and sale of an ambulance with a design defect. Carley claimed that the ambulance was unreasonably prone to turn over during intended use because of an excessively high center of gravity. One of the affirmative defenses raised by Wheeled Coach was the government contractor defense. Wheeled Coach claimed that it was immune from liability because it built the ambulance in the performance of its obligations under a contract with the United States government.

Wheeled Coach moved for summary judgment and the district court granted the motion. The court concluded that either federal common law or Virgin Islands law governed the dispute, and that under either body of law, the government contractor defense is available to nonmilitary contractors and was established by Wheeled Coach as a matter of law. Carley moved for reconsideration on the grounds that Florida law applies, and Florida law does not recognize a government contractor defense for nonmilitary contractors. See Dorse v. Armstrong World Indus., Inc., 513 So. 2d 1265, 1269 (Fla. 1987). The district court denied her motion, concluding that even if this suit were governed by state law instead of federal common law, Virgin Islands law would apply and render Wheeled Coach immune. Carley appealed.

The district court had jurisdiction under 28 U.S.C. § 1332(a)(1) (1988), and we have jurisdiction under 28 U.S.C. § 1291 (1988). Our review of a grant of summary judgment is plenary. Clement v. Consolidated Rail Corp., 963 F.2d 599, 600 (3d Cir. 1992). We apply the same test as the district court under Fed. R. Civ. P. 56(c), asking whether there remains a genuine issue of material fact, and if not, whether the moving party is entitled to judgment as a matter of law. Id. We view all facts and all inferences therefrom in the light most favorable to the nonmoving party, in this case the plaintiff Carley. Id.

II.

[1, 2] In Boyle v. United Technologies Corp., 487 U.S. 500, 507-08, 108 S. Ct. 2510, 2515-16 (1988), the Supreme Court held that before state tort law is applied in a products liability action involving the government contractor defense, it must first be determined whether state law is in significant conflict with the federal interests associated with federal procurement contracts. The Court announced a three-prong test for determining when state tort law is displaced by federal common law in a suit against a military contractor:

Liability 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. at 512, 108 S. Ct. at 2518; Maguire v. Hughes Aircraft Corp., 912 F.2d 67, 70 (3d Cir. 1990). If all three prongs are met, the government contractor defense is established and the defendant manufacturer is immune from liability under state law.

[3] In Boyle, the Court specifically applied the government contractor defense in the context of a military procurement contract. The defendant manufacturer built a military helicopter with an allegedly defective escape hatch in compliance with specifications provided by the United States. 487 U.S. at 502-03, 108 S. Ct. at 2513. The Court, however, did not address whether the government contractor defense is also available to manufacturers of nonmilitary products, an issue which has generated a significant split in author-ity.¹ We conclude that the reasoning of Boyle applies to both military and nonmilitary contractors.²

The Court initially observed that a few areas involving uniquely federal interests are so committed to federal control by the Constitution and laws of the United States that state law is preempted and replaced, where necessary, by federal common law. Id. at 504, 108 S. Ct. at 2514. The Court identified two areas of unique federal concern: the obligations to and rights of the United States under its contracts, id. at 504-05, 108 S. Ct. at 2514 (citing United States v. Little Lake Misere Land Co., 412 U.S. 580, 592-94, 93 S. Ct. 2389,2396-97 (1973)), and the civil liability of federal officials for actions taken in the course of their duty, id. at 505, 108 S. Ct. at 2514-15 (citing Westfall v. Erwin, 484 U.S. 292, 295, 108 S. Ct. 580, 583 (1988)). Though neither of these two lines of precedent involved a federal interest unique to the military, they provided the basis for judicial recognition of the government contractor defense. See id. at 504-07, 108 S. Ct. at 2414-15.

The Court also relied heavily on Yearsley v. W.A. Ross Construction Co., 309 U.S. 18, 60 S. Ct. 413 (1940) (cited in Boyle, 487 U.S. at 506, 108 S. Ct. at 2515), in which a construction company damaged the property of riparian landowners while constructing dikes pursuant to a contract with the United States government. The construction project was authorized by an act of Congress and supervised by federal officials. The Court held that the contractor could not be held liable for damages under state law, reasoning that "if [the] authority to carry out the project was validly conferred, that is, if what was done was within the constitutional power of Congress, there is no liability on the part of the contractor for executing its will." Id. at 20-21, 60 S. Ct. at 414.

[3, 4] This same rationale, which is equally applicable to military and nonmilitary contractors, underlies the modern government contractor defense. A private contractor who is compelled by a contract to perform an obligation for the United States should, in some circumstances, share the sovereign immunity of the United States. Though the contractor in Yearsley was an agent of the United States, id., while the contractor in Boyle and the present case were independent contractors, this distinction was not significant to the Court in Boyle. See 487 U.S. at 505-06, 108 S. Ct. at 2515. The Court regarded the federal interest in a performance contract in Yearsley as being essentially the same as the federal interests in procurement contracts. See id. "[T]he liability of independent contractors performing work for the Federal Government . . . is an area of uniquely federal interest." Id. at 505 n.1, 108 S. Ct. at 2515 n.1. The imposition of liability on an independent contractor who enters into a procurement contract with the United States directly implicates the significant federal interest in the completion of the government's work. See id. at 505, 108 S. Ct. at 2515. That significant federal interest exists regardless of whether the procurement contract is military or nonmilitary in nature.

The Court in Boyle acknowledged that there is a unique federal interest in all contracts in which the government procures equipment, not just those with military suppliers. See id. at 506-07, 108 S. Ct. at 2515-16. The Court described how tort actions...