Dickerson, Inc. v. U.S.
| Decision Date | 27 June 1989 |
| Docket Number | No. 88-3449,88-3449 |
| Citation | 875 F.2d 1577 |
| Parties | , 58 USLW 2096, 58 USLW 2132, 19 Envtl. L. Rep. [PG21,057 DICKERSON, INC., Dickerson, Florida, Inc., Dickerson Realty Florida, Inc., Plaintiffs-Appellees, v. UNITED STATES of America, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Robert S. Greenspan, John P. Schnitker, and Dwight G. Rabuse, Civ. Div. Appellate Staff, U.S. Dept. of Justice, Washington, D.C., for defendant-appellant.
Richard G. Rumrell, Rumrell & Johnson, Jacksonville, Fla., for plaintiffs-appellees.
Appeal from the United States District Court for the Middle District of Florida.
Before RONEY, Chief Judge, and HILL, Circuit Judge, and HOWARD *, Chief District Judge.
In this Federal Tort Claims Act (FTCA) suit against the United States for damages resulting from improper disposal of hazardous waste materials, we affirm the district court's judgment against the Government, holding: (1) the United States was not exempt from liability under the discretionary-function exception to the FTCA for the decision to delegate to an independent contractor safety responsibilities for the disposal of certain toxic waste: polychlorinated biphenyls (PCBs), and (2) under the authority of Emelwon, Inc. v. United States, 391 F.2d 9 (5th Cir.), cert. denied, 393 U.S. 841, 89 S.Ct. 119, 21 L.Ed.2d 111 (1968), the FTCA's independent-contractor exception is inapplicable to exempt the Government from liability because under the relevant Florida tort law, the duty of due care for inherently dangerous activities is nondelegable. 1
Plaintiff Dickerson, a company primarily engaged in road paving and other asphalt work, had three facilities in Jacksonville, Florida. The operations of these facilities included heating asphalt prior to paving with it. To heat the asphalt Dickerson initially burned diesel fuel. After the 1978 oil embargo, however, the company also began using a comparatively cheap fuel, waste oil. Holloway Waste Oil Company (Holloway) was Dickerson's primary source of this cheaper fuel. American Electric Corporation (AEC) in turn was Holloway's principal source.
The defendant United States Government became involved in this case through the actions of the Defense Property Disposal Service (DPDS), an agency within the Department of Defense. DPDS bore responsibility for disposal of PCBs from military installations throughout the country. PCBs are highly toxic chemicals frequently used in electrical transformers.
In 1981 DPDS contracted with private companies to transport and dispose of these PCBs. Two of the contracts were awarded to AEC. The first (known as the "Ogden I contract"), awarded in May 1981, was administered by Ernest Bertagnolli, a DPDS employee, and covered the disposal of PCBs from military installations in Utah and California. The second (known as the "Battle Creek I contract"), awarded in September 1981, was administered by Ronald Wagner, also a DPDS employee, and covered the northeastern and southern states. Bertagnolli and Wagner were contract specialists with little background or training in PCBs or other hazardous wastes.
As required by 40 C.F.R. Secs. 262.20-262.23, DPDS employed a "manifest" system to keep track of PCBs. The manifest was in essence a shipping document containing the following information: the name and address of the generator of the wastes; the names of all transporters; a description of the amount, composition, and quantity of the wastes; the number and types of containers; and the origin, routing, and destination of each shipment. The generator (here, the Department of Defense) of the wastes had to certify that the information on the manifest was accurate and the materials were acceptable for transporting. No one at DPDS, however, had responsibility for determining whether a contractor properly disposed of wastes once it removed them from a military installation.
During the Ogden I contract, AEC would be paid if the waste item appeared on a manifest, the manifest was properly signed, and Bertagnolli received confirmation that some material had been removed. AEC received payment for disposal upon proof of removal. DPDS did not verify the disposal of any of the items under the Ogden I contract or communicate with any of the designated final disposal sites. Administering the Battle Creek I contract, Wagner likewise did little more than rely on the manifest documents provided by AEC.
In 1981 during the Ogden I contract, Bertagnolli learned from AEC employee Richard Schmigel that AEC's performance was not on the "up and up." Bertagnolli noted Schmigel's name and telephone number and gave it to DPDS's legal counsel, but, believing that Schmigel was merely a disgruntled AEC employee, Bertagnolli never looked into the matter or reported it to Wagner.
The contracts required color-coded, segregated storage prior to disposal of PCB-contaminated waste oil according to three categories: those with PCB concentrations of less than 50 parts per million, those 50 or greater but less than 500 parts per million, and those 500 parts per million or greater. These categories corresponded to Environmental Protection Agency (EPA) regulations requiring greater precautions in storing and disposing of PCBs of greater concentrations. See 40 C.F.R. Secs. 761.60-761.79.
When the Ogden I contract commenced, only two facilities, Rollins and ENSCO, were licensed to incinerate wastes with concentrations of greater than 500 parts per million of PCBs. Bertagnolli later learned from another AEC employee, Audrey Quackenbush, that AEC was having difficulty completing disposal under the Ogden I contract because AEC did not have signed contracts with the disposal sites. Quackenbush also indicated that AEC had commingled the PCB-contaminated waste oil in the tanks at its Jacksonville facilities.
Holloway bought PCB-contaminated waste oil from AEC, hauled it from AEC's storage tanks, and ultimately resold and delivered much of it to Dickerson. In January 1982, Bio-Environmental Services of Jacksonville informed Dickerson that tests revealed PCB concentrations of greater than 500 parts per million in storage tanks at all of Dickerson's facilities. DPDS instituted an investigation of the manifest system and found that it could not account for twenty-five percent of the PCBs disposed of under the Battle Creek I contract.
With permission from the EPA, Dickerson consolidated all of the PCB-contaminated waste oil in one large storage tank, encased the tank in concrete, contracted for a hazardous-waste disposal service to remove the contaminated waste oil, and hired security officers to stand guard until disposal was finally complete.
Alleging that DPDS had been negligent in selecting AEC and failing to supervise its disposal of PCBs, Dickerson brought this FTCA action against the Government. The Government responded that it was excluded from liability under the independent-contractor and discretionary-function exceptions to the FTCA. The Government further contended that the alleged breach of duty was not the proximate cause of Dickerson's damages (an issue not raised in this appeal) and that Dickerson had been contributorily negligent.
Following a trial on Dickerson's claims, the district court concluded: first, that the discretionary-function exception applied to DPDS's decision to award the contracts but not to the decision to delegate safety responsibility to AEC and forego any supervision of it; and second, that under Florida tort law DPDS had a nondelegable duty to third parties, such as Dickerson, so that DPDS was not exempt from liability when it hired an independent contractor to perform an inherently dangerous activity. The court held that DPDS negligently breached its duty and proximately caused damage to Dickerson, and that Dickerson had not been contributorily negligent. The court entered a judgment against the Government in the amount of $916,995.17, later amended to $1,125,854.82.
Consideration of a case such as this under the FTCA requires a three-step inquiry:
First, are the alleged negligent acts or omissions discretionary functions which are immune from suit under the FTCA?
Second, if not, does FTCA's independent-contractor exception apply to insulate the Government against liability?
Third, if not, are the theories of liability asserted cognizable under the applicable state tort law?
The discretionary-function exception provides, in relevant part, that liability shall not lie for:
[a]ny claim ... based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused.
28 U.S.C.A. Sec. 2680(a).
The basic inquiry concerning this exception is "whether the challenged acts ... are of the nature and quality that Congress intended to shield from tort liability." United States v. S.A. Empresa de Viacao Aerea Rio Grandense (Varig Airlines), 467 U.S. 797, 813, 104 S.Ct. 2755, 2764, 81 L.Ed.2d 660 (1984). This exception protects only governmental actions and decisions involving the "permissible " exercise of policy judgment. Berkovitz v. United States, 486 U.S. ----, 108 S.Ct. 1954, 1959, 100 L.Ed.2d 531 (1988) (emphasis added). It does not apply "when a federal statute, regulation, or policy specifically prescribes a course of action for [a Government] employee to follow." Id. at ----, 108 S.Ct. at 1958. In other words, this exception applies to policy judgments, even to those constituting abuse of discretion, but not to choices which are either outside the policy-making context or in an area in which federal law directs a particular course of action.
The district court properly concluded that the federal statutes, regulations, and policies made the discretionary-function exception unavailable to the...
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