Grammatico v. U.S.

Decision Date19 March 1997
Docket NumberNo. 96-2954,96-2954
Citation109 F.3d 1198
PartiesJames GRAMMATICO, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
CourtU.S. Court of Appeals — Seventh Circuit

Richard A. Dahl, Barash, Stoerzbach & Henson, Galesburg, IL, Michael J. Warner, Rock Island, IL, for Plaintiff-Appellant.

K. Tate Chambers, Gerard Brost, argued, Office of the U.S. Atty., Peoria, IL, for Defendant-Appellee.

Before BAUER, FLAUM, and KANNE, Circuit Judges.

FLAUM, Circuit Judge.

Appellant James Grammatico brings this action against the United States under the Federal Tort Claims Act ("FTCA"), 28 U.S.C. § 1346(b). Appellant claims that on March 26, 1992, while employed at Lewis Machine and Tool Company, his arm became enmeshed in a radial milling machine, causing severe and permanent injuries to his left hand and forearm. Lewis Machine and Tool Company had purchased the machine at a public auction conducted by the Defense Reutilization and Marketing Service ("DRMS"), a division of the Department of Defense ("DOD") that disposes of the DOD's surplus property.

Grammatico's complaint alleged that the government was strictly liable for placing an inherently dangerous product in commerce, negligent in selling the machine with a defective hand break, without an appropriate guarding mechanism and without an emergency stop mechanism, and negligent in failing to inspect the machine to ascertain whether it was safe when operated for its intended use. The government moved to dismiss the case for lack of subject matter jurisdiction. The district court granted this motion on the ground that the FTCA does not allow for actions based on strict liability and on the ground that appellant's negligence claims were barred by the discretionary function exception to the FTCA. Grammatico appeals only the district court's dismissal of his negligence claims. We affirm.

I.

The FTCA authorizes suit against the United States for money damages "for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable...." While the FTCA on its face is a "broad waiver" of sovereign immunity that provides for governmental liability commensurate with that of private parties, its waiver of immunity is far from absolute; "several important classes of tort claims" are excepted from the Act's coverage. See United States v. Varig Airlines, 467 U.S. 797, 808, 104 S.Ct. 2755, 2761, 81 L.Ed.2d 660 (1984). At issue in this case is the "discretionary function exception," which provides that the FTCA shall not apply to:

Any claim based upon an act or omission of an employee of the Government, exercising due care, in the execution of a statute or regulation, whether or not such statute or regulation be valid, or 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. § 2680(a) (emphasis added). This exception "marks the boundary between Congress' willingness to impose tort liability upon the United States and its desire to protect certain governmental activities from exposure to suit by private individuals." Varig Airlines, 467 U.S. at 808, 104 S.Ct. at 2762. It was Congress' belief that imposing liability on the government for the discretionary acts of its employees "would seriously handicap efficient government operations." Id. at 814, 104 S.Ct. at 2765.

Whether the discretionary function exception bars suit against the United States in a given case depends on two factors. See Maas v. United States, 94 F.3d 291, 297 (7th Cir.1996) (citing Rothrock v. United States, 62 F.3d 196, 198 (7th Cir.1995)). First, a discretionary act must be involved. In other words, the act for which liability is sought to be imposed must involve "an element of judgment or choice." United States v. Gaubert, 499 U.S. 315, 322, 111 S.Ct. 1267, 1273, 113 L.Ed.2d 335 (1991) (internal quotations omitted); see also Rothrock, 62 F.3d at 198. Therefore, if "a federal statute, regulation, or policy specifically prescribes a course of action for an employee to follow," the discretionary function exception does not apply. Gaubert, 499 U.S. at 322, 111 S.Ct. at 1273. Second, "even assuming the challenged conduct involves an element of judgment, it remains to be decided whether that judgment is of the kind that the discretionary function exception was designed to shield." Id. "Because the purpose of this exception is to prevent judicial second-guessing of legislative and administrative decisions grounded in social, economic, and political policy ..., the exception protects only governmental actions and decisions based on considerations of public policy." Id. at 323, 111 S.Ct. at 1273-74; see also Maas, 94 F.3d at 296; Rothrock, 62 F.3d at 198.

The district court concluded that the sale of the milling machine by the DRMS was the type of discretionary function excepted from the Act and dismissed the case under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. We review de novo the district court's dismissal of appellant's complaint. See Rothrock, 62 F.3d at 198.

II.

In order to determine whether the sale of the milling machine by the DRMS involved an exercise of judgment of the kind that the discretionary function exception was designed to shield, we examine the statutes and regulations which authorized the sale. Under the Federal Property and Administrative Services Act of 1949 ("FPASA"), the Administrator of General Services is entrusted with the broad task of supervising and directing the disposition of surplus property, which includes any excess property not required for the needs of any federal agency. See 40 U.S.C. § 484(a) & § 472(g). The Administrator, who is free to delegate this task to any executive agency, has granted the DOD the authority to dispose of its own excess personal property. See 41 C.F.R. § 101-45.1031(b). Agencies which have been delegated the task of disposing of their surplus property have the power to "do so by sale, exchange, lease, permit, or transfer, for cash, credit, or other property, with or without warranty, and upon such other terms and conditions as the Administrator deems proper...." 40 U.S.C. § 484(c).

Congress, through these provisions, has vested considerable discretion in the federal agencies, as the means by which the agencies dispose of their surplus property has been left entirely to their judgment. The task of formulating a plan for the disposal of surplus property is one which clearly requires the exercise of judgment and choice as to the proper method and manner of disposal. In the instant case, the DOD has exercised its discretionary authority to dispose of its property by public auction. Nothing in the FPASA or the Federal Property Management Regulations ("the Regulations"), 41 C.F.R. § 101, dictates a procedure for the DOD to follow in selling its property to the public. The DOD, in the absence of regulations guiding its conduct, determined that it would sell the property "as is" and "where is." These terms are outlined in the DOD's "Sale by Reference" pamphlet, which states as follows:

The Bidder is invited, urged, and cautioned to inspect the property prior to submitting the bid.... Unless otherwise specifically provided in the Invitation, all property is for sale "as is" and "where is." ... [T]he Government makes no warranty, express or implied, as to quantity, kind, character, quality, weight, size, or description of the property, or its fitness for any use or purpose....

In addition, the DOD chose not to inspect its property for defects prior to sale or to issue warnings to purchasers of potential risks associated with its property. This was within the agency's discretion, as nothing in the FPASA or the Regulations require the DOD to assume these responsibilities. 1 The manner in which the sale would be conducted, including the extent to which the agency would take steps to protect the public, was left entirely to the DOD's consideration. See Cassens v. St. Louis River Cruise Lines Inc., 44 F.3d 508, 513 (7th Cir.1995) (holding discretionary function exception applies to Coast Guard's formulation of inspection procedure because neither statute nor regulations specified course of conduct for Coast Guard inspectors in meeting goal of insuring compliance); Cisco v. United States, 768 F.2d 788, 789 (7th Cir.1985) ("Congress has left to the EPA to decide the manner in which, and the extent to which, it will protect individuals and their property from exposure to hazardous wastes."). The DOD's formulation of its disposal plan is therefore properly classified as a discretionary function.

The question remains whether the discretion exercised by the DOD in determining the manner in which its sales would be conducted is the type of discretion which the exception seeks to protect. The congressional declaration of policy accompanying the FPASA states that it was Congress' intent "in enacting this legislation to provide for the Government an economical and efficient system for ... the disposal of surplus property...." 40 U.S.C. § 471. Congress left the means of carrying out its policy of economic and efficient disposal to the determination of the federal agencies. A decision by the DOD to inspect all of its surplus property, which, according to the government, includes everything from aircraft carriers to wild burros, to ensure that it is safe for use by the public necessarily would impact the efficiency with which the government could dispose of surplus property. Decisions such as these which require the balancing of safety and economics clearly fall within the...

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