Green v. U.S.

• Decision Date: 02 October 1980
• Docket Number: No. 78-2739,78-2739
• Citation: 629 F.2d 581
• Parties: Raymond GREEN, Irvin Green, Larry Campbell, William Kuehne, Don McClure, Norman McClure, Stuart Petersen, Reuben R. Depner, Mike Harrington, and Wandon Ashby, Plaintiffs-Appellants, v. UNITED STATES of America, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 581

629 F.2d 581

Raymond GREEN, Irvin Green, Larry Campbell, William Kuehne Don McClure, Norman McClure, Stuart Petersen Reuben R. Depner, Mike Harrington, and Wandon Ashby, Plaintiffs-Appellants, v. UNITED STATES of America, Defendant-Appellee.

No. 78-2739.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Aug. 13, 1980.

Decided Oct. 2, 1980.

Patrick B. Cerutti, Spokane, Wash., for plaintiffs-appellants.

Carroll D. Gray, Asst. U. S. Atty., Spokane, Wash., for defendant-appellee.

Appeal from the United States District Court for the Eastern District of Washington.

Before BROWNING, SNEED and CANBY, Circuit Judges.

SNEED, Circuit Judge:

Appellants brought suit under the Federal Tort Claims Act, 28 U.S.C. § 2674 (1976) ("FTCA"), for economic losses resulting from the application of DDT to federal grazing lands upon which appellants' cattle were grazing. The district court ruled that appellants' tort claims were barred by the misrepresentation and discretionary function exceptions to the FTCA. 28 U.S.C. § 2680(a) and (h) (1976). We affirm.

I. FACTS

Appellants, who held grazing permits issued by the Bureau of Indian Affairs, pastured cattle during the period in question upon lands belonging to the Colville Indian Reservation located in the State of Washington. Beginning in 1970, an outbreak of the Douglas fir tussock moth caused extensive defoliation of timber in Washington, Oregon, and Idaho. The only pesticide known to be effective against the tussock moth was DDT, the use of which was restricted by federal law. For several years, various federal and state agencies studied the problem, and alternative pesticides were tried, without success. On February 26, 1974, after several public hearings, the Environmental Protection Agency (EPA) authorized the use of DDT by the Forest Service. The EPA order contained a number of restrictions, one of which provided that "(t)o the extent possible, livestock and other domestic animals shall be removed from the treatment area . . . ."

Various state and federal agencies, including the Forest Service and the Bureau of Indian Affairs, participated in the program in which DDT was used. The Forest Service prepared a letter to be sent to livestock owners notifying them of the program and of its consequences for livestock in the treatment area. On March 5, 1974, the Bureau of Indian Affairs, which was responsible for notifying cattle owners operating on the Colville Indian Reservation, sent its notification letter to those owners. This letter differed from that prepared by the Forest Service in what the district court found to be two significant respects. First, although both letters referred to an earlier study conducted near Burns, Oregon, in which one of five cows tested six months after DDT had been applied to grazing lands had residues in excess of established limits, the Service's letter stated that the program in this case "may result in both higher levels of residue and greater percentages of animals exceeding the tolerance level." The Bureau's letter merely stated that "similar results may be found in our area." Second, although both letters warned that cattle with residue levels in excess of the legal limit could not be sold, the Service's letter advised that livestock owners would bear the substantial costs of testing cattle for residue levels. No such warning appeared in the Bureau's letter.

Appellants continued to graze their cattle on Reservation lands, and in June those lands were sprayed with DDT. As a result, the cattle could not be sold that fall but had to be held over for sale the following year. Appellants allegedly suffered financial injury due to the weight loss of the cattle and the costs of winter maintenance.

Appellants brought suit under the FTCA, alleging negligence, trespass, and noncompliance with the EPA order. Appellants also alleged an unconstitutional taking of property by the United States. However, the parties agreed that the district court lacked jurisdiction over the taking claim and that if appellants did not prevail on their FTCA claims, the taking claim should be transferred to the Court of Claims, pursuant to 28 U.S.C. § 1406(c) (1976). At trial, most of the facts were stipulated. The district court found that the government's decision to use DDT was an act of discretion protected by the discretionary function exception to the FTCA. The court also found that the letter sent to appellants by the Bureau of Indian Affairs contained material misstatements and omissions. The court concluded, however, that the government was not liable because of the misrepresentation exception. The court thus dismissed appellants' tort claims and transferred the taking claim to the Court of Claims. Appellants appeal the dismissal of their FTCA claims.

II. THE MISREPRESENTATION EXCEPTION

Appellants' principal contention is that the government is liable for its failure adequately to warn them of the full consequences of its DDT program. Although the district court found that the Bureau's notice letter contained material misstatements and omissions, it held that liability was precluded by the misrepresentation exception in 28 U.S.C. § 2680(h) (1976). Seeking to avoid this exception, appellants assert that the government's liability rests on its failure to discharge its duty to warn, not on its false statements in the notice letter. Appellants also argue that the misrepresentation exception is applicable only when the government has no duty to provide information to the persons injured by the misrepresentation. ¹

We cannot accept appellants' arguments. Giving false information is a type of failure to give true information. Nothing should turn on the inclusion of the former in the latter nor upon the ease with which imparting false information can be described as a failure to impart true information. Nor does the case law support the appellant. The misrepresentation exception has been held to bar suits based on a failure to give any warning to injured parties. E. g., City and County of San Francisco v. United States, 615 F.2d 498, 504-05 (9th Cir. 1980); Preston v. United States, 596 F.2d 232 (7th Cir. 1979); Cargill v. United States, 426 F.Supp. 127 (D.Minn.1976). Nor does the existence of a duty on the part of the government to provide information to the plaintiffs render the exception inapplicable. In United States v. Neustadt, 366 U.S. 696, 81 S.Ct. 1294, 6 L.Ed.2d 614 (1961), the Supreme Court held that the misrepresentation exception precluded the claim of the buyers of a house who had relied to their detriment on a careless and inaccurate FHA appraisal. In so holding the Court acknowledged that "it may be said that the Government owes a 'specific duty' to obtain and communicate information carefully, lest the intended recipient be misled to his financial harm." Id. at 710, 81 S.Ct. at 1302. See also Preston, 596 F.2d at 237. ²

In applying the misrepresentation exception, therefore, the question is not whether the government is guilty of an affirmative misstatement or merely of an omission. Nor is the existence of a specific duty to warn the decisive factor. We think, rather, that the applicability of the exception depends upon the commercial setting within which the economic loss arose. In Preston, 596 F.2d at 239, the court declared that "(t)he test is not whether the injury was economic but whether it resulted from a commercial decision based on a government misrepresentation." Similarly, in Ramirez v. United States, 567 F.2d 854, 856 (9th Cir. 1977) (en banc), this court stated: "The misrepresentation exclusion presumably protects the United States from liability in those many situations where a private individual relies to his economic detriment on the advice of a government official." See also Neustadt, 366 U.S. at 711 n.26, 81 S.Ct. at 1302 n.26. We hold, therefore, that the misrepresentation exception precludes liability where the plaintiff suffers economic loss as a result of a commercial decision which was based on a misrepresentation by government consisting either of false statements or a failure to provide information which it had a duty to provide.

Though we recognize that the decisions in this area may not be fully reconcilable, our view of the misrepresentation exception is consistent with case law construing the provision. Where the plaintiffs' injuries were not commercial, as, for instance, in the airplane crash cases, e. g., Ingham v. Eastern Airlines, Inc., 373 F.2d 227 (2d Cir.), cert. denied, 389 U.S. 931, 88 S.Ct. 295, 19 L.Ed.2d 292 (1967); United Air Lines, Inc. v. Wiener, 335 F.2d 379 (9th Cir.), cert. dismissed, 379 U.S. 951, 85 S.Ct. 452, 13 L.Ed.2d 549 (1964), and the medical services cases, e. g., Ramirez, supra ; Betesh v. United States, 400 F.Supp. 238 (D.D.C.1974), courts have generally ruled that the exception does not preclude claims based on the government's failure to inform. See also Indian Towing Co. v. United States, 350 U.S. 61, 76 S.Ct. 122, 100 L.Ed. 48 (1955). On the other hand, the exception has usually been held to bar claims for damages resulting from commercial decisions based on false or inadequate information. E. g., Neustadt, supra ; Preston, supra ; Cargill, supra ; Scanwell Laboratories v. Thomas, 521 F.2d 941, 947-48 (D.C. Cir. 1975).

In this case, appellants assert that the misstatements and omissions in the notice letter prevented them from making an informed decision as to whether to continue to graze their cattle on reservation lands. As a result, appellants suffered economic loss. As we see it, this is the kind of injury to which the exception applies. Cf. Saxton v. United States, 456 F.2d 1105 (8th Cir. 1972) (exception precludes claim based on plaintiffs' failure to treat cattle in reliance on government tests indicating cattle were not diseased). The district court was correct in holding that the government is not liable for the inadequate...