Merklin v. U.S., 85-5079

• Decision Date: 14 May 1986
• Docket Number: No. 85-5079,85-5079
• Citation: 788 F.2d 172
• Parties: William MERKLIN, Appellant, v. UNITED STATES of America.
• Court: U.S. Court of Appeals — Third Circuit

Page 172

788 F.2d 172

William MERKLIN, Appellant, v. UNITED STATES of America.

No. 85-5079.

United States Court of Appeals Third Circuit.

Argued March 18, 1986.

Decided April 15, 1986.

As Amended May 14, 1986.

Allan Kanner (argued), Allan Kanner & Associates, Philadelphia, Pa., Raymond P. Vivino, Vivino & Rocco, Wayne, N.J., for appellant.

Robert C. Longstreth (argued), M. Faith Burton, Washington, D.C., Richard K. Willard, Acting Asst. Atty. Gen., W. Hunt Dumont, U.S. Atty., Jeffrey Axelrad, Director, Torts Branch, for appellee.

Before HUNTER, MANSMANN, Circuit Judges, POLLAK, ^* District Judge

OPINION OF THE COURT

JAMES HUNTER, III, Circuit Judge:

Appellant William Merklin filed this action under the Federal Torts Claims Act ("FTCA" or "Act"), 28 U.S.C. Secs. 1346(b), 2671-2680 (1982), seeking compensation for the injuries he allegedly sustained as a result of his work with radioactive materials in a plant retained and regulated by the Atomic Energy Commission ("AEC"). Because we hold that the district court prematurely granted judgment in favor of the United States on one of Merklin's claims, we reverse and remand.

I.

Between 1953-59 and 1962-71, Merklin was employed by Rare Earths, Inc. and its successor, W.R. Grace & Co., as a foreman in a radioactive ore processing plant in Wayne, New Jersey. ¹ In 1954, the AEC issued Grace a license authorizing the company to possess and process "source materials," i.e., radioactive industrial ores and chemicals. The AEC then entered into a contract with Grace under which the AEC would deliver radioactive monazite ore to Grace. Grace would extract thorium hydrozide from the ore for delivery to the AEC, which would use the metal to manufacture atomic weapons. Under the terms of the contract, the AEC retained title to the ore and to the refined products.

In 1981, Merklin was diagnosed as having cancer of the larynx, throat, and lymph nodes of the neck. Merklin underwent surgery involving the removal of the larynx, partial removal of the throat, and left radical neck dissection. Believing that his exposure to the source materials had caused his cancer, Merklin submitted an administrative claim to the Nuclear Regulatory Commission as required by FTCA Sec. 2675(a). The Commission denied his claim on June 27, 1983, finding that Merklin had failed to present evidence that his cancer had been proximately caused by the AEC's negligence.

In December 1983, Merklin filed suit in the District Court for the District of New Jersey alleging liability under the FTCA on three grounds. Merklin maintained that the AEC had breached its duty to inspect properly the Grace facility. He also suggested that the AEC, as the employer of Grace, owed a duty to Grace's employees to ensure that the processing plant was not an unreasonably dangerous work environment. Finally, Merklin contended that the AEC, as the owner of a dangerous chattel (the monazite ore and its derivatives), owed a duty to warn those who would come in contact with the chattel of the risks associated with it. After extensive briefing on these issues, the district court granted the United States' motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).

II.

5. The FTCA authorizes suits against the United States for compensatory damages for:

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 to the claimant in accordance with the law of the place where the act or omission occurred.

28 U.S.C. Sec. 1346(b). Therefore, to succeed in this suit, Merklin must show that the United States would be liable as a private person under a tort theory recognized by New Jersey courts. His action must be in negligence, however, because the Act does not waive the United States' sovereign immunity for vicarious or strict liability suits. See Laird v. Nelms, 406 U.S. 797, 92 S.Ct. 1899, 32 L.Ed.2d 499 (1972). The Act also proscribes suits arising from the performance of discretionary governmental functions. FTCA Sec. 2680(a) states that the Act does 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 of a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved was abused.

See generally United States v. S.A. Empresa de Viacao Aerea Rio Grandense, 467 U.S. 797, 104 S.Ct. 2755, 81 L.Ed.2d 660 (1984) ("Varig Airlines "); Dalehite v. United States, 346 U.S. 15, 73 S.Ct. 956, 97 L.Ed. 1427 (1953); Pennbank v. United States, 779 F.2d 175 (3d Cir.1985).

We note that because we are reviewing an order granting judgment under 12(b)(6), we are constrained to accept appellant's factual allegations as true. Our scope of review of the district court's judgment is plenary. See Bogosian v. Gulf Oil Corp., 561 F.2d 434, 444 (3d Cir.1977), cert. denied, 434 U.S. 1086, 98 S.Ct. 1280, 55 L.Ed.2d 791 (1978).

III.

Merklin maintains that New Jersey's "good samaritan" rule imposed a duty on AEC inspectors to warn Grace employees of health hazards they may have discovered during the course of inspections conducted pursuant to the Atomic Energy Act, 42 U.S.C. Secs. 2011-2284 (1982). Under New Jersey's formulation of the good samaritan theory of liability, one who undertakes to render a service to another is liable if he does so negligently. See Bauer v. 141-149 Cedar Lane Holding Co., 24 N.J. 139, 145, 130 A.2d 833, 837 (1957); see also Restatement (Second) of Torts, Secs. 323, 324. The district court determined that this theory was barred by the discretionary function exception. We agree.

In Varig Airlines, the Supreme Court identified two guidelines for determining whether governmental action is discretionary for the purposes of the FTCA. First, we must ascertain whether "the challenged acts of a Government employee--whatever his or her rank--are of the nature and quality that Congress intended to shield from tort liability." Varig Airlines, 104 S.Ct. at 2765. On this point, we must be mindful that Congress designed the exception to preclude the application of the Act to agency decisions involving policy judgments. Id. at 2764. Second, the Court observed that the discretionary function exception plainly applies to "the discretionary acts of the Government acting in its role as a regulator of the conduct of individuals." Id. at 2765. See generally General Public Utilities Corp. v. United States, 745 F.2d 239, 242-46 (3d Cir.1984), cert. denied, ---- U.S. ----, 105 S.Ct. 1227, 84 L.Ed.2d 365 (1985).

Merklin has not referred us to any authority suggesting that the AEC's decisions about the method and manner of plant inspections are not committed to its discretion. Indeed, our own review of the Atomic Energy Act indicates that Congress granted the AEC a wide scope of discretion in the administration of the Atomic Energy Act's provisions. See 42 U.S.C. Sec. 2035(c) (creating an Inspection Division "to gather information" to determine whether contractors are complying with the Atomic Energy Act). Moreover, we agree with the district court that the discretionary function exception clearly precludes Merklin's good samaritan theory because the theory attempts to hold the AEC liable in its capacity as a regulator. "When an agency determines the extent to which it will supervise the safety procedures of private individuals, it is exercising discretionary regulatory authority of the most basic kind." Varig Airlines, 104 S.Ct. at 2768. See Begay v. United States, 768 F.2d 1059, 1064 (9th Cir.1985) (government inspection of uranium mines covered by the discretionary function exception).

Merklin urges us to follow McMichael v. United States, 751 F.2d 303 (8th Cir.1985), where the Eighth Circuit held that the discretionary function exception did not prohibit a claim based on the allegedly negligent inspection of a munitions plant by Defense Department officials. We do not believe that McMichael applies here. The McMichael court found that government regulations and provisions of the contract between the manufacturer and the government obligated several full-time inspectors to perform a large number of precise and highly technical inspections involving no policy judgment. Cf. Griffin v. United States, 500 F.2d 1059 (3d Cir.1974) (discretionary function exception inapplicable to the approval of a batch of vaccine where such approval was based on scientific, not policy, judgment). We believe that McMichael must be read narrowly to apply only to those situations where no policy judgment is implicated. We find the instant case differs distinctly from McMichael in that the AEC's discretion in conducting plant inspections appears unbounded. Accordingly, we hold that the discretionary function exception bars Merklin's good samaritan claim. ²

IV.

Merklin also argues that the United States may be found liable as the employer of Grace for Grace's negligence in permitting the processing plant to become contaminated with radioactive material. The general rule is that the employer of an independent contractor is not liable for the torts of the contractor. See Majestic Realty Associates v. Toti Contracting Co., 30 N.J. 425, 430, 153 A.2d 321, 324 (1959). This rule is subject to three limitations. Under Majestic, the employer may be liable for his contractor's negligence: (i) where the employer retains substantial control over the contractor's work; (ii) where the employer engages the contractor to perform "inherently dangerous" work; and (iii) where the employer has negligently selected an incompetent contractor. Id. at 430-35, 153 A.2d at 324-26; see generally W. Keeton, D. Dobbs, R. Keeton, & D....