Petition — Keene Corp. v. United States

g 2 sins l 8 36 Oftice-Supreme Court, U.S.

FiLLEu

me MAY 11 1983

ALCYANIDER L. STEVAS,

CLERK

IN THE SUPREME COURT

OF THE UNITED STATES

OCTOBER TERM, 1982

KEENE CORPORATION,

Petitioner,

v.

UNITED STATES OF AMERICA,

Respondent.

ON WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

PETITION FOR WRIT OF CERTIORARI

Eugene R. Anderson*

Jerold Oshinsky

Irene C. Warshauer

Marcy Louise Kahn

Frederic L. Neustadt

ANDERSON RUSSELL KILL &

oLICck., F.C.

666 Third Avenue

New York, New York 10017

(212) 850-0700

Counsel for Petitioner

* Counsel of Record

QUESTIONS PRESENTED?

1. Whether this Court should

resolve the irreconcilable conflicts

among the First, Second, Fourth and

Ninth Circuits as to whether admiralty

jurisdiction applies to claims arising

from injury allegedly caused by exposure

to asbestos-containing products on

vessels in navigable waters or in ship-

yards.

2. Whether this Court should

resolve the irreconcilable conflicts

among the Circuits as to whether

administrative regulations promulgated

2 This is Keene Corporation's orig-

inal designation of corporate relation-

ships pursuant to Supreme Court Rule

28.1. Bairnco Corporation is the parent

of Keene Corporation. BZ Acquisition

Corp. is a wholly-owned subsidiary of

Bairnco Corporation. Lightolier, Incor-

porated is a wholly-owned subsidiary of

BZ Acquisition Corp. Lightolier, Incor-

porated is an affiliate of Keene Corpo-

ration.

The caption of this action

contains the names of all of the parties

hereto.

by the Department of Justice pursuant to

the Federal Tort Claims Act ("ICA"), 320

Uae. § 2672, restrict the subject

matter jurisdiction of the federal court

in cases brought under the FTCA.

3. Whether the court below

applied an overly restrictive

interpretation of the administrative

filing requirements of the Federal Tort

Claims Act, 28 U.S.C. § 2675, rendering

it impossible for a litigant who incurs

continuing damages in thousands of

pending lawsuits to comply with those

Procedures in a single action and

thereby compelling it to file separate

claims against the United States of

America (the "Government") in each of

the thousands of lawsuits, particularly

where the Government publicly refuses to

settle any such claim.

aiia

TABLE OF CONTENTS

Page

Questions Presented ....-+-++eeeres i

Taklea of COmtOnte® .ccccrcccevvcses 533

Table of Authorities ...ceceeesees Vv

Opinions Below ....-eeereeeeeecees 2

Re eg ee a

Existence of Jurisdiction

a ae ne en 3

Constitutional and Statutory

Provisions Involved ......+++e--. 4

Statement of the Case .....-eeeeees 5

Proceedings Below ....-+eeeeeeeees sa

Reasons for Granting

Ce ee 8 cee eee hee eee ens 17

I. THE CLEAR AND IRRECONCIL=-

ABLE CONFLICT AMONG THE

DECISIONS OF THE FEDERAL

CIRCUITS ON THE APPLICA=-

TION OF ADMIRALTY JURIS-

DICTION TO THOUSANDS OF

LAWSUITS WARRANTS REVIEW

AND RESOLUTION BY THIS

CO vce kk dene We eee nee cy

-iii-

II. THE CONFLICT AMONG THE

CIRCUITS AS TO WHETHER

COMPLIANCE WITH ADMINIS-

TRATIVE REGULATIONS

ADOPTED BY THE JUSTICE

DEPARTMENT PURSUANT TO

THE FICA IS A JURISDIC-

TIONAL PREREQUISITE TO

SUIT AGAINST THE GOVERN-

MENT SHOULD BE RESOLVED

— ee or... 25

III. THE DECISION BELOW PLACES

AN OVERLY STRICT INTERPRE-

TATION OF THE ADMINISTRA-

TIVE FILING REQUIREMENTS

OF THE FTCA AND WOULD

RENDER IT IMPOSSIBLE FOR A

CLAIMANT SUCH AS PETITION-

ER TO EVER FILE A SINGLE

CLAIM AGAINST THE

OO ca 29

rrr. 36

occiput a ae A-1

TABLE OF AUTHORITIES

CASES:

Adams v. United States, 615

D.2G 266 (oem Car. S900) ~2us-s ao,ai

Austin v. Unarco Industries,

Tnc., No. 82-1166 (ist Cir.

ON 20-21

Avery v. United States, 680

wae GOs teem Cif. L968) «.-s5-- 26,a/

Block v. Neal, 103 S.Ct. 1089

3

Butz v. Economou, 438 U.S. 478

be ee 34

Community Communications Co.

v. City of Boulder, 102

Se, Bee CARD su cee ecw eewces 33

Douglas v. United States, 658

7.2m 665 (Goce Gat. 3964) «2.2. 26,29

Executive Jet Aviation, Inc.

v. City of Cleveland, 409

eT es ee 18

Foremost Insurance Co. v.

Richardson, 102 S.Ct. 2654

eo een a a 18

Franklin v. Johns-Manville

Corp., No. C81-533M (W.D.

Wasn. June 10, 1982), aff'd

upon reconsideration

(Sent. 20, L9GZ) .-seccevscvcces ao

-V@=

In re: General Dynamics

Asbestos Cases, C.M.L. ae |

(D. Conn. Mar. ae BOO .n ec. aa,a0

Glover v. Johns-Manville

Corp., 662 F.2d 235 (4th

Wee Se oid ck... BS ae

House v. Mine Safety Appli-

ances Co., 573 F.2d 609 (9th

Cir.), cert. denied, 439

oot med ty, |) 2s at

Indian Towing Co. y. United

scates, 350 U.S. 61 ee 34

Jacobowitz v. Johns-Manville

Sales Corp., No. 79 Cc 865

? om oe Sept. 28, BO nck ec. 44,22

Keene Corp. v. United States,

700 F.2d 836 (2d Cir. 1983 )

afte 80 Civ. 401 (626)

ioe oe eee) passim

Lockheed Aircraft Cor. ¥,

Unitew States, 103 =.Cc.

soit imme. i ne ia

Lunsford v. United States, 570

F.2d 221 (8th Cir. Gere e oc. 27

Owen v. City of Independence,

445 U.S. 622 (1980) 34

e © © @ ¢ © @:. 6 6 @ @ 6

Owens-Illinois, Inc. vy. United

States District Court, 698

F.2d 967 (9th Cir. Bee ncaa... 19-20

Sperry Rand Corp. v. Radio

Corp. of America, 618 F.2d

wen (oem Gace. 2980) ............ 22

Tucker v. United States Postal

Service, 676 F.2d 954 (3d

We RE Gh oe ec eee 26

United States v. Aetna

Casualty & Surety Co., 338

om. Oe CRE 6h eb he ee ko wes 34

White v. Johns-Manville Corp.,

662 F.20 23% (4th Cir.

1981), cert. denied, 454

oe Eee CARE bc cee eee aes 14,15,

19,22

White v. Johns-Manville Corp.,

SGe F.42G 263 (4th Cir. i961) ... LoS

STATUTES:

Extension of Admiralty Juris-

G@iction Act, 46 U.S.C. § 740 ... 3,4

Federal Employees’ Compen-

sation Act, 5 U.S.C.

De UA cab Gh b ee shed dh wea was 13

Federal Tort Claims Act, 28

U.S.C. $6 1346(5), 2671-2680 ... 3,4

Se ee OR hwo ee eee ees 53.4

Be ee Oc bw hee eek ee be we 4

Bee es Oe bee he eee eke eee ii,4

12,26

Public Vessels Act, 46 U.S.C.

De PEE bes hk dee eee ee ces 3,4

Suits in Admiralty Act, 46

Me Oe FOI Oe Cikeb becca ceews +

-vii-

oe oe, © 295K) 2... 3

wee eG, 6 tee... 5... 4

Oe Voeee. © 3ees 2.0... 3,4

RULES AND REGULATIONS:

We ee A i

OTHER AUTHORITIES:

Oversight Hearings on the

Effect of the Manville and

UNR Bankruptcies on Com-

pensation of Asbestos Vic-

tims, before Sub-Comn. on

Labor Standards of the

House Comm. on Education &

Labor, 97th Cong., 2d Sess

(1982) (statement of

J. Paul McGrath, Assistant

U.S. Attorney General)

(eee. we SO 4... 10-11

-vViii-

IN THE SUPREME COURT

OF THE UNITED STATES

OCTOBER TERM, 1982

KEENE CORPORATION,

Petitioner,

7.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

Petitioner Keene Corporation

("Keene") respectfully prays that a writ

of certiorari issue to review the opin-

ion and judgment of the United States

Court of Appeals for the Second Circuit

(hereinafter "Second Circuit") entered

On February 10, 1983.

OPINIONS BELOW

The opinion and judgment below of

the Second Circuit appears in the ap-

pendix commencing at A-l. The opinion

is officially reported at 700 F.2d 836.

The opinion and judgment of the United

States District Court for the Southern

District of New York, which was affirmed

by the Second Circuit, appears in the

Appendix commencing at A-40. This deci-

Sion is not officially reported, but is

unofficially reported at [1980-81 Trans-

fer Binder] Prod. Liab. Rep. (CCH)

1 9083. The opinion of the District

Court denying Keene's motion for reargu-

ment, which is not officially reported,

appears in the appendix commencing at

Page A-8s0.

JURISDICTION

The opinion and judgment of the

Second Circuit of which review by this

Court is sought was entered on Febru-

ary i9, i963. The jurisdiction of this

Court to review the judgment below ex-

ists pursuant to 28 U.S.C. § 1254(1).

EXISTENCE OF JURISDIC=-

TION BELOW

The courts below dismissed this

action for lack of subject-matter juris-

diction. Keene contends that the Dis-

trict Court's jurisdiction was properly

invoked under the Federal Tort Claims

Act ("FICA"), 26 6U.S.C. §§ 1346(b),

2671-2680, or, alternatively, under the

general admiralty and maritime law of

the United States of America, 28 U.S.C.

§ 1333, the Suits in Admiralty Act, 46

a.3.o, §§ 741-752, the Extension of

Admiralty Jurisdiction Act, 6 U.S.C.

§ 740, and the Public Vessels Act, 46

u.2.¢. 66 781-790, or, alternatively,

under 28 U.S.C. § 1331 and the common

law.

CONSTITUTIONAL AND

STATUTORY PROVISIONS

INVOLVED

Extension of Admiralty Jurisdiction AGT,

46 U.S.C. § 745

Federal Tort Claims Act, ae 68.8.6.

§§ 1346(b), 2761-2680

40 U.8.C. § 2672

46 U.8.C. & 26764

46 U.S.C, & 2675(a)

Public Vessels Act, 46 U.S.c. § 781

Suits in Admiralty Act, 46 ¥.5.C. § 742

26 U.S.C. § 1333

The pertinent text of the constitu-

tional and Statutory provisions involved

are set forth in the Appendix commencing

at A-88.

STATEMENT OF THE CASE

The Second Circuit's decision has

necessitated this petition for writ of

certiorari (1) to resolve the conflict

among the First, Second, Fourth and

Ninth Circuits, as well as numerous

district courts, on the application of

admiralty jurisdiction to claims of

injury allegedly caused by exposure to

asbestos-containing thermal insulation

products in shipyards and on vessels in

navigable waters, and third-party claims

arising out of those actions; (2) to

resolve the conflict among the Circuits

as to whether administrative regulations

promulgated by the Department of Justice

pursuant to the FTCA restrict the dis-

trict court's subject matter jurisdic-

tion over suits against the Government;

and (3) because the Second Circuit's

overly restrictive interpretation of the

administrative filing requirements of

the FICA would otherwise render it im-

possible for a litigant incurring con-

tinuing damages in thousands of pending

lawsuits to comply with those require-

ments.

This action arises out of the thou-

sands of lawsuits presently pending in

State and federal courts throughout the

United States (the "underlying cases")

in which the plaintiffs (the "claim-

ants") have alleged personal injury or

wrongful death caused by exposure to

asbestos-containing thermal insulation

products. Petitioner Keene Corporation

has been named as a defendant in more

than 17,000 of the underlying cases.“ A

a. Keene itself has never manufactured

or sold any thermal insulation products

containing asbestos. In 1968, Keene ac-

quired the stock of Baldwin-Ehret-Hill,

Inc. ("BEH"), which was later merged in-

to a wholly-owned Keene subsidiary,

Keene Building Products Corporation

("Reec”). BEH was a minor manufacturer

of thermal insulation products contain-

ing asbestos. BEH never mined asbestos,

and purchased asbestos from the Govern-

(footnote continued)

majority of the claimants in the under-

lying cases have alleged exposure to

asbestos fibers while engaged in the

installation of thermal insulation on

ships during their initial construction,

during the repair of ships already

launched, and during rip-outs of old

thermal insulation from ships. These

claimants worked with asbestos-contain-

ing thermal insulation on ships already

afloat in navigable waters, on vessels

in dry dock in the shipyards and in

shops on land in the shipyard.

In the present action, Keene seeks

to recover in one action, rather than in

thousands of individual gdirect or

third-party actions, its damages from

the Government for injury, indemnity,

(footnote continued from previous page)

ment, as well as from mining and manu-

facturing companies. Between 1968 and

1972, all asbestos was removed from

BEH's thermal insulation product lines.

In 1974, Keene sold all of the stock of

KBPC. Keene, KBPC and BEH will be col-

lectively referred to herein as "Keene".

contribution, apportionment and other

damages which Keene has suffered as a

result of the negligent or wrongful acts

or omissions of the Government. Thou-

Sands of the claimants in the underlying

cases were employees of the Government

who worked in U.S. naval shipyards or

were workers in private shipyards under

contract to the Government. Keene's

Claims arise from the Government's use

and specification of asbestos-containing

thermal insulation Products in connec-

tion with the Government's massive ship-

building projects of the 1940's, 1950's

and 1960's under conditions which the

Government knew were dangerous to the

health of shipyard workers exposed to

these products.

Despite its knowledge of the ad-

verse health effects of asbestos as

early as 1938, the Government extensive-

ly specified the use of asbestos in

thermal insulation products and permit-

ted no deviation from these specifica-

tions. Indeed, one of Keene's products,

"Super Powerhouse Cement," did not in-

clude asbestos fiber as an ingredient,

but a special military formulation was

created to include asbestos solely in

order to meet the Government's specifi-

cations. The Government had the knowl-

edge and technical skill to prevent

worker exposure to excessive dust con-

centration, and developed and establish-

ed workplace safety standards regarding

the handling of asbestos-containing

products which were designed to prevent

the contraction of asbestos-related

injuries by shipyard workers. The Gov-

ernment failed, however, to observe or

enforce its own safety standards and

repeatedly violated those standards from

the 1940's to the 1970's. The Govern-

ment also failed to disclose both its

Own knowledge of the adverse health

effects of asbestos and its failure to

observe its own safety standards to its

workers, contractors and suppliers,

including Keene. As a result of the

Government's action, Keene has been

named as a defendant in thousands of

lawsuits brought by claimants who worked

in United States naval or government

contract shipyards.

The Government is presently a de-

fendant or third-party defendant in

approximately 1,200 asbestos-related

actions involving nearly 13,000 indivia-

ual claims. According to a recent

statement, "the government's position in

the pending asbestos litigations is that

it has no tort liability to the victims

of asbestos-related diseases." Over-

Sight Hearings on the Effect of the

Manville and UNR Bankruptcies on Compen-

Sation of Asbestos Victims, before Sub-

a Ts

Comm. on Labor Standards of the House

Comm. on Education & Labor, 97th Cong.,

2d Sess (1982) (statement of J. Paul

McGrath, Assistant U.S. Attorney Gener-

al) (Sept. 9, 1982) at 1 (A96-97).°

Proceedings Below

In January 1979, Keene presented

various agencies of the Government with

notice of Keene's claims for damages

against the Government pursuant to the

requirements of the FTCA and the appli-

cable regulations thereunder. Rather

than filing thousands of individual

notices for each of the underlying ac-

tions, Keene presented its entire claim

in one notice in order to avoid massive

duplication and repetition.

In its notice, Keene stated that

its total damages with respect to the

a. A copy of this statement is re-

printed in the Appendix commencing at

page A-95.

ollie

underlying cases pending or resolved as

of the time of its claim was in the

amount of $1,088,135, with the proviso

that "[t]his sum certain does not in-

clude other Damages of which Keene is

‘ Keene also pro-

presently unaware."

vided the Government with the general

and specific allegations of the Govern-

ment's misconduct, and provided or of-

fered to make available to the Govern-

ment virtually all of the information

concerning the underlying cases avail-

able to Keene, most of which was already

in the Government's possession.

Six months elapsed without any

final disposition of Keene's claims by

the various agencies. Keene then filed

its complaint pursuant to 28 U.9.6.

§ 2675(a).

4. In the ad damnum clause of its

notice of claim, Keene also stated that

"the United States of America is indebt-

ed to Keene for Damages in the sum of

$1,088,135 and in an additional amount

yet to be ascertained."

“it«

~

e040 «CC O2SCKIct | | 6Court erroneously

dismissed Keene's complaint for lack of

subject matter jurisdiction. The court

held, inter alia,” that Keene's claims

did not lie within admiralty jurisdic-

tion on the grounds that the installa-

tion of high temperature thermal insula-

tion around pipes and boilers on vessels

in navigable waters did not bear a rela-

tionship to traditional maritime activi-

ty. The court concluded that "[t]here

is simply no significant relationship

between the hazards of asbestos and

2. The district court also held the

exclusivity provisions of the Federal

Employees' Compensation Act ("FECA"),

Ss v.s.c. § 8116(c), barred Keene's

claims with respect to underlying cases

brought by past or present government

employees. A-72-73. Although the

Second Circuit did not directly address

this issue, it also stated that FECA

barred suits against the United States

for contribution and indemnity by joint

tortfeasors. A=sS 8.i3, 700 ¥.28 at

845 n.13. This Court's recent decision

in Lockheed Aircraft Corp. v. United

States, aus 8. Ct. 1033 (1983), has

effectively overruled both of these

holdings.

a Se

traditional maritime activity." (A70-71)

The District Court also incorrectly held

that Keene had not satisfied the admin-

istrative filing requirements of the

FICA and the regulations promulgated

thereunder.

The Second Circuit affirmed the

decision of the District Court for es-

sentially the same reasons expressed in

the District Court's decision. With

respect to admiralty jurisdiction, the

court ruled that Keene's claims was not

within admiralty jurisdiction because

such claims are not sufficiently related

to “traditional maritime activity." In

so holding, the court specifically de-

clined to follow the contrary decision

of the Fourth Circuit in White v.

Johns=-Manville Corp., 662 F.2d 234 (4th

Cir. 1981) ("White II"), cert. denied.

454 U.S. 1163 (1982) (admiralty juris-

diction applies to personal injury

«tte

claims of asbestos workers in ship-

yards).° (A=35)

The Second Circuit also affirmed

the dismissal of Keene's claims under

the FTCA on the grounds that Keene's

notice of claim dic not satisty the

FTCA's administrative requirements. The

Court acknowledged that there is a split

in the Circuits as to whether compliance

6. White II was decided five days af-

ter the District Court's decision in

Keene rejecting admiralty jurisdiction.

In two companion cases decided the same

day, the Fourth Circuit also held that

"Tal noncontractual indemnity claim

arising [from a maritime tort claim] is

Similarly a maritime claim . . . %©® be

assessed under principles of maritime

law." White v. Johns-Manville Corp.,

662 F.2d 243, 247 (4th Cir. 1981) (cita-

tion omitted), and that admiralty juris-

diction could be exercised over a manu-

facturer'’s contractual indemnity claim

against the Government. Glover v.

Johns-Manville Corp., 662 F.2d 225 (4th

Cir. 1981). Keene had moved for recon-

Sideration before the District Court on

the basis of the Fourth Circuit's deci-

sions, but the court refused to apply

the Glover and White II decisions to

Keene's suit, and denied the motion for

reconsideration. The Second Circuit

also refused to follow the Glover deci-

sion.

ai Su

with the administrative regulations

promulgated under the FTCA, as opposed

to the Statutory requirements, was a

jurisdictional prerequisite to bringing

suit under the FTCA. The court below

applied the stricter Standards inherent

in the regulations, rather than those of

the statutory filing requirements, as

jurisdictional prerequisites to Keene's

suit.

The court held that Keene's reser-

vation as to future damages rendered

indefinite Keene's specific statement of

its claim's worth. The Court required

Keene to provide an itemization of dam-

ages, including defense costs and in-

creased insurance costs, for each of the

thousands of cases pending against

Keene. The court also held that Keene

had not provided sufficient information

so that the Government could investigate

Keene's claims. In concluding, the

o16<

Court in essence held that Keene could

net bring one ection for all of its

claims, but rather "[t]he very volume

and diversity of claims which have

placed Keene in its unfortunate position

also preclude the wholesale adjudication

of its essentially individual, retail

claims against the government." A-38,

700 F.2d at 845.

REASONS FOR GRANTING

THE WRIT

I. THE CLEAR AND IRRECONCILABLE

CONFLICT AMONG THE DECISIONS

OF THE FEDERAL CIRCUITS ON THE

APPLICATION OF ADMIRALTY JUR-

ISDICTION TO THOUSANDS OF LAW-

SUITS WARRANTS REVIEW AND

RESOLUTION BY THIS COURT

The conflict among the federal

circuits that have considered the appli-

cation of admiraity jurisdiction to

claims of injury caused by exposure to

asbestos-containing products in ship-

yards and on navigable waters, and

oh oe

third-party claims arising out of those

actions, warrants review by this Court

of the Second Circuit's decision below.

In the absence of intervention by this

Court, the application of admiralty law

in factually identical circumstances

Will depend solely upon the forum in

which the suit is pending. Furthermore,

to the extent that claims in the under-

lying cases against Keene are held to be

cognizable in admiralty, Keene Clearly

should be permitted to seek contribution

or indemnity on the same jurisdictional

basis.

In Executive Jet Aviation, ie. +.

City of Cleveland, 409 U.s. 249 (1972),

and Foremost Insurance Co. wy. Richard-

son, 102 5. Ce. 2654 (1982), this Court

emphasized the need for uniform rules

where special maritime concerns relating

to navigation or commerce are present.

By the same token, uniform rules should

~186

govern where two claimants are injured

by alleged asbestos exposure under vir-

tually identical factual circumstances.

No such uniformity presently exists as

to the application of admiralty jur-

isdiction to claims of ‘injury allegedly

caused by. exposure to asbestos-contain-

ing products on vessels in navigable

waters or in shipyards.

In White II the Fourth Circuit held

that shipyard workers engaged in ship

construction and ship repair were en-

gaged in traditional maritime activity,

such that claims for injury during that

work fell within admiralty jurisdiction

"because the installation of the asbes-

tos products has a direct effect on

marine navigation and commerce." 662

F.2d at 239.

However, in Owens-Illinois, Inc. v.

United States District Court, 698 F.2d

967 (9th Cir. 1983), the Mintk Circuit

«10~

ruled that admiralty jurisdiction did

not lie to hear a plaintiff's claim for

personal injury arising from exposure to

asbestos-containing products while em-

ployed in a shipyard. Acknowledging the

conflict among the Circuits, the Ninth

Circuit stated:

"In so holding, we decline to

follow the holding of the

Fourth Circuit [in White ati,

which recently determined that

admiralty jurisdiction existed

2m 68h action substantially

Similar to the one underlying

this mandamus proceeding”.

ag. at 971.

Similarly, tn Austin yv. Unarco

Industries, Inc., No. 82-1168 (ise Circ.

War. 30, 1963), the Siret Circuit cies

declined to follow the White II decision

and instead held that admiralty juris-

diction did not apply to the claims of a

Claimant alleging exposure to asbestos

while working aboard ships in navigable

# The unreported decision in Austin

is reprinted in the Appendix commencing

at A-105.

=<"

water. The Court specifically noted the

split in the Circuits on this issue,

stating:

"In addressing this question,

we note that there is already

some disagreement among the

circuits both as to the proper

analysis and as to the ulti-

mate resolution of the issue

‘ [citing Keene, Owens-

Illinois and White II]. For

reasons set out below, we

disagree, in part, with the

analysis of all three courts,

but we are pursuaded that the

result reached by the Second

and Ninth Circuits is sound."

A-134-135.

In the present action, the Second

Circuit declined to apply admiralty

jurisdiction because it held that the

roles of the parties did not bear a

significant relationship to maritime

activities such as navigation or com-

merce, and that "[g]Jeneral allegations

that the contacts with asbestos took

place in shipyards or even aboard

launched vessels are thus insufficient

to establish admiralty jurisdiction."

A-34, 700 F.2d at 844. The Second Cir-

cuit also recognized conflict among the

Circuits in declining to follow the

Fourth Circuit in White II. A-35, 700

F.2d at 844. In addition, the court

below implicitly recognized that the

Circuits are in conflict on the applica-

tion of admiralty jurisdiction over an

indemnity action arising out of a claim

alleging exposure in a maritime setting.

In so holding, the Second Circuit ex-

pressly declined to follow the reasoning

of the Fifth Circuit in Sperry Rand

Corp. Vv. Radio Corp. of America, 618

F.2d 319 (Sth Cir. 1980), which had held

that a claim for contribution or indem-

nity with respect to an injury cogniza-

ble in admiralty and caused by a product

not specifically or exclusively made for

maritime use nonetheless fell within

admiralty jurisdiction. The Court also

declined to follow the Fourth Circuit's

a 22u

decision in Glover vy. Johns-Manville

Car. , S62 F.26 225 45a Cir. 1981),

which had held that admiralty jurisdic-

tion could apply to a manufacturer's

contractual claim for indemnity against

the Government. A-35-36, 700 F.2d at

845.

The Second Circuit's decision in

this case has thus destroyed the chance

for uniformity, and has made resolution

of whether the distinct and unique body

of admiralty law will apply to the

cisias of ja particulier cisainant or

third-party action arising out of those

claims, dependent solely upon the forum

in which the action is brought. © Fur-

8. The confusion generated by these

conflicting decisions and results is

further reflected in decisions being

handed down in district courts through-

out the country. Compare, e.g., In re

General Dynamics Asbestos Cases, C.M.L.

No. 1 (D. Conn. Mar. 25, 1983) (permit-

ting plaintiffs to amend complaint to

add allegations of admiralty juris-

diction), and Jacobowitz v. Johns-Man-

ville Sales Corp., No. 79 C 865

(footnote continued)

thermore, in the Second Circuit, Keene

is being forced to defend asbestos per-

sonal injury claims in the underlying

cases in many instances where the sole

or primary jurisdictional basis is ad-

miralty. See Jacobowitz, A-186, and In

re General Dynamics Asbestos Cases, A-

214, supra. Ironically, the Second

Circuit's decision Prohibits Keene from

seeking indemnity or contribution for

such claims on the basis of admiralty

jurisdiction. To the extent Keene is

being held liable under admiralty juris-

(footnote continued from previous page)

(E.D.N.Y. Sept. 28, 1982) (same), with

Franklin vy. Johns-Manville Corp.,

No. C81-533M (W.D. Wash. June 10, 1982),

aff'd upon reconsideration (Sept. 20,

1982) (despite claim of 95% exposure on

ships and navigable waters, motion to

amend complaint to add allegations of

admiralty jurisdiction denied). Fac-

tually identical cases are thus being

governed by different bodies of law,

depending upon the court in which the

cases are pending. The unreported deci-

sions in General Dynamics, Jacobowitz

and Franklin are reported in the Ap-

pendix commencing at A-178, A-186 and

A-214, respectively.

o26<

diction, Keene clearly should be permit-

ted to seek indemnity on the same juris-

dictional basis.

There are thousands of cases pend-

ing in this country where the issue of

admiralty jurisdiction has been and is

being raised. In light of the con-

flicting opinions being rendered, the

need is clear and the time is ripe for

review of this important issue by the

Court.

II. THE CONFLICT AMONG THE

CIRCUITS AS TO WHETHER

COMPLIANCE WITH ADMINIS-

TRATIVE REGULATIONS

ADOPTED BY THE JUSTICE

DEPARTMENT PURSUANT TO

THE FTCA IS A JURISDIC-

TIONAL PREREQUISITE TO

SUIT AGAINST THE GOVERN-

MENT SHOULD BE RESOLVED

BY THIS COURT

As noted by the Second Circuit,

there is a conflict among the Circuits

as to whether a failure to comply with

the administrative regulations promul-

i |e

gated by the Justice Department pursuant

to the FTCA can serve to bar a claimant

from subsequently commencing suit pur-

Suant to 28 U.S.C. § 2675(a). At least

four Circuits have held that where a

Claimant such as Keene has exhausted its

administrative remedies in accordance

with the statutory provisions of 28

u.5.C. S§ 2675, any alleged failure to

meet the requirements of the Justice

Department's administrative regulations

respecting the contents of the adminis-

trative filing does not deprive the

Court of jurisdiction. See Adams yv.

United States, 615 F.2d 284 (Sth Cir.

1980); Douglas v. United States, 658

F.2d 445 (Sta Cir. 1981); Tucker vy.

United States Postal Service, 676 F.2d

954 (3d Cir. 1982); Avery v. United

States, 680 F.2d 608 (Sth Cir. 1982).

These courts have reasoned that the

regulations are designed to facilitate

~26<

the settlement of claims by the Govern-

ment. Adams v. United States, supra,

6iS F.2c at 290. Where the Government

has refused to settle a claim, the regu-

lations cease to be pertinent. Juris-

aiction of the district court to hear

the claim is created by Congressional

enactment, not by administrative fiat.

Other courts have engrafted the

administrative filing regulations onto

the statute in determining the existence

of subject matter jurisdiction. House

v. Mine Safety Appliances Co., 573 F.2d

609: (Sth Cir.), cart. denied, 439 U.S.

862 (1978);° Lunsford v. United States,

570 F.2d 221 (8th Cir. 1977).

The Second Circuit ostensibly did

not address this conflict and left the

issue unresolved. A-20-21 n.9, 700 F.2d

at 842 xn.3. The Court's reasoning,

9. The House decision may be con-

sidered to have been overruled sub

Silentio by a subsequent Ninth Circuit

panel in Avery v. United States, supra.

oy

however, effectively (and improperly)

applied the stricter standards inherent

in the administrative regulations, and

not present in the FTCA itself, as a

jurisdictional prerequisite to suit,

defeating the exercise of jurisdiction

in this action. Keene was required

under the statute to provide only the

"minimal notice" of its claims. Avery

v. United States, supra, 680 F.2d at

Gii. The requirements created by the

Second Circuit's interpretation of the

administrative regulations, that expli-

cit detail be provided with respect to

each of the 17,000 underlying cases,

directly conflicts with the rulings of

at least four other Circuits. This

conflict is thus ripe for resolution by

this Court.

This Court should rescive the con-

flict and hold that a failure to comply

with administrative requirements cannot

«260

Georive a plaiatift of the right to

commence his action in federal court

where the provisions of the statute have

been satisfied. As the Sixth Circuit

stated in Douglas v. United States 658

F.2d 445, 447-48 (6th Cir. 1981):

"These regulations, however,

govern administrative settle-

ment proceedings; they do not

set federal jurisdictional

prerequisites. By failing to

comply with regulations prom-

ulgated under 28 U.S.C.

§ 2672, a-claimant loses only

"the opportunity to settle his

or her claim outside the

courts.’ Adams, supra, 615

28 st 2590." (emphasis ad-

ded).

III. THE DECISION BELOW PLACES

AN OVERLY STRICT INTERPRE-

TATION OF THE ADMINISTRA-=-

TIVE FILING REQUIREMENTS OF

THE FTCA AND WOULD RENDER

IT IMPOSSIBLE FOR A CLAIM-

ANT SUCH AS PETITIONER TO

EVER FILE A SINGLE CLAIM

AGAINST THE GOVERNMENT

Under the reasoning of the Second

Circuit's decision, no party suffering

continuing injury due to mass tort liti-

gation could ever bring an omnibus ac-

«26.

tion against the Government for indem-

nity. The Second Circuit's decision

would require that a Party such as Keene

commence individual actions for each of

the 17,000 lawsuits, notwithstanding the

massive duplication of effort involved.

The relitigation of identical issues in

thousands of identical actions is pre-

cisely the result Keene sought to

avoid,; such a cumbersome process can

serve no purpose but to clog the courts

unnecessarily.

In its administrative notice of

Claim, Keene gave its claim a specific

dollar amount, and Provided (or offered

to make available) to the Government

virtually all of the information con-

cerning its claim which is available to

Keene. The Second Circuit nonetheless

held that Keene had not submitted _

valid administrative Claim, reasoning

that (1) a reservation of rights as to

oT

damages resulting from underlying cases

to be brought in the future rendered the

sum uncertain; (2) Keene was required to

itemize its particular damages for each

underlying case, rather than providing a

total amount of its claim, and (3) Keene

had not provided the Government with

sufficient information to evaluate

Keene's claims, despite the fact that

Keene had provided virtually all the

information available to it.

The Second Circuit placed an unduly

Marrow construction on the-~ statutes

permitting suit against the Government.

The purpose of the filing requirements

of the FTCA are so that information will

be provided the Government to facilitate

settlement.

As a practical matter, Keene could

not have provided any more information

regarding its claims, absent the provid-

ing of all of the papers generated in

in

each of the 17,000 underlying actions.

nm Lact, Keene offered to permit the

Government to review all of its files

respecting underlying cases which had

been resolved through settlement or

judgment. — The Government declined

Keene's invitations. In addition, the

Government, Which is a defendant in

thousands of underlying cases, is fully

aware of the facts and allegations un-

derlying Keene's claim. Furthermore,

any effort to duplicate these millions

of documents would be an utterly futile

act as the Government has made clear

that it will not settle any of the as-

bestos-related cases brought against it

(A-96-97). This completely undercuts

the Second Circuit's rationale of re-

quiring that a claimant Provide the

Government with massive amounts of in-

formation to investigate the claim.

ey

Keene also could not have stated a

sum with any greater particularity as to

its damages suffered as of the date of

the filing ef its notice of ciaia, as

that was indeed the specific damages

suffered as of that date. The Second

Circuit's requirement that there be an

itemization of each item of damage,

including attorneys’ fees and insurance

costs, as to each underlying case, is an

overly restrictive interpretation of the

jurisdictional requirements of the FTCA

and is contrary to the emerging trend of

recent decisions of this Court acceler-

ating the movement against purely tech-

nical impediments to a sovereign's lia-

Biisty. See, e.g., Block v. Neal, 103

S.Ct. 1089 (1983) ("misrepresentation"

exception to liability under the FTCA

not applicable where government employee

negligently performs inspection); Commu-

nity Communications Co. v. City of

atte

Boulder, 102 S.Ct. 635 (1982) (munici-

palities do not enjoy antitrust exemp-

tions of states under the Sherman Act);

Owen v. City of Independence, 445 U.S.

622 (1980) (restricting scope of immuni-

ty of municipal officials); Butts VV.

Economou, 438 U.S. 478 (1978) (immunity

restricted for federal officials).

As this Court has observed:

"'The exemption of the

sovereign from suit involves

hardship enough, where consent

has been withheld. We are not

to add to its rigor by refine-

ment of construction, where

consent has been announced.'"

United States v. Aetna Casual-

Sy & Surety Co., 338 U.S. 366,

383 (1949) (quoting Anderson

v. Hayes Construction Co., 243

m.X. i640, 47, I53 we. 28,

29-30 (1926)).

See also Indian Towing Co. Vv. United

states, 350 U.S. 61, 68 (i955). The

Second Circuit's unduly rigid interpre-

tation of the Government's waiver of

sovereign immunity requires review by

this Court in order to avoid "refinement

a

of construction" of the Government's

waiver of sovereign immunity which would

render it impossible to bring a single

action against the Government and re-

quire petitioner to implead the Govern-

ment in 17,000 pending cases.

w2Ge

CONCLUSION

The decision below is appropriate

for review by this Court for the reasons

stated herein, and Petitioner prays that

a writ of certiorari be issued to review

the judgment and opinion of the United

States Court of Appeals for the Second

Circuit.

May 11, 1983

Respectfully submitted,

Zs/ Eugene R. Anderson

Eugene R. Anderson*

Jerold Oshinsky

Irene C. Warshauer

Marcy Louise Kahn

Frederic L. Neustadt

ANDERSON RUSSELL KILL &

OLICK. F.c.

666 Third Avenue

New York, New York 10017

(212) 850-0700

Counsel for Petitioner

* Counsel of Record

APPENDIX

TABLE OF CONTENTS

Keene Corp. v. United States,

7100 F.2@ G36 (24a Cir. i963)

Keene Corp. v. United States,

60 Civ. 401 (GLG) (S.D.N.fY.

Sept. 30, 1981) os

Keene Corp. v. United States,

SO Civ. 401 (GLG) (S.0.N.Y.

Dec. 21, 19861) Soaks

Constitutional and Statutory

Provisions Involved

Extension of Admiralty

Jurisdiction Act, 46

U.S.C. § 740

Federal Tort Claims Act,

26 U.S.C. §§ 1346(5)

428 U.S.C. § 2672

26 U.S.C. § 2674

26 U.S.C. § 2675

Public Vessels Act, 46

U.S.C. § 7ei :

Suits in Admiralty Act,

46 U.S.C. § 742 ;

426 U.S.C. § 1333

A-92

A-93

Oversight Hearings on the

Effect of the Manville and UNR

Bankruptcies on Compensation

of Asbestos Victims, before

Sub-comm. on Labor Standards

of the House Comm. on Educa-=

tion & Labor., 97th Cong.,

2d Sess (1982) (statement of

J. Paul McGrath, Assistant

U.S. Attorney General)

(Sept. 9, 1982) ie

Austin v. Unarco Industries,

ne... Me. 82-1168, (lst Cir.

esc ig Oe

In re: General Dynamics

Asbestos Caees, C.N.L. No. 1

(D. Conn. Mar. 25, 1983)

Jacobowitz v. Johns=-Manville

sales Corp., No. 79 C 865

(E.D.N.VY. Sept. 28, 1982)

Franklin v. Johns-Manville

Corp., No. C81-533M (W.D.

Wash. June 10, 1982), aff'd

upon reconsideration

(Sept. 20, 1982)

A-ii

A-105

A-178

A-186

A-214

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

No. 32 -=- August Term, 1982

(Argued Decided

October 1, 1982 February 10, 1983)

Docket No. 82-6023

KEENE CORPORATION,

Plaintiff-Appellant,

at V.°

UNITED STATES OF AMERICA,

Defendant-Appellee.

Before:

LUMBARD, OAKES and WINTER,

Circuit Judges.

Plaintiff Keene Corporation appeals

from a final judgment of the United

States District Court for the Southern

District of New York (Gerard L. Goettel,

Judge), dismissing Keene's amended com-

plaint for lack of subject matter juris-

diction, and from an order denying

Keene's motion for reargument.

Affirmed.

EUGENE R. ANDERSON, New York, New

York (Anderson, Russell, Kill &

Olick, P.C., New York, New York,

Irene C. Warshauer, Marcy Louise

Kahn, Frederic L. Neustadt,

Daniel N. Sang, New York, New

York, of counsel), for Appellant.

DAVID M. JONES, Assistant United

States Attorney, Southern

District of New York (John s.

Martin, Jr., United States

Attorney, Southern District of

New York, Peter C. Salerno,

Assistant United States Attorney,

Southern District of New zork, of

counsel), for Appellee.

WINTER, Circuit Judge:

Keene Corporation appeals from a

judgment dismissing its complaint for

A-2

lack of subject matter jurisdiction

entered by Judge Gerard L. Goettel,

United States District Court for the

Southern District of New York. The

gravamen of Keene's complaint is that

the United States is liable under vari-

ous legal theories for the costs of more

than 14,0001 personal injury and wrong-

ful death actions against Keene, arising

from occupational exposure to asbestos

fibers contained in thermal insulation

products manufactured or sold by a Keene

as In January, 1979, when Keene filed

its Amended Notice of Claim with a nunm-

ber of government agencies in an attempt

to comply with the Federal Tort Claims

Act, approximately 1,000 suits had been

brought against the company. The origi-

nal complaint in this action was filed

on January 2, 1980. By November of that

year, approximately 5,959 cases and

claims had been filed against Keene, and

as of April 1, 1982, 12,775 lawsuits had

been filed. At oral argument on Octo-

ber 1, 1982, counsel for Keene informed

us that the number of suits now exceeded

14,000, roughly 45 more cases being

filed each week. As of April 1, 1982,

only 2,888 of these claims had been ter-

minated, either by settlement, verdict,

non-suit or dismissal.

affiliate.? On appeal, Keene urges that

jurisdiction over this action exists

under the Federal Tort Claims Act

("FTCA"), 28 U.S.C. §§ 1346(b) and

2671-2680 (1976) or, alternatively,

under the general maritime and admiralty

jurisdiction of the United States, 28

U.S.C. § 1333 (1976), the Suits in Ad-

Miralty Act, 46 U.s.c. §§ 741-752

(1976), the Extension of Admiralty

Jurisdiction Act, 46 U.S.c. § 740

a. Keene Corporation was organized in

1967 and one year later acquired most of

the stock of Baldwin-Ehret-Hill, inc.

("BEH"). BEH, together with its prede-

cessors, manufactured and sold thermal

insulation products containing asbestos.

In 1970 BEH was merged into a newly cre-

ated wholly-owned Keene subsidiary,

Keene Building Products Corporations

("KEPC"). In 1974, KBPC transferred all

assets and liabilities relating to the

thermal insulation precucts to a divi-

Sion of Keene known as Keene Insulation

and Contracting Division. Keene then

sold its stock in KBPC to an unidenti-

fied person. KBPC and its predecessors

have been named as defendants in an un-

specified number of the lawsuits.

(1976), and the Public Vessels Act, 46

U.S.C. §§ 781-790 (1976).°

Keene's amended complaint alleges

that the United States is liable to it

for all costs arising out of the more

than 14,000 actions. However, it has

made no attempt to categorize the ac-

a. In the district court, Keene also

raised, as grounds for jurisdiction, the

general federal question jurisdiction of

the court, 26 U.S.C. § 1331 and the com-

mon law. Although Keene all but aban-

dons these claims on appeal, see infra

note 13, it is clear that Section 1331

does not establish a waiver of sovereign

immunity and therefore cannot act as a

basis for federal jurisdiction in this

case.

Keene has also brought an action

for breach of contract against the gov-

ernment which is currently pending be-

fore the Court of Claims. See Keene

Corp. v. United States, No. 579=79C (Ct.

Cl., filed Bee. 21, 1979). Keene's

petition in the Court of Claims seeks

damages for indemnity and contribution

arising from express and implied con-

tracts between the government and KBPC.

In that action, the Court of Claims de-

nied a government motion for summary

judgment on the ground that material is-

sues of fact remain in dispute. Keene

Corp. v. United States, No. 579=79C (Ct.

Ci. May i, i961) (per curiam).

tions against it on the basis of indi-

vidual characteristics, such as the role

Played by the United States, the employ-

ment relationship of the Claimants, the

circumstances under which they came into

contact with asbestos, or the theory or

theories of liability. Some of Keene's

allegations, moreover, use terms such as

"most" or "typically" in describing the

actions against it.

For example, the complaint alleges

that the government Played the following

roles relating to the actions against

it: a seller of asbestos fiber, a pur-

chaser of asbestos insulation, a design-

er or specifier of insulation products,

an employer of the claimants or their

employers, an inspector of the claim-

ants' workplace, and a promulgator and

enforcer of health regulations. In the

case of any particular claim against

Keene, however, the government may have

A-6

played only one of these roles. Simi-

larly, Keene alleges only that "most" of

the claimants were “either employees of

the defendant working in U.S. naval

shipyards or employees working in pri-

vate shipyards under contract to the

U.S. Navy, an agency of the United

States." According to Keene, the claim-

ants "typically" assert that they worked

with or around thermal insulation prod-

ucts bearing asbestos and that in the

course of their work, they were exposed

to and inhaled air-borne asbestos fi-

bers, causing asbestosis or other inju-

ries. "Typically," the complaint al-

leges, the workers were involved in

shipyards, some working on shipboard,

some on land, while still others were

exposed to asbestos in the course of

installing insulation in "power plants

and other industrial and commercial

plants, including refineries." The

Government sold Keene some of, but ap-

parently not all, the asbestos used in

its products, and Keene's asbestos-

containing products were sold under

contract both to the government and to

others. On the basis of these allega-

tions, Keene asserts against the United

States twenty-three causes of action,

sounding in negligence, breach of war-

ranty, strict liability, and unjust

enrichment.

Keene has denied the allegations of

all 14,000 complaints and has not yet

been subjected to a final judgment of

liability. It has, however, settled

some of the claims and incurred expenses

in the defense of others. Relying upon

the doctrines of indemnification, con-

tribution and apportionment, Keene ar-

gues that the government is liable for

any and all damages it may sustain as a

result of the lawsuits against it.

The unusual nature of the complaint

‘and the legal problems it raises stem

from the sheer volume and diversity of

claims brought against Keene. Keene's

counsel asserts, and we have no reason

to doubt it, that Keene simply cannot

afford to hire local counsel and defend

each case in the many state and federal

judicial districts in which actions have

been brought against it. Presumably, it

also cannot afford the discovery neces-

Sary to analyze and categorize each

action so that some semblance of order

can be brought to its complaint or even

to implead the government as a third

party defendant in actions pending in

federal district courts.

As the complaint before us stands,

potentially dozens of materially differ-

ent factual combinations are within its

allegations. Looking at the more spe-

cific allegations, the government may

have played at least six different roles

involving at least three different cate-

gories of claimant/employees, who came

into contact with Keene asbestos prod-

ucts in at least three different work

settings. Some of Keene's products were

sold to the government, some to others.

Some were manufactured with asbestos

purchased from the government, some with

asbestos purchased elsewhere. The com-

plaint is not limited even to these

variables, however, since the words

"most" and "typically" strongly imply

the existence of actions with other

factual patterns. Twenty-three separate

causes of action against the government

are alleged.

The complaint thus literally al-

leges dozens of factual combinations,

e.g., (1) The government purchased insu-

lation from Keene containing asbestos

procured from a private producer; the

insulation was used in a private ship-

yard under contract to the government

where employees of the shipyard were in

contact with it on land; (2) A refinery

purchased insulation from Keene contain-

ing asbestos procured from a private

producer; employees of the refinery came

into contact with it in circumstances

covered by government health regula-

tions; (3) A refinery purchased insula-

tion from Keene containing asbestos

purchased from the government; employees

of the refinery came into contact with

it; (4) A factory purchased insulation

from Keene containing asbestos procured

from a private producer; the product

used asbestos pursuant to government

specifications and employees of the

factory came into contact with it; and

so on. Each combination of facts, more-

over, may raise a different legal issue

so far as to the government's liability

to Keene or our jurisdiction is concern-

ed.

Were this an action against a pri-

vate party, the sufficiency of the no-

tice given by the complaint would obvi-

ously be a serious issue. Since the

United States is the defendant, however,

and actions against it are permissible

only where sovereign immunity has been

waived, we must first address the gov-

ernment's Challenge to our jurisdiction.

We agree with Judge Goettel, whose ef-

forts in reducing this suit to order we

much appreciate, that "Keene has at-

tempted to do too much at one time, with

too little jurisdiction," Keene Corp. vw.

United States, No. 80 Civ. 401, mem. op.

at 22 (S.D.N.Y. Sept. 20, 1961). We

affirm his dismissal of the complaint

for substantially the reasons stated in

his opinion.

FEDERAL TORT CLAIMS ACT

The Federal Tort Claims Act,

28 U.S.C. §§ 1346(b) and 2671-2680,

requires that a claimant against the

federal government file an administra-

tive claim with the appropriate agency

prior to institution of suit. Thus, 2&

U.S.C. § 2675(a) provides in pertinent

part:

An action shall not be insti-

tuted upon a claim against the

United States for money dama-

ges 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,

unless the claimant shall have

first presented the claim to

the appropriate Federal agency

and his claim shall have been

finally denied by the agency

in writing and sent by certi-

fied or registered mail. :

The provisions of this subsec-

tion shall not apply to such

claims as may be asserted

under the Federal Rules of

Civil Procedure by third party

complaint, cross-claim, or

counterclaim.

A-13

Keene contends that it has met the ad-

ministrative filing requirements or,

alternatively, that no administrative

filing was necessary because its suit is

"in the nature of a third party action."

In September 1978, Keene filed a

Notice of Claim with eight federal agen-

cies:* four months later, in January

1979, it filed an Amended Notice of

Claim.> The Amended Notice contained a

list of lead plaintiffs and docket num-

bers for roughly a thousand lawsuits. ©

4. These agencies included the General

Services Administration, the Department

of Justice, the Judge Advocate General

of the Army, the Department of Health,

Education and Welfare, the Surgeon Gene-

ral, the Department of Defense, the De-

partment of Labor, and the United States

Public Health Service.

2. Since Keene's Amended Notice of

Claim was filed prior to final admin-

istrative disposition of the September

Notice, it totally supercedes that ini-

tial Notice. See C.F.R. § 14.2(b).

6. Keene asserts that it has filed a

subsequent Notice of Claim for another

3,822 claims, more or less, and contends

(footnote continued)

It described the claims against Keene as

contending generally that the company

had sold products containing asbestos

fiber without adequate warning of the

dangers posed by asbestos and stated

that "[mJany if not all of the Asbestos

Claims against Keene arise out of the

primary fault of United States of

America." The Amended Notice stated

five separate claims based on (1) the

government's role as supplier of asbes-

tos; (2) its role as employer of ship-

yard workers who were exposed to asbes-

tos fibers on the job; (3) the govern-

ment's failure to take precautions or

(footnote continued from previous page)

that the filing of the notice during

this litigation should not bar consoli-

dation of those claims with the earlier

1,000 claims comprised in the Amended

Notice, citing Kubrick v. United States,

so. F.42G. i092, i036 (3d Cir. i978),

rev'd on other grounds, 444 U.S. 111

(1979); McCormick v. Cooley, 458

F. Supp. 776 (W.D. Pa. 1978). Because

of the result we reach regarding the

sufficiency of the Amended Notice, we

need not reach this issue.

A-15

warn workers regarding the dangers of

asbestos after it required the use of

asbestos in insulating products it pur-

chased; (4) the failure of the govern-

ment to make safety inspections of fa-

cilities using asbestos; and (5) "any

other theory that will support a claim

against the United States of America for

Damages."

Keene did not link any of the one

thousand appended claims with one or

another of these grounds of liability.

It simply asserted that

[t]o the extent that Keene

settles or has settled any

such claim and to the extent

that Keene has been or is held

liable in any court or admini-

strative tribunal or has in-

curred costs and expenses,

including attorneys' fees,

costs of insurance and the

cost of executive time with

respect respect to or in con-

nection with such Asbestos

Claims, then the United States

of America is liable to Keene

for indemnity, contribution or

both. "Damages" as used here-

in includes all such settle-

ments, judgments, indemnity,

contribution, costs, expenses,

insurance premiums, attorneys'

fees, the cost of executive

time, and such other and fur-

ther relief as is just and

proper.

The Amended Notice then stated,

The present amount of such

Damages applicable to each of

the claims set forth below is

the sum of $1,088,135. This

sum certain does not include

other Damages of which Keene

is not presently aware.

Later, the Amended Notice again asserted

that the United States of

America is indebted to Keene

for Damages in the sum of

$1,088,135 and in an addition-

al amount yet to be ascertain-

ed.

The requirement that a notice of

claim be filed is jurisdictional and

cannot be waived. House v. Mine Safety

Appliance Co., S73 F.2d 609, Gi? (9th

Cir.), cert. denied, 439 U.S. 862

(1978). Moreover, because the FTCA

constitutes a waiver of sovereign immu-

nity, the procedures set forth in Sec-

tion 2675 must be adhered to strictly.

Three-M Enterprises, Inc. v. United

States, 548 F.2d 293, 295 (10th Cir.

1977); Brown v. General Services Admini-

stration, 507 F.2d 1300, 1307 (2d Cir.

S974), aff 2. 425 U.S. 826 (1976).

Since Keene has filed no Notice of

Claim regarding the vast majority of the

suits against it,’ it is clear that no

jurisdiction exists under the FTCA as to

these claims. As to the remaining

claims, the government also contends

that the Amended Notice is defective

because it failed to state a sum cer-

tain, 28 C.F.R. § 14.2 (1980), and be-

cause it does not provide sufficient

information to permit an investigation,

see 28 C.F.R. § 14.4 (1980), as required

by regulations promulgated pursuant to

28 U.S.C. § 2672.8

ye See supra note 6.

8. 28 U.S.C. § 2672 provides in perti-

nent part that

(footnote continued)

While there is a conflict among the

courts concerning whether the admini-

strative filing requirements of Section

2675 -- which are jurisdictional in

nature -- should be read in the light of

regulations issued under 28 U.S.C.

(footnote continued from previous page)

{t}]he head of each Federal

agency or his designee, in

accordance with regulations

prescribed by the Attorney

General, may consider, ascer-

tain, adjust, determine, com-

promise, and settle any claim

for money damages against the

United States 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 agency while acting within

the scope of his office or em-

ployment, under circumstances

where the United States, if a

private person, would be lia-

ble to the claimant in accord-

ance with the law of the place

where the act or omission oc-

curred: Provided, That any

award, compromise, or settle-

ment in excess of $25,000

shall be effected only with

the prior written approval of

the Attorney General or his

designee.

§ 2672,” courts seem agreed that the

statement of damages in any Notice of

Claim must contain a Sum certain. See,

e.g., Adams v. United States, supra note

9. For example, the Fifth Circuit has

ruled that the regulations do not apply

to Section 2675 because they bear solely

on the procedures to be followed for the

settlement of claims and not on the man-

ner in which a claimant must Present his

or her claim. Adams v. United States,

615 F.2d 284, 288 (Sth Cir. 1980). Sim-

gLarivy. in Douglas v. United States, 658

F.2d 445, 447-48 (6th Cir. aoe.), the

Sixth Circuit held that

[t]hese regulations, however,

govern administrative settle-

ment proceedings; they do not

set federal jurisdictional

prerequisites. By failing to

comply with regulations prom-

ulgated under 28 U.S.c.

§ 2672, a claimant loses only

"the opportunity to settle his

or her claim outside the

courts." (citation omitted)

In contrast, other circuits have applied

the Section 2672 regulations in deter-

mining the sufficiency of a Notice of

Claim. See, €.g., House v. Mine Appli-

ances, 573 F.2d at 615-16; Lunsford v.

United States, 570 F.2d 421, 4225 (8th

Cir. 1977); Pennsylvania v. National

Association of Flood Insurers, 520 F.2d

11, 19-20 (3d Cir. 1975). Although the

Second Circuit has not directly address-

(footnote cartéinued }

9, 615 F.2d at 291 n.15 (Section 2672

regulations do not apply to Section 2675

but the claimant still must state a sum

certain). Section 2675 is designed, in

conjunction with Section 2672, to pro-

vide a procedure under which the govern-

ment may investigate, evaluate and con-

sider settlement of a claim. This pur-

pose requires that the Notice of Claim

provide sufficient information both to

permit an investigation and to estimate

the claim's worth. It seems clear to us

that a claim which includes "an addi-

tional amount yet to be determined,"

which may dwarf the sum stated, is a

request for damages so indefinite as to

fail to satisfy the statutory purpose.

(footnote continued from previous page)

ed the issue, district judges in this

circuit have applied the Section 2672

regulations to Section 2675. See e.g.,

Luria v. Civil Aeronautics Board, 473

F. Supp. 242, 244 (S.D.N.Y. 1979);

Kantor v. Kahn, 463 F. Supp. 1160

(S.0.mics. L979). We £ind it unnecessary

A-21

Faced with a reservation as to future

damages which may entail huge sums,

government officials cannot possibly

evaluate the claim with a view to set-

tlement.

Keene suggests that the Court may

Strike as surplusage the reservation as

to future claims, Erxleben v. United

States, 668 F.2d 268 (7th Cir. 1981);

Fallon v. United States, 405 F. Supp.

1320, 1322 (D. Mont. 1976). However,

Keene failed to Satisfy statutory pur-

pose even as to its $1,088,135 claim

because it did not specify the amount of

indemnity or contribution it demanded

for each underlying lawsuit. Where

separate claims are aggregated under the

FTCA, the claimant must present the

government with a definite damage amount

for each claim. Kantor v. Kahn, supra

note 9, 463 F. Supp. at 1164. Only with

a breakdown on a claim by claim basis

can the government evaluate the underly-

ing merits of the claims against it in

order to decide whether to settle or to

litigate.

Keene's Amended Notice is insuffi-

cient on yet a second ground. The gene-

rality of the statement claiming liabil-

ity on the part of the government failed

to provide sufficient information re-

garding the nature and merits of Keene's

claim so far as liability is concerned.

The burden is on the claimant to provide

this information, Kantor, supra, and

that burden is not met simply either

because the government is generally

familiar with asbestos litigation or

because the case names and docket num-

bers are appended to the Notice.

Keene's Notice does no more than create

an opportunity for the government to

sift through the record of each of the

lawsuits named. That is not sufficient

notice to enable the government to eval-

uate its exposure so far as liability is

concerned.

The problem of the sufficiency of

notice in this case is more than a ques-

tion of technical niceties. Keene's

laundry list of potential variables

makes it impossible for the government

== or a court -=- to evaluate Keene's

action against the government. Dozens

of different combinations of material

facts are possible under the complaint,

and the exposure of the government on

liability may vary enormously between

them, yet, short of a detailed examina-

tion of each action against Keene, the

government cannot evaluate that expo=-

sure. Keene's failure even to organize

the individual suits by general category

ethets makes it impossible for the gov-

ernment to respond to Keene's suit. We

are aware that the cost of Ordering the

thousands of actions brought against

Keene may be staggering. The FTCA,

however, does not authorize us to bal-

ance relative means or relative hard-

ships but places the burden on the

claimant to provide sufficient details

of the claim made against the govern-

ment.

Keene contends that it is

excused from the filing requirement

because its suit is in the nature of a

third party complaint. 28 U.S.C.

§ 2675. However, under Fed. R. Civ. P.

14, a third party action is one in which

a defendant asserts a claim against a

non=-party to the original action for all

or part of the plaintiff's claim against

him. Since Keene is the original com-

plainant in this suit, its action is not

within Rule 14. See generally, 6C

Wright & A. Miller, Federal Practice and

Procedure §§ 1441, 1453-55 (1971). We

perceive no reason to read the FTCA's

reference to third party actions as

included more than is encompassed by

Rule 14,10

10. Keene relies heavily upon a case

decided by Judge Blumenfeld, Raybestos-

Manhattan, Inc. v. United States, No.

H-78-416 (D. Conn. Feb. im, 2979). ie

that case, approximately 100 suits had

been filed against Raybestos, a

manufacturer of asbestos insulation

products, by employees of the Elecric

Boat Division of the General Dynamics

Corporation for damages as a result of

their exposure to asbestos. Other

insulation manufacturers were also named

as defendants in the suit. Raybestos,

however, was the only defendant which

was a citizen of Connecticut and, as a

result of the absence of diversity

jurisdiction, the Electric Boat

employees, who were also Connecticut

citizens, had to sue Raybestos in a

State court, while those who were

citizens of Rhode Island brought their

actions in the District of Connecticut.

While Raybestos impleaded the

United States in the federal suits, it

was unable to implead the United States

in the state court actions, 28 U.S.C.

§ 1346(b), and, therefore, filed an in-

dependent action in the district court

for indemnity and contribution for the

state court actions. Judge Blumenfeld

denied the government's motion to dis-

miss for lack of subject matter juris-

{footnote continued)

ADMIRALTY JURISDICTION

The Suits in Admiralty Act

("SIAA"), 46 U.S.C. §§ 741-752, and the

Public Vessels Act ("PVA"), 46 U.S.C.

§§ 781-790, waives sovereign immunity in

the area of maritime torts. Under the

SIAA the United States waives sovereign

(footnote continued from previous page)

diction, holding that the action should

be brought within the third party excep-

tion of 268 U.S.C. § 2675(a) in order to

further the joinder policies behind Fed.

R. Civ. P. 14 and to avoid needless du-

plication of litigation. Judge Goettel

distinguished Raybestos on the grounds

that Judge Blumenfeld's ruling created

the opportunity for joint trial and

joint discovery for a small number of

claims that were in almost every way

Similar to and a part of the larger

federal action. While Raybestos in-

volved indemnification for suits in only

one federal district and the courts of

one state, the present case involves

suits in numerous federal and state

courts. Finally, unlike the defendant

in Raybestos, Keene has failed to im-

plead the United States into those suits

which were brought against it in the

federal courts. Since we hold that

Keene's action is clearly not covered by

Rule 14, we express no opinion as to the

merits of the distinctions relied upon

by Judge Goettel as far as Raybestos is

concerned.

immunity with respect to cases in which

"if such vessel were privately owned or

operated, or if such cargo were private-

ly owned or possessed, or if a private

person or property were involved, a

Proceeding in admiralty could be main-

tained.” 46 U.S.C. $8 742. ‘The PYA

waives sovereign immunity with respect

to "damages caused by a public vessel of

the United States." 46 U.S.C. § 781.

Keene argues that even if we lack juris-

diction over its claim under the Frca, }}

federal jurisdiction exists in admiral-

cy.

Admiralty jurisdiction in tort

exists when the wrong (1) took place on

navigable waters ("situs") and

(2) "bear[s] a significant relationship

to traditional maritime activity" ("sta-

11. These jursidictional bases are

mutually exclusive. The FTCA speci-

fically provides that it does not apply

to suits in admiralty against the United

States. 28 U.S.C. § 2680(d).

tus"). Executive Jet Aviation, Inc. v.

City of Cleveland, 409 U.S. 249, 254-61

(1972); Foremost Insurance Co. v.

Richardson, 50 U.S.L.W. 4778, 4780 (U.S.

June 22, 1982) (approving application of

Executive Jet test outside the context

of aviation torts); see also Kayfetz v.

Walker, 404 F. Supp. 75, 76 (D. Conn.

1975) (Lumbard, Circuit Judge). 74

12. Keene argues that the situs test

must be read in the light of the Exten-

sion of Admiralty Jurisdiction Act

("EAJA"), 46 U.S.C. § 740, which extends

admiralty jurisdiction to injuries on

land caused by a vessel or its appurten-

ances, and, relying upon White v.

Johns-Manville Corp., 662 F.2d 234, 239

fata Cit. 1981). cert. denied. i102 S.Ct.

1037 (1982) ("White II"), asserts that

once installed, asbestos-containing in-

sulation becomes an appurtenance of the

vessel. However, Keene has failed to

meet the requirements of the EAJA. Like

the FTCA, the EAJA requires submission

of a notice of claim to the appropriate

federal agencies prior to filing suit in

the district court. Keene's Amended

Notice does not constitute an adequate

"claim" under the EAJA for the same rea-

son that it fails to satisfy the FTCA

notice requirements. Keene's argument

regarding the EAJA is also somewhat be-

side the point in view of our holding

(footnote continued)

A-29

The Amended Complaint states that

"[mjost of the claimants [against Keene]

were involved in installing high temper-

ature thermal insulation around pipes

and boilers on naval ships, on vessels

in navigable waters, and in power plants

and other industrial and commercial

Plants, including refineries." Admiral-

ty jurisdiction clearly does not extend

to those workers who were exposed to

asbestos in power plants, refineries,

and other land-based commercial facili-

ties, and even if the other workers were

exposed to asbestos in a maritime situs,

see White II, supra note a2, 662 F.2d at

242 (Widener, J., concurring), it is

impossible to determine which of the

(footnote continued from previous page)

that its claim satisfies neither the

situs nor the status tests of Executive

Jet. Although failure to Satsify either

would be fatal to admiralty jurisdic-

tion, our reasoning in rejecting the

claim of admiralty situs applies equally

to the extended situs test of the EAJA.

A-30

underlying actions would be properly

heard in admiralty, and which not,

without a case by case evaluation.

Where a group is composed of workers

with and without maritime status,

admiralty jurisdiction does not exist as

to the group. Brown v. United

States, No. H-76-434, slip op. at 21-22

(D. Conn. July 23, 1979). Keene now

offers to make such an individualized

showing in an evidentiary hearing before

the district court. Since Keene refused

several previous opportunities to

individualize the claims against it, we

believe this offer comes too late.

Moreover, Keene has not met the second

prong of the Executive Jet test, the

status requirement, and a hearing on

individualized situs would be futile.

Keene argues that the fact that its

products were ultimately installed and

used on shipboard is, by itself, suffi-

A-31

cient to meet the status test of Execu-

tive Jet. However, Keene's argument

makes the geographic location of a tort

decisive as a matter of law and thus

effectively collapses the situs and

status test, a result Executive Jet

expressly seeks to avoid.

In Kelly v. United States, 531 F.2d

1144, 1146 (2d Cir. 1976), we stated

that the status test is satisfied when

the "acts and omissions ... suffi-

ciently relate to traditional maritime

activity," whether land-based or not.

Under the Kelly decision, two elements

are critical in this case. First, Keene

does not allege that its insulation was

designed specifically for maritime use.

Indeed, it appears from the complaint

that it was used in a variety of land-

based plants and refineries. Second,

many of the roles attributed to the

government and allegedly giving rise to

Keene's causes of action -- the govern-

ment's sale of asbestos to Keene, its

specification of asbestos as a component

of insulation it purchased from Keene,

its alleged breach of its duty to in-

spect the work place, its obligations as

a promulgator of health regulations --

do not bear a significant relationship

to traditional maritime activities such

as "navigation and commerce." See Kay-

fetz v. Walker, 404 F. Supp. at 76.

These roles seem even less intimately

connected with such activities than

contracts for shipbuilding, contracts to

supply materials for ship construction

and warranties arising under such con-

tracts, which are non-maritime, see,

e.g., North Pacific Steamship Co. v.

Hall Brothers Marine Railway and Ship-

building Co., 249 U.S. 119, 126-27

(1919); White v. Johns-Manville CorD.,

662 F.2d 243, 247 (4th Cir. 1981)

("White I"); G. Gilmore and Cc. Black,

The Law of Admiralty 26 (2d ed. 1975),

and contract for services to a vessel

laid up and out of navigation, also

non-maritime status. G. Gilmore and C.

Black, The Law of Admiralty at 26. In-

deed, a tort arising out of work on an

uncompleted vessel has been held to fall

outside admiralty jurisdiction. Hollis-

ter v. Luke Construction COo., Si7 F.24

720, 921 (Sth Cir. 1975) (per curiam).

General allegations that the contacts

with asbestos took place in shipyards or

even aboard launched vessels are thus

insufficient to establish admiralty

jurisdiction. These defects in the com-=

plaint are fatal as well to Keene's

argument that its contractual breach of

warranty and indemnity claims sound in

admiralty. The government's sale of

asbestos to Keene is a contract lacking

in maritime flavor, as is, absent fur-

ther specification, Keene's provision of

insulation to the government.

Viewed as a whole, therefore,

Keene's claims fail to implicate tradi-

tional concepts of maritime law such as

seaworthiness, cargo damage, salvage, or

the like. We expressly decline to fol-

low the reasoning of the Fourth Circuit

in White II, 662 F.2d at 239-40 (holding

that the personal injury claims of ship-

yard workers engaged in installation of

asbestos insulation are cognizable in

admiralty), White I, 662 F.2d at 249

(holding the manufacturers' third party

complaint against the workers' employer

also fell within admiralty jurisdic-

tion), and Glover v. Johns-Manville

Cora., 662 F.2d 225, 232 (4th Cir. 1981)

(insofar as it held that admiralty ju-

risdiction might exist over manufac-

turers' indemnity claims against the

government under the SIAA or PVA) and,

as well, the reasoning of the Fifth

Circuit in Sperry Rand Corp. v. Radio

Corporation of America, 618 F.2d 319

(Sth Cir. 1980) (holding that an action

for indemnity or contribution could be

brought in admiralty against a manufac-

turer whose products were implicated in

a grounding of a vessel anda collision

upon navigable waters even though the

articles in question were not designed

specifically for marine use). 23

13. Insofar as we find that Keene has

not met the jurisdictional requirements

of the FTCA, SIAA or PVA, we need not

consider its claims under the Federal

Employees Compensation Act ("Feca"), &

U.S.C. §§ 8101-8193 (1976). The FECA is

the exclusive remedy of federal employ-

ees, such as federal shipyard workers,

against the United States, although they

may, of course, institute suit against

third parties such as Keene. The FECA

does not constitute a waiver of sover-

eign immunity as to third parties;

indeed it bars suits against the United

States for contribution and indemni-

fication by joint tortfeasors. See 5

U.S.C. § 8116(c); Galimi v. vetco, Inc.,

914 F.2d 949, 953 (2d Cir. 1975). Sven

were suits for indemnification possible,

(footnote continued)

CONCLUSION

Our rejection of Keene's claims in

no sense reflects either a lack of sym-

pathy for its predicament or a belief

(footnote continued from previous page)

because there is no waiver of sovereign

immunity under the FECA, Keene would be

required to assert an independent juris-

dictional base under FTCA, SIAA, or PVA.

For the reasons stated in the body of

this opinion, such jurisdictional

grounds are foreclosed. General federal

question juriediction, 28 U.S.C. % 1331,

is also lacking because it contains no

waiver of sovereign immunity. See supra

note 3. To the extent that Keene's

claims for indemnity are contractual,

its remedy is in the Court of Claims

under the Tucker Act, 28 U.S.C.

§§ 1346(a)(2), 1491. See Galimi, 514

S.20 at 395i a.2.

Keene also seeks recovery of the

FECA benefits that the government has

recouped from government employee as-

bestos claimants through its statutory

lien on their awards or settlements from

Teare parties. S&S G.S.C. § 8132. Once

again Keene claims jurisdiction for its

claim under the FTCA and SIAA, which we

have already held to be barred. Keene

also raises general federal question

jurisdiction for this claim, alleging,

inter alia, that there has been an

unconstitutional taking of property

without due process. We agree with

Judge Goettel that insofar as Keene

(footnote continued)

that Keene's counsel might have somehow

remedied the fatal defects in its com-

plaint. The very volume and diversity

of claims which have placed Keene in its

unfortunate position also preclude the

wholesale adjudication of its essential-

ly individual, retail claims against the

government. Upholding Keene's complaint

might well "put the government's feet to

the fire" in order to provoke a legisla-

(footnote continued from previous page)

relies on Section 1331 to establish

federal jurisdiction for a suit involv-

ing a constitutional tort following the

rational of Bivens v. Six Unknown Named

Agents of the Federal Bureau of Narcot-

ics, 403 U.S. 388 (1971), it is mistaken

precisely because there is no waiver of

sovereign immunity. Bivens authorizes

suits against the responsible federal

official, Butz v. Economou, 438 U.S.

478, 504 (1978), not against the govern-

ment itself, Norton v. United States,

S81 F.2d 390, 393 (4th Lr. ), Care.

denied, 439 U.S. .1003 (1978), and

Bivens-type actions against the United

States are, as the district court noted,

routinely dismissed for lack of subject

matter jurisdiction, See, e.g., Contem-

porary Mission, Inc. v. United States

Postal Service, 648 F.2d 97, 104 (2d

Cir. 1981).

tive solution to the burgeoning asbestos

litigation, but it would also do vio-

lence to established processes of the

judicial system and well established

principles relating to the FTCA and

admiralty jurisdiction.

Affirmed.

A-39

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

KEENE CORPORATION,

Plaintiff, : S80 Civ. 401

(GLG)

-against-

THE UNITED STATES : @FRIiNi oS N

OF AMERICA,

Defendant.

oe om x

APPEARANCES

La

ANDERSON RUSSELL KILL & VLICK, F.C.

Attorneys for Plaintiff

630 Fifth Avenue

New York, New York 10111

By: Eugene R. Anderson, Esq.

Nicholas L. Coch, Esq.

Irene C. Warshauer, Esq.

Marcy Louise Kahn, Esq.

Frederick L. Neustadt, Esq.

Of Counsel

JOHN S. MARTIN, %) ae

United States Attorney for the

Southern District of New York

Attorney for Defendant

One St. Andrew's Plaza

New York, New York 10007

By: David M. Jones, Esq.

Assistant United States

Attorney

Of Counsel

A-40

PVT TE hi, OD. J.

This action arises out of the pro-

liferation of litigation relating to

exposure to asbestos that has saturated

federal and state courts throughout the

country.? Plaintiff Keene Corporation

("Keene") is a defendant in over 6000

lawsuits brought by persons alleging

personal injury or death from inhalation

of asbestos fibers contained in thermal

1. Asbestos is a mineral fiber that ap-

pears throughout the world and which is

best known for its use as an insulator

against heat. It has been recognized

for over fifty years that the inhalation

of asbestos dust can produce a disease

known generally as asbestosis. Asbes-

tosis is technically defined as a form

of pneumoceniosis. Although lawsuits

arising out of exposure to asbestos are

commonly referred to as asbestosis law-

suits, they actually include a variety

of diseases such as lung cancer, cancer

of the esophagus, cancer of the stomach,

and cancer of the colon. For a general

description of asbestosis and asbestosis

litigation, see Borel v. Fibreboard

Paper Products Corp., 493 F.2d 1076 (Sth

Cir. 1973), cert. denied, 419 U.S. 869

(1974), and the authorities cited there-

in; In Re Asbestos & Asbestos Insulation

Material Products Liability Litigation,

431 F. Supp. 906 (J.P.M.L. 1977).

insulation products alleged to have been

manufactured or sold by Keene and its

subsidiaries. In this action, Keene

seeks indemnity and contribution from

the United States for all damages that

Keene may sustain as a result of these

lawsuits. > The Government moves to dis-

2. Keene alleges that it has never

manufactured or sold thermal insulation

Products that contain asbestos. Keene

was organized and formed in 1967. In

1968, Keene acquired most of the stock

of Baldwin-Ehret-Hill, Inc. ("B-E-H")

which, together with its predecessors,

had manufactured and sold thermal

insulation products containing asbestos

fiber.. In 1970, B-E-H was merged into a

newly created Keene subsidiary, Keene

Building Products Corporation | “FePC").

Keene sold the stock of KBPC in 1974.

3. The gist of Keene's claims against

the Government is that the Government

utilized asbestos-containing thermal

insulation up until 1979 despite the

Government's knowledge, allegedly as

early as 1938, of the hazards of

asbestos. Keene also alleges that the

Government had the knowledge and

technical skill to prevent worker

exposure to excessive dust

concentration, but failed to take

appropriate action. (The Government has

reserved its right, pending decision of

this motion, to move to dismiss for

failure to state a claim against these

novel theories of liability. )

A-42

miss pursuant to Rule 12(b)(1) of the

Federal Rules of Civil Procedure on the

ground that the Court lacks subject

matter jurisdiction over the claims as-

serted by Keene.

In its amended complaint, Keene

alleges twenty-three separate causes of

action sounding in negligence, breach of

Warranty, strict liability, and unjust

enrichment, as well as a violation of

the Due Process Clause of the United

States Constitution. Keene has also

brought an action for breach of contract

against the Government that is currently

pending in the United States Court of

Claims.” See Keene Corp. v. United

ocaces, No. 579-79C (Ct. Cl., filed

*. In its petition in the Court of

Claims, Keene seeks damages for

indemnity and contribution allegedly

arising from express and implied

contracts between the Government and

KBPC. The Court of Claims recently

denied a Government motion for summary

judgment on the ground that issues of

material fact remain in dispute. See

Keene Corp. v. United States, No. 579-

73— (CG. Cli. May 1, 1981) (per curian).

Dec. 21, 1979). Jurisdiction for this

action is asserted under the Federal

sort Claims Act, 28 U.S.C. §§ 1346(b)

and 2671 et seg., alternatively under

the general admiralty and maritime law

of the United States of America, 28

U.S.C. § 1333, the Suits in Admiralty

Act, 46 U.S.C. §§ 741-752, the Extension

of Admiralty Jurisdiction Act, 46 U.S.C.

§ 740, and the Public Vessels Act, 46

U.S.C. §§ 781-790, and alternatively,

under 28 U.S.C. § 1331 and the common

law. Having reviewed the thousands of

pages of memoranda and affidavits sub-

mitted by the parties in connection with

this motion, the Court has determined

that this action is barred by the doc-

trine of sovereign immunity.

The Federal Tort

Claims Act

The jurisdictional issue under the

Federal Tort Claims Act ("“FCTA"), 28

A-44

U.S.C. § 2671 et seq., stems from the

requirement that the claimant file an

administrative claim with the appro-

priate federal agency prior to insti-

tutine suit. 26 U.S.C. § 2675. Secticn

2675 provides in pertinent part that

{a]Jn action shall not be instituted

upon a claim against the United

States for money .. . unless the

claimant shall have first presented

the claim to the appropriate Fed-

eral agency and his claim shall

have been finally denied. ‘

The provisions of this subsection

shall not apply to such claims as

may be asserted under the Federal

Rules of Civil Procedure by third

party complaint, cross-claim, or

counter claim. (Emphasis added. )

Keene contends that this action is in

"the nature" of a third party complaint

and consequently comes under the excep-

tion for third party claims. in the

alternative, it argues that this admin-

istrative filing requirement has been

satisfied.

The purpose of the administrative

filing requirement is to expedite the

settlement of tort claims asserted

A-45

against the government and to avoid un-

necessary litigation. Adams v. United

States, 615 F.2d 284 (Sth Cir.), rehear-

ing denied, 622 F.2d 197 (5th Cir.

1980). The exception for third party

complaints is consistent with this pur-

pose in that it fosters the policy of

the Federal Rules of Civil Procedure

favoring resolution of as many claims as

possible in one lawsuit. Raybestos-

Manhattan, Inc. v. United States, No.

H-/78-416, slip op. at 7 (D. Conn.

Feb. 15, 1979); Jacoby, The 89th Con-

gress and Government Litigation, 67

Colum. &. Rev. 1212. 3279 (2967). The

administrative filing requirement is

jurisdictional and cannot be waived.

House v. Mine Safety Appliances Co., 573

F.2d 609 (9th Cir.), cert. denied, 439

U.S. 862 (1978); Goulding v. United

States, 488 F. Supp. 755 (D. Ariz.

1980), rev'd on other grounds sub non.

Poindexter v. United States, 647 F.2d 35

(9th Cir. 1981). Moreover, because it

constitutes a waiver of sovereign

immunity, the procedures delineated in

| section 2675 must be strictly construed.

Three-M Enterprises, Inc. v. United

states, 5468 F.2d 293, 295 (i0th Cir.

1977); Brown v. General Services

Administration, S07 F.2d i300, i307 (2d

Cis. 1976), aff'd, 425 U.S. 820 (1976).

Consequently, the exceptions for third

party complaints, cross-claims, and

counterclaims have likewise been

strictly construed. See, e.g., West v.

United States, 592 F.2d 487 (8th Cir.

1979); Rosario v. American Export-

isbranctsen Lines, iInc., 531 F.2d 1227

(3a Cir.), cert. denied, 429 U.S. 857

(1976); Bernard v. U.S. Gines, inc., 475

yaa 2236, 141396 (40h Cir. i973). It

would appear, therefore, that Keene's

contention that the Court should treat

this action as being "in the nature of a

third party action" should be summarily

A-47

rejected. Our only hesitancy in so pro-

ceeding comes from the unpublished deci-

sion in Raybestos-Manhattan, Inc. v.

United States, supra, in which Judge

Blumenfeld of the United States District

Court of Connecticut did something like

what Keene proposes the Court do here.

Raybestos arose from highly unusual

circumstances. Approximately one hun-

dred suits had been filed against Ray-

bestos-Manhattan, Inc. ("Raybestos"), a

manufacturer of asbestos insulation pro-

ducts, by employees of the Electric Boat

Division of the General Dynamics Corpo-

ration ("Electric Boat") for damages

resulting from their exposure to

asbestos. Suits against other manufac-

turers of asbestos products had been

filed in the District of Connecticut as

well. Raybestos, however, was the only

manufacturer defendant that was a citi-

zen of Connecticut. As a result, the

Electric Boat employees who were citi-

A-48

zens of Connecticut were required to sue

Raybestos in Connecticut state court

because there was no diversity juris-

diction.

Raybestos impleaded the United

States in all of the cases filed against

Raybestos in federal court. Because it

could not implead the United States in

the state court actions, see 28 U.S.C.

§ 1346(b), Raybestos filed an indepen-

dent action in the district court for

indemnity and contribution for the state

court actions. The Government moved to

dismiss for lack of subject matter jur-

isdiction. Judge Blumenfeld denied the

motion, holding that the complaint

should be treated as a third party com-

plaint to the extent that it would bring

the action within the "third party" ex-

ception of 28 U.S.C. § 2675(a).

The principal reason underlying

Judge Blumenfeld's decision was to gain

judicial economy in an unusual set of

circumstances. The same considerations

do not apply to the case at bar. All

the cases filed in the District of Con-

necticut by employees of Electric Boat

had been consolidated for purposes of

discovery because of the complexity of

the litigation. This action, in con-

trast, involves twenty-eight separate

federal districts and includes cases

that are not related to shipbuilding

activities. See generally In Re Asbes-

tos & Asbestos Insulation Material

Products Liability Litigation, 431 F.

Supp. 906 (J.P.M.L. 1977). (Ironically,

none of the cases brought against Keene

have been filed in this Gistrict. }

Moreover, unlike Raybestos, which had

impleaded the United States in those

cases that had been filed in federal

court, Keene has generally not impleaded

the United States in the federal actions

brought against Keene. To the extent

that cases brought against Keene have

A-50

been terminated, this action would not

effectuate any of the joinder policies

of Rule 14 discussed by Judge Blumenfeld

in Raybestos. In short, whereas Judge

Blumenfeld avoided the duplication of

litigation that would have resulted

merely because some of the plaintiffs

lacked diversity, this action does not

avoid such duplication. Accordingly,

the Court shall not treat this action as

a third party action for the purposes of

the section 2675(a) exception.

Keene argues in the alternative

that it has satisfied the administrative

filing requirements of section 2675.

Prior to the commencement of this ac-

tion, Keene presented an Amended Notice

of Claim” ("Amended Notice") listing the

docket numbers of approximately 1000

5. An undated "Notice of Claims" was

submitted to the agencies on or about

September 25, 1978. This initial notice

was superceded by an "Amended Notice of

Claim" ("Amended Notice"), which was

filed prior to final administrative

disposition of the initial notice.

lawsuits instituted against Keene for

damages allegedly resulting from the

exposure to asbestos fibers. This no-

tice was »nresented to various agencies

including the General Services Adminis-

tration, the Department of Justice, the

Judge Advocate General of the Army, the

Department of Health, Education & Wel-

fare, the Surgeon General, the Depart-

ment of Defense, the Department of

Labor, and the United States Public

Health Service. By the time Keene filed

this action, 1500 more lawsuits had been

filed against it. A total of 6000 law-

suits had been filed by the time this

Court heard oral argument on this mo-

tion. ® Most of the lawsuits for which

Keene seeks indemnification or contri-

bution, therefore, are not encompassed

6. As of November 1, 1980, 5,959 cases

had been filed against Keene of which

approximately 700 had been terminated by

settlement, verdict, non-suit, or

dismissal. Approximately forty-five new

cases are filed against Keene each week.

Affidavit of Howard Mileaf q 5.

by the Amended Notice. Consequently,

Keene's claims resulting from those law-

suits clearly cannot be considered under

the FTCA. See Szyka v. United States

Secretary of Defense, 525 F.2d 62, 65

(2d Cir. 1975); Altman v. Connally, 456

R.g0 i134, 1316 (20 Cir. 1972).

With respect to the 1000 lawsuits

for which purported administrative

Claims have been filed, the Government

contends that the Amended Notice is de-

fective because it fails to state a sum

certain, see 28 C.F.R. § 14.2 (1980),

and because it does not provide suffi-

cient information to allow an investi-

gation, see 28 C.F.R. § 14.4 (1980), 7 as

ae The Government also contends that

the Amended Notice is defective because

it was not accompanied by evidence of

the purported representative's authority

to present a claim on behalf of Keene as

required by 28 C.F.R. § 14.3(e). This

request, however, appears to have been

satisfied by a letter from Keene's chief

executive, Glenn W. Bailey, to the De-

partment of Justice that specifically

authorizes Keene's lawyers to present

claims on Keene's behalf.

required by the regulations promulgated

pursuant to 28 U.S.C. § 2672." There is

a conflict among the circuit courts,

however, over whether the administrative

filing requirements of 28 U.S.c. s 2675

should be read in light of these regu-

8. ae U.8.C. §& 2672 provides, in per-

tinent part, that

[t]he head of each Federal

agency or his designee, in

accordance with regulations

prescribed by the Attorney

General, may consider, as-

certain, adjust, determine,

compromise, and settle any

claim for money damages

against the United States 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 agency

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:

Provided, That any award, com-

promise, or settlement in ex-

cess of $25,000 shall be ef-

fected only with the prior

written approval of the At-

torney General or his desig-

nee.

lations. The Fifth Circuit has ruled

that these regulations do not apply to

section 2675 because they bear solely on

the procedures to be followed for the

settlement of claims and not on the

manner in which a claimant must present

his or her claim. See Adams v. United

States, supra, 615 F.2d at 288-293. In

contrast, other circuits have applied

the Justice Department regulations to

determine whether a claimant has

satisfied section 2675. See, e.g.,

House v. Mine Safety Appliances Co.,

supra, 573 F.2d 615-16; Lunsford v.

United States, 570 F.2d 221, 225 (8th

Cir. 1977); Pennsylvania v. National

Association of Flood Insurers, 520 F.2d

11, 19-20 (3d Cir. 1975). Although

there does not appear to be any Second

Circuit decision directly on point,

district judges in this circuit have

applied these regulations to section

2675. oe. &.¢., Lauria ¥. C.A.8.. 673

Fe. Supp. 242, 244 (S.D.N.Y. 1979)

(Lasker, J.); Kantor v. Kahn, 463

F. Supp. 1160 (S.D.N.Y. 1979)

(Sand, J.).

Despite this conflict over the re-

lationship between sections 2672 and

2675, it is well established that a

claimant must place a specific dollar

amount on his damages. Adams v. United

States, supra, 615 F.2d at 291 n.15.7

It is clear that Keene has failed to

satisfy this requirement. The Amended

Notice does not seek a definite sum of

money. Rather, Keene seeks $1,088,135

plus "an additional amount yet to be

ascertained, "1° Claims for indetermin-

9. In Adams, the Fifth Circuit con-

strued section 2675 as requiring the

notice of claim to include a specific

amount of claimed damages. Other cir-

cuits have reached the same result

through the "sum certain" requirement of

28 C.F.R. § 14.2 (1980). See, °.¢.,

Caton v. United States, 495 F.2d 635,

637 (9th Cir. 1974).

10. Amended Notice of Claim at 13.

Similarly, in its Amended Complaint,

(footnote continued)

ate damages simply do not satisfy the

sum certain requirement. See, e.g.,

Caton v. United States, 495 F.2d 635

(9th Cir. 1974); Bialowas v. United

States, 443 F.2d 1047 (3d Cir. 1971):

Raymond v. United States, 445 F. Supp.

740 (E.D. Mich. 1978); Wright v. United

guecee, G27 ©. Supp. 726, 727 ua.2

(o. Oeil. 1977).

Keene responds that the Court may

disregard the reservation as to future

claims. See Fallon v. United States,

405 ©. Supp. 1320, 1322 (D. Mont. 1976).

But see Mudlo v. United States, 423

E. Supp. 1373 (W.D. Pa. 1976). Even if

the Court were to do so, however, the

Amended Notice would still be deficient

because it fails to particularize the

damages requested for each individual

lawsuit insofar as Keene seeks "costs,

(footnote continued from previous page)

Keene seeks "an amount presently unknown

but which is believed to be in excess of

$20 million." Amended Complaint at 36.

expenses, insurance premiums, attorneys’

fees [and] the cost of executive

time. "11

There is another reason why the

Amended Notice is insufficient. After

Keene submitted the Amended Notice, the

Justice Department, on its behalf and on

behalf of the other agencies to which

the Amended Notice had been sent,

requested a more detailed statement from

Keene pursuant to 28 C.F.R. § 14.4

11. In this regard, the Court agrees

with the Government's analogy to ad-

ministrative tort claims made on behalf

of a class of claimants. Although Keene

has technically put forth only one

Claim, that claim si the aggregate of

the one thousand separate claims that

Keene could have filed for each indivi-

dual lawsuit filed against Keene. In

this respect, it is like a class action.

When an aggregate claim is made on

behalf of a class of Claimnants, the no-

tice must state a specific amount for

each claim. See, e.g., House v. Mine

Safety Appliances Co., supra, 573 F.2d

at Gid; Turia vv. C.A.B., supra, 473

F. Supp. at 245; Kantor v. Kahn, supra,

463 F. Supp. at 1164. Similarly, Keene

must state the specific amount it seeks

for each individual asbestosis lawsuit.

Keene has failed to do this.

(1980). Specifically, the Justice

Department requested a list of the

amount of damages sought on each claim

together with an itemization of various

additional items of recovery sought by

Keene in relation to each particular

lawsuit. It also requested information

regarding any insurance benefits that

Keene might have recovered on these

claims. Keene has not provided this

information to the Government.

Once again, although there is a

dispute over whether the regulations

enacted pursuant to section 2672 apply

to section 2675, compare Adams v. United

States, supra, with Swift v. United

States, 614 F.2d 812 (lst Cir. 1980),

the Government, at a minimum, is

entitled to sufficient information to

enable it to evaluate the claim and

choose between settlement and litiga-

tion. Adams v. United States, supra,

615 F.2d at 289. Claimants who fail to

respond to an agency's request for this

information are treated as having not

exhausted their administrative remedies

and, consequently, cannot present their

Claims to a district court. See Swift

v. United States, supra, 614 F.2d at

814; Emch v. United States, 474 F., Supp.

99, 103 (B.D. Wis. S979), aff'd, 636

F.240 523 (7th Cir. 1980), cert. denied,

401 S. Ct. 3463 (1981); Founding Church

of Scientology v. F.B.1., 459 F. Supp.

#46 (D.D.C. 1978). Keene' a response

that the Government is generally

familiar with asbestosis litigation is

insufficient. Although the Government

may be on notice of the Various theories

On which Keene seeks contribution and

indemnification, the Government is

nevertheless entitled to specific

information regarding each claim. See

ee

Founding Church of scientology, supra,

459 ©. Supp. at 758. The Government

Clearly cannot be expected to settle the

A-60

claims on an all or nothing basis.

Moreover, the Government is not required

to sift through the records of the indi-

vidual lawsuits filed against Keene; the

burden is on the claimant to supply the

necessary information. See Kantor v.

Kahn, supra, 463 F. Supp. at 1163.

Because Keene has failed to comply

with the administrative filing require-

ments of section 2675, the Court cannot

exercise subject matter jurisdiction

over the claims asserted under the FTCA.

We next consider Keene's claim of

admiralty jurisdiction. +?

Admiralty Jurisdiction

The Suits in Admiralty Act

("SIAA"), 46 U.S.C. § 741 et seq., and

the Public Vessels Act ("PVA"), 46

12. These two theories of jurisdiction

are mutually inconsistent. The FTCA

specifically provides that it does not

apply to suits in admiralty against the

United States. 28 U.S.C. § 2680(d); see

Kelly v. United States, 531 F.2d 1144

(2a Cir. i976).

V.o.cC. § 781 et seg., constitute a

Waiver by the United States of its

sovereign immunity against suits arising

out of maritime incidents. Blanco v.

United States, 464 F. Supp. 927, 930

(S.D.N.Y. 1979). Under the SIAA, the

United States has waived sovereign immu-

nity with respect to "cases where if

such vessel were privately owned or

operated, or if such cargo were pri-

vately owned or possessed, or if a pri-

vate person or property were involved, a

proceeding in admiralty could be main-

Teined.” 46 U.S.C. & 742. By the PVA,

sovereign immunity was further lifted

with respect to "damages caused by a

public vessel of the United States." 46

U.S.C. § 781. This aspect of the motion

to dismiss, therefore, turns on whether

Keene's claims against the United States

come within this admiralty jurisdiction.

a. Tort Jurisdiction

We note at the outset that although

the persons making claims against Keene

were often exposed to asbestos in mari-

time settings, Keene's claims over

against the United States result from

actions and inactions taken in

Washington, D.C. See note 3 supra. It

is a very long stretch to convert these

governmental decisions into admiralty

torts. We shall proceed, however, on

the assumption that the ultimate damage

to Keene bears a remote relationship to

admiralty.

The standard test for federal

admiralty tort jurisdiction is (1) did

the wrong occur on navigable waters, and

(2) does the wrong complained of bear a

Significant relationship to traditional

maritime activity. Executive Jet

Aviation v. City of Cleveland, 409 U.S.

249, 254-61 (1972). The first part of

the Executive Jet test, the situs

requirement, however, must be read in

light of the Extension of Admiralty

Jurisdiction Act, 46 U.S.C. § 740

("EAJA"), which extends jurisdiction to

injuries that occur on land, so long as

the injury was caused by a vessel or one

of its appurtenances. See generally

Victory Carriers, Inc. v. Law, 404 U.S.

202, 209-12 (1971). The EAJA does not

affect the requirement that the wrong

bear a significant relationship to

traditional maritime activity. See Heim

v. City of New York, 442 F. supe. 35, 37

(2.D0.N.¥. 1977).

A difficult aspect of this case is

determining where the alleged wrong

occurred. Keene alleges in Paragraph 13

of the Amended Complaint that "[mjost of

the claimants were involved in

installing high temperature thermal

insulation around pipes and boilers on

naval ships, on vessels in navigable

waters, and in power plants and other

industrial and commercial plants,

including refineries." (Emphasis added).

This allegation of various situs of

injuries typifies the difficulty of

d4sypurses Lypilrses the aGlrriculity orf

bringing a consolidated action of this

sort. The Court may not determine

whether maritime jurisdiction exists as

to the entire group of 6000 lawsuits,

but must make its determination on a

more individualized basis. Brown v.

United States, No. 76-434, slip op. at

2i (D2. Conn. July 23, 1979). Because

the burden of establishing jurisdiction

is on the party who asserts it, Escude

Cruz v. Ortho Pharmaceutical Corp., 619

F.2d 902 (lst Cir. 1980); Lehigh Valley

Industries, Inc. v. Birenbaum, 527 F.2d

87 (2d 1975), the Court could require

Keene to make a more specific showing of

jurisdiction. Rather than protract

13

these proceedings any further, how-

13. The Government initially noticed

this motion in May of 1980. The Court

did not receive the final papers on this

motion until June, 1981.

ever, the Court has reviewed Keene's

Claim of admiralty jurisdiction

wee ee we

admiralty tort jurisdiction does not

lie.

At the outset, the Court can elimi-

nate all claims for lawsuits involving

workers who were exposed to asbestos

while working "in power plants and other

industrial and commercial plants,

including refineries." Amended Complaint

f 13. Although the EAJA extends

admiralty jurisdiction to shoreside

workers, the injury must still be

"caused by a vessel on navigable water."

46 U.S.C. § 740; see Boudloche v. Conoco

Oil Corp., 615 F.2d 687, 688 (Sth Cir.

1980). The EAJA does not convert "'a

classic nonmaritime, land-based injury

into something else.'" Pryor yv.

American President Lines, 520 F.2d 974,

979 (4th Cir. 1975) (quoting Kent v.

shell Oil Co., 286 F.2d 746, 750 (5th

Cir. 1961), cert. denied. 423 U.S. 1055

(1976). Rather, there must be a proxi-

mate cause relation: in hetween the

mate cause relationship between the

injury and the vessel. Bailey v.

Johns-Manville Corp., No. 77-1, slip op.

at 3 (8.0. Va. Mareh 30, 13978). That

the asbestos was ultimately installed on

a vessel does not establish the requi-

site proximate cause. Id.

With respect to those claims for

lawsuits of plaintiffs who were exposed

to asbestos while working on vessels in

navigable waters, the Court must deter-

mine whether the installation of high

thermal insulation around pipes and

boilers bears a significant relationship

to traditional maritime activity. The

Court concludes that it does not.

The factors that are frequently

considered in determining whether the

tort alleged bears a significant rela-

tionship to traditional maritime acti-

vity include the functions and roles of

the parties, the types of vehicles and

instrumentalities involved, the causa-

tion and type of injurv. and the tradi-

tion a type Of injury, and the tradi-

tional concepts of the role of admiralty

law. See Edynak v. Atlantic Shipping

Inc., 562 F.2d 215, 220-21 (3d Cir.

1977), cert. denied, 434 U.S. 1034

(1978); Kelly v. Smith, 485 F.2d 520,

o420 (Sth Cir. 1973), cert. denied, 416

U.S. 969 (1974); Otto v. Alper, 489 F.

Supp. 953, 955 (D. Del. 1980);

Montgomery v. Harrold, 473 F. Supp. 61

(E.D. Mich. 1979); Kayfetz v. Walker,

406 F. Supp. 75, 76-77 (D. Conn. 19758)

(laambard, Cir. J.).

The function and role of the

Government viz Keene was that of

supplier of asbestos and purchaser of

asbestos products. As the purchaser,

the Government designed the specifi-

cations for the asbestos products.

There is nothing in this relationship

that is indigenous to maritime law. See

generally Baily v. Johns-Manville,

supra, Slip op. at 5S.

The "vehicles involved" include

naval ships and vessels. That these

workers were exposed to asbestos on

ships rather than in power plants or

refineries was purely fortuitous. More-

over, it does not appear that these

ships ever left the dock while they were

being built or repaired. See Montgomery

¥. Harroid, supra, 473 F. Supp. at 64.

The cause and type of injury, expo-

sure to asbestos, is certainly not

unique to admiralty. Indeed, lawsuits

stemming from the exposure to asbestos

have arisen from a variety of

industries. In Re Asbestos & Asbestos

Insulation Material Products Liability

Litigation, supra, 431 F. Supp. at 907.

Moreover, Keene has not referred to any-

thing in the traditional concepts of

admiralty that would militate toward

admiralty jurisdiction in this case.

There is simply no significant relation-

ship between the hazards of asbestos and

traditional maritime activity.

b. Contract Jurisdiction

Keene also contends that admiralty

jurisdiction exists with respect to

Keene's claims for breach of warranty

sounding in contract. The Court rejects

this claim of admiralty jurisdiction as

well.

The general rule is that admiralty

jurisdiction is limited to contracts

that are related to a maritime service

Or a maritime transaction. See

ee

generally 1 Benedict on Admiralty

§§ 182, 183 (1974 & Supp. 1980). "The

mere fact that the services to be per-

formed under a contract relate to a ship

or its business, or that a ship is the

object of such services, does not, in

and of itself, mean they are maritime.

The test to be applied in deciding

whether or not a contract is maritime is

its nature and subject matter." P.D.

Marchessini & Co. v. Pacific Marine

Corporation, 227 F. Supp. i7, i868 (1974)

(Weinfeld, J.). The contracts between

the Government and Keene involved the

purchase and sale of asbestos fiber and

thermal insulation products. Although

some of these products might have ulti-

mately been used in the construction or

repair of vessels, that fact alone will

not convert a nonmaritime contract into

a maritime contract.

FECA Claims

Many asbestosis claimants were

employees of the United States working

in naval shipyards when they were

exposed to asbestos. 24 As such, their

exclusive remedy against the United

14. The Amended Notice does not indicate

how many claimants are or were employees

of the United States Government. The

Government needs this information to

settle these claims.

States is pursuant to the Federal

Employees Act ("FECA"), 5 U.S.C. § 8101

~~

et seq. They are not precluded, how-

ever, from instituting suit against

negligent third parties.

Keene seeks contribution or indem-

nity for the damages it has paid or will

pay in those actions brought against it

by Government employees. It is not

clear what Keene's jurisdictional basis

is for this claim. FECA does not con-

stitute a waiver of sovereign immunity.

Keene must therefore rely on FICA, SIAA,

or PVA jurisdiction, which for reasons

already discussed, are not available to

Keene. /> Moreover, FECA bars suits by

joint tortfeasors against the United

15. Keene also alleges federal question

surisdiction. 26 U.S.C. 4 1331. We

summarily reject this claim of

jurisdiction because it is well

established that federal question

jurisdiction is not a waiver of

sovereign immunity. See, e.g., Estate

of Watson v. Blumenthal, 586 F.2d 925

(2d Cir. 1978); Doe v. United States

Civil Service Commission, 483 F. Supp.

939 (S.D.N.¥. 1980).

States for contribution or indemnity

rélating t6 a federal éitployee's

injuries. See Zapico v. Bucyrus-Erie

Co., 579 F.2d 714 (2d Cir. 1978);26

Galimi v. Jetco, 514 F.2d 949 (2d Cir.

1975). See also Austin v. Johns-

Manville Sales Corporation, 508 F. Supp.

343, 317 (D. Me. 1981): Oman v. Johns-

Manville Corp., 482 F. Supp. 1060,

1069-71 (E.D. Va. 1980). To the extent

that Keene seeks contract based

immunity, its remedy is in the Court of

Claims under the Tucker Act. See 28

U.S.C. §§ 1346(a)(2), 1491. Galimi v.

Jetco, supra, 514 F.2d at 951.

In Counts 19 through 23 of the

Amended Complaint, Keene seeks recovery

of the amount of FECA benefits that the

Government has recouped from asbestosis

16. Although Zapico involved the

"exclusive remedy" provision of the

Longshoremen's and Harbor Workers’

Compensation Act, 33 U.S.C. § 905(a),

that provision is nearly identical to

that of FECA and has been construed in a

Similar fashion.

Claimants. FECA provides that whenever

a federal employee obtains a judgment

on, or settles a claim arising out of

his death or injury, the federal

employee must reimburse the Government

for its FECA payments. 5 U.S.C. § 8132.

The Government's lien on its employees'

recoveries from third parties is typical

of workers' compensation programs.

Keene contends that it is entitled

to the monies recouped by the Government

because the Government played a signifi-

cant role in causing the injuries to the

asbestosis claimants. Keene sets forth

five separate theories of recovery:

Count 19 is a claim for damages based on

unjust enrichment. Count 20 is a claim

for restitution of money had and

received. Count 21 is a claim for

consequential damages arising from the

Government's intentional conduct. Count

22 alleges an unconstitutional taking of

property without due process of law.

Count 23 seeks to enjoin the Government

from future violations of Keene's

constitutional rights. Jurisdiction for

Counts 19, 20 and 21 is alleged to exist

under the FTCA and the SIAA. Keene

alleges jurisdiction for Counts 22 and

23 under 28 U.s.c. § 1331, federal

question jurisdiction.

Keene's assertion of FTCA and SIAA

jurisdiction for Counts 19-21 must be

rejected for the reasons discussed

earlier. With respect to the Claim

under the FTCA, Keene has failed to

Satisfy the administrative filing

requirements of 28 U.S.C. ; 2074.

Accordingly, the Court Cannot exercise

subject matter jurisdiction over Keene's

Claims under the FTCA. SIAA jurisdic-

tion cannot be relied upon since there

is no nexus between the Government's

recoupment of its FECA liens and tradi-

tional maritime activities.

Accordingly, the Court does not have

subject matter jurisdiction over Counts

19-21.

Keene's assertion of federal ques-

tion jurisdiction for its constitutional

claims must likewise be rejected. Keene

relies primarily on the landmark case of

Bivens v. Six Unknown Named Agents of

Federal Bureau of Narcotics, 403 U.S.

368 (1971), in which the Supreme Court

first implied a private cause of action

for damages arising out of a violation

of constitutional rights by government

officials. Bivens, however, does not

stand for the proposition that the

United States may be sued for constitu-

tional violations. Norton v. United

States, 581 F.2d 390, 393 (4th Cir.),

jerk. dented. 499 U.S. 1003 (1978). ft

authorizes actions only against the

responsible federal official. Butz. Vv.

Economou, 438 U.S. 478, 504 (1978).

Bivens type actions brought against the

United States, therefore, are routinely

dismissed for lack of subject matter

jurisdiction. See, e.g., Contemporary

Mission, Inc. v. United States Postal

service, 648 F.2d 97, 104 (2d Cir.

1981); Leonhard v. United States, 633

F.2d 599, 618 n.27 (2d Cir. 1980), cert.

denied, 49 U.S.L.W. 3864 (U.S. May 18,

1981) (No. 80-1651). To the extent that

the Court would have jurisdiction to

hear Keene's constitutional claims,

jurisdiction would lie under the Tucker

Act, 28 U.S.C. 1346(a). Since Keene's

claims exceed $10,000, jurisdiction lies

exclusively in the Court of Claims. See

Estate of Watson v. Blumenthal, 586 F.2d

925, 928 (2d Cir. 1978); 1 Moore's

Federal Practice § 0.65 [2.-3] (2d ed.

1980).

Conclusion

It is clear that something must be

done to decongest the courts from the

glut of asbestos related lawsuits. 2?

Although the Court understands Keene's

efforts to make the unmanageable more

manageable, this action must be dis-

missed because Keene has attempted to do

too much at one time, with too little

jurisdiction. The doctrine of sovereign

immunity, although commonly considered

to be "dying," remains powerful and per-

mits the United States to dictate the

manner in which it may or may not be

sued. United States v. Mitchell, 100 $s.

Ct. 1349, 1352 (1980). Because Keene

has failed to satisfy the requirements

for bringing suit against the United

States, this action must be dismissed

for want of subject matter jurisdic-

tion. 18 Accordingly, the Government's

17. It may be that the only practicable

solution is a legislative one. Cf.

Black Lung Benefits Act, 30 U.S.C. § 901

et seq.

18. In addition, to the extent that

Keene seeks indemnity for actions that

have not been terminated, the Court

(footnote continued)

motion to dismiss is granted.

SO ORDERED.

Dated: New York, N.Y.

September 30, 1981

GERARD L. GOETTEL

fe a

(footnote continued from previous page)

lacks subject matter jurisdiction

because there is no case or controversy.

see generally Forty-Eight Insulations,

Inc. v. Johns-Manville Products Corp.,

S/2 ©. Supp. 385 (N.D. f11. 3979).

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

a ee i i Oa ae

KEENE CORPORATION, : 80 Civ. 401

(GLG)

Plaintiff,

-against- : MEMORANDUM

DECISION

THE UNITED STATES

OF AMERICA,

Defendant.

On September 30, 1981, the Court

dismissed this action for lack of sub-

ject matter jurisdiction. The plain-

tiff, relying on the Fourth Circuit's

recent opinion in Glover v. Johns-Man-

ville Corp., No. 80-1085 (4th Cir.

Oct. 5, 1981), seeks leave to reargue

this Court's ruling that the plaintiff's

claims against the United States do not

lie in admiralty. In addition, the

Plaintiff seeks to alter or amend the

Court's order pursuant to Fed. R.

Civ. P. 59(e) and seeks leave to file a

supplemental complaint pursuant to

Fed. KR. Civ. &. iS(d@). Ali of these

motions are denied.

1. Motion to Reargue

We note initially that the ground

upon which the plaintiff seeks leave to

reargue, that a subsequent Fourth Cir-

cuit decision is contrary to the view

taken by this Court, is insufficient.

The standard for granting a motion for

reargument is whether "the court has

overlooked 'matters or controlling de-

cisions' which, had they been consider-

ed, might reasonably have altered the

result reached by the court." New York

Guardian Mortgagee Corp. v. Cleland, 473

EF. Supp. 409, 420 (S$.D.N.Y¥. 1979)

(quoting United States v. International

Business Machines Corp., 79 F.R.D. 412,

414 (S.D.N.Y. 1978)); United States v.

N.V. Nederlandsche Combinatie Voor

Chemische Industrie, 75 F.R.D. 473

(S.D.N.Y. 1977). Because the decision

cited by the plaintiff was rendered

subsequent to the one in the case at

bar, it clearly could not have been |

"overlooked." Moreover, a case from the

]

Fourth Circuit is not a "controlling"

decision in this district and, accord-

ingly, is not a proper basis for rear-

gument. United States v. N.V. Neder-

landsche Combinatie Voor Chemische In-

Guatrie, 75 F.R.D. 673. 474 [o...01. 7.

i977). This Court has recently had the

experience of following the opinion of

another circuit's Court of Appeals (with

which it did not agree) only to be enm-

phatically reversed by the Second Cir-

cuit and told that reliance on the other

circuit's decision was "misplaced." Doe

v. New York University, No. 81-7680,

slip op. at 27 n.7 (2d Cir. Mov. 24,

1981).

Finally, the Fourth Circuit's de-

cision in Glover, even if applicable,

does not control the case at bar.

Glover involved district court juris-

diction under the Tucker Act, 28 U.S.C.

§ 1346(a) (1976), an issue that the

plaintiff concedes is not relevant for

present purposes. Interestingly, a case

decided on the same day as Glover and

not relied upon by the Plaintiff in its

motion to reargue, White v. Johns-Man-

ville Corp., Nos. 79-1854, 80-

1028/1140/1154/1227/1228 (4th Cir.

Oct. 5, 1981), has greater relevance.

In White, the Fourth Circuit ruled that

admiralty jurisdiction attached to the

Claim of five Shipyard workers who had

developed asbestosis as a result of

their exposure to asbestos dust and

fiber. The instant case, however, is

"eadily distinguishable. Whereas White

involved five shipyard workers, this

case involves over 9,000 Claims, some of

which involve workers who were exposed

to asbestos "while working in power

plants and other industrial and commer-

cial plants, including refineries."

Amended Complaint 7 13. Another dis-

tinction is in the relationship between

the parties. White involved claims by

shipyard workers, who have an obvious

connection with maritime activity,

against the asbestos manufacturers.

This case is more distant from tradi-

tional maritime activity. As we noted

in the opinion, "Keene's claim over

against the United States results from

action and inaction taken in Washington

D.C. . . . It is a very long stretch to

convert these governmental decisions

into admiralty torts." Keene Corp. vy.

United States, No. 80-401, Siid op. at

13 {S.D.N.Y. Sept. 30, 1982).

2. Rule 59(e) Motion

Keene moves to amend the order to

find jurisdiction over Keene's claims

under the Federal Tort Claims Act

("EIRA"), 28 U.S.C. 68 1346. 2672 et

seq. Keene bases this motion on its

submission of supplemental information

concerning its claim against the gov-

ernment which, according to Keene, rec-

tifies "virtually all" of the defects

found by this Court.

We have not reviewed these recent

submissions because we consider them

premature. A claimant must first pre-

sent his claim to the appropriate gov-

ernment agency and have his claim fi-

nally denied prior to instituting suit.

28 U.6.C. &§ 2675. If there is no agency

action within six months, the claimant

may treat the inaction as a final ad-

ministrative determination. Failure to

Satisfy these requirements mandates the

dismissal of the action. Contemporary

Mission, Inc. v. United States Postal

service, 648 F.2d 97, 104-05 n.9 (2d

Cir. 1981).

Keene, relying on two recent FTCA

cases, Kubrick v. United States, 435

©. Supp. 166, 189 (6.0. Pa. 1977},

aff'd, S81 F.2e 1092, 1098 (3d Cis.

1978), rev'd on other grounds . 444

U.S. 111 (1979) and McCormick v. Cooley,

“55 &. Supp. 776 (W.D. Pa. 1978), re-

quests the Court to accept its proposed

Supplemental complaint at this time and

hold the supplemental complaint in

abeyance pending final agency action.

Neither of these cases Supports this

unusual procedural request. They stand

for the proposition that, when an action

has been filed prematurely and the ad-

ministrative claim is denied before

there has been any "substantial pro-

gress" in the case, the court may deem

the jurisdictional defect to be cured

without requiring the claimant to refile

the suit. They do not stand for the

proposition that the Court can warehouse

*

a claim pending administrative review.

The motions are denied.

SO ORDERED

Dated: New York, N.Y.

December 21, 1981

LS/

GERARD L. GOETTEL

U.S.D.J.

Keene also seeks leave to supplement its amended

complaint to add the supplemental information that it

recently submitted to the Government. In light of ou

conclusion that this action must be dismissed, there

does not seem to be any purpose in granting leave to

Supplement the amended complaint. Accordingly, that

application is denied.

CONSTITUTIONAL & STATU-

TORY PROVISIONS INVOLVED

Extension cf Admiralty

Jurisdiction Act,

46 U.S.C. & 740:

The admiralty and maritime

jurisdiction of the United States

shall extend to and include all

cases of damage or injury, to per-

son or property, caused by a vessel

on navigable water, notwithstanding

that such damage or injury be done

Or consummated on land.

In any such case suit may be

brought in rem or in personam ac-

cording to the principles of law

and the rules of practice obtaining

in cases where the injury or damage

has been done and consummated on

navigable water: Provided, That as

to any suit against the United

States for damage or injury done or

consummated on land by vessel on

navigable waters, the Public Ves-

sels Act or Suits in Admiralty Act,

aS appropriate, shall constitute

the exclusive remedy for all causes

of action arising after June 19,

1948, and for all causes of action

where suit has not been hitherto

filed under the Federal Tort Claims

Act: Provided further, That no

suit shall be filed against the

United States until there shall

have expired a period of six months

after the claim has been presented

in writing to the Federal agency

Owning or operating the vessel

causing the injury or damage.

Federal Tort Claims Act,

26 0.5.c. §§ 1346(b),

2671-2680

a0 U.S.0. § 1346(b):

28

Subject to the Provisions of

chapter 171 of this title, the

district courts, together with the

United States District Court for

the District of the Canal Zone and

the District Court of the Virgin

Islands, shall have exclusive jur-

isdiction of civil actions on

claims against the United States,

for money damages, accruing on and

after January 1, 1945, for injury

or loss of Property, or personal

injury or death caused by the neg-

ligent 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 ac-

cordance with the law of the place

where the act or Omission occurred.

3.6. § 2672:

The head of each Federal

agency or his designee, in accorad-

ance with regulations Prescribed by

the Attorney General, may consider,

ascertain, adjust, determine, com-

Promise, and settle any claim for

money damages against the United

States for injury or loss of prop-

erty or personal injury or death

Caused by the negligent or wrongful

act or omission of any employee of

the agency 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: Provided, That any

award, compromise, or settlement in

excess of $25,000 shall be effected

only with the prior written ap-

proval of the Attorney General or

his designee.

Subject to the provisions of

this title relating to civil ac-

tions of tort claims against the

United States, any such award,

compromise, settlement, or deter-

mination shall be final and con-

Cclusive on all officers of the

Government, except when procured by

means of fraud.

Any award, compromise, or

settlement in an amount of $2,500

or less made pursuant to this sec-

tion shall be paid by the head of

the Federal agency concerned out of

appropriations available to that

agency. Payment of any award,

compromise, or settlement in an

amount in excess of $2,500 made

pursuant to this section or made by

the Attorney General in any amount

pursuant to section 2677 of this

title shall be paid in a manner

Similar to judgments and compro-

mises in like causes and appropri-

ations or funds available for the

payment of such judgments and com-

promises are hereby made available

for the payment of awards, compro-

mises, or settlements under this

chapter.

The acceptance by the

Claimant of any such award, com-

promise, or settlement shall be

28

final and conclusive on the claim-

ant, and shall constitute a com-

plete release of any claim against

the United States and against the

employee of the government whose

act or omission gave rise to the

claim, by reason of the same sub-

ject matter.

oc. 8 2074.

28

The United States shall be

liable, respecting the provisions

of this title relating to tort

claims, in the same manner and to

the same extent as a private indi-

vidual under like circumstances,

but shall not be liable for inter-

est prior to judgment or for puni-

tive damages.

If, however, in any case

wherein death was caused, the law

of the place where the act or

omission complained of occurred

provides, or has been construed to

provide, for damages only punitive

in nature, the United States shall

be liable for actual or compensa-

tory damages, measured by the pe-

cuniary injuries resulting from

such death to the persons respec-

tively, for whose benefit the ac-

tion was brought, in lieu thereof.

testes © £2OTS?

(a) An action shall not be

instituted upon a claim against the

United States for money damages for

injury or loss of property or per-

sonal injury or death caused by the

negligent or wrongful act or omis-

sion of any employee of the Gov-

ernment while acting within the

scope of his office or employment,

unless the claimant shall have

first presented the claim to the

appropriate Federal agency and his

Claim shall have been finally de-

nied by the agency in writing and

sent by certified or registered

mail. The future of an agency to

make final disposition of a claim

within six months after it is filed

Shall, at the option of the claim-

ant any time thereafter, be deemed

a final denial of the claim for

purposes of this section. The

Provisions of this subsection shall

not apply to such claims as may be

asserted under the Federal Rules of

Civil Procedure by third party

complaint, Ccrossclaim, or counter-

Claim.

Public Vessels Act,

45 U.S.C. 4 761.

A libel in personam in ad-

miralty may be brought against the

United States, or a petition im-

pleading the United States, for

damages caused by a public vessel

of the United States, and for com=

pensation for towage and salvage

services, including contract sal-

vage, rendered to a public vessel

of the United States: Provided,

That the cause of action arose af-

ter the 6th day of April, 1920.

Suits in Admiralty Act,

*5 0.5.C, & 742:

In cases where if such ves-

sel were Privately owned or oper-

ated, or if such Cargo were pri-

28

vately owned or possessed, or if a

private person or property were

involved, a proceeding in admiralty

could be maintained, any appropri-

ate nonjury proceeding in personam

may be brought against the United

States or against any corporation

mentioned in section 741 of this

title. Such suits shall be brought

in the district court of the United

States for the district in which

the parties so suing, or any of

them, reside or have their prin-

Cipal place of business in the

United States, or in which the

vessel or cargo charged with lia-

bility is found. The libelant

shall forthwith serve a copy of his

libel on the United States attorney

for such district and mail a copy

thereof by registered mail to the

Attorney General of the United

States, and shall file a sworn

return of such service and mailing.

Such service and mailing shall

constitute valid service on the

United States and such corporation.

In case the United States or such

corporation shall file a libel in

rem or in personam in any district,

a cross libel in personam may be

filed or a set-off claimed against

the United States or such corpora-

tion with the same force and effect

as if the libel has been filed by a

private party. Upon application of

either party the cause may, in the

discretion of the court, be trans-

ferred to any other district court

of the United States.

-6.0. § I3aa:

The district courts shall

have original jurisdiction, exclu-

Sive of the courts of the States,

of:

(1) Any civil case of ad-

miralty or maritime jurisdiction,

Saving to suitors in all cases all

other remedies to which they are

otherwise entitled.

DEPARTMENT OF JUSTICE

STATEMENT

OF

J. PAUL McGRATH

ASSISTANT ATTORNEY GENERAL

CIVIL DIVISION

BEFORE

THE

EDUCATION AND LABOR COMMITTEE

SUBCOMMITTEE ON LABOR STANDARDS

HOUSE OF REPRESENTATIVES

CONCERNING

MANVILLE AND UNR BANKRUPTCY

ON

SEPTEMBER 9, 1982

Mr. Chairman and Members of the Sub-

committee:

I am pleased to respond to the

Subcommittee's request for the perspec-

tive of the Department of Justice on the

asbestos litigation and on the recent

filings for reorganization under Chapter

11 of the Bankruptcy Code by Manville

Corporation and UNR Industries. Both of

these entities are involved in extensive

litigation concerning asbestos related

diseases. As you are aware, the United

States is involved in some of this liti-

gation. The Civil Division of the

Department of Justice is responsible for

representing the interests of the United

States both in the asbestos litigations

and in insolvency proceedings.

The Government's Position

in the Asbestos Litigation

The government's position in the

pending asbestos litigations is that it

has no tort liability to the victims of

asbestos-related diseases. If such

victims were exposed to asbestos while

they were government employees, then

they may be compensated through the

Federal Employees Compensation Act. If

they were not government employees, then

they must look to other workmen's com-

pensation schemes or to litigation

against their employer or others for

compensation.

The United States is currently a

defendant or third-party defendant in

approximately 1,200 asbestos products

liability actions involving nearly

13,000 individual claims. In the

majority of these cases, plaintiffs have

sued manufacturers and suppliers of

asbestos-bearing thermal insulation

products, and the defendant industry

members have impleaded the United States

seeking contribution and indemnity.

Approximately 80 percent of these

third-party actions arose at govern-

ment-owned or private shipyards.

Asbestos liability claims against

the United States primarily stem from

the activities of four federal agencies:

the General Services Administration, the

Labor Department, the Department of

Health and Human Services, and the Navy

Department. The principal asserted

bases of liability against the govern-

ment are that it sold asbestos without

adequate warning or labeling, that it

failed to warn the public about the

dangers of asbestos exposure which

government agencies had discovered and

that it failed to provide safe working

conditions at yards where ships were

built for the Navy.

Government sales of asbestos were

made from stockpiles of strategic goods.

Asbestos was stockpiled by GSA as a

Strategic and critical commodity es-

sential to the national defense because

industry required it to make insulation

products marketed to the government and

other users. Pursuant to express

Congressional approval, between 1966 and

1974 GSA sold 55,000 tons of asbestos

fiber from its stockpiles to the as-

bestos industry. GSA sales have

accounted for only about one percent

(1%) of the asbestos fiber used domes-

tically since 1920. Since the strategic

stockpiling program typically required

the government to purchase material at

high prices and sell at depressed

prices, Congress mandated that GSA avoid

preventable loss upon resale. Accord-

ingly, in selling to the asbestos in-

dustry GSA operated on the reasonable

assumption that the industry knew better

than anyone how properly to use and

handle asbestos fiber. Accordingly, GSA

officials determined to avoid the ex-

pense of repackaging and labeling the

fiber prior to resale, and all sales to

these knowledgeable purchasers were made

"as is" without warranty of any kind.

Such decisions are not a basis for

charging the public treasury; instead

any liability is properly placed on the

industry members who made use of the

asbestos.

The principal claims against HHS

and Labor relate to inspection and

enforcement activities. For example,

the Department of Labor was authorized

to carry out inspections of job sites in

the enforcement of the Walsh-Healy

Public Contracts Act of 1936 and the

Occupational Safety and Health Act of

1970. The Department of Health and

Human Services also has had various of

its components responsible for conduct-

ing industry inspections, including the

A-100

National Institute for Occupational

Safety and Health. In many of the

pending cases it is charged that the

findings of these studies were not com-

municated to workers in facilities where

asbestos was used and that this gives

rise to liability on the part of the

government. The United States' efforts

to improve the working conditions of

Americans were never intended as a sub-

stitute for proper discharge of primary

responsibility of private employers lest

they relax their efforts. Moreover,

government efforts to improve the

general health and welfare should never

form the predicate for tort liability

lest such efforts be irrevocably chilled

and the government be charged with the

cost of abating the wrongs it attacks.

Thus, it is the company which failed to

provide a safe work site to which the

worker must look for compensation.

A-101

Claimants have also sought to re-

cover from the government on account of

disease contracted from exposure to

asbestos at shipyards. Until recent

years, asbestos was used in great

quantities in the construction of Navy

Ships. Navy ships were built both in

government-owned shipyards and in yards

owned by private contractors.

As for Naval shipyards, the govern-

ment was responsible for providing a

safe workplace for its own employees.

Congress has provided benefits for these

workers under the Federal Employees

Compensation Act, and in that Act

Congress clearly and unequivocally

stated that the government's obligation

under that Act is exclusive of any

other.

Where disease was contracted at

privately owned Shipyards, it is our

position that the government should not

A-102

be held liable for the torts of others,

including its independent contractors.

It should be noted, however, that the

government has long sought to insure

that workers at private shipyards could

be compensated for work-related injury.

Navy contracts required the contractors

to secure workmen's compensation bene-

fits under relevant state or federal

law, and the contractor was permitted to

charge back to the Navy all the costs of

such coverage.

In summary, we believe Congress has

clearly circumscribed the government's

liability for these injuries. The

Justice Department has vigorously and,

to date, successfully enforced and sup-

ported those laws in the products lia-

bility litigation. At the same time it

should also be noted that many alterna-

tive remedies have been provided to

victims of asbestos exposure.

A-103

The Department of Justice's Role in

the UNR and Manville Bankruptcy Matters

To date neither UNR nor Manville

has scheduled the United States as a

debtor or creditor in its filings, and

so the United States has no immediate

interest as a direct party in either

proceeding. The United States, of

course, will be considering whether it

has any claims to be asserted in either

proceeding. The bankruptcy proceedings

may have the effect of staying litiga-

tions in which the United States has a

direct or indirect interest or of trans-

ferring such litigations to the bank-

ruptcy courts, but we have not yet taken

a position on those procedural matters.

We have those questions under study.

A-104

UNITED STATES COURT OF APPEALS

For the First Circuit

No. 82-1168

MARGARET AUSTIN, ETC.,

Plaintiff, Appellant,

Vv.

UNARCO INDUSTRIES, INC., ET AL.,

Defendants, Appellees.

APPEAL FROM THE

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. Edward T. Gignoux,

U.S. District Judge]

Before

Coffin, Chief Judge,

Campbell and Bownes, Circuit Judges.

Patrick N. McTeague, with whom

G. William Higbee, Maurice A. Libner,

Thomas R. Watson, McTeague, Higbee,

Libner, Reitman & Priest, Thomas W.

Henderson, and Baskin and Sears were on

brief, for appellant.

Thomas R. McNaboe, with whom

Mark G. Furey, and Thompson, Willard &

McNaboe were on brief, for Raybestos-

Manhattan, Inc.

Peter W. Culley, Stephen C. Whit-

ing, and Hewes, Culley, Feehan and Beals

on brief, for Unarco Industries, Inc.

March 30, 1983

A-105

COFFIN, Chief Judge.

Factual and Procedural Background

This is an appeal of one segment of

a complex collection of complaints by

victims of asbestos-related cancer and

their survivors against producers and

suppliers of asbestos products used at

Bath Iron Works from the mid 1950's un-

til the early 1970's. Plaintiff's de-

cedent, Blaine Austin, was employed at

Bath Iron Works (BIW) from 1952 through

the fall of 1976 as a painter and

cleaner. He worked on board ships

berthed in the Kennebec River at BIW,

both on new ships berthed in the river

after launching and on older ships

brought into BIW for repair. His pri-

mary job was to follow behind the pipe-

coverers, who applied asbestos insula-

tion products to the ships' pipes,

boilers and other machinery, and paint

over the asbestos insulation. He was

A-106

also responsible for sweeping up asbes-

tos scraps left by the pipecoverers.

During both tasks, he breathed in as-

bestos fibers and dust created by the

Pipecoverers' cutting and shaping of the

asbestos insulation. In November, 1976,

plaintiff's decedent was diagnosed as

having pleural mesothelioma, an asbes-

tos-induced cancer of the lining of the

lung. He died on October 13, 1977.

On June 14,1978, plaintiff brought

suit in the United States District Court

for the District of Maine against a

number of suppliers of asbestos to Bath

Iron Works. Her complaint alleged jur-

isdiction based on diversity of citi-

zenship and causes of action under Maine

law in negligence, strict products lia-

bility and breach of warranty. Approx-

imately 140 other complaints by present

and former employees of either Bath Iron

Works or Portsmouth Naval Shipyard, or

their widows, were filed in the same

A-107

court near the time plaintiff filed her

complaint.

A number of the pretrial proceed-

ings relating to the complaints of four

of the plaintiffs, all based on injuries

incurred at BIW, were consolidated. In

May of 1981, five defendants moved for

summary judgment against those four

Plaintiffs, based on the statute of

limitations, lack of the privity of

contract required under Maine law as a

prerequisite to recovery for pre-1979

negligence or breach of Warranty, and

the inapplicability of Maine's strict

liability statute to claims based on

products supplied before the effective

date of the statute, October 3, 1973.

On August 7, 1981, the court granted the

motions with a few minor exceptions.

Plaintiff's claims against three of the

manufacturer defendants, Johns-Manville

Sales Corp., Unarco Industries, Inc.

(Unarco) and Raybestos-Manhattan (Ray-

A-108

bestos), were not disposed of on summary

judgment and were tried together, be-

ginning on November 2, 1981. Plaintiff

and defendant Johns-Manville settled

during the course of the trial.

At the close of plaintiff's evi-

dence, defendant Unarco moved for a

directed verdict on plaintiff's strict

liability and breach of warranty claims.

Defendant Raybestos made a similar mo-

tion at the close of all of the evi-

dence. As to the breach of warranty

claim, plaintiff indicated that she no

longer intended to press the claim. She

requested the [sic] the strict liability

count not be dismissed, but acknowledged

that under Maine law, it appeared that a

claim in strict liability could not be

made based on products supplied before

October 3, 1973. The court granted both

motions, finding insufficient evidence

that either defendant had supplied as-

bestos products to BIW prior to Octo-

A-109

ber 3, 1973 to warrant submitting the

strict liability issue to the jury.

At the close of all of the evi-

dence, plaintiff moved to strike defen-

dants' comparative negligence defense.

Defendants had introduced evidence that

the decedent could have worn a respira-

tor that would have reduced his risk of

cancer, but that he had failed to do so.

Plaintiff argued, in Support of her mo-

tion, that there was insufficient evi-

dence that plaintiff's decedent was

aware that exposure to asbestos could

cause serious disease; thus, he could

not have been negligent in failing to

wear a respirator. The court denied the

motion.

After five weeks of trial, the jury

returned a verdict in favor of defen-

dants. The jury found that both Unarco

and Raybestos were guilty of negligence

that proximately caused Blaine Austin's

mesothelioma and death, but that Austin

A-110

was contributorily negligent and that

his negligence was equal to or greater

than that of the defendants. Under

Maine's comparative negligence statute,

therefore, recovery was barred. Judg-

ment was entered for the defendants on

December 8, 1981.

On December 11, 1981, plaintiff

filed a motion for a new trial, alleging

that the jury verdict was against the

weight of the evidence. On December 17,

1981, plaintiff filed a motion for

judgment n.o.v., alleging that there was

no evidence that the decedent was con-

tributorily negligent or, in the alter-

native, that the verdict was against the

weight of evidence. The court denied

both motions.

Plaintiff appealed to this court

from the judgment against her and from a

number of alleged errors in the pro-

ceedings below. After the filing of

that appeal, but before argument, de-

Ae-lll

fendant Unarco filed a voluntary peti-

tion for reorganization under chapter 11

of the Bankruptcy Reform Act, 11 U.S.C.

§ 101 et seq., in the United States

Bankruptcy Court for the Northern Dis-

trict of Illinois, Eastern Division.

Upon notification of that petition, on

August 5, 1982, this court stayed fur-

ther proceedings in this appeal pending

a final determination by the Bankruptcy

Court. On October 1, 1982, the Bank-

ruptcy Court issued an order authorizing

plaintiff to pursue her appeal in this

case against parties other than Unarco.

The court noted that plaintiff had not

sought to have the stay lifted against

defendant Unarco, but determined that

the automatic stay provisions of 11

U.S.C. § 362 do not apply to the bank-

rupt defendant's solvent co-defendants.

Plaintiff now seeks to pursue her appeal

against Raybestos alone. Before pro-

ceeding to the merits of this appeal, we

A-112

address defendant's contention that

plaintiff should not be allowed to pro-

ceed against it alone.

lL. Lifting of the Stay

The first issue before us is

whether we should decide the merits of

this appeal. On August 5, 1982, we

stayed all proceedings in this case,

pending a final determination by the

Illinois Bankruptcy Court of the Chapter

ll bankruptcy proceeding voluntarily

initiated by Unarco, one of the original

co-defendants in this case. Since that

time, the Bankruptcy Court has made

clear its position that the automatic

stay of all proceedings against bankrupt

debtors provided by § 362(a) of the

Bankruptcy Code, 11 U.S.C. § 362(a),

applies only to the debtor and not to

the debtor's solvent co-defendants. On

the basis of that ruling, the plaintiff

requested and received from the Bank-

A-113

ruptcy Court on October l, 1982, an or-

der authorizing her to pursue her appeal

in this court as to Parties other than

Unarco. On October 20, 1982, plaintiff

requested this court to lift its stay of

August 5, 1982 and to allow the appeal

to proceed against Raybestos alone.

Raybestos does not urge that the

Bankruptcy Court was wrong in deciding

that the automatic Stay provisions of ll

U.S.C. § 362(a) apply only to the bank-

rupt debtor and not its solvent co-de-

fendants. It argues, instead, that Un-

arco is a necessary Party and that par-

ticularly because plaintiff made no ef-

fort to have the Stay of proceedings

against Unarco lifted, she should not be

allowed to proceed against Raybestos

alone.

As an initial matter and because we

expect that the issue will arise again

am thie circuit. we express our judgment

that the Bankruptcy Court was correct in

A-114

deciding that the automatic stay provi-

sions of 11 U.S.C. § 362(a) apply only

to the bankrupt debtor. We are per-

suaded by the reasoning of the Illinois

Bankruptcy Court in Royal Truck and

Trailer, Inc. v. Armadora Maritima Sal-

vadorena, S.A. de C.V., 10 B.R. 488

(Bankr. N.D. Ill. i981), and by a com-

parison of the stay provisions provided

by Congress for a chapter 13 bankruptcy

proceeding, which expressly include co-

defendant debtors, with those provided

for a chapter 11 bankruptcy proceeding,

which make no mention of co-defendant

debtors, that had Congress intended

§ 362(a) to apply to solvent co-defen-

dants, it would have said so. See also

In re: Related Asbestos Cases, No. C-

79-3586 R.F.F., Slip op. (N.D. Cal.

September 23, 1982); Aboussie Bros.

Construction Co. v. United Missouri Bank

of Kirkwood (In re Aboussie Bros. Con-

etruction Ce.), & B.R. 302 (Sankr. f.2.

A-115

Mo. 1981). Courts that have come to a

different conclusion do not appear to

have done so on the basis that § 362

requires such a result, but rather that

additional considerations Warrant a stay

as to all defendants. see, e.g., Fed-

eral Life Ins. Co. (Mutual) v. First

Financial Group of 7enas,. Inc... S$ BR.

sis (S.D. Tex. 1980) (claims too in-

terwoven to sever, although the bank-

ruptcy court has authority to lift the

stay as to less than all of the defen-

dants); Rupp v. Cloud Nine Ltd. (In Re

Cloud Nine, bom.), 3 BR. 202 (Bankr.

D.N.M. 1980) (relief from stay "will

result in at best only a partial reso-

lution of the issues and at worst will

further complicate the issues and result

in needless relitigation"); In re White

Motor Credit Corp., 11 B.R. 294, 295

(Bankr. N.D. Ohio 1981) ("for many rea-

Sons (perhaps including section 362 it-

self), products liability plaintiffs

A-116

IIS 'Sr—-— rr

cannot dismiss a reorganization debtor

and proceed against co-defendants on-

ly"). We agree that there might be

cases in which additional considerations

Warrant a refusal to lift the stay as to

some but not all of the co-defendants;

we disagree only with the assertion that

those considerations should be read into

§ 362. It is to those additonal [sic]

considerations that we now turn.

Defendant argues that Unarco is a

necessary party to this litigation and

therefore that we should not allow the

appeal to proceed against Raybestos

alone. It urges that we apply standards

analogous to the necessary and indis-

pensable party criteria of Fed. R.

Civ. P. 19. We agree that despite the

absence of a specific rule of appellate

procedure authorizing the court to delay

review in the absence of necessary par-

ties, the court has the power to make

such a determination. We do not agree,

A-117

however, that this is a case warranting

such delay. Joint tortfeasors are not

considered indispensable parties under

federal law. See Field v. Volkswagen-

werk AG, 626 F.2d 293, 298 n.7 (sd Cir.

1980); Jett v. Phillips & Associates,

439 F.2d 987 (10th Cir. 1971); Herpich

v. Wallace, 430 F.2d 792, 817 (Sah Cir.

1970). The plaintiff will not be af-

forded incomplete relief. If she pre-

vails on appeal and is entitled to a new

trial on any of the issues she raises,

she will be able to assert her full

claim against Raybestos, leaving Ray-

bestos to proceed against Unarco for

contribution. Whatever prejudice re-

sults to Raybestos from being forced to

proceed without Unarco is Simply that

inherent in the principle of joint and

several liability.

Even absent a determination that

Unarco is an indispensable party, we

could stay the proceedings in the in-

A-118

terest of judicial economy and fairness

to the parties. The Supreme Court has

indicated, however, that to be entitled

to a stay, a party must demonstrate a

clear case of hardship if there is a

danger that the stay will damage the

other party. Landis v. North America

Co., 299 U.S. 248, 255 (1936); Dellinger

v. Mitchell, 442 F.2d 782, 786-88 (D.C.

Cae. 2972). In this case, the damage to

the plaintiff would be the financial

hardship of being forced to wait for an

undefined but potentially lengthy period

before receiving the money to which she

may be entitled. An additional consid-

eration is that this is only one of a

number of similar cases that have been

and will be brought in the federal

courts. Ina number of those cases,

plaintiffs and crucial witnesses are

dying. We are not persuaded that the

hardship to defendants of having to go

forward on this appeal without Unarco,

A-119

or the interests of judicial economy in

avoiding relitigation of the issues, are

strong enough to justify forcing plain-

tiff and a number of other plaintiffs to

wait until bankrupt defendants are suc-

cessfully reorganized in order to be

able to pursue their claims. We pro-

ceed, therefore, to the merits.

Il. Refusal to Apply Admiralty Law

Plaintiff's first claim of error

below is that the trial judge refused to

accept the applicability of admiralty

law to her claims against the defendant

manufacturers. The error was particu-

larly harmful, according to plaintiff,

because it resulted in application of

Maine's comparative negligence statute,

pursuant to which the jury found the

decedent at least 50 per cent respon-

sible for his own injuries and thus de-

nied recovery. Under admiralty law,

plaintiff claims, she would not have

A-120

been denied all recovery on a negligence

claim unless her husband was 100 per

cent responsible for his own injuries

and under a strict liability claim un-

less the jury found that he knowingly

and unreasonably assumed the risk of his

own injuries.

A. Procedural Bar

A threshold question is whether, as

defendant urges, plaintiff is barred

from raising the issue of admiralty law?

In the memorandum accompanying her

motion to amend, plaintiff used "admir-

alty law" and "admiralty jurisdiction"

interchangeably. She expressly noted,

however, that "[b]y arguing for a deter-

mination that admiralty law applies,

Plaintiff by no means intends to waive

[her] right to a jury trial. Since

there is also diversity jurisdiction,

plaintiff is entitled to a trial by

jury. Romero v. International Terminal

Operating Co., 358 U.S. 354 (1959)." It

appears, therefore, that what plaintiff

wanted was to have admiralty law control

her action which was properly before the

court as a suit based on diversity jur-

isdiction.

Executive Jet set out a test for

the invocation of admiralty jurisdic-

(footnote contin

A-121

because of the lateness of her motion to

amend. A recitation of relevant events

is necessary for an understanding of why

(footnote continued from previous page)

tion, rather than for the application of

admiralty law. Nevertheless, for our

Purposes, it appears that the tests are

the same, since, in general "To]nce ad-

miralty jurisdiction is established,

then all of the substantive rules and

Precepts peculiar to the law of the sea

become applicable." Brance v. Shumann,

445 F.2d 175, 178 (Sth Cir. Agfa). This

is true even when the plaintiff decides

to pursue her claim in the civil Side of

a federal court or in a state court.

See Pope & zalbot. Inc. v. Hawn, 346

U.S. 406, 409-11 (1953); Chelentis v.

Luckenbach S.S. Co., 247 U.S. 372

(1918); G. Gilmore & Cc. Black, The Law

of Admiralty § 6-5 at 279 (2d ed. 1975).

The Supreme Court has recognized

that the states do not lose all concern

for their land-based workers, even

though their injuries may be considered

maritime. See Kossick v. United Fruit

Co., 365 U.S.. 9731, 739 (1961). Thus,

admiralty sometimes borrows or draws on

state law in deciding issues in which

the state has a strong interest. See,

€-g., In re Dearborn Marine Service

Inc., 499 F.2d 263, 277 n.27 (Sth Cir.

1974), and cases cited therein. While

state law may supplement admiralty law,

however, it may not flatly contradict it

and is generally referred to only when

it affords greater protection to mari-

time employees than that afforded by ad-

miralty law. See Pope & 20ibDo0t. Inc.

Supra, 346 U.S. at 409-10; Gilmore &

Black, supra, § 1-17 at 49.

/

A-122

we have decided to address the merits of

the admiralty law issue.

Plaintiff filed her complaint in

June of 1978, alleging diversity of

citizenship and basing her claims on

Maine's Wrongful Death and Survival

Statutes. On August 10, 1981, the court

set the trial date for October 19, 1981,

discovery to be completed by October l,

1981. On September 30, 1981, the trial

date was moved back to November 2, 1981,

the jury to be impaneled on October 19.

Plaintiff's first formal motion to amend

her complaint to allege admiralty law

was made on October 9, 1981. On the

same day, the trial judge held a pre-

trial conference at which he considered

and denied plaintiff's motion to amend.

In his report of the pretrial conference

he noted defendant's objections to the

motion: "That [it] had received insuf-

ficient notice to be prepared to brief

and argue the merits of the jurisdic-

A-123

tional question and that the motion was

not timely filed inasmuch as the action

has been pending in this Court since

June 1978, that all counsel have pre-

pared for trial of the action as a di-

versity action in which Maine law would

apply, and the action has been assigned

for trial commencing on Monday, Novem-

ber 2, the jury to be impaneled on Mon-

day, October 19." He noted that "lajf-

ter hearing counsel, over objection of

Plaintiff, the court denied plaintiff's

motion. The court endorsed its action:

on the original motion."

rec. R. Civ. FB. 15(a) provides that

"leave [to amend] shall be freely given

when justice so requires." The Supreme

Court has emphasized that the motion to

amend ordinarily should not be denied

"Tiln the absence of any apparent or

declared reason -- such as undue delay,

bad faith or dilatory motive on the part

of the movant, repeated failure to cure

A-124

deficiencies by amendments previously

allowed, undue prejudice to the opposing

party by virtue of allowance of the

amendment, [or] futility of amendment."

Foman v. Davis, 371 U.S. 178, 182

(1962). Defendant urges that we read

the trial judge's report of the pretrial

proceedings as an implicit acceptance of

its arguments that a granting of the

motion to amend would unduly prejudice

it. Were these events all that had oc-

curred, we would be inclined to agree

that the recitation of the defendant's

arguments is, if not a declared, at

least an apparent and justifiable reason

for denial of the motion. Defendant

insists that, in addition to the delay

and expense that would be required to

brief the admiralty law issue, some of

the discovery already completed by it

would have had to be duplicated, because

admiralty law does not have Maine's

$10,000 ceiling on damages recoverable

A-125

for loss of consortiun. In addition,

much of defendant's trial preparation

based on Maine law would have had to be

discarded and a last ditch effort made

to prepare for trial on the liability

and damages standards applicable under

admiralty law.

Plaintiff, however, insists that

the October motion to amend cannot be

taken in isolation. She points to the

fact that she had made an earlier, un-

successful effort, in June of 1981, to

allege admiralty law and the trial judge

made a substantive ruling that admiralty

law did not apply to her claims. Thus,

she argues, it would have been fruitless

for her to move to amend her complaint

prior to October when the law on which

the judge relied in denying her earlier

request was changed; she should not be

penalized for the lateness of her mo-

tion; and any threat of prejudice to the

defendant could have been relieved by a

A-126

granting of the motion for a continuance

which she made shortly after her motion

to amend.

The manner in which the issue of

admiralty law was earlier raised is as

follows. A number of defendants in the

consolidated asbestos actions, but not

including the defendants here, had moved

for summary judgment against the four

plaintiffs whose cases had been consol-

idated for pretrial proceedings. The

motions for summary judgment were based,

among other things, on the lack of the

privity of contract required under Maine

law for claims based on negligence,

breach of warranty and strict liabili-

ty.“ In their consolidated response to

the motions for summary judgment,

plaintiffs contended that the actions

were governed by admiralty law and

, For further discussion of the pri-

vity requirement for a claim based on

Maine's strict liability statute see

Section III A, infra.

A-127

therefore not barred by a requirement of

privity of contract. They noted that

they would amend their complaints to

allege admiralty jurisdiction should the

Court sustain their contention. The

court rejected plaintiffs' contention as

to admiralty law and with certain ex-

ceptions not significant here, granted

the motions for summary judgment.

Defendant understandably argues

that this procedural history should not

be considered because it was not a party

technically involved in the motions for

summary judgment. But the circumstances

of this massive litigation, and of the

court's ruling on plaintiff's request,

cast doubt on the propriety of such a

narrow interpretation. In his August 7,

1981 ruling on the motions for summary

judgment, the trial judge noted that the

motions were by five defendants against

four of approximately 140 plaintiffs who

had filed actions against various as-

A-128

bestos manufacturers and suppliers.

Actions against a number of defendants

were generally combined in the numerous

pretrial proceedings held by the court.

In fact, although not a party to the

motions for summary judgment that

prompted plaintiff's first request that

the judge find admiralty law control-

ling, counsel for defendant Raybestos

was present at the hearing held on the

admiralty issue and participated ina

colloquy with the judge on the merits of

plaintiff's request. In addition, in

ruling on the issue, the judge made a

substantive determination which could

reasonably have been interpreted by

plaintiff as applying to all of the

claims by plaintiff against the de-

fendant asbestos suppliers and manufac-

turers, not just to the parties to the

motion for summary judgment. The judge

held that:

"Federal admiralty law does

not govern these actions. In

A-129

the first place, plaintiffs in

their complaints have not in-

voked admiralty jurisdiction

under 28 U.S.C. § 1333(1), nor

have they met the procedural

requirements of Fed. R.

Civ. P. 9(h). In any event,

the product liability tort

claims asserted by plaintiffs

in these cases -- the failure

to warn of the dangers of as-

bestos -

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