Petition — McKay v. Rockwell International Corp.

No.

IN THF dea ere

SUPREME COURT OF THE UNITED STATES

October Term, 1983

JANICE MCKAY, Executrix of the Estate

of LT. CDR. MALCOLM McKAY, Deceased,

MARIE CARSON, Administratrix of the

Estate of PRANK J. CARSON, Deceased,

Petitioners,

vs.

ROCKWELL INTERNATIONAL CORPORATION,

INC., a Delaware corporation,,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IRWIN, HALE & JACOBS

BY: MARTIN E. JACOBS

Suite 320

2029 Century Park East

Los Angeles, CA 90067

(213) 277-3700

Attorneys for Petitioners

Of Counsel:

LEONARD RATNER

Law Center

University of Southern California

Los Angeles, CA 90089

QUESTIONS PRESENTED FOR REVIEW

The questions presented for review

are:

(i) Does government approval of

the design of military equipment immu-

nize a military contractor from liabil-

ity for injuries to servicemen resulting

from latent design defects which were

not known to the government at the time

of approval.

(ii) Is government compulsion

as to design a necessary element to

immunity of military contractors from

liability to servicemen for injuries

caused by design defects.

(iii) Under what circumstances

is a military contractor immunized from

liability for injuries to servicemen

from design defects in military equip-

ment under the government contractor

defense.

(iv) Under the Death on the

High Seas Act, when is a government

contractor liable to any injured

servicemen for a defective product.

ii

TABLE OF CONTENTS

QUESTIONS PRESENTED FOR REVIEW

TABLE OF AUTHORITIES

PETITION FOR WRIT OF CERTIORARI

A.

STATEMENT OF THE GROUNDS ON

WHICH THE JURISDICTION OF

THIS COURT IS INVOKED.

CONSTITUTIONAL PROVISIONS,

TREATIES, STATUTES, ORDIN-

ANCES AND REGULATIONS.

STATEMENT OF THE CASE

ARGUMENT

POINT I. THE NINTH CIRCUIT

OPINION IS A DEPARTURE FROM

AND IS IN CONFLICT WITH SUB-

STANTIAL PRE-EXISTING CASE

LAW.

POINT II. GOVERNMENT APPRO-

VAL OF A CONTRACTOR'S DESIGN

CANNOT BE SAID TO BE APPROVAL

OF DEFECTS IN THE DESIGN WHEN

THE GOVERNMENT WAS UNAWARE

THAT THE DEFECTS EXISTED UPON

APPROVING THE DESIGN.

iii

Page

16

POINT III. THE NINTH CIRCUIT

OPINION OVERLOOKS CRITICAL

ECONOMIC FACTORS THAT SUPPORT

THE STRICT LIABILITY OF GOV-

ERNMENT CONTRACTORS.

POINT IV. MILITARY HONOR,

EXPECTATIONS AND EMPLOYMENT

BENEFITS DO NOT PRECLUDE

THIRD PARTY LIABILITY TO

MILITARY PERSONNEL, NOR DOES

SUCH LIABILITY SIGNIFICANTLY

INTERFERE WITH MILITARY DECI-

SIONS.

CONCLUSION

APPENDIX A

OPINION OF DAVID W. WILLIAMS,

UNITED STATES DISTRICT JUDGE,

UNITED STATES DISTRICT COURT,

CENTRAL DISTRICT OF

CALIFORNIA, FILED March 30,

1981, Entered March 31, 1981

APPENDIX B

OPINION OF MAJORITY, UNITED

STATES COURT OF APPEALS FOR

THE NINTH CIRCUIT, Filed

April 20, 1983

APPENDIX C

DISSENTING OPINION OF JUDGE

ALARCON UNITED STATES COURT

OF APPEALS FOR THE NINTH

CIRCUIT, Filed April 21, 1983

iv

Page

17

23

25

Page

APPENDIX D

ORDER DENYING REHEARING

UNITED STATES COURT OF

APPEALS FOR THE NINTH CIR-

CUIT, Filed August 5, 1983 D-1

TABLE OF AUTHORITIES Ms

Page

Cases

Boeing Airplane Co. v. Brown

291 F.2d 310

(9th Cir. 1961) 10, 14, 16

Feres v. United States (1950)

340 U.S. 135 18

Foster v. Day & Zimmerman

502 F.2d 867 (5th Cir. 1974) 10

Gladstone v. Gruman Aircraft

Engineering Corp. (1938)

254 App.Div. 871, 5 NYS2d 252 12

Jennings v. Goodyear Tire &

Rubber Co.

231 F.Supp. 447 (S.D.N.Y. 1964) 9

Johnston v. United States (1983)

568 F.Supp. 351 15, 21

Kropp v. Douglas Aircraft Co.

329 F.Supp. 447 (E.D.N.Y. 1971) 11

Lindsay v. McDonnell Douglas

Corporation

460 F.2d 631 (8th Cir. 1972) 1l

McKay v. Rockwell International

Corp. .

704 F.2d 444 (9th Cir. 1983) 2

vi

Merritt, Chapman & Scott Corp.

v. Guy F. Atkinson Co.

295 F.2d 14 (9th Cir. 1961) — 13

Moywer v. Martin Marietta Corp.

481 F.2d 585 (5th Cir. 1973) 11

North American Aviation, Inc. v.

Hughes

247 F.2d 517 (lst Cir. 1957) 10

O'Keefe v. Boeing

335 F.Supp. 1104

(S.D.N.Y. 1971) ll, 14

Quadrini v. Sikorsky Aircraft

Division, United Aircraft

Corporation

425 F.Supp. 81 (D. Conn. 1977) 9

Renner v. Rockwell International

Corporation

403 F.Supp. 849 (C.D. Cal. 1975) 1l

Sanner v. Ford Motor Co.

144 N.J. Super. 1, 364 A.2d 43

(1976), aff'd, 154 N.J. Super.

407, 381 A.2d 805 (1977) 12, 16

Stencel Aero Engineering Corp. v.

United States (1977)

431 U.S. 666,

52 L.Ed.2d 665 12, 18, 22

Whitaker v. Harvell-Kilgore Corp.

418 F.2d 1010 (5th Cir. 1969 10

vii

Statutes

28 U.S.C. §1254(1)

46 U.S.C. §§ 761-767

‘—_ GS ae

No.

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1983

JANICE MCKAY, Executrix of the Estate of

LT. CDR. MALCOLM MCKAY, Deceased,

MARIE CARSON, Administratrix of the

Estate of FRANK J. CARSON, Deceased,

Petitioners,

vs.

ROCKWELL INTERNATIONAL CORPORATION,

INC., a Delaware corporation,

Respondent.

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE NINTH CIRCUIT.

PETITION FOR WRIT OF CERTIORARI

TO: THE HONORABLE CHIEF JUSTICE AND

ASSOCIATE JUSTICES OF THE SUPREME COURT

OF THE UNITED STATES:

The Petitioners, JANICE MCKAY ,.

Executrix of the Estate of LT. CDR.

1

MALCOLM MCKAY, Deceased, and MARIE

CARSON, Administratrix of the Estate of

FRANK J. CARSON, Deceased, respectfully

pray that a writ of certiorari issue to

review the judgment and opinion of the

United States Court of Appea's for the

Ninth Circuit, made and entered in this

proceeding on April 20, 1983.

The citation of the Ninth Circuit

opinion is Mckay v. Rockwell Interna-

tional Corp., 704 F.2d 444 (9th Civ.

1983).

A. STATEMENT OF THE GROUNDS ON

WHICH THE JURISDICTION OF THIS

COURT IS INVOKED.

(i) The judgment or decree sought

to be reviewed is the opinion of the

United States Court of Appeals for the

Ninth Circuit, made and entered April

20, 1983.

(ii) <A petition for rehearing was

timely filed and denied August 5, 1983.

2

(iii) The statutory provision

believed to confer on this Court juris-

diction to review the judgment or decree

in question by writ of certiorari is 28

U.S.C. §1254(1).

B. CONSTITUTIONAL PROVISIONS,

TREATIES, STATUTES, ORDINANCES

AND REGULATIONS.

This case arises under i ie Death on

the High Seas Act, 46 U.S.C. §§761-767.

This appeal does not, however, involve

issues with respect to the language of

such sictions but, rather, the question

of immunity from liability arising under

case law.

Cc. STATEMENT OF THE CASE

In each of these cases, a Naval

aviator was killed on a routine training

mission, by a broken neck, upon ejection

from a Navy aircraft in an ejection seat

system designed, developed and manufac-

tured by Defendant, ROCKWELL, and

3

accepted by the Navy. The majority

opinion reverses the District Court

which held Defendant liable for the

deaths because of the defectively

designed ejection seat system.

The defect which the court found in

the ejection seat system was that it

functioned in such a way as to cause the

head of the ejecting Naval aviator to be

in a flexed downward direction from

which it could be slammed by wind blast

back against the headrest. The ejection

seat system should have ejected the

aviator in a head back, eyeballs “orward

stabilized position on ejection from the

aircraft.

ROCKWELL had made various repre-

sentations to the Navy concerning the

safety of its ejection seat system.

The opinion of the Trial Court (at

A-18 - A-19) quotes the following

statement by ROCKWELL to the Navy,

a

describing the HS-lA ejection system

previously designed by ROCKWELL:

"This system incorporates

a complete packaging of the

crewman prior to egressing

into the air stream to

provide restraints to the

limbs and extremities to

prevent flailing plus a

completely stabilized seat

in an upright attitude to

the point of seat~-man

separation.”

TEmphasis added. ]}

In its 1961 final report on the HS-1l

system, (Exhibit 107) transmitted to the

Navy, ROCKWELL expressly represented

that the system would recover airmen

without injury or incapacitation from

any point in the flight envelope (which

was up to seven hundred fifty (750)

knots, almost double the air speed

involved in these cases. Trial Trans-

cript, pp. 1371-72). The following

appears in the Trial Transcript, at

1371, line 10, through 1372, line 21:

"Q Do you see the first

paragraph, [of the ROCKWELL

5

report], the first paragraph

states:

‘North American Aviation,

Inc., Columbus Division

{i.e., ROCKWELL (Trial

Transcript 1478)] developed

and qualified a supersonic

escape system which will

recover an airman without

injury or incapacitation

from any point in the flight

envelope of the A3-JL Weapon

system. ...'

"Now, sir, when you

prepared this report in 1961

this was the final report on

the HS-l, is that correct.?

"A. Yes.

“9. Did you intend

representing to the United

States Government in this

document that your. seat

would in fact recover an

airman without injury or

incapacitation from any

point in the flight enve-

lope?

"A. We indicated that it

had the capability to do

that, yes."

With regard to ROCKWELL'S design

representations, the Trial Court found:

". . ». the ejections in

these cases were well within

the advertised and claimed

design capabilities of the

ejection system to safely

recover a human being."

The Trial Court found that ROCKWELL

was negligent, as follows (A-22 -

A-24):

". . »« It seems clear to

the Court that the design of

the escape system is all-

important for the safety of

ejections. . ° . The

Restatement (Second) of

Torts recognizes a general

liability on the part of

suppliers of chattels where

(1) the chattel is known or

should be known to be

dangerous for the intended

use (Section 388), and (2)

it is known or should be

known to be incapable of

safe use, or unlikely to be

used safely (Section 389).

The evidence supports

finding Rockwell liable

under both of these sec-

tions.

"Everyone connected with

the design of the HS-lA

system knew of the dangers

of introducing an airman

into forceful windstreams at

high altitudes and of the

compelling importance of

creating such seat stability

as to protect the human body

from the jerking which would

otherwise arise from such an

introduction. The designer

must accept the responsibi-

lity of this difficult task

when it undertakes to market

a product of this unique

7

character. ...

"Rockwell must be held to

have failed to test, measure

or evaluate the dynamics of

the ejection process on the

heac, helmet, and neck of

the ejecting crewman. .. ."

The Ninth Circuit Court of Appeals

reversed the Trial Court stating that if

the military approved reasonably

detailed specifications for the HS-lA

ejection system, then the contractor is

immune from liability for the design

defect. The majority opinion held that

this was true, notwithstanding the fact

that the military had no knowledge of

the design defect at the time of

approval. The majority opinion also

held that government compulsion was not

a necessary element for the military

contractor to achieve design immunity.

The jurisdiction of the United

States District Court was in admirality

under the Death on the High Seas Act, 46

U.S.C. §$761~-767.

D. ARGUMENT

POINT I. THE NINTH CIRCUIT OPINION IS A

DEPARTURE FROM AND IS IN CONFLICT WITH

SUBSTANTIAL PRE-EXISTING CASE LAW.

Government defense contractors

historically have been held liable for

the injuries or death to servicemen

caused by negligence or defects in

products which they have designed,

manufactured or supplied to the mili-

tary. See Quadrini v. Sikorsky Aircraft

Division, United Aircraft Corporation,

425 F.Supp. 81 (D.Conn. 1977) [negli-

gence and breach of warranty action for

death of two marine majors in a helicop-

ter crash); Jennings v. Goodyear Air

Corp., 227 F.Supp. 246 (D.Del. 1964)

[negligence and breach of warranty

action for death of crewman in Navy

dirigible crash]; Montgomery v. Goodyear

Tire & Rubber Co., 231 F.Supp. 447

(S.D.N.Y. 1964) [negligence action for

9

death of crewmen in a blimp crash];

North American Aviation, Inc. v. Hughes,

247 F.2d 517, 520 (1 Cir. 1957) [liabil-

ity for death of the pilot due to

negligent manufacture and inspection of

an F-86F aircraft]; Foster v. Day &

Zimmerman, 502 F.2d 867, 873-874 (5 Cir.

1974) [strict liability for injuries

from premature explosion of a hand

grenade); Whitaker v. Harvell-Kilgore

Corp., 418 F.2d 1010 (5 Cir. 1969)

{strict liability for premature explo-

sion of a hand grenade used by a ser-

viceman]).

More specifically, military defense

contractors who design and supply

aircraft to the military have been held

liable in negligence and strict liabi-

lity for the design of the aircraft and

component parts sold to the military

which injure or kill servicemen. See

Boeing Airplane Co. v. Brown, 291 F.2d

10

310 (9 Cir. 1961) [negligent design of a

component part of a B-52, death of the

crew]; Moywer v. Martin Marietta Corp.,

481 F.2d 585 (5 Cir. 1973) [negligent

design of the ejection seat in a B-57A,

death of the pilot]; Kropp v. Douglas

Aircraft Co., 329 F.Supp. 447 (E.D.N.Y.

1971) [negligent design of the ejection

door in a A3A jet bomber, death of the

crewmen); Lindsay v. McDonnell Douglas

Corporation, 460 F.2d 631 (8 Cir. 1972)

{strict liability in the design and

manufacture of a F-4B, death of the

crewmen]; Renner v. Rockwell Interna-

tional Corporation, 403 F.Supp. 849

(C.D.Cal. 1975) (vacated on other

grounds) 587 F.2d 10630 {negligence and

strict liability for design and manufac-

ture of a RA-5C aircraft tail hook,

death of the crewmen]; O'Keefe _ v.

Boeing, 335 F.Supp. 1104 (S.D.N.¥. 1971)

[negligent design of a B-52 bomber,

ll

death of the crew); Stencel Aero Engi-

neering Corp. v. United States (i977)

431 U.S. 666, 52 L.Ed.2d 665 [underlying

action based upon negligence in design

and manufacture of a F-100 ejection

system); Gladstone v. Gruman Aircraft

Engineering Corp. (1938) 254 App.Div.

871, 5 NYS2d 252 [negligent specifica-

tions by the manufacturer, death]).

The requirement of compulsion to

insulate the manufacturer of a goverment

product from strict liability is illust-

rated by the leading case of Sanner v.

Ford Motor Co., 144 N.J. Super. 1, 364

A.2d 43 (1976), aff'd, 154 N.J. Super.

407, 381 A.2d 805 (1977). In that case,

the Ford Motor Company told the govern-

ment that a Jeep should have seatbelts.

The government rejected the suggestion

and insisted that the Jeep be manufac-

tured without seatbelts. Obviously, it

would have been unfair to hold Ford

12

Motor Company strictly liable for a

product defect where the decision to

retain the defect was the Federal

government's and not Ford's. That is a

far cry from a situation where a manu-

facturer designs an ejection seat and

presents it to the Federal government

for acceptance. Whether or not the

Federal government examines the design

in detail, the design remains that of

the manufacturer and is the manufac-

turer's responsibility unless the

government is made specifically aware of

a defect and decides to retain it.

The requirement of compulsion has

been so well-established that the Ninth

Circuit, itself, has previously des-

cribed the requirement as “elementary.”

Thus, in Merritt, Chapman & Scott Corp.

v. Guy F. Atkinson Co., 295 F.2d 14 (9th

Cir. 1961), the court, holding that the

government-contractor defense was not

13

available to a contractor who designed

and constricted a defective temporary

dam pursuant to government plans and

specifications, stated: "(ijt is

elementary that compulsion must exist

before the ‘government contract defense’

is available."

In Boeing Airplane Co. v. Brown, 291

F.2d 310 (9th Cir. 1961) (relied upon in

O'Keefe v. Boeing Company, 335 F.Supp.

1104 (S.D.N.¥. 1971)) a plane manufac-

turer attempted to avoid liability for a

crash caused by a defectively designed

alternator by arguing that "if the

design was defective . . . the Air

Porce, in view of its continual contact

with the project [approving the design

of the alternator drive prior to manu-

facture, supervising its manufacture,

monitoring the qualifications and

production testing, and accepting the

completed aircraft] was negligent in its

14

failure to

require its correction."

316-17.) This

government contractor defense,

not specifically so

ing the defense,

that the manufacturer was

for

discover

was

the defect and

(291 F.2d at

essentially the

although

labeled. In reject-

the Court recognized

responsible

its own defective design despite

government approval with no compulsion.

(See dissenting opinion

case, 11-12.)

PP-

in the present

Additionally, there is a conflict in

the Circuit Courts

government contract defense

extended to product

personal injury at

was summarized in

Johnston v. United

as to whether the

should be

liability actions or

all. This conflict

the recent case of

States, 568 F.Supp.

351, 356 (1983), as

"[9) In

relatively

however,

products

military,

all

produced for the

follows:

a handful of

recent cases,

involving

the government

15

contract defense has been

extended to products liabi-

lity actions for personal

injury. See Note, supra, 23

B.C.L.Rev. at 55-64;

McKay, supra; Agent Orange,

supra; Sanner v. Ford Motor

Co., 144 N.J.Super.1, 364

A.2ad 43 (1976), aff'd 154

N.J.Super. 407, 381 A.2da 805

(1977), cert. denied 75 N.J.

616, 384 A.2d 846 (1978);

Casabianca _ v. Casabianca,

104 Misc.2d 348, 428 N.Y.-

S.7d 400 ‘Sup.Ct. 1980)."

POINT II, GOVERNMENT APPROVAL OF A

CONTRACTOR'S DESIGN CANNOT BE SAID TO BE

APPROVAL OF DEFECTS IN THE DESIGN WHEN

THE GOVERNMENT WAS UNAWARE THAT THE

DEFECTS EXISTED UPON APPROVING THE

DESIGN,

As indicated in Sanner v. Ford Motor

Co. and Boeing Airplane Co. v. Brown,

supra, governmental approval of a

manufacturer's design may imply approval

of design defects only if the government

was aware of the defect. In the present

case, there was no such awareness when,

and if, the government approved the

16

design.

In fact, as is clear from the

factual statements, there were repre-

sentations by ROCKWELL to the government

with regard to the safety and stability

of the ejection seat system.

POINT III. THE NINTH CIRCUIT OPINION

OVERLOOKS CRITICAL ECONOMIC FACTORS THAT

SUPPORT THE STRICT LIABILITY OF GOVERN-

MENT CONTRACTORS.

i. The majority opinion of the

Ninth Circuit Court of Appeals rejects

the strict liability, and upholds the

government-contractor defense of a

manufacturer whose defectively designed

product has been approved by the govern-

ment. To support its expanded version

of the government-contractor defense

that goes far toward eliminating the

ability of servicemen injured by defec-

tive government equipment to recover

from the manufacturer, the majority

17

opinion of the Ninth Circuit Court of

Appeals relied on the argument that the

government demand for military products

being “inflexible,” the manufacturer, if

held liable, can pass on the liability

cost to the government and thereby

defeat the government's immunity from

tort liability to military personnel,

which was established by the Federal

Tort Claims Act, Feres v. United States,

(340 U.S. 135 (1950)), and Stencel Aero

Eng. Corp. v. United States, (431 U.S.

666 (1977).

2. A manufacturer who designs

military equipment is in the best

position to analyze and test the design

and to uncover latent defects. The

manufacturer is pushed to do this by

strict liability for defective products

because liability costs increase the

manufacturer's production costs. The

majority opinion of the Ninth Circuit

18

Court of Appeals asserts that military

demand is inelastic and that the manu-

facturer will defeat the government

military tort immunity by simply passing

on the cost to the government. The

government, however, like any consumer,

is limited by a budget. Congress holds

the purse strings. If the price of a

military product is increased, the

military will be forced to reduce its

purchases of the product or substitute

the product of a more efficient manufac-

turer. Consequently, strict liability

prods the manufacturer to reduce the

liability cost by trying harder to

discover design defects, instead of

risking a loss of profits in the long

run by simply trying to pass the cost to

the government. The strict liability

rule places the liability for defects on

the best cost avoider, i.e., the one

with greatest control of the manufactur-

19

ing process, thereby reducing costs and

increasing efficiency. This is the very

purpose that the majority opinion denies

is accomplished in such government

contractor cases.

3. The cost to the government from

accidents and unsafe products, in the

long run, is increased if the manufac-

turer is relieved from strict liability.

The resulting increase in such accidents

will increase government loss of invest-

ment in personnel training, loss of

military equipment, benefit payments to

personnel and families, and the compen-

sation required to induce volunteers for

hazardous duty, even though government

immunity from military tort liability is

preserved. The incentive to reduce

liability costs resulting from the

strict tort liability of military

producers reduces military costs (al-

though the increased cost of producing a

20

safer product is included in the con-

tractor's negotiated price) and

increases military efficiency, including

morale, by reducing accidents.

4. Any ability of a manufacturer to

pass on the liability cost to the

government, despite government immunity

from liability to military personnel, is

also present in cases of negligence and

of strict liability for defective

material, as distinguished from defec-

tive design. But the majority opinion

of the Ninth Circuit Court of Appeals

does not insulate the manufacturer from

liability in cases of negligence or

defective material. As the Court noted,

in Johnston vv. United States, 568

F.Supp. 351, 357 (1983):

"It must. be recalled,

however, that the government

contract defense does not

apply to manufacturing

defects. See, Mckay, 704

F.2a at 451. On what

principled ground, then,

21

could it be justified that

the cost of manufacturing

defects will be passed

along, through higher

contract prices to the

government, to all of us who

are taxpayers, while the

design defect ‘tax’ will

fall only on a few unfortu-

nate, innocent, randomly

selected victims?"

5. In Stencel Aero Eng. Corp. v.

United States, 431 U.S. 666 (1977), the

Supreme Court, holding government

immunity from a cross-claim for indem-

nity brought by a manufacturer sued by a

serviceman for injuries caused by a

defective ejection seat, recognized that

the manufacturer could take the liabi-

lity cost into account in negotiating

its contract with the government (431

U.S. 672, ftnt. 8) but gave no indica-

tion that recovery by the serviceman

from the manufacturer would interfere

with the government's immunity and,

therefore, be improper.

POINT IV. MILITARY HONOR, EXPECTATIONS

AND EMPLOYMENT BENEFITS DO NOT PRECLUDE

THIRD PARTY LIABILITY TO MILITARY

PERSONNEL, NOR DOES _SUCH _ LIABILITY

SIGNIFICANTLY INTEREFERE WITH MILITARY

DECISIONS.

1. The majority opinion argues that

the presence of compensation from the

United States eliminates the justifica-

tion for imposing third party liability

upon a manufacturer who designs a

defective product. {B-28 - B=-29.)

However, the third party action will

yield more adequate compensation than

mere employment benefits. Emp loyment

benefits have never been considered by

the courts to insulate a third party

tortfeasor from liability to an injured

party.

20 The majority opinion of the

Ninth Circuit Court of Appeals further

states that the serviceman can hardly be

23

said to have anticipated third party

liability at the time of enlistment.

(B-28 - B-29.) In the present cases,

the existing rule of manufacturer

liability would have been a reasonable

expectation of the servicemen at the

time of enlistment. It is the Ninth

Ciscuit Court of Appeals majority

opinion that would take away a pre-

existing benefit and which would,

accordingly, be in contravention of the

reasonable expectations of the service-

men.

36 The majority opinion suggests

that allowing recovery by military

personnel from third party tortfeasors

on the game basis as ordinary consumers

would demean and dishonor the high

station of military personnel. (B-30 -

B-31) It is respectfully submitted that

most military personnel would not agree.

Military honor does not preclude fair

24

compensation to military personnel who

risk their lives for their Country where

a third party is responsible for the

defect in equipment.

4. Manufacturer liability, as

contrasted with government liability

directly or by indemnity, does not

require review of the appropriateness of

military decisions nor a determination

of military fault. The only issue is

the conduct of the manufacturer. If the

manufacturer claims government compul-

sion, the proof is objective and lim-

ited. The Court does not sit in judg-

ment on military policies.

CONCLUSION

In addition to the reasons hereto-

fore stated, the decision in these cases

is important because it sets forth a

disturbing new and novel doctrine,

contrary to pre-existing cases, includ-

ing various circuit court cases and the

25

implications of a Supreme Court case,

and because it affects a large number of

pending and prospective cases involving

the liability of government contractors

for design defects. It is respectfully

submitted that a writ of certiorari

should be granted.

DATED: October 31, 1983

Respectfully submitted,

MARTIN E. JACOBS

IRWIN, HALE & JACOBS

2029 Century Park East,

Suite 320

Los Angeles, California

90067

(213) 277-3700

Of Counsel:

LEONARD G. RATNER

Law Center

University of Southern

California

Los Angeles, California

90089

Attorneys for

Petitioners,

JANICE MC KAY and

MARIE CARSON

26

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

JANICE MC KAY, Executrix

| of the Estate of MALCOM

WAGNER MC KAY, DECEASED,

CV 75-3672-DWW

CV 76-576-DWW

Plaintiff,

Be

vs.

ROCKWELL INTERNATIONAL

CORPORATION, a Delaware

Corporation, et al.,

Defendants.

)

)

)

)

)

)

)

) OPINION

)

)

)

)

)

)

)

MARIE CARSON, Administra-)

trix of the Estate of )

FRANK J. CARSON, DECEASED)

)

Plaintiff,

)

)

vs. )

)

ROCKWELL INTERNATIONAL )

CORPORATION, a Delaware )

Corporation, et al., )

)

)

)

Defendants.

FILED MARCH 30, 1981

Clerk, U.S. District Court

Central District of California

By Deputy

ENTERED MARCH 31, 1981

Clerk, U.S. District Court

A- 1

Central District of California

By Deputy

These are consolidated wrongful death

actions arising out of two unrelated

crashes of RA-5C naval aircraft in the

waters off the coast of Florida. Prior to

trial, the Court held an evidentiary hear-

ing in order to determine the locations of

decedents' deaths and therefore resolve

the basis of jurisidiction. The Court

concluded that the deaths both occurred

over one marine league from shore, and

that jurisdiction was based exclusively

upon the Death on the High Seas Act

("DOHSA") (46 U.S.C. Sections 761-67).

The Court further concluded that DOHSA was

cognizable exclusively in admiralty, and

that the cases must therefore be tried to

the Court.

Plaintiffs contend that Rockwell is

responsible for the deaths of these pilots

based upon theories of negligence, breach

of warranty, and strict liability. They

predicate such liability upon the alleged-

ly defective design of the aircraft and of

the escape ejection systems.

THE AIRCRAFT

It will be helpful at this point to

describe the aircraft involved in these

accidents. In the mid-1950's, defendant

Rockwell, under contract with the Navy,

began developing an aircraft capable of

attaining altitudes of up to 75,000 feet

and speeds up to two and one-half times

the speed of sound. The original air-

craft, the A-5A, was designed to be a su-

personic carrier-based attack bomber cap-

able of delivering nuclear and convention-

al weapons. Its fuselage was designed as

a bombay which stretched 25 feet forward

from the tail cone and was flanked by two

engines, thus providing storage for

A- 3

nuclear armaments. The A-5A was designed

for a two-man flight crew consisting of a

pilot and navigator who were positioned in

separate compartments, one behind the

other. After a few years, the Navy decid-

ed to redesign the A-5A as a supersonic

carrier-based reconnais ance aircraft des-

ignated the RA-5C. The modifications led

to changes in the configuration of the

airplane which will be discussed in great-

er detail below. Both of the aircraft in-

volved in this case were RA-5SCs.

The plane involved in the Carson acci-

dent, Navy RA-5C Bureau Number (Buno)

149296, had been delivered to the Navy by

Rockwell on October 20, 1967, and was

therefore approximately seven years old at

the time of its accident. It was recorded

as having 1800 hours of flight use in its

history and had undergone complete over-

haul maintenance at the Navy's Jackson-

A- 4

ville Depot at least three times.

The plane involved in the McKay acci-

dent, Navy RA-5C Buno 151630, was deliver-

ed by Rockwell to the Navy on January ll,

1965, and was approximately nine years old

at the time of the accident and had 3,000

flight hours. It had received a complete.

Navy overhaul at least five times. More

than 90% of both Buno 149296 and 151630

were recovered by salvage crews and the

parts laid out in a hanger to assist in-

vestigators in their attempt to determine

the causes of the accidents.

THE CARSON ACCIDENT

In 1974, Lt. Frank Carson was a Navy

pilot with eight years of experience. He

had served in combat in Southeast Asia and

Vietnam, and at the time of the accident

was stationed in Key West, Florida for

training in the RA-5C. O March 5, 1974,

Carson was assigned to fly a daylight

A- 5

training mission in Navy RA-5C Buno 149296

with Lt. Cmdr. George Comstock reconnais-

sance naWigator. Both airmen inspected

Buno 149296 before commencing the flight

and tound that it had no operational dis-

crepancies. The crew took off and climbed

to an altitude of 5000 feet where the pi-

lot began after-burner acceleration ac-

cording to training instructions. Carson

noticed that one electrical generator had

"gone off-line" but he was able to reset

it. He then continued his climb for five

minutes at which time the number one hy-

draulic system was lost. This happened at

an air speed of 600 knots and an altitude

of 10,0600 feet. Carson decided to return

to Key West and then noticed an aircraft

fire warning light which indicated a fire

in one engine. That engine was secured

but shortly thereafter the pilot experi-

enced the loss of the remaining hydraulic

A - 6

system and then the remaining engine.

With fire in one or both of the engines

and total loss of power and no hydraulic

pressure, the crew had no ability to con-

trol the aircraft and it began a descent.

Both men positioned themselves for ejec-

tion and Carson activated the process

which would eject them from the disabled

aircraft.

Comstock was ejected from the plane in

such a way as to cause a jerk to his neck

and head, but he had a good chute and des-

cended normally. At the appropriate time

during the descent, he deployed his life

raft and made use of it after hitting the

water. Within ten minutes after water en-

try Comstock was rescued by a shrimp boat.

During his descent he noticed that Carson

had attained ejection and man-seat separa-

tion and that he had good chute. He did

not, however, observe Carson deploying his

A- 7

life raft as per training instructions.

This strongly suggests that during his

descent Carson either was unconscious or

dead before landing in the ocean. Despite

a search by fishing boats and the Coast

Guard, Carson could not be found and his

body was not recovered for 9 days. The

autopsy revealed an injury to the right

lateral neck, a fracture of the hyoid bone

and a broken neck described as a cervical

spine fracture with the anterior disloca-

tion of the C-5 vertebrae at C-6. He had

no other injuries to his body or vital or-

gans. The autopsy surgeon concluded that

the cause of Carson's death was a probable

contusion of the spinal cord, secondary to

the C5-C6 fracture due to neck injury.

Lt. Comstock also sustained neck injuries

suffered in the ejection and was hospital-

ized for 5 days and off-flight duty for

about 30 days.

THE MC KAY ACCIDENT

In 1974, Lt. Cmdr. Malcolm W. McKay

was a Navy pilot with twelve years of ex-

perience. He was a more experienced pilot

than Lt. Carson, having accumulated over

2000 hours flight time and served a tour

of duty in Vietnam. At the time of the

accident, he was assigned to the Naval Air

Station at Key West undergoing refresher

training in the RA-5C prior to a carrier

assignment. On August 13, 1974, McKay was

assigned to fly a night training mission

in Navy RA-5C Buno 151630 with Lt. Hugh

Evans as his navigator. Pre-flight in-

spection of Buno 151630 also revealed no

operational discrepancy and the crew took

off to commence their assigned training

profile. The aircraft climbed to an alti-

tude of 13,000 feet. Approximately 20

minutes after taking off, it was noticed

that one electric generator went “off-

A-9

line” and would not re-set. The two men

decided to abandon the mission and turned

back toward Key West. McKay then reported

that a hydraulic warning light had activa-

ted, indicating the loss of one of the two

hydraulic systems. This was deemed an em-

ergency and the Miami airport was notifi-

ed. The aircraft then began a steep,

nose-down dive rocking vilently from side

to side. It was traveling at about 450

knots and at 10,000 feet altitude when

McKay activated the escape system which

ejected the navigator without warning to

him.

Later, Stephens reported that he had

heard an explosion and smelled something

burning. He next recalled being separated

from his seat and suspended from his para-

chute. He too was safely lowered into the

ocean and picked up in a few minutes by a

shrimp boat. Lt. Cmdr. McKay was sequen-

A - 10

tially ejected immediately after Stephens

had left the aircraft but he did not sur-

vive the ordeal. His body was recovered a

few days after the accident and an autopsy

revealed injuries which caused the coroner

to determine the probable cause of death

to be spinal cord injury, secondary to

neck traumatism.

AIRCRAFT DESIGN

Plaintiff's first theory involves the

placement of the hydraulic, pneumatic, and

electrical lines inside the fuselage of

the aircraft. When the A5-A was redesign-

ed as a reconnaissance aircraft, the bom-

bay was utilized as a linear tunnel into

which was installed a maze of hydraulic

and pneumatic lines, cables, and electric

wires which were bunched and wrapped in

protective covering. These lines and

pipes were generally installed against the

inner walls and roof of the linear tunnel

A- 11

and were often secured by clamps. The in-

ner core of the tunnel was largely unob-

structed, thus permitting maintenance and

inspection crews to slide along its inter-

ior on a sled and determine the need for

repairs to, or replacement of sections of

the lines.

Plaintiffs contend that the airplanes

were defectively designed by the manufac-

turer in that the density of the installa-

tions did not provide the access through

the tunnel necessary for proper inspection

and maintenance and causing the rubbing of

lines against one another during the oper-

ation of the aircraft. In support of this

contention, plaintiffs called several ex-

pert witnesses who testified that the de-

sign of the linear tunnel of the RA-5C was

defective because it did not safely route

the circuitry of the many hydraulic, pneu-

matic, and electrical lines so as to pro-

A=- 12

vide such clearance between them to pre-

vent chafing and allow proper room for in-

spection and maintenance. Plaintiffs also

argue that the negligent placement of the

hydraulic lines in the linear tunnel ex-

posed the systems to excessive heat. They

contend that chafing caused leakage which,

in conjunction with the excessive heat,

caused fire within the linear tunnel and

contributed to the two crashes. Plain-

tiffs also claim that the fuel system was

defectively designed so as to increase the

danger of fire in the tunnel. Faulty

placement of electrical wiring was also

said to be an invitation to disaster.

Rockwell defends its design placement of

these lines on the ground that the config-

uration of the airplane which was ordered

by the Navy permitted no other possible

placement of the lines which would still

properly serve the engines and surface

A- 13

openings of the aircraft. Defendant

claims that the true cause of the acci-

dents was pilot error and improper main-

tenance of the aircraft by the Navy during

their long years of use. Rockwell con-

tends that since the plaintiffs could not

sue the government under the Federal Tort

Claims Act, they are struggling to attri-

bute the cause of the fatalities to de-

sign.

Chafing, the placement of lines in

such a manner as to permit them to touch

Or cross one another and result in deter-

ioration of protective coverings and the

exposure of bare electrical wires, is a

common aeronautical problem. The extreme

stress to which these aircraft were sub-

jected during takeoff, supersonic flight,

and landings brought about displacement of

the lines within the interior of the lin-

ear turnnel and caused chafing to the pro-

A - 14

tective coverings of the electrical bunch-

ings. However, this chafing cannot clear-

ly be attributed to defective design. It

is without dispute that the task of main-

taining and repairing the airplanes and

keeping them operational was the duty of

the Navy. Indeed, it was Navy policy to

give some inspection and maintenance at

some regular stages, and to provide a com-

plete overhaul every 300 to 600 hours, de-

pending on the type of aircraft. This

latter operation consisted of removing the

engines for complete disassembly and re-

building, as well as a thorough examina-

tion of the fuselage so that all the sys-

tems could be maintained in good working

order. Despite this duty and policy, and

despite the stress of supersonic opera-

tions, there is convincing evidence

strongly suggesting that the Navy did a

less than ideal job of keeping these air-

A - 15

planes in good repair. For example, there

was evidence that the airplanes were per-

mitted to operate even though holding

clamps were loose and missing, thus inter-

fering with the safe routing of lines to

delivery points.

Bearing in mind the age of the RA-5Cs

piloted by the Cecedents, the intense

stress to which they were constantly sub-

jected during supersonic flight and car-

rier operations, and apparent failure of

the Navy to live up to its duty to vigi-

lantly inspect, maintain, and repair these

high-performance airplanes, it cannot be

concluded that the plaintiffs have sus-

tained their burden of proof in laying the

responsibility for these fatalities to the

design of the aircraft. I therefore up-

hold Rockwell's contentions as to the de-

sign of the R&-5C.

////

DESIGN OF ESCAPE SYSTEM

The conclusion which must be drawn

from the evidence introduced to describe

the design of the pilot ejection system is

quite another matter. Plaintiffs advance

the theory that the seat ejection system

designed by Rockwell for the RA-5C was de-

fective and did not carry out its intended

function of safely catapulting airmen from

disabled aircraft and parachuting them to

a safe landing. More specifically, they

claim that the design was defective be-

cause it did not provide a proper posi-

tioning of the body of the crew member and

sufficient seat stabilization so as to re-

sist terrific air forces into which the

crewman was introduced upon ejection.

Plaintiffs claim, and the evidence shows,

that there existed a pattern of neck in-

juries to Naval pilots who had been invol-

ved in ejections using the defendant's

system during flight.

A- 17

Ejection of a pilot from an airplane

such as the RA-5C is no simple matter. An

ejection system must be capable of remov-

ing a pilot almost instantly from a dis-

abled aircraft. In order to be completely

effective, the system must be capable of

deployment at all of the speeds and alti-

tudes within the airplane's operating par-

ameters, or “envelope.” Finally, if ejec-

tion occurs at high speeds, the designer

of such a system must deal with the prob-

lem of introducing an airman suddenly into

terrific wind pressures which could propel

the pilot's body into violent torque.

With all of these requirements in mind, it

was the intent of Rockwell to design a

system so as to accomplish recovery of an

airman within five seconds in any emergen-

cy situation:

This system incorporates a com

plete packaging of the crewman

A- 18

prior to egressing into the air

stream to provide restraints to

the limbs and extremities to pre-

vent flailing plus a completely

stablized seat in an upright atti-

tude to the point of seat-man separ-

ation.

Plaintiffs' Exhibit 122 at 6G.

Development of ejection systems in-

tended to rescue airmen from disabled air-

craft commenced around 1950. Several com-

peting ejection systems were developed by

various manufacturers. Rockwell designed,

developed, tested, and manufactured a sys-

tem for the early A-5A. This system was

also used in the early RA-5C. Known as

the FS-1 system, it had the capability of

safely ejecting crewmen from aircraft at

speeds from 90 to 750 knots and at alti-

tudes up to 70,000 feet.

In 1972, the FPS-l1 system was redesign-

A- 19

ed and denominated the HS-l1A. This system

was utilized by both decedents in ejecting

from their respective aircraft. The HS-lA

system was intended upon deployment to

lift off the canopy which covered the two

men, package the crewmen by physically re-

staining them in their seats in a fetal

position with the exception of the head,

and then ballistically eject them, naviga-

tor first and pilot immediately afterward,

by rocket thurst into the air stream.

Then a drogue chute would initiate the

opening of a 28 foot parachute which would

enable the crewmen to descend safely to

the ground.

The HS-l1A system was distinguished in

having a “zero-zero" low mode ejection

system. The sysem was designed so as to

measure the velocity and altitude of the

airplane at the time of ejection and to

respond accordingly. The low mode became

A - 20

operable at speeds under 200 knots and at

low altitude, and shortened the time for

initiating ejection and for seat-man se-

paration in an attempt to accelerate full

deployment of the parachute. Improvements

to the HS-1A system included a large para-

chute, a “spreader gun" to ballistically

deploy the main chute, and a more powerful

catapult and rocket charge to hasten ejec-

tion. Tests showed that the system was

capable of successfully ejecting dummies

placed in an aircraft which was not mov-

ing.

The system was designed to be initiat-

ed by the pilot sitting in the front seat.

As noted, the body of each airman was

locked in restraints after initiation so

that his arms or legs would not flail. It

was agreed by all that once the pilot ac-

tivated the system, neither crewman could

do anything that would alter the automatic

A- 21

sequential lifting of the canopy, ballis-

tic catapulting of the navigator and the

pilot, man-seat separation, and automatic

opening of the parachute. It seems clear

to the Court that the design of the escape

system is all-important for the safety of

ejections, and that maintenace of the sys-

tem is of lesser importance. This is a

product intended for only one use, and its

package must be so designed as to give

maximum assurance to its user of its pro-

per functioning. The Restatement (Second)

of Torts recognizes a general liability on

the part of suppliers of chattels where

(1) the chattel is known or should be

known to be dangerous for the intended use

(Section 388), and (2) it is known or

should be known to be incapable of safe

use, Or unlikely to be used safely (Sec-

tion 389). The evidence supports finding

Rockwell liable under both of these sec-

A - 22

tions.

Everyone connnected with the design of

the HS-1A system knew of the dangers of

introducing an airman into forceful wind-

streams at high altitudes and of the conm-

pelling importance of creating such seat

stability as to protect the human body

from the jerking which would otherwise

arise from such an introduction. The de-

signer must accept the responsibility of

this difficult task when it undertakes to

market a product of this unique character.

The product should be withdrawn from the

marketplace if its continued use shows, as

here, that a pattern of neck injuries was

developing. Evidence of this pattern came

to the attention of Rockwell in a timely

fashion through Navy messages. The many

neck injuries that had been experienced by

crewmen who had activated the HS-1A and

the similar preceding FS-l escape systems

A - 23

must have brought notice to Rockwell, as

designer and manufacturer, of the need to

effect high seat stabilization of the

tipoff point so as to bring about a proper

body posture to protect against the impact

of the airstream. Rockwell must be held

to have failed to test, measure or

evaluate the dynamics of the ejection

process on the head, helmet, and neck of

the ejecting crewman. Moreover, the

ejections in these cases were well within

the advertised and claimed design

capabilities of the ejection system to

safely recover a human being.

The evidence also supports recovery

under a theory of strict liability. A

court sitting in admiralty may apply the

law of strict liability in determining a

case properly before it. Pan-Alaska

Fisheries v. Marine Construction & Design

Co., 565 F.2d 1129, 1134-35 (9th Cir.

A - 24

1977). Recovery under a theory of strict

liability is also recognized under DOHSA.

Lindsay v. McDonnell Douglas Aircraft

Corp., 460 F.2d 631 (8th Cir. 1972). In

Pan-Alaska, the Ninth Circuit expressly

adopted Restatement (Second) Section

402-A, which states:

"(1) One who sells any product in a

defective condition unreasonably

dangerous to the user or consum-

er or to his property is subject

to liability for physical harm

thereby caused to the ultimate

user Or consumer, or to his pro-

perty, if

"(a) the seller is engage’

in the business of selling

such a product, and

"(b) it is expected to and

does reach the user or con-

sumer without substantial

change in the condition in

which it is sold.

"(2) The rule stated in Subsection

(1) applies although

"(a) the seller has exer-

cised all possible care in

the preparation and sale of

his product, and

"(b) the user or consumer

has not bought the product

from or entered into any

contractual relation with

A- 25

the seller."

Supra, 565 F. 2d at 1135. This Circuit

has also approved the concept of products

liability set forth in Greenman v. Yuba

Power Products, 59 Cal. 2d 57 (1963).

Pan-Alaska Fisheries v. Marine Construc-

tion & Design Co., supra, 565 F. 2d at

1135.

The evidence shows, and the Court

finds, that the HS-1A ejection system was

sold in a condition unreasonably dangerous

to the user. Furthermore, as indirectly

indicated above, the Court finds that the

condition of the HS-1A ejection systems

involved in the Mc Kay and Carson crashes

had not substantially changed between the

time they were installed by Rockwell and

the time they were deployed by decedents.

DAMAGES

The Act (46 U.S.C. Section 762) pro-

vides for recovery for the pecuniary loss

A - 26

sustained by the beneficiaries in a wrong-

ful death action. There shall be included

no award for loss of society, etc. Mobil

Oil Corp. v. Higginbotham, 436 U.S. 618

(1978).

Evidence has been presented (Exhibits

143 and 144) to show plaintiffs' computa-

tion of damages. The Court accepts much

of this theory of damages but rejects the

notion that V.A. pension benefits now be-

ing paid the widows should not be deducted

because of the Collateral Source rule.

Plaintiffs should not be permitted to re-

cover the “lost” military retirement while

presently collecting the retirement in the

form of a V.A. pension. However, I reject

defendants contention that payments made

to Social Security during decedents life

time should be deducted.

Damages are computed as follows:

////

A - 27

MC KAY

Past loss $ 133,838

Future pilot 237,059

Future retirement 242,080

612,977

Deduct V.A. Pension 287,172

Award $ 325,805

CARSON

Past loss S$ 127,686

Future pilot 344,963

Future retirement 232,654

705,303

Deduct V.A. Pension 319,600

$ 385,703

Pursuant to Rule 52(a) of F.R.C.P.

this memorandum of decision shall consti-

tute the findings of the Court. Plain-

tiffs shall prepare and file a proposed

form of judgment in each case.

A - 28

‘

Since each of the two widows have mi-

nor children of their marriage, which

children are entitled to a portion of the

recovery here awarded, this Court reserves

jurisdiction to approve of the division of

award at such time as this judgment is fi-

nal and no portion of the award shall be

paid by defendant to plaintiffs until such

division is proposed and approved.

DATED: This 30th day of March, 1981.

DAVID W. WILLIAMS

United States District Judge

A - 29

APPENDIX

B

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JANICE McKAY, Executrix

)

of the Estate of LT. ) Nos. 81-5540

CDR. MALCOLM WAGNER ) 81-5541

McKAY, Deceased, ) D.C.# CV75—-

) 3672 DWW

Plaintiff-Appellant, )

)

vs. nae os 2.

) April 20,

ROCKWELL INTERNATIONAL } 1983

CORPORATION, a Delaware )PHILLIP B.

corporation, ) WINBERRY

)Clerk, U.S.

Defendant-Appellee. )Court of

) Appeals

MARIE CARSON, Adminis-

tratrix of the Estate Nos. 81-5542

of FRANK J. CARSON, 81-5543

Deceased, D.C.# CV76-

576 DWW

Plaintiff-Appellant,

OPINION

vs.

ROCKWELL INTERNATIONAL

CORPORATION, a Delaware

corporation,

Defendant~-Appellee.

me mee ee ee eee eee ee ee

Appeal from the United States District

Court for the Central District of

California

David W. Williams,

District Judge, Presiding

Argued and Submitted October 5, 1982

Be- 1

Before: SNEED, and ALARCON, Circuit

Judges, and HARDY*, District

Judge

*Honorable Charles L. Hardy, United

States District Judge for the District

of Arizona, sitting by designation.

SNEED, Circuit Judge:

These are consolidated wrongful

death actions arising out of two

unrelated crashes of RA-5C naval

aircraft in the waters off the coast of

Florida. The widows of the two Navy

pilots killed in the crashes seek

damages from Rockwell International

Corp. ("Rockwell"), the manufacturer of

the RA-5C aircraft and its ejection

system. The district court held that

Rockwell was liable for the pilots'

deaths because of defects in the

aircraft's ejection system. Both the

widows and Rockwell have appealed.

In this case we confront the

B- 2

question under what circumstances, if

any, the doctrine of strict liability

in tort, as set forth in section 402A

of the Second Restatement of Torts,

should be extended to cover manufac-

turers of military equipment that

proves to be defective in design and

injures members of the armed forces who

are on active duty. We also must

address the question whether, under the

circumstances of this case, sections

388 and 389 of the Second Restatement

impose liability on Rockwell. For the

reasons set forth below we reverse the

judgment of the district court and

remand for further proceedings.

I.

FACTS

Rockwell, under contract with the

United States Navy, began development

in the mid-1950s of an aircraft capable

of sustained flight at altitudes of up

B- 3

to 75,000 feet, and with a potential

speed of two and a half times the speed

of sound. In the early 1960s, the Navy

decided to redesign the aircraft as a

wupersonic carrier-based reconnaissance

aircraft, designated the RA-5C "Vigi-

lante.” The RA-5C was put into use by

the Navy in 1962 and was used exten-

sively in Vietnam.

Both the RA-5C aircraft involved in

the accidents out of which these cases

arise were equipped with the HS-lA

escape system. This system was a

modified version of an earlier escape

system in use in the RA-5C aircraft.

The HS-1A system operated by physically

restraining the crew in their seats,

and then ejecting them ballistically

into the airstream by means of a rocket

thrust. After ejection, a drogue chute

would initiate the opening of a 28 foot

parachute to enable the crewmen to

B- 4

descend safely to the ground.

On March 5, 1974, Navy Lieutenant

Frank Carson was killed during a

daytime training mission when the RA-5C

aircraft he piloted caught fire and he

was forced to eject from the aircraft.

Navy Lieutenant Commander Malcolm McKay

was killed on August 13, 1974, after

ejecting from a burning RA-5C aircraft

during a night training mission.

Autopsies of the two pilots revealed

that their deaths were probably caused

by injuries sustained during ejection.

Plaintiffs filed civil actions in

the United States District Court for

the Central District of California,

seeking recovery of damages for the

death of plaintiffs' decedents under

theories of negligence, breach of

warranty, and wrongful death.

The cases were consolidated for

trial and, after an evidentiary

B- 5

hearing, the district court determined

that it had admiralty jurisdiction over

the actions pursuant to the Death on

the High Seas Act, 46 U.S.C. §§ 761-

7167. 4/

The district court found that

Rockwell properly was liable for the

design of the HS-l1A escape system under

the principles of tort law set forth in

sections 388, 389, and 402A of the

Second Restatement of Torts. The court

declined to impose liability under

these principles for the design of the

RA-5C aircraft. It entered judgment in

favor of plaintiff Carson for

$385,703.00 and in favor of plaintiff

McKay for $325,850.00. Carson and

McKay seek review of the measure and

amount of damages awarded in their

respective judgments. Rockwell also

appeals, contending that military

suppliers should not be liable to

servicemen for injuries caused by

defects in military hardware. 2/

Our

disposition of Rockwell's appeal makes

it unnecessary to address the appeals

of Carson and McKay.

Il.

LIABILITY UNDER SECTION 402A OF THE

SECOND RESTATEMENT OF TORTS

The district court, as stated

above held that Rockwell was liable

under section 402A of the Second

Restatement of Torts for defects in the

design of the HS-1A escape system. 3/

We applied the principles of this

section in admiralty in Pan-Alaska

Fisheries, Inc. v. Marine Construction

& Design Co., 565 F.2d 1129 (9th Cir.

1978). But in Pan-Alaska we did not

hold that strict liability applies for

all purposes and for all defendants. 4/

Section 402A is not a federal statute.

It should be applied only when the

purposes it seeks to serve dictate its

B- 7

application. When that is not the case

it has no independent force. To apply

it merely because it is there is to

abdicate judicial responsibility.

Mindful of this responsibility, we

conclude that only under the limited

circumstances we shall enumerate below

should a manufacturer be held strictly

liable in tort for injuries to a

serviceman on active duty caused by

design defects in military equipment.

A. Feres-Stencel Doctrine

We commence our analysis with Feres

v. United States, 340 U.S. 135 (1950).

In that case the Supreme Court held

that the United States is not subject

to liability under the Federal Tort

Claims Act, 28 U.S.C. § 2674, toa

member of the armed forces who sustains

an injury while on active duty. The

scope of governmental immunity was

broadened recently in Stencel Aero

Engineering Corp. v. United States, 431

U.S. 666 (1977). There, the Court held

that the Federal Tort Claims Act

precludes the United States from

indemnifying a third party for damages

paid by it to a member of the armed

forces who is injured during military

service. The Stencel Court explained

that allowing indemnity would subject

the United States to varying degrees of

liability, depending on the situs of

the accident, would require the United

States to pay indirectly to the ser~

viceman what the Veterans' Benefits Act

forbids it to pay directly, and would

interfere with military discipline.

Id, at 672-73.

Thus, under the circumstances of

these cases, the United States would be

immune both from direct tort liability

as well as from the obligation of

indemnifying Rockwell for damages it

B- 9 A

might be required to pay.

B. Government Contractor Defense

Given the immunities of the United

States in cases such as these, the

question arises whether a supplier of

military equipment should be required

to shoulder directly and immediately

the entire burden of the liability to

an injured serviceman. Some courts,

when confronted with this issue, have

relied on the so-called government

contractor defense. 3/ This rule,

first articulated by the Supreme Court

in Yearsley v. W. A. Ross Construction

Co., 309 U.S. 18 (1940), protects a

government contractor from liability

for acts done by him while complying

with government specifications during

execution of performance of a contract

with the United States. See Myers v.

United States, 323 F.2d 580, 583 (9th

Cir. 1963). The rule has been applied

B - 10

when the United States is immune from

suit. Dolphin Gardens, Inc. v. United

States, 243 F. Supp. 824, 827 ({D. Conn.

1965).

While the government contractor

defense covered at first only construc-

tion projects, it has recently been

applied by several courts to military

equipment design defect cases. S/ See

Note, 23 B.C.L. Rev. 1025, 1055-64

(1982). For example, in Sanner v. Ford

Motor Co., 44 N.J. Super. 1, 364 A.2d

43 (1976), aff'd, 154 N.J. Super. 407,

381 A.2d 805 (1977), cert. denied, 75

N.J. 616, 384 A.2d 846 (1978), the

court held that when a manufacturer

produces a jeep in compliance with

government specifications, the manufac-

turer cannot be held strictly liable

for defects in the government's design

specifications. Similarly, in

Casabianca v. Casabianca, 104 Misc. 2d

B- 11

348, 428 N.Y.S.2d 400 (1980), the

manufacturer of kitchen equipment made

for the Army and in accordance with

Army specifications was held not to be

subject to liability for defects in the

equipment. Finally, in In Re Agent

Orange Product Liability Litigation,

534 F. Supp. 1046 (E.D.N.Y. 1982), the

court approved a government contractor

defense for manufacturers of a chemical

defoliant where the government set or

ratified performance specifications for

a product, the manufacturer met those

specifications, and warned the govern-

ment of known dangers from using the

product. Id. at 1055. See also

Littlehale v. E.I. DuPont de Nemours &

Co., 268 F. Supp. 791 (S.D.N.Y. 1966),

aff'd, 380 F.2d 274 (2nd Cir. 1967) (no

duty to print warnings on blasting caps

where not required by Navy specifica-

tions).

The reasons for applying the

government contractor defense to

suppliers of military equipment with

design defects approved by the govern-

ment parallel those supporting the

Feres-Stencel doctrine. First, the

Supreme Court emphasized in Stencel

that the United States cannot be

directly or indirectly liable to

servicemen injured by defective mili-

tary products. LU But holding the

supplier liable in government contrac-

tor cases without regard to the extent

of government involvement in fixing the

product's design and specifications

would subvert the Feres-Stencel rule

since military suppliers, despite the

government's immunity, would pass the

cost of accidents off to the United

States through cost overrun provisions

in equipment contracts, through reflec-

ting the price of liability insurance

B - 13

in the contracts, or through higher

prices in later equipment sales. See

In Re Agent Orange Product Liability

Litigation, 506 F. Supp. 762, 793-94

(E.D.N.Y.), rev'd on other grounds, 635

F.2d 987 (2d Cir. 1980); Dolphin

Gardens, Inc. v. United States, 243 F.

Supp. 824, 827 (D. Conn. 1965); Note,

55 N.Y.U. L. Rev. 601, 618 (1980). As

the Court explained in Stencel:

To permit [petitioner] to

proceed .. . here would be

to judicially admit at the

back door that which has

been legislatively turned

away at the front door. We

do not believe that the

[Federal Tort Claims] Act

permits such a result.

432 U.S. at 673 (quoting from Laird v.

Nelms, 406 U.S. 797, 802 (1972)).

Second, to hold military suppliers

liable for defective designs where the

United States set or approved the

design specifications would thrust the

judiciary into the making of military

decisions. Although judges must decide

cases arising from fields of endeavor

of which they know little, their

otherwise omnicompetence confronts its

limits in military matters. At this

point, it must be acknowledged, separa-

tion of powers becomes a proper con-

cern. See In Re Agent Orange Product

Liability Litigation, 534 F. Supp. at

1054; Montgomery v. Goodyear Tire &

Rubber Co., 231 F. Supp. 447, 450

(S.D.N.Y. 1964); see also Morrison v.

Larsen, 446 F.2d 250, 253 (9th Cir.

1971); Aero Corp. v. Department of the

Navy, 493 F. Supp. 558, 567 (D.D.C.

1981). Trials on design defects where

government specifications are at issue

would "involve second-guessing military

orders, and would often require members

of the Armed Services to testify in

court as to each other's decisions and

B- 15

actions." Stencel, 431 U.S. at 673.

These trials would raise concerns about

their effect on military discipline,

id., as well as on national security.

8/

Third, it should be noted that in

setting specifications for military

equipment, the United States is

required by the exigencies of our

defense effort to push technology

towards its limits and thereby to incur

risks beyond those that would be

acceptable for ordinary consumer goods.

A supplier is frequently unable to

negotiate with the United States to

eliminate those risks. As one court

put it:

Where, as here, manufac-

turers claim to have been

compelled by federal law to

produce a weapon of war

without ability to negoti-

ate specifications, con-

tract prices or terms, the

potential for unfairly

imposing liability becomes

B- 16

great. Without the govern-

ment contract defense a

manufacturer capable of

producing military goods

for government use would

face the untenable position

of choosing between severe

penalties for failing to

supply products necessary

to conduct a war, and

producing what the govern-

ment requires but at a

contract price that makes

no provision for the need

to insure against potential

liability for design flaws

in the government's plans.

In Re Agent Orange Product Liability

Litigation, 506 F. Supp. at 794. See

generally Tobak, A Case of Mistaken

Liability: The Government Contractor's

Liability for Injuries Incurred by

Members of the Armed Forces, 13 Pub.

Cont. L.J. 74 (1982); Note, 23 B. C. L.

Rev. 1025 (1982).

Finally, a government contractor

defense provides incentives for suppli-

ers of military equipment to work

closely with and to consult the mili-

tary authorities in the development

B- 17

and testing of equipment. The defense

therefore encourages fixing the locus

of responsibility for military equip-

ment design with more precision than is

possible under a system where the

government contractor rule is not

illowed.

While conceding that the government

contractor defense can apply to mili-

tary products, plaintiffs-appellants

argue that it should not apply to these

cases. As they see it, the defense is

only available where the specifications

in the contract leave no discretion to

the supplier in the formulation of the

product's design. They rely on O'Keefe

v. Boeing Co., 335 F. Supp. 1104

(S.D.N.Y. 1971), and on Merritt,

Chapman & Scott Corp. v. Guy F.

Atkinson Co., 295 F.2d 14 (9th Cir.

1961), to support this assertion. 3/

Plaintiffs-appeilants' reliance is

B~- 18

misplaced.

In O'Keefe, the court rejected

Boeing's claim that it was not liable

for an alleged defect in a B-52 because

of the involvement of the United States

in the development of the aircraft.

335 F. Supp. at 1122-24. But the

discussion of the design discretion

issue in O'Keefe was dictum, since the

court found that the design was not

defective. Moreover, the O'Keefe

dictum is not compatible with the later

Stencel holding.

Notwithstanding its insistence that

"compulsion" is an essential element of

the government contractor defense,

Merritt, Chapman is distinguishable.

It held that a subcontractor who built

a faulty cofferdam in a dam project can

be held liable for damage caused by the

collapse of the cofferdam. The govern-

ment contractor claim was rejected

B- 19

because the contract with the United

States left the design, materials, and

method of construction entirely to the

discretion of the subcontractor. The

United States merely set the height

requirement for the cofferdam. Id. at

15-16.

Under these circumstances, Merritt,

Chapman properly precludes the govern-

ment contractor rule. When only

minimal or very general requirements

are set for the contractor by the

United States the rule is inapplicable.

The situation is different where the

United States reviewed and approved a

detailed set of specifications. This

is precisely what may have happened in

the present cases. See R.T. at

1303-04, 1309-10, 1486-87.

It is at this point that the

Feres-Stencel doctrine comes sharply

into focus. The United States has

B =- 20

limited its liability to service

personnel injured while on active duty.

It is consistent with this limitation

to construe the government contractor

rule so as to avoid imposing on the

contractor liability properly attribut-

able to acts of government: The

narrower the scope of this rule the

greater the extent of this "misplaced"

liability. While to narrow the rule

aids members of the armed services and

their dependents, it also imposes

indirectly burdens on taxpayers and/or

inflation bearers which the Feres-

Stencel doctrine precludes. It follows

that the scope of the government

contractor rule, when applied in cases

involving military personnel, should be

drawn somewhat more broadly than the

dictum in Merritt, Chapman might

suggest.

To summarize, we hold that under

B- 21

the Feres-Stencel doctrine and the

government contractor rule, a supplier

of military equipment is not subject to

section 402A liability for a design

defect where: (1) the United States is

immune from liability under Feres and

Stencel, (2) the supplier proves that

the United States established, or

approved, reasonably precise specifica-

tions for the allegedly defective

military equipment, (3) the equipment

conformed to those specifications, and

(4) the supplier warned the United

States about patent errors in the

government's specifications or about

dangers involved in the use of the

equipment that were known to the

supplier but not to the United States.

The imposition of this duty to warn of

known defects is necessary to enable

the United States to balance the risks

and benefits inherent in the use of the

B=- 22

equipment. Cf. In Re Agent Orange

Product Liability Litigation, 534 F.

Supp. at 1055; Note, 23 B.C.L. Rev. at

1074-85.

We recognize that the term "mili-

tary equipment" is somewhat imprecise,

and that at some point lines will have

to be drawn. We need not do so here.

The line, however, lies somewhere

between an ordinary consumer product

purchased by the armed forces - a can

of beans, for example - and the escape

system of a Navy RA-5C reconnaissance

aircraft. The latter falls within the

term while the former does not.

We also note that the rule enunci-

ated here does not relieve suppliers of

military equipment of liability for

defects in the manufacture of that

equipment. To hold otherwise would

remove the incentive from manufacturers

to use all cost-justified means to

B - 23

conform to government specifications in

the manufacture of military equipment.

C. Policy Considerations in the

Imposition of Strict Liability

The reasons for imposing strict

liability as set forth in section 402A

are inapplicable when the elements of

our holding exist. See Note, 23 B.C.L.

Rev. at 1080-85. Courts and commenta-

tors have identified four principal

reasons for imposing strict liability

on an accident producing activity -

enterprise liability, market deter-

rence, compensation, and implied

representation of safety. 10/ See

Note, 33 Stan. L. Rev. 535, 536 & n.7

(1981). We shall consider each.

l. Enterprise Liability

Under the enterprise liability

rationale, when a product's price

reflects the cost of accidents caused

by the use of the product, that price

B= 24

will rise. Increased prices will then

discourage consumers from purchasing

risky products, and thereby lower

accident costs to society. See Klemme,

The Enterprise Liability Theory of

Torts, 47 U. Colo. L. Rev. 153, 158

(1976). Cf. Pan-Alaska Fisheries, 565

F.2d at 1135.

However, the rationale rests on two

assumptions. These are that consumers

underestimate the risks involved in a

product's use, and will therefore

overconsume the product unless the

products price reflects the cost of

accidents, and that demand for a

product is elastic - that is, that it

will decrease as the product's price

rises. Note, 33 Stan L. Rev. at 537 &

n.8.

Neither of these assumptions

applies in the usual case to sales of

military equipment to the government.

B - 25

First, the armed forces are aware of

most, although sometimes not all, the

risks involved in using military

equipment. They undertake a constant

program of testing and evaluating such

equipment. Higher prices would not

affect significantly their awareness of

the safety risks involved in the use of

the equipment. In addition, within

broad limits demand is not elastic for

military equipment. Rather, government

purchases of military equipment are

planned in advance, and are based on

considerations of military and politi-

cal strategy, as well as on the govern-

ment's assessment of the risks and

benefits involved in the use of the

equipment. Thus, including the cost of

accidents in the price of sales to the

military would probably have little or

no effect on product sales. Meeting

adequately the needs of nationai

B- 26

defense, not accident costs, is the

ultimate standard by which purchases of

military equipment must be measured.

2. Market Deterrence

A second reason for imposing strict

liability is to deter manufacturers

from marketing unsafe products by

encouraging the use of cost-justified

safety features. See W. Prosser, The

Law of Torts § 4, at 23 (4th ed. 1971).

The safer the product, the argument

runs, the lower the cost of accidents.

This should reduce the product's price

which, in turn, should increase the

sales of the product.

But in the case of military equip-

ment, as noted above, the demand for

such equipment is quite inelastic.

Moreover, the government, the sole

purchaser of most military equipment,

has both the ability to recognize

safety problems in military equipment

B- 27

and to negotiate with suppliers to

remedy those problems. It constantly

balances the safety of the article

against the imperatives of national

defense. Strict liability would no

doubt increase defense costs but would

do little not already being done to

increase the use of safety features in

military equipment. See In Re Agent

Orange Product Liability Litigation,

506 F. Supp. at 793. Increased defense

costs, on the other hand, will diminish

either other expenditures, public or

private, or the level of national

defense, if the level of total expendi-

tures of that purpose were to be held

constant.

3. Compensation

A third justification for strict

liability is that it provides compensa-

tion for victims of accidents caused by

defective products. Restatement

B- 28

(Second) of Torts § 402A, comment c.

In the case of injured military person-

nel, however, the Veterans' Benefits

Act provides what the Supreme Court

called "a generous military compensa-

tion scheme," and "a swift, efficient

remedy." Stencel, 431 U.S. at 672-73.

ii/ Thus, the serviceman or his family

will not go uncompensated, unlike the

case of an ordinary consumer injured by

a defective product. It is true, of

course, that strict liability would

increase that compensation, but it can

hardly be said that any such increase

was anticipated at the time of enlist-

ment.

4. Implied Representation

Finally, it has been reasoned that

by marketing a product, a supplier

makes an implied representation that

the product, if put to its intended

use, will not be unreasonably dangerous

B- 29

and will meet the safety standard

expected of similar products. If the

product proves to be defective, con-

sumers should receive compensation for

the disappointment of their reasonable

expectations of safety. Note, 33 Stan.

L. Rev. at 544; Restatement (Second) of

Torts § 402A, comment i.

Members of the armed forces are not

ordinary consumers with respect to

military equipment. Their "reasonable

expectations of safety" are much lower

than those of ordinary consumers. They

recognize when they join the armed

forces that they may be exposed to

grave risks of danger, such as having

to bail out of a disabled aircraft.

This is part of the job. The Nation

sometimes demands their very lives.

This is an immutable feature of their

calling. To regard them as ordinary

consumers would demean and dishonor the

B - 30

high station in public esteem to which,

because of their exposure to danger,

they are justly entitled.

D. Application of Our Holding to the

Facts of These Cases

The application of our holding to

the facts of these cases requires that

we reverse and remand the judgments

below. It is clear, and we so hold,

that in these cases the United States

is immune from liability for the design

of the HS-1lA ejection system under

Feres and Stencel. Moreover, the

district court held that the defect in

the system was its design, not its

failure to conform to government

specifications. Finally, there is no

allegation that Rockwell failed to warn

the United States of dangers known to

Rockwell but not to the Navy.

The present record, however, does

not permit us to say with assurance

B- 31

that the United States set or approved

reasonably detailed specification for

the HS-1lA system. On the one hand,

Rockwell alleges that the United States

was deeply involved in the process of

designing and approving the system. On

the other hand, plaintiffs-appellants

contend that the United States did

little more than send Rockwell a letter

asking them to come up with a new

ejection system and agree to purchase

Rockwell's completed design. i2/

We remand these cases to the

district court to determine whether the

United States set or approved reason-

ably detailed specifications for the

HS-1A ejection system. If the district

court finds that the involvement of the

United States was limited in the manner

the plaintiffs-appellants assert - that

is, if the United States neither set

specifications for the system (other

B - 32

than general outlines of what type

system it required) nor approved

Rockwell's final reasonably detailed

specifications (by examining and

agreeing to a detailed description of

the workings of the system) - then

Rockwell is subject to strict liability

under the rule set forth in section

402A. We note that Rockwell, the

supplier, has the burden of proving by

a preponderance of the evidence that

the United States established, or

approved, reasonably precise specifica-

tions for the ejection system.

IIil.

LIABILITY UNDER SECTIONS 388 AND 399

OF THE SECOND RESTATEMENT OF TORTS

The district court also found that

Rockwell was liable under Restatement

(Second) of Torts §§388 and 389 for

breach of a duty to "test, measure or

evaluate the dynamics of the ejection

B - 33

process on the head, helmet, and neck

of the ejecting crewman," and to

withdraw the HS-1A system after "con-

tinued use [showed] ... that a

pattern of neck injuries was develop-

ing." We reverse.

We commence by observing that this

court has not yet adopted sections 388

and 389 as a basis for liability in

admiralty in this circuit. But even if

we had, these sections would not

support the district court's holding.

First, many of the arguments discussed

in Part II apply with equal force here.

For example, the high incidence of

government evaluation of the safety

of military equipment places it ina

position quite different from that of

an ordinary purchaser or consumer.

Also the socio-economic justifications

for strict liability, as set forth

above in Part II-C, continue to be

B- 34

inapposite when liability under these

sections is considered. — addition,

as explained below, the requirements

for liability under sections 388 and

389 have not been met.

A. Section 388

Under section 388, a supplier of a

"dangerous chattel” is liable to those

whom the supplier should expect to use

the chattel if (1) the supplier knows

or has reason to know that the chattel

is or is likely to be dangerous; and

(2) it has not reason to believe that

users will realize the danger; and (3)

it fails to warn the users of the

23/ an

chattel's dangerous condition.

three criteria must be satisfied for

liability to attach under section 388.

Dougherty v. Hooker Chemical Corp., 540

F.2d 174, 178 (3d Cir. 1976). Here

both the second and third requirements

for liability are lacking.

B - 35

The Navy, the principal user of the

HS-1lA system, was aware of any injuries

incurred while using the system, It

"realized the danger"; it was engaged

in a continuous process of evaluating

the system, and of exchanging informa-

tion on its performance with Rockwell.

See, e.g., R.T. at 1342-44. Thus,

there was no reason for Rockwell to

believe that the Navy was unaware of

problems with the HS-lA system, and

Rockwell therefore had no duty to warn

the Navy about the system's "dangerous

14/

condition.” — See section 388,

comment k; see also Strong v. E. I.

DuPont de Nemours Co., 667 F.2d 682,

687 (8th Cir. 1981).

In reaching its conclusion the

district court relied on the following

assumptions: Rockwell had a duty to

test the HS-1A system; Rockwell failed

adequately to test the system; testing

B - 36

would have revealed that the system was

dangerous; Rockwell would then have

been obliged to warn the Navy about

these dangers and to withdraw the

system from the market; and warning and

withdrawal would have prevented the

accidents. These assumptions are

flawed.

First, it is questionable whether

section 388 imposes a duty on a sup-

plier to test a product for latent

defects. See Lockett v. General

Electric Company, 376 F. Supp. 1201,

1208 (E.D. Pa. 1974), aff'd mem., 511

F.2d 1393 (3d Cir. 1975); see also

Sears, Roebuck & Co. v. Marhenke, 121

F.2d 598, 600 (9th Cir. 1941). To

impose on Rockwell a duty to test for

latent defects would cause it to become

a virtual guarantor of the proper

performance by the Navy of its duties.

And neither the text nor the comments

B - 37

to section 388 indicate that there is a

duty under that section on the part of

a supplier to withdraw a product from

the hands of the user, particularly

when that user is the Navy of the

United States.

Second, even if there were such

duties, the record does not show that

breach of the duties proximately caused

the injuries at issue in this case.

There is no evidence that the Navy

would have removed the system from its

existing RA-5C aircraft had the Navy

been aware of the possibility of the

type of accident with which we are

concerned. Indeed, the Navy evaluated

the system subsequent to the accidents

and found, on balance, that it was

"safe-for-flight." Exhibit 112 (United

States Navy, A-4, A-5, & A-6 Aircraft

Escape System Neck Injury Investiga-

tion, Nov. 12, 1974), at 413.

B - 38

Moreover, a warning directly to crews

of the RA-5C aircraft, assuming that

they are the "users" of whom section

388 speaks, would not have prevented

the accidents here, since the crews had

no choice but to fly aircraft equipped

with the HS-1lA system. Under these

circumstances the pilots had no alter-

native to using the system in the case

of a midair accident. az/

B. Section 389

Section 389 provides plaintiff-

appellants no better support. Under

it, a supplier of a chattel who has

informed the person to whom the chattel

has been supplied of its dangerous

propensities may be held liable to

persons who are ignorant of the

dangerous character of the chattel if

the supplier is aware that the chattel

is unlikely to be made reasonably safe

before being put to its expected

B - 39

use. 16/

One difficulty in applying section

389 to the facts of these cases is that

it presupposes that use by the Navy of

the chattel, as supplied by Rockwell,

was improper. This we cannot say

without assuming the role of naval

officers. As we pointed out above, the

Navy evaluated the system after the

accidents at issue here and continued

its use. Section 389 also presupposes

that the pilots, the “persons who are

ignorant of the dangerous character of

the chattel," would not fly if they

knew the "dangerous character" of the

"chattel." This cannot be assumed.

Naval pilots are required to fly as

ordered. The alternative to ejection

following an accident usually will be

death. i7/

Finally, section 389 only

applied when a chattel is not "reason-

ably safe." But, to repeat, the Navy's

B - 40

post-accident study found that the

HS-1A system was reasonably safe. It

is not for us to interfere in the

Navy's evaluation of its own weapons

systems. See Aero Corp. v. Department

of the Navy, 493 F. Supp. 558, 567

(D.D.C. 1981).

Military personnel frequently have

been sent to their deaths by the

incompetence of others. Hardly a page

of history lacks an example or two. We

do not suggest that is the case here.

However, should it be so those who

serve the United States in an active

military capacity are assured their

survivors will receive some compensa-

tion. We merely hold that it is not

for this court to increase that compen-

sation in the manner plaintiff-

appellants suggest.

The judgment of the district court

is reversed and these cases remanded

B- 41

for proceedings consistent with this

opinion.

These holdings, to repeat, make it

unnecessary for us to consider the

appeals by the plaintiffs-appellants.

REVERSED and REMANDED.

"Judge Alarcon dissents and may

file a seperate statement at a

later date"

B- 42

Di ri

FOOTNOTES

1. Plaintiffs-appellants contend that

jurisdiction should also be based on

general maritime law, see Moragne v.

States Marine Lines, 398 U.S. 375

(1970), which allows litigants ina

wrongful death action to recover for

loss of society, comfort, and care.

See Sea Land Services v. Gaudet, 414

U.S. 573 (1974). We need not address

this contention since we do not reach

the damages issue in this case, and,

apart from damages, the relevant law is

the same under general maritime law as

under the Death on the High Seas Act.

2. Plaintiffs-appellants claim that

the district court erred by refusing to

award them prejudgment interest, by

misapplying the collateral source rule

and thereby wrongly reducing the award

of damages, and by declining to award

compensation for the loss of services

and society. Rockwell contends that

the district court erred in its find-

ings of fact, evidentiary rulings, and

opinion format.

3. Section 402A states:

(1) One who sells any product ina

defective condition unreasonably

dangerous to the user or consumer or to

his property is subject to liability

for physical harm thereby caused to the

ultimate consumer, or to his property,

if

(a) the seller is engaged in

the business of selling such a product,

and

B - 43

(b) it is expected to and does

reach the user or consumer without

substantial change in the condition in

which it is sold.

(2) The rule stated in Subsection

(1) applies although

(a) the seller has exercised

all possible care in the preparation

and sale of his product, and

(b) the user or consumer has

not bought the product from or entered

into any contractual relation with the

seller.

4. Strict liability does not apply to

every accident-producing activity.

See, e.g., Restatement (Second) of

Torts Stoda, comment k (unavoidably

unsafe products); La Rosa v. Superior

Court, 122 Cal. App. 3d 741, 176 Cal.

Rptr. 224 (1981) (used products); Pena

v. Sita World Travel, Inc., 88 Cal.

App. 3d 642, 152 Cal. Rptr. 17 (1978)

(services); Silverhart v. Mount Zion

Hospital, 20 Cal. App. 3d 1022, 98 Cal.

Rptr. 187 (1971) (sales-service

hybrid).

5. Rockwell preserved its right to

rely on the government contractor

defense by asserting it in a motion for

summary judgment.

6. Most of the cases cited by

plaintiffs-appellants in which a court

held a manufacturer liable to a ser-

viceman involve manufacturing, rather

than design defects. See, e.g., Foster

v. Day & Zimmerman, 502 F.2d 367 (5th

Cir. 1974); Whittaker v.

B- 44

Harvell-Kilgore Corp., 418 F.2d 1010

(Sth Cir. 1969); Montgomery v. Goodyear

Tire & Rubber Co., 231 F. Supp. 447

(S.D.N.Y. 1964). In other cases relied

on by plaintiffs-appellants, the

parties failed entirely to raise the

contractor issue. See, e.g., Stencel

Aero Engineering Corp. v. United

States, 431 U.S. 666 (1977); Boeing

Airplane Co. v. Brown, 291 F.2d 310

(9th Cir. 1961); Renner v. Rockwell

International Corp., 403 F. Supp. 849

(C.D. Cal. 1975), vacated, 587 F.2d

1030 (9th Cir. 1978).

7. ‘The recent decision of the Supreme

Court in Lockheed Aircraft Corp. v.

United States, 103 S. Ct. 1033 (1983),

does not detract from the Feres-Stencel

doctrine's rationales.

In Lockheed, a civilian employee of

the Navy was Killed in a crash of a

C-5A aircraft manufactured by Lockheed,

and flown by the Air Force. The United

States paid death benefits to the

employee's survivors under the Federal

Employees' Compensation Act (FECA).

The survivors then sued Lockheed, and

Lockheed impleaded the United States as

a third party defendant for indemnifi-

cation purposes. The Court held that

FECA does not bar such an indemnity

action against the United States.

The Court distinguished the Feres-

Stencel doctrine from Lockheed. The

Court explained that while the United

States had waived its immunity from an

indemnity action based on an injury to

a civilian employee who had been

compensated under FECA, the United

States still enjoyed sovereign immunity

B- 45

under Feres-Stencel from an indemnity

action based on an injury to a service-

man. 103 S. Ct. at 1037-38 n.8.

8. Also, allowing liability would, as

the Stencel court feared, subject the

United States indirectly to paying for

damages to injured servicemen, where

the amount of damages would vary

depending on the applicable law. 431

U.S. at 672.

9. Plaintiffs-appellants also rely on

Montgomery v. Goodyear Tire & Rubber

Co., 231 F. Supp. 447 (S.D.N.Y. 1964).

That case, as noted above, involves a

manufacturing, not a design defect.

10. For convenience, we subsume the

most important justifications for

strict liability into four categories,

based on the usage of the Oregon

Supreme Court. See, e.g., Tillman v.

Vance Equipment Co., LG Or. 747,

752-54, 596 P.2d 1299, 1302-03 (1979).

For a fuller list of the possible

rationales for strict liability, see

Henderson, Extending the Boundaries of

Strict Products Tiabiiie : Implica-

tions of the Theory of the Second Best,

T28 U. Pa. L. Rev. 1036 (1980); Owen,

Rethinking the Policies of Strict

Products Liability, 33 Vand. L. Rev.

Some commentators include among the

principal justifications for imposing

strict liability the reduction of

transaction costs by relieving the

plaintiff of the problem of proving

negligence or warranty violations.

See, e.g., Schwartz, Forward: Under-

Ss di

tanding Products Liability, 67 Calif.

L. Rev. , = .

B- 46

Other authorities maintain that the

burden of proving negligence is not

significantly more difficult than than

of strict liability. See, e.g., Sachs,

Negligence or Strict Product Liability:

Is There Really a Difference in Law or

Economics?, 8 Ga. J. Int'l & Comp. L.

ll. The Veterans' Benefits Act may not

provide full compensation for a loss in

a situation similar to the present

case. For example, veterans' benefits

do not compensate for loss of compan-

ionship or services. But many of these

benefits are also unavailable under the

Death on the High Seas Act. Moreover,

compensation under the Veterans'

Benefits Act is not reduced by the high

transaction costs present in ordinary

products liability litigation.

Stencel, 431 U.S. at 673. See Note, 23

B.C.L. Rev. 1025, 1083-84 (1982).

12. The district court did not make a

factual finding on this issue in

denying Rockwell's motion for summary

judgment on the government contractor

defense, R.T. at 25, or in its opinion.

Plaintiffs-appellants are mistaken in

their assertion to the contrary.

13. Section 388. Chattel Known to be

Dangerous for Intended Use.

One who supplies directly or

through a third person a chattel for

another to use is subject to liability

to those whom the supplier should

expect to use the chattel with the

consent of the other or to be endan-

gered by its probable use, for physical

harm caused by the use of the chattel

B- 47

in the manner for which and by a person

for whose use it is supplied, if the

supplier (a) knows or has reason to

know that the chattel is or is likely

to be dangerous for the use for which

it is supplied, and (b) has no reason

to believe that those for whose use the

chattel is supplied will realize its

dangerous conditon, and (c) fails to

exercise reasonable care to inform them

of its dangerous condition or of the

facts which make it likely to be

dangerous.

14. It is necessary here to distin-

guish between the Navy, the principal

user of the HS-1A system, and

plaintiffs-appellants' decedents, who

were “secondary users," or “ultimate

consumers" of the system. In the case

of section 388, a warning to the Navy

would have been sufficient to relieve

Rockwell of liability for injury to a

Navy pilot. Section 388, comment n.

Cf. Dalke v. Upjohn Co., 555 F.2d 245,

247-48 (9th Cir. 1977).

15. The district court found that both

aircraft were out of control, and were

flying at speeds in excess of 400

knots.

16. Section 389. Chattel Unlikely to

be Made Safe for Use.

One who supplies directly or

through a third person a chattel for

another's use, knowing or having reason

to know that the chattel is unlikely to

be made reasonably safe before being

put to a use which the supplier should

expect it to be put, is subject to

liability for physical harm caused by

B- 48

such use to those whom the supplier

should expect to use the chattel or to

be endangered by its probable use, and

who are ignorant of the darigerous

character of the chattel or whose

knowledge thereof does not make them

contributorily negligent, although the

supplier has informed the other for

whose use the chattel is supplied of

its dangerous character.

17. But see §389, comment d (railroad

is liable to soldier for accident

caused by defective track even though

soldier was ordered to take train over

the track). The example in comment d

is based on Bryson v. Hynes, 268 F. 290

(4th Cir. 1920), a case which is not

law in this circuit, and which is

unlikely to be followed by modern

courts, especially after the Feres and

Stencel decisions.

B- 49

APPENDIX C

FILED

Apr 21 1983

PHILLIP B. WINBERRY

Clerk U S Court of Appeals

JANICE MCKAY, Executrix of the Estate of

Lt. CDR. MALCOLM MCKAY, Deceased, Plain-

tiff-Appellant and Cross-Appellee v.

ROCKWELL INTERNATIONAL CORPORATION

INC., A Delaware corporation, Defendant-

A Tlee and Cross-A llant. Nos. 81-

ah 81-5541; MARIE CARSON, Administra-

trix of the Estate of FRANK J. CARSON,

Deceased, Plaintiff-A llant and Cross-

Appellee v. ROCKWELL INTERNATIONAL

CORPORATION, INC., A Delaware corpora-

tion, Defendant-Appellee and Cross-

Appellant. Nos. 81-5542, 81-5543.

ALARCON, Circuit Judge, dissenting.

I respectfully dissent. Neither the

Feres-Stencel doctrine nor the govern-

ment contractor defense protects

Rockwell from liability in this case.

As demonstrated by the discussion below,

a remand on this issue is unnecessary

and the district court's finding of

liability should be affirmed. To the

extent that the damage awards have been

reduced for failure to apply the

C-1

collateral source rule, the decision

should be reversed and the original

amounts awarded.

Finally, the failure to grant pre-

judgment interest or damages for loss of

services in discussed and instructions

for the consideration of these issues on

remand are given.

FERES-STENCEL

The majority's reliance on these

opinions for authority in this context

is misplaced. Neither opinion

addresses, limits, nor precludes

contractor liability to military person-

nel who are injured while using defec-

tively designed and unsafe equipment.

The Feres case involved a claim

brought by a serviceman's widow under

the Federal Tort Claims Act (hereinafter

the PTCA). She alleged that her

husband's death resulted from the negli-

gence of his commanding officers.

In affirming the district court's

dismissal of the action, the Supreme

Court noted that the purpose of the FTCA

was to "waive immunity from recognized

causes of action, not to visit the

government with novel and unprecedented

liabilities." Feres, 340 U.S. at 142.

Because no American law had ever "per-

mitted a soldier to recover for negli-

gence, against either his superior

officers or the Government he is

serving,” id. the Court concluded that

the widow's claim was outside the waiver

of immunity contemplated by the PTCA.

In Stencel, a serviceman brought suit

against both Stencel Aero Engineering

Corp. (hereinafter "Stencel"), the

supplier of the ejection seat in which

he was injured, and the United States,

The serviceman claimed that his injury

was the result of the defendants' indiv-

idual and joint negligence. Stencel

then cross-claimed against the Govern-

ment for indemnification of any

liability it might suffer as a result of

the serviceman's claim. The Government,

in response, moved for dismissal of both

the tort and the cross-claim citing

Feres for authority. The motion was

granted and the Supreme Court affirmed.

The Court agreed that Feres con-

trolled and limited the government's

liability to the amounts provided in the

Statutory benefit packajes. Because

Stencel's indemnification claim would

have pushed the government's liability

above this upper limit, it also was

prohibited. To hold otherwise, the

Court concluded, “would be to judicially

admit at the back door that which has

been legislatively turned away at the

front door. We do not beleive that the

{Federal Tort Claims] Act permits such a

result.” Stencel, 431 U.S. at 673,

(quoting Laird v. Nelms, 406 U.S. 797,

802 (1972)).+/

It is apparent from a reading of

these opinions that the Feres-Stencel

doctrine is concerned exclusively with

government, not contractor, liability.

As stated in In re Agent Orange Product

Liability Litigation, 506 F. Supp. 762

(E.D.N.Y. 1980) reh. den., 534 F. Supp.

1046 (E.D.N.Y. 1982) (hereinafter,

"Agent Orange"), "“[t]o the extent that

plaintiff's complaints seek recovery

against the defendant chemical com-

panies, of course, the Feres doctrine

has no application." Id. at 772

(emphasis added); see also 1 Jayson,

Handling Federal Tort Claims § 155.02 at

5-66 n.9 and 5077 n.24.

In this case, Mrs. McKay and Mrs,

Carson have filed neither a direct claim

nor a claim of indemnification against

the Government. As such, their claims

reside outside the previously defined

area of concern expressed in Feres-

Stencel and Agent Orange.

More significant than the doctrine's

failure to preclude Rockwell's liabil-

ity, however, is the Stencel opinion's

implied recognition that a cause of

action against a military contractor is

proper. The Court states in footnote

eight that prohibiting indemnification

of Stencel is not unfair because it "no

doubt had sufficient notice so as to

take this risk [i.e., being held liable

without indemnification by the Govern-

ment] into account in negotiating its

contract for the emergency eject system

at issue here.” Stencel, 431 U.S. at

674. This statement implies (1) the

Court was aware of Stencel's liability

for the ejection seat and declined to

restrict or preclude it, 2/ and (2) the

Court recognized that contractors like

Stencel are aware of their possible

liability in this context and have

already set their bid prices to reflect

this risk. Here abs: Ube Court declined

to restrict or preclude this practice.

Consequently, limiting the risk which

supports this added cost, as the major-

ity has done, merely results in a wind-

fall to suppliers like Rockwell and

Stencel who have existing contracts.

Under the majority's analysis, how-

ever, such a result is not discussed.

To the contrary, it is assumed that

current military contracts do not con-

tain this type of compensation. Rather,

the majority fears that contractors

will, if held liable for unsafe designs,

begin passing these liability costs on

to the Government. This will be

achieved, the majority suggests, through

later sales and cost overrun provi-

sions. ?/ Such contractual indemnifica-

tion, the majority concludes is (1)

precluded by the Feres-Stencel doctrine,

and (2) going to significantly increase

the costs of military equipment.

Neither conclusion is correct.

With regard to the first conclusion,

it is simply not supported by the opin-

ions themselves. The Feres opinion does

not even mention the issue, and footnote

eight of the Stencel opinion recognizes

that most military equipment contracts

already reflect this cost to some

extent. The Stencel opinion's failure

to condemn this practice reflects the

Court's appreciation for the realities

which control in a free market system.

If contractors are subject to products

liability, then that factor will be

reflected in their overall cost of doing

business. This cost, of course, will

ultimately dictate the price charged to

customers.

There is, however, no reason to

believe that these costs are common, in

amount and frequency, between all mili-

tary equipment suppliers. Those with

proven safety records may be able to

secure liability insurance at much lower

rates than less careful suppliers.

Presumably, such cost savings enable

these manufactures to make lower bid

prices and be more competitive. Because

the Military is free to pursue and

accept these lower bids, they help

sharpen competition and keep the overall

cost of bids down. Those manufacturers

who do suffer liability, because of

unsafe equipment, will be unable to pass

on these costs freely due to the lower

bids of their safer competitors. This

analysis also demonstrates the error in

the majority's second conclusion, i.e.,

products liability in this context will

translate into significantly higher

equipment costs to the Military.

While there is no doubt that some of

these liability costs will find their

way into overall bid costs, this is to a

Cc-10

certain extent inevitable. The free

market system, however, insures that

this cost transfer will be minimized.

Just as some manufacturers are better at

minimizing the cost of overhead, others

will be better at producing safe designs

and avoiding liability. Bid price

competition and the cost of liability

provide incentives to minimize both.

Footnote eight of the Stencel opinion

concedes this system's existence and

recognizes that one way or another, all

costs incident to manufacture get passed

on to the customer, whether or not it is

the Government. As long as our economy

continues as a free market system this

court should refrain from denying its

realities.

The above analysis, of course, does

not apply to all government contractors,

c-11

for not all of them contract at arms

length with the Government. In those

situtations where compulsion exists, in

one form or another, the contractor

should be immune from suit. Public

policy, however, requires that this

immunity be extended only in those cases

where liability will not encourage safer

design or lower costs.

GOVERNMENT CONTRACTOR DEFENSE

In its analysis of this defense, the

majority has chosen to disregard the

aforementioned public policy limitation.

The four elements of the defense summa-

rized in the opinion too easily allow

contractors to shift responsibility for

the safety of their designs on to the

Government. Under the majority's four

part test, any contractor who submits

designs to the Military and secures

C-12

ie

approval for them is immune from unsafe

design liability. This goes too far.

The Ninth Circuit has already

analyzed the government contractor

defense in Merritt, Chapman & Scott

Corp. v. Guy F. Atkinson Co., 295 F.2d

14 (9th Cir. 1961). In that case, this

court held that "[ilt is elementary that

compulsion must exist before the

‘government contract defense' is avail-

able." Id. at 16, (emphasis in orig-

inal). This compulsion requirement,

however, “is dismissed by the majority.

Under that analysis, Merritt is found

inapplicable because of the simplicity

of the construction specifications

involved in that case. Why the detail

of the specifications should, by itself,

negate the compulsion requirement, is

not explained. By failing to do so,

however, the majority glosses over what

this circuit has recognized to be an

“elementary” requirement of the defense.

The question of compulsion is funda-

mentally distinct from a project's

complexity. A contractor can be

required to make blasting caps in the

exact manner provided in military speci-

fications during time of war, see

Littlehale v. E.I. du Pont de Nemours &

Co., 268 F. Supp. 791, 801-802 (S.D.N.Y.

1966), aff'd, 380 F.2d 274 (2d Cir.

1967) or be given free reign to design a

complex airplane like the B-52. See

Boeing Airplane Co. v. Brown, 291 F.2d

310 (9th Cir. 1961) and O'Keefe vy.

Boeing Company, 335 F. Supp. 1104

(S.D.N.Y. 1971). Merritt recognizes the

distinction between these situations and

endorses the extension of immunity only

in those cases where behavior has been

compelled.

Merritt does not stand alone in this

respect. All of the cases relied on by

the majority, which apply the defense,

found some factor which compelled the

contractor to act as they did. In

Casabianca v. Casabianca, 428 N.Y.S. 2d

400 (1980),*the subject bakery dough

mixer had been built "in or about 1942

or 1943 for the United States Army in

accordance with the Army's specifica-

tions for use in field kitchens during

World War II." Id. at 401. Later,

after having been installed in the

plaintiff's pizza parlor, the machine

injured the plaintiff's son. In dismis-

sing the son's claim against the manu-

facturer, the court held that "a

supplier to the military in time of war

C-15

has a right to rely upon such specifi-

cations [i.e. those provided by the

military] . . ." without fear of

liability. Id. at 402. (Emphasis

added). The court then expressly

limited the extension of this immunity

to contracts performed under "time of

war" restrictions. Id.

The approval of the government con-

tractor defense in the In re Agent

Orange Products Liability Litigation,

506 F. Supp. 762 (E.D.N.Y. 1980), reh.

den., 534 F. Supp. 1046 (E.D.N.Y. 1982)

opinion, also involved manufacturers who

alleged that they were compelled during

"time of war" to produce supplies

according to specifications developed

and provided by the Military. 506 F.

Supp. at 794-95. 4/ although that case

has yet to come to trial, the court

C-16

established the elements of the govern-

ment contractor defense which the chem-

ical companys must prove. There, the

court stated, that "one of the elements

of the defense is that the product in

issue be one for which the government

established the design and specific

characteristics." 534 F. Supp. at

1056. Furthermore, "if it should appear

that the contract set forth merely a

‘performance specification', as opposed

to a specified product, then the govern-

ment contract defense would be far more

restricted than as described here."

Id. It is clear from these statements

that the agent Orange court recognizes

and requires control or compulsion as an

element of the defense.

In Sanner v. Ford Motor Co., 144 N.J.

Supp. 1, 364 A.2d 43, aff'd, 154 N.J.

Super. 407, 381 A.2d 8U5 (1977), cert.

denied, 75 N.J. 616, 384 A.2d 846 (1978)

another form of compulsion was pre-

sented. There, the contractor merely

built a vehicle according to plans and

specifications provided to it by the

Military. The court found that "defen-

dant had no discretion with respect to

the installation of seatbelts and since

it strictly adhered to the plans and

specifications owned and provided by the

government, Ford is protected from

liability." Id. at 806 (emphasis

added).

Each of these cases demonstrate, in

one way or another, the compulsive

nature of the Government's behavior or

direction when its contractor is immune.

Only then will the contractor's behavior

be the result of governmental discretion

18

2)

!

and direction. Consequently, only then

should the contractor share in the

Government's immunity.

In this case, Rockwell has not even

alleged it was compelled to produce this

ejection system. Furthermore, the only

specifications which Rockwell adhered to

were initially produced by its own

design staff. Whether the Military

subsequently ratified these designs

should not alter Rockwell's primary

responsibility for their content and

adequacy. This case is unlike Sanner or

Casabianca where the contractor merely

followed plans and specifications pro-

vided and developed by the Military.

Rather, this matter more clearly resem-

bles the situation described in Agent

Orange where the Military merely pro-

vides “performance specifications". As

c-19

such, the government contract defense

should be "far more restricted” than

that described by the majority. See

Agent Orange, 539 F. Supp. at 1056.

More specifically, Rockwell's posture

reflects that of Boeing, in Boeing

Airplane Company v. Brown, 291 F.2d 310

(9th Cir. 1961) (hereinafter Brown) and

O'Keefe v. Boeing Company, 335 F. Supp.

1104 (S.D.N.Y. 1971) (hereinafter

O'Keefe). In O'Keefe, Boeing was sued

for negligent design of the tail support

structure in the B-52 bomber. In

response, Boeing argued the government

contractor defense. The court then

conceded that “ultimate responsibility

for the design and use of the B-52

bomber rests and has always rested with

the United States government." 335 F.

Supp. at 1124. Neverthless, the court

c-20

went on to say that "this fact, in

itself, neither exonerates the defen-

dant, nor has it in any way altered the

defendant's duty as a manufacturer in

this case where there has been no show-

ing that the defendant was totally

oblivious of and/or aloof from the

genesis of the design specifications

7 o" Id.

The majority discusses this conclu-

sion but dismisses it as dictum. °/

Nevertheless, it is based on the holding

in Brown. There, a defectively designed

alternator disintegrated and caused the

B-52 in which it was installed to crash.

In this case Boeing also attempted to

avoid liability by shifting primary

responsibility for the defect on to the

Government. They argued, according to

the court, that:

the Air Force was negligent in

its entire course of conduct in

approving the design for the

alternator drive prior to manu-

facture, supervising its manufac-

ture, monitoring the qualifica-’

tion and production testing, and

accepting the completed aircraft.

Appellant predicates this view on

the assumption, for the purpose

of argument, that the design of

the alternator drive was

defective. If the design was

defective, it is contended, the

Air Force, in view of its

continual contact with the

project, was negligent in its

failure to discover the defect

and require its correction.

C-22

291 F.2d at 316-17. Although Boeing did

not specifically label this argument

"the government contractor defense",

clearly its content demonstrates its

essential similarity to that defense.

The Ninth Circuit, however, was no

more impressed with the argument at that

time than it should be now. The court

recognized that inspection and approval

do not constitute direction or compul-

sion. Therefore, Boeing was responsible

for its own actions and design decisions

despite the Government's approval. °/ As

long as Boeing continued as the source

or genesis of the design, the negligence

of that design remained its own respon-

sibility.

The majority, however, does not even

address this earlier decision by the

Ninth Circuit. Instead, it is dismissed

C-23

in footnote six, ante, as being a case

which fails to discuss the contractor

issue. The above excerpt demonstrates

that this is not the case. Furthermore,

the two Boeing cases are significant in

that they are nearly identical to the

case at bar. All three involve contrac-

tors who supplied negligently designed

complex weapons systems which were

approved and tested by the Military. In

each, the courts held that responsi-

bility for the designs remained with the

manufaturer despite military approval.

Furthermore, unlike the other cases

which involved supply contracts entered

into either during time of war or pur-

suant to government supplied plans and

specifications, these cases involved

contracts made pursuant to "performance

specifications". The above mentioned

C-24

similarities and distinctions demon-

strate that Brown and O'Keefe rather

than Sanner and Casabianca should con-

trol here.

The majority is also concerned about

possible deleterious effects this type

of contractor liability would have on

military discipline. Although the

Stencel opinion expressed some concern

for that issue, Justice Marshall's

dissent in that case clearly demon-

strated its boundaries. He recognized

that a contractor, sued by a civilian,

might “cross claim against the Govern-

ment. In that hypothetical case, ...

there would be the same chance that the

trial would ‘involve second guessing

military orders, and would... require

members of the Armed Services to testify

in court as to each other's decisions

and actions’. Ante at 673. Yet, there

would be no basis, in Feres or in the

Tort Claims Act, for concluding that the

suit is barred because of the nature of

the evidence to be produced at trial.”

Stencel, 431 U.S. at 676-77 (Marshall,

dissenting). Clearly then, if

Marshall's hypothetical suit is not

blocked by discipline concerns, then the

far more attenuated suit at issue here

is also unblocked by this concern.

Finally, the majority suggests that

to treat military personnel “as ordinary

consumers would demean and dishonor the

high station in public esteem to which,

because of their exposure to danger,

they are justly entitled." Ante. at

18. While all can agree that military

personnel are entitled to the high honor

and esteem in which they are held, I

C-26

take issue with the majority's descrip-

tion of its source.

Military personnel are honored and

esteemed because they are willing to

fight for their country and risk their

lives doing so. They are not so

respected becuse they are sometimes

forced by their calling to use unsatis-

factory or unsafe equipment. It is the

Military's, Rockwell's and this court's

duty to insure that our servicemen are

provided with reliable and safe equip-

ment. Just as the Military can make any

parachute packer take one that he has

just folded and make him jump with it,

the court should require that Rockwell

stand behind the products for which it

voluntarily contracts and provides at a

profit. To extend the contractor

defense in the way the majority suggests

c-27

will only result in more unsafe and

unreliable equipment. To do so would

unnecessarily increase the danger which

our military personnel face so patrioti-

cally. ?/

THE REMAND

Applying the holdings and reasoning

of O'Keefe, Brown, Merritt and Agent

Orange to the instant case demonstrates

that a remand on the issue of liability

is unnecessary. As mentioned earlier,

although Rockwell raised the government

contractor defense in a motion for

summary judgment, it failed to put on

evidence in support of that defense at

trial. Rockwell does not point to any

testimony or evidence in the record

which shows that it was compelled by the

Military to build the ejection system in

a particular manner. °/ On the other

c-28

hand, the district court opinion is

replete with references which demon-

strate that the trial judge found

Rockwell, not the Military, to be the

designer of the ejection system. 9/

Furthermore, Rockwell's reliance on

Kropp v. Douglas Aircraft, 329 F. Supp.

447 (E.D.N.Y. 1971) for a description of

their ejection seat design process

demonstrates that they are not entitled

to the defense. In Kropp, the design

process was described as beginning

"rather informally with an idea or

suggestion which may emanate either from

the manufacturer or the Government,

usually the latter." Id. at 456. This

description closely parallels the

"performance specification" situation

described in Agent Orange. There, the

court held that the government

contractor defense was "far more

restricted." See Agent Orange, 539 F.

Supp. at 1056. It also reflects Boeing's

behavior in O'Keefe, where a failure to

show “the defendant was totally

oblivious and/or aloof from the genesis

of the design specifications in the

first place” precluded the defense. See

O'Keefe, 335 F. Supp. at 1124. Finally,

Brown shows that inspection and approval

of a design by the Military does not in

any way dismiss the primary responsi-

bility of the contractor who creates the

design. See Brown, 291 F.2d at 317.

The purpose of the remand, proposed

by the majority, is to discover whether

or not the Government set or approved

“reasonably detailed specifications for

the HS-1A system." Ante at 18. As

C-30

shown by the discussion above, however,

it is compulsion, to follow Government

plans, not Government approval of con-

tractor plans which entitles Rockwell to

immunity. Even if we assume, arguendo,

that a detailed set of plans created by

Rockwell were submitted and then

approved, the lack of compulsion would

prevent the Government from assuming

responsibility for the safety or

adequacy of Rockwell's design. Because

Rockwell has failed to prove or allege

that it was compelled to produce the HS-

1A system, a remand is unnecessary.

Without evidence of the compulsion

element, the Ninth Circuit has held and

should continue to hold as a matter of

law, that the defense is unavailable.

See Merritt, 295 F.2d at 16. If the

majority continues to insist on a

remand, then, in addition to the four

elements set out in the opinion,

Rockwell should be required to prove, as

a fifth element of the defense, that it

was compelled by the government to

produce the ejection system in a manner

which failed to protect the crewman's

head and neck froffinjury.

While I believe that a remand on the

liability issue is unnecessary, I do

believe that other issues, not discussed

by the majority, require reversal and

further consideration by the district

court. In the interest of judicial

economy, I will discuss them at this

time.

THE DAMAGES ISSUE

The district court concluded, in both

cases, that the amount of Rockwell's

liability was to be reduced by the V.A.

C-32

benefits each widow was receiving. The

trial judge concluded that "[(p)laintiffs

should not be permitted to recover the

‘lost' military retirement while pres-

ently collecting that retirement in the

form of V.A. pension.” District court

opinion at 14. The conclusion is incor-

rect.

The Ninth Circuit has recognized the

"well established rule that a tort-

feasor's liability is not reduced by

funds or services received by the

injured person from a source collateral

to the tortfeasor. The tortfeasor

should not be required to compensate

twice for the same injury, [see Brooks

v. United States, 337 U.S. 49, 53-54, 69

S.Ct. 918, 93 L.Ed. 1200 (1949)]} but he

should not have the benefit of payments

to the injured person which he did not

C-33

make." Gypsum Carrier, Inc. v.

Handelsman, 307 F.2d 525, 534 (9th Cir.

1962). Therefore, the question before

us is whether Rockwell can be considered

th source of the V.A. benefits being

received by Mrs. McKay and Mrs. Carson.

The benefits at issue are distributed

pursuant to 38 U.S.C. §§ 410-417 (1979)

(Dependency and indemnity compensation

benefits). Funds for these benefits are

by Congressional appropriation and other

than general payment of taxes, Rockwell

makes no specific contribution to these

funds. Therefore, the Government, not

Rockwell, is the source of these bene-

fits.

Rockwell conterds, however, that its

contractual relationship with the

Government prohibits this conclusion and

cites City of Salinas v. Souza & McCue

Construction Co., 66 C.2d 217, 57

Cal.Rptr. 337, 424 P.2d 921 (1967)

(hereinafter "“Souza") for support. The

contention has no merit.

The Souza opinion is inapplicable to

Rockwell's situation for two reasons.

First, because a public-entity defendant

was involved, Souza restrained applica-

tion of the rule. The court reasoned

that "the collateral source rule is

punitive in nature (United Protective

Workers v. Ford Motor Co., 223 F.2d 49,

54 (7th Cir. 1955); 2 Harper & James,

Law of Torts, § 22.22 p. 1345; Fleming,

The Collateral Source Rule and Lors

Allocation in Tort Law, 54 Cal.L.Rev.

1478, 1482-1484)", and that "the levying

of punitive damages against a public

entity has not been authorized." Souza,

66 C.2d at 228. Second, Souza involved

C-35

“aK

ee

a breach of contract action. In such

cases, the recovery "is intended only to

restore the injured party to the posi-

tion he would have occupied in the

absence of the breach." Id. at 227.

Therefore, set-offs which limit recovery

to the benefit of the bargain are not

objectionable. In tort cases, however,

no such limitation applies. To restrain

the collateral source rule in this

context "would negate the deterrent

effect of an award against a tort-

feasor." Id. Consequently, both fac-

tors which restrained application of the

collateral source rule in Souza do not

apply here. Rockwell, despite its

contractual relation with the Govern-

ment, is not a public entity, and its

liability stems from tortious conduct,

not contract breach. Rockwell's other

arguments in favor of set-off are

equally unpersuasive.

First, Rockwell argues that the

collateral source rule only applies to

contributory benefits. The cases upon

which Rockwell relies, iowever, have

only applied this cequirement to situa-

tions where there is a government defen-

dant which is already paying benefits to

the plaintife, 19/ The contribution

requirement in these cases protects

government defendants from double

liability. Such protection is unneces-

sary in Rockwell's situation. Further-

more, Feres-Stencel insures that the

Government's liability is limited to the

V.A. benefits being paid.

Second, Rockwell argues that the V.A.

benefits represent a payment by a tort-

feasor prior to litigation and should be

deducted. 1/ The district court, how-

ever, did not find that the Government

was negligent with respect to the ejec-

tion seat design. 12/ Consequently, the

Government is not a joint-tortfeasor

with respect to Rockwell's present

liability for unsafe design.

Rockwell's final contention is that

V.A. benefits are equivalent to those

provided under the Federal Fmployment

Compensation Act and are therefore, set .

off under Witt v. Jackson, 57 Cal.2d 57,

73, 17 Cal.Rptr. 369, 366 P.2d 816

(1961). The holding in Witt, however,

was limited to California workmen's

compensation benefits and only applies

when the employer is a concurrent tort-

feasor. See De Cruz v. Reid, 69 Cal.2d

217, 222-23, 70 Cal.Rptr. 550, 443 P.2d

193 (1968); Arbaugh v. Proctor & Gamble

c-38

Mfg. Co., 80 Cal.App.3d 500, 145

Cal.Rptr. 608 (1978). As has been

discussed earlier, the district court

did not find the Government to be a

concurrent tortfeasor with respect to

the ejection seat design. Therefore,

Witt does not apply and it is unneces-

Sary to decide whether or not V.A.

benefits are equivalent to workman's

compensation.

In sum, Gypsum Carrier, supra, states

the general rule in this circuit.

Despite Rockwell's arguments, there is

no reason why it should not be applied

in this case. The V.A. benefits pres-

ently being paid to Mrs. Carson and Mrs,

McKay stem from a source “wholly inde-

pendent" of Rockwell. As such, they are

a collateral source, and the district

court erred in concluding otherwise.

The district court ruling on this issue

should be reversed and the original sum

awarded.

PREJUDGMENT INTEREST

The damages awarded to plaintiffs do

not include an amount for prejudgment

interest. "In admiralty, prejudgment

interest must be granted unless peculiar

circumstances justify its denial;”"

Dillingham Shipvard v. Associated Insul-

ation Co., 649 F.2d 1322, 1328 (9th Cir.

1981). “The determination of whether

peculiar circumstances exist warranting

the denial of prejudgment interest is

left to the sound discretion of the

trial court." Edinburgh Assur. Co. v.

R.L. Burns Corp., 669 F.2d 1259, 1263

(9th Cir. 1982). Failure to articulate

why prejudgment interest) is not to be

awarded is an abuse of discretion.

c-40

Id. Under these authorities, the

failure to either award plaintiffs

prejudgment interest or articulate

reasons for not doing so was an abuse of

discretion by the district court. Upon

remand, the trial judge should either

"determine at what rate and from what

time prejudgment interest should be

awarded," Edingurgh, supra at 1263, or

articulate why he has not done so.

LOSS OF SERVICES

The damages awarded to plaintiffs did

not provide for loss of services. This

measure of damage is distinct from loss

of society and is recoverable under

DOHSA. See Mobil Oil Co. yv.

Higginbotham, 436 U.S. 618, 622 reh.

denied, 439 U.S. 884 (1978); Solomon v.

Warren, 540 F.2d 777, 788-90 (5th Cir.

1976), cert. dismissed, 434 U.S. 801

C-41

(1977). (Loss of services herein called

"loss of nurture".) Loss of services is

compensable because it is capable of

being valued. "Guidance of a parent in

matters material, moral, and spiritual

is of a definite practical and financial

value and is subject to pecuniary esti-

mate." Moore-McCormack Lines v.

Richardson, 295 F.2d 583, 593 n.9a (2d

Cir. 1961), cert. denied, 368 U.S. 989

(1962); Bodden v. American Offshore,

Inc., 681 F.2d 319, 329 (5th Cir. 1982).

Consequently, it was error for the

district court to grant an award which

did not include an amount for loss of

services or an explanation why they were

excluded. On remand, the trial judge

should determine whether there is a

factual basis for loss of services in

these cases:

C-42

Under DOHSA the wrongful death of

a parent standing alone is an

insufficient predicate to support

recovery by a child of the loss

of parental nurture, and in order

to recover this item of damages

the evidence must show that the

deceased parent was fit to

furnish such training and that

training and guidance had

actually been rendered by the

parent during his or her lifetime

to their children.

Solomon v. Warren, supra at 788; sce

Petition of Risdale & Anderson, Inc.,

291 F. Supp. 353, 358 (D. Mass. 1968)

(factors to consider).

C-43

FOOTNOTES

1/ The use by the majority of this

quotation at page 9, ante may lead to a

misinterpretation or mislead others as

to the Supreme Court's holding. There,

the usage of the quote implies that the

Stencel opinion disapproves of contrac-

tors passing on their costs through

later sales and cost overrun provisions.

In fact, the quoted language merely

refers to indemnity suits.

2/ The Agent Orange opinion comports

with this analysis. There the court

stated that the “FPeres-Stencel doctrine

bars defendant's attempt to seek contri-

bution or indemnity from the United

States based'on any recovery plaintiffs

may obtain for injuries. ..." Agent

c-44

Orange, 506 F. Supp. at 774. This

acknowledgement that plaintiffs might

recover from a military contractor

within an analysis of Stencel implies

that such a recovery is not barred by

that opinion.

3/ The majority fails to explain how

liability costs can be legitmately

included within the ambit of a cost-

overrun provision.

4/ It should be noted that the court in

Agent Orange denied a motion for summary

judgment based on these compulsion

allegations. Instead, the court

required defendants to prove at trial

that this compulsion in fact occurred.

Agent Orange, 506 F. Supp. at 795-96.

See also Jenkins v. Whittaker Corp., 551

c-45

F. Supp. 110 (D. Haw. 1982), where the

court noted that the Agent Orange ruling

"should be limited to cases involving

the manufacture of ‘weapons during

wartime.'" Id. at 114. Also, because

the atomic simulator at issue was not

"designed under the urgency of wartime,”

the Agent Orange holding was "“inapposite

to the case at bar." Id.

5/ The majority fails to explain why

the dictum in O'Keefe is less meritor-

ious than the dictum in Agent Orange

upon which it so heavily relies.

6/ See Jenkins v. Whittaker Corp.,

Supra, note 4 where the court "ORDERS

that Whittaker will be prohibited from

arguing to the jury that Whittaker

cannot be held liable for design. .

C-46

because Whittaker followed the plans and

specifications of the government. ...”"

551 F. Supp. at 114-15.

7/ See Foster v. Dav & Zimmermann,

Inc., 502 F.2d 867 (8th Cir. 1974)

(where the court stated:

In making the grenade and its

component parts the defendant

knew that it was made for mili-

tary personnel and that it was to

be used by them. We believe the

public interest in human life and

health requires the protection of

the law against the manufacture

of defective explosives, whether

they are to be used by members of

the public at large or members of

the public serving in our armed

forces.

C-47

Id. at 871; see also Challoner y. Day &

Zimmermann, Inc., 512 F.2d 77 (5th Cir.

1975).

8/ See, footnote 4, supra where defen-

dants in the Aoent Orange case were

required to prove, among other things

that (1) the military developed and

provided exact specifications for the

product, and (2) that they were compel-

led to produce Agent Orange in this

manner by the war time provisions of

federal law.

9/ See District Court Opinion at 10

"Rockwell designed, developed, tested,

and manufactured a system... known as

the FS-l system..." also, "the many

neck injuries that had been experienced

by crewman who had activated the HS-lA

C-48

and the similar preceding FS-l escape

system must have brought notice to

Rockwell, as designer and manufacturer,

+ « «" at 12. (emphasis added).

10/ Rockwell relies primarily on:

Helfend v. Southern Cal. Rapid Transit

District, 2 Cal.3d 1, 13-14, 84

Cal.Rptr. 173, 181 (1980); United States

v. Brooks, 176 F.2d 482 (4th Cir. 949);

and Overton v. United States, 619 F.2d

1299 (8th Cir. 1980).

1l/ The rule which Rockwell relies on

requires that the payments be in

"settlement." See Donham v. United

States, 536 F.2d 765, 775 n.12 (8th Cir.

1976), aff'd sub nom., Stencel Aero

Engineering Corp. v. United States, 431

U.S. 666 (1977). Furthermore, the

c-49

Donham footnote is based on the reason-

ing in Murray v. United States, 405 F.2d

1361 (1968). This reasoning was

rejected by the Ninth Circuit in Dodge

v. Mitsui Shintaku Ginko K.K. Tokyo, 528

F.2d 669, 671-72 (9th Cir. 1975), cert.

denied, Mitsui Shintaku Ginko K.K. Tokyo

v. Dodge, 425 U.S. 944 (1976). There,

this court noted that the Murray

approach had been rejected by the Second

Circuit and that it was contrary to the

great weight of authority.

12/ There was some suggestion in the

district court opinion that the Navy had

been negligent in its apparent failure

"to live up to its duty to vigilantly

inspect, maintain, and repair these high

performance airplanes.” District Court

Opinion at 9. With regard to the

c-50

ejection seat, however, that was “quite

another matter." Id. "It seems clear

to the Court that the design of the

escape system is all-important...

maintenance of the system is of lesser

importance." Id. at 12. Finally, "the

court finds that the condition of the

HS-1A ejection system involved ... had

not substantially changed between the

time they were installed by Rockwell and

the time they were deployed by dece-

dents." Id. at 14.

c-51

APPENDIX D

FILED

AUG 05 1983

PHILLIP B. WINBERRY

Clerk, U.S. Court of Appeals

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JANICE MCKAY, Executrix of

the Estate of LT. CDR.

MALCOLM WAGNER MCKAY, Deceased,

Nos. 81-5540

Plaintiff-Appeilant, 81-5541

vs.

ROCKWELL INTERNATIONAL

CORPORATION, A Delaware

corporation,

Defendant-Appellee.

MARIE CARSON, Adminitratrix of

the Estate of FRANK J. CARSON,

DECEASED,

Nos. 81-5542

Plaintiff-Appellant, 81-5543

vs.

ROCKWELL INTERNATIONAL

CORPORATION, a Delaware

corporation, ORDER

Defendant-Appellee.

D-1

Before: SNEED, and ALARCON, Circuit

Judges, and HARDY*, District

Judge

Judges Sneed and Hardy have voted to

deny the petition for rehearing; Judge

Alarcon has voted to grant the petition.

The full court was advised of the

suggestion for en banc rehearing, and an

active judge of the court requested that

a vote be taken on the suggestion. A

majority of the active judges did not

vote in favor of en banc consideration.

Fed. R. App. P. 35 (b).

The Petition for rehearing is denied

and the suggestion for rehearing en banc

is rejected.

*Honorable Charles L. Hardy, United

States District J for the District

of Arizona, sitting designation.

D-2