Petition for Writ of Certiorari — Eschler v. Boeing Co.

| Supreme Court, U.S.

: FILED

| OCT 22 1985

?

JOSEPH F. SPANIOL, JR

CLERK

IN THE

Supreme Court of the United States

OctToBER TERM, 1985

In Re Arr Crash DISASTER AT MANNHEIM,

GERMANY ON SEPTEMBER 12, 1982

MDL-555

UrsuLA SCHOENBORN,

Petitioner,

v.

THE Bortmnc Company,

Respondent.

On Writ of Certiorari to the United States

Court of Appeals for the Third Circuit

PETITION FOR WRIT OF CERTIORARI

PHILP SILVERMAN, Esq.

SpeIser, Krause & MAnoLe

1216 Sixteenth Street, N.W.

Washington, D.C. 20036

(202) 223-8501

Attorney for Petitioner

Cheryl Ann Eschler, e# al.

AS TLS TALE TTT: SARTRE ARABI

PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203

bi

i

QUESTIONS PRESENTED

1. May the courts endow an independent contractor

with the government’s sovereign immunity so as to

immunize the contractor from its own negligence, with-

out autorization from Congress?

2. Ix the principle of separation of powers appli-

cable, »:en a jury finds that a helicopter, accepted for

use by the military, has been negligently designed, but

the United States is not a party to the litigation and

has no interest in its outcome?

3. Did the Third Circuit fail to apply the elements

of the “government contractor defense” which it

adopted, and usurp the funttion of the jury, when it

ruled that the issue of relative knowledge of the Army

and Boeing concerning the danger to the synch shaft

of pinion displacement was ‘‘irrelevant’’?

4. Is the manufacturer of a product used by the

military immune from liability to military personnel

and non-military claimants for negligent design of

the product merely because the government accepted

or approved the manufacturer’s negligent design?

5. Did the Third Circuit fail to follow all of the

law of Pennsylvania in applying the government con-

tractor defense in favor of defendant?

i

PARTIES TO THE PROCEEDINGS

Pursuant to Supreme Court Rules 15.1(b) and 28.1,

Counsel for Petitioner certifies that the parties to this

proceeding are:

*Brrott Brock

*F'rRankK B. Coomss and EImeen O. Coomss

SHEA Cruz

*Arice E. DEVAULT

*CHERYL A. ESCHLER

*NoLa FONFE

*Ronap G. GREEN and Patricia G..ZEN

*KAREN HAZELL

KATHRYN SUZANNE Hvupson

*Prrer G. KIsBLEWHITE and EILEEN Y. KIBBLEWHITE

*MICHEL PIERRET and ANITRES PIERRET

*JoaNn Doris PORTER

*Brenpa HELEN RAYMOND

*PrTeR HarRoLpD RIDGEWELL

*Miiapa RvucHTI

*Orro SCHINDLER and ELISABETH SCHINDLER

Ursuta J. SCHOENBORN

*BarsaRa D. Scorr

*Susan Laura SHIERS

Teresa L. STEWART

Susan SUTTON

*Karin TRUMPFHELLER

Tue Boerne Company, Defendant.

* Denotes plaintiffs on whose behalf this petition is filed.

Page

Quusroows Pamsmwrep .......... 0.0... cccccccee ee... i

PaRTIES TO THE PRucEEDINGS ........................ ii

i ania nwans's is vc oocccrecnvkccnc: iii

RARER GP AWTMOMIUIEE oo ooo. c cc ccccccccec ce iv

SPUN IIS Lis ccc ccacceacces Dineseuevcceeesd 1

PS anon kx nn whe hebben ce cecccn 2

StaTutory Provisions Invonvep .................... 2

cg 2

Reasons ror Grantine THE Wait ................... io

iv

TABLE OF AUTHORITIES

CasEs: Page

Black v. Stephens, 662 F.2d 181 (3d Cir. 1981), cert.

denied, 455 U.S. 1008 (1981), reh. denied, 456 US.

Q5O (1981) 2... . ccc cece cence cece eecccceenecees 20

Brown v. Caterpillar Tractor Company (Brown TI], 696

F.2d 246 (3d Cir. 1982) ...........e serene 16, 17, 23

Brown v. Caterpillar Tractor Company [Brown II),

741 F.2d 656 (3d Cir. 1984) .......... 15, 18, 23, 24, 25

Bynum v. FMC Corporation, 770 F.2d 556 (5th Cir.

ROBB) nn ccccccccccncccccscccedvesscceecses 10, 14, 23

Crown Coat Front Co. v. United States, 386 U.S. 503

(1967) oc cccccccccccccccccccscccccvcsccccceces 8

Ference v. Booth & Flynn Co., 370 Pa. 400, 88 A.2d 413

(IDGB) cn cccccccccccccccwccccncecsecceacsosens 16

Feres v. United States, 340 U.S. 135 (1950) . 5, 12, 13, 15,17

Foster v. Day & Zimmerman, Inc., 502 F.2d 867 (8th

i SR es eae naka eees 9, 25

Glidden Co. v. Zdanok, 370 U.S. 530, reh’g denied, 371

U.S. 854 (1962) ...... Ne eae 9

Hahn v. Atlantic Richfield Co., 625 F.2d 1095 (3d Cir.

(1GBD) ccc cccacccccccccccccccsccncsccccccsenes

Hammond v. International Harvester Co., 691 F.2d 646

__ (3d Cir. BIE ciacncckacaescdanneecd Khesenceee 25

Heilman v. United States, 731 F.2d 1104 (3d Cir. 1984) 12

Hinkie v. United States, 715 F.2d 96 (3d Cir. 1983),

cert. denied, 104 S.Ct. 1276 ... 2... 6. eee eee eee ees 12

Honda v. Clark, 386 U.S. 484 (1967) ........--+-+--- 8

Hopkins v. United States, 513 F.2d 1360 (Ct. Cl. 1975),

aff’d in part, vacated in part, 427 U.S. 123 (1976) . 8

|

Vv

Tasie oF AuTHorITIEs continued

Page

In re Agent Orange Product Liability Litigation, 534

F. Supp. 1046 (E.D.N.Y. 1982) .............. passim

In re Agent Orange Product Liability Litigation, 580

F’. Supp. 1242 (E.D.N.Y. 1984), appeal dismissed,

CGD Dae Oe CH CR FE seins hace necenccicns 12

In re Air Crash Disaster at Mannheim, Germany on

September 12, 1982, 769 F.2d 115 (3d Cir. 1985 .. 2, 12,

19, 20

In re Air Crash at Mannheim, Germany on September

12, 1982, 575 F. Supp. 521 (E.D.Pa. 1983) ........ 3

In re Air Crash at Mannheim, Germany on September

12, 1982, 586 F. Supp. 711 (E.D.Pa. 1984) ....... cs

International Engineering Co., Division of A-T-O Inc.

v. Richardson, 512 F.2d 573, 167 U.S.App.D.C. 396

(D.C. Cir. 1975), cert. denied, 423 U.S. 1048 (1976). 8

Johnston v. United States, 568 F. Supp. 351 (D.Kan.

BOOP > ivvasdsdiensse queen: Fo Ser Seger eae 22

Keifer € Keifer v. Reconstruction Finance Corpora-

Soom, SOS WA, GRE CAO a eos isk ook ccc 4,8

Koutsoubos v. Boeing Vertol, 755 F.2d 352 (3d Cir.

CEIERD ce CW aden decd Fevwenck $a 04 cevaes 18, 20, 22, 23

Larson v. Domestic and Foreign Commerce Corp., 337

Shas WE AD en os Gh E491 Ua vb nk Kua kecad cian 7,9

Lee v. United States, 400 F.2d 185 (9th Cir. 1968), cert.

denied, 393 U.S. 1053 (1969) ................... 13

McKay v. Rockwell International Corp., 704 F.2d 444

(9th Cir. 1983), cert. denied, —— U.S. —-, 104

S.Ct. 711, 79 L.Ed.2d 175 (1984) ............ passim

Merritt, Chapman & Scott Corp. v. Guy F. Atkinson

Co., 295 F.2d 14 (9th Cir. WOGL) 22. nc cececcncens 22

vi

Tasie or AurHoritiges continued

Page

Pennhurst State School é Hospital v. Halderman, ——

U.S. ——, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984) .... 9

Powell v. United States, 339 U.S. 497 (1950) ........ 10

Sheppard v. United States, 369 F.2d 272 (3d Cir. 1966),

cert. denied, 386 U.S. 982 (1967) .............5+- 13

Sloan Shipyards Corporation v. United States Shipping

Board Emergency Fleet Corporation, 258 U.S. 549

CIBBR) ccccccccccccanscaatsbessccececsccousccs 7

Stafford v. Briggs, 444 U.S. 527 (1980) ............. 9

Stencel Aero Engineering Corp. v. United States, 431

UB. GB (IBTT) ccc ccccccsccccencecs 12, 13, 14, 15, 17

Tillet v. J. I. Case Co., 756 F.2d 591 (7th Cir. 1985) .. 6

United States v. Pennsylvania Environmental Hearing

Board, 431 F. Supp. 747 (M.D.Pa. 1977) ........ )

United States v. Shearer, 473 U.S. ——, 87 L.Ed.2d 38,

105 S.Ct. —— (1985) ..... ccc cecnseceness 12, 13, 14

Valley Forge Gardens v. James D. Morrissey, Inc., 35

Pa. 477, 123 A.2d 888 (1956) ...........-..00e 16, 17

Whitaker v. Harvell-Kilgore Corporation, 418 F.2d

BORD CBU Cie, BIRD aces cicccencnccauscasabacds 9

Yearsley v. W. A. Ross Construction Co., 309 U.S. 18

CUE) cocccnassesscncsnccesctseseeuenseeecnes 6

Statutes & Recu.ations:

$2 CFR 7-104:45 (1974) ........ cc cece eee eeeeeeees 10

IN THE

Supreme Court of the United States

Ocroser TERM, 1985

No.

In Re Arm Crasx Disaster aT MANNHEIM,

GERMANY ON SEPTEMBER 12, 1982

MDL-555

Ursuta SCHOENBORN,

Petitioner,

v.

THE Bormc Company,

Respondent.

On Writ of Certiorari to the United States

Court of Appeals for the Third Circuit

PETITION FOR WRIT OF CERTIORARI

OPINIONS BELOW

The opinion of the Appeals Court (P. App. A) is

reported at 769 F.2d 115 (3d Cir. 1985). The opinion

of the District Court (P. App. B.) is reported at

586 F.Supp. 711 (E.D. Pa. 1984).*

* Any reference to ‘‘P. App.’’ refers to the Appendix filed by

Petitioner Schoenborn.

JURISDICTION

The Third Circuit entered judgment in this matter

on June 28, 1985. P. App. C. A petition for rehearing

and suggestion of hearing en banc was denied on July

24, 1985. P. App. D. The jurisdiction of this Court is

invoked under 28 U.S.C. 1254(1).

STATUTORY PROVISIONS INVOLVED

There are no statutory provisions involved.

STATEMENT OF TH® CASE

The instant case arises out of the crash of a U.S.

Army CH-47C ‘‘Chinook”’ helicopter on September 11,

1982 at Mannheim, West Germany, killing the 46 occu-

pants. Numerous actions were brought by families of

the deceased occupants which included eight (8) Amer-

ican servicemen, and 38 British, French and West Ger-

man civilian parachutists for wrongful death and sur-

vival in the Eastern District of Pennsylvania against

the Boeing Company, Boeing-Vertol Division, which

were consolidated for the purpose of trial on the issue

of liability. In re Air Crash at Mannheim, Germany

on September 12, 1982, 769 F.2d 115 (3d Cir. 1985).

The crash occurred when a bearing in the pinion

package of the forward transmission of helicopter S/N

99992 failed and displaced the pinion shaft, which is

connected to the No. 1 section of the synchronizing

(synch) shaft through a coupling and an adapter.

When the pinion shaft became displaced, it caused the

synch shaft, considered a critical part, to come into

contact with fuselage structure at Station 120 causing

separation of the synch shaft, and resulting in desyn-

3

chronization, blade to blade contact and the catastrophe

which followed. The clearance between the synch shaft

and the fuselage structure was only 3% of an inch.

The CH-47C, a tandem rotor helicopter was designed

and manufactured by the Boeing-Vertol Division of

The Boeing Company at its plant outside Philadel-

phia. Plaintiffs based their claims on theories of negli-

gence, strict liability, and breach of warranty for de-

fective design, defective product and failure to warn.

The Court also ruled that under its diversity juris-

diction, it would apply the law of Pennsylvania to the

issues of liability and damages as to all parties. In re

Air Crash at Mannheim, West Germany on September

11, 1982, 575 F. Supp. 521 (E.D. Pa. 1983).

After a two week trial to a jury, the Court sub-

mitted the case on special interrogatories which found

for the plaintiffs as follows: (P. App. E)

1. Was the defendant Boeing-Vertol negligent ?

YEs.

2. Was the negligence of Boeing-Vertol a proxi-

mate cause of the accident?

YEs.

3. Was the Government’s maintenance a super-

seding cause of the accident?

No.

4. Did the defendant Boeing-Vertol have final

control of the design of the aircraft?

YEs.

5. Was the aircraft when delivered by defend-

ant to the Army defective?

YEs.

4

6. Was the defect a proximate cause of the acci-

dent ?

YES.

On this basis the District Court entered judgment

on liability in favor of the plaintiffs. Boeing’s motions

for judgment notwithstanding the verdict or for a new

trial, were denied. In re Air Crash at Mannheim, Ger-

many on September 11, 1982, 586 F.Supp. 711 (E.D.

Pa. 1984). The Court certified the issues, and the

Third Circuit thereafter granted Boeing’s petition for

leave to appeal.

REASONS FOR GRANTING THE WRIT

The issues and questions arising out of this litiga-

tion present important questions of federal law affect-

ing this and other pending litigation in district and

circuit courts of appeal throughout the country, on

which this Court has never ruled directly and which

require settlement. Keifer & Keifer v. Reconstruction

Finance Corporation, 306 U.S. 381, 387 (1939).

This litigation was hefore the District Court in

Pennsylvania under its diversity jurisdiction, and the

District Court, under Pennsylvana’s choice of law

rules, applied Pennsylvania law to the parties. The

Third Circuit applied a form of federal decisional law

recently articulated in federal courts in connection

with product liability litigation against government

contractors. See e.g. In re Agent Orange Product Lia-

bility Litigation, 534 F. Supp. 1046, 1054-1055 (E.D.

N.Y. 1982); McKay v. Rockwell International Corp.,

704 F.2d 444, 451 (9th Cir. 1983) cert. denied, ——

U.S. ——, 104 S.Ct. 711, 79 L.Ed.2d 175 (1984).

5

The adoption and interpretation of these principles

by the Third Circuit would eliminate completeiy the

claims of hundreds of service personnel against mili-

tary contractors for defective design of a product,

merely because the government accepted the contract-

or’s design and regardless of its defective condition.

Such a result would also give to military contractors

and their insurers, a windfall not intended by any

military procurement contract. Further, allowing this

defense to preclude a recovery in this and other cases,

would perpetuate any defect in the design of a product

sold to the military, to the detriment of our service

personnel.

The adoption of this defense based on a concept of

shared immuni’v, permits the courts to endow an in-

dependent cont actor with a portion of the govern-

ment’s immunity, without authorization from Congress

though the contractor may be negligent or provides a

defective product. Such a result is contrary to deci-

sions of this court.

In addition, the Third Circuit’s application of this

defense, based on the ‘‘separation of powers’’ princi-

ple, to claimants who are not barred fom suing the

United States under the doctrine set out in Feres v.

United States, 340 U.S. 135 (1950), and when the

United States is not a party to the litigation, is con-

trary to the decisions of this court, and would preclude

recovery by civilians even when the accident is caused

by the contractor’s negligence in designing the heli-

copter, which results in injuring or killing innocent

persons on the ground and destroying property.

6

The issue before the court is whether, based on a

concept of shared immunity with the United States,

there is a government contractor defense, which per-

mits an independent contractor to escape liability for

negligent design of a product sold to the military

merely because the government accepts it in its de-

fective condition.

This defense is basically described as having three

elements, which defendant must prove: (1) establish-

ment of product specifications by the government,

(2) manufacture in accordance with those specifica-

tions, and (3) government knowledge of hazards at

least equal to that of the manufacturer, In re Agent

Orange Liability Litigation, 534 F. Supp. 1046, 1054-

1055 (E.D.N.Y. 1982) and is applied when it appears

that the United States is immune from suit. McKay

v. Rockwell International Corp., 704 F.2d 444, 448-449

(9th Cir. 1983).

The government contractor defense has been wrongly

premised on this Court’s decision in Yearsley v. W. A.

Ross Construction Co., 309 U.S. 18 (1940). See, Mc-

Kay v. Rockwell International Corp., 704 F.2d 444,

448 (9th Cir. 1983); Tillet v. J. I. Case Co., 756 F.2d

591, 596 (7th Cir. 1985). In Yearsley, plaintiff argued

that the work contracted for caused a part of petition-

ers land to be washed away, resulting in a taking of

their land without just compensation in violation of

the Fifth Amendment. 309 U.S. at 19-20. This Court

held that there could be no liability unless the con-

tractor exceeded his authority or that authority was

not validly conferred. 309 U.S. at 20-21. However,

Yearsley did not involve a claim of negligence or any

other common law tort.

7

In other decisions this Court has held differently.

In Sloan Shipyards Corporation v. United States

Shipping Board Emergency Fleet Corporation, 258

U.S. 549 (1922) the petitioner alleged, inter alia, that

the Fleet Corporation had unlawfully taken possession

of property and retained it. The Court recognized that

the United States could not be sued, but ‘‘even if they

might have sued the United States, they are not cut

off from a remedy against the agent that did the wrong-

ful act. In general, the United States cannot be sued

for a tort, but its immunity does not extend to those

that acted in its name.’ 258 U.S. at 567-568.

In Larson v. Domestic and Foreign Commerce

Corp., 337 U.S. 682 (1949), the suit was against the

Administrator of the War Assets Administration, an

agency of the United States, seeking an Order that

the Administrator adhere to a contract for the sale

of coal, and not sell or deliver it to any other party.

The Court found that this action was a suit against

the sovereign, which was not a party to the action, and

reversing the Court of Appeals, upheld dismissal by

the district court. The court explained that, based on

the acts of the government’s agent, ‘‘If those actions

are such as to create a personal liability, whether

sounding in tort or contract, the fact that the officer

is an instrumentality of the sovereign does not, of

course, forbid a court from taking jurisdiction over a

suit against him. Sloan Shipyards v. U.S. Fleet Corp.,

258 U.S. 549, 567 (1922).’’ 337 U.S. at 686. Likewise,

the court pointed out, that to determine if the govern-

ment’s agent can be held liable, it must be considered

whether the judgment sought will require action by

the sovereign or disturb the sovereign’s property. 337

U.S. 686-692. 3

8

In Keifer & Keifer v. Reconstruction Finance Cor-

poration, 306 U.S. 381 (1939), this court considered

whether a Regional Agricultural Credit Corporation,

chartered by the R.F.C., itself a creature of Congress,

was immune from suit. The plaintiffs claimed that the

Regional was negligent in providing proper care for

livestock delivered to its care with resulting damage

to the livestock. Both the R.F.C. and the Regional

were sued. Mr. Justice Frankfurter, writing for the

court, wrote:

“* * * the government does not become the con-

duit of its immunity in suits against its agents

or instrumentalities merely because they do its

work. United States v. Lee, 106 U.S. 196, 213, 221;

org Shipyards v. U.S. Fleet Corp., 258 US.

549, 567.

306 U.S. at 388-389.

The concept of allowing an independent contractor

to share the government’s immunity is not supported

by any act of Congress. It has long been the rule that

the United States is immune from suit except as it

consents to be sued. Honda v. Clark, 386 U.S. 484

(1967); a waiver of immunity must be specifically

waived by an act of Congress. Hopkins v. United

States, 513 F.2d 1360 (Ct. Cl. 1975) affirmed in part,

vacated in part, 427 U.S. 123, 128 (1976). Only Con-

gress has the power to defir2 the limits and conditions

of a waiver of immunity. /nternational Engineering

Co., Division of A-T-O Inc. v. Richardson, 512 F.2d

573, 167 U.S. App. D.C. 396 (D.C. Cir. 1975), cert.

denied, 423 U.S. 1048 (1976); Crown Coat Front Co.

v. U.S., 386 U.S. 503, 520 (1967).

9

If the waiver of sovereign immunity depends on an

act of Congress, a court is without authority to endow

an independent, private contractor with any portion of

the government’s immunity against a legitimate claim

of negligence by a government employee. There has

not been any Congressional authorization to the courts

permitting the courts to cloak a military contractor

with the government’s immunity. Glidden Co. Vv.

Zdanok, 370 U.S. 530, 567-568 rehearing dented, 371

U.S. 854 (1962).

By applying the so-called “government contractor

defense,’’ the courts have created a private barrier to

liability in favor of an independent contractor, based

on endowing or cloaking the contractor with the im-

munity of the United States without any authority

from Congress.

There is no basis for an independent contractor to

be accorded any portion of the government’s immunity

since a judgment against an independent contractor

such as Boeing does not operate as a judgment against

the United States. See, Pennhurst State School &

Hospital v. Halderman, —— U.S. ——, 104 S.Ct. 900,

79 L.Ed.2d 67, 78-79 (1984); Stafford v. Briggs, 444

U.S. 527, 542 n.10 (1980) ; Larson ». Domestic & For-

eign Commerce Corp., 337 U.S. 682, 686 (1949).

Independent military contractors who sought to

share in the government’s immunity have been denied

that right even though an indemnity agreement existed.

Foster v. Day & Zimmerman, Inc., 502 F.2d 867 (8th

Cir. 1974): Whitaker v. Harvell-Ktlgore Corporation,

418 F.2d 1010 (5th Cir. 1969). Similarly, in United

States v. Pennsylvania Environmental Hearing Board,

431 F. Supp. 747 (M.D. Pa. 1977), the Board sought

10

to impose penalties on a government contracting officer

and Chamberlain Manufacturing Company, an inde-

pendent contractor, managing certain government-

owned ammunition plants, for violating Pennsylvania’s

anti-water pollution statutes. The court distinguished

between the government, which was shielded from

regulation by the states unless there was a clear man-

date from Congress which unambiguously authorized

such regulation, 431 F. Supp. at 753; but, finding that

Chamberlain was ‘‘an independent contractor and not

an agency of the government”’ the court let the penalty

against the independent contractor stand. 431 F. Supp.

at 754-755. See also Powell v. United States, 339 U.S.

497, 505-507 (1950).

Some courts justify the sharing of the government’s

immunity on principles of fairness. See Bynum Vv.

FMC Corporation, 770 F.2d 556, 566 (5th Cir., 1985).

Fairness to whom? Under the government contractor

defense, is it fair that a contractor which gets millions

of dollars from the government should be fully immune

from responsibility when its negligently designed

product kills or injures a serviceman, because, the

serviceman is ‘“‘at least, partially compensated.’’ Jd.

at 566.

The contractor already had a windfall under a

Standard Armed Service Procurement Regulation

which limited liability of a contractor for loss or dam-

age to the product occurring after delivery to the

government “resulting from defects or deficiencies in

such supplies.’’ 32 CFR 7-104:45.

Another excuse used by the courts is that contractor

liability will result in increases in insurance premiums

which will be passed on as a cost to the government.

ll

Id. at 566. Boeing had already been reimbursed by the

government for the cost of insurance premiums at the

time of trial. Immunizing the contractor results in a

windfall to the insurance company, as well as the con-

tractor, since the insurer gets the premium but has

no risk, and the serviceman and others for whose bene-

fit the insurance was acquired and paid for by the

government, gets nothing. Fairness indeed!

In this litigation the contract itself established that

Boeing was undertaking the contract ‘“‘as an inde-

pendent contractor and not as an agent or employee

of the government * * *.’’ In this case also, there was

no evidence of an indemnity agreement, thus no indi-

cation that a judgment against Boeing would operate

as a judgment against the United States, or affect the

assets or other property of the United States.

There is a substantial conflict in the application of

decisions of this Court as to when an independent

contractor is entitled to be sheltered from suit even

though found to be negligent, merely because he is

attempting to fulfill a government contract.

The anomaly exists, based on the decisions of this

Court, that although it takes an act of Congress to

bestow governmental immunity on a government cor-

poration, the courts are giving it away to private

contractors to the detriment of service personnel who

are innocent victims of contractor negligence.

In reversing the district court, the Third Circuit

did not specifically address the claims involving non-

military personnel. Instead, these claims were dis-

12

missed with the curt statement that ‘‘the separation

of powers principle that bars judicial second guessing

of military judgments applies regardless of the status

of the plaintiffs * * *.” 769 F.2d at 121.

This result is contrary to this court’s decision in

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

Aero Engineering Corp. v. United States, 431 U.S. 666

(1977) and its most recent decision in United States

v. Shearer, 473 U.S. ——, 87 L.Ed.2d 38, 105 S.Ct. ——

(1985) and conflicts with the premise that the rationale

for the existence of a government contractor defense is

bottomed on the immunity of the government under

Feres/Stencel. McKay v. Rockwell International

Corp., 704 F.2d 444, 448-451 (9th Cir. 1983).

The Feres case and its progeny have never been

applied to non-military personnel. The rationale for

Feres has always been based on the question of mili-

tary discipline. The British, French and German para-

chutists were non-U.S. military personnel, not subject

to U.S. military discipline and, therefore, cannot be

governed by the Feres doctrine. Stencel Aero Engt-

neering Corp. v. United States, 431 U.S. at 669. Nor

does Feres bar independent actions by dependents of

servicemen. See e.g. In Re Agent Orange Litigation,

580 F. Supp. 1242 (#.D. N.Y. 1984), appeal dismissed,

745 F.2d 161 (2d Cir. 1984).

The Third Circuit’s conclusion that the status of the

plaintiff is immaterial also conflicts with its own deci-

sions. Heilman v. United States, 731 F.2d 1104, 1106-

1107 (3d Cir. 1984) ; Hinkie v. United States, 715 F.2d

96, 98 (3d Cir. 1983), cert. denied 104 S.Ct. 1276

(where injury to civilian derived through injury to

13

serviceman) ; Sheppard v. United States, 369 F.2d 272

(3d Cir. 1966), cert. denied, 386 U.S. 982 (1967);

[See also Lee v. United States, 400 F.2d 185 (9th Cir.

1968), cert. dented, 393 U.S. 1053 (1969), arising out

of same accident as Sheppard]. It is clear that the

status of a claimant governs whether the Feres doc-

trine is applicable. Mr. Justice Marshall, in his dissent

in Stencel, also recognized that the difference in status

of the injured party has an effect on liability. Stencel

Aero Engineering v. United States, 431 U.S. at 676.

In United States v. Shearer, supra, this court ruled

that the mother of an Army serviceman could not bring

an action against the Government under the Federal

Tort Claims Act for the death of her son who was

kidnapped and murdered by another serviceman, since

the death occurred as a result of an assault and bat-

tery, a tort for which the United States may not be

sued. 28 U.S.C. 2680(h). 431 U.S. ——, 87 L.Ed.2d at

42-44. In discussing the potential application of Feres,

this court concluded that a suit against the United

States would not stand since the suit could require the

civilian court to second guess military decisions, in-

volving the “ ‘management’ of the military.” 87 L.Ed.

2d at 44.

This approach is consistent with the decision in

Stencel barring the suit for indemnity against the

government, because the trial would ‘‘ * * * involve

second guessing military orders and would often re-

quire members of the Armed Services to testify in

court as to each others decisions and actions.

However, unlike either Shearer or Stencel, the

United States is not being sued in this litigation, is

not a party to the actions, and any judgment against

14

Boeing for its negligence would not operate as a judg-

ment against the government or its property.’

Beyond its bare pronouncement, the Third Circuit

failed to explain how the separation of powers prin-

ciple is violated when a jury is asked to evaluate a

military contractor’s negligence, not the government’s,

and the government is not a party to the action. The

decisions of the military are not being questioned;

what is in issue is the action of the manufacturer in

providing a defectively designed helicopter and in fail-

ing to follow the standards of a prudent manufacturer,

by not conducting a failure mode analysis and by

failing to warn the customer of all the hazards and

dangers in the use of its product, or which are inherent

in its design.

The trial did not involve the second guessing of miu-

tary orders or decisions; no members of the military

testified as to each other’s decisions and actions. Mili-

tary discipline is not involved. The government was

not a party to the action and no government witness

was called by Boeing to explain any of its decisions

or underlying considerations in the purchase of the

helicopter. Stencel, 431 U.S. at 673.

If there is any second guessing, in this case, it was

by the Circuit Court, when it tried to explain why it

concluded that the issue of relative knowledge was

irrelevant, contrary to the elements of the government

contractor defense it had just adopted. 769 F.2d at

124-125. (See infra, pp. 18-20).

*The Shearer case has already been misapplied in a government

contractor case. See Bynum v. F.M.C. Corp., 770 F.2d 556, 561-563

(5th Cir. 1985).

15

The circuit court failed to cite any authority or rule

supporting the application of the separation of powers

principle in this negligence case where the government

was not a party and where the issue was whether the

manufacturer had met the standards of a prudent

manufacturer in Pennsylvania, Brown v. Caterpillar

Tractor Co., 741 F.2d 656, 659-669 (3d Cir. 1984) a

ease in which, notwithstanding the similarity of the

underlying facts, the Court found no basis for appli-

cation of the separation of powers principle. Likewise,

there is none here, whether the plaintiff is military or

non-military.

The separation of powers principle has no applica-

tion in this ‘“‘government contractor’’ case, purport-

edly based on the Feres/Stencel doctrine; it distorts

the Feres doctrine to imply that the separation of

powers principle that bars judicial second-guessing of

military judgments applies, regardless of the status of

the plaintiffs, when the government is not a party to

the action.

Today’s “government contractor defense’’ was set

forth in the case of In Re Agent Orange Product Lia-

bility Litigation, 534 F. Supp. 1046, 1055 (E.D. N.Y.

1982) as follows:

** * a defendant * * * will be entitled to jude-

ment dismissing all claims against it based on

that defendant’s having supplied ‘‘Agent Orange’”’

to the government pursuant to a contract, if the

defendant proves:

1. That the Government established the specifica-

tions for “‘ Agent Orange’’;

16

2. That the “Agent Orange’’ manufactured by

the defendant met the government's specifications

in all material respects; and

3. That the government knew as much as or more

than the defendant about the hazards to people

that accompanied use of ‘‘Agent Orange.”’

In Brown v. Caterpillar Tractor Co. (Brown I),

696 F.2d 246 (3rd Cir. 1982), the Third Circuit found

that Pennsylvania recognizes the ‘‘government con-

tractor defense,” which was based on two highway

construction cases, i.e., Ference v. Booth & Flynn Co.,

370 Pa. 400, 88 A.2d 413 (1952) and Valley Forge

Gardens v. James D. Morrissey, Inc., 385 Pa. 477, 123

A.2d 888 (1956). In each case, the state placed a con-

tract to build highways out for bid and supplied the

complete specification of the work to he done, which

was the work product of the State Highway Commis-

sion. Under these circumstances, the successful bidder

agreed to follow those plans and specifications for con-

structing the highway. But neither of these cases dealt

with the issue present in this case, i.e., whether the

defense is applicable, and under what circumstances,

when the plans and specifications originate with the

contractor.

Here, the plaintiffs showed that Boeing originated

and prepared the detail design, designed the clearance

at Station 120, but did not do any failure analysis to

determine what effect forward pinion shaft displace-

ment due to bearing failure would have on the No. 1

synch shaft. Boeing claimed it retained all proprietary

rights to the design and drawings.

Since the design and detail specifications for the

velicopter were prepared by Boeing, and not the gov-

17

ernment, Boeing cannot claim it was merely doing the

government’s will. And even if Boeing was merely

doing the government’s will when it designed the heli-

copter, it was required to do so in a non-negligent

fashion. Valley Forge Gardens, 385 Pa. at 483-484,

123 A.2d at 891; Brown I, 696 F.2d at 250.

In Brown I, vhe Third Circuit found the approach

in ‘Agent Orange’’ to be both “attractive’’ and

“novel,” but did not apply it. 696 F.2d at 254, n. 17.

In McKay v. Rockwell International Corporation,

704 F.2d 444 (9th Cir. 1983) Alarcorn, J. dissenting,

the Court ruled out contractor liability under the

principles of strict liability enunciated in section 402A,

Restatement of Torts, but not manufacturing defects,

and modified the ‘‘Agent Orange’’ elements. 704 F.2d

at 451.

The McKay Court bottomed its rationale on this

Court’s dual decisions in Feres v. United States, 340

U.S. 135 ©1950) and Stencel Aero Engineering Corp.

v. United States, 431 U.S. 666 (1977) which together

hold that under the Federal Tort Claims Act, a service-

man may not recover for injuries sustained incident

to service as a result of government negligence; thus

a third party is precluded from recovering indemnity

from the government for the damages it pays to a

serviceman since it would require the government to

do indirectly what it is forbidden to do directly. Me-

Kay v. Rockwell International Corporation, 704 F.2d

at 448.

The McKay court modified the Agent Orange prin-

ciples by making the government’s immunity under

Feres/Stencel the first condition of the defense, and

then required a showing that the government estab-

18

lished the specifications, ‘‘or approved, reasonably

precise specifications for the allegedly defective mili-

tary equipment” and that the supplier warned the

United States about patent errors in the government’s

specifications or about dangers involved in the use of

the equipment which were known to the supplier but

not to the United States. 704 F.2d at 451.

The Third Circuit had an opportunity to consider

the Agent Orange/McKay doctrine in its second deci-

sion in Brown v. Caterpillar Tractor Company (Brown

IT), 741 F.2d 656 (3rd Cir. 1984) but did not. How-

ever, in Koutsoubos v. Boeing Vertol, 755 F.2d 352

(3rd Cir. 1985), the Third Circuit applied Agent

Orange principles as federal common law, since it was

an admiralty case (Id. p. 354), holding that the govern-

ment’s approval of specifications, developed through

negotiations between the contractor and the military,

satisfied the first prong of the Agent Orange defense,

even though the majority of specifications originated

with the contractor. Id. p. 355.

Assuming there is a ‘‘government contractor de-

fense and it consists of the elements enunciated in

Agent Orange/McKay, the Third Circuit failed to

follow the rule it adopted.

One of the key elements of the alleged defense, which

the defendant must prove, is that the government knew

as much as or more than the defendant about the

hazards to people that accompanied the use of the

product or that the supplier warned the government

about the errors in its specifications known to the

supplier. Agent Orange, 534 F.Supp. at 1055; McKay,

704 F.2d at 451.

19

This element enables the United States to balance

risks and benefits inherent in its use. McKay, 704 F.2d

at 451; or to decide whether and how to use the prod-

uct. Agent Orange, 534 F. Supp. at 1057-1058.

Boeing had a duty to advise the military of known

risks attendant to the helicopter which it supplied,

and for its failure to do so, Boeing should not be in-

sulated from liability for damages which would never

have occurred if the Army had been apprised of the

hazards known to Boeing.

The evidence was overwhelming that after investi-

gating a prior accident, Boeing had never communi-

cated to the Army information concerning the effect

of pinion shaft bending on the synch shaft that “‘ when

the pinion bends two degrees, the synch shaft rubs

hard on structure. This rub (hard) precipitates the

immediate and ultimate failure * * *.’? P. App. F.

Boeing, which had the burden of proof, produced no

letters, memos, reports or other documents indicating

this information was transmitted to the Army and also

failed to produce any documents indicating it ever

recommended that the Army consider increasing the

clearance between the synch shaft and structure, to

avoid the rubbing which ‘“‘precipitates the immediate

and ultimate failure * * *.’’

By deciding that the issue of knowledge was ‘“‘irrele-

vant,’’ 769 F.2d at 124, the Third Circuit usurped

the function and finding of the jury, thus substituting

its own evaluation of the evidence in place of the

jury’s findings.

Without reference to any portion of the record to

indicate the extent or quality of the Army’s knowledge,

the Third Circuit concluded that the Army had knowl-

20

edge that the forward transmissions in use on the

CH-47C had a dangerous propensity towards bearing

failure, yet the Army adhered to the original design

specifications. 769 F.2d at 124. Determining the extent

and quality of the knowledge war a jury function.

The overwhelming evidence of Boeing’s failure to

meet its duty to warn of the danger to the synch shaft,

McKay, 704 F.2d at 451, easily exnlains the Army’s

adherence to the original design specifications. This

failure to warn was an issue for the jury to evaluate,

and determine if such knowledge as the Army had

was equal to or greater than that of Boeing’s.

By characterizing the issue of knowledge and Boe-

ing’s duty to warn, as “irrelevant,’’ and by ignoring

the jury’s findings, as well as the evidence, the Third

Circuit undermined the rule it adopted in Koutsoubos

v. Boeing Vertol Div., 755 F.2d at 354-355, and failed

to adhere to its own standard of review that the jury’s

verdict should be upheld if the record contained the

minimum quantum of evidence, from which the jury

could have rationally reached the verdict. Black v.

Stephens, 662 F.2d 181, 187 (3d Cir. 1981), cert. de-

nied, 455 U.S. 1008 (1981), reh. denied, 456 U.S. 950

(1981) ; Hahn v. Atlentic Richfield Co., 625 F.2d 1095,

1099 (3d Cir. 1980).

IV.

If it is assumed there is a valid basis for a ‘‘govern-

ment contractor defense,’’ which would insulate an

independent contractor such as Boeing from the con-

sequences of its own negligent design of a product, and

its failure to warn of hazards, the rule adopted by the

Third Circuit is inadequate and incomplete.

21

In Agent Orange, the court wrote as follows:

Courts should not require suppliers of ordnance

to question the military’s needs or specifications of

re during wartime. Whether to use a par-

ticular weapon that creates a risk to third parties,

whether the risk could be avoided at additional

cost, whether the weapon could be made safer if

a longer manufacturing time were allowed, indeed,

whether the weapon involves any risk at all, are

all proper concerns of the military which selects,

buys and uses the weapon * * * (emphasis added)

534 F. Supp. at 1054.

The contract which included manufacture of S/N

22292 was let in June, 1974 at a time when the United

States involvement in the Viet Nam hostilities was

officially over. Delivery of the first helicopter was due

in December, 1974 and was to be spread out over a

period of thirteen months until December, 1975. The

design defect was contained in the original design

drawings.

Testimony by Boeing’s contract manager conceded

the independent character of Boeing as a contractor

and admitted that Boeing was under no compulsion

to accept the contract. Boeing’s acceptance of the con-

tract was merely the act of an entrepreneurial entity,

manufacturing a helicopter which Boeing had defec-

tively designed for profitable sale.

To take advantage of a so-called ‘“‘government con-

tractor defense’’ the independent contractor should be

required to make a showing of compulsion, beyond the

obligations assumed under the contract. For the gov-

ernment contractor defense to be effective, there is a

requirement that the government ‘‘compel,’’ ‘‘direct”’

22

or ‘‘design’’ the construction, manufacturing or other

activity at issue, e.g. Merritt, Chapman & Scott Corp.

v. Guy F. Atkinson Co., 295 F.2d 14, 16 (9th Cir. 1961)

(compulsion a necessary element of the government

contractor defense); Johnson v. United States, 568 F.

Supp. 351, 356 (D. Kan. 1983) (government contract

defense applies only where injury-causing aspect of

the product mandated by the contract); In Re Agent

Orange Product Lrability Litigation, 534 F. Supp.

1045, 1055 (E.D. N.Y. 1982) (government contract de-

fense applies when the government establishes specifi-

cations and the contractor meets those specifications in

all respects).

The Ninth Circuit ignored the element of ‘‘compul-

sion’? in McKay, though its previous holding in Mer-

ritt, supra, and ‘‘all the cases relied upon by the Mc-

Kay majority, which apply the [government contrac-

tor] defense, found some factor which compelled the

contractor to act as they did.” McKay, supra, 704 F.2d

at 458 (Alarcon, J., dissenting). Although the Ninth

Cireuit’s new McKay standard only required the mili-

tary to establish or approve reasonably precise specifi-

cations for the allegedly defective military equipment,

Id. at 451 (emphasis added), the McKay majority

avoided expressly announcing the demise of Merritt

and the compulsion requirement.

Although the Third Circuit in Koutsoubos v. Boeing

Vertol, 755 F.2d 352 (3rd Cir. 1985), was concerned

that without proof of compulsion, there would be no

justification for the defense, it found this concern

satisfied by a ‘‘continuous back-and-forth’’ with the

company, concluding the Navy exercised final author-

ity over the specifications. Id. at 355. The fundamental

23

change wrought by McKay, that the government need

not compel or establish design, but merely approve it,

is not altered. The final authority over the specifica-

tions mentioned above in Koutsoubos is only the ability

to approve or reject the contractor’s specifications or

design, but does not meet the test of compulsion.

This departure from.the traditional government con-

tractor defense requiring that compulsion be shown,

if universally applied, will eliminate all civil liability

in tort of military contractors to military personnel

during peacetime as well as wartime. An independent

contractor, such as Boeing, should not be allowed to

escape liability for its negligent design when the defec-

tive design was not compelled by the military and there

is no showing that the design served any unique mili-

tary purpose.

Without a showing of compulsion, there is no justi-

fication for barring negligence suits whenever the mili-

tary approves a contractor’s design and the application

of the government contractor defense, without such

a showing, unjustly defeats such vlaims.

Vv.

Since the helicopter was manufactured in Pennsyl-

vania, the Third Circuit undertook to apply Pennsyl-

vania law based on its prior holdings in Brown v.

Caterpillar Tractor Co., 741 F.2d 656 (3d Cir. 1984)

[Brown II], and Brown v. Caterpillar Tractor Co.,

696 F.2d 246 (3d Cir. 1982) [Brown I].

With the decision in Bynum v. FMC Corporation,

770 F.2d 556 (5th Cir., 1985) a conflict has developed

as to whether state law is applicable as posited by the

24

Third Circuit in this case, or whether “federal com-

mon law’’ is applicable. Bynum, T70 F.2d 567-578.

However, if the Third Circuit was correct to apply

Pennsylvania law the Circuit Court failed to apply

fully all of the applicable law. In Brown v. Caterpillar

Tractor Co., 741 F.2d 656 (3d Cir. 1984) [Brown IT],

after plaintiff’s appeal from a defense verdict, the cir-

cuit reaffirmed the applicability of the principles of

Section 402A [Restatement of Law (Torts) IT]. Spe-

cifically the Court ruled it was error to instruct the

jury that if they found the Army knew of the danger

of operating the bulldozer without the appropriate

protective device, then Caterpillar was not liable for

plaintiff’s injury. 741 F.2d at 659-661.

The court explained that Pennsylvania’s concern is

that manufactured products be free from defects as

of the time of manufacture, regardless of whose hands

they subsequently fall into, and the responsibility of

the manufacturer runs to the ultimate consumer in

accordance with Pennsylvania struct liability policy of

risk spreading, pointing out that ‘“‘the risk remains

with the manufacturer unless actually assumed by the

user.’’ 741 F.2d at 660.

Boeing’s failure to adivse the Army, its pilots and

mechanics, of the relationship between pinion shaft

displacement and synch shaft displacement, with its

potentially disastrous consequences, rendered the CH-

47C defective under Pennsylvania law. The facts in

this case do not even reach the level of proof in Brown

IT, where evidence showed that notice had been given

to the Army, and the Circuit Court remanded to see

if the information Caterpillar gave to the Armv was

sufficiently effective. 741 F.2d at 661.

25

In Brown II, the Circuit Court stated, somewhat

simplistically, that ‘‘the issue in a design defect case

is whether the design of the product is or is not that

called for by the specifications.’ 741 F.2d at 662.

But the evidence was clear that there was no gov-

ernment performance specification which mandated or

even referred to the size of the clearance between the

synch shaft and the fuselage structure at Station 120;

the final detail specification made no reference to the

clearance. The clearance could only be determined by

reference to certain drawings.

Defectiveness is solely a function of the condition in

which the product is delivered to the consumer. Ham-

mond v. International Harvester Co., 691 F.2d 646,

652 (3d Cir. 1982). Certainly, the clearance was an

**objectively definable condition inherent in the product

itself * * * ’’ Id. at 650, which had been carried over

from the original design to the manufacture of heli-

copter 22292. The government’s mission requirements,

to which Boeing designed the CH-47, did not call for

Boeing to build a defectively designed helicopter. Fos-

ter v. Day and Zimmerman, Inc., 502 F.2d 867, 874,

n. 5 (8th Cir. 1974).

Thus, the Cireuit Court, under Pennsylvania law,

should have applied the law of the Brown case with

equal vigor and let stand the jury’s verdict that heli-

copter 22292 was defective because the clearance be-

tween the No. 1 shaft and Station 120 was inadequate.

CONCLUSION

For the reason set forth, it is respectfully submitted

that this Petition for Certiorari be granted.

26

Respectfully submitted,

Pup SILVERMAN, Esq.

Spetser, Krause & Mapo.e

1216 Sixteenth Street, N.W.

Washington, D.C. 20036

(202) 223-8501

Attorney for Petitioner

Cheryl Ann Eschler, e¢ al.