Petition for Writ of Certiorari — Proctor v. United States

In THE

Supreme Court of the Gnited States

Octoser Term, 1985

LESLIE WALPOLE PROCTOR, et al.,

Petitioners,

vs.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

HUGH C. GRIFFIN*

WILLIAM P. BUTLER

WALLACE E. MALONEY

PHILIP M. FOSS

LORD, BISSELL & BROOK

115 South LaSalle Street

Chicago, Illinois 60603

(312) 443-0700

Counsel for Petitioners

* Counsel of Record

Photex — 444 North Wabash Avenue — Chicago 60611 — 321-0223

i

QUESTION PRESENTED FOR REVIEW

Did this Court intend its discretionary function holding

in the Varig Airlines case! to immunize any and all neglli-

gent conduct by every federal regulatory agency employee

engaged in carrying out a regulatory function, no matter

how operational and violative of the agency’s own policies

and directives the employee’s conduct may be?

1 United States v. S.A. Empresa de Viacao Aerea Rio Grandense

(Varig Airlines), 467 U.S. 797, 104 S. Ct. 2755, 81 L. Ed. 2d 660

(1984).

il

TABLE OF CONTENTS

QUESTION PRESENTED FOR REVIEW ...

TABLE OF AUTHORITIES .................

OPINIONS BRIO hccsscsscacuseaene eee

SURES ENON oisvviens cu ngaeneeie ees

APPLICABLE STATUTORY PROVISIONS ...

STATEMENT OF THE CASE ...............

REASONS RELIED ON FOR

ALLOWANCE OF THE WRIT:

I,

THE COURTS OF APPEAL ARE IN PA-

TENT CONFLICT AND DISAGREEMENT AS

TO THE INTERPRETATION OF THIS

COURT’S HOLDING IN THE VARIG AIR-

LINGS CARE. .50sciuswenean eee

A. Decision In Velie 4...<ssis55esee eee

B. The Factual Allegations In The Case At

Bar Are Totally Different Than The Facts

In VOOR ..\iv0iveavent eee

C. Conflict In Decisions After Varig .....

Fa.

THE GOVERNMENT’S ATTEMPT TO CON-

VERT THE DISCRETIONARY FUNCTION

EXCEPTION TO A “REGULATORY” FUNC-

TION EXCEPTION SHOULD NOT BE AL-

LOWED WITHOUT REVIEW AND AP-

PROVAL BY THIS COUR. <6 <ciccessuas ss

CONCLUSION ......ccscecocccccecsek ee

ill

TABLE OF AUTHORITIES

: Cases

Alabama Elec. Co-op, Inc. v. United States, 769

F.2d 1623 (llth Cir. 1985) ................

Andrulonis v. United States, 593 F.Supp. 1336

i a week yp pedcen shee eek N we

Berman v. United States of America (N.D. Ga.

Ns RENEE RUAR Ss SNRKK SORA GRAR ES OOO WA

Canadian Transport Co. v. United States, 663 F.2d

8 a Se ee eee

Collins v. United States, 783 F.2d 1225 (5th Cir.

DET NGSEASSAKSR ER REAS DASE SACRA CSAR RK EAAS

Dalehite v. United States, 346 U.S. 15, 73 S Ct.

966, 97 L. Ed. 2d 1427 (1953) .............

Ducey v. United States Coast Guard, 713 F.2d 504

i uae ek db ewenanees

Eastern Airlines Inc. v. Union Trust Co., 221 F.2d

62 (D.C. Cir. 1955) (en banc), affd sub nom.,

United States v. Union Trust Co., 350 U.S. 907

Te hk s ohh ehh bioe

General Public Utilities Corp. v. United States, 745

F.2d 239, U.S. cert. den. 105 S. Ct. 1227 (8d

eG ECWAGKR Gas a HALAS AA 64 RRwA CAA Ss

Griffin v. United States, 500 F.2d 1059 (8d Cir.

1s Ses PUES ee eee

Gross v. United States, 676 F.2d 295 (8th Cir.

ck ah ewciaeee

eR ee an ee

PAGE

13

13

13

17

13, 17

co

17

12

16, 17

16

iv

Indian Towing v. United States, 350 U.S. 61, 76

S. Ct. 122, 100 L. Ed. 2d 48 (1955) ....... 9

Lindgren v. United States, 665 F.2d 978 (9th Cir.

| RO er te i ar en a eee 16

Marine Coal Transport Corp. v. United States,

ee ei es Bua cae Geile kos 13, 14, 15

McBeath v. Inter-American Citizens for Decency

Committee, 374 F.2d 359 (5th Cir. 1967) ..... 17

McGarry v. United States, 549 F.2d 587, U.S.

cert. den. 4384 U.S. 922 (9th Cir. 1977) ..... 16

McMichael v. United States, 751 F.2d 303 (8th Cir.

re Oe Pr ree Pt rr eae 13

Russell v. United States, 763 F.2d 786 (10th Cir

Ry eae cm y avy Pea Nine Pt epee! 12

Schindler v. United States, 661 F.2d 552 (6th Cir

ee Fa ee ee Lar oe 16, 17

United States v. S.A. Empresa de Viacao Aerea

Rio Grandense (Varig Airlines), 467 U.S. 797,

104 S. Ct. 2755, 81 L. Ed. 2d 660 (1984) ....

Waymire v. United States of America, (D.Ct. Kan.

SEDs kc 5 nb va CASA WERE hea aaween 12

In THE

Supreme Court of the United States

Octoser Term, 1985

LESLIE WALPOLE PROCTOR, et al,

Petitioners,

VS.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Petitioners, Leslie Walpoie Proctor, et al.,2 pray that

a Writ of Certiorari issue to review the judgment and

opinion of the United States Court of Appeals for the

Ninth Circuit. The Court of Appeals upheld the District

Court’s dismissal of Petitioners’ Complaint by interpreting

this Court’s decision in Varig v. United States, 104 S. Ct.

2755 (1984) to immunize the United States against any

and all operational misconduct of Federal Aviation Admin-

2 The Petitioners are Leslie Walpole Proctor, individually and as

representatives of those Underwriters at Lloyd’s, London, and

those insurance companies, domestic and foreign, subscribing to

Policy No. 551/BM1579 which insured a certain Lockheed Tri-Star

L-1011 aircraft, Registration HZ-AHK, owned by Saudi Arabian

Airlines.

=

istration employees whose negligent inspection of an air-

craft cargo compartment design violated the FAA’s own

policies and directives and proximately caused Petitioners’

loss.

OPINIONS BELOW

The Opinion of the Ninth Circuit Court of Appeals is

not yet reported and is printed in the Appendix hereto

(App. 1-3).:The District Court’s unpublished Memorandum

Order granting the government’s Motion to Dismiss the

Complaint, on the ground that no set of facts could ever

be proved entitling Petitioners to any relief, is also printed

in the Appendix (App. 4-9).

JURISDICTION

The Opinion and judgment of the Ninth Circuit Court

of Appeals was entered on January 28, 1986. This Peti-

tion is timely filed within 90 days of that date, 28 U.S.C.

§2101(c). Federal jurisdiction is claimed under 28 U.S.C.

§1346(b) and the Federal Tort Claims Act, 28 U.S.C.

§2671, et seg. The statutory provision granting jurisdic-

tion to this Court is contained in 28 U.S.C. §1254(1) as

follows:

“Cases in the court of appeals may be reviewed by

the Supreme Court by the following methods:

(1) By writ of certiorari granted upon the petition

of any party to any civil or criminal case, before

or after rendition of judgment or decree.”

=

APPLICABLE STATUTORY PROVISIONS

28 U.S.C. §1346(b)

United States As Defendant

* * *

(b) Subject to the provisions of Chapter 171 of this

title, the district courts together with the United

States District Court for the District of the Canal

Zone and the District Court of the Virgin Islands,

shall have exclusive jurisdiction of civil actions on

claims against the United States, for money damages,

accruing on or after January 1, 1945, for injury or

loss of property, or personal injury or death caused

by the negligent or wrongful act or omission of any

employee of the Government while acting within the

scope of his office or employment, under circum-

stances where the United States, if a private per-

son, would be liable to the claimant in accordance

with the law of the place where the act or omission

occurred.

28 U.S.C. §2674

Liability Of United States

The United States shall be liable, respecting the pro-

visions of this title relating to tort claims, in the same

manner and to the same extent as a private indi-

vidual under like circumstances, but shall not be

liable for interest prior to judgment or for punitive

damages.

If, however, in any case wherein death was caused,

the law of the place where the act or omission com-

plained of occurred provides, or has been construed

to provide, for damages only punitive in nature, the

United States shall be liable for actual or compen-

aillicees

satory damages, measured by the pecuniary injuries

resulting from such death to the persons respective-

ly, for whose benefit the action was brought, in lieu

thereof. June 25, 1948, c. 646, 62 Stat. 983.

28 U.S.C. §2860(a)

Exceptions

The provisions of this chapter and section 1346(b) of

this title shall not apply to—

(a) any claim based upon an act or omission of an

employee of the Government, exercising due care, in

the execution of a statute or regulation, whether or

not such statute or regulation be valid, or based upon

the exercise or performance or the failure to exer-

cise or perform a discretionary function or duty on

the part of a federal agency or an employee of the

Government, whether or not the discretion involved

be abused.

-

STATEMENT OF THE CASE

This case arises out of a fatal fire which began in the

aftmost cargo compartment of an FAA-certified Lockheed

L-1011 Tri-Star aircraft. The relevant facts, which must

be viewed in a light most favorable to Petitioners in connec-

tion with Respondent’s motion to dismiss, are as follows:

Airplane Accident Giving Rise

To Petitioners’ Claim

On August 19, 1980, exactly one year after its manufac-

ture and delivery as a new aircraft, a Lockheed L-1011

“Tri Star” aircraft, serial no. 1169, operating as Saudi

Arabian Airlines Flight 163, departed Karachi, Pakistar.

for Jeddah, Saudi Arabia, with an interim stop in Riyadh,

Saudi Aravia. CR 1 para. 9.

Investigators have concluded that shortly after takeoff

from Riyadh for the second leg of its flight, fire broke

out in the aircraft’s aftmost cargo department. The fire

did not remain confined to the cargo department, and

smoke, fumes and flames soon entered the aircraft cabin

through the floor of the cabin. While the aircraft ulti-

mately managed to make an emergency landing at Riyadh,

toxic gases from the fire permeated the passenger cabin,

causing the death of all 301 passengers and crew. Fire

then destroyed the aircraft. Jd.

Loss Attributed To The Failure

Of Cargo Compartment To Meet FAA

Requirements For Fire Containment

Post-accident investigation concluded that the cause of

loss was the failure of the aircraft’s “Class D’’ 700 cubic foot

we

cargo compartment to meet the specific fire containment

regulations set forth in the applicable Federal Aviation

Regulations, 14 C.F.R. §25.857(d).%

FAA Employees Conducted Actual

Compliance Inspections Of The L-1011 Cargo

Department Design, But Did So Negligently

The Lockheed “Tri Star” L-1011 involved in this case

was one of 244 similar “Tri Stars” built by Lockheed Air-

craft Corporation in Palmdale, California. Prior to the

tragic fire at Riyadh on August 19, 1980, the design bases

for cargo compartments on all 244 L-1011 aircraft were

inspected, approved, and certified by FAA personnel as

meeting each of the requirements set forth in 14 C.F.R.

25.857(d). The FAA did not delegate this matter to the

aircraft manufacturer, Lockheed. On the contrary, limited

document discovery (prior to Magistrate’s order cutting

off further discovery) has shown that the FAA’s policy

in this instance was to make a complete and thorough in-

spection and that FAA inspectors made detailed inspec-

tions of all aspects of the cargo compartment’s design and

actually defended the Lockheed design from criticism lodged

by certifying authorities in the United Kingdom while re-

viewing the design. FAA personnel also performed ground

and flight inspections of an actual cargo compartment on

a prototype L-1011 aircraft. These various inspection activ-

ities are documented on FAA forms signed by the FAA

employees and representatives that conducted them.*

3 Copy of Regulations contained in Appendix hereto (App. 9).

4 The specific FAA personnel involved in said inspections had

been identified and their depositions noticed at the time the Dis-

trict Court Magistrate granted the government’s motion to stay

all discovery pending disposition of its motion to dismiss.

px

Petitioners’ complaint alleged and Petitioners are

prepared to prove that the FAA inspectors performed

their inspections in a highly negligent manner and ap-

proved the design of the 700 cubic foot cargo compart-

ment on the L-1011 when they knew or should have

known that said design did not meet the FAA’s Class D

requirements.5 CR 1 para. 9.

The FAA Employees’ Negligence

Caused Petitioners’ Loss

Petitioners’ complaint alleged and Petitioners are pre-

pared to prove that Petitioners’ subrogor, Saudi Arabian

Airlines, relied upon the FAA’s inspection of the L-1011

cargo compartment and its certification that said compart-

ment met the fire containment requirements set forth in

14 C.F.R. 25.857(d). CR 1 para. 9. In fact, FAA certifica-

tion was a condition of sale in Saudi Arabian Airlines’ pur-

chase contract with Lockheed, and a certificate of FAA

inspection was prominently displayed in each L-1011 air-

craft upon delivery to Saudi Arabian Airlines.

If the FAA inspectors had exercised reasonable care in

the performance of their inspection, the aircraft would not

have been certified and would not have been purchased

by Saudi Arabian Airlines, or the cargo compartment

would first have been redesigned to meet the Class D

5 For example, discovery has incredibly revealed that at the time

the FAA personnel inspected and approved the L-1011 700 cubic

foot —_ compartment as meeting the fire suffocation require-

ments of 14 C.F.R. 25.857(d), the FAA had already conducted tests

which showed that even a 500 cubic foot compartment was too

large and contained too much oxygen to suffocate a cargo com-

partment fire and would not prevent such a fire from reaching

the aircraft cabin.

= =

requirements. In either event, the loss would not have

occurred and Petitioners would not have been damaged.

CR 1 para. 10, 11 and 17.

-

District Court

The District Court dismissed the action on the pleadings

without even allowing discovery to determine the full ex-

tent of the FAA employees’ negligence and violation of

the FAA’s own policy directives, citing this Court’s deci-

sion in United States v. S.A. Empresa de Viacao Aerea

Rio Grandense (Varig Airlines), et al., 467 U.S. 797, 104

S. Ct. 2755, 81 L. Ed. 2d 660 (1984). In the District

Court’s view, discovery to determine the actual facts of

the FAA’s conduct was properly denied since under its

interpretation of Varig, the discretionary function excep-

tion to the Federal Tort Claims Act (FTCA) makes “the

entire FAA certification process immune from potentiai

tort liability.”’ (App. 7)

Court Of Appeals

The Court of Appeals for the Ninth Circuit summarily

affirmed the District Court, citing Varig as controlling

(App. 2).

=

REASONS RELIED ON

FOR ALLOWANCE OF THE WRIT

I.

THE COURTS OF APPEAL ARE IN PATENT CON-

FLICT AND DISAGREEMENT AS TO THE INTERPRE-

TATION OF THIS COURT’S HOLDING IN THE VARIG

AIRLINES CASE.

A. Decision In Varig.

On June 19, 1984, this Court rendered its Opinion in

United States v. S.A. Empresa de Viacao Aerea kio

Grandense (Varig Airlines), 467 U.S. 797, 104 S. Ct. 2755,

81 L. Ed. 2d 669 (1984). Citing its prior decisions deline-

ating between discretionary and non-discretionary conduct,

Dalehite v. United States, 346 U.S. 15, 73 S. Ct. 956, 97

L. Ed. 2d 1427 (1953) (discretionary function exception pro-

tected government’s policy and plan for labeling, bagging

and storing explosives) and Indian Towing v. United

States, 350 U.S. 61, 76S. Ct. 122, 100 L. Ed. 2d 48 (1955)

(discretionary function exception did not protect govern-

ment from liability for negligence in inspection, mainte-

nance and repair of lighthouse once it exercised its discre-

tion to build it),® this Court held that the discretionary

function exception to the Federal Tort Claims Act applied

to the FAA’s discretionary policy decision to conduct a

“spot check” of the design of the aircraft (Boeing 707)

involved in that case.

6 See also Eastern Airlines Inc. v. Union Trust Co., 221 F.2d

62 (D.C. Cir. 1955) (en banc), affd sub nom., United States v.

Union Trust Co., 350 U.S. 907 (1955) (negligence of a FAA con-

trol tower operator not within discretionary function exception).

a

Under this spot check policy, FAA officials, due to man-

power and budgetary limitations, had decided to forego

inspection of certain elements of the Boeing 707 design

and to rely solely on the airplane manufacturer to comply

with the applicable regulations in designing those aspects

of the aircraft.

The Varig Court set forth the following two deter-

minative factors in the discretionary function analysis (104

S. Ct. at 2765):

“First, it is the nature of the conduct, rather than

the status of the actor, that governs whether the

discretionary function exception applies in a given

case . . . Thus the basic inquiry concerning the ap-

plication of the discretionary function exception is

whether the challenged acts of a Government em-

ployee—whatever his or her rank—are of the nature

and quality that Congress intended to shield from

tort liability.

“Second, whatever else the discretionary function ex-

ception may include, it plainly was intended to en-

compass the discretionary acts of the Government

acting in its role as a regulator of the conduct of

private individuals. . . Congress wished to prevent

qudicial ‘second guessing’ of legislative and adminis-

trative decisions grounded in social, economic and

political policy through the medium of an action in

tort.”” (Emphasis added)

Applying these factors to the facts at hand, the Varig

Court concluded that the discretionary function plainly ap-

plied to the FAA’s “‘spot-check” policy, stating (104 S.

Ct. at 2768):

“Here, the FAA has determined that a program of

‘spot-checking’ manufacturers’ compliance with mini-

mum safety standards best accommodates the goal

of air transportation safety and the reality of finite

Geciinen

agency resources. Judicial intervention in such deci-

sion making through private tort suits would require

the courts to ‘second-guess’ the political, social, and

economic judgments of an agency exercising its regu-

latory function.” (Emphasis added)

B. The Factual Allegations In The Case At Bar Are Totally

Different Than The Facts In Varig.

The determinative facts of the Varig decision concern-

ing the FAA’s “spot check’”’ policy for the different air-

craft involved in that case and the factual aliegations upon

which Petitioners’ complaint is based in the instant case

could not be more contrary.

Petitioners’ complaint allegations do not challenge the

sufficiency of any policy, discretionary decision or regula-

tory scheme of the United States or the FAA. Nor do

petitioners challenge any FAA determination not to in-

spect or to spot check or to defer inspection to the manu-

facturer or to some other entity. On the contrary, the al-

legations of the instant compiaint are: 1) that the FAA’s

policy decision in this instance was not to follow a “‘spot-

check” procedure but to conduct a detailed inspection of

the L-1011 cargo department design for compliance with

the applicable fire containment regulations in 14 C.F.R.

25.857(d); 2) that the FAA inspectors charged by the FAA

with performing such inspections violated FAA policy by

conducting their inspections in a negligent and careless

manner with the result that they certified the cargo com-

partment as com>lying with the said fire containment

regulations when such compliance did not exist; 3) that

these negligent inspection activities by FAA personne!

caused petitioners’ subrogor, who relied on that FAA in-

spection, to suffer the loss for which this action is brought.

CR 1 para. 9, 10, 11 and 17.

=

C. Conflict In Decisions After Varig.

In the two years since this Court’s decision in United

States v. S.A. Empresa de Viacao Aerea Rio Grandense

(Varig Airlines), 467 U.S. 797, 104 S. Ct. 2755, 81 L. Ed.

2d 660 (1984), there has literally been a morass of diver-

gent Court of Appeal and District Court decisions as to

its meaning.

All Regulatory Activity Protected. Some courts, like the

Ninth Circuit in the case at bar, have interpreted Varig

to confer a blanket of immunity over any and all negli-

gent conduct by every federal regulatory agency employee

engaged in carrying out a regulatory function, no matter

how nondiscretionary and violative of the agency’s own

policies and directives the employee’s conduct might happen

to be. E.g., Hylin v. United States, 755 F.2d 551 (7th Cir.

1985) and Russell v. United States, 763 F.2d 786 (10th

Cir. 1985) (Varig discretionary function exception applies

to negligent inspection activities by Mine Safety and

Health Administration (MSHA) employees); General Pub-

lic Utilities Corp. v. United States, 745 F.2d 239 US.

cert. den. 105 S. Ct. 1227 (3d Cir. 1984) (Varig discre-

tionary function exception applies to negligent inspection

activities by Nuclear Regulatory Commission employee in-

specting nuclear plant); Waymire v. United States of

America, (D.Ct. Kan. 1/14/86) (Civ. No. 84-2428) (FAA pro-

tected by discretionary function exception for negligent

inspection activities of its employees, relying on Proctor.)

All Regulatory Activity Not Protected. Other courts have

interpreted Varig in the manner that Petitioners urge

here and have held that it is the nature and quality of

the regulatory employee’s conduct that should be examined,

not his status, and therefore acts of negligence that are

not discretionary and in fact violate the regulatory agen-

—138—

vo

cy’s own policies are not protected. Collins v. United

States, 783 F.2d 1225 (5th Cir. 1986) (Varig discretionary

function exception did not apply to protect negligent mine

inspection by employee of MSHA); Alabama Elec. Co-op,

Inc. v. United States, 769 F.2d 1523 (11th Cir. 1985) (Varig

discretionary function exception did not apply to protect

negligent design decisions on the part of an engineer with

Army Corps of Engineers); McMichael v. United States,

751 F.2d 303 (8th Cir. 1985) (Varig discretionary function

exception did not apply to negligence of Defense Depart-

ment inspectors who violated the Department’s inspection

policies); Andrulonis v. United States, 593 F.Supp. 1336

(N.D.N.Y. 1984) (discretionary function exception did not

apply to negligence by employee of Federal Center for

Defense while carrying out his responsibilities under a

federal wildlife immunization program); Berman v. United

States of America, (N.D. Ga. 1/4/85) (Civ. Act. C80-1479A,

C81-301A) (various acts of negligent conduct by FAA em-

ployees with respect to the administration of a flight test

was not protected by Varig discretionary function excep-

tion); Marine Coal Transport Corp. v. United States, (S.D.

N.Y. 5/31/85) (84 Civ. 5265) (Varig discretionary function

exception did not apply to negligent vessel inspection con-

ducted by Coast Guard employees).

The conflict in decisions was best summed up by the

Fifth Circuit in Collins v. United States, supra, rejecting

the contrary holding of the Seventh Circuit in Hylin v.

United States, supra, and stating (783 F.2d at 1229 n. 3):

“To the extent that the holding in Hylin v. United

States, 755 F.2d 551, 554 (7th Cir. 1985) (per curiam)

supports the government’s position, we find it unper-

suasive. .. . We disagree with Hylin. . . . that the

presence of discretion in any aspect of the regulatory

process means that at any stage of it negligent con-

duct is within §2680(a).’’ (Emphasis added)

="

The issue was also well-framed by the District Court

in Marine Coal Transport Corp. v. United States, supra,

(Shp Opinion, pp. 4-5):

“Plaintiffs contend that the instant ease is distinguish-

able from Varig. Plaintiffs purport not to ‘challenge

any policy decision or discretionary act of the United

States Coast Guard.’ Rather, plaintiffs ‘allege that

the Coast Guard’s duly appointed inspectors negli-

gently failed to act in conformity with delegated au-

thority and with long established procedures imple-

mented under the Coast Guard statutory mandate to

inspect merchant vessels. Plaintiffs thus claim to pre-

sent the factual scenario which Varig itself distin-

guished: A government employee’s negligent execu-

tion of a discretionary safety compliance program.

Such a claim, plaintiffs argue, raises only the issue

of individual negligence and does not challenge, as

plaintiffs claim in Varig necessarily did, the social

wisdom, political practicability or economic expediency

of an agency’s regulatory scheme. Varig is distin-

guishable on the ground plaintiffs articulate .. .

Whether this distinction will ultimately be sustained

will depend on the Supreme Court’s evaluation as

to the extent to which it undercuts the reasoning in

Varig.”’ (Emphasis added).

This distinction of Varig is exactly the distinction urged

by Petitioners and rejected by the Court of Appeals in

this case. Petitioners here essentially alleged that duly

appointed FAA inspectors negligently failed “to act in con-

formity with their delegated authority and with estab-

lished procedures” which in this case dictated a complete

and thorough examination of the L-1011 cargo compart-

ment design and thus presented the factual scenario of

a government employee’s “negligent execution of a discre-

tionary safety compliance program.”

_

in sum, the instant case squarely presents the very

issue on which the Circuit Courts of Appeals and the Dis-

trict Courts cannot agree after Varig. As the Marine Coal

Transport Corp. decision correctly notes, such a conflict

over the meaning of a decision of this Court can only be

resolved by this Court. Thus, to give needed guidance to

the federal bench and bar on this recurring issue and to

stop the burgeoning growth of conflicting decisions, we

urge this Court to act now to resolve the conflict by

granting the Writ of Certiorari sought herein.

Il.

THE GOVERNMENT’S ATTEMPT TO CONVERT THE

DISCRETIONARY FUNCTION EXCEPTION TO A “REGD-

LATORY”’ FUNCTION EXCEPTION SHOULD NOT BE

ALLOWED WiTHOUT REVIEW AND APPROVAL BY

THIS COURT.

As the post-Varig cases makes clear, the government has

attempted to use Varig to escape Federal Tort Claim Act

liability in virtually every case where the negligent gov-

ernment employee (no matter how ministerial, operational

and non-discretionary his negligent conduct) was employed

by a federal regulatory agency involved in carrying out

a regulatory function. Thus, in the case at bar, the govern-

ment’s Court of Appeals’ brief was candid to state that

its position was not just that all negligence by FAA em-

ployees engaged in the aircraft certification process was

protected by the discretionary function exception, but

rather that the government could not be held liable in

tort in any case “for carrying out its regulatory duties”

(Appellee Br. 26-27).

Significantly, because of this all encompassing interpre-

tation of Varig, the government did not even attempt to

rebut Petitioners’ contention below that adoption of the

sae: emcees ia meaaaS raat areas

==

government’s view in the instant case would mean that

if during the course of an FAA certification test flight

an FAA pilot’s negligence caused the aircraft to crash kill-

ing 100 people, the government would be immune from

suit simply hecause at the time of the accident the FAA

was involved in the “certification process.” Similarly, the

FAA would also be protected where an FAA employee,

ordered to perform a specific inspection, instead kept one

eye or both on the T.V. or even took the afternoon off

and went to the Rams game.’ The government did not

respond to these examples because this is precisely what

it wants the law to be after Varig.

This Court in Varig gave no indication of such an

ominous holding. Such a broad proposition and interpre-

tation of Varig would overrule literally scores of prior

decisions upholding Federal Tort Claim Act liability for

negligent, nondiscretionary misconduct by federal regula-

tory agency employees. E.g., Lindgren v. United States,

666 F.2d 978 (9th Cir. 1982) (Bureau of Reclamation);

McGarry v. United States, 549 F.2d 587 U.S. cert. den.

434 U.S. 922 (9th Cir. 1977) (Atomic Energy Commission);

Griffin v. United States, 500 F.2d 1059 (8d Cir. 1974) and

‘Schindler v. United States, 661 F.2d 552 (6th Cir. 1981)

(Department of Health, Education and Welfare); Gross v.

United States, 676 F.2d 295 (8th Cir. 1982) (Agricultural

Stabilization and Conservation Service Committee).

Such an interpretation of Varig also overrules the here-

tofore unanimous decisions (relied upon by Petitioners

below) holding that no discretionary function decision

should be made without a full hearing to determine the

7 We believe the evidence will show the negligence of the FAA

inspectors in the instant case to be just as irresponsible and as

violative of the FAA’s own policies as this example.

=, =

jurisdictional facts as was done in Varig. E.g., Canadian

Transport Co. v. United States, 663 F.2d 1081, 1093 (D.C.

Cir. 1980) (summary judgment reversed and case remanded

for further proceedings to establish facts relating to govern-

ment’s claim that Coast Guard was making ‘“‘policy judg-

ments” protected by 2680(a)); Schindler v. United States,

661 F.2d 552, 557 (6th Cir. 1981) (whether or not agency

decision complained of protected by §2680(a) requires further

factual analysis and perhaps expert testimony); McBeath

v. Inter-American Citizens for Decency Committee, 374

F.2d 359, 363 (5th Cir. 1967) (error for trial court to grant

12(bX1) motion without opportunity for full proof on merits

when question of jurisdiction was so “inextricably con-

nected with the merits of the case itself’’); Ducey v.

United States Coast Guard, 713 F.2d 504, 515 (9th Cir.

1983) (case remanded for examination of whether duty to

warn of or guard against hazards on facts of case fell within

discretionary function exception).

Before Varig, almost all courts rejected the govern-

ment’s claim that the discretionary function exception in

28 U.S.C. §2680(a) acts to ‘‘exclude all claims arising from

acts of a regulatory nature,” Griffin v. United States,

supra, 500 F.2d at 1063. Since Varig, many courts have

still rejected the government’s argument as violative of

the very purposes of the Federal Tort Claims Act (See

Point I supra). Indeed, acceptance of the government’s

broad brush application of Varig to encompass all regula-

tory function activity would change the discretionary func-

tion exception from an exception for policy type decisions

to an all encompassing rule whereby the government is

insulated from “nearly all tort liability,” thereby emascu-

lating the very purposes of the Federal Tort Claims Act.

Collins v. United States, supra, 783 F.2d at 1234 (con-

curring opinion).

—18—

At the very least, this Court, which decided Varig, should

be the one to decide whether the government’s pervasive

interpretation of Varig is correct. An interpretation of the

discretionary function exception that would make it a

means by which Federal Tort Claims Act liability is nulli-

fied for any and all negligent conduct by government em-

ployees of regulatory agencies—even where that conduct

contravenes the very regulatory policies, standards and

procedures under which the employee is acting—should

not become the law of the land without review by this

Court.

CONCLUSION

To resolve the patent conflict between the Circuit

Courts of Appeal as to the meaning of this Court’s hold-

ing in the Varig case as well as to decide the important

issue of whether all federal regulatory agency negligence

is protected by the discretionary function exception to the

Federal Tort Claims Act, Petitioners respectfully request

that a Writ of Certiorari issue to review the judgment

and opinion of the Ninth Circuit Court of Appeals herein.

Respectfully submitted,

HUGH C. GRIFFIN *

WILLIAM P. BUTLER

WALLACE E. MALONEY

PHILIP M. FOSS

LORD, BISSELL & BROOK

115 South LaSalle Street

Chicago, Illinois 60603

(312) 443-0700

Counsel for Petitioners

* Counsel of Record

APPENDIX

INDEX TO APPENDIX

Opinion of the Court of Appeals for the Ninth

Circuit, rendered January 28, 1986 ..... App. 1

Memorandum Order of the U.S. District Court

for Central District of California, rendered

TE UES eS 5506000 cc cesccce App. 4

Relevant Federal Aviation Regulations ..... App. 10

App. 1

Opinion Of Court Of Appeals

Rendered January 28, 1986

[Filed January 28, 1986]

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 84-6339

D.C. No. CV 83-3415-AWT

LESLIE WALPOLE PROCTOR, et al, )

Plaintiffs-Appellants,

v. ) OPINION

)

UNITED STATES OF AMERICA, )

Defendant-Appellee. )

Appeal from the United States District Court

for the Central District of California

Honorable A. Wallace Tashima, Presiding

Submitted May 9, 1985,

Before: WRIGHT, ALARCON, and Norris, Circuit Judges

PER CURIAM:

This is an action brought under the Federal Tort Claims

Act (FTCA), 28 U.S.C. §§ 2671-80 (1982), for damages for

loss of an L-1011 aircraft which was destroyed by a fire

that originated in the cargo compartment. Plaintiffs base

their claim that the government is liable on the allega-

App. 2

tion that the Federal Aviation Administration (FAA) neg-

ligently inspected the cargo compartment for fire safety

in the process of certificating the aircraft. The district

court dismissed the action pursuant to Fed. R. Civ. P.

12(bX1) for lack of subject matter jurisdiction, ruling that

the action was barred by sovereign immunity because the

FAA’s conduct in certificating the aircraft fell within the

discretionary function exemption of the FTCA. 28 U.S.C.

§2680(a) (1982). We affirm.

In our view this case is controlled by United States v.

S.A. Empresa de Viacao Aerea Rio Grandense (Varig Air-

lines), 104 S.Ct. 2755 (1984), and Natural Gas Pipeline

Company of America v. United States, 742 F.2d 502 (9th

Cir. 1984). In Varig plaintiffs alleged that FAA inspec-

tors negligently failed to inspect the lavatory trash recep-

tacle during an inspection of plaintiffs’ aircraft, resulting

in the spread of a fire in-flight and the destruction of the

aircraft. The Supreme Court ruled that both the FAA

decision to apply a ‘‘spot-check” system of compliance

review, and the application of the “spot-check”’ system

to the particular aircraft were protected by the discre-

tionary function exemption. 104 S.Ct. at 2768. The Court

reasoned that since the extent of a given inspection is

entirely within the discretion of the FAA employee on-

site there could be no governmental liability under sec-

tion 2680(a). 104 S.Ct. at 2767-68.

In Natural Gas Pipeline this court held that Varig was

controlling precedent in a case involving alleged FAA neg-

ligence in failing to discover defects in an aircraft modifica-

tion process during periodic inspections of a modification

plant. Our court, citing Varig, held that a “challenge to

the FAA’s execution of its responsibility by failing to dis-

cover the defects sooner and failing to adequately monitor

App. 3

the [aircraft manufacturing] operation is barred by the dis-

cretionary function exemption [to the FTCA.]” 742 F.2d

at 504-05.

Plaintiffs attempt to distinguish Varig and Natural Gas

Pipeline on the ground that this case involves alleged

FAA negligence in the actual inspection of a discrete part

of the aircraft, namely, the cargo compartment. We dis-

agree that this is a legally significant distinction. Although

Varig involved an alleged negligent failure to inspect, the

Supreme Court wrote broadly in concluding that ‘the

discretionary function exemption precludes a tort action

based on the conduct of the FAA in eertificating . . . air-

craft for use in commercial aviation.” 104 S.Ct. at 2766.

In Natural Gas Pipeline our court held that Varig con-

trols a case of alleged negligence in conducting actual in-

spections for certification of a modification plant. We now

hold that Varig also controls alleged FAA negligence in

the actual inspection of discrete parts of an aircraft.

AFFIRMED.

App. 4

Memorandum Order Of United States District

Court For Central District Of California

Rendered August 21, 1984

[Filed August 21, 1984]

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

No. CV 83-3415 AWT

LESLIE WALPOLE PROCTOR,

etc., et al.,

MEMORANDUM

ORDER

OF

DISMISSAL

Plaintiffs,

V.

UNITED STATES OF AMERICA,

Defendant.

Nm ee ee ee ee ee”

This is an action for property damage and indemnity

arising out of a tragic airplane accident. Plaintiffs are in-

surers who entered into a contract with Saudi Arabian

Airlines Corp. (“SAA”) to insure a certain Lockheed Tri-

Star L-1011 aircraft, registration number HZ-AHK (the

“aircraft”, or “plane’’), for damage to the aircraft and for

liability arising out of its ownership and use. Plaintiffs

allege that on August 19, 1980, the aircraft was on a regu-

larly scheduled flight between Riyadh and Jeddah, Saudi

Arabia, when a fire broke out in the aft part of the plane.

The plane returned to Riyadh airport, but was consumed

by flames. All 301 persons on board the flight were killed.

App. 5

Plaintiff insurers allege that they have paid to their in-

sured, SAA, $45 million in fuil settlement of loss of the

aircraft and over $7 million in good faith settlements of

wrongful death claims. Plaintiffs bring this action as sub-

rogees of SAA for its claims for property damage and

indemnification for payments in settlement of the wrongful

death claims. Jurisdiction is invoked under the Federal

Torts Claim Act, 28 U.S.C. §§ 2671, et seg. (“FTCA”’).

Plaintiffs claim liability on the part of the United States

for the alleged “failure” of employees of the Federal Avia-

tion Administration (“FAA”) “to properly inspect” the air-

craft for compliance with FAA regulations, resulting in

the negligent issuance of a type certification for the air-

craft. In its answer, the United States denied plaintiff's

allegations of negligence and asserted, inter alia, as an

affirmative defense, lack of subject matter jurisdiction,

pursuant to 28 U.S.C. §2680(a), which bars claims against

the United States for discretionary acts of its employees,

whether or not the discretion involved is abused.

Recently, in two actions against the FAA “for its al-

leged negligence in certificating aircraft for use in com-

mercial aviation” the Supreme Court held that the actions

were “barred by the discretionary function exception.”

United States v. S.A. Empressa de Viacao Aerea Rio

Grandense (Varig Airlines), 104 S. Ct. 2755, 2769 (1984)

(“Varig’’). Before the Court is the government’s motion

to dismiss; the sole issue raised by the motion is whether

Varig is controlling.

The Court stated broadly that it granted certiorari in

the two cases “to determine whether the United States

may be held liable under the Federal Tort Claims Act,

28 U.S.C. §§ 2671 et seqg., for the negligence of the Fed-

eral Aviation Administration in certificating . . . aircraft

App. 6

for use in commercial aviation.” Jd. at 2758. In one case,

a fire in the lavatory of a commercial jet resulted in the

death of most of its passengers. Plaintiff alleged that the

Civil Aeronautics Agency, the FAA’s predecessor, had

been negligent when it conducted an inspection and issued

a type certificate for an aircraft which did not comply with

applicable fire standards. The second case concerned an

airplane crash which resulted from an improperly installed

heater and the government’s alleged negligence in cer-

tificating the heater. In holding that both actions were

barred by the discretionary function exception, the Court

stated that the exception “plainly was intended to encom-

pass discretionary acts of the Government acting in its

role as a regulator of the conduct of private individuals.”

Id. at 2765.

The Court then summarized the FAA’s regulatory activ-

ities:

In the exercise of this discretion, the FAA, as the

Secretary’s designee, has devised a system of com-

pliance review that involves certification of aircraft

design and manufacture at several stages of produc-

tion... . The FAA certification process is founded

upon a relatively simple notion: the duty to ensure

that an aircraft conforms to FAA safety regulations

lies with the manufacturer and operator, while the

FAA retains the responsibility of policing compliance.

Thus, the manufacturer is required to develop the

plans and specifications and perform the inspections

and tests necessary to establish that an aircraft

design comports with the applicable regulations; the

FAA then reviews the data for conformity purposes

by conducting a “spot check” of the manufacturer’s

work.

Id. at 2766-67. The Court concluded that the ultimate

responsibility for aircraft safety, and the commensurate

App. 7

liability for aircraft accidents resulting from a breach of

that duty, rested with the aircraft manufacturer rather

than with the government: “The FAA has a statutary

duty to promote safety in air transportation, not to in-

sure it.’’ Id. at 2769 (emphasis in original).

Plaintiffs contend that Varig is distinguishable because

Varig addressed only the propriety of the FAA’s “spot

check” system. Here, plaintiffs do not challenge the pro-

priety of that system, but contend that an inspection,

which is alleged actually to have been performed, was per-

formed negligently. Plaintiffs first note that the Court

stated:

From the records in these cases there is no indica-

tion that either the Boeing 707 trash receptacle or

the DeHavilland Dove cabin heater was actually in-

spected or reviewed by an FAA inspector or repre-

sentative. . . . Respondents thus urge in effect that

the negligent failure of the FAA to inspect certain

aspects of aircraft type design in the process of cer-

tification gives rise to a cause of action against the

United States under the [FTCA].

Id. at 2766. Plaintiffs then argue that since they do not

allege failure to inspect as did respondents in Varig, but

allege a negligently performed inspection, the holding in

Varig does not preclude this action. I must disagree.

Although plaintiffs may well accurately characterize the

position of respondents in Varig, it is clear that the Court

adopted the much broader position urged by the govern-

ment; that is, that the entire FAA certification process

is immune from potential tort liability. Thus, the Court

agreed with the government that “the discretionary func-

tion exception precludes a tort action based upon the con-

duct of the FAA in certificating these aircraft for use in

commercial aviation.” Jd. (emphasis added).

App. 8

Plaintiffs contention that Varig addressed only the pro-

priety of FAA policy directives, rather than employee con-

duct in effectuating such directives, is contrary to the

opinion.

It follows that the acts of FAA employees in ex-

ecuting the “spot check” program in accordance with

agency directives are protected by the discretionary

function exception as well. See Dalehite v. United

States, 346 U.S. at 36. The FAA employees who con-

ducted compliance reviews of the aircraft involved in

this case were specifically empowered to make policy

judgments regarding the degree of confidence that

might reasonably be placed in a given manufacturer,

the need to maximize compliance with FAA regula-

tions, and the efficient allocation of agency resources.

Id. at 2768.

Plaintiffs’ claim of negligent inspection is, in essence,

a claim that the FAA should have conducted a more care-

ful sr thorough inspection of the aircraft system alleged

to have caused the fire. However, Varig insulates from

liability the discretionary judgment of FAA employees as

to the degree of manufacturer oversight deemed necessary

in a given certification. This discretionary judgment en-

compasses decisions to thoroughly check, cursorily check,

or not to check at all a particular aircraft or system in

order to police compliance with the applicable FAA regu-

lations. Liability simply may not be placed on the FAA

in the certification process, as its role merely is to pro-

vide incentive, in addition to that provided by prospec-

tive tort liability, for manufacturers to manufacture safe

airplanes.

A contrary holding would lead to the anomalous situa-

tion where the FAA would be immune from liability under

Varig if it certificated an aircraft without inspection, but

App. 9

would be subject to liability for any certificated aircraft

it did inspect. This would tend to encourage the FAA to

inspect as few aircraft as possible, and would run counter

to the FAA’s statutory responsibility to promote safety

in air transportation and to the public interest. It is the

kind of judicial second guessing Varig counsels courts to

avoid:

Judicial intervention in such decisionmaking through

private tort suits would require the courts to “‘second-

guess”’ the political, social, and economic judgments

of an agency exercising its regulatory function. It was

precisely this sort of judicial intervention in policy-

making that the discretionary function exception was

designed to prevent.

Id.

For the foregoing reasons, I conclude that Varig is con-

trolling; the discretionary function exception to FTCA

jurisdiction precludes this action. Defendant’s motion is

granted and the action is DISMISSED.

Dated: August 21, 1984

/s/ A. Wallace Tashima

United States District Judge

App. 10

Relevant Federal Aviation Regulations

§ 25.857 Cargo compartment classification.

* * * *

(d) Class D. A Class D cargo or baggage compartment

is cne in which—

(1) A fire occurring in it will be completely confined

without endangering the safety of the airplane or the

occupants;

(2) There are means to exclude hazardous quantities of

smoke, flames, or other noxious gases, from any compart-

ment occupied by the crew or passengers;

(3) Ventilation and drafts are controlled within each

compartment so that any fire likely to occur in the com-

partment will not progress beyond safe limits; and

(4) [Reserved]

(5) Consideration is given to the effect of heat within

the compartmert on adjacent critical parts of the airplane.

bor compartments of 500 cu. ft. or less, an airflow of 1500

cu. ft. per hour is acceptable.

—s

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