On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civil No. 81-1090).
Garth and Higginbotham, Circuit Judges, and McCUNE, District Judge.*fn*
A. LEON HIGGINBOTHAM, JR., Circuit Judge.
This an appeal form a final judgment of the district court for appellees Boeing Vertol and its parent, The Boeing Company (collectively referred to as "Boeing"), in a suit brought under the Death on the High Seas Act, 46 U.S.C. §§ 761-768 (1982), by appellant Spiros Koutsoubos, administrator of the estate of James Koutsoubos. Because we find no error of fact or law in the district court's conclusion that Boeing had made out the elements of a "government contractor" defense, we will affirm.
Decedent James Koutsoubos was one of three Navy crewmen killed during a training flight off the Florida coast on March 21, 1979, when the helicopter they were aboard hit the water and turned upside down. Appellant filed suit alleging that the helicopter, manufactured by Boeing for the Navy, was unsafe due to design defects. Boeing moved for summary judgment, contending that government contractors who supply products made to government specifications are shielded from liability to third parties.
In a precise and thoughtful opinion, Judge Pollak ruled that Boeing would have to prove three elements in order to make out this affirmative defense: (1) that the government established the specifications for the helicopter; (2) that the helicopter met the government's specifications in all material respects; and (3) that the government knew as much as or more than Boeing about the hazards of the product. Koutsoubos v. Boeing Vertol, 553 F. Supp. 340 (E.D. Pa. 1982). On the basis of the affidavits and exhibits submitted the district court granted partial summary judgment, finding that the first two elements of the defense had been established. "[T]he Navy chose the 'material' design features for this helicopter; that is, the Navy established the specifications crucial to plaintiff's allegations of defective design. Inspection by the Navy revealed that these specifications had been satisfied." 553 F. Supp. at 344 (footnotes omitted). After a subsequent evidentiary hearing, Judge Pollak found that the third element of the defense had also been established, and therefore entered final judgment for Boeing.
Prior to that hearing, appellant moved for reconsideration of the partial summary judgment, contending that the deposition testimony of two Boeing employees showed that the government had not "established" the helicopter's specifications. Though the district court agreed that some specifications originated with Boeing, it found that these proposals simply initiated a "back-and-forth" discussion between Boeing and the Navy, with the Navy making all final decisions as to the helicopter specifications. Accordingly, the motion for reconsideration was denied. Appellant contends that this denial was reversible error.
It is clear that federal common law provides a defense to liabilities incurred in the performance of government contracts. See, e.g., Yearsley v. W.A. Ross Construction Co., 309 U.S. 18, 84 L. Ed. 554, 60 S. Ct. 413 (1940); Myers v. United States, 323 F.2d 580 (9th Cir. 1963); Dolphin Gardens v. United states, 243 F. Supp. 824 (D. Conn. 1965). This court has not previously had occasion to define the contours of such a defense. Cf. Brown v. Caterpillar Tractor Co., 696 F.2d 246 (3d Cir. 1982) (applying Pennsylvania law). The three-part test adopted by the district court in this case was first announced by Judge Pratt in In re "Agent Orange" Product Liability Litigation, 534 F. Supp. 1046 (E.D.N.Y. 1982), and has since been applied in a number of products liability cases involving military contractors. McKay v. Rockwell International Corp., 704 F.2d 444 (9th Cir. 1983), cert. denied, 464 U.S. 1043, 104 S. Ct. 711, 79 L. Ed. 2d 175 (1984); Shaw v. Grumman Aerospace Corp., 593 F. Supp. 1066 (S.D. Fla. 1984); Schoenborn v. Boeing Co., 586 F. Supp. 711 (E.D. Pa. 1984); Hubbs v. United Technologies, 574 F. Supp. 96 (E.D. Pa. 1983). This court, in dicta, has called Judge Pratt's formulation "attractive". Brown v. Caterpillar Tractor Co., supra, 696 F.2d at 254 n.17. These cases have advanced a number of public policy justifications for the Agent Orange approach, among them:
1. That to hold military contractors liable for design defects could subvert the government's immunity under Feres v. United States, 340 U.S. 135, 95 L. Ed. 152, 71 S. Ct. 153 (1950) and Stencel Aero Engineering Corp. v. United States, 431 U.S. 666, 52 L. Ed. 2d 665, 97 S. Ct. 2054 (1977) since contractors could pass the cost of accidents along to the government.
2. That holding military contractors liable would "thrust the judiciary into the making of military decisions. Although judges must decide cases arising from fields of endeavor of which they know little, their otherwise omnicompetence confronts its limits in military matters. At this point, it must be acknowledged, separation of powers becomes a proper concern." McKay, supra, 704 F.2d at 449.
3. That military contractors are often unable to negotiate over specifications which, due to defense requirements, involve risks that would be deemed ...