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Smith v. Johns-Manville Corp.

argued: April 14, 1986.

On Appeal from the United States District Court for the District of New Jersey - Newark. Reargued June 3, 1986.

Author: Hunter


HUNTER, Circuit Judge:

1. This case requires us to decide whether the General Service Administration's decision to sell surplus asbestos "as is," without warnings or warranties, falls within the discretionary function exception to the Federal Tort Claims Act ("FTCA"), 28 U.S.C. § 2680(a) (1982). Jurisdiction before the district court was based on the FTCA, 28 U.S.C. §§ 1346(b), 2671-80 (1982). Appellate jurisdiction is proper under 28 U.S.C. § 1292(b) (1982). The district court determined that the government could be held liable for the asbestos sales under the FTCA. Because we conclude that the discretionary function exception protects the government's conduct, we will reverse.


2. These consolidated cases were originally filed by approximately eighty present or former employees of the Manville, New Jersey, plaint of the Johns-Manville Corporation. Plaintiffs alleged that they or their decedents had suffered injuries as a result of exposure to asbestos products supplied by defendants, including defendants Bell Asbestos Mines, Ltd. and Cassiar Mining Corporation.*fn1 Certain defendants filed cross-claims and third-party claims against the United States for indemnity and contribution on the grounds that the government also had supplied asbestos to the Johns-Manville plant.

3. In December 1982, the government moved for dismissal of the third-party claims. The government argued that the General Service Administration's failure to place warnings on the asbestos was conduct protected from tort liability under the FTCA's discretionary function exception. The magistrate who heard the motion concluded that the exception did not apply, and recommended that the district court deny the government's motion entirely. In July 1984, the district court determined that the facts of the case would not support the asbestos companies' claims for indemnification, and accordingly granted the government's motion with regard to that theory. The court agreed with the magistrate's report that the exception was inapplicable, however, and denied the government's motion to dismiss the third-party claims for contribution.

4. In reaching its decision, the court noted that the record failed to reveal specific congressional directions to sell the asbestos without warnings. The court also found that the government did not affirmatively make a policy decision concerning warning labels. From these findings, the court reasoned that the decision not to warn was not the type of conduct Congress intended to protect from tort claims by the discretionary function exception, because "to the extent an excercise of discretion entered the decision to warn, it was not that of a governmental policy maker, but merely that of a commercial supplier."

5. in January 1985, the government moved for reconsideration of its motion in the wake of our decision in General Public Utilities Corp. v. United States, 745 F.2d 239 (3d Cir. 1984), cert. denied, 469 U.S. 1228, 105 S. Ct. 1227, 84 L. Ed. 2d 365 (1985), the first Third Circuit case interpreting the Supreme Court's construction of the discretionary function exception in United States v. S.A. Empresa de Viacao Aerea Rio Grandense, 467 U.S. 797, 81 L. Ed. 2d 660, 104 S. Ct. 2755 (1984) ("Varig Airlines"). The court denied the motion for reconsideration, but granted the government's alternative motion for certification as an interlocutory order under 28 U.S.C. § 1292(b). We granted the government's motion for certification on August 7, 1985.*fn2

The facts in this case are disputed. Between 1966 and 1975, the United States supplied surplus asbestos to the Manville facility from government strategic material stockpiles. The General Services Administration ("GSA") managed the disposal program pursuant to the Strategic and Critical Materials Stock Piling Act ("Stock Piling Act"), 50 U.S.C. §§ 98-100a (1976).*fn3 Section 98b(e) of the Stock Piling Act governs the disposal of surplus strategic materials, and provides, in part:

§ 98b. Purchase, storage, refinement, srotation, and disposal of materials

The Administrator of General Services shall--

(e) dispose of any materials held pursuant to this subchapter which are no longer needed because of any revised determination made pursuant to section 98a of this title, as hereinafter provided. No such disposition shall be made until six months after publication in the Federal Register and transmission of a notice of the proposed disposition to Congress . . . . Such notice shall state the reasons for such revised determination [of the necessary amount of strategic materials], the amounts of the materials proposed to be released, the plan of disposition proposed to be followed, and the date upon which the material is to become available for sale or transfer. The plan and date of disposition shall be fixed with due regard to the protection of the United States against avoidable loss on the sale or transfer of material to be released and the protection of producers, processors, and consumers against avoidable disruption of their usual markets. . . .

50 U.S.C. § 98b(e) (1976) (emphasis added). Between 1966 and 1975, Congress passed at least four laws authorizing the GSA to sell stock-piled asbestos. Each reiterated the ...

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