DELBERT BOYLE, PERSONAL REPRESENTATIVE OF THE HEIRS AND ESTATE OF DAVID A. BOYLE, DECEASED, PETITIONER V. UNITED TECHNOLOGIES CORPORATION No. 86-492 In the Supreme Court of the United States October Term, 1987 On Writ of Certiorari to the United States Court of Appeals for the Fourth Circuit Supplemental Memorandum for the United States as Amicus Curiae Although the opening brief in this case addressed primarily the shape that the military contractor defense should take, the first oral argument focused on whether the defense should be recognized by this Court as a matter of federal common law. As noted in our opening brief (at 11-12), the uniquely federal interests involved in the design of military products and the disruptive effects on the national defense of tort suits alleging that such products were defectively designed justify recognition of the military contractor defense as a matter of federal common law. This Court's decision in Westfall v. Erwin, No. 86-714 (Jan. 13, 1988), slip op. 3 (quoting Howard v. Lyons, 360 U.S. 593, 597 (1959)), in which the Court held that "the scope of absolute official immunity afforded federal employees is a matter of federal law, 'to be formulated by the courts in the absence of legislative action by Congress,'" bolsters that conclusion. This Court has made clear that there are two steps in determining whether a particular rule should be recognized as a matter of federal common law. First, it is necessary to decide whether the applicable legal rule is to be determined as a matter of federal or state law. "When Government activities 'aris(e) from and bea(r) heavily upon a federal . . . program,' the Constitution and Acts of Congress '"require" otherwise than that state law govern of its own force.'" United States v. Kimbell Foods, Inc., 440 U.S. 715, 726-727 (1979) (citation omitted). Second, assuming that the issue is properly governed by federal law, it is necessary to determine whether a specific uniform national rule is appropriate or whether, as a matter of federal law, the various rules of state law should be allowed to govern. In making this determination, the Court has considered the purposes to be served by the proposed uniform national rule, the adverse consequences resulting from the application of the various state law rules, and the disruptive consequences of supplanting the state law rules. E.g., id. at 730-733; Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 432-433 (1964). Also, the Court has sometimes been attentive to inferences from legislative action or inaction to the effect that Congress has indicated its disapproval of a proposed uniform common law rule. Texas Industries, Inc. v. Radcliff Materials Inc., 451 U.S. 630, 645 (1981); United States v. Standard Oil Co., 332 U.S. 301, 315 (1947). Absent such a resonable inference, however, where this Court has concluded that a uniform national rule is indicated as a matter of federal interest, it has fashioned the rule. 1. The intimate connection between the potential product liability of military contractors and the ability of the United States Government to procure the highly specialized weapons systems that it must have for the national defense strongly support the conclusion that federal law must govern. As we indicated in our opening brief (at 12-17), the application to military weapons producers of ordinary state law tort liability rules would discourage those manufacturers from providing necessary assistance in the product design and development process, would undermine military discipline by authorizing the second-guessing of weapons design and procurement decisions, and would increase the manufacturer's uncertainty as to potential liability, thus increasing the costs to the United States as well. The relationship between the government and its soldiers is "distinctively federal," and its "scope, nature, legal incidents and consequences * * * are fundamentally derived from federal sources and governed by federal authority" (Standard Oil Co., 332 U.S. at 305-306). No less distinctively federal is the relationship between the government and its suppliers of ordnance. Stencel Aero Engineering Corp. v. United States, 431 U.S. 666, 672 (1977). /1/ Tort suits alleging that military products were defectively designed greatly impair the ability of the government to enlist effectively the assistance of private contractors in developing and producing weapons systems required for the national defense, since such liability arises from participation in the design process. It is thus plain that "the authority and duties of the United States as sovereign are intimately involved" (Texas Industries, Inc., 451 U.S. at 641) in the issue of contractor liability, and that this case falls with those where the Court has found the governing law to be federal. Kimbell Foods, Inc., 440 U.S. at 726; Sabbatino, 376 U.S. at 427; Standard Oil Co., 332 U.S. at 305; Clearfield Trust Co. v. United States, 318 U.S. 363, 366 (1943). 2. For the same reasons that federal law must govern the duties of military contractors arising from the development and production of weapons, a uniform military contractor defense -- as is set forth in our opening brief (at 17-19) -- should be recognized. The government's ability effectively to enlist the assistance of private contractors in the product development process and to acquire effective weapons systems at reasonable cost and in an expeditious manner would be substantially impaired if such a defense is not recognized. /2/ This case therefore presents just the sort of "significant conflict" between "federal policy or interest and the use of state law" that justifies the formulation of a federal common law rule. Wallis v. Pan American Petroleum Corp., 384 U.S. 63, 68 (1966). Indeed, a more striking conflict between a critically important federal interest and the consequences of otherwise applicable state law can not be found among the decisions of this Court invoking uniform federal common law rules. The decisions of this Court declining to recognize federal common law rules themselves confirm that the military contractor defense should be recognized as a matter of federal common law. In Kimbell Foods, for example, while recognizing that federal law governs, the Court declined to substitute a nationwide federal rule for the existing body of state law relating to the priority of liens arising from federal loans. The Court reached that conclusion after noting the minimally disruptive effect of existing state law on the government's lending practices (440 U.S. at 730-737) and balancing it against the disruption that would result from the formulation of separate federal rules to operate against the backdrop of existing state commercial law (id. at 739). The adverse consequences on defense procurement resulting from the application of state tort law in the present context are plainly of far more substantial proportions. In Miree v. DeKalb County, 433 U.S. 25 (1977), this Court declined to override state law allowing survivors of persons killed in plane crash to sue as third party beneficiaries of a contract between the County and the Federal Aviation Administration, under which the County agreed to restrict activities adjacent to its airport to purposes compatible with normal airport operations. The Court reasoned (id. at 31) that "(t)he question of whether petitioners may sue respondent does not require decision under federal common law since the litigation is among private parties and no substantial rights or duties of the United States hinge on its outcome." In the present case, the United States will be substantially and adversely impacted by application of state tort law to the activities of military contractors. It can not be said here, as it was in Miree (id. at 32-33 (citation omitted)), that "any federal interest in the outcome of the question before us" is "'too speculative'" or "'too remote'" to justify application of federal law. Similarly, in Wallis the Court relied on the absence of any significant threat to an identifiable federal policy of interest and declined to substitute a federal rule for Louisiana law relating to the enforcement of contracts transferring rights under federal mineral leasing contracts. The Court found no incompatibility between the application of state law and any federal policy or interest, and on that account upheld the application of state law without even considering the strength of the state interest in having its own rules govern. 384 U.S. at 68. /3/ 3. This is not a situation where Congress, by action or inaction, has indicated a preference against the judicial formulation of a military contractor defense. See Texas Industries, Inc., 451 U.S. at 645 ("(t)here is nothing in the statute itself, in its legislative history, or in the overall regulatory scheme to suggest that Congress intended courts to have the power to alter or supplement the remedies enacted"); Standard Oil Co., 332 U.S. at 315 ("the situation is not new, at any rate not so new that Congress can be presumed not to have known of it or to have acted in the light of that knowledge"). Suits against manufacturers of military products were unknown until very recently since, as amicus Association of Trial Lawyers of American pointed out (Br. 9-10), there was no basis for such suits in state law until the 1960s. In response to the revolution in products liability law, the courts immediately formulated the military contractor defense. While there has been some variation in the nature of the defense recognized, no court has refused to recognize the defense altogether, and the majority of courts have followed the approach enunciated in McKay v. Rockwell International Corp., 704 F.2d 444, 449, 451 (9th Cir. 1983), cert. denied, 464 U.S. 1043 (1984). Thus, Congress's inaction here cannot be presumed to indicate that it does not favor the defense. Rather, if any conclusion may be drawn from Congress's silence, it is that it approves of the defense as fashioned by the court in McKay. /4/ The issue presented here has a close parallel in this Court's many cases recognizing an immunity from state law liability for another class of defendants sued on account of actions taken at the behest of the United States -- federal employees. In Howard v. Lyons, for example, the Court concluded that "the extent of the privilege in respect of civil liability for statements allegedly defamatory under state law which may be claimed by officers of the Federal Government" was plainly a matter of "peculiarly federal concern" that could not be left to determination under "the vagaries of the laws of the several States" (360 U.S. at 597). More recently, in Westfall v. Erwin, supra, this Court, while restricting the types of conduct to which the immunity applies, recognized the continued vitality of the federal common law defense to be applied in cases alleging that federal employees were negligent under state-law standards. The Court there recognized that "when officials exercise decisionmaking discretion * * * potential liability may shackle 'the fearless, vigorous, and effective administration of policies of government.'" Slip op. 4-5 (quoting Barr v. Matteo, 360 U.S. 564, 571 (1959)). The Court noted that "Congress is in the best position to provide guidance for the complex and often highly empirical inquiry into whether absolute immunity is warranted in a particular context," so that "(l)egislated standards governing the immunity of federal employees involved in state-law tort actions would be useful" (Westfall v. Erwin, slip op. 8). But, while asking Congress for assistance, the Court nevertheless made clear that the defense continues to exist as a matter of federal common law. A similar approach is warranted here. As indicated by the unanimous view of the lower courts that a military contractor defense should be recognized, potential contractor tort liability would interfere with the efficient procurement of military products, just as potential tort liability on the part of federal employees would interfere with the efficient administration of government. While legislated standards might be useful, in light of the adoption of the McKay test by the majority the courts of appeals there is no basis to infer from congressional inaction any disapproval of the defense. Respectfully submitted, CHARLES FRIED Solicitor General APRIL 1988 /1/ As the Fifth Circuit stated in Bynum v FMC Corp., 770 F.2d 556, 569 (1985), it is difficult to think of an area that is more uniquely of federal concern since "(t)he composition, training, equipping, and management of our military forces is a matter exclusively within the rights and duties of the federal government and * * * any interference with the federal authority over national defense and military affairs implicates uniquely federal interests of the most basic sort." Unlike the Fifth Circuit, the Third Circuit in Brown v. Caterpillar Tractor Co., 696 F.2d 246 (1982), concluded that a military contractor defense did not need to be formulated as a matter of federal common law (although it recognized the defense as a matter of Pennsylvania law). The Fifth Circuit correctly concluded (770 F.2d at 570 n.17 (quoting 696 F.2d at 249)) that the Third Circuit erred by stating that suits brought against military contractors "'generally do not necessitate the second-guessing of military decisions.'" As the Fourth Circuit concluded in Tozer v. LTV Corp., 792 F.2d 403 406 (1986), "it is nearly impossible to contend that the contractor defectively designed a piece of equipment without actively criticizing a military decision." /2/ It may be answered that the United States can induce contractors to continue to provide product design consultation and assistance by agreeing to indemnify them for all liability to which they are exposed as a result of their role in developing the product. While that may be true, it offers no realistic alternative. The United States is itself generally immune under the discretionary function exception of the Federal Tort Claims Act, 28 U.S.C. 2680(a), from liability for its own weapons design decisions, and it would incur a substantial new liability if it were to agree to pay all judgments against contractors arising from challenges to the designs of weapons systems. Since Congress has determined that the United States should not be liable for injuries caused by design defects of military products, the United States should not be forced to assume liability simply because it seeks the assistance of private entities in performing its governmental obligations. /3/ Furthermore, while the disruption of state policies is a factor to be considered in determining whether federal common law should be applied, it appears that no major disruption would occur here since "a clear majority of courts that have considered the availability of the government contractor defense under applicable state law have decided to adopt the defense." Bynum 770 F.2d at 571, citing Tillett v. J.I. Case Co., 756 F.2d 591, 599-600 (7th Cir. 1985) (Wisconsin); Brown v. Caterpillar Tractor Co., 696 F.2d 246 (3d Cir. 1982) (Pennsylvania); Hunt v. Blasius, 55 Ill. App. 3d 14, 370 N.E.2d 617 (1977); Sanner v. Ford Motor Co., 144 N.J. Super. 1, 7-9, 364 A.2d 43, 46-47 (1976), aff'd, 154 N.J. Super. 407, 408-410, 381 A.2d 805, 806 (1977); Casabianca v. Casabianca, 104 Misc. 2d 348, 350, 428 N.Y.S.2d 400, 402 (Sup. Ct. 1980). /4/ Congress recently has considered but not passed bills that would provide relief to military contractors. Its failure to enact those bills cannot be read as opposition to the military contractor defense as it has been formulated by the majority of the lower courts. The bills have differed from the military contractor defense as enunciated in McKay in that indemnification has been proposed for negligent contractors and other provisions have been proposed that would create incentives for contractors not to participate in the design process. As stated in our opening brief (at 21-22 n.21), the Justice Department opposed the bills on account of those problems. By failing to enact legislation, Congress, presumably aware that most of the federal courts have adopted the McKay version of the defense, has left matters in the hands of the federal courts.