Opinion ID: 1463027
Heading Depth: 5
Heading Rank: 3

Heading: The government made a discretionary determination regarding Agent Orange's toxicity

Text: The next question, and we think it to be a more difficult one, is whether the government made a discretionary determination that created the conflict between the federal government's interests and the defendant's state law duties that is necessary to invoke the government contractor defense. The plaintiffs argue that the defendants could have manufactured Agent Orange that produced either dioxin-free or nearly dioxin-free 2, 4, 5-T by employing the lower-temperature manufacturing process developed and used by a German manufacturer, C.H. Boehringer Sohn. This process, the plaintiffs say, would have permitted the defendants to comply with their federal contractual duties and deliver a less toxic defoliating agent, albeit at a somewhat slower rate. As a result, the plaintiffs argue, the defendants could have met both their federal duties and their state tort-law duties; the direct conflict contemplated by Boyle is absent; and the first requirement for the contractor defense therefore cannot be established. [15] (i) Analysis. In determining whether the government made a discretionary decision that would create the type of conflict between tort law and government interests contemplated by Boyle, we are not called upon to assess the merits of the alleged state tort law violation. [16] We are tasked only with determining whether the government's discretionary actions with respect to the allegedly defective design and the alleged state law tort duty conflict. If they do, the first Boyle requirement is met; if they do not, the government contractor defense does not apply, and we must return the case to the district court for trial on its merits. Cf. Grispo, 897 F.2d at 627 n. 1 (noting that appeal of summary judgments pertaining to applicability of the contractor defense did not raise the question whether New York law imposes a duty to warn under the[ ] facts [of the' case], or whether a failure to warn was the proximate cause of the [plaintiffs'] alleged injuries.). The first Boyle requirement is designed to ensure that a conflict with state law exists. Lewis, 985 F.2d at 86. We have observed that, therefore, answering the question whether the [g]overnment approved reasonably precise specifications for the design feature in question necessarily answers the question whether the federal contract conflicts with state law. Id. at 87. If such specifications are present, the contractor's federal contractual duties will inevitably conflict with alleged state tort duties to the contrary because complying with the federal contract will prevent compliance with state tort law as the plaintiffs have alleged that it exists. See id. Alternatively, where a contractor could comply with both its contractual obligations and the state-prescribed duty of care, displacement generally would not be warranted, and state law would apply. Boyle, 487 U.S. at 509, 108 S.Ct. 2510. The defendants do not contest that the government's contractual specifications for Agent Orange were silent regarding the method of manufacture or that the government harbored no preference, expressed or otherwise, regarding how the herbicides were to be produced. See, e.g., Appellees' Br. at 36-37. Indeed, they admit that they were under no federal contractual duty to produce Agent Orange using any particular manufacturing process or with any particular reference to the resulting toxicity levels. See id. at 96-97, 99 (characterizing lack of specifications regarding method of manufacture or toxicity levels as discretionary omission and conceding that omitted specifications do not constitute contractual duties). The defendants argue instead that the government's Agent Orange procurement contracts nevertheless created a conflict with their alleged state tort duty to manufacture the herbicides differently. The defendants reason that the documentary evidence establishes as a matter of law that the manufacture of dioxin-free Agent Orange was impossible and that, in any event, they could not have complied with their procurement contracts with the government had they used the slower, less efficient, Boehringer method. They contend further that the government ordered the herbicides with full knowledge of the relevant dangers, which, they say, is equivalent to the government having approved a reasonably precise specification about that danger. Id. at 91-99, 102-04. But the documents cited by the defendants, as to the inevitability of dioxin content in Agent Orangeincluding declarations by the Environmental Protection Agency that dioxin in some very small amounts was unavoidable and that the potential risks of harm to humans outweighed any benefits of continued use of commercially available 2, 4, 5-T, see EPA Notice of the Denial of Applications for Federal Registration of Intrastate Pesticide Products Containing 2, 4, 5-T, 45 Fed.Reg. 2,898, 2,899 (Jan. 15, 1980); EPA Decision and Emergency Order Suspending Registrations for the Forest, Rights-of-Way, and Pasture Uses in 2, 4, 5-T, 44 Fed.Reg. 15,874, 15,874 n. 1 (Mar. 15, 1979)do not refute what we understand to be the thrust of the plaintiffs' argument: that had the defendants used the Boehringer method, the Agent Orange they produced would have contained no then-detectable amounts of dioxin. In that event, the plaintiffs allege, the lower levels of dioxin would have avoided much, if perhaps not all, of the harm allegedly suffered as a result of the presence of dioxin in Agent Orange. The documents submitted to the district court also do not establish as a matter of law that there was an inherent conflict between use of the Boehringer process and compliance with defendants' contractual obligation to the government. Dow Chemical adopted and used the Boehringer method, or something like it, see Mem. from J.D. Doedens, Chemicals Dep't, Dow Chem. Co. (Mar. 1, 1965), at 2; Mem. from Alex Widiger, Midland Division Research & Dev., Dow Chem. Co. (Apr. 25, 1967), at 2, at the time the government was requesting Agent Orange in increasing quantities and sequestering the entire domestic market for 2, 4, 5-T. This change in manufacturing method and its timing at least raises a triable issue of fact as to whether the defendants could have complied with their contractual obligations to the government while using what the plaintiffs contend was a process that would have resulted in a defoliating agent substantially less dangerous to military personnel. And so we must determine whether the government did in fact, as the defendants argue, approve of the toxicity levels present in Agent Orange in a manner that would create the necessary conflict with the alleged state law tort duty such that the latter must be displaced. We think that it did. We have previously concluded that where the government contracts for the purchase of a product with knowledge that the product has an arguable defect, it is considered to have approved reasonably precise specifications for that product, with the known defect, for purposes of the first Boyle requirement. Lewis, 985 F.2d at 89. In Lewis, the government reordered a cable that connected a parachute to the crew module of an Air Force fighter jet with knowledge that the coating that protected the steel cable was prone to cuts, resulting in cable corrosion. Id. at 85. Although the government during its initial order had not made a discretionary decision about which materials should be used in constructing the cable, it subsequently ordered replacement cables even after an Air Force investigation into the corroded cables had revealed the problem with the protective coating, reasoning that changes to its maintenance manual would sufficiently alleviate the risk of harm. id. In light of this considered attention by the government to the precise defect alleged, we concluded that the cable could not be characterized as a stock item and that the contractor's decision regarding the materials to be used for the cable could not be second-guess[ed]. Id. at 89. We did not discuss whether or how the contractor had been alerted to the government's investigation or the reasons for its reordering, nor whether the contract for replacement cables also omitted reference to the material used to construct them, as had the original cable contract. Based on the reorder alone, we said, the contractor could] claim: `The [g]overnment made me do it.' Id. (quoting Glispo, 897 F.2d at 632). Here, similarly, the record discloses that the government explicitly evaluated the alleged design defect (toxic 2, 4, 5-T), and thereafter continued to order replacement herbicides. The government examined the toxicity of what the plaintiffs contend was the most toxic Agent Orange variant used in VietnamAgent Purple and determined that it posed no unacceptable hazard. See Tr. of Oral Arg. at 24 (plaintiffs' attorney's comments regarding Agent Purple's toxicity). On April 26, 1963, the Army conducted a meeting at its Edgewood (Maryland) Arsenal to evaluate the toxicity of a[n herbicide] mixture known as `Purple.' Minutes of a Meeting Held to Discuss and Evaluate the Toxicity of 2, 4-D and 2, 4, 5-T Compounds (Apr. 26, 1963) (April 1963 Meeting Minutes), at 3. Their analysis required reaching a conclusion about dose levels and hazards to health of men and domestic animals from 2, 4-D and 2, 4, 5-T based on the medical literature and unpublished data of various research laboratories. Id. Those in attendance included officials from various branches of the military and various other government agencies, and representatives from manufacturers Dow Chemical and AmChem Products. Id. at 2. The group heard various presentations on the subject. At the end of the meeting, the participants adopted acute toxicity figures for Agent Purple. They concluded in summary and after careful review of toxicological data related to 2, 4-D and 2, 4, 5-T plus the knowledge as to the manner these materials have been used for defoliation in military situations in Southeast Asia, ... that no health hazard is or was involved to men or domestic animals from the amounts or manner these materials were used. . . . Id. at 5. Thereafter, the government continued to contract with the defendants for purchase of the same and similar defoliating agents. [17] In other words, the Army examined the toxicology data available to it and concluded that Agent Orange's components, 2, 4, 5-T and 2, 4-Din the formulation that the government, in its discretion, used when ordering it, and as it was then being manufacturedposed no health hazard and were, at least under the circumstances of international armed conflict, suitable for use in Southeast Asia. Since the government continued to order Agent Orange after having evaluated its toxicity levels and declared them acceptable, we cannot second-guess the manufacturers' decision to produce the agents in the manner that they did. Lewis, 985 F.2d at 89. Because [t]he imposition of liability under state law would constitute a significant conflict with the [g]overnment's decision that the defoliants used in Vietnam as they were produced by the defendants posed no unacceptable hazard, id., we conclude that the first Boyle requirement is met. (ii) The Grispo language. There is language in Grispo that seems to require something more: that when the government mak[es] a discretionary, safety-related military procurement decision contrary to the requirements of state law, it incorporate[] th[e] decision into a military contractor's contractual obligations. Grispo, 897 F.2d at 632. But we concluded in Lewis that the government's order of replacement Babcock cables with knowledge of the risks to pilots associated with the defect in question was itself sufficient to prevent second-guess[ing] of the manufacturer's choice to continue using the same cable coating, even though nothing in Lewis suggests either (1) that the government included in the re-order contract a specification instructing that the suspect material be used, or (2) that the defendant manufacturer had been apprised of the government's investigation of the alleged corrosion problem. See Lewis, 985 F.2d at 89 (We hold that when the [g]overnment reordered the specific Babcock cable, with knowledge of its alleged design defect, the [g]overnment approved reasonably precise specifications for that product such that the manufacturer qualifies for the military contractor defense for any defects in the design of that product. (emphasis added)). Insofar as there is a tension between the two cases, we think it is resolved by Boyle. In framing the first Boyle requirement, the Boyle Court sought to assure that the suit [in which the contractor defense is asserted] is within the area where the policy of the `discretionary function' would be frustrated absent the availability of the defense. Boyle, 487 U.S. at 512, 108 S.Ct. 2510. Although the Court used the term reasonably precise specifications, we think that, as in Lewis, reordering the same product with knowledge of its relevant defects plays the identical role in the defense as listing specific ingredients, processes, or the like. In Boyle, the alleged state law duty of care was precisely contrary to the duty imposed by the [g]overnment contract. Id. at 509, 108 S.Ct. 2510. But the opinion did not hold that a conflicting, express contractual duty was required for the contractor defense to preempt state law. The issues as framed by the Boyle Court were not narrowly about duties imposed by contract; they were more broadly about federal policies and interests and the exercise of federal discretion, in the face of contrary state law, in furthering them. See id. at 507, 108 S.Ct. 2510 (Displacement will occur only where . . . a `significant conflict' exists between an identifiable `federal policy or interest and the [operation] of state law.') (quoting Wallis v. Pan Am. Petroleum Corp., 384 U.S. 63, 68, 86 S.Ct. 1301, 16 L.Ed.2d 369 (1966) (brackets in original) (emphasis added)); see also id. at 509, 108 S.Ct. 2510 (stating that even where federal contractual and state tort duties were precisely contrary, it would be unreasonable to say that there is always a `significant conflict' between the state law and a federal policy or interest (emphasis added)). The government's uniquely federal interest, id. at 504, 108 S.Ct. 2510, in fully taking advantage of its ability to determine what level of risks and dangers must be tolerated in order to achieve a particular military goal need not be belabored. See Agent Orange I Opt-Out Op., 818 F.2d at 191 (Civilian judges and juries are not competent to weigh the cost of injuries caused by a product against the cost of avoidance in lost military efficiency. Such judgments involve the nation's geopolitical goals and choices among particular tactics....). We pause only to note that the federal interest implicated by the lawsuits here is not only the ordinary need to ensure the government's work gets done, Boyle, 487 U.S. at 505, 108 S.Ct. 2510, but the ability to pursue American military objectivesin this case, protection of American troops against hostile fire. The government made an express determination, based on the knowledge available to it at the time, that Agent Orange as then being manufactured posed no unacceptable hazard for the wartime uses for which it was intended, and that the product should continue to be manufactured and supplied to it. In light of this exercise of discretion, we read Boyle to require displacement of any alleged state law rules to the contrary. [18] 2. Compliance with Specifications. The plaintiffs' challenge to the defendants' ability to demonstrate the second requirement for Boyle protectioncompliance with the contracts' specifications does not warrant extensive discussion. Nothing about the presence of dioxin in trace amounts within the 2, 4, 5-T component of Agent Orange rendered the Agent Orange delivered to the government non-compliant with its contractual obligations. The plaintiffs' own expert agrees. See Aff. of Harry Ensley (Feb. 6, 2004), at ¶ 20 ([T]he 2, 4, 5-T the government purchased could contain varying amounts of such impurities as ... dioxin ..., yet still be in compliance with the government's specifications. . . .). There is no allegation that the government received Agent Orange with 2, 4, 5-T present in anything other than the proportions and purity levels called for by the terms of the contracts. The second requirement is therefore met as a matter of law. See Miller, 275 F.3d at 420-21 (rejecting same argument made by civilian plaintiffs seeking compensation for injuries allegedly caused by Agent Orange). 3. Defendants' Warnings About Known Dangers. The final Boyle requirement for the invocation of the government contractor defense is that the defendants demonstrate that they warned the United States about the dangers in the use of the equipment that were known to [them] but not to the United States. Boyle, 487 U.S. at 512, 108 S.Ct. 2510. The plaintiffs make essentially two arguments in this regard: (1) that the defendants knew more about the hazards of 2, 4, 5-T than did the government, but failed to warn the government about them; and (2) that even if some members of the government had some knowledge regarding the dangers of dioxin, Boyle requires that for the defense to be applicable, the actual contracting officials must have such knowledge, and those involved in the specification process for Agent Orange knew nothing about 2, 4, 5-T's hazards. The thrust of the defendants' response is that (1) none of the plaintiffs claim an injury of the sort that was a danger known by anyone at the time of Agent Orange's production; (2) as to dangers about which the defendants were aware, the evidence demonstrates as a matter of law that they shared that knowledge with the government; and (3) irrespective of what the defendants knew about Agent Orange in general, the government had far greater knowledge than the defendants about Agent Orange and the dangers posed by its intended use in Vietnam. We doubt that the defendants can establish as a matter of law on the present record either the second or third of their contentionsthat they shared the knowledge of dangers of which they were aware with the government and that the government had far more knowledge about the dangers of Agent Orange in its planned use. Each is intensely factual and hotly disputed. [19] We think that the record is clear, however, that the defendants did not fail to inform the government of known dangers at the time of Agent Orange's production of the type that would have had an impact on the military's discretionary decision regarding Agent Orange's toxicity. We therefore conclude that the defendants have established Boyle' s third requirement as a matter of law. Boyle mandates that to obtain the benefit of the government contractor defense, a contractor must inform the government, about known dangers in the use of the equipment. Boyle, 487 U.S. at 512, 108 S.Ct. 2510. But the Boyle Court was silent as to what types of risks rise to the level of dangers that must be disclosed. Prior to Boyle, we were of the view that manufacturers need disclose to the government only those hazards that (1) are based on a substantial body of scientific evidence; and (2) create dangers likely serious enough to call for a weighing of the risk against the expected military benefits, that is, substantial enough to influence the military decision to use the product. Agent Orange I Opt-Out Op., 818 F.2d at 193. Until now, neither we nor the Supreme Court has been called upon to decide, post- Boyle, what constitutes knowledge of a danger that would trigger a duty to inform as to the equipment being ordered. This much is plain: Boyle did not contemplate requiring disclosure of any and all potential risks by the contractor to the government, irrespective of their relation to the governmental discretionary decision at issue. The Boyle Court was concerned primarily with protecting the government's ability to assume certain kinds of risks without assuming the costs of liability for those risks. See Boyle, 487 U.S. at 511-12, 108 S.Ct. 2510. It protected this ability by ensuring that where the government accepts such a risk knowingly, a state law that would require finding that same risk unacceptable must be displaced. We therefore do not think that the Boyle Court meant that a defendant seeking the protection of the defense was required to demonstrate that it had shared all known hazards with the government, irrespective of whether those hazards allegedly not conveyed would have had an impact on the government's exercise of discretion about the design defect alleged. It would be impractical to require that a manufacturer compile and present to the government in advance a list of each and every risk associated with a product it is producing for the government. The operation of a tank or a transport planemore so the manufacture and use of a chemical agentinvolves, at the extremities, virtually limitless risks. Even if it were possible to generate such complete lists, their comprehensiveness would overwhelm government decision makers with largely irrelevant data, extending the time and costs associated with federal contracting and obscuring those risks most likely to have an impact on contracting decisions. A rule that required full disclosure of all possible risks to anyone would be contrary to Boyle's underlying rationale of protecting the federal interest in getting the Government's work done. Id. at 505, 108 S.Ct. 2510. We therefore adhere to our pre- Boyle precedent. We conclude, much as we did before Boyle was decided, that a defendant may satisfy the third Boyle requirement if it demonstrates that it fully informed the government about hazards related to the government's exercise of discretion that were substantial enough to influence the military decision made. Agent Orange I Opt-Out Op., 818 F.2d at 193. The defendants can demonstrate a fully informed government decision by showing either that they conveyed the relevant known and substantial enough dangers, id., or that the government did not need the warnings because it already possessed that information, see Lewis, 985 F.2d at 89-90 (There is no requirement that appellees inform the Air Force of dangers already known to the Air Force.). Here, the plaintiffs allege that the defendants knew of dioxin's hazards but failed to inform the government of them. The documents to which they cite for this proposition, however, pertain almost universally to the risk of chloracne (a severe skin disease) and liver damage to workers manufacturing Agent Orange. These risks, the manufacturers thought, were created by the dioxin impurity that resulted from producing trichlorophenol, a component of 2, 4, 5-T. See, e.g., V.K. Rowe, Test. for the 2, 4, 5-T Hr'g (undated), at 28 (referring to dioxin build-up in trichlorophenol manufacture), PA 3501-02.; Mem. of V.K. Rowe, Dow Chemical Co., at 1 (Jun. 24, 1965) (Rowe Jun. 1965 Mem.) (referring to dioxin impurities present in trichlorophenol that could be carried through into the T acid). There is, indeed, ample evidence that the defendants were concerned about the health effects of dioxin, specifically chloracne [20] and liver damage, [21] on their workers. Tests were conducted that involved exposing, animals to pure dioxin, which revealed some severe response[s], see Report on the Chloracne Problem Meeting on March 24, 1965 (Mar. 29, 1965) (Mar. 29 Report), at 5; similar tests performed on humans some years later using a one-percent dioxin solution that resulted in skin lesions, see Letter of Albert M. Kligman to V.K. Rowe, Dow Chemical Co. (Jan. 23, 1968) PA 3732. At least two defendants considered whether the dioxin in trichlorophenol's manufacture would be manifest in the trichiorophenol itself or in the end products containing trichlorophenol, see, e.g., id. at 4; Mem., Dow Chem. Co. (Mar. 10, 1965) (Mar. 10 Dow Mem.), Mem. from E.L. Chandler, Diamond Shamrock Co. (Chandler Mem.) (Jul. 9, 1962), but the danger with which they were concerned was limited to the possibility of a chloracne outbreak among those handling it, see Mar. 10 Dow Mem. (discussing possible need to take precautions that would prevent injury akin to what had been taken following past incidents of chloracne outbreaks); Chandler Mem. (indicating two commercial customers had claimed chloracne problems with Diamond esters, one of which had no similar problems with other manufacturers' product). There is no evidence to which we have been directed or that we have otherwise found that the defendants' knowledge of 2, 4, 5-T's risks extended to dioxin as a carcinogen, as a toxin that potentially might cause diseases long after exposure, or as a significant health risk (apart from chloracne) to those exposed to herbicides containing 2, 4, 5-T being used as such, in wartime conditions or otherwise, except for workers manufacturing them or their component chemicals. [22] How much the government knew about the workplace dangers associated with production of 2, 4, 5-T while it was considering the use of and ordering Agent Orange is unclear. The minutes from the 1963 meeting at Edgewood Arsenal contained references to a lack of workplace incidents involving 2, 4-D and, 4, 5-T. April 1963 Meeting Minutes at 4, Appendix A. The domestic safety record of herbicides containing these two chemicals, including the manufacturers' alleged reports to the Department of Agriculture regarding the absence of ill effects from the herbicides on their workers, was also relayed to the President's Science Advisory Committee in a May 1963 briefing entitled Possible Health Hazard of Phenoxyacetates as Related to Defoliation Operations in Vietnam. At least two domestic manufacturers, however, had already experienced chloracne breakouts and other problems among its workers. The documents make clear, however, that the military was concerned about the likely effect on those exposed to the herbicides in the manner in which they were, and were to be, used in Vietnam. This is hardly surprising. The principal purpose of Agent Orange was to attempt to protect American troops from attack by limiting vegetation around American facilities and emplacements that could provide cover to enemy combatants. To that extent, the chemical agents were to be used on American and allied positions, not those of the Viet Cong. And the undisputed record with respect to dangers that were posed by the use of Agent Orange is that during the entirety of the production of Agent Orange, the defendants knew only that it was possible that those handling herbicides containing 2, 4, 5-T might develop the skin disease chloracne. The Edgewood participants, including delegates from various branches of the government, military and civil, were aware of this type of risk. See April 1963 Meeting Minutes at 5 (AmChem representative, related experiences of industrial firms making ... continuous field applications over very large areas and noted skin sensitization was the maximum effect produced in probably one out of a thousand persons). Yet the government continued to order Agent Orange in the manner specified in the procurement contracts. If the government had decided to manufacture Agent Orange, as it considered doing for a period during the late 1960s, the defendants might well have been required more fully to inform the government of all the possible dangers associated with the manufacture of the chemical (none of them, incidentally, being malignancies). The record suggests that they were prepared to do so. See Plan `Orange' Production, Dow Chemical Co. (Apr. 20, 1967), at 3 (stating that [a] serious potential health hazard to production workers is involved in the production of 2, 4, 5-T and noting that its knowhow regarding elimination of the hazard could be made available to the government), attached to. Letter from A.P. Beutel, Vice Pres., Dir. of Gov't Affairs, Dow Chemical Co., to H.G. Fredericks, Deputy Dir. of Procurement and Production, Edgewood Arsenal (Apr. 20, 1967). We conclude, however, that no reasonable factfinder could find that the defendants had knowledge of a danger that might have influenced the military's conclusion that operational use of Agent Orange posed no health hazard ... to men or domestic animals, April 1963 Meeting Minutes, at 3, 5, and its presumably related decision to continue to purchase Agent Orange as it was then being produced by the defendants. We find nothing in the record to support an assertion that the defendants cut[] off information highly relevant to ... discretionary decision[s] of the government, Boyle, 487 U.S. at 513, 108 S.Ct. 2510, i.e., that they possessed knowledge of dangers unknown to the government that, had they been shared, might have influenced the government's decision regarding the extent of the hazard posed by use of Agent Orange or its choice to continue its use. We acknowledge that there may well have been some aspects of the dangers of Agent Orange resulting from the trace presence of dioxin that personnel of one or more of the defendants were aware of that members of the military may not have known, at least contemporaneously. We cannot conceive of a long-term relationship between the military and a civilian contractor in which complete equivalence of knowledge at all times in the relationship can be expected or could be established. But nothing in the record of which we are aware would create a triable issue of fact as to whether there was never-disclosed knowledge of a sort that might have influenced the government's decision-making process regarding Agent Orange as it was used in Vietnam. Accordingly, we conclude that the defendants have established as a matter of law the third requirement of Boyle.