Legal Document

516 U.S. 417116 S.Ct. 981134 L.Ed.2d 47 HERCULES INCORPORATED, et al., Petitioners,v.UNITED STATES. No. 94-818. Supreme Court of the United States Argued Oct. 30, 1995. Decided March 4, 1996. Syllabus* Petitioner chemical manufacturers produced defoliant Agent Orange under contracts with Federal Government during Vietnam era. After they incurred substantial costs defending, and then settling, tort claims by veterans alleging physical injury from use Orange, petitioners filed suits Tucker Act to recover such on alternative theories contractual indemnification warranty specifications provided Government. The Claims granted summary judgment against them dismissed complaints. Appeals consolidated cases affirmed. Held: Petitioners may not their warranty-of-specifications contractual-indemnification claims. Pp. __-__. (a) Act's grant jurisdiction hear determine that are founded upon any "express or implied" contract States, 28 U.S.C. § 1491(a), extends only either express implied in fact, law, see, e.g., Sutton v. 256 575, 581, 41 563, 565-566, 65 L.Ed. 1099. Because at issue do contain provisions, must establish that, based circumstances time contracting, there was an agreement between parties provide undertakings allege. (b) Neither nor Spearin, 248 132, 39 59, 63 166, seminal case recognizing a cause action for breach warranty, so far as render responsible defending settling veterans' Where, here, provides directing how is be performed, it logical infer warrants contractor will able perform satisfactorily if follows specifications. However, this inference does support further would extend beyond performance third-party contractor. Thus, Spearin made postperformance matter law. (c) Although required petitioner Thompson produce authority Defense Production 1950 (DPA) threat civil criminal fines, imposed detailed specifications, had superior knowledge hazards, and, measurable extent, seized Thompson's processing facilities, these conditions give rise implied-in-fact indemnify losses third parties. Anti-Deficiency Act, which bars federal employees entering into future payment money advance of, excess existing appropriation, 31 1341, viewed strong evidence contracting officer have provided, And, statutes regulations enable officers indemnity agreements certain contractors show should readily inferred. Also contrary argument, DPA provision specifying "[n]o person shall held liable damages penalties act failure res ulting directly indirectly compliance a[n] . order issued pursuant Act," 50 U.S.C.App. 2157, reveal intent contractors. Likewise, since its customer rather than seller supplier, misplaces reliance Ryan Stevedoring Co. Pan-Atlantic S.S. Corp., 350 124, 76 232, 100 133. Finally, petitioners' equitable appeal "simple fairness" considerably weakened fact injured could Government, see Feres 340 135, 71 153, 95 152, event, entertained Court, Minnesota Mutual Investment Co., 271 212, 217-218, 46 501, 502-503, 70 911. 24 F.3d 188 (C.A.Fed.1994), REHNQUIST, C.J., delivered opinion SCALIA, KENNEDY, SOUTER, THOMAS, GINSBURG, JJ., joined. BREYER, J., dissenting opinion, O'CONNOR, STEVENS, took no part consideration decision case. On Writ Certiorari Circuit. Carter Phillips, Provo, UT, petitioners. Edward C. DuMont, Washington, DC, respondent. Chief Justice REHNQUIST Court. 1 arising out contracts. In sought alternate We hold so. 2 When armed forces stationed Southeast Asia 1960's, asked several manufacturers, including Hercules Incorporated (Hercules) Wm. T. Company (Thompson), manufacture sell specific phenoxy herbicide, code-named Orange. Department wanted spray high concentrations tree plant life both eliminate enemy's hiding places destroy food supplies. From 1964 1968, (DPA), 64 Stat. 798, amended, 2061 seq. (1988 ed. Supp. V), entered series fixed-price production military prescribed formula manufacture. also instructed suppliers mark drums containing herbicide 3-inch orange band identification content." Lodging 30. fully complied. 3 late 1970's, families began filing lawsuits nine plaintiffs alleged exposure dioxin, toxic by-product found believed many hazardous, caused various health problems. were Eastern District New York class certified. re "Agent Orange" Product Liability Litigation, 506 F.Supp. 762, 787-792 (1980). 4 Judge Pratt awarded basis defense May 1983. 565 1263 (E.D.N.Y.1983). Before entered, however, transferred Weinstein, who withdrew Pratt's ruled viability determined before trial, reinstated defendants. See 597 740, 753 (E.D.N.Y.1984). 5 1984, hours start settled. defendants agreed create $180 million settlement fund each manufacturer contributing market-share basis. Hercules' share $18,772,568, $3,096,597. exceeding $9 combined.1 6 want reimburse litigation. They attempted first contribution noncontractual indemnification. Having failed there,2 sued invoking 1491, raising sounding contract.3 Government's motions, Hercules, Inc. 25 Cl.Ct. 616 (1992); 26 17 (1992). 7 two divided panel Circuit (1994). court claim because prove causation damages. explained pursued class-action litigation completion, barred imposition liability them. defense, courts recognized settlement, but did consider until afterward, shields products manufactured accordance warned about hazards known Boyle Technologies 487 500, 512, 108 2510, 2518-2519, 101 442 (1988). availed themselves voluntarily assumed responsible. It rejected argued 707 DPA, 2157 ed.), impliedly promised i ndemnify liabilities performing DPA. Not persuaded, indemnification, suit brought disgruntled whose work displaced. certiorari, 514 ----, 115 1425, 131 308 (1995), now affirm below different grounds.4 8 begin noting limits jurisdiction. "[T]he sovereign, 'is immune save consents terms consent define court's entertain suit.' " Testan, 424 392, 399, 96 948, 953, 114 (1976), quoting Sherwood, 312 584, 586, 61 767, 769-770, 85 1058 (1941). Congress created Court5 permit "a special limited cases" proceed Tennessee Sneed, 69, 75, 610 (1878), "can take cognizance those [claims] some committed it," Thurston 232 469, 476, 34 394, 395, 58 688 (1914); supra, 586-589, S.Ct., 769-771. confers determine, inter alia, States. 1491(a). 9 repeatedly 1099 (1921); Merritt 267 338, 341, 45 278, 279, 69 643 (1925); 217, 911 (1926); Mitchell, 463 206, 218, 103 2961, 2968-2969, 77 580 (1983). Each material term obligation, well whole, subject jurisdictional limitation. See, Sutton, 580-581, 565-566 (refusing recognize pay fair value performed fact" dredging services); Lopez A.C. & S., Inc., 858 F.2d 712, 714-715, 716 (C.A.Fed.1988) (a within asbestos fact). 10 distinction "implied law," consequent limitation, established our cases. An "founded meeting minds , which, although embodied contract, inferred, conduct showing, light surrounding circumstances, tacit understanding." Baltimore Ohio R. 261 592, 597, 43 425, 426-427, 67 816 (1923). Russell 182 516, 530, 21 899, 904, 1210 (1901) ("[T]o demand convention parties—'a coming together minds' "). By contrast, law "fiction law" where promise imputed legal duty, repay obtained fraud duress." 426. 11 contend provisions. Therefore, prevail, turn. 12 166 (1918). case, contracted build dry dock plans called relocation storm sewer. moved sewer, he completed dock, sewer broke site flood. refused annulled contract. balance due his lost profits. This "if bound according prepared [the Government], consequences defects specifications." Id., 136, 61. this, 13 far. frustrate make impossible. quite circumstance one party providing capability performance. But alone example, strange conclude understanding herbicide's use, actually contemplated sums paid settle involved present action. seems more likely avoid reimbursement through what denied Stencel Aero Engineering 431 666, 97 2054, 52 665 (1977).6 14 As recovery, contends context compelled constitutes parties.7 facilities. Under conditions, contends, read include protect losses. cannot agree. 15 relevant extent help us deduce fact. These here not, we think, agreement.8 There reason think agree open-ended here. employee agency appropriation. 1341.9 Ordinarily appropriation covers contractors' payments claimants Comptroller General has procurement agencies enter type implicitly received contracts.10 view officer's presumed prohibition, effort reach, argues applicable "judicially fashioned" "not provision." Brief 41. "[t]he limitation impose obligations implication expressly made." U.S., 580, (opinion Brandeis, J.). 16 statutory mechanisms existed specified classes conditions. 1431 ed., V) (permitting President, whenever deems necessary facilitate national authorize without regard other provisions regulating making contracts; 1958, Executive Order 10789, delegated Defense, "within amounts appropriated authorization therefor" "[p]roper records all actions taken authority" maintained; 1971, President amended specify contractors); 2354 (1956 statute authorizing department research development); 42 2210 (indemnity scheme, enacted 1957, nuclear incidents, described Duke Power Carolina Environmental Study Group, 438 63-67, 98 2620, 2625-2627, 57 595 (1978)). statutes, set meticulous detail supported panoply implementing regulations,11 entirely unnecessary arise contracting. interpret superfluous. Cf. Ast oria Savings Loan Assn. Solimino, 501 104, 112, 111 2166, 2171-2172, (1991).12 find unpersuasive argument DPA13 reveals Congress' harmless flow reads too broadly. plainly immunity, indemnity. liability, notwithstanding unlucky defendant.14 petitioner's 133 (1956), likewise misplaced; there, private parties, stevedore shipowner amount latter former. Here customer, supplier. 18 Perhaps weakness position, plead fairness," Tr. Oral Arg. 3, ask "redress unmistakable inequities," 40. Fairness, course, respects comparative concept, claimed 152 (1950), weakens appeal. event constrained "based merely considerations." 503, (1926). 19 For foregoing reasons, 20 Affirmed. STEVENS 22 whom O'CONNOR joins, dissenting. petitioners, companies, seeking exposed product companies argue promises warranties effect, harmless. To win most elementary promises, breached them, foreseeable harm. Restatement (Second) Contracts §§ 346, 347, 351 (1979); A. Corbin, 997, 1001, 1002 (1964). 23 concede warranties, written explicitly but, intend background facts say, implicit bargain struck. id., 538, 551 (common trade usage, course dealings, rules always probative meaning parties). following: &#149; 1960's exercising authority, over explicit objection least companies. V); App. 8-9, 23-24. precise, Ibid. 27 At knew defective, unsafe, point might lead plausible advanced used it. 10-11, 25. label ways promoted safe (with, dilution instructions), while, same time, permitted soldiers unreasonably risky (such using empty containers showers barbecues). 8-10. 29 (1960's) 30 (1918), approved common judicial practice reading "plans specifications," "the Lower decisions increase undisclosed "vital information" causes cost increase. Helene Curtis Industries, 160 Ct.Cl. 437, 774, 777-778, n. (1963) (collecting cases). 32 broad language authorized contracts—language enough indemnify. Exec. CFR 426 (1954-1958 Comp.). 11610, 594 (1971-1975 Comp.) (taking grants indemnification). 33 while permitting place compulsory orders, says firms "be resulting with" "order." ed.). say k new better force use. add doctrines analogous risks. (under DPA) subjecting (through specifications) serious risks damage, respect (because knowledge) compensation. contracts, responsibility promising assume specification defects, defect-related suits. 35 affirmed But, doing so, decide promises. Instead (reluctantly argument's sake) existence went regardless. Even assuming wrote, litigated instead asserted "government defense," (1988), thereby won lawsuits. concluded suits, "voluntary payment" cuts causal link broken promise, 36 petition certiorari initial brief merits, primarily review, reverse, "no causation" holding. today's discuss holds my view, record Rather, reverse Appeals' holding remand proceedings. 37 I need mention fatal flaw holding, hindsight. Appeals, essence, companies' obviously unnecessary, abnormal, removed ordinary behavior, been "foreseeable," 351; 1002, (if recast Court's tort-like "causation" language) cut promise-breach benefit hindsight, neither unforeseeable intervening "cause" loss. 38 when settled, notably reasonableness motivation settlements terminate major litigation, less clear today. even Circuits already defense" immunized servicemen claiming defective products. McKay Rockwell International 704 444, 448-451 (C.A.9 1983), cert. denied, 464 1043, 104 711, 79 175 (1984); Brown Caterpillar Tractor 696 246, 249-254 (C.A.3 1982); Tillett J.I. Case 756 591, 599-600 (C.A.7 1985). state differ among Brown, supra; Tillett, Hansen Johns-Ma nville Products 734 1036, 1044-1045 (C.A.5 1984), 470 1051, 105 1749, 84 814 (1985). Second Circuit, home decided issue. trial judges (due irrelevant procedural considerations) considered contractor" opposite ways. Compare 1263, 1274-1275 (E.D.N.Y.1983) 847-850 (E.D.N.Y.1984), aff'd, 818 145 (C.A.2 1987), sub nom. Fraticelli Dow Chemical 484 1004, 695, 648 authoritatively uphold 1988, four years after Boyle, supra. ground Courts previously relied. McKay, 448-451; 596-597 (finding (1950)) 509-511, 2516-2518 (explicitly rejecting defense"). contemporaneous uncertainty, perspective reasonable strategy, avoided added significant additional helping Orange," 749 (explaining why district settlement). Nothing suggests contrary. "foreseeable" potential consequence therefore scope protecting harms 188, 205-208 (C.A.Fed.1994) (Plager, dissenting). reason, simply aside determination point. 40 decides basis, namely, claim. very much creature particular circumstance—the terms, negotiating understandings industry practice. 562, 566-570. Unlike majority, compartmentalizes separate doctrinal categories "Spearin claim, claim)—each separately doctrine-specific reasons—I believe submissions, fairly read, forth general fact-based details order, allocate defective-government-specification-caused harm—namely company, inferior knowledge, seek compensation price. allege true complete (as stage proceedings), plausible. considerations majority points answer basic contentions. five sets points, together, (of sort claimed); hence, possibly imply t "in fact." 561. suggest First, implies officer, likelihood, indemnity, bypass "render superfluous," "panoply regulations" procedures follow obtain Ante, __. My problem lies statute, Order, differently. nonspecific ambiguous phrased language, reference (1964 portion today treats special, exist 1964, silent (indemnification) (no indemnification); compare 17-301 (1975) (implementing procedures) (1964) 17.204-4 (1960) ("Informal commitments formalized persons formal [e.g., furnished property services good faith apparent giving oral instruction]. Formalization normally assuring treated expeditiously"); 17.206(i) (indemnification obligation availability funds). Second, opinions "open-ended" violate 1341 __-__, n.10 (citing Assumption Contractor Third Persons—Reconsideration, 62 Comp. Gen. 361 (1983)). open-ended, capped insurer improper. Reimbursement Costs Connection Liabilities Parties Employees' Negligence, 892 (1943). A agreement, reflected price, makes kind self-insurer, effect expenditure risk roughly equal premiums saves self-insuring), sufficient plaintiffs' purposes. all, factual allegations, aware sensed trouble, insurance, premium buy treat unknowing similarly. Indemnification Public Utilities Against Loss Arising Out Sale 59 705 (1980) "sole source" service lawful Act). Whether spend writing Act. 44 Third, distinguishes Brandeis discussed protects "specifications" majority's words, "frustrate impossible," "extend contractor." itself distinction. Nor subsequent Michigan Wisconsin Pipeline Williams-McWilliams 945 1977) (allowing recovery damage following specifications). F.3d, 197 (Spearin proves defective). If pay, contractor's own machinery destroyed (defective-specification-caused) explosion destruction frustrates performance, Ordnance Research, 221 641, 609 462, 479 (1979) (treating explosions causing increased specifications), takes just complete? identical next-door neighbor explosion? whether answers questions, unlikely namely compel favor, offers indirect support, background, implying (in circumstances) Spearin-like protection. Fourth, "hold harmless" ("no order") "do attempt DPA's affirmative indemnity." Reply 2. "an backdrop sweeping contained DPA." stated objective—to relieve involuntarily liability—would led (given parties' uncertainty interpretation) (existing intended indemnify, (before interpretation immunity provision) thought forced Fifth, 198, 8, ante, ---- - accepted Corp. (1977). That doctrine personnel suits) contractors, tort, turn, sue Otherwise soldier, unable ) caused, rifle, rifle instead, thereby, sense, circumventing One postdates formation decade. More importantly involve Rather concerns Stencel, 667-668, nn. 2, 2056 3. nowhere says, implies, prohibits agreeing, implicitly, Indeed, "fail[s] supports conclusion Tort remedy, remedy. absence bar remedies having elements tort." Hatzlachh Supply 444 460, 465, 647, 650, 614 (per curiam). insofar warns easily armed-services-related liability; then, words represent wise caution absolute prohibition. 48 sum, circumstances—compelled production, defect—which, true, government, dealing "implied" particularly authorities, offered somewhat similar guarantees circumstances. validity turn strength evidence, practices 1960's—matters lower familiar we. 49 unnecessarily restricts lacking proceeding, relies fear practical disposing proceeding difficult, eye towards achieving allocation intended. * syllabus Reporter Decisions convenience reader. Detroit Lumber 200 321, 337, 282, 287, 499. Nearly 300 "opt out" certified independent defendant plaintiffs. opt-out credible connection injuries liability. 611 1223 (E.D.N.Y.1985). affirmed, solely defense. 187, 189 (1987), Krupkin 1234, 2899, 932 claims, appeals (1977), precluded second "well-established principles underlying settled "were merit." 207. raised complaint Takings Clause Fifth Amendment, subsequently abandoned still 17, 22, BREYER's dissent distinguish between, address, observes "also forth" "much claim." Post, believe, indistinguishable (but Hercules) raised, address. differs decline it; presented briefs Improvement 1982, newly inherited substantially Claims. 1992, changed title Administration 106 4506. recent change rendered refer throughout opinion. BREYER asserts, post, __, impl[ies] (1977)." cited implication, warranty-of-specification observed Ni nth adopted position inconsistent 1972. 669, 6, 2057 Air Lines, Wiener, 335 379, 404 1964), Barr Brezina Constr. 1141, 1143-1144 (C.A.10 1972)). drafted, Wiener suggested theory. raise Appeals. disavowed Plaintiff's Memorandum Opposition Motion Dismiss Summary Judgment 55 ("Hercules' relief breaches duties; liabilities"). find, do, suggesting discovery develop complaints unarticulated 4; plea necessarily apply claim; fails explain needed, developed, sit allegations inadequate. addition, skeptical information regarding 30-year-old transactions remains undisclosed, yet discoverable. presumably Thompson, access materials (including thousands documents scores depositions) Protective Staying Discovery 90-496 (Cl.Ct.), pp. 1, 3-4, 1. provides: "(a)(1) Columbia government — "(A) available obligation; "(B) unless law." With peculiar exception sanctioned, accounting never sanctioning incurring contrary." 361, 364-365 finds problematic applies equally agreements. cf. __ creation agreements); 235.070 (1994) (specifying criteria clauses development contracts); 252.235-7000 252.235-7001 (contract 2354); 7-303.62 (1983) Pub.L. 85-804, 1431-1435 V)). asserts citing regulations, of" cover fields done showing Section provides, part: "No rule, regulation, thereafter declared competent invalid." urges barring customers orders delayed displaced account priority accorded authorizes require preferential treatment "necessary appropriate promote defense." 2071(a)(1) V). clearly functions hint

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