Court Opinion

ID: 9484174
Source: CourtListenerOpinion
Date Created: 2023-08-05 09:42:55.138795+00
Date Added: 2024-06-11T17:40:09.772982
License: Public Domain

BECKER, Circuit Judge,
concurring and dissenting.
Using Boyle v. United Technologies Corp., 487 U.S. 500, 108 S. Ct. 2510 (1988), as a springboard, the majority has announced a sweep*330ing rule of federal common law under which federal government contractors may share the government's immunity from tort liability. In my view, the majority has extended Boyle, which dealt only with contracts for military equipment and was premised on concerns unique to the military, far beyond its logical limits. In so doing, the majority has encroached on the domain of Congress and that of the states. I would hold the Boyle defense inapplicable to nonmilitary government contracts such as the one at issue.
In view of my conclusion, I must reach the question whether a government contractor defense applies here as a matter of state law. I believe that the plaintiff is judicially estopped from making her argument that Florida law rather than Virgin Islands law applies. I therefore look to Virgin Islands law, and conclude that the defense does not apply. In my view, an immunity rule for government contractors is inconsistent with the principles of strict products liability applied in the Virgin Islands. Accordingly, while I agree with the majority that the summary judgment order of the district court must be reversed and the case remanded, and in that respect concur in the judgment, I would direct the district court to conduct proceedings in the absence of either a federal or a Virgin Islands government contractor defense. To that extent, I respectfully dissent.
A.
Boyle announced the following test for identifying when a military contractor may share the government's immunity from product liability:
Liability for design defects in military equipment cannot be imposed, pursuant to state law, when (1) the United States approved reasonably precise specifications; (2) the equipment conformed to those specifications; and (3) the supplier warned the United States about the dangers in the use of the equipment that were known to the supplier but not to the United States.
Boyle, 487 U.S. at 512, 108 S. Ct. at 2518 (emphasis added). In my view, Boyle does not lend itself to the majority's expansive reading, especially in light of the well-established principle that rules of federal common law should be narrowly drawn and imposed only in *331rare circumstances where there is a "significant conflict" between a federal interest and the application of state law, see Wallis v. Pan American Petroleum Corp., 384 U.S. 63, 68, 86 S. Ct. 1301, 1304 (1966); infra Part I.C.
I agree with the majority that the first step in the Boyle decision — the Court's conclusion that there is a "uniquely federal interest" in potential civil liability arising out of the performance of federal procurement contracts, see Boyle, 487 U.S. at 505-06, 108 S. Ct. at 2514-15 — might apply to any government contract, military or nonmilitary. However, as Justice Scalia's opinion (for the Boyle majority) demonstrates, "[t]hat the procurement of equipment by the United States is an area of uniquely federal interest. . . merely establishes a necessary, not a sufficient, condition for displacement of state law." Id. at 507, 108 S. Ct. at 2516. Displacement of state law with federal common law is permissible only where there exists a "significant conflict . . . between an identifiable federal policy or interest and the operation of state law." Id. (citations omitted). I cannot agree with the majority's assertion that such a "significant conflict" is involved whenever the federal government exercises discretion in the context of an ordinary procurement contract. See Majority Typescript at 8, 9, 13-14.
In identifying the "significant conflict" at issue in Boyle, the Court looked first to the "discretionary function" exception of the Federal Tort Claims Act (FTCA), which immunizes federal employees and agencies from tort liability where the basis for the tort claim is the exercise of a "discretionary function or duty on the part of a federal agency or an employee of the government." 28 U.S.C. § 2680(b). After determining that the "selection of the appropriate design for military equipment used by our Armed Forces is assuredly a discretionary function within the meaning of this provision," 487 U.S. at 511, 108 S. Ct. at 2518, the Court spelled out the particular reasons for shielding military contractors from tort liability via federal common law, reasons which are either unique to or heightened in the military context. The Court explained that the design of military equipment "often involves not merely engineering analysis but judgment as to the balancing of many technical, military and even social considerations, including specifically the trade-off between greater safety and greater combat effectiveness." Boyle, 487 U.S. at 511, 108 S. Ct. at 2518 (emphasis added).
Parsing this key portion of Boyle, the majority concludes that, aside from concerns about combat effectiveness, "all of the other *332policy reasons cited by the Court in support of the government contractor defense are equally applicable to military and nonmilitary procurement." Majority Typescript at 9. This reading, in my view, distorts the Court's reasoning. While it may be true that some of the policy reasons mentioned by the Court in Boyle as part of the justification for shielding military contractors from tort liability (i.e., interests in protecting the government's discretionary decisions involving technical, economic or social concerns) may apply outside of the military context, see Majority Typescript at 9, these concerns do not create the same degree of conflict between a federal interest and the operation of state law that exists in the military context, where product safety must be balanced against national security.1
The courts are split on the question whether Boyle's federal government contractor defense can be extended to contracts for nonmilitary equipment. See Majority Transcript at 6 n.l. However, the only other federal court of appeals that has specifically addressed *333the issue has refused to extend the defense to contracts for nonmilitary equipment.2 In Nielsen v. George Diamond Vogel Paint Co., 892 F.2d 1450 (9th Cir. 1990), the Ninth Circuit held that the Boyle defense did not extend to a products liability suit brought by a civilian employee of the Army Corps of Engineers against a paint manufacturer for injuries incurred while painting a dam for the Corps. The defendants argued that they were entitled to summary judgment under Boyle because they manufactured the paint in accordance with government-approved specifications and did not know of any dangers that were unknown to the government. Rejecting this argument, the Ninth Circuit reasoned that, although the Supreme Court in Boyle based the government contractor defense in part on the policies behind the discretionary function exception to the FTCA, "the policy behind the defense remains rooted in considerations peculiar to the military." Nielsen, 892 F.2d at 1454.3
*334A number of courts have agreed with the Ninth Circuit's conclusion that Boyle applies only to contracts for military equipment. See In re Chateaugay Corp., 146 Bankr. 339 (S.D.N.Y. 1992) (Boyle defense not applicable to products liability suit brought by injured postal employee against manufacturer of allegedly defective postal vehicle); Pietz v. Orthopedic Equip. Co., 562 So. 2d 152, 155 (Ala. 1989) (Boyle defense is limited to military equipment), cert. denied, 498 U.S. 823, 111 S. Ct. 75 (1990); Reynolds v. Penn Metal Fabricators, Inc., 146 Misc. 2d 414, 550 N.Y.S. 2d 811 (Sup. 1990) (Boyle defense does not apply to government contractor responsible for manufacture of postal vehicle); In re New York City Asbestos Litig., 144 Misc. 2d 42, 46, 542 N.Y.S.2d 118, 121 (Sup. 1989) (Boyle defense does not apply to products liability claim involving asbestos used in material that was not strictly military equipment).4 However, other courts have applied Boyle to contracts for nonmilitary equipment. See Johnson v. Grumman Corp., 806 F. Supp. 212 (W.D. Wis. 1992) (Boyle defense applies to procurement contract for mail delivery vehicle); Vermeulen v. Superior Court, Alameda County, 204 Cal. App. 3d 1192, 251 Cal. Rptr. 805 (1st Dist. 1988) (Boyle defense applies equally to military and nonmilitary government contracts).
I believe that the Ninth Circuit has adopted the sounder approach. It was the heightened federal interest in shielding government decisions involving the national security, and not merely the exercise of discretion by government officials, which justified the Supreme Court's decision in Boyle to take the extreme and rare step of displacing state law with a rule of federal common law. No *335such interest justifies the majority's decision in this case to extend the Boyle defense to all government contractors.5
B.
The majority bases its decision to extend Boyle to nonmilitary government contracts in part on the premise that, if government contractors are subject to liability for design defects, they will pass the costs of that liability on to the government. See Majority Typescript at 7-9. Concern that the government may bear indirectly some of the liability costs of the products it purchases is not, in my view, a sufficient justification for displacing state law with a judge-made immunity rule for government contractors.
The Court did not suggest in Boyle, as the majority does here, that a "significant conflict" between federal interests and state law exists every time the costs of tort liability are passed on to the government by a government contractor. Rather, read in context, the cost concern articulated in Boyle was that the passing of liability costs for design defects from military contractors to the government would have the effect of second-guessing highly sensitive military decisions involving the balance between equipment safety and combat effectiveness. See Boyle, 487 U.S. at 511, 108 S. Ct. at 2518; supra Part I.A. In other words, the concern in Boyle about passing liability costs on to the government is meaningful because of its *336relation to the acute federal interest in avoiding judicial interference with the design of military equipment.6
Indeed, the cost theory relied on by the majority proves too much, for every time the government purchases a product made in the private sector, potential liability costs (factored into the price) are passed on to the government. While I agree with the majority that "[t]he government would suffer this economic harm regardless of whether it procured a product for military or civilian use," Majority Typescript at 7, the likelihood that the government will bear indirectly the liability costs of the products it procures from the private sector does not justify the displacement of state law with a sweeping rule of federal common law. Cf. South Carolina v. Baker, 485 U.S. 505, 521, 108 S. Ct. 1355, 1365-66 (1988) (nondiscriminatory imposition of costs on private entities that pass them on to federal government does not unconstitutionally burden federal functions).
Moreover, the government contractor defense, by definition, applies only to design defects, and not to manufacturing defects. See Mitchell v. Lone Star Ammunition, Inc., 913 F.2d 242, 245 (5th Cir. 1990). As the court noted in Johnston v. United States, 568 F. Supp. 351, 357 (D. Kan. 1983), since liability for manufacturing defects is not shielded by the government contractor defense, the argument that the purpose of the defense is to prevent the passing of liability costs on to the government carries little weight.
Additionally, it is not certain that subjecting government contractors to liability for design defects necessarily results in significantly greater costs to the government. As Justice Brennan pointed out:
The tort system is premised on the assumption that the imposition of liability encourages actors to prevent any injury whose *337expected cost exceeds the cost of prevention. If the system is working as it should, Government contractors will design equipment to avoid certain injuries (like the deaths of soldiers or Government employees) which would be certain to burden the Government.
487 U.S. at 530, 108 S. Ct. at 2528 (Brennan, J., dissenting); see also McKay v. Rockwell Int'l Corp., 704 F.2d 444, 457 (9th Cir. 1983) (Alarcon, J., dissenting) (contractors with better safety records will secure less expensive liability insurance and will pass those savings, as well as the benefits of greater safety, on to the government), cert. denied, 464 U.S. 1043, 104 S. Ct. 711 (1984); Johnston, 568 F. Supp. at 357 (same).
In short, the cost avoidance rationale does not justify the displacement of state products liability law with a federal judge-made immunity rule for all government contractors. In my view, the determination whether cost concerns justify the preemption of state tort law with a federal immunity rule for government contractors, and if so, the nature and scope of such a rule, lies in the domain of Congress.
C.
The majority's decision to extend the Boyle defense to all government contractors flies in the face of the long-standing doctrine that federal common law may replace state law only in "few and restricted" instances. Wheeldin v. Wheeler, 373 U.S. 647, 651, 83 S. Ct. 1441, 1444 (1963); see also Miree v. De Kalb County, 433 U.S. 25, 32-33, 97 S. Ct. 2490, 2495 (1977); Wallis v. Pan American Petroleum Corp., 384 U.S. at 68, 86 S. Ct. at 1304. In my view, Congress, not the federal judiciary, is the proper institution to create a broad, policy-driven immunity rule for private government contractors.7
The Court's decision in Boyle to fashion a rule of federal common law shielding military contractors from tort liability was controversial. Justice Brennan argued forcefully in his dissent that legislators, not judges, should decide whether and to what extent private government contractors should share the government's immunity from tort liability:
*338Congress . . . has remained silent — and conspicuously so, having resisted a sustained campaign by Government contractors to legislate for them some defense. The Court — unelected and unaccountable to the people — has unabashedly stepped into the breach to legislate a rule denying Lt. Boyle's family the compensation that the state assures them .... In my view, this Court lacks both the authority and the expertise to fashion such a rule ....
Boyle, 487 U.S. at 515-16, 108 S. Ct. at 2520-21 (Brennan, J., dissenting) (footnote omitted); see also id. at 531-32, 108 S. Ct. at 2528-29 (Stevens, J., dissenting) (arguing that the legislature is better equipped to create an entirely new, policy-driven rule); Michael D. Green and Richard A. Matasar, The Supreme Court and the Products Liability Crisis: Lessons from Boyle's Government Contractor Defense, 63 S. Cal. L. Rev. 637, 714-26 (1990) (arguing that Congress, rather than the Court, is the proper institution to establish a federal government contractor defense); Paula G. Curry, Note, Expanding Federal Interests and Diminished Plaintiff Rights: The Government Contractor Defense, 31 B.C. L. Rev. 337, 371-73 (1990) (arguing that Boyle Court should have left the creation of a novel federal government contractor defense to Congress).
Although the Supreme Court in Boyle may have taken a controversial step, the majority today takes a giant leap, exponentially expanding the reach of Boyle. In so doing, the majority seems to ignore the long-standing principle that
[t]he enactment of a federal rule in an area of national concern, and the decision whether to displace state law in doing so, is generally made not by the federal judiciary, purposefully insulated from democratic pressures, but by the people through their elected representatives in Congress.
Milwaukee v. Illinois, 451 U.S. 304, 312-13, 101 S. Ct. 1784, 1790 (1981); see also Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S. Ct. 817, 822 (1938) ("Except in matters governed by the Federal Constitution or by Acts of Congress, the law to be applied in any case is the law of the State.").
Congress has not, as yet, decided to immunize government contractors from tort liability. See supra n.7. Nor are there "clear and substantial interests of the National Government, which . . . will suffer major damage if the state law is applied," United States v. *339Yazell, 382 U.S. 341, 352, 86 S. Ct. 500, 507 (1966), to hold nonmilitary government contractors liable for design defects. As I have discussed, an acute national interest in shielding government decisions regarding the design of military equipment justified the creation of a limited rule of federal common law in Boyle. But here the majority has articulated no such substantial national interest to justify immunizing manufacturers of nonmilitary equipment through a rule of federal common law.
II.
Because I would hold that Boyle's federal government contractor defense does not apply to the defendant in this case, I must consider whether a government contractor defense is available to the defendant as a matter of state law.
I address the plaintiff's choice of law argument only briefly. Carley argues on appeal that the court erred in applying the law of the Virgin Islands (the place of injury) and instead should have applied the law of Florida (the place of manufacture).8 Without reaching the merits of Carley's choice’ of law argument, I would hold that Carley is judicially estopped from making her choice of law argument. Not only did Carley fail to raise the argument until after the district court granted summary judgment, but she had previously argued in her Memorandum in Opposition to Defendant's Motion for Summary Judgment that Virgin Islands law should be applied (rather than federal common law under Boyle). Only after the district court held that "Virgin Islands law should incorporate the government contractor defense if it has not already done so," did Carley submit that Florida law should be applied. This court has "consistently held that judicial estoppel precludes a party from assuming a position in a legal proceeding inconsistent with one previously asserted." Government of Virgin Islands v. Paniagua, 922 F.2d 178, 183 (3d Cir. 1990); see also Muslin v. Frelinghuysen Livestock Managers, Inc., 777 F.2d 1230, 1231 n.1 (7th Cir. 1985) (acquiescence in court's choice of law amounts to waiver of any objection *340to such choice). Given this scenario, I believe Carley is judicially estopped from arguing that Florida law should apply.
Accordingly/I will address whether a government contractor defense exists as a matter of Virgin Islands law. I note preliminarily that the question whether a government contractor defense exists as a matter of Virgin Islands law is different from whether such a defense exists as a matter of federal common law, see supra Part I. As I have discussed, long-standing principles of federalism restrict the authority of federal courts to displace state law with judge-made rules of federal common law. See supra Part I.C. Such federalism concerns do not come into play when this court, sitting as the Supreme Court of the Virgin Islands, is asked to decide whether some version of the government contractor defense applies as a matter of Virgin Islands common law.
There is no Virgin Islands precedent for application of a government contractor defense.9 Section 402A of the Restatement (Second) of Torts, which governs strict products liability in the Virgin Islands, see Murray v. Fairbanks Morse, 610 F.2d 149, 154 n.8 (3d Cir. 1979); V.I. Code Ann. tit. I, § 4 (1967),10 is silent on whether such a defense may be applied to a strict liability claim, and there is no Virgin Islands statutory law on this issue. Thus, I must look to the general tenets of strict liability law in the Virgin Islands and to the rationales for the government contractor defense to determine whether adoption of the defense as a matter of Virgin Islands common law is warranted. See Polius v. Clark Equipment Co., 802 F.2d 75, 80 (3d Cir. 1986) ("In our role as the Supreme Court of the Virgin Islands . . . when the Restatement does not control, we must apply the law which represents the better approach, be that the minority or majority rule.").
*341Section 402A provides that if a person who is in the business of selling and/or manufacturing a product sells or manufactures the product "in a defective condition unreasonably dangerous to the user or consumer or to his property!, that person] is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property." Restatement (Second) of Torts § 402A. Liability is imposed even where "the seller has exercised all possible care in the preparation and sale of his product." Id.
In Murray v. Fairbanks Morse, this court, announcing Virgin Islands law, explained the policies behind § 402Á:
By focusing the legal inquiry on the product defect rather than the defendant's conduct and thereby easing the plaintiff's burden of proof, strict liability theory endeavors to place the risk of economic loss on the manufacturers of defective products, thereby spreading the loss and not saddling it solely on an innocent injured consumer. Because manufacturers bear the loss, strict liability also has the desirable effect of deterring manufacturers and sellers from introducing unsafe products into the stream of commerce.
610 F.2d at 158; see generally Dan B. Dobbs, Robert E. Keeton & David G. Owen, Prosser and Keeton on Torts § 98, at 692-94 (5th ed. 1984) (discussing the rationales for strict liability, including cost spreading, compensating injured parties, and deterring sale of unsafe products). Thus, § 402A, as applied in the Virgin Islands, places great emphasis on protecting potentially injured persons by providing compensation for injuries caused by design defects and by encouraging manufacturers and sellers to produce and sell safer products.
A rule that would immunize private manufacturers whose products conform to federal or state government specifications from strict liability for design defects would conflict with these policies. The most obvious effect of the government contractor defense is to place the full cost of accidents resulting from design defects on injured parties, thereby thwarting both the policy of compensating injured persons and the policy of risk-spreading. See generally Gail Rubin, Comment, The Government Contract Defense in Strict Liability Suits for Defective Design, 48 U. Chi. L. Rev. 1030 (1981) (arguing that the government contractor defense should not be applicable to bar strict liability claims for design defects). The defense also conflicts with the deterrence rationale behind strict liability: immuniz*342ing government contractors will give them little incentive to scrutinize government-provided or government-approved design specifications for potential dangers. See Ronald A. Cass & Clayton P. Gillette, The Government Contractor Defense: Contractual Allocation of Public Risk, 77 Va. L. Rev. 257, 260 (1991). Thus, unless the various rationales for the government contractor defense strongly outweigh the policies behind § 402A, I can see no justification for recognizing such a defense as a matter of Virgin Islands common law.
In applying the government contractor defense, courts have explained that it is simply not fair to impose tort liability on a government contractor who has merely complied with government specifications and therefore is not at fault. See, e.g., Vanchieri v. New Jersey Sports & Exposition Authority, 104 N.J. 80, 85-86, 514 A.2d 1323, 1326 (1986); In re "Agent Orange" Prod. Liab. Litig., 506 F. Supp. 762, 793 (E.D.N.Y. 1982). However, as I have noted, strict liability law in the Virgin Islands is not based on negligence or faulty conduct. "[Liability is imposed on the defendant even if it has exercised 'all possible care in the preparation and sale of [its] products.'" Murray v. Fairbanks Morse, 610 F.2d at 156 (citing Restatement (Second) of Torts § 402A(2)(a)); see also Acosta v. Honda Motor Co., 717 F.2d 828, 835 (3d Cir. 1983) ("The touchstone of § 402A ... is that the character of the manufacturer's conduct is essentially irrelevant to its liability — only the condition of the product is to be considered by the trier of fact.").11 In fact, strict *343liability for design defects applies to sellers and distributors even though they may not have actually manufactured the allegedly defective product.12 Thus, in my view, the fairness rationale for the government contractor defense carries little weight in the strict liability context. Accord Challoner v. Day & Zimmermann, Inc., 512 F.2d 77, 83 (5th Cir. 1975), vacated and remanded on other grounds, 423 U.S. 3, 96 S. Ct. 167 (1975). At all events, the notion that holding government contractors liable for designs specified by the government is unfair does not outweigh, in my view, the policies of victim compensation, cost-spreading and deterrence that underpin § 402A.
The doctrine of sovereign immunity is also considered a rationale for application of the government contractor defense. See, e.g., Beaver Valley Power Co. v. National Eng'g & Contracting Co., 883 F.2d 1210, 1215-15 (3d Cir. 1989); Mackey v. Maremont Corp., 350 Pa. Super. 415, 504 A.2d 908, 911 (1986). Although the Virgin Islands Legislature has waived the government's sovereign immunity from personal injury claims alleging negligence or a wrongful act or omission, this waiver does not apply to strict liability claims. See V.I. Code Ann. tit. 33, § 3408 (1992).13 The United States government is also immune from strict liability. See Laird v. Nelms, 406 U.S. 797, 92 S. Ct. 1899 (1972). Some courts have explained that the government's immunity from strict liability for design defects would be meaningless if a private contractor who simply fulfills the terms of a government-approved contract cannot share the immunity. See, e.g., Nielsen, 892 F.2d at 1456 ("Courts often absolve contractors from liability when following government specifications ... because of their reluctance to impose liability ... when the government itself would be immune from suit.").
*344I am not persuaded. The best explanation for the application of sovereign immunity today is that by restricting suits brought directly against the government, judicial interference with governmental policy-making is minimized. See Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 703-04, 69 S. Ct. 1457, 1468 (1949). But there is a significant difference between subjecting the government directly to tort liability claims and allowing such claims against private government contractors. "Surely suits against government contractors will have a less pronounced effect on government officials' decisions than suits against those officials personally, even if the costs of the former are passed on to the government." Green & Matasar, 63 S. Cal. L. Rev. at 716; see also Dorse, 513 So.2d at 1268 & n.4 (a private entity acting as an independent government contractor and not as an agent of government logically cannot share the government's immunity); Jeremy Travis, Note, Rethinking Sovereign Immunity, 57 N.Y.U. L. Rev. 597, 618-19 (1982).
Tied up with the sovereign immunity rationale for the government contractor defense is the concern that if government contractors are subject to liability for design defects, they will pass the costs on to the government, whereas if the government itself had made the product, it would be immune from such liability. See, e.g., Majority Typescript at 7-9, (relying on cost rationale as basis for extending the federal government contractor defense to all government contractors); Vanchieri, 514 A.2d at 1326 ("If contractors never shared government immunity, their costs of doing business would be higher and those costs would be passed on to the government entities hiring the contractors."); Mackey, 504 A.2d at 911 (government contractor defense "encourages lower costs to the government on competitive bids"). For the reasons discussed above, supra Part I.B., I am not persuaded that an interest in cutting government costs justifies immunizing private government contractors from liability for design defects. In my view, the strong policy interests behind the application of strict liability for design defects (compensation of injured victims, cost-spreading, and deterring unsafe products) outweigh any putative lowering of the cost of government procurement that might result from immunizing government contractors.
In short, none of the rationales for the government contractor defense outweigh the policies behind § 402A so as to convince me that the defense should be applied as a matter of Virgin Islands *345common law. Therefore, while I agree with the majority that the summary judgment order of the district court must be reversed and the case remanded, and to that extent concur in the judgment, I would direct the district court to conduct proceedings in the absence of either a federal or a Virgin Islands government contractor defense.

 The majority's reliance on Yearsley v. W.A. Ross Construction Co., 309 U.S. 18, 60 S. Ct. 413 (1940), as a basis for its extension of the Boyle defense to all government contracts is also, in my view, unavailing. See Majority Typescript at 6-7. In Yearsley, the Court barred a suit for damages based on the Takings Clause against a government contractor who had built a dam that had allegedly eroded the plaintiffs' land. But as the majority recognizes, see Majority Typescript at 6-7, the Court in Yearsley found that the contractor was an agent of the United States, and not a private contractor like the defendant in the case at bar. Yearsley, 309 U.S. at 20-21, 60 S. Ct. at 414; see also Dorse v. Armstrong World Industries, Inc., 513 So.2d 1265, 1268 n.4 (Fla. 1987) (entity may share governmental immunity under Yearsley only when performing activities within scope of true agency relationship with government); Reynolds v. Penn Metal Fabricators, Inc., 146 Misc. 2d 414, 416, 550 N.Y.S. 2d 811, 812 (Sup. 1990) (because defendant in Yearsley was in actual agency relationship with the government, Yearsley is distinguishable from case of private contractor seeking government immunity). It also bears noting that Yearsley was decided prior to the passage of the Federal Tort Claims Act in 1948, which drastically reduced the federal government's immunity from tort suits. Thus, Yearsley is of minimal relevance to the issue in this case. See Boyle, 487 U.S. at 524-25, 108 S. Ct. at 2525 (Brennan, J., dissenting).
Moreover, Yearsley was relied on in Boyle only to support the Court's preliminary conclusion that there is a "unique federal interest" in limiting civil liabilities that arise out of the performance of government procurement contracts. As I have discussed, I do not dispute the existence of a "unique federal interest" here. However, the existence of such an interest is not sufficient to justify the displacement of state law. See Boyle, 487 U.S. at 507, 108 S. Ct. at 2518.

 The majority relies on two pre-Boyle cases, Burgess v. Colorado Serum Co., 772 F.2d 844 (11th Cir. 1985) and Boruski v. United States, 803 F.2d 1421 (7th Cir. 1986). Majority Typescript at 12-13. However, the majority fails to make clear that the federal courts in these pre-Boyle cases were applying state law versions of the government contractor defense (Burgess applied a government contractor defense under Alabama law, while Boruski applied the defense as a matter of Illinois law). These cases thus did not deal with the very different concerns involved when federal courts impose rules of federal common law to displace state law. See infra Part I.C.
Several post-Boyle decisions by the Fifth and Eleventh Circuits do suggest that those courts view the Boyle defense as extending to contracts for nonmilitary equipment. See Glassco v. Miller Equipment Co., 966 F.2d 641 (11th Cir. 1992); Trevino v. General Dynamics Corp., 865 F.2d 1474 (5th Cir.), cert. denied, 493 U.S. 935, 110 S. Ct. 327 (1989). However, these cases applied Boyle to military equipment and therefore did not specifically address or decide the issue.

 The Ninth Circuit recently reaffirmed its reading of Boyle as limited to government contracts for military equipment in In re Hawaii Fed. Asbestos Cases, 960 F.2d 806 (9th Cir. 1992). Asbestos manufacturers sought to invoke the Boyle defense to tort claims brought on behalf of individuals injured from exposure to asbestos dust while serving in the U.S. Navy. The court held that the asbestos insulation, although contracted for by the military, was not military equipment and therefore was not subject to the Boyle defense (which the court referred to throughout as a "military contractor defense"). The rule of federal common law articulated in Boyle, the court explained, immunizes contractors "only with respect to the military equipment they produce . . . [because] the military makes highly complex and sensitive decisions regarding the development of new equipment for military use." 960 F.2d at 811. Because *334the asbestos insulation "was not manufactured with the special needs of the military in mind," id. at 812, the court held that the manufacturers could be exposed to tort liability, just as they would be had a private party, instead of the government, contracted for the insulation.

 The courts have not addressed with precision the issue of which products within the military context constitute "military equipment" under Boyle, and that issue is not before us here. See, e.g., Stout v. Borg-Warner Corp., 933 F.2d 331 (5th Cir.) (assuming without discussion that an Army air conditioning unit used to cool Hawk Missile System Mobile Repair Unit was military equipment and was therefore subject to Boyle defense), cert. denied, 112 S. Ct. 584 (1991); but see Hawaii Fed. Asbestos Cases, 960 F.2d 806 (9th Cir. 1992) (holding that asbestos insulation in Navy buildings was not military equipment and was therefore not subject to Boyle defense), discussed above, supra n.3.

 The majority suggests that Boyle's rejection of the Feres doctrine as the source of the government contractor defense, and the Court's reliance instead on the discretionary function exception to the FTC A, is a strong indication that the Supreme Court intended to extend the government contractor defense to all government contracts. See Majority Typescript at 7-8.1 do not read Boyle that way. In Boyle, the Court explained that it could not rely on Feres as a basis for the government contractor defense because the Feres doctrine was both too broad and too narrow. The Court concluded that Feres was too broad in that it would immunize government contractors from suits by members of the armed services even when the products that caused their injuries were designed without government input. Conversely, the Court concluded that Feres was too narrow because it would only cover members of the armed services, and not civilians injured by military equipment. However, the Court did not suggest that an additional reason for avoiding Feres and looking instead to the discretionary function exception was that the discretionary function exception is not limited to the military context. As the Ninth Circuit explained, although the Court "changed the intellectual moorings of the defense from the Feres doctrine to the discretionary function exception [,]... the policy behind the defense remains rooted in considerations peculiar to the military." Nielsen, 892 F.2d at 1454-55.

 The Court also invoked the cost concern in the first part of its analysis, explaining that "imposition of liability on government contractors will directly affect the terms of government contracts: either the contractor will decline to manufacture the design specified by the government, or it will raise its price. Either way, the interests of the United States will be directly affected." Boyle, 487 U.S. at 507, 108 S. Ct. at 2515-16. But the Court made this point only to support its preliminary conclusion that there is a "unique federal interest" in potential civil liabilities that arise out of the performance of federal government contracts. As I have explained, I agree that such an interest exists, but the existence of a "unique federal interest" is not sufficient to justify displacement of state law. See supra Part I.A; Boyle, 487 U.S. at 507, 108 S. Ct. at 2516.

 Congress has considered, but never passed, various versions of a federal government contractor defense. See, e.g., H.R. 4765, 99th Cong., 2d Sess. (1986); S. 2441, 99th Cong., 2d Sess. (1986).

 Because the district court was unsure whether the applicability of the government contractor defense was governed by federal or state law, the court held that the defense was available as a matter of either federal or Virgin Islands law. The court then concluded that the same three-pronged defense set out in Boyle applies to all government contractors under Virgin Islands law.

 Aside from the district court's offhand assertion in this case that Virgin Islands law should incorporate a government contractor defense, and a few lines of dicta in an unpublished district court opinion which similarly assumed without deciding that the defense applies (or should apply) in the Virgin Islands, see Nielsen v. Oshkosh Truck Corp., Civ. No. 1986/80, slip op. at 1-3 (D.V.I. Apr. 13, 1988), I am aware of no other Virgin Islands cases that mention the defense.

 V.I. Code Ann. tit. I, § 4 adopts the rules in the Restatements as the rules of decision in the Virgin Islands in the absence of local laws to the contrary.

I note in this regard that the government contractor defense should not be confused with the similar, though analytically distinct, "contract specifications defense." The latter defense applies to negligence claims involving products that are manufactured to the order and specifications of another party (private or governmental). The commentary to § 404 of the Restatement, which deals with negligence, explains that where a contractor simply follows the design specifications of another, the contractor "is not subject to [negligence] liability if the specified design or material turns out to be insufficient to make the chattel safe for use, unless it is so obviously bad that a competent contractor would realize that there was a grave chance that his product would be dangerously unsafe." Restatement (Second) of Torts § 404, cmt. a. Because the contract specifications defense is grounded in negligence (and is discussed in the Restatement only in the context of negligence), it should have no application to strict liability claims, where faulty conduct on the part of the seller or manufacturer is irrelevant. Several courts have so held. See, e.g., Shaw v. Grumman Aerospace Corp., 778 F.2d 736, 739 (11th Cir. 1985), cert. denied, 487 U.S. 1233, 108 S. Ct. 2896 (1988); Challoner v. Day & Zimmermann, Inc., 512 F.2d 77, *34383 (5th Cir.), vacated and remanded on other grounds, 423 U.S. 3, 96 S. Ct. 167 (1975); Johnston v. United States, 568 F. Supp. at 354; Dorse, 513 So.2d at 1267.

 Restatement (Second) of Torts § 402A, cmt. c. provides in part: The rule ... applies to any person engaged in the business of selling products for use or consumption. It therefore applies to any manufacturer of such a product, to any wholesale or retail dealer or distributor .... The basis for the rule is the ancient one of the special responsibility for the safety of the public undertaken by one who enters into the business of supplying human beings with products which may endanger the safety of their persons or property.

 Moreover, the Virgin Islands' waiver of sovereign immunity is limited to $25,000. See V.I. Code Ann. tit. 33, § 3411 (1992).