Court Opinion

ID: 9486744
Source: CourtListenerOpinion
Date Created: 2023-08-05 11:58:40.204843+00
Date Added: 2024-06-11T17:51:54.645819
License: Public Domain

*205PLAGER, Circuit Judge,
dissenting.
The story of the litigation stemming from our Government’s use of Agent Orange during the Vietnam War is long and complex. See PETER H. SCHUCK, AGENT ORANGE ON TRIAL: MASS TOXIC DISASTERS IN THE COURTS (enlarged ed., 1987). It may be that it is best to put this chapter of our nation’s history behind us, and to bury the issues with the dead. Appellants, by bringing this suit, do not allow us that peace. Be that as it may, as a court of law we are obliged to give appellants whatever justice the law affords. I believe the law affords substantially more justice than the majority concedes.
The background of this particular case is set forth in some detail by the majority. Undue attention to trees, however, often hides the forest. Appellants, the Hercules and Thompson chemical companies, manufactured Agent Orange pursuant to contracts made by and with the Government. Indeed, both Hercules and Thompson allege that the contracts were for a product which they did not choose to make, and which they were compelled to produce under penalty of law. The companies, along with others, were sued some years back by veterans and their families (collectively “the Agent Orange plaintiffs”) for injuries caused by exposure to Agent Orange when the Government used the defoliant in pursuit of its war in Vietnam; appellants claim that the Government should indemnify them for the financial losses they sustained in the settlement of the Agent Orange litigation.
Appellants present a host of arguments founded in government contract law, each of which a majority of this panel rejects. The many points of government contract law raised in this case and so finely parsed, however, should not be allowed to obscure the fundamental question: if the Government compels manufacture of a product by private companies, a product known to the Government to be potentially dangerous, and the use by the Government of the product causes the manufacturers to incur liability, may the Government claim immunity from the consequences of its conduct? I think not.
1.
The answer the Government gives, and the majority accepts, to this question is that there was no liability for the manufacturers to incur — the manufacturers could not have been held liable for the injuries sustained by the Agent Orange plaintiffs because the manufacturers were totally protected by a doctrine known as the government contractor defense. Op. at 198-99. The majority concludes from this that the over twenty million dollars paid to the Agent Orange plaintiffs by Hercules and Thompson resulted -from a “voluntary decision” by the companies. Op. at 200.
I find that reasoning unpersuasive. While there no doubt are civic-minded individuals in the upper ranks of both companies, and perhaps even among their lawyers, the notion that these manufacturers voluntarily made a twenty million dollar contribution to the veterans of the Vietnam War and their families out of the goodness of their hearts seems rather far fetched, and might even raise questions about their fiduciary obligations to their shareholders.1
The trial judge who presided over the settlement, an experienced and well-respected jurist, must have believed there was at least some ground upon which liability could be found. This was not a ease in which the parties came to the judge with an agreed settlement, one which the judge without further exploration approved. As the record shows, two trial judges shared this case. The first held that, under the government contractor defense as a matter of law, neither Hercules nor Thompson were liable for the veterans’ claimed injuries. In re “Agent Orange” Prod. Liab. Litig., 565 F.Supp. 1263 (E.D.N.Y.1983). However, before an order to dismiss was entered by this judge, a second judge assumed the case.2 The second *206judge rescinded the first judge’s summary-judgment for the manufacturers, and denied the motion to dismiss. In re “Agent Orange” Prod. Liab. Litig., 580 F.Supp. 1242 (E.D.N.Y.1984). This judge must have believed that there was a valid and ongoing “case or controversy,” or the court could not have retained jurisdiction over these defendants. This same judge presided over the extensive settlement negotiations conducted in his courthouse. In re “Agent Orange” Prod. Liab. Litig., 611 F.Supp. 1396 (E.D.N.Y.1985); see also Sehuek, supra, at 143 et seq. We must assume that this trial judge acted in good faith in a belief that the manufacturers might not be able to escape all liability. It ill behooves the Government, or this court, years later to question whether the trial judge properly understood the law of the case before him.
2.
The majority concludes that, despite what the trial judge may have believed, the Government had no liability to these contractors because of the government contractor defense as explicated in Boyle v. United Technologies Corp., 487 U.S. 500, 108 S.Ct. 2510, 101 L.Ed.2d 442 (1988). In the majority’s view, Boyle disposes of appellants’ implied warranty of specifications theory because the Supreme Court in Boyle in effect immunizes contractors such as these from all liability in situations such as that in the original Agent Orange plaintiffs’ suit. There are at least two problems with this reasoning.
For one, Boyle was decided in 1988, some four years after the settlement that is the subject of this suit.3 Yet the issue as the majority poses it is not whether years later the substantive law of the case might have been found (or might have changed?) to favor the companies, but whether at the time of the settlement the companies simply gave away money to the plaintiffs, or whether they settled under a reasonable apprehension of legal compulsion in order to minimize their (and the Government’s) potential liability.
The second reason why Boyle is inapposite to this case is that the issue and holding in Boyle turned on a question of federal preemption, an issue not in this ease. The question in Boyle is, in a suit on behalf of a deceased military officer against the manufacturer of a product purchased by the military and alleged to have caused the death, a suit which was brought under the substantive law of a particular state, may the Government’s manufacturer be held liable under state tort law. The Supreme Court answered no. The suit was brought in Federal Court as a diversity suit with a state cause of action. Although the Government was not the named defendant, the Supreme Court viewed the ease as implicating the Federal Tort Claims Act (FTCA), the statute in which Congress waived the Government’s immunity from tort liability. See 28 U.S.C. § 1346(b). The Supreme Court decided that the discretionary function exemption of the FTCA applied — the design of the escape hatch of the airplane was an exercise of federal discretion, and therefore state law was displaced. See 28 U.S.C. § 2680(a).
In the Agent Orange litigation, suit was brought by the plaintiffs not as a state tort action under the FTCA, but as a federal law action based on certain federal statutes and on case law recognizing, even after Erie,4 a limited scope for federal common law.5 Jurisdiction was alleged, not in diversity, but under “the common law and/or the statutory laws of the United States of America,” as a federal question case under 28 U.S.C. § 1331.6 The original trial judge held that substantial federal interests were affected by the litigation, and that federal common law *207provided both the substantive measure of liability and the basis for jurisdiction.7
The Second Circuit on appeal reversed the trial judge’s ruling on jurisdiction, and held the case was properly in federal court, but on diversity of citizenship jurisdiction.8 On remand the second trial judge ruled that this did not necessarily affect the substantive law of the case. In an exhaustive opinion he ruled that, as a choice of law rule, the substantive law of the case remained one of federal law: a federal or national consensus common law.9 Thus the preemption rule— whether federal law supercedes state substantive law in these eases — which was the concern in Boyle has no applicability to the Agent Orange litigation, a litigation in which federal law defined the substantive standard to be applied.
The difficulty the majority has in finding a satisfactory rationale for the outcome it supports is understandable. The so-called “government contractor defense” is a label hung on a group of issues which first found expression in Feres v. United States, 340 U.S. 135, 71 S.Ct. 153, 95 L.Ed. 152 (1950). In that ease the Supreme Court was called upon to decide whether the general waiver of tort immunity contained in the Federal Tort Claims Act gave military personnel the right to sue the Federal Government under routine tort theories in state courts. The Court held that, for a variety of policy reasons, the Act did not apply to injuries incident to military service; military personnel could not sue their employer in state courts.
Later, in Stencel Aero Engineering Corp. v. United States, 431 U.S. 666, 97 S.Ct. 2054, 52 L.Ed.2d 665 (1977), the Court extended Feres and held that neither the Government nor the manufacturer were liable to a military pilot for alleged negligence in the design and construction of an airplane’s life support system. However, the Court in Stencel revisited the policy arguments on which Feres stood, and revised its rationale for the result. Thus began a series of cases in which the Court has tried to find a reasoned basis for the military exception rule,10 culminating in United States v. Johnson, in which four members of the Court were of the view that Feres had been wrongly decided,11 and finally Boyle, with a different rationale altogether, keyed to the language of the FTCA itself.12
In light of this history, to suggest that the evolving government contractor defense would clearly dictate the outcome in the original Agent Orange litigation seems to me to be unwarranted historical revisionism, out of place in the decision before us in this case. I do not know what the ultimate decision in the Agent Orange litigation would have been on this issue, nor does anyone.13 Since I find *208unpersuasive the majority’s defense of the trial judge’s summary judgment on this point, and since I believe there are a number of unresolved fact and law issues, I would return the case to the Court of Federal Claims with instructions to hold a full trial on the issues.
3.
A few remaining observations about the trees. The majority has also rejected appellants’ theory of government liability under the doctrine of superior knowledge. If the Government’s knowledge is superior to that of the contractor, the Government may incur liability if it fails to disclose information required by the contractor. There are “instances in which the defendant [the Government] is clearly under such an affirmative obligation and cannot remain silent.” Helene Curtis Indus., Inc. v. United States, 312 F.2d 774, 778, 160 Ct.Cl. 437 (1963). The Government had more knowledge of the potential harm caused by Agent Orange than did appellants, who had not participated in the development of, had little experience with, and were relatively ignorant regarding the health hazards posed by, Agent Orange. Thus appellants contend that the Government is responsible for the harms caused to the Agent Orange plaintiffs, and that consequently the Government should pay appellants’ share of the settlement fund.
The majority disagrees. It understands American Ship Building Co. v. United States, 654 F.2d 75, 228 Ct.Cl. 220 (1981), to require that the Government divulge information only when the contractor’s ignorance would hinder the contractor’s performance of the contract. In this case, the costs imposed on the appellants are the result of a settlement reached long after performance had ceased. The majority therefore holds that appellants cannot recover under the doctrine of superior knowledge because the damages arose after performance.
There is neither prior authority nor present reason to limit the doctrine of superior knowledge to require compensation only for difficulties incurred during performance.
The doctrine of superior knowledge is generally applied to situations where (1) a contractor undertakes to perform without vital knowledge of a fact that'affects performance costs or duration, (2) the government was aware the contractor had no knowledge of and had no reason to obtain such information, (3) any contract specification supplied misled the contractor, or did not put it on notice to inquire, and (4) the government failed to provide the relevant information. See, e.g. Helene Curtis Industries, Inc. v. United States, 160 Ct. Cl. 437, 312 F.2d 774 (1963).
American Ship, 654 F.2d at 79 (emphasis supplied). Contrary to the • majority’s deployment of the case, nothing in American Ship confines the doctrine of superior knowledge to information regarding the performance of contracts. American Ship merely notes that the doctrine has generally been invoked in cases in which the contractor’s performance was hindered because of the Government’s failure to divulge information.
The majority differentiates the doctrine of superior knowledge from the doctrine of implied warranty of specification, announced in United States v. Spearin, 248 U.S. 132, 39 S.Ct. 59, 63 L.Ed. 166 (1918). The majority acknowledges that, under the latter doctrine, government liability is not limited to contract performance, but extends to later losses as well. Op. at 197. Spearin requires that “if the contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequences of defects in the plans and specifications.” Id., 248 U.S. at 136, 39 S.Ct. at 61. The theory is that the author of *209a plan detailed enough to comprise specifications often possesses knowledge superior to that of the party who contracts to execute that plan. “Specifications so susceptible of a misleading reading (or implication) subject the [Government] to answer to a contractor who has actually been misled to his injury. United States v. Spearin, 248 U.S. 132, 137, 39 S.Ct. 59, 61, 63 L.Ed. 166 (1918).” Helene Curtis, 312 F.2d at 778 (citation abbreviated).
However, as the quotation above from American Ship indicates, the Court of Claims in American Ship relied on Helene Curtis, which is in turn founded on Spearin. The doctrines of superior knowledge and the implied warranty of specification are thus different expressions of a single principle. Both doctrines ultimately rest upon general contract law. If the Government’s incomplete or misleading information, or its particular specification of its requirements, imposes losses, now or later, on the contractor, then the Government, like any other contractor, should not escape responsibility. That responsibility may well extend beyond the period of performance of the contract; there is no reason to hold that the doctrine of superior knowledge makes the Government responsible only for hindrances to performance of the contract.
Finally, as noted earlier, the Government compelled appellants to produce Agent Orange under the authority granted by the. Defense Production Act (DPA), 50 U.S.C. app. §§ 2061 et seq. (1964). The DPA requires manufacturers to accept contracts deemed necessary to the national defense, and further requires manufacturers to give such contracts absolute priority over other obligations. 50 U.S.C. app. § 2071(a) (1964).
The DPA also includes a “hold harmless” provision, 50 U.S.C. app. § 2157 (1964), that states:
No person shall be held hable for damages or penalties for any act or failure to act resulting directly or indirectly from compliance with a rule, regulation, or order issued pursuant to this Act ...
The Court of Federal Claims rejected Thompson’s argument that § 2157 immunizes the manufacturers from liability for any eventual use of the defoliant.14 It held that the provision should be read narrowly, to apply only to liability caused by giving the Government its claimed priority for production. Thompson argues that even if that is so, the provision at least supports the conclusion that there is an implied-in-fact obligation on the part of the Government to indemnify Thompson for the damages incurred. The majority agrees with the trial court’s reading of the provision, and concludes that the immunity — like the common-law doctrine of impossibility of performance — extends only to contract breaches required by the Government’s imposition. From that, the majority concludes that the Government is immune from the claims of the manufacturers.
I have three problems with the majority’s reading of the DPA. ' First, the majority’s conclusion is a non sequitur: that the Act grants manufacturers immunity against third parties on contractual claims does not suggest, much less require, that the Act grants the Government immunity against manufacturers who suffer other losses.
Second, although justice may be blind, judges should take some cognizance of practical realities. A statute that gives the Government the authority to force private manufacturers to accept contracts and to place such contracts before their other obligations gives the Government substantial operational control over those enterprises. Under the DPA, the Government in effect can seize the company. Congress recognized that reality, and specified a hold harmless clause in the Act.
Third, the majority ignores the language of the statute. The majority argues that “if Congress had intended [the statute] to impose upon the government the kind of liability asserted by Thompson, it would have said so in clear and unequivocal terms.” Op. at 204. The Agent Orange litigation was historic, and was both substantively and procedurally unimaginable at the time of the passage *210of the Defense Production Act. We should not expect Congress to have specifically described a liability problem arising from a judicial process of which they could have had scant idea. Yet if Congress intended to limit the sweeping scope of the hold harmless provision to contract performance only, Congress could have written, for example, “No person shall be held liable for breach of contractual obligations caused by any act or failure to act, etc.” That is not the language of the statute. It is difficult to imagine more “clear and unequivocal” terms than that actually used by Congress: “No person shall be held liable for damages or penalties for any act or failure to act resulting directly or indirectly from compliance with a rule, regulation, or order issued pursuant to this Act ...” 50 U.S.C. app. § 2157 (1964). The law as well as the circumstances support the Government’s liability.
4.
Over the past several years the parties to this litigation and the courts have expended much effort phrasing the issues presented by this case in terms of government contract law. As the preceding discussion suggests, however, the conceptual grammar of government contract law may be inadequate to the task. Because the relationship between appellants and the Government was never arms-length, any discussion of that relationship in doctrinal terms that presume freedom of contract is incoherent.
The twenty million dollars or so at stake in this litigation may be small potatoes to the Federal Government, and we do not know how much the money means to the financial health of appellants. But if there ever is a case in which we can fairly say, it is not the money, it is the principle that matters, this is the case. At the core of this litigation is the way in which our nation distributes the burden of its military activity among its citizens. In wartime, that burden is inevitably distributed unevenly. We cleave to the Constitution, however, in spite of unfairness. The Constitution provides an apt analogy — the Takings Clause of the Fifth Amendment is “designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” Armstrong v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563, 1569, 4 L.Ed.2d 1554 (1960). The question in this case is whether the public should pay for the damages that the federal judiciary has attributed to the use of Agent Orange in Vietnam, or whether appellants alone should bear the burden.
The Government took away appellants’ control over their businesses. By assuming control, the Government deprived appellants of their ability to conduct themselves prudently, and instead forced appellants to engage in a dangerous enterprise, the manufacture of Agent Orange. In exposing appellants to risk, the Government incurred an obligation to make appellants whole should the danger come to pass. The danger of the Government’s use of Agent Orange is now clear, or as clear as our law can make it. Equally clear is the Government’s obligation to indemnify appellants. No amount of niggling at doctrine can obscure that simple truth.
I respectfully dissent.

. If the companies’ lawyers advised that the making of the contribution was necessary, when the law so clearly provided an absolute and airtight defense to liability, there might be a malpractice issue as well.

. Judge George C. Pratt, the judge originally assigned to these cases, was elevated to the Court *206of Appeals, and his responsibilities as the trial judge were reassigned to Chief Judge Jack Wein-stein.

.The Agent Orange plaintiffs filed their original suit in July 1978; after extensive pretrial proceedings, trial was set for May 7, 1984. The case was settled that day.

. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).

. See, e.g., Clearfield Trust Co. v. United States, 318 U.S. 363, 318 U.S. 744, 63 S.Ct. 573, 87 L.Ed. 838 (1943).

. In re “Agent Orange" Prod. Liab. Litig., 506 F.Supp. 737, 740 (E.D.N.Y.1979).

. Id. at 744.

. In re "Agent Orange" Prod. Liab. Litig., 635 F.2d 987 (2d Cir.1980).

. In re "Agent Orange” Prod. Liab. Litig., 580 F.Supp. 690 (E.D.N.Y.1984).

. See, e.g., United States v. Shearer, 473 U.S. 52, 105 S.Ct. 3039, 87 L.Ed.2d 38 (1985).

. United States v. Johnson, 481 U.S. 681, 692, 107 S.Ct. 2063, 2069, 95 L.Ed.2d 648 (1987) (Justice Scalia, with whom Justices Brennan, Marshall, and Stevens joined, dissenting).

. Although the question of government liability to military personnel would seem of direct interest to only a small segment of the legal profession, the Feres-Stencel-Boyle cases have generated their share of academic attention, largely critical. One of the most recent and exhaustive reviews is David E. Seidelson, From Feres v. United States to Boyle v. United Technologies Corp.: An Examination of Supreme Court Jurisprudence and a Couple of Suggestions, 32 Duq. L.Rev. 219 (1994). See also 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 (1990); Barry Kellman, Judicial Abdication of Military Tort Accountability: But Who is to-Guard the Guards Themselves?, 1989 Duke L.J. 1597; John Paul Stevens, Is Justice Irrelevant?, 87 Nw.U.L.Rev. 1121 (1993).

.In its 1987 opinion upholding both the settlement in the original litigation and Judge Wein-stein's later dismissal of the ‘opt-out' cases, the Second Circuit had to walk a tight line. In effect, the court had to find a cause of action for the one (in support of the trial judge’s denial of the motion to dismiss the original defendants), but not for the other (in support of the grant of the motion to dismiss regarding the opt-outs). The Second Circuit opined that "in the light of hindsight, some 15 to 20 years after the fact, the weight of present scientific evidence does not establish that personnel in Vietnam were injured by Agent Orange, and there cannot have been a breach of an earlier duty to inform the govern*208ment of known hazards.” In re “Agent Orange” Prod. Liab. Litig., 818 F.2d 145, 174 (2d Cir. 1987). In like vein the court thought that "defendants clearly did not breach any duty to inform the government of hazards relating to Agent Orange,” and thus were protected by the 'military contractor defense.’ Id. at 173. To the extent those conclusions were invoked as a rationale for affirming the judgments against the opt-out plaintiffs, they are arguably defensible given the burdens of proof and deference owed the trial judge. However, as a basis for initially predicting the eventual outcome of the original litigation, they would be inconsistent with the position taken by Judge Weinstein, and are speculative.

. Interestingly, both Hercules and Thompson alleged in their complaints that they had been compelled under the Defense Production Act to manufacture Agent Orange, but only Thompson briefed on appeal the question of whether the 'hold harmless' clause of the Act applied.