Hercules Incorporated v. The United States, Wm. T. Thompson Company v. United States

AFFIRMED-IN-PART, jury’s dаmage thus vacate the award VACATED-IN- PART, damages a recalculation of and REMANDED remand for letter. the date of the 1989 Damages

D. Buckeye

Finally, argues that

jury’s damage award was excessive because jury per to account for the failed $40 required pay plate center that Amsted was INCORPORATED, HERCULES Dresser, purchase agree pursuant to their Plaintiff-Appellant,

ment, plate center that Amsted sold. each v. denying Buckeye’s post-trial motion on STATES, issue, UNITED Defendant- the district court stated that Buck Appellee. eye object by failing this issue waived argument pertaining evidence and to the dis COMPANY, WM. T. THOMPSON puted The court nevertheless ad $40. Plaintiff-Appellant, jury’s dressed the issue and held that award should not be disturbed because there jury was no indication that the included the STATES, The UNITED Defendant- per plate in its award and because there $40 Appellee. support jury’s was sufficient evidence to 92-5124, Nos. 92-5138. award exclusive of the We conclude $40. jury light award was reasonable Appeals, United States Court of Studs, of the entire record. See Sun Inc. v. Federal Circuit. Inc., Equip. Leasing, ATA 872 F.2d (Fed.Cir.1989). USPQ2d 4,May Buckeye’s attempts jury to reconstruct delib Rehearing Suggestion Rehearing speculative jury erations are at best. The Banc July Denied and Declined $1,649,512 than awarded less Amsted sought simply and the record does not show jury profits failed reduce the lost per plate. $40

CONCLUSION denying

The district court did not err in

Buckeye’s motion for JMOL the issue of infringement

willful and did not abuse its awarding

discretion in Amsted treble dam-

ages attorney correctly fees. The court recovery

determined that Amsted’s of dam-

ages 287(a), is limited under 35 U.S.C. but denying

erred as a matter of law in Buck-

eye’s respecting motion for JMOL the date properly Buckeye Amsted notified of its

infringement. Accordingly, the case is re-

manded for a redetermination of opinion.

consistent with this

COSTS party

Each shall bear its own costs.

190

Branch, Stephen Doyle M. and Burke M. Wong. Dumoff, Turner, Atty.,

Alan Swankin & DC, Washington, argued, plaintiff-appel- lant, Thompson T. him Wm. Co. With on the brief, was James S. Turner.

Stephen Doyle, Atty., Dept, M. U.S. Justice, DC, Washington, argued, for defen- brief, dant-appellee. With him on the were Gerson, Gen., Atty. Stuart M. Asst. J. Pat- Director, Brаnch, Glynn, rick Torts David S. Fishback, Director, Asst. and Burke M. Wong. PLAGER, CLEVENGER,

Before and SCHALL, Judges. Circuit SCHALL, Judge. Circuit appeals, these consolidated Hercules In- (Hercules) corporated Thompson and Wm. T. Company (Thompson), respectively, appeal April 2 April judgments and 1992 the United States Claims Court.1 In those judgments, the court dismissed Hercules’ Thompson’s complaints granting after the motions of the United States for sum- mary judgment.2 Thompson, Hercules and Homer, Anderson, Kill, Gregory Atty., W. manufacturers, sought who are chemical DC, Oshinsky, Washington, argued, Oliek & to recover the sums contributed to a plaintiff-appellant, Hercules Inc. With fund established in connection with the set- brief, Nancy him on A. were Markowitz tlement of a district court class action tort Oshinsky. and Jerold Of counsel was Walter brought against compa- suit them and other Rowland, Inc., Wilmington, S. nies and on behalf of individuals who were DE. exposed “Agent to a defoliant known as Fishback, Director, Orange” during David S. Asst. U.S. the Vietnam War. Hercules Justice, DC, Dept, Washington, argued, Thompson sought also had to recover the defendant-appellee. attorney him expenses With fees and incurred brief, Gerson, Atty. litigation.3 Finding were Stuart M. Asst. no error in the Claims Gen., Director, Glynn, decisions, Patrick judgments. J. Torts Court’s affirm we "Agent Orange" Litig., 1. The Federal Courts Administration Act of i. In re Prod. Liab. 506 102-572, 902(a), (E.D.N.Y.1980) (decision Pub.L. No. 106 F.Supp. certify- Stat. 762 4516, changed 23(b)(3) the name of the United States plaintiffs); Fed.R.Civ.P. class of Claims "United States Court of "AgentOrange" Litig., ii. In re Prod. Liab. requires Federal Claims.” Unless the context (E.D.N.Y.1983) (decision F.Supp. grant- otherwise, we refer to the trial court the name ing summary judgment in favor of defendant pending which it had while this matter was be- subsequently chemical recon- manufacturers — fore it. sidered after the case was to anoth- transferred judge); er district Hercules, States, Inc. v. United 25 Cl.Ct. 616 "Agent Orange” Litig., iii. In re Prod. Liab. (1992); States, Wm. T. (E.D.N.Y.1984) (decision Co. United F.Supp. ap- 26 Cl.Ct. 17 proving agreement between class plaintiffs action and defendant chemical manu- facturers); Throughout opinion, we will cite to the following "AgentOrange” Litig., four district court we decisions in what iv. In re Prod. Liab. (E.D.N.Y.1985) (decision "Agent Orange litigation”: F.Supp. grant- refer to as the 1274. From 1966 to

BACKGROUND product measurably Hercules’ was not con- dispute: not in following facts are taminated with dioxin. Id. A. Historical Thompson produced phenoxy herbicides 1960s, Hercules and In the mid to late 2,4,5-T 2,4-D containing in the 1950s group members of a however, Thompson, originally and 1960s. manufactured companies that chemical government’s declined to bid on the solicita- military. States Orange for the United pro- tion to chemical manufacturers for the equal parts Orange is a blend Orange. Thomp- duction of T.Wm. (2,4-D) and 2,4-Dichlorophenoxyaeetic Acid son v.Co. United 26 Cl.Ct. (2,4,5-T), Acid 2,4,5-Trichlorophenoxyacetic course, however, In due phenoxy herbicides. Her- both of which are required Thomp- ment the DPA and invoked cules, 616, Inc. v. 25 Cl.Ct. United supply Agent Orange pursuant son to to two (1992). Depending produc- on its method of 19, 1967, 24, April May contracts dated and tion, Orange may varying Agent contain “Agent Orange”, F.Supp. 1968. In re 2,3,7,8 Tetrachlorodibenzo-p-diox- amounts of September January 1272. Between 1967 and (dioxin), extremely toxic substance. Id. 1969, Thompson supplied Agent Orange to military Agent Orange during the used military. Id. There is no evidence that large to defoliate areas of for- Vietnam War Thompson was aware of the health risks Cong and Nоrth Vietnamese est so Viet Agent Orange. associated with Id. at 1273. foliage troops could not hide beneath Hercules, government As in the case military mixed view of aircraft. The from provided specifications the formula and by Agent Orange produced the various any- input Orange without from companies mixture and stored the chemical Thompson. large During drums. Id. mili- period, relevant Orange Litigation B. The knowledge of hazards tary had considerable 2,4,5-T and dioxin. In re associated with 1979, Starting in numerous tort actions Orange” Litig., Liab. “Agent Prod. veterans were filed Vietnam and (E.D.N.Y.1983). 1263, F.Supp. families the various chemical manu- produced Agent Orange for facturers who phenoxy began producing herbi- Hercules government, including Hercules, Hercules and 2,4,5-T containing in 1961. cides Thompson. alleged that The tort actions produced at 619. It 25 Cl.Ct. 1964, exposure to dioxin contained in 8, veterans’ May for the between Agent Orange produced the chemical May pursuant sepa- to fifteen and prob- companies caused various health military supplied had contracts. Id. The rate cancer, plaintiffs, mis- specifications for manufac- lems for the such as the formula and carriages, The Judicial Agent Orange, and birth defects. turing with Hercules Litigation complaint in Panel on Multi-District consolidat- complied. Id. In its the Claims Court, tort actions in the United States alleged that it manufactured ed these Hercules for the Eastern District of supplied Agent Orange pursuant to the District Court and York, 1950, heading No. 381. New under the MDL Production Act of 50 U.S.C. Defense (1964) DPA).4 (hereinafter, comprising a class all app. § 2061-2170 The court certified claiming injuries had served in veterans who Hеrcules learned of the health risks 2,4,5-T changed or near between 1961 with its Vietnam associated 23(b)(3). pursuant The certi- production to eliminate dioxin to Fed.R.Civ.P. method of Id.; spouses, “Agent Orange”, also included the veterans’ product. its In re fied class necessary appropriate pro- ing summary judgment which he deems in favor of defendant against plaintiffs preference manufacturers who to other chemical the national defense in mote action). opted-out of the class app. pertinent § 2071. The contracts. 50 U.S.C. parts below. are discussed statute President, alia, DPA authorizes the inter acceptance require of contracts (born contracting January more than the defen- before much as or children parents, and people 1984) injured the hazards to that accom- derivatively as a dant about directly or ” ‘Agent Orange.’ Id. at panied the use of exposure. In re veterans’ result of the Litig., 506 Prod. Liab. “Agent Orange” (E.D.N.Y.1980). Plain- 787-92 Hercules, respect to district court With “opt out” of the Rule allowed to

tiffs were “product that because its was diox- concluded 23(b)(3) by May 1984. Id. As dis- class in-free, knowledge Hercules had no of harm below, plaintiffs nearly 300 of the cussed from dioxin contamination caused its opted out. than product and thus did not know more government about hazards associated Thompson, along with sever- manufacturers, product.” Id. at 1274. the use of its moved for al other defendant court on summary judgment in the district case, Thompson’s the district court con- status as ground because of their although the evidence established cluded contractors, may “knowledge have had them from defеnse shielded liabili- possible health hazards related to the manu- injuries ty to the veterans or their Orange[, the evidence did facture by exposure allegedly families caused knowledge establish] “Agent Orange”, Agent Orange. In re 565 (emphasis hazards to users.” Id. at 1273 previous pretrial F.Supp. at 1265.5 In a contrast, supplied). In the district court be- order, had defined the con- the district court 1967, by [was] lieved that “it clear when government contractor defense tours of the manufacture Thompson first contracted to as follows: signifi- Agent Orange, government had a in this case will be entitled defendant [A] knowledge ... cant amount of about dioxin dismissing against it judgment all claims problems.” ... and its association with health having supplied based on that defendant’s Id. pursu- “Agent Orange” Thompson’s victory in Hercules’ and contract, proves: if ant to a the defendant short-lived, proved district court to be how- government established the 1. That the summary judgment ever. After was entered Orange”; specifications “Agent for their favor and favor of the other two “Agent Orange” manufac- 2. That the Agent Orange manufacturers —but before govern- met the tured the defendant judgment of dismissal was entered —the case in all material re- specifications ment’s judge transferred to another in the spects; and In Eastern District of New York. November knew as much That the 1983, judge the transferee reconsidered about the haz- or more than the defendant summary judgment and denied the the issue accompanied people that use ards to Thompson. In motions of Hercules See “Agent Orange.” “Agent Orange” Litig., re Prod. Liab. 597 (E.D.N.Y.1984). 740, F.Supp. 753 Orange” (quoting “Agent Prod. Id. In re (E.D.N.Y. Liab., F.Supp. May On the date that trial would 1982)). suit, begun par- have in the class action 20,1983, May granted court ties reached a settlement. The settlement On the district Thomp- million summary judgment for Hercules and called for the creation of set- $180 son, fund, with each defendant contribut- along with two other manufacturers tlement percent- proportion to the fund in to its Agent Orange, finding that met age volume of requirements “government of the total ruling, produced, for at 1274. In so with a factor the level of dioxin defense.” Id. particular product. manufacturer’s the district court framed the “central issue” “Agent Orange”, F.Supp. at as whether the third element of the re 748. Her- had been estab- cules’ share of the settlement was about ten ment contractor defense $18,772,568. lished, i.e., percent, Thompson’s “whether the knew as valued "government the term contract defense." Id. 5. The district court used earlier, amounting years two percent, two before the case was around share $3,096,597. opinion approving the set- was transferred. In its tlement, court noted that the district Appeals Court of United States for difficulty- extreme would have had plaintiffs the Second Circuit affirmed both the settle injuries resulted from ex- proving that their 23(b)(3) class, ment with the Rule In re in the present to dioxin posure “Agent Orange” Litig. Prod. Liab. MDL No. Orange. “Agent Orange”, In re (2d Cir.1987), 818 F.2d 145 at 782. grant summary judgment in favor of the against opt-out defendant manufacturers action, the class Upon settlement ‍‌‌​‌‌‌​​​​​‌​​​‌‌‌​​​‌​​‌‌‌‌‌‌​​‌‌​​‌‌‌‌​‌​​​​​​‍of plaintiffs. “Agent Orange” In re Prod. Liab. manufacturers, including Hercules defendant (2d Cir.1987), Litig., 818 F.2d 187 cert. de summary judg- Thompson, moved nied, U.S. S.Ct. plaintiffs against nearly who ment Appeals L.Ed.2d 932 The Court of action suit. These opted-out of the class grant summary judgment affirmed the plaintiffs were those who had volun- opt-out opt-out plaintiffs solely part of certified tarily chosen not to be basis of. the contractor defense 23(b)(3) class, consequently and who did Rule (referred “military to as the contractor de in the million settlement fund. not share $180 Circuit), fense” the Second and did not motion, summary judgment support grounds summary address the other argued that the defendant manufacturers judgment advanced the district court. Id. judgment they were entitled to plaintiffs of each conceded inabili- because ty identify manufacturer the individual Proceedings C. Claims Court given Agent Orange to which a inapplicability any exposed, veteran was Hercules and each theory brought that would in alternative an action the Claims Court (i) inability, government seeking overcome that United indem- defense, inability any plain- respective nification for contract and their contributions to injuries in prove tiff to that his or her the settlement fund the 1984 class action (ii) settlement, by Agent Orange. legal expenses fees and caused Agent Orange litigation. in incurred “Agent Orange” Litig., In re Prod. Liab. Hercules, 25 Cl.Ct. at 620. The actions were (E.D.N.Y.1985), aff'd, grounded Thompson’s in Hercules’ and re- (2d Cir.1987), denied, F.2d 187 cert. spective government for contracts with L.Ed.2d 932 108 S.Ct. Orange. production Agent granted summary judg The district court complaint, Hercules’ filed June primarily on the ment for the manufacturers that it to recover from ground plaintiffs pres failed to asserted was entitled had government link one of the follow- ent credible evidence of a causal between Orange ing four theories: exposure Agent plaintiffs’ and the alleged injuries. at As a sec Id. 1259-60. Superior Knowledge government 1. —The basis, ondary district court held that the allegedly implied-in-fact an contrac- breached companies lia defendant were insulated from by withholding obligation tual from Hercules bility by contractor defense government’s superior knowledge con- as “clear from the ... it was record cerning unprecedented military use of as, than, government knew as much or more Agent Orange by companies the defendant chemical about the possible such use. health risks attendant with possible Agent health effects of adverse government alleged- Orange as it at 2. Good Faith —The was used Vietnam.” Id. secondary ground summary ly implied-in-fact an contractual ob- 1263. This breached identical, course, in- judgment ligation good faith and not exercise by using Agent ground upon summary judgment crease costs Hercules!’] which Orange unprecedent- in an granted in in Southeast Asia been favor of Hercules cases. mary judgment and dismissed both poten- to avoid that failed military manner ed superior ruling, the court held that the so risks. tial health knowledge only applied situations doctrine Warranty “Reverse” —The possessed vital knowl- where implied-in-fact contrac- an allegedly breached “performance edge that affected contract using due care obligation to exercise tual Hercules, performance.” or duration of costs Specifically, Her- Agent Orange. Hercules’ 623; Thompson, T. 25 Cl.Ct. Wm. duty government had a alleged that the cules Thomp- at 24. Because Hercules’ Cl.Ct. purchased it to use the post- costs were the result of son’s increased reasonably calculated in manner Hercules litigation and were not connect- performance and to take potential health risks to avoid performance, the ed to contract Claims pro- safeguards or adequate precautions and concluded, knowledge superior doctrine ingredients of active vide identification encompass expanded to could not be adequate warnings and instructions concern- Similarly, the Claims Court claims. Id. exposure Agent proper use of and good faith could found that Hercules’ Orange. summary judgment because it not withstand Warranty Specifications— Implied performance-related doctrine” was “another im- government allegedly breached an not be extended to matters occur- that could obligation to contractual estab- plied-in-fact point in future” ring “at some distant requirements specifications and lish Hercules, performance. 25 Cl. after Agent Orange sufficient to make Ct. unprec- for the Orange adequate and suitable regard warranty to Hercules’ reverse With military actual use to intended and edented argument, that such the Claims Court held put in Asia. it was Southeast implied-in-fact reverse never of its different theories of each Under surrounding arose because the circumstances alleged liability, support a the sale of could not obligations its contractual ment’s breach of gov- factual inference that Hercules and the Hercules to sustain increased ex- caused meeting “actually come to a ernment had and incur substantial penses upon [the] the minds and taken themselves money damages with the connection corresponding obligations and liabilities” of Orange cases and that Hercules was entitled Hercules, warranty. alleged the reverse indemnification therefor. to contractual Cl.Ct. at 624. 7, 1990, complaint, May Thompson’s filed Turning warranty specifications 23,1990, amended October asserted theory, Court held that even as- the Claims against to recover the it was entitled arose, suming warranty plain- the any one of three contractual ment prove “that tiff-manufacturers had failed to theories, substantially were two of which warranty by the was breached Govern- to two of Hercules’ theories of liabil- identical and that this breach caused [them] ment government, ity: superior knowledge damages type of recoverable suffer the implied warranty specifications. and an Hercules, 625-26; at contract.” Cl.Ct. theory liability, a third alternative As Thompson, T. 26 Cl.Ct. at 25. Address- Wm. Thompson contended portion damages of the claim first the implied-in-fact an contractual obli- breached payments into the which consisted of the indemnify Thompson gation to for losses fund, sepa- the court set forth two settlement compelled production of arising from its prevented Her- rate reasons that it believed Orange DPA. under the they Thompson proving that cules and from subjected liability by “actually to tort moved to were In each case or, alternative, parties because of manufacture complaint, [their] third dismiss the mili- for the Government’s summary judgment as a matter of law. Hercules, 626; Hercules, 620; Thomp- tary 25 Cl.Ct. at Wm. at T. use.” 25 Cl.Ct. Wm. “First,” son, Thompson, 26 T. Cl.Ct. 26 Cl.Ct. at 22. The Claims Court stated, been “dioxin has never granted government’s motions for sum- Claims Court scientifically proven injuries to cause the could not establish that the dam- second, аlleged, [plain- ages they veterans payments incurred —their protected were] tiff-manufacturers from lia- into fund— bility to the veterans in event under the flowed from a warranty, breach of that be- Government contractor defense....” Id. cause contractor defense protected them damages those Regarding type damages sought, they incurred damages those as a result of Court, Baxendale, citing Hadley v. Claims their decision to litigation settle the in the 341, 156 (1854), Eng.Rep. Ex. and North protection. face of that States, 707, ern Helex Co. v. United 524 F.2d 721, (1975), denied, 207 Ct.Cl. 862 cert. As far as attorney’s the claims for fees U.S. 97 S.Ct. 50 L.Ed.2d 146 concerned, the Claims Court held that stated that “it is axiomatic that ... Hercules and could not recover [arising from contract breaches] are limited they represented such fees because the kind reasonably to those that were at foreseeable consequential of remote and damages not parties the time the formed the contract.” normally awarded in contract cases. Hercu Hercules, 627-28; 25 Cl.Ct. at T. Wm. les, 627-28; 25 Cl.Ct. at Thompson, Wm. T. Thompson, 26 Cl.Ct. at 27-28. 27-28, 26 Cl.Ct. at citing both Kania v. Unit proposition, From this the court reasoned ed 650 F.2d 227 Ct.Cl. denied, cert. 102 S.Ct. may support implied facts

[t]he warran- L.Ed.2d 210 ty specification, they but cannot be In the Thompson’s case of Hercules’ and support stretched so far as to assertions that were entitled to contract parties meeting came to a indemnification, the Claims Court noted that minds that there would be an indemnifica- respective provi- contracts contained no agreement tion between them if the im- expressly providing sion for indemnification. plied warranty specification alleged, was Hercules, 633; 25 Cl.Ct. at T. Thomp- Wm. proven, but never to be violated. son, case, at Thompson’s Cl.Ct. 28. In Hercules, 627; Thomp- 25 Cl.Ct. at Wm. T. rejected court implied- the contention that an son, 26 Cl.Ct. at 28. in-fact contract indemnification term arose The Claims Court also held that DPA,6 from section 707 of the because that there was no breach of the merely section “excuses a Government con- specification based on the manufacturer’s other, tractor’s breach of its non-Govemment tort parties supposedly to third adversely contracts which were affected injured by product because the manu- priority given pro- to the Government’s facturer, alleged, under the circumstances curement demands under DPA.” Wm. protected liability by the Govern- addition, Thompson, T. Cl.Ct. ment contractor defense. Thompson, the case of both Hercules and the Hercules, 628; at Thomp- assuming Cl.Ct. Wm. T. court held even that an im- son, plied-in-fact 26 Cl.Ct. at 28. read obligation We this latter contractual to indem- existed, holding by statement as a nify provision the Claims Court the would be unen- that, assuming implied the of an Anti-Deficiency existence as of forceable violative the (1988).7 warranty specifications, Act, Hercules, § of Hercules and 31 U.S.C. (A) pertinent part, 6. In expenditure section 707 of the DPAstates: make or authorize an or obli- gation exceeding person an amount No penalties shall be held liable available in an for or any resulting appropriation expenditure act or failure to act or fund for the or directly indirectly compliance or with a obligation; or rule, regulation, pursuant or order issued (B) involve a [the] contract or this Act.... obligation payment money for the of before an (1964). app. § 50 U.S.C. appropriation by is made unless authorized law. pertinent part, Anti-Deficiency Act states 31 U.S.C. employees or officers of the United States may not: Cl.Ct, appel- carefully all of considered We have 634; Thompson, 26 Cl.Ct. T. at Wm. Having appeal. found arguments on lants’ at 29. law, any of genuine nor issues no errors of Court held Finally, the Claims fact, the Claims conclude material we contrac- underlying the policies of the contract correctly decided each “separate and inde- provided a tor defense Hercules claims asserted based all claims for denial of pendent” basis judgments affirm the of Thompson. We Thompson. by Hercules and not reach that basis and do Court on Claims 631; Thomp- Hercules, T. Wm. 25 Cl.Ct. contrac- the issue of whether son, 26 Cl.Ct. provide “separate would tor defense court’s

independent” basis for the decision. DISCUSSION however, seen, presence of As will be dispositive defense is government contractor Review of A. Standard claims contract based asserted of two of the each appeal. consider below We summary may award A trial court claims. contract based as genuine no issue judgment where there is party moving is fact and the any material C.Analysis law. judgment as a to a matter entitled 56(c); 56(c); Mingus RUSCC Fed.R.Civ.P. Knowledge Superior States, Constructors, 812 F.2d Inc. v. United argue each Hercules (Fed.Cir.1987). reviewing a government had superior that because by the trial summary judgment grant of with dangers associated knowledge court, whether determine for ourselves we dioxin, obligation in it had contractual summary judgment have the standards dangers. such Because form them of trial met and we are bound been so, contend, government failed to do genuine is ruling that there are no court’s its contractual obli government breached Id. fact the ease. sues material gation. knowledge gen- superior The doctrine of is Appellants’ B. Contentions (1) where erally applied to situations appeal, contends because On perform undertakes to without contractor exist, fact disputed of material issues per- knowledge of a fact that vital affects error committed reversible Claims Court (2) duration, formance costs or summary judgment respect with granting contractor no ment aware the upon the theo- its contractual claims based had no reason to obtain knowledge of and warranty, knowledge, superior reverse ries of (3) information, specifi- warranty specifications. implied and an supplied cation misled that the existence Thompson also contends (4) inquire, put it on notice to did not summary disputed precluded facts material provide the rele- government failed to judgment respect to its contractual vant information. superior upon based the theories of claims Ship Bldg. Co. v. United American speci- implied knowledge and an (1981). Thus, 228 Ct.Cl. 220 654 F.2d contends that Thompson further fications. superior knowl- ‍‌‌​‌‌‌​​​​​‌​​​‌‌‌​​​‌​​‌‌‌‌‌‌​​‌‌​​‌‌‌‌​‌​​​​​​‍a claim the doctrine law in erred as a matter of the Claims Court government where the fails edge is tenable (i) implied-in-fact contractual holding that an knowledge in with vital provide a contractor indemnity not arise under obligation for did government’s рossession bears (ii) DPA, that a and term —assum- perfor- upon of the contractor’s the costs barred did arise —would be it was contract at issue. That mance under the Anti-Deficiency Lastly, both Hercules Act. here. not the case Thompson contend that the Claims and Thompson argue that and each government Hercules holding in Court erred point im- summary judgment on this was provided “separate a and defense disputed properly granted because factual claims. independent” for denial of their basis concerning type warranty, plaintiff issues remain whether the of must allege prove and (1) damages they (2) suffered were “foreseeable” warranty existed, that a valid meaning Hadley (3) within the of v. Baxendale. warranty breached, plaintiffs and argues disputed Hercules further fac- damages were caused the breach. San regarding tual issue exists the relative levels Irrig. Drainage Carlos and Dist. v. United knowledge Agent of about the hazards of States, (Fed.Cir.1989); 877 F.2d ac- issues, Orange. alleged disputed These how- cord Contracting Wunderlich Co. v. United ever, are immaterial to our Even decision. States, 351 F.2d 173 Ct.Cl. 180 (i) assuming, arguendo, Hercules’ and (1965) (stating plaintiff that a asserting a foreseeable, Thompson’s damages were and claim for implied breach of an warranty of (ii) government superior knowledge had specifications has the establishing “burden of dioxin, of the hazards associated with such the causation, fundamental facts liability, of foreseeability knowledge bearing' and had no injury.”). and resultant Unlike superior Thompson’s performance Hercules’ and doctrine, knowledge above, discussed the im- i.e., production under the сosts or plied contract — warranty specifications of prob- covers manufacturing way, times. Put another arising performance lems after of the under- nothing government did or faded do lying States, contract. See Poorvu v. United any impact upon Thomp- Hercules’ and 420 F.2d 190 Ct.Cl. 640 production Agent Orange. son’s of As the present case, In the Hercules Thomp- noted, Claims Court the eases cited for the argue son government because the sup- superior knowledge doctrine concern the plied specifications and formula for withholding superior knowledge Agent Orange, is liable for it perform makes more difficult to under the injuries by their reason of the breach of an Hercules, terms of contract at issue. implied warranty specifications, even 622-23; T. Thompson, Cl.Ct. Wm. 26 Cl. though alleged (i.e., harm costs incurred See, Indus., e.g., Ct. at 22-23. Helene Curtis Orange litigation) occurred sev- (Ct.Cl. Inc. v. United 312 F.2d 774 years eral completion after of the 1963). accept We decline to Hercules’ and Orange production contracts. Both Hercules Thompson’s invitation to extend the doctrine Thompson summary contend that judg- superior knowledge encompass ment was improperly granted because vari- post-performance claims for settlement and ous factual dispute issues remain in litigation expenses, expenses because those regard claims, (i) to their including whether during were not incurred implied warranty arose out of the con- underlying contracts. (ii) tracts, type whether sought “reasonably foreseeable” at the Implied Warranty Specifica- 2. The (in) formed, whether, time the contracts were tions lеaving aside the contractor de- Thompson Both Hercules and ar fense, poten- faced gue recovery upon based of an tial Orange litigation, implied warranty specifications, as set (iv) whether the knew that Her- Spearin, forth United States potential liability, cules and faced 39 S.Ct. 63 L.Ed. 166 and its (v) government’s speci- whether the defective progeny. Spearin proposition stands for the gave alleged potential fications rise to their when the includes detailed (vi) liability, and whether the class action specifications contract, in a it impliedly war settlement constituted reasonable conduct (i) rants that if the contractor follows those fight potential liability. specifications, product the resultant will not unsafe, (ii) not, however, be defective or We need if the resul resolve the unsafe, product proves tant necessary defective or above factual issues because a ele appellants’ contractor will not be liable for the ment of breach conse 136-37, quences. Spearin, i.e., 248 U.S. at lacking. causation —is As noted claims — any above, S.Ct. As with prima contract-based to make out a case of facie claim, however, to implied warranty recover for a breach of specifica- breach of an of 198 However, our decision on prefer we to rest Thompson must show not tions, and Hercules by the court: ground articulated implied war- the third support an only the facts that Thompson prove cannot that warranty and was breach- Hercules

ranty, also but by by govern- the damages caused damages were caused were that their ed and Carlos, warranty implied F.2d at alleged 877 breach of an San ment’s breach. the damages to the above, protected as as far were specifications because As seen of Orange to the Agent Orange plaintiffs of contributions to the extent from concerned, the Claims are fund by government contractor defense. settlement the Thompson’s that Hercules’ held Court explained the Supreme Court The (i) scien- the absence of failed because claims Boyle v. United contractor defense ment consequences of the regarding tific evidence 500, Corp., Technologies 487 U.S. S.Ct. finding the a that precluded exposure dioxin (1988). Boyle, In a 2510, L.Ed.2d (ii) assuming breached, even warranty was training during a was killed exer- serviceman warranty speci- implied of an existence the design his alleged to an defect cise due not the fications, warranty would include the representative Boyle’s personal aircraft. (iii) here, the sought indemnity kind brought diversity a action federal (Boyle) de- government contractor availability the government con- against court the district finding that their precluded a fense aircraft, the that had tractor manufactured alleged breach. Hercu- by caused the were Boyle government. al- not sue the but did 626-28; Thompson, T. les, Wm. at 25 Cl.Ct. law, alia, Virginia tort leged, inter agree the We with at 26-28. Cl.Ct. defectively designed that the contractor from the that the record Court Claims sys- emergency escape-hatch aircraft’s the to respect with sparse Orange litigation is it had that contractor contended The injuries the veterans’ proof that tem.. scientific escape-hatch system in the ac- manufactured agree -with also by dioxin. We caused government-supplied specifica- cordance have to facts would the Court that the Claims contract, required' and there- tions as support .un- stretched be jury Boyle. liable to The re- fore specifications, implied an der Boyle, general for turned a verdict be Thompson would entitled Hercules motion denied the contractor’s district court government their contribu- recover notwithstanding judgment the verdict. for fund.8 tions against government. Court underlying reasoned the rationale is on This-view based injured serviceperson to circum- that allow an in Feres United Supreme Court's decisions v. the States, by suing government 153, a 135, vent Feres doctrine 95 L.Ed. 152 71 S.Ct. 340 U.S. contractor, government who would then sue (1950), Eng'g Corp. United Aero v. and Stencel indemnity, deleterious would the same 2054, have 52 L.Ed.2d 97 S.Ct. 431 U.S. allowing directly against the as tort suits results Feres, 340 U.S. S.Ct. militaiy context. government in the Stencel Supreme held Court L.Ed. Thus, Aero, 97 S.Ct. at 2058. may tort for not be sued in that the United States permit Supreme "[t]o Court determined serviceperson on by a while injuries incurred proceed serviceperson] ... here would be [the Supreme duty. Court had occasion active judicially admit at the back door that which in the explicate the Feres decision toAero Stencel away legislatively at the front turned has been allegedly injuries of service-related context (citations omitted). Id. door.” contrac- caused actions Aero, injured sued an serviceman In Stencel tor. has asserted Hercules nor Neither fighter malfunctioning respective of his any provisions the manufacturer of their contracts liability theory. Aero product plane argument Stencel support Aero), Corp. (Stencel party the manufac- Engineering indemnify agreed to for third tort them turer, government for any express provision, cross-claimed Absent claims. of its indemnity, claiming indemnify to be agreement malfunction have im- would defective, S., Inc., government- plied-in-fact. Lopez A.C. & product was caused See (Fed.Cir.1988). components. view of specifications and Hold- supplied F.2d 714-15 doctrine, con- it is difficult to relevant in Feres Aero envi- Feres-Stencel considerations it, which court the case before sion circumstances under trolled the outcome implied-in-fact agreement grant upheld find an Supreme the district could court’s to'provide the kind of part summary judgment for both the serviceman, indemnity as well against the and Stencel Aero argue. Stencel Aero's cross-claim as the dismissal of Appeals for Id. at The United States Court tion of state law. 108 S.Ct. at Looking Fourth Circuit reversed and remanded with discretionary function judgment exception directions that be entered for the Act, to the Federal Tort Claims found, 1346(b), (1988) (herein- Fourth §§ contractor. The Circuit as a U.S.C. 2671-2680 law, after, FTCA)10, matter of federal the contractor the Court reasoned that allegedly significant could not be held liable for the such a conflict present design circumstances, it defective because had satisfied the Boyle’s because to allow requirements against of the contractor suit the contractor would constitute judicial defense. second-guessing of decisions Congress intended to be within the discretion certiorari, Supreme granted Cоurt Id. at military. of the U.S. 108 S.Ct. at and held that where a contractor 2518.11 To further define the contours of the requirements has satisfied the of the defense, contractor Supreme defense, ment contractor as set forth in the in Boyle set forth following three- Boyle opinion, the contractor cannot be held part test: law, liable under state tort because to allow Liability design military defects liability specific objectives would frustrate equipment imposed, cannot be pursuant legislation. Boyle’s Although federal claim (1) law, state when ap- United States law, was asserted on the basis of state proved reasonably precise specifications; Supreme Court concluded that “the Federal (2) equipment spec- conformed to those procurement Government’s interest (3) ifications; supplier warned the equipment implicated by is suits such as the United dangers States about the in the use present though dispute one —even is one equipment of the that were known to the private parties.” Boyle, between at U.S. supplier but not to the United States. 506, 108 S.Ct. at 2515.9 In eases where the government’s Id. implicated, interest is the Su- 108 S.Ct. at A continued, preme Court federal law will dis- who satisfies this test is immune to tort place significant state law if is a liability there con- under state law prod- for defects in policy flict between a opera- federal ucts manufactured for the ations, explained: including 9. The Court specifically the trade-off be- greater safety greatér tween imposition combat liability effec- on Government con- directly tiveness. And we are further tractors will affect the of the view that terms of Gov- permitting "second-guessing” judg- ernment contracts: either the contractor will of these ments, Airlines, design specified by decline to manufacture the Varig see United States v. Government, price. or it will raise its Ei- [104 U.S. S.Ct. way, ther interests of the United States will through 660] L.Ed.2d state tort suits directly be affected. against produce contractors would the same Boyle, 487 U.S. at 108 S.Ct. at 2515-16. sought effect to be avoided the FTCA ex- emption. judgments The financial burden of part, discretionary 10. In relevant function against ultimately the contractors would be exception to the FTCA states that the limited passed through, substantially totally, if not sovereign immunity waiver of in the FTCA does itself, the United States since defense contrac- not extend to cover, predictably prices tors will raise their [a]ny upon claim ... based the exercise or against, contingent liability or to insure for the per- or the failure to exercise or designs. put point Government-ordered To discretionary duty form a function or differently: It makes little sense to insulate the part agency employee of a federal or an of the Government financial for the Government, whether or not the discretion in- judgment particular military that a feature of volved be abused. equipment necessary is when the Government 2680(a) (1988). 28 U.S.C. itself, produces equipment the' but not when it sum, production. 11. The Court stated: contracts for the we are of the view that state law which holds Govern- appropriate We think that the selection design ment contractors design liable for defects in military equipment to be used military equipment assuredly does in some circum- discretionary our Armed is Forces present “significant meaning provision. function stances conflict” within the of this policy merely engineering analy- displaced. It often involves not federal and must be 511-12, judgment Boyle, balancing many sis but technical, as to the 487 U.S. at 108 S.Ct. at 2518 (footnote omitted). military, and even social consider- 200 in case, brought an action Eugene Kania specifi- that government-supplied accordance predecessors, the Court court’s one of this cations. Claims, govern- alleged that in which he Boyle, the district above, to prior As seen to pursuant a contract ment had breached each concluded Circuit the Second court and in prosecute him agreed not it had to oper- defense contractor government testimony a federal before for his return Thompson. See and ated to shield Hercules grand in the jury. he grand After testified F.Supp. at 1273- Orange”, 565 “Agent In re for various offenses. jury, indicted Kania was summary (1983 initially granting decision 74 however, successful, in his efforts to was He Thompson and in of Hercules

judgment favor dismissed, upon based indictment have the manufacturers); and other two agreement with purported his F.Supp. at 1263 Orange”, 611 “Agent In re dismissal, in sued he ment. After (1985 manufacturers granting all the decision ex- seeking recover the to Claims Court of opt-out plain- against summary judgment against gov- defending in incurred penses litigation Agent Orange following the tiffs of Claims charges. The Court ernment’s settlement); “Agent Orange”, 818 In re and because, jurisdiction it without held (1987 that decision appeals court of 189 F.2d at Ka- arrangement between existed against the whatever summary judgment affirming no con- government, “there was Thus, and nia and Hercules plaintiffs). opt-out jurisdic- satisfy court’s to this sеpa- tract successfully argued ‍‌‌​‌‌‌​​​​​‌​​​‌‌‌​​​‌​​‌‌‌‌‌‌​​‌‌​​‌‌‌‌​‌​​​​​​‍three sufficient Thompson Kania, F.2d at requirements.” contrac- tional government rate occasions on to state: liability for court then went 269. The them tor defense shielded Consequently, claims. the veterans’ tort error, must now add in we this be Should that had no serious doubt there can be and counsel fees jurisdiction to award litigation proceed- class action an element of litigation expenses as other termination, have no would ed extremely dubi damages would be breach Thompson. imposed Hercules been consequential dam It is the kind ous. in contract normally ages de- awarded government contractor Because Green Construc to the cases. William complete defense breach provided a fense States, 616, 201 Ct.Cl. claims, said that tion Co. v. United it cannot be tort veterans’ denied, (1973), 477 F.2d 930 cert. by Hercules and asserted (1974). L.Ed.2d government, S.Ct. by the Thompson were caused not, dam awarding in breach do recognized. As far as Courts the Claims Court as indirect through the remote ages, fund are follow their contributions as distin consequences of the breach ($18,772,568in the case of Hercu- concerned directly contempla guished from those $3,096,597 Thompson), in the case of les North made. the contract was voluntary decision to enter tion when appellants’ it was States, 207 Ct.Cl. Co. v. United dam- ern Helex led to those into the settlement denied, cert. F.2d 707 nothing to en- did ages. L.Ed.2d 146 Thompson 97 S.Ct. compel U.S. courage or Hercules to fore- appellants’ decision settle. It was issue of the go litigating the Kania, assuming the exis- even fight completion caused contraсtor defense specifications warranty of implied tence of monetary injury incur them to case, warranty not be could such a fund. to the settlement contribution warranty encompass a construed Thompson that Hercules implied upon the of an Based themselves pay have to defend and would not specifications, Hercules warranty merit because that lacked against tort claims they entitled are Thompson also contend doctrine, legal such as attorney’s fees which to recover defense, provided a defense Orange litigation. As in the incurred Court, In the Claims ap them. above, rejecting this element of seen suggesting that Thompson alleged no facts claims, upon relied Claims Court pellants’ to exist would have 269. In 650 F.2d at Kania v. United —which (W.D.Wash.1986). Hercules and to re- Lopez, order for attorney’s fees from the cover their employee exposed civilian to asbestos at a “directly Orange litigation in contem- shipyard brought naval an action in the Unit- —was plation” when Hercules and en- ed States District Court for the Western respective tered into their contracts with the Washington against District of several manu- Kania, government. 650 F.2d at 269. supplied facturers who pur- the asbestos government suant to a Upon contract. set- Warranty 3. Reverse claim, tling employee’s the the asbestos man- argues govern Hercules the third-party complaints ufacturers filed in the implied-in-fact had an contractual obli ment court, part district based on the Little Agent gation Orange produced to use the Act, § Tucker seeking U.S.C. potential it in a manner so as to avoid both recover рayments litiga- their settlement subsequent risks servicemen the tort expenses government. tion from the against appellants. suits A material issue of manufacturers’ Tucker Act claims were exists, asserts, fact Hercules as to whether theory on specifying based the that in asbes- obligation this arose when the tos, government impliedly warranted to package Agent Orange ordered Hercules to the asbestos manufacturers that its use of only band, orange in drums marked with an product expose would not the manufac- precluding applying thus Hercules from turers to unforeseen product defective liabili- warnings normally extensive and instructions persons ties to might injured by who be placed on its commercial Accord herbicides. exposure Lopez, asbestos. 858 F.2d at Hercules, permitted it because was not claims, In dismissing 714. the Tucker Act place adequate warnings Agent the district court held that such claims were containers, Orange government thereby by operation barred Anti-Deficiency government’s warranted to Hercules that the Act, Lopez, U.S.C. product use of the would take into account basis, at 159. As an alternative the district warnings the absence of and instructions de court dismissed the manufacturers’ claims for signed product’s to assure the safe use. Al jurisdiction, noting jurisdiction lack of ternatively, Hercules asserts that a material only under the Tucker Act extends to claims govern issue of fact exists as to whether the arising express out of implied-in-fact or con- mixing Agent ment’s of Hercules’ dioxin-free tracts, arising and not to claims out of im- Orange with dioxin-tainted im plied-in-law contracts. Id. The district posed potentiаl liability on Hercules oth court express concluded that no mixing, erwise would not have existed. In so that, law, term existed and as a matter of argues, Hercules assumed relationship between the man- vendor/vendee obligations properly compensat include government, standing ufacturers and the ing it for liabilities incurred as a result of alone, implied-in-fact agree- not an did create such conduct. Hercules further contends indemnify ment recognized that courts have the existence of injuries implied-in-fact warranty resulting manufacturers for from running an purchaser purchaser purchased to the seller where the use of the asbestos under the engaged has in conduct which warrants the contract. Id. at 160. We affirmed the dis- imposition duty of a to exercise due care in trict court’s dismissal of the manufacturers’ using product. a seller’s The Claims Court grounds Tucker Act claims being characterized Hercules’ claim as based provide Tucker Act not did claims based Hercules, warranty” theory. on a “reverse implied-in-law, on contracts and that an im- 25 Cl.Ct. at 624. warranty plied-in-fact running gov- from the ernment to the manufacturers was “bizarre Irrespective identify of the name used to by Her’cules, theory and novel” that could not be inferred reject advanced we S., Inc., Lopez Lopez, ed similar claim & from the circumstances the case. A.C. (Fed.Cir.1988), 714-15, aff'g, Although 858 F.2d 712 649 858 F.2d at 716-17.12 regarding Anti-Deficiency 12. Because of our doubts the conclu- sion that the Act barred the man- for its be indemnified far to hold go so as not did Lopez decision Orange warranty contribution of reverse breach that a claim it incurred expenses which Tucker for thе brought under the fund and be could never litigation. The Claims in the Act, clear made it doing, it express implied- In so rejected argument. either have to be would Id. at court implied-in-law. reasoning the district in-fact, than upon rather relied T. Orange litigation. Wm. in the There, ap- Thompson, 26 Cl.Ct. re alleged express has settlement, the district the 1984 proving hard- Beyond we are warranty. verse of the defen- rejected the contention court of this circumstances how pressed to see were Orange plaintiffs dants Hercu that an inference support ease could against any claims asserting from barred meeting “to a came les suit from were immunized them because upon themselves [took] minds and of the “Agent In re of the DPA. 707 under section liabili obligations and corresponding [the] district F.Supp. at The Orange”, 844. warranty run accompany a ties” that would in which states that section Her court held the seller. purchaser to ning the from held liable for person shall be (citing part “[n]o that cules, Hirschman at 624 25 Cl.Ct. (1986)).13 any to for act or failure damages penalties or 11 Cl.Ct. United indirectly com- however, directly from resulting our decision or to rest act prefer, We rule, is- regulation, de or order government contractor a point pliance on the this Act,” implied-in- provide assuming an did not pursuant to this Even sued fense. Agent Orange warranty by could be found immunity asserted fact reverse breached, Hercu to been at 844^45. said have could be defendants. Her the same reason that fails for les’ claim court stated: district upon an claims based Thompson’s cules’ and section protection afforded Spe warranty specifications fail. implied viz., imрosed, correspond to risk should government contrac cifically, in of the view to need for the possible defense, prove that its could not Hercules tor parties or with third contracts break its of such a by the breach damages caused employees or users to risk increased Rather, damages were warranty. Hercules’ speeded up production. posed by the enter into its decision to the result of F.Supp. at 845. plaint with the contends appeal, Thompson On iffs.14 compelled of the the circumstances under Obligation Contractual Implied-in-fact here, op DPA 707 of the section production Indemnify to obligation implied-in-fact to create erated indemnify part on the authority provid- government used its damages it incurred: Thompson for the DPA, app. 101 of the U.S.C. ed in section Agent Orange settlement contribution 2071(a) (1964), Hercules require both § expenses it incurred which fund and into to enter contracts litigation. Thompson ar Orange War Agent Orange for the Vietnam produce accept erred gues the Claims Court fact, but upon Thompson, this Based effort. Spe reasoning of the court. ing the district Hercules, Court argued in the Claims not that because DPA, cifically, contends 707 of pursuant to section the Presi- the DPA 101 of authorizes section § it was entitled app. U.S.C. implied claims, with the as it did in connection 14. Just we Act chose ufacturers' Tucker ground. theory, warranty specifications the rationale Lopez on rest our decision a under Kania bars Hercules' claim doctrine, it is Aero In view of the Peres-Stencel recovery attorney fees reverse under the circumstances difficult to envision liti- expenses incurred in the part court find which a could gation. implied-in-fact reverse government the kind of argues. supra See warranty for note 8. 2071(a) (1964) compel as well app. dent 50 U.S.C. (emphasis supplied). acceptance, imposed” as contract the “risk is not limited to breach of contract actions aris- Section 707 of the DPA states as follows: contracts,

ing preference given to DPA out person No shall be held liable for possible but rather extends to tort suits penalties or any act or failure to act arising parties subsequent use of third resulting directly indirectly or from com- product produced under the DPA con- pliance rule, regulation, with a or order tract. pursuant Act, issued to this notwithstand- rule, any regulation, or order disagree. We As did district court in by judicial shall thereafter be declared Agent Orange litigation and the Claims competent other authority to be invalid. suit, we read section 707 of the person No shall against discriminate or- providing DPA as a DPA defense for con- ders or priority contracts to which is as- non-government tractor suit signed or for which materials or facilities customer in the event that DPA contrac- are allocated under title I of this Act or tor is forced to breach another contract to rule, regulation, or order issued government’s requirements. fulfill the Sec- thereunder, by charging higher prices or provide protec- tion 707 does not the kind of by imposing different terms and conditions by Thompson.15 tion asserted for such orders or contracts than for other generally comparable contracts, orders or statute, interpreting we first turn to any inor other manner. language. Holding its VE v. Johnson Co. (1964). app. § 50 U.S.C. 2157 Co., 1574, Appliance Gas 917 F.2d 101(a) language of section makes it (Fed.Cir.1990) (citing Mallard v. United States purpose clear that of the statute is to Iowa, 296, Dist. Court S. Dist. of authorize the President to pref- dictate that 300-01, 1814, 1817-18, 104 109 S.Ct. L.Ed.2d given erence be to contracts (1989)), denied, cert. U.S. necessary promote which are to the national S.Ct. 113 L.Ed.2d 248 Accord Indeed, defense. section 101 is titled “Priori- ingly, begin analysis perti we our with the ty in Although contracts and orders.” statutory provisions: nent sections 101 and Thompson correctly observes that the statute 101(a) 707 of the DPA. Section of the DPA compel authorizes the President to both con- states: performance tract acceptance, and contract (1) hereby The President is authorized to 101(a) expressly section states require performance under contracts granting authority of such purpose is “for the (other employ- or orders than contracts of assuring priority.” of ... Significantly, sec- ment) 101(a) necessary which he appro- deems or tion does not spe- mention either the priate promote to cific performance the national nature of DPA defense under a contract, priority subsequent goods or the performance shall take over use of produced Therefore, under such a contract. any order, and, other contract or we conclude imposed by while the risk purpose assuring priority, such to re- 101(a) section possible does include the need quire acceptance performance of such of a contractor to break its with contracts preferenсe contracts or orders to other parties give preference third in order to to a by any person contracts or orders he finds contract, DPA it does include the risk (2) capable performance, of their product produced under the DPA allocate materials and facilities in such inherently contract will be unsafe to users. manner, conditions, upon and to such necessary ap- extent as he shall deem or compelled Once a contractor has been propriate promote accept the national defense. a national defense contract under sec- require 15. The employees posed by circumstances of this case do not creased risk to or users ... holding us to address the of the district court that speeded up production.” "Agent Orange", In re protection “the afforded section 707” serves protect DPA contractors "the in- inherently unsafe to users. is contractor acts to shield 101(a), section tion extent rele Rather, that to the com- we conclude resulting from liability from contractor here, protection of section in this intended At issue vant section. pliance with that liability against under the analogous provided to that 707 is case is nature per impossibility shielded. is the contractor doctrine common-law delay nonperfor formance, which excuses DPA above, complying with As noted agreed upon when a contract mance of re- 101(a) may have section “commercial has been rendered in order outstanding contracts its prioritize superven by an unforeseen ly impracticable” to a сom- preference required give contemplation of the not within event reason It stands to DPA contract. pelled was formed. time the contract parties by DPA section provided protection Lines, Doug Inc. v. McDonnell Air a contractor Eastern only to shield 707 extends (5th Cir.1976) arising a conse- F.2d Corp., 532 as las breach of First, declaratory (“[DPA simply it is is re-prioritization. 707] section quence of such interpretation that statutory impossibility].”) [doctrine rule of law settled the common to be a statute are separate provisions Construction (quoting United States Texas together and in Cir.1955)). interpreted (5th construed 224 F.2d Company, true to ascertain light of each other court, see In agree the district also We explained: court has This legislative intent. F.Supp. at “Agent Orange”, 597 re incorporat- is purpose legislative When the im section 707 to Congress had intended if legislation, such as complex piece in a ed kind of liabili government the pose upon the major regulatory or establishing a those Thompson, it would have said ty asserted meaning of program, entitlement See, e.g., unequivocal terms. so clear be provision cannot phrase or particular Business v. International States United by taking the simply securely known (Fed.Cir. 1006, 1009 Corp., F.2d Machs. them as treating and of context words out 1989) (“Had make the Congress to intended straightforward This rather self-evident. it could it how: exemptions permanent, knew pretentious more in the homily captured is words of would have used and we believe pari parts of a statute proposition that futurity_”). together. construed be materia must sum, by section protection afforded the and Secretary, Dep’t Health Amendola v. the no than DPA extends further 707 of the (Fed.Cir. Servs., 989 F.2d Human 101(a) DPA. by of the imposed section risk 1993); Div. accord Ambassador of Florsheim by of the DPA Accordingly, invocation F.2d Shoe United production (Fed.Cir.1984) statu (stating that where two implied-in-fact to Orange give rise did materia, pari tory provisions are enacted gov- obligation part of the contractual provisions to have legislative intent indemnify for its con- Thompson to ernment in to be harmoniously together” is “work tribution ferred). protects that section To hold Thompson expenses or for the which fund greater is a risk which contractors litigation. Agent Orange in the incurred it with which by the statute than created rule. this operates violate would Furthermore, language of section CONCLUSION that the section conclusion supports

itself reasons, indemnity judgments foregoing assert- the kind does not For the extend sentence by The second are affirmed. ed of the Hercules. Claims discrimination prohibits section which as- priority is to which

“against contracts COSTS ...,” the view signed reinforces by provided section immunity suit from its own costs. party shall bear Each in which it is tort suits not extend to does by DPA AFFIRMED. produced alleged that the item PLAGER, Judge, dissenting. Circuit liability, may manufacturers to incur immunity Government claim from the conse- story litigation stemming The quences of conduct? I think not. its use of dur- our Government’s long complex. the Vietnam War is and SCHUCK, PETER H. AGENT See TRIAL: DI- ORANGE ON MASS TOXIC The gives, answer the Government ed., THE (enlarged IN COURTS SASTERS majority accepts, question to this is that 1987). may put It that it is be best there was no for the manufacturers us, chapter history of our nation’s behind and to incur —the manufacturers could not have bury Appel- the issues with the dead. injuries been held liable for by sustained lants, suit, by bringing this do not allow us Agent Orange plaintiffs because the man- peace. may, Be that as it as a court of totally ufacturers protected by were a doc- obliged give appellants law we are whatev- trine known as the justice I er the law affords. believe the law Op. majority defense. at 198-99. The con- substantially justice affords more than the twenty cludes from this that the over million majority concedes. paid Orange plaintiffs by dollars background particular of this case is and resulted -from a by majority. set forth in some detail “voluntary companies. Op. decision” trees, however, Undue attention to often Appellants, forest. hides the the Hercules I reasoning unpersuasive. find that While companies, chemical manufac- there no doubt are civic-minded individuals in Agent Orange pursuant tured to contracts upper companies, per- ranks of both Indeed, made and with the Government. haps among lawyers, even the notion Thompson allege both Hercules voluntarily these manufacturers made a product they contracts were for a did twenty million dollar contribution to the vet- make, not choose to and which erans of the Vietnam War and their families compelled produce penalty of law. goodness out of the of their hearts seems others, companies, along were sued fetched, might rather far even raise years some back veterans and their fami- questions fiduciary obligations about their (collectively Agent Orange plain- lies “the their shareholders.1 tiffs”) injuries by exposure caused to Agent Orange when the Government used judge presidеd The trial who over the set- Vietnam; pursuit the defoliant in in its war tlement, experienced an well-respected and appellants claim that the Government should jurist, must have believed there was at least indemnify them for the financial losses ground upon some which could be sustained in the settlement of the found. This was not a in ease which the Orange litigation. parties judge agreed came to the an

Appellants present settlement, arguments a host of judge one which the without fur- law, in founded contract exploration approved. each of ther As the record majority panel rejects. shows, which a judges of this The two trial shared this case. many points law The first held under the finely law, in parsed, raised this case and so how- contractor defense as a matter of neither ever, should not be allowed to obscure the Hercules nor liable for the question: injuries. fundamental if the “Agent Government veterans’ claimed In re compels product by private Orange” manufacture of a Litig., F.Supp. Prod. Liab. (E.D.N.Y.1983). companies, product However, a to known the Govern- before an order potentially dangerous, judge, ment be by dismiss was entered a sec- product judge use the Government of the causes ond assumed the case.2 The second companies’ lawyers tight liability, 1. If the might advised that the defense to there be a mal- practice making issue as well. necessary, of the contribution was when clearly provided the law so and absolute air- Pratt, Judge George judge originally C. cases, assigned to these was elevated to the Court they set- or whether money plaintiffs, summary- judge’s the first judge rescinded legаl apprehension a manufacturers, reasonable tled under and denied judgment for (and minimize in compulsion order Orange” “Agent In re to dismiss. the motion Government’s) liability. potential 1242 the F.Supp. Litig., 580 Liab. Prod. be- judge must (E.D.N.Y.1984). have This inapposite why Boyle is reason The second ongoing was a valid there lieved that holding the issue and is that to this case not court could controversy,” or the “case or pre- question of federal on a Boyle turned defen- over these jurisdiction have retained in this The not ease. emption, an issue judge presided over This dants. same a is, on behalf of Boyle in a suit question in negotiations conducted extensive manu- ‍‌‌​‌‌‌​​​​​‌​​​‌‌‌​​​‌​​‌‌‌‌‌‌​​‌‌​​‌‌‌‌​‌​​​​​​‍military against the officer deceased Orange” “Agent re courthouse. in his mili- product purchased facturer of a Litig., 611 Liab. Prod. death, a caused the tary alleged to have Sehuek, supra, at (E.D.N.Y.1985); also see under the substantive brought was suit which this trial assume that must seq. 143 et We state, may Govern- particular law of in a belief that good faith judge acted held be liable manufacturer ment’s escape might be able manufacturers an- Supreme law. The tort state Government, ill liability. It behooves all brought in Federal The was no. suit swered court, question years whether later or this cause of diversity with a state suit Court as law properly understood the judge trial was not Although Government action. him. before of the case defendant, Supreme Court the named implicating Federal ease as viewed (FTCA), Act the statute Tort Claims that, despite what majority concludes im- the Government’s Congress waived believed, may the Gov- judge have the trial liability. See 28 U.S.C. munity from tort liability to these contractors had nо ernment 1346(b). decided Supreme Court § de- government contractor of the because exemption of the discretionary function Boyle Tech- explicated in v. United fense as escape design of the applied FTCA —the 500, 108 S.Ct. nologies Corp., 487 U.S. an exercise airplane was hatch majority’s In the 101 L.Ed.2d discretion, law state therefore federal implied appellants’ view, disposes of Boyle 2680(a). displaced. 28 U.S.C. was See because specifications Boyle in effect immunizes Supreme Court Orange litigation, suit In the liability in from all such as these contractors tort not as a state plaintiffs brought original that in the such as situations FTCA, law but as a federal action under are least suit. There Orange plaintiffs’ federal statutes based on certain action reasoning. problems with this two Erie,4 recognizing, after even law case Jur- scope common law.5 1988, for federal one, some limited Boyle was decided For diversity, but alleged, not in that is the isdiction years after the settlement four statutory law “the common the issue as and/or suit.3 Yet subject of this America,” as a of the United years later laws States it is whether poses majority under 28 U.S.C. question case might have federal the case law of the substantive judge held that original trial The (or changed?) favor 1331.6 might have been found were affected federal interests substantial at the time companies, but whether law federal common litigation, and that away the simply gave companies 64, S.Ct. Tompkins, 304 U.S. 58 v. 4. R.R. Co. responsibilities trial Erie as the Appeals, and his 817, (1938). 1188 82 L.Ed. Judge reassigned Wein- judge Chief Jack stein. States, See, v. e.g., Trust Co. United 5. Clearfield 573, 744, 363, 63 S.Ct. 318 U.S. U.S. original Orange plaintiffs filed their 3.The (1943). L.Ed. 1978; pretriаl pro- July extensive after suit in Litig., 7, Orange" Liab. May “Agent Prod. case 6. re was set The In ceedings, trial 737, (E.D.N.Y.1979). day. was settled that, measure of provided variety policy reasons, both the substantive held for a jurisdiction.7 and the basis for apply injuries Act did not incident military service; military personnel could not appeal on The Second Circuit reversed the employer sue their in state courts. jurisdiction, judge’s ruling trial and held court, properly in the case was federal but on Later, in Stencel Engineering Aero Corp. diversity jurisdiction.8 citizenship On re- States, 666, United 97 S.Ct. U.S. judge mand the second trial ruled that this 52 L.Ed.2d 665 the Court extended necessarily did not affect the substantive law Feres and held that neither the Government opinion of the case. an exhaustive he nor the manufacturer were liable to a mili rule, ruled a choice of law as the sub- tary pilot alleged negligence design stantive law the case remained one of airplane’s construction of an support life federal law: federal or national consensus system. However, the Court in Stencel re preemption common law.9 Thus the rule— policy arguments visited the on which Feres supercedes whether federal law state sub- stood, and revised its rationale for the result. stantive law in these eases—which was the began Thus a series of cases which the in Boyle applicability concern has no to the Court has tried to find a reasoned basis for Agent Orange litigation, litigation in which military rule,10 exception culminating in federal law defined the substantive standard Johnson, United States v. in which four applied. to be members of the Court were of the view that difficulty majority finding has in decided,11 Feres had wrongly been finally satisfactory sup- rationale for the outcome it Boyle, with a different altogether, rationale ports “gov- is understandable. The so-called keyed language of the FTCA itself.12 ernment hung contractor defense” is a label light history, of this suggest on a group expres- of issues which first found evolving government defense sion in Feres v. United 340 U.S. clearly would (1950). dictate the outcome in orig 71 S.Ct. 95 L.Ed. 152 In that inal Orange litigation seems Supreme ease to me to upon Court was called revisionism, be general unwarranted historical decide whether the waiver of out of tort place in immunity contained in the decision before us in Federal Tort this case. I gave military personnel Claims Act do not know right what the ultimate decision to sue the Federal Orange litigation Government under rou- would have been on issue, tine tort theories in state courts. The Court anyone.13 nor does I Since find (1994). 7. Id. at 744. L.Rev. 219 See also Michael D. Green Matasar, Supreme and Richard A. Court and "Agent Orange" Litig., 8. In re Prod. Liab. Liability the Products Crisis: Lessons (2d Cir.1980). F.2d 987 Boyle's Defense, Contractor 63 S.Cal. Government (1990); Kellman, Barry L.Rev. 637 Judicial Abdi- "Agent Orange” Litig., 9. In re Prod. Liab. Military Accountability: cation Tort But Who (E.D.N.Y.1984). F.Supp. 690 Themselves?, is to-Guard the Guards 1989 Duke 1597; Stevens, L.J. John Paul Is Justice Irrele- See, Shearer, e.g., United States v. 473 U.S. vant?, (1993). 87 Nw.U.L.Rev. 1121 105 S.Ct. 87 L.Ed.2d 38 opinion upholding 13.In its 1987 both the settle- Johnson, 681, 692, 11. United States v. original litigation Judge ment in the Wein- (1987) 107 S.Ct. 95 L.Ed.2d 648 cases, ‘opt-out' stein's later dismissal of the (Justice Scalia, Brennan, with whom Justices tight Second Circuit had to walk a Marshall, line. joined, dissenting). and Stevens effect, the court had to find a cause of action for (in support judge’s the one Although question government of the trial denial of liability the of defеndants), original military the motion to personnel dismiss the to would seem of direct inter- (in only support grant but not for segment legal profes- est to sion, the other of the of small of the regarding opt-outs). the Feres-Stencel-Boyle generat- the motion to dismiss the cases have attention, opined light largely ed their The Second share of academic Circuit that "in the of crit- fact, hindsight, years ical. One of the most recent and some 15 to 20 after exhaustive the the Seidelson, weight present reviews is David E. From of Feres v. scientific evidence does not Boyle Technologies personnel injured United States to v. United establish that in Vietnam were Corp.: Supreme by Agent Orange, An Examination Court Juris- and there cannot have been a of prudence Couple Suggestions, Duq. and a duty govern- 32 breach of an earlier to inform the of the knowledge because superior of of the majority’s defense the unpersuasive performance. arose after judgment on summary judge’s trial a number there are I believe point, and since authority pres- prior nor There is neither issues, I would law fact unresolved of superior the of to limit doctrine ent reason of Federal the Court to the case return only for require compensation knowledge to a full trial to hold with instructions Claims during performance. incurred difficulties the issues. knowledge gen- is superior The doctrine (1) a to where erally applied situations perform to without undertakes per- that'affects knowledge of a fact vital the about remaining observations (2) A few duration, or formance costs appel- rejected also majority has The trees. had no the contractor was aware ment liability under theory lants’ had reason obtain knowledge of and no If knowledge. superior (3) the doctrine information, any specifi- that superior to knowledge is contractor, Government’s supplied misled the cation may contractor, incur the Government (4) of the inquire, and it on notice to put did not re- information to disclose liability if it fails provide the rele- failed to “in- are There quired the contractor. See, e.g. Helene Curtis information. vant Govern- [the defendant States, stances which Industries, 160 Ct. Inc. v. United an affirmative clearly under such is (1963). ment] 437, F.2d 774 Cl. Helene silent.” remain obligation and cannot (emphasis at 79 Ship, 654 F.2d American States, F.2d Indus., Inc. v. United Curtis (cid:127) majority’s de- Contrary to the supplied). (1963). Govern- The 160 Ct.Cl. case, nothing American ployment of potential knowledge of the had more ment superior knowl- Ship the doctrine confines ap- did Orange than by Agent harm caused perfor- regarding the edge information in the participated not who pellants, had merely Ship contracts. American mance of with, of, experience little had development generally been doctrine has they with the litigation, would be inconsistent protected the 'mili- Orange,” and thus Weinstein, spec- by Judge and are position taken To the at tary defense.’ Id. ulative. as ratio- were invoked those extent conclusions plan enough comprise specifica- detailed to The Court of rejected Federal Claims possesses knowledge superior tions often Thompson’s argument to § that 2157 immunizes party that of the who contracts to execute the manufacturers from liability any for plan. “Specifications susceptible so of a eventual use of the defoliant.14 It held that (or misleading reading implication) subject provision should narrowly, be read apply only to answer to a contractor [Government] caused giving the actually injury. who has been misled to his Government priority its claimed produc- for 132, 137, Spearin, United States v. Thompson tion. argues that even if that is (1918).” so, provision S.Ct. 63 L.Ed. 166 Helene supports at least the conclu- Curtis, (citation abbreviated). 312 F.2d at 778 sion that there is an implied-in-fact obligation part on the of the indemnify Government to However, quotation as the above from Thompson damages for the incurred. The indicates, Ship American the Court of majority agrees with the trial reading court’s Ship Claims in American relied on Helene provision, of the and concludes that im- Curtis, Spearin. which is in turn founded on munity the common-law doctrine of im- —like superior knowledge The doctrines of possibility performance only to —extends implied warranty specification are thus contract required by breaches the Govern- expressions single principle. different of a imposition. ment’s From majority ultimately upon general Both doctrines rest concludes that the Government is immune law. If the Government’s incom- from the claims of the manufacturers. information, plete misleading or partic- or its I problems have three majority’s with the specification ular requirements, impos- of its ' reading First, of the majority’s DPA. losses, later, contractor, es now or sequitur: conclusion is a non that the Act Government, any then the like other contrac- grants immunity against manufacturers third tor, escape should not responsibility. That parties on contractual sug- claims does not responsibility may beyond well extend gest, much require, less grants the Act period contract; there immunity against Government manufac- is no reason to hold that the doctrine of turers who suffer other losses. superior knowledge makes the Government Second, justice responsible only although may blind, perfor- be hindrances judges should cognizance prac- mance of the contract. take some tical gives realities. A statute the Gov- Finally, earlier, as noted the Government ernment authority private to force manu- compelled appellants produce Agent accept facturers contracts place and to authority granted by under the the. such contracts obligations before their other (DPA), Defense Production Act 50 U.S.C. gives operational the Government substantial app. §§ seq. 2061 et The DPA re- control enterprises. over those Under the quires accept manufacturers contracts DPA, the Government in effect can seize the necessary defense, deemed to the national company. Congress recognized reality, requires and further give manufacturers to specified a hold harmless clause in the priority contracts absolute over other Act. 2071(a) (1964). obligations. app. § 50 U.S.C. Third, majority ignores language The DPA also includes a “hold harmless” majority argues the statute. The that “if provision, app. 50 U.S.C. that Congress had [the intended to im- statute] states: pose upon the kind of liabili- person No shall ty be held hable for by Thompson, asserted it would have said penalties or act or failure to act unequivocal so clear and Op. terms.” resulting directly indirectly from com- 204. litigation was histor- pliance rule, ic, regulation, substantively or order and was both procedur- pursuant issued to this Act ... ally unimaginable passage at the time of the Interestingly, both Agent Orange, only Hercules and manufacture but alleged complaints appeal question had been briefed on of whether the compelled under the Defense Production Act to applied. 'hold harmless' clause of the Act be justice, should which, in all fairness Act. We should Production the Defense Armstrong as a whole.” by public de- borne specifically to have Congress expect 80 S.Ct. v. United arising from a problem scribed (1960). ques The 1563, 1569,4 L.Ed.2d 1554 have had could of which judicial process public should case is tion in this whether limit intended to Congress ifYet scant idea. judicia the federal damages that pay for harmless the hold scope of sweeping to the use attributed ry has only, Con- to contract provision appellants alone Vietnam, or whether written, example, “No have gress could bear the burden. should breach of liable for held be person shall any act obligations caused contractual away appellants’ took Government The lan- act, That is not the etc.” or failure assuming By their businesses. control over imag- It is difficult the statute. guage of deprived appellants control, the Government than unequivocal” terms “clear ine more pru- ability conduct themselves of their person Congress: “No actually used appellants to en- forced dently, and instead penal- held liable be shall manufac- enterprise, dangerous gage in a resulting to act any act or failure ties for appel- exposing Orange. ture of indirectly compliance with from directly or risk, an incurred the Government lants to pursuant issued rule, or order regulation, should appellants whole to make obligation app. ...” U.S.C. Act to this danger The pass. danger come circumstances as the law as well The Agent Orange is now use of Government’s liability. support the Government’s it. can make clear, our law or as clear as obligation Equally clear is the Government’s nig- appellants. No amount indemnify simple obscure at doctrine can gling years parties past several Over truth. expended have courts litigation this presented issues phrasing the much effort respectfully I dissent. government contract in terms of this case suggests, preceding discussion law. As

however, grammar of conceptual inadequate to the may be law

ment contract ap- relationship between

task. Because never and the Government

pellants of that relation-

arms-length, discussion presume freedom

ship in terms doctrinal is incoherent. of contract OIL CORPO- AMERICAN TEXAS Plaintiff-Appellant, RATION, or so stake twenty million dollars potatoes to the may small be litigation Government, know we do not Federal OF DEPARTMENT STATES UNITED to the financial money means how much Defendant-Appellee. ENERGY, is a if there But ever appellants. health say, not the fairly it is No. 93-1152. can in which we case matters, this is money, principle it is the Appeals, United States litigation is core of this At the the case. Circuit. Federal distributes the bur- way our nation in which activity among its military citizens. den of its May inevitably wartime, distrib- is that burden to the Constitu- unevenly. cleave We uted however, unfairness.

tion, spite apt analogy provides Constitution —the is Amendment Fifth

Takings Clause forcing

“designed to Government bar public bear burdens alone to

some people notes regarding the relatively ignorant and were contractor’s in cases invoked Agent Orange. by, posed hazards health because was hindered performance the Govern- contend appellants Thus divulge information. failure to Government’s harms caused for the responsible is ment the doctrine of majority differentiates The conse- and that Orange plaintiffs, of im- knowledge from the doctrine superior pay appel- should quently the Government announced in specification, plied fund. share of the lants’ Spearin, 248 U.S. States United majority The L.Ed. 166 It S.Ct. disagrees. understands majority doctrine, acknowledges under the latter Building v. United Co. Ship American to contract is limited 228 Ct.Cl. 654 F.2d to later losses as but divulge performance, extends infor the Government require that requires that “if Spearin Op. at 197. ignorance well. only ‍‌‌​‌‌‌​​​​​‌​​​‌‌‌​​​‌​​‌‌‌‌‌‌​​‌‌​​‌‌‌‌​‌​​​​​​‍the contractor’s when mation according build is bound to performance of the contractor contractor’s hinder the would prepared specifications case, imposed plans and the costs In this the contract. responsible owner, not be contractor will of a settle are the result appellants plans consequences of defects for the long after reached ment Id., specifications.” majority therefore holds ceased. the author of 61. The is S.Ct. at doctrine recover appellants cannot opt- affirming judgments Orange” “Agent nale for In re of known ment hazards.” given arguably (2d defensible plaintiffs, are out Cir. Litig., 818 F.2d Prod. Liab. proof owed deference 1987). thought "de- the burdens the court In like vein However, initially as a basis duty judge. to in- trial clearly did not breach fendants original predicting eventual outcome relating Agent hazards form the

Case Details

Case Name: Hercules Incorporated v. The United States, Wm. T. Thompson Company v. United States

Court Name: Court of Appeals for the Federal Circuit

Date Published: Jul 7, 1994

Citation: 24 F.3d 188

Docket Number: 92-5124, 92-5138

Court Abbreviation: Fed. Cir.