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Government Contractor Denied Immunity from Katrina Claims – Specifications Not Precise Enough
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December 6, 2010
By Christian Henel
The U.S. Court of Appeals for the 5th Circuit has denied a government contractor sued by New Orleans residents for damages resulting from Hurricane Katrina the protection of government contractor immunity, holding that specifications approved by the government were not precise enough to qualify for the defense.
Government contractor immunity, first articulated by the U.S. Supreme Court in Boyle v. United Technologies Corp., 487 U.S. 500 (1987), protects government contractors against negligence claims by third parties when the contractor can show that 1) the government approved the contractor’s “reasonably precise” specifications (with knowledge of potential dangers) and 2) the contractor’s work conformed to those specifications. The defense rests on the concept that a contractor should not be liable to third parties for work sanctioned by and effectively directed by the federal government.
Washington Group International, Inc. contracted to provide engineering, construction and construction management services to the Army Corps of Engineers to remediate hazardous, toxic and radioactive contamination on an indefinite delivery/indefinite quantity basis. In 1999, the Corps began its Inner Harbor Navigation Canal Lock Replacement Project in New Orleans. One part of the project involved environmental cleanup of the East Bank Industrial Area in New Orleans. Under its IDIQ contract, Washington Group was required to remove surface and subsurface obstructions and to perform an environmental remediation.
The Corps issued an initial statement of work that was brief and described the work only generally. Washington Group developed more detailed specifications for the work, which it submitted to the Corps for review and approval. After a review period, which included discussions back and forth, technical analyses and requests for information by the Corps, the Corps issued a Recommendation Report. Washington Group adopted the Corps’ recommendations and created a project work plan, which contained final specifications. The Corps approved these final specifications.
After work began, Washington Group encountered previously unknown subsurface structures in the area to be remediated. The Corps issued a new statement of work to address the newly discovered structures. Washington Group submitted a proposal for removing the obstructions. The Corps rejected the proposal as too costly and suggested instead that Washington Group reduce costs by using on-site borrow material as the primary source of backfill rather than importing all backfill. Washington Group incorporated the Corps’ suggestions into a revised proposal, which was approved by the Corps. That proposal also provided that backfill be placed in 2-foot lifts and compacted but that no compaction testing of backfill would be required. Washington Group completed the work in accordance with the approved, revised plan.
In August 2005, Hurricane Katrina breached levees in New Orleans, causing deaths and horrific property damage. Two of the breaches were near areas where Washington Group had excavated and backfilled. In 2007, plaintiffs sued Washington Group in the U.S. District Court for the Eastern District of Louisiana. They alleged that Washington Group was negligent in backfilling and compacting and that the negligence resulted in undermining the levees, resulting in their failure and the flooding of New Orleans and St. Bernard Parish.
Washington Group moved for summary judgment, asserting that the government contractor immunity shielded it from liability. Washington Group asserted that the government had approved the backfill and compaction specifications and that Washington Group had merely performed government-approved work. The District Court agreed and granted summary judgment in favor of Washington Group. Plaintiff’s appealed, and the 5th Circuit reversed. In re Katrina Canal Breaches Litigation, No. 09-30428 (Sept. 14, 2010).
Government contractor immunity shields government contractors from liability under state laws by preempting those laws. Under Boyle, to qualify for the defense, the government contractor must prove that: 1) the government approved reasonably precise specifications; 2) the contractor’s work conformed to those specifications; and 3) the contractor warned the government about the dangers involved in its work that were known to the contractor and not known to the government.
To satisfy the reasonably precise standard, the appeals court wrote, the specifications must be precise enough that “discretion over significant details and all critical design choices will be exercised by the government.” Reasonably precise specifications for one aspect of a large project do not “create an umbrella of protection for an entire project.” Rather, the specifications must be reasonably precise for the specific feature of the project at issue in the litigation.
The appeals court concluded that Washington Group’s backfill and compaction submittals to the Corps were not “reasonably precise.” The appeals court found that Washington Group never specified, and the Corps never approved, what jobsite materials could be used for backfill. “The Corp neither mandated the composition of backfill material nor established precise procedures to test material for its suitability as backfill,” the appeals court wrote. The only Corps specification was that the backfill be clean, not contaminated, and not be full of debris -- leaving a wide variety of acceptable backfill material, the appeals court found. Similarly, it found that no different standard was imposed for off-site material and that there was no evidence the Corps applied a testing process for off-site material.
The appeals court quoted deposition testimony by Washington Group’s project manager that “there were no specifications for compaction” beyond backfilling in 2-foot lifts and compacting. Such a “general directive” did not establish reasonable precision in specifications but instead gave Washington Group discretion to choose a method without a required result, the appeals court held. It noted, for example, that Proctor compaction testing was not required, nor was any specific standard for compaction set. Rather, to reduce costs, the Corps simply visually observed compaction.
The appeals court acknowledged that the Corps itself decided not to specify more than basic compaction. But, it wrote: “The relevant inquiry… is whether the Corp approved sufficiently precise specifications, such that it is evident that the government was the primary agent of decision over the compaction method.” Imprecise or general guidelines give the government contractor discretion over design and methods, and “exercise of that discretion… is not protected” by government contractor immunity, the appeals court held.
The appeals court wrote that the essence of the defense is that “the government made me do it.” But, the court held, the government did not make Washington Group use the exact backfill that it used or specify the method for or extent of compaction.
The case was remanded for trial on the contractor’s liability.
In their reply brief, the plaintiffs argued that government contractor immunity should apply only to defense contractors and not to government contractors for civil works, as was the case here. The appeals court held that the argument was waived because the plaintiffs did not make it in their opening brief.
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