Recently, in Sawyer v. Foster Wheeler LLC, the Fourth Circuit held that a government contractor is entitled to federal jurisdiction, even in product liability failure-to-warn actions, based on the contractor’s assertion that it has a colorable federal defense of government contractor immunity. 860 F.3d 249 (4th Cir. 2017). The big takeaway from this case, however, is that the Fourth Circuit has now joined the Second, Third, Fifth, Seventh, and Ninth Circuits in holding that a government contractor need not demonstrate that it attempted to provide a warning, but was prohibited from doing so by the government. Id.; see Cuomo v. Crane Co., 771 F.3d 113 (2nd Cir. 2014); Papp v. Fore-Kast Sales Co., Inc., 842 F.3d 805 (3d Cir. 2016); Zeringue v. Crane Company, 846 F.3d 785 (5th Cir. 2017); Ruppel v. CBS Corp., 701 F.3d 1176 (7th Cir. 2012); Leite v. Crane Co., 749 F.3d 1117 (9th Cir. 2014). Instead, for the government contractor defense to apply, the contractor is only required to establish that the government dictated or approved the warnings the contractor actually provided.
Sawyer involved the claims of a decedent’s family against Foster Wheeler LLC in Maryland state court, in which they alleged that the decedent’s death was caused by exposure to asbestos while he assembled Foster Wheeler boilers for use aboard Navy vessels in the boiler shop of the Sparrows Point Shipyard, and that the defendants failed to warn him of the dangers associated with asbestos exposure. Sawyer, 860 F.3d at 249. Foster Wheeler removed the case to federal district court based on federal officer jurisdiction conferred as a result of its government contractor defense. Following plaintiffs’ motion, the district court remanded the case and Foster Wheeler appealed. Id.
In support of federal officer jurisdiction, Foster Wheeler asserted that it manufactured boilers for the Navy under the Navy’s strict specifications and that “in the manufacture and sale of boilers and auxiliary equipment for the Navy, including all aspects of warnings associated with that equipment, [it] was acting under an officer or agency of the United States.” Id. In support, Foster Wheeler supplied the affidavits of a former employee and a retired Navy captain, in which they attested: (1) Foster Wheeler designed boilers to match highly detailed ship and military specifications provided by the Navy, that “deviations from these specifications were not acceptable,” and the Navy exercised “intense direction and control over all written documentation to be delivered with its naval boilers;” and (2) “the Navy was well aware of the health hazards associated with the use of asbestos from the early 1920s,” and that the Navy’s information “with respect to the specification and use of asbestos, and the health hazards associated with its use aboard Navy vessels, far exceeded any information that possibly could have been provided by a boiler manufacturer.” Id.
The Plaintiffs argued: (1) that the government contractor defense does not apply to failure-to-warn actions; and (2) the boilers were not constructed on U.S. naval ships, were manufactured under the direction of Foster Wheeler personnel, and only later transported and installed upon U.S. naval ships. Id. In addition, Plaintiffs argued that there is no evidence that the government prohibited Foster Wheeler from warning those individuals constructing the boilers concerning the hazards associated with asbestos exposure. Id.
The Fourth Circuit reversed and remanded, finding that Foster Wheeler satisfied all three criteria to establish federal jurisdiction, namely that: (1) it acted under a federal officer; (2) it has a colorable government contractor defense; and (3) the charged conduct was carried out for or in relation to official authority. Id. With regard to the government contractor defense, the Fourth Circuit held that the defense applies to failure-to-warn claims where the defendant can demonstrate that: (1) the government exercised discretion and approved certain warnings; (2) the defendant provided the required warnings; and (3) the defendant warned the government about hazards that were known to it but not to the government. But, the Court went one step further and held that “the government need not prohibit the contractor from providing additional warnings; the defense applies so long as the government dictated or approved the warnings the contractor actually provided.” Id.
In its application of that standard, the Fourth Circuit found that Foster Wheeler demonstrated that the Navy “exercised intense direction and control over all written documentation to be delivered with its naval boilers,” including those manufactured by Foster Wheeler. Id. The Court cited one of Foster Wheeler’s affidavits which stated that “Foster Wheeler would not be permitted, under the specifications, associated regulations and procedures, and especially under actual practice as it evolved in the field, to affix any type of warning or caution statement to a piece of equipment intended for installation onto a Navy vessel beyond those required by the Navy.” Id. It also found that Foster Wheeler actually gave the warnings that were required by the Navy and that the Navy would penalize any deviation. Id. Finally, the Court found that Foster Wheeler credibly demonstrated that the Navy’s knowledge of asbestos-related hazards exceeded Foster Wheeler’s during the relevant time period. Id. Based on those findings, the Court held that Foster Wheeler had demonstrated that it was entitled to litigate this case in a federal forum. Id.