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The government contractor defense to products liability cases has been severely limited by a recent ruling of the Pennsylvania Supreme Court. By a 7-0 vote in Connor v. Quality Coach Inc. , the justices reversed and remanded a Superior Court’s ruling that a company contracted by a government agency to modify the van of a special needs person was immune from a suit stemming from its negligent design. The court refused to give weight to a fear that has caused other courts to broaden the defense; those courts have said that if contractors know they don’t have immunity, they will hike up the cost of their services. “Thus, we hold that the prospect that the commonwealth may indirectly bear increased costs in procurements from the private sector does not justify a judicial rule of law broadly exempting government contractors from tort liability,” Justice Thomas Saylor wrote in the 23-page opinion. Conshohocken, Pa. sole practitioner Joseph I. McDevitt represented plaintiff Bruce Connor. The Pennsylvania Trial Lawyers Association, represented by Arthur L. Bugay of Philadelphia’s Galfand Berger, filed an amicus petition in McDevitt’s support. Both Bugay and McDevitt commented that the opinion went far beyond the arguments each party presented to the court. “The decision is a well-needed beacon in a confusing area of the law,” Bugay said. “For anyone who receives state assistance for special needs devices, this is a victory.” And both agreed the effects of the decision will extend far beyond Connor’s case. “Any type of government specification defense is circumspect in light of this decision,” Bugay said. McDevitt’s interpretation of the decision was more dramatic. “A clear implication of the Supreme Court’s decision is to effectively eliminate government contractor immunity as a defense in product liability actions,” he said. “For the purposes of this case, its effect is to give my client his day in court.” Gallagher, Reilly, Lachat & Egbert attorney Frederick T. Lachat, who represented Quality Coach, did not return a phone call comment. The Product Liability Council Inc. also filed an amicus brief in support of Quality Coach in which it stressed the importance of the public policy issues underlying the government contractor defense in the case. Christopher S. D’Angelo of Philadelphia-based Montgomery, McCracken, Walker & Rhoads represented the council. MODIFIED VAN Because he suffered a spinal cord injury in his adolescence, Connor is unable to use his legs and has limited use of his arms and hands. He was able to get around independently in a van modified for control by manual input. In 1990, Connor applied to the Office of Vocational Rehabilitation for funding for updated hand controls in a new van. OVR referred Connor to Moss Rehab Driving School for the Disabled, which in turn recommended a left-hand control providing for acceleration and braking via side-to-side movement, Saylor said. The recommendation also included a device described as a “palmer cuff with D-Ring on velcro,” which was designed to secure the driver’s hand to the throttle/brake control. OVR approved funding and accepted a bid from Quality Coach Inc. to implement the modification. Quality Coach purchased the brake/throttle device and the palmer cuff from Creative Controls Inc. Connor was in a motor vehicle accident four years later and sustained serious injuries. Connor sued Quality Coach, Moss and Creative Controls, alleging that he lost control of the van because he wasn’t able to remove his left hand from the brake/throttle control. Connor claimed the hand secure device was defectively designed and presented theories of negligence, breach of warranty and strict products liability. Quality Coach countered that it was immune from suit as a government contractor. The trial court granted that defendant’s motion for summary judgment. The Pennsylvania Superior Court affirmed on appeal, finding that several policy interests supported a government contractor defense — the defense shields government contractors from liability absent a negligent or willful tort, and the defense encourages lower competitive bidding by assuring contractors they won’t be sued, thereby lowering government costs. The lower court rejected Connor’s argument that under its 1986 decision Mackey v. Maremont Corp., in which it held that the government contractor defense should only be available to military contractors. In Connor’s case, the Superior Court had said the offense could be made available to non-military contractors in a products liability case if three criteria were met: � The government established specifications for the part of the product that caused the plaintiff’s injuries. � The product met the government’s specifications in all material aspects. � The contractor warned the user about any patent errors or design defects that were known or should have been known. The court used the third criterion to replace two factors deemed relevant by the Mackey court in the military contractor context — that the defendant warned the government about known dangers and that the defendant provided necessary warnings or instructions. The Superior Court found all three criteria were met in Connor. In his appeal to the high court, Connor argued that the lower court improperly supplanted the Mackey court’s rule that a contractor who wants to make use of the defense must show that it warned the government about known dangers. “Connor contends that such a pre-manufacturing warning is necessary so that the government may balance the risk and benefits inherent in the use of the product and to remove any incentive on the part of the contractor to withhold knowledge of risks involved in the use of the product,” Saylor said. Connor cited the 1998 U.S. Supreme Court case Boyle v. United Technologies, noting that a pre-manufacturing warning to the government is still an integral part of the federal contractor defense. Boyle was an appropriate jumping off point for Saylor’s analysis because both parties and their amici focused on public policy considerations. In Boyle, the estate of a U.S. Marine lieutenant sued a military contractor for the negligent design of a component in the helicopter the decedent crashed in. Saylor said the decision represented a “marked expansion” of government contractors’ immunity under U.S. Supreme Court caselaw when it created a federal common law rule. “Acknowledging that the court generally refuses to find federal preemption of state law in absence of clear statutory prescription or direct conflict in laws,” Saylor said, “Justice [Antonin] Scalia (the opinion author) found nevertheless that, in a few areas involving uniquely federal interests (i.e. interests that were exclusively federal or vitally affected the interests, powers and relations of the federal government), the judiciary would act to create protection through ‘so-called federal common law.” Before Boyle, government contractors had only two defenses, the contract specification defense and the government agent defense. The former protected contractors from liability associated with work performed and products manufactured under the specifications of the government or a private contract. The latter, developed in the 1940 U.S. Supreme Court case Yearsley v. W.A. Ross Construction Co., insulated contractors from liability when they acted non-negligently pursuant to the authority or direction of the federal government. Current Pennsylvania law regarding defenses available to government contractors mirrors pre- Boyle federal jurisprudence, Saylor said. So the court was put in the same position as its federal counterpart, being asked for the first time to endorse a common law rule extending immunity to a commonwealth contractor. However, the Boyle decision was not entirely helpful to the court. “Obviously, as a matter of federal preemption, this court is bound by Boyle concerning immunity from state tort law conferred by a contractor’s status as a federal government contractor,” Saylor said. “The present case, however, does not involve a federal contractor – OVR is a commonwealth agency. Thus, Boyle and its conception of federal preemption are not directly controlling on our decision here.” COMMON LAW In the federal arena, sovereign immunity has maintained its common law roots, but in Pennsylvania, the Supreme Court has abolished common law justifications for sovereign immunity. So the court was left to decide whether the General Assembly intended to include government contractors within the shield of sovereign immunity. The relevant statute, 1 Pa.C.S. �2310, states the “the commonwealth, and its officials” can enjoy immunity. That language does not foster an interpretation that includes government contractors, Saylor said. “For the same reasons that it would be inappropriate to broaden such defense in favor of commonwealth contractors using the mechanism of the common law, we also decline to employ the rubric of public policy to expand the reach of statutory sovereign immunity,” Saylor said. Saylor said the court acknowledged the fear that the lack of immunity could drive up the commonwealth’s costs in retaining contractors. But the justices have already dealt with that issue in Mayle v. Pennsylvania Dept. of Highways, he said. “Significantly, however, in Mayle this court found such a general policy statement, lacking in empirical support, ill-suited to serve as a counterweight to the policies favoring just compensation, underlying our tort system,” he said. “Moreover, there are a range of other considerations that would compete with protection of the government’s economic interests, not the least of which is that the insulation of the commonwealth from indirect costs on grounds of public interest has the perverse effect of permitting a government officer to minimize as a consideration in procurement decisions (at least as a matter of financial concern) external societal costs, particularly in terms of potential diminishment to public safety. … “Rather, in cases, such as this one, in which Boyle’s federal preemption analysis is not implicated, to the extent that litigants’ substantive rights are to be substantially altered, modified, abridged or enlarged on the basis of public policy centered upon the protection of the public fisc though elimination of pass-through costs, such a rule, if appropriate, will have to originate in the legislative branch.” REACTION Bugay said he was impressed with the thoroughness of the opinion. “The Supreme Court looked at the defense from its origins and distinguished the case from Boyle and said ‘this is not that kind of animal,’” he said. Bugay also said he had concerns with the defense’s argument. “It’s a troublesome thought – we’ll supply the product without doing a safety analysis in exchange for providing you with cheaper products,” he said. According to McDevitt, the justices seemed equally suspect of that argument. “The opinion seems to me to call into question the viability of the defense,” he said. “Saylor questioned the argument raised by the opponent that by permitting product liability cases, contractors could increase costs. That’s something that’s never truly been proven or shown, in my experience.” McDevitt intimated that the opinion is more far-reaching that it might seem to be at first glance. He said in the past, the government contractor defense was used only rarely. But in the past 18 to 20 years, it has filtered into traditional products liability cases. In Conner, the high court now seems to be pulling back the reins.

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