Unpublished Disposition, 923 F.2d 862 (9th Cir. 1984)

No. 89-55881.

United States Court of Appeals, Ninth Circuit.

Before REINHARDT and CYNTHIA HOLCOMB HALL, Circuit Judges, and RE,^*  Chief Judge.

MEMORANDUM^** 

This is a diversity case arising from a malfunctioning military aircraft ejection seat which resulted in the death of Major Thomas C. Guerinot, the decedent of appellant Marilyn Guerinot. The appellant appeals from an order of the United States District Court for the Southern District of California granting appellees', Rockwell International Corp. (Rockwell) and Precision Sensors, Inc. (PSI), motion for summary judgment. The district court held that Rockwell and PSI were protected or immune from liability by the Government Contractor's defense. Concluding that they had been abandoned, the court also dismissed two of appellant's other theories of liability.

On appeal, appellant asks this court to consider whether the district court erred in: (1) its application of the Government Contractor's defense; (2) concluding that no genuine issues of material fact exist as to any of the elements of the Government Contractor's defense; and (3) concluding that the appellant had abandoned two theories of liability. On the facts before this court, which are not genuinely in dispute, we hold that the Government Contractor's defense was properly applied and that appellees cannot be held liable. Accordingly, we affirm the decision of the district court.

BACKGROUND

In November 1963, the Department of the Navy issued a "Type Specification" as to a proposal seeking a light counterinsurgency, armed aircraft, Model OV-10A. The Type Specification required "emergency escape throughout the entire flight envelope of the aircraft ... including ground level escape at zero airspeed." In September 1964, shortly after the Navy issued its testing requirements for Model OV-10A, Rockwell issued document NA64H-895. This document contained specifications for a dual mode sensor system which would use altitude and airspeed to activate the ejection seat system in either a high or low mode.

Specification NA64H-895, and other evidence in the record, set forth the manner of operation of the ejection system. The system allows the pilot in the front seat to initiate ejection and parachute deployment for both the front and rear seats. The speed sensor determines when the ejection seat deploys, based on altitude and airspeed. In low mode, there is a one-eighth of a second delay between the moment the seat begins to move and the beginning of parachute deployment. In high mode, the delay is extended to two seconds to allow enough time, before parachute deployment, for the seat to clear the aircraft. After testing, the Navy issued document SD-556-1 which specified that the ejection seat system be built in accordance with specification NA64H-895.

After further negotiations, the Navy, in 1966, ordered 223 model OV-10A aircraft from Rockwell. Rockwell, in turn, contracted with PSI for the manufacture of a speed sensor, in accordance with Navy approved specifications, which would activate the ejection system.

In May 1971, the Navy requested that Rockwell refine the airspeed tolerance specification for the -1 sensor. Rockwell requested that PSI manufacture the EDS74DC-9 sensor (the "-9 sensor") to meet the new Navy specifications. Beginning in 1972, the -9 sensor was incorporated into the model OV-10A aircraft, including the aircraft Major Guerinot was ejecting from when he died. The -9 sensor changed the lower airspeed limit for ejection in high mode, thereby increasing the airspeed limit for low mode ejection. The Navy requested the change after determining that safer ejection would occur with a higher airspeed limit for low-mode ejection.

The -9 sensor, like all of the sensors manufactured by PSI, uses an end cap which is threaded onto a plunger. To ensure that the end cap is properly attached to the plunger, and to prevent movement of the endcap, a locking agent must be used. PSI uses, in all its sensors, an industrial strength thread locking compound called loctite. Loctite, an adhesive which hardens in the absence of air, helps maintain the proper clearance between the endcap and the plunger, and prevents thread movement, is widely used by the Navy and the industry.

In 1980, despite PSI's objections, the Naval Air Rework Facility of Cherry Point, North Carolina (the NARF) used a -1 sensor manual to disassemble and overhaul the -9 sensor. During the overhaul, the NARF applied loctite to the plunger and endcap.

On November 16, 1984, the Model OV-10A aircraft, equipped with the overhauled -9 sensor, with decedent Major Guerinot as co-pilot, crashed during a simulated single engine landing at Camp Pendleton, California. The pilot, Captain Mueller, who controlled ejection, initiated ejection for both seats. It is undisputed that Major Guerinot's seat did not function in the low mode ejection sequence, and he died when his seat hit the ground.

After the accident, the Navy conducted an investigation. The Navy accident report states that an investigation of the -9 sensor "revealed that extraneous [loctite] contamination was most probably introduced during the last [overhaul]." Further, evidence reveals that the extraneous loctite contamination was sufficient to cause the plunger to activate improperly, and the extraneous loctite would not have caused the accident if the curing and testing requirements had been followed when the sensor was overhauled.

DISCUSSION

Viewing the evidence in the light most favorable to the nonmoving party, we review de novo a district court's grant of summary judgment to determine whether there are any genuine issues of material fact, and whether the district court correctly applied the relevant substantive law. See Tzung v. State Farm Fire and Casualty Co., 873 F.2d 1338, 1339-40 (9th Cir. 1989).

We have consistently recognized the availability of the Government Contractor's defense when a finding of liability under state law would create a significant conflict with a federal policy or interest. See McKay v. Rockwell Int'l Corp., 704 F.2d 444, 448-51, (9th Cir. 1983), cert. denied, 464 U.S. 1043 (1984). A recent Supreme Court decision accepted, for the most part, the defense as laid out in McKay. See Boyle v. United Technologies Corp., 487 U.S. 500, ----, 108 S. Ct. 2510, 2518 (1988). Hence, when, as here, an action is brought to recover damages suffered in the course of military duties and attributable to allegedly defective military equipment designed in accordance with government-approved specifications, the Military Contractor's defense is available to displace state law in order to protect identified federal interests. See Boyle, 108 S. Ct. at 2518; McKay, 704 F.2d at 451.

In Boyle, the Supreme Court observed that disputes between private parties may have an adverse impact upon the federal government's interest in the procurement of military equipment. See 108 S. Ct. at 2515. The Court stated that " [t]he imposition of [state tort] liability on Government contractors will directly affect the terms of Government contracts: either the contractor will decline to manufacture the design specified by the Government, or it will raise its price. Either way, the interests of the United States will be directly affected." Id. The Court, however, added that a finding that an interest or policy of the United States is affected when it procures military equipment from an outside contractor, although a necessary first step, does not end the inquiry. For state law to be displaced, a "significant conflict" must exist between the federal policy or interest and a finding of liability under state law. See id.

The Court in Boyle reasoned that since the Government is immune from liability when it exercises its discretion in producing its own military equipment, the same protection should, under some circumstances, be afforded outside military contractors when they are acting on government approved specifications. See id. at 2517-18. The circumstances which would require displacement of state law exist when there is a "significant conflict" between a finding of state liability and the federal policy or interest involved. See id. at 2518. If a defendant meets the three part test as set out in Boyle, a conflict exists and state law will be displaced. The conflict exists when: "(1) the United States approved reasonably precise specifications; (2) the equipment conformed to those specifications; and (3) the supplier warned the United States about the dangers in the use of the equipment that were known to the supplier but not to the United States." Id. The Boyle analysis "assure [s] that the suit is within the area where the policy of the 'discretionary function' would be frustrated--i.e., [it] assure [s] that the design feature in question" was a result of a government officer's consideration of the specifications, not merely the result of a decision made by the contractor. Id. Hence, we conclude, as did the district court, that this formulation or analysis must be applied to the facts now before us.

Pursuant to the Boyle analysis, in the present case we must first determine whether there is a federal interest or policy that would be affected if liability is imposed upon the defendants under state law. The present case presents facts similar to those in Boyle. If liability is imposed, the result will likely be that the contractor will either increase prices in order to insure against future liability, or the contractor will decline future contracts. It seems clear that this directly affects the government's interest in procuring military equipment from outside contractors.

The appellant strenuously argues that before the three-part test is applied, this court must first find a conflict between a federal interest embodied in the contract requirements and the duty imposed by state law. The Boyle analysis, however, does not require, as appellant contends, that the Government have an interest in each and every feature of the aircraft. Rather, once a federal interest or policy has been identified, here, the procurement of military aircraft, the court must then determine, without regard to the contract requirements, whether a "significant conflict" exists between that interest or policy and a finding of liability under state law.

The next step is to address the Boyle three part test. First, did the United States approve reasonably precise specifications? The design must have been a result of continuous "back and forth discussions" between the Navy and the contractor, ensuring that the Government's approval was more than a "rubber stamp." See Trevino v. General Dynamics Corp., 865 F.2d 1474, 1480 (5th Cir.), cert. denied, 110 S. Ct. 329 (1989). Additionally, the choice of a design which was produced by the contractor rather than the Government can still represent a significant policy decision if the Government approved reasonably precise specifications. See Boyle, 108 S. Ct. at 2518.

During the development of the ejection system and its sensor, the Navy specified that the system be built in accordance with Rockwell's specification NA64H-895 by issuing documents SD-556-1 and SD-556-2. The system was originally equipped with the -1 sensor, and later with the -9 sensor. There is extensive documentation that the Navy and Rockwell interacted in more than a cursory way in their negotiations. The Navy required specific tests for the ejection system and changes were made as a result of certain failures during the tests. Specifications relating to the speed sensor were approved by the Navy. Additionally, although the Navy did not specifically require the use of loctite as a locking agent, the specifications state that an epoxy may be used as a locking agent, and evidence in the record indicates that the Navy has approved the use of loctite as an epoxy. Further, ample opportunity existed for the Navy to disapprove of its use. Loctite was used for many years in the model OV-10A aircraft and was applied to the aircraft in question by the NARF in 1980. Hence, it seems clear that the Navy approved reasonably precise specifications. See Niemann v. McDonnell Douglas Corp., 721 F. Supp. 1019, 1025 (S.D. Ill. 1989).

The second Boyle element requires that the equipment conform to those specifications. The appellant does not claim that the speed sensor, with loctite as the locking agent, deviates from the specifications. Rather, the appellant claims the decision to use loctite was in error. Therefore, there is no issue of material fact as to the second Boyle element.

The third element requires contractors to warn of defects known to them but not known to the Government. There is no evidence that PSI or Rockwell knew of any incident where a plunger of a sensor was hindered from functioning properly due to loctite contamination. Further, the overhaul manual, had its instructions been followed, would have guarded against the loctite contamination. However, its instructions were not followed. Since the contractor is only under a duty to warn of risks known to it but not to the Government, and is not held to a "should have known" standard, we conclude that appellees have met their duty to warn. See Trevino, 865 F.2d at 1487.

In sum, since the three prongs of the Boyle test are met, and there are no issues of material fact, state law will be displaced, and the Government Contractor's defense will protect the appellees from liability.

Since the evidentiary burden of showing a "genuine, triable issue of material fact" was not met despite the time available in the three years between the filing of the complaint and the motion for summary judgment, appellant's other theories of liability were properly dismissed as abandoned. See Celotex Corp. v. Catrett, 477 U.S. 317, 326-27 (1986). Accordingly, the district court's entry of summary judgment is affirmed.

AFFIRMED.