In the federal arena, Uncle Sam can be sued only with Congressional consent, and the Federal Tort Claims Act has not waived sovereign immunity for claims “based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused.” 28 U.S.C. § 2680(a). Governmental adoption of design specs is almost always a discretionary function, so suing the Government for negligent design won’t work. But what about suing the contractor who implemented the faulty design?
In Yearsley v. W.A. Ross Construction Co., 309 U.S. 18 (1940), a contractor who simply performed as the Government directed was held immune from suit. The plaintiffs in Yearsley sued to recover damages for land that was washed away as the result of work done by a contractor in building dikes in the Missouri River under a contract with the United States Government. The Supreme Court held that “if what was done was within the constitutional power of Congress, there is no liability on the part of the contractor for executing its will.” Id. at 20-21. The Court recently clarified that while government contractors do not “share the Government's unqualified immunity from liability and litigation,” under Yearsley they may sometimes “obtain certain immunity in connection with work which they do pursuant to their contractual undertakings with the United States.” Campbell-Ewald Co. v. Gomez, 577 U.S. 153, 166 (2016) (quoting Brady v. Roosevelt S.S. Co., 317 U.S. 575, 583 (1943)).
Courts have dubbed this “derivative sovereign immunity.” The “driving purpose of derivative sovereign immunity ‘is to prevent the contractor from being held liable when the government is actually at fault but is otherwise immune from liability.’” In re U.S. Office of Personnel Mgmt. Data Security Breach Litigation, 928 F.3d 42, 70 (D.C. Cir. 2019) (quoting In re World Trade Center Disaster Site Litigation, 456 F.Supp.2d 520, 560 (S.D.N.Y. 2006). Apparently it applies not just on federal projects, but to any project on which federally-imposed designs are followed. Campbell-Ewald Co., 577 U.S. at 167 n.7 (“Critical in Yearsley was not the involvement of public works, but the contractor’s performance in compliance with all federal directions.”).
Overlapping the “derivative sovereign immunity” defense is the so-called “government contractor defense” to liability for procurement of negligently designed equipment, articulated in Boyle v. United Technologies Corp., 487 U.S. 500, 512 (1988), which immunizes a federal government contractor from liability for design defects 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.” Boyle has been extended by several lower federal courts beyond equipment procurement to service contracts in general – and a subsequent Supreme Court case suggests that the logic of Boyle applies to service contacts too. Correctional Services Corp. v. Malesko, 534 U.S. 61, 74 n.6 (2001) (citing Boyle and noting that “[w]here the government has directed a contractor to do the very thing that is the subject of the claim, we have recognized this as a special circumstance where the contractor may assert a defense”).
Whether Yearsley immunity and/or Boyle immunity will apply by analogy to designs implemented at the behest of state or municipal governments is presently an open question in New Hampshire. A number of other states have adopted these defenses – and since RSA 541-B:19, I(c) furnishes the State of New Hampshire with the same discretionary function immunity enjoyed by the United States, don’t be surprised if our state falls in line.