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From Products Liability Law Daily, September 6, 2018

Government contractor defense not available to state sub-contractor despite federal approval of guardrail end terminal

By Pamela C. Maloney, J.D.

The federal government contractor defense did not shield a manufacturer of a guardrail end terminal, which had been deemed eligible for federal reimbursement under a federal highway repair program, from product liability claims brought by a driver who was injured when her vehicle struck the guardrail, the U.S. District Court of New Hampshire ruled in a case of first impression. The court refused to extend the defense to the manufacturer who was a state sub-contractor because the federal interest on which the proposed defense was based was enforced through a federal highway funding program that "gave no hint to unsuspecting states that their tort laws would be displaced if they accepted an offer of federal funds" (Turgeon v. Trinity Industries, Inc., September 5, 2018, Barbadoro, P.).

The driver of a 2013 Dodge Durango sustained serious injuries when her vehicle drifted to the right, exited the roadway, and struck a guardrail end terminal, which had been manufactured by Trinity Industries., Inc. According to the driver, the end terminal malfunctioned and jammed—or locked-up—at a critical point during the impact, which caused a jagged piece of folded guardrail to penetrate the driver’s side compartment and impale the driver’s leg. Alleging that her injuries were enhanced because the end terminal components had been defectively designed so that the guardrail as a whole did not safely absorb and dissipate the vehicle’s energy, but instead malfunctioned and jammed at a critical point, the driver and her husband filed claims for both negligence and strict products liability against Trinity. In response, Trinity moved for summary judgment, arguing that the federal government contractor defense should be extended to cover the state tort claims because the federal government had reimbursed the state for the cost of the end terminal pursuant to a program that covered improvements to the National Highway System (NHS).

Government contractor defense. The federal contractor defense was created under federal common law to protect contractors who provided military equipment to the federal government from state tort law liability. It was not intended to displace state tort law unless the imposition of liability under state law would significantly interfere with some uniquely federal interest. Conceding that it was acting as a state sub-contractor rather than a federal contractor when it sold the end terminal, the manufacturer maintained that the federal contractor defense should shield it from liability for the couple’s state law claims because the Federal Highway Administration (FHWA) had issued an approval letter stating that the end terminal was sufficiently crashworthy under relevant federal testing standards, thereby making the device eligible for federal reimbursement under the Federal-Aid Highway Program (FAHP).

If it accepted the manufacturer’s argument, the court noted that it would be required to extend the defense into a new area. After observing that no other court had yet made the defense available to state contractors, the court proceeded with its analysis as to whether the manufacturer’s liability in this case would directly affect a uniquely federal interest and whether the manufacturer had identified a significant conflict between the federal interest involved and the operation of New Hampshire tort law.

Uniquely federal interest. The court was not persuaded by the manufacturer’s arguments that the FHWA had a uniquely federal interest in ensuring the safety of equipment installed on the nation’s highways, or that the FHWA had a unique interest in funding highway safety projects through FAHP. In the court’s opinion, the federal government’s asserted interest in ensuring the safety of NHS products was not "unique" to the FHWA because New Hampshire had an equally compelling interest in ensuring the safety of highway equipment installed on its own roadways. The fact that some of those roadways also comprised portions of the NHS did not diminish New Hampshire’s interests. Furthermore, although the FHWA was charged with developing minimal safety standards for the selection of acceptable safety devices for use on the NHS, the agency’s enforcement authority for noncompliance with those standards was limited to withholding federal funding. Actual reimbursement for a product ultimately was dependent on federal testing and approval, which in turn was contingent upon the product’s compliance with applicable state regulations. Therefore, the governmental interest in testing standards for highway safety devices installed on the NHS could not be considered "uniquely federal" because it was inextricably entwined with the interest of the states in ensuring safe highways, the court reasoned.

Equally unpersuasive was the end terminal manufacturer’s argument that cost control was a uniquely federal interest. The manufacturer argued that exposing developers like itself to the risk of liability arising from the use of its products on the NHS would directly affect those interests because the FHWA would indirectly bear the cost of liability judgments through increased contractor prices. According to the court, the cost of a safety feature was not addressed in the guidelines used by the FHWA as part of the approval process. In fact, those guidelines made it clear that cost was not a consideration in evaluating a safety feature. As a result, states could set higher safety standards than those required by the FHWA regardless of whether those higher standards increased costs. Given that in enacting the FAHP, Congress had not instructed the FHWA to consider a product’s cost when determining whether it was eligible for reimbursement, it would be inappropriate for the court to conclude, as a matter of federal common law, that a uniquely federal interest in cost control required the displacement of state tort law.

Significant conflict. Even if a uniquely federal interest in safe highways were to be assumed, the court could not justify the displacement of New Hampshire’s tort law in this case because it did not conflict with any identifiable federal interest or legislative objective. The criteria on which the FHWA based its approval of the guardrail end terminal merely outlined the testing procedures for evaluating safety performance. These procedures did not prescribe, or attempt to prescribe, design specifications for any particular safety feature. In addition, the FHWA’s product submission guidelines also made it clear that although the manufacturer’s end terminals had to be tested and found acceptable under the established criteria in order to be eligible for federal reimbursement, the state department of transportation was free to impose more rigorous standards before purchasing and installing any given end terminal.

It was clear to the court that the dynamic between the respective federal and state duties was much different than that required under the federal contractor defense in that it was possible for the end terminal manufacturer to comply with both mandates at the same time. The FHWA criteria for reimbursement simply established a minimum safety-performance standard for devices seeking FAHP eligibility, and a device’s compliance with a higher, state-imposed duty of care had no bearing on the FHWA’s determination. As a result, any state-imposed duty of care as to the design of the product would not be contrary to any federally imposed contractual or regulatory standard. There was nothing in the record to indicate that the end terminal manufacturer would be precluded from complying with both its federal testing obligations and its state-prescribed tort duty to design a reasonably safe product, the court opined. Nor could the manufacturer reasonably assert that the imposition of a state-prescribed duty to refrain from the use of unreasonably dangerous and defective products on the nation’s highways would frustrate specific federal legislative objectives.

Having concluded that this case did not present the type of significant conflict between state and federal interests that would justify allowing the manufacturer to plead the federal contractor defense to shield it from liability for the negligence and strict products liability claims asserted by the couple, the court denied the manufacturer’s motion to dismiss.

The case is No. 15-cv-288-PB.

Attorneys: D. Michael Noonan (Shaheen & Gordon PA) for Cheryl Turgeon and Marc Turgeon. Brian T. Kelly (Nixon Peabody LLP) and Asha L. Spencer (Bartlit Beck Herman Palenchar & Scott LLP) for Trinity Industries, Inc. and Trinity Highway Products, LLC.

Companies: Trinity Industries, Inc.; Trinity Highway Products, LLC

MainStory: TopStory DefensesLiabilityNews DesignManufacturingNews IndustrialCommercialEquipNews NewHampshireNews

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