Immunity for KBR and Halliburton? Not yet, says the Fourth Circuit

March 10

The U.S. government contracted with various corporations, including Kellogg Brown & Root (KBR) and Halliburton, to provide waste disposal and water treatment services on military bases in Iraq and Afghanistan. Various people — mostly U.S. military personnel — sued these corporations on various state tort and contract claims, alleging that they were exposed to various toxic chemicals when the corporations (1) burned the waste in open-air pits without safety controls and (2) provided them with contaminated water.

Last year, the district court dismissed the servicemembers claims based on the political question doctrine, derivative sovereign immunity, and the combatant activities exception. On Friday (March 7), the Fourth Circuit decided Metzgar v. KBR, Inc. (In re KBR, Inc., Burn Pit Litigation) on Friday, vacating the district court’s decision and remanding for further proceedings. Bottom line: no immunity for these corporations; the case can go forward.

There were three theories in the case, mirroring the three theories on which the district court dismissed the servicemembers’ claims: the political question doctrine, derivative sovereign immunity (which mostly comes down to the discretionary function exemption), and the combatant activities exception.

*     *     *

The political question doctrine

The political question doctrine is cases where the decision “belongs to the legislative or executive branches rather than to the judiciary”. Most military decisions are like that, but not all; Baker v. Carr (1962) has a six-factor test to figure out whether any given decision is a political question. Here are the factors:

  1. “Textually demonstrable constitutional commitment of the issue to a coordinate political department”;
  2. “A lack of judicially discoverable and manageable standards for resolving it”;
  3. “The impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion”;
  4. “The impossibility of a court’s undertaking independent resolution without expressing lack of the respect due coordinate branches of government”;
  5. “An unusual need for unquestioning adherence to a political decision already made”;
  6. “The potentiality of embarrassment from multifarious pronouncements by various departments on one question.”

In Taylor v. Kellogg Brown & Root Services Inc. (4th Cir. 2011), the Fourth Circuit developed its own two-factor test to take the government contract context into account: “the extent to which [the government contractor] was under the military’s control”, and “whether national defense interests were closely intertwined with the military’s decisions governing [the government contractor's] conduct”. Based on the Taylor factors, the Fourth Circuit concluded that (1) on the military-control prong, there was some evidence of military oversight, but not enough to call the case nonjusticiable right now, and (2) on the closely-intertwined prong, deciding this tort claim didn’t require evaluating the military’s judgment unless the military at least partly caused the injuries and the theory of recovery involved allocating liability based on fault.

So there was insufficient reason to dismiss based on the political question doctrine. (Apparently, in the Fourth Circuit, the Taylor factors replace the Baker factors. This doesn’t seem quite right, but just eyeballing the Baker factors, it seems that if the Taylor factors come out against the existence of a political question, then several of the Baker factors will also tend to do likewise, particularly (as the Fourth Circuit said in Taylor) factors 2 and 4.)

Derivative sovereign immunity / Discretionary function exemption

Tort claims against the government are governed by the Federal Tort Claims Act (FTCA), which is a partial waiver of the government’s sovereign immunity. One of the cases where the government still retains its immunity is the “discretionary function exception”: there’s no liability (and in fact no jurisdiction) for “[a]ny claim . . . 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.” A discretionary function “involves an element of judgment or choice”: that is, if a government agent had some perfectly ministerial task that he misperformed, the discretionary function exception wouldn’t apply, and liability would be possible. (I write about the FTCA and various exceptions to liability in my article on tort suits against prisons, which I serial-blogged here recently.)

So if government employees had burned the waste and provided the contaminated water to servicemembers based on some cost-benefit analysis about whether to provide greater protections, that might well be precluded by the discretionary-function exemption. But, one might ask, who cares? The government’s liability based on the actions of its employees is governed by the FTCA, but the FTCA specifically excludes contractors! Why should the FTCA have any applicability here at all? But the Supreme Court has recognized some derivative sovereign immunity in various circumstances. One case is Boyle v. United Technologies Corp. (1988), but that will have to wait for the next section below. Another case is Yearsley v. W.A. Ross Construction Co. (1940).

In Yearsley, Congress authorized a construction project, and the government hired a contractor to carry it out. The project caused erosion that damaged nearby property. The landowners affected sued the contractors, arguing that there had been a taking without just compensation. The Supreme Court said you couldn’t sue the contractors: “if this authority to carry out the project was validly conferred — that is, 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.” (As the Fourth Circuit points out, Yearsley‘s holding is “quite narrow”: the case itself doesn’t mention sovereign immunity, and instead says that it’s the government that impliedly promises to pay just compensation for takings.)

Yearsley does apply here, but the derivative sovereign immunity it recognizes only applies when the contractor is acting within the scope of the authority conferred. But that gets to the merits of the case: the plaintiffs alleged that KBR exceeded its authority because it violated specific government directives. KBR wanted to interpret the authority more broadly, as “general waste management and water treatment functions”, but the Fourth Circuit took the servicemembers’ narrower view.

And at this point in the litigation, there wasn’t enough information to determine whether KBR was acting within the scope of its authority. Nor was there enough information to determine whether KBR’s tasks were really “discretionary” in the sense of requiring judgment rather than being dictated exactly by military directives. So the Fourth Circuit likewise reversed the district court on this ground of dismissal.

Combatant activities exception

The FTCA also has a combatant activities exception: the government retains immunity from “[a]ny claim arising out of the combatant activities of the military or naval forces, or the Coast Guard, during time of war.” This, too, applies only to acts of the government and its employees, not to contractors, so one would again wonder why this applies. But in Boyle v. United Technologies Corp. (1988), the Supreme Court recognized a kind of government contractor immunity — though it wasn’t specifically tied to any particular provision of the FTCA.

In Boyle, a Marine helicopter co-pilot died when his helicopter crashed during a training exercise. The jury, applying Virginia law in a tort suit against the contractor that had built the helicopter, determined that the helicopter’s escape hatch was defectively designed; but the Supreme Court held that, because the government had specifically requested that sort of escape hatch, there was no liability for the contractor. The Supreme Court found that there were “uniquely federal interests” at stake and that there was a “significant conflict” between those interests and state law (as shown, for example, by the FTCA’s discretionary function exemption), and developed a test that required preemption under certain circumstances. (I’ve written more about Boyle in this Reason blog post.)

The Fourth Circuit’s decision to discuss Boyle in this context seems a bit questionable, since Boyle wasn’t decided under the combatant activities exception; it probably should have been discussed earlier, together with Yearsley, in the general discussion of different bases for derivative sovereign immunity. But the error, if any, seems harmless. In the end, the Fourth Circuit decided the waste management and water treatment activities were combatant activities because they’re “functions to aid military personnel in a combat area” and therefore “undoubtedly ‘necessary to and in direct connection with actual hostilities’”. But derivative sovereign immunity under Boyle (and the D.C. Circuit’s test in Saleh, also discussed in the Reason blog post), requires that the military have retained “command authority” over the activities, which again we don’t know before discovery. So on this issue too, the district court’s decision to dismiss was premature.

As a result, the Fourth Circuit disapproved all of the district court’s bases for dismissal. Not that they’re no good, but it was premature to dismiss at this stage, because whether they’ll apply or not depends on extra evidence that might come out. So the case goes back to trial now.

Sasha Volokh lives in Atlanta with his wife and three kids, and is an associate professor at Emory Law School. He has written numerous articles and commentaries on law and economics, privatization, antitrust, prisons, constitutional law, regulation, torts, and legal history.
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