Last week, the Fourth Circuit Court of Appeals affirmed a lower court decision to dismiss a Telephone Consumer Protection Act (“TCPA”) lawsuit against General Dynamics Information Technology, Inc. (“GDIT”), on the basis that GDIT was immune from suit as a government contractor under what is known as the “Yearsley doctrine.”  Craig Cunningham v. GDIT, No. 17-1592 (Apr. 24, 2018). The decision follows a long line of Fourth Circuit decisions in which contractors have been granted protection from liability when they perform work that supports important governmental functions. 

GDIT was hired to assist the Centers for Medicare and Medicaid Services (“CMS”), a government agency, by calling individuals using an auto-dialer and a pre-approved script to provide information about their health insurance options under the Affordable Care Act.  When plaintiff Craig Cunningham received one of these calls, he filed a lawsuit alleging that GDIT had violated the TCPA for failing to obtain his prior consent.

The Fourth Circuit agreed with the lower court, finding that GDIT was immune from suit under the Supreme Court’s Yearsley doctrine.  In Yearsley, the Supreme Court held that the doctrine of sovereign immunity that traditionally applies to the U.S. government may be extended to government contractors in instances where (1) the government authorized the contractor’s actions in question; and (2) the government “validly conferred” such authorization.  Yearsley v. W.A. Ross Construction Co., 309 U.S. 18, 20-21 (1940).  More recently, the Supreme Court applied the Yearsley doctrine to the TCPA, holding that contractors may be exempt from TCPA claims so long as they are lawfully acting on behalf of the government.  Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663, 672 (2016).

On appeal, Cunningham argued that the lower court erred in applying Yearsley because: (1) the doctrine only applies to state law claims, not federal statutory claims; (2) the government did not authorize GDIT’s actions; (3) the government cannot “validly confer” the authority to engage in conduct that violates the law; and (4) the doctrine is a merits defense from liability rather than a source of jurisdictional immunity.

The Fourth Circuit rejected each of these arguments, finding that :

  1. Nothing in Yearsley limits its applicability to state law claims, and the defense may be asserted to bar a court’s jurisdiction over certain federal claims;
  2. GDIT faithfully performed the duties specified in its contract with the government;
  3. “The purpose of Yearsley immunity is to prevent a government contractor from facing liability for an alleged violation of law, and thus, it cannot be that an alleged violation of law per se precludes Yearsley immunity”;
  4. Yearsley is a jurisdictional defense, which deprives federal courts of jurisdiction to hear certain claims against government contractors, and
  5. The parties had conducted enough jurisdictional discovery to provide the plaintiff “sufficient procedural safeguards” and the court sufficient information to justify dismissal on Rule 12(b)(1) grounds (i.e., “75 days of limited discovery on the applicability of Yearsley, which included six subpoenas, four Touhy requests, numerous other document requests, six depositions of GDIT and CMS employees, and supplemental briefing on the issue”).

The Fourth Circuit’s decision is significant for government contractors that are sued by third parties for alleged injuries arising from the performance of federal contracts.  While the GDIT case involved alleged violations of the TCPA, the court’s discussion and application of Yearsley immunity underscores the enduring viability of the defense in a variety of contexts, including when contractors are sued for personal injuries, death, or property damage under state tort law.

A version of this post also was posted to Covington’s Inside Privacy blog: https://www.insideprivacy.com/.

Print:
EmailTweetLikeLinkedIn
Photo of Raymond Biagini Raymond Biagini

A distinguished counselor and litigator, Raymond Biagini has risen to national prominence in a number of high-profile tort cases, defending commercial and government contractors.  In particular, Mr. Biagini’s cases have established key legal principles in high profile “contractor on the battlefield” tort suits. …

A distinguished counselor and litigator, Raymond Biagini has risen to national prominence in a number of high-profile tort cases, defending commercial and government contractors.  In particular, Mr. Biagini’s cases have established key legal principles in high profile “contractor on the battlefield” tort suits.  In 2002, Mr. Biagini authored the core provisions of the U.S. SAFETY Act which protects homeland security companies from enterprise-threatening tort suits arising out of terror attacks.  Mr. Biagini also has an extensive product liability prevention practice, counseling companies on mechanisms for reducing their tort exposure for products and services sold to government and commercial entities.

Photo of Daniel Russell Jr. Daniel Russell Jr.

Dan Russell has extensive experience representing government contractors in complex, high-stakes litigation.  He has litigated numerous “contractor on the battlefield” tort suits arising out of wartime incidents, as well as other tort suits that implicate significant national defense interests.  Mr. Russell is frequently…

Dan Russell has extensive experience representing government contractors in complex, high-stakes litigation.  He has litigated numerous “contractor on the battlefield” tort suits arising out of wartime incidents, as well as other tort suits that implicate significant national defense interests.  Mr. Russell is frequently called upon by clients to develop and assert an array of federal-law-based defenses, including the political question doctrine, federal preemption, the government contractor defense, and derivative sovereign immunity.

Mr. Russell has litigated a variety of claims brought by or against the federal government, including: contract disputes before the Court of Federal Claims and the Armed Services Board of Contract Appeals; enforcement actions brought by the U.S. Food & Drug Administration; and claims against federal agencies brought under the Administrative Procedure Act and the Federal Tort Claims Act.