Government contractors should take note of the Fifth Circuit’s June 30, 2021 decision in Taylor Energy Co. v. Luttrell, which reaffirmed that contractors can enjoy a broad immunity from third-party liabilities—known as “derivative sovereign immunity,” or “Yearsley immunity.” Yearsley immunity emanates from Yearsley v. W.A. Ross Const. Co., an 80-year-old Supreme Court decision, which established that a contractor is immune when (i) it performed acts pursuant to a valid authorization of Congress and (ii) the contractor did not exceed the scope of that authority.

In Taylor Energy, the court dismissed claims arising out of an oil spill containment project in the Gulf of Mexico. The basic claim in the suit was that the contractor failed to effectively remediate and contain the oil. The Fifth Circuit found that the government: (i) provided direction to the contractor through the statement of work, in the form of “goals” and specific contract deliverables and deadlines; and (ii) periodically met with the contractor and reviewed and approved the work during performance. Based on these core facts, the court held the contractor was immune. The court held that it was irrelevant that the statement of work was “barebones,” and that the contractor—rather than the government—designed certain elements of the remediation effort. Following the Fourth Circuit’s 2018 decision in Cunningham v. GDIT, the Taylor Energy decision is another appellate court victory for contractors in the wake of the Supreme Court reaffirming Yearsley’s core principles in Campbell-Ewald Co. v. Gomez.


Continue Reading Fifth Circuit Reaffirms Breadth of Yearsley Immunity For Government Contractors

Following up on our post earlier this week giving a general overview of the Defense Production Act of 1950 (“DPA”), 50 U.S.C. §§4501 et seq., this post comments on President Trump’s March 18, 2020 Executive Order on Prioritizing and Allocating Health and Medical Resources to Respond to the Spread of COVID-19 (the “COVID-19 E.O.”) and provides some key considerations that companies should keep in mind if they are concerned about receiving prioritized or rated contracts or allocation orders or directives under the DPA.
Continue Reading The Defense Production Act and the Coronavirus Executive Order: Key Considerations

As a followup to our recent post on the implications of the PREP Act for government contractors working to respond to the COVID-19 outbreak, this post will provide an overview of the Defense Production Act—including its key powers that the federal Government might invoke to counter the pandemic.
Continue Reading A Coronavirus Contractor’s Guide to the Defense Production Act

We’ve covered several topics already this week on the U.S. Government’s varied responses to the COVID-19 outbreak and how these responses will affect contractors that do business with the government, including BARDA’s EZ-BAA for COVID-19 diagnostics, mission-essential services during the outbreak, and how excusable delay provisions may help federal contractors affected by the outbreak.  But one area that has yet to receive in-depth discussion is the federal government’s mechanisms for addressing liability concerns raised by the use and distribution of countermeasures to the virus.  After all, while contractors are no doubt responding with appropriate speed and diligence in developing and deploying various COVID-19 countermeasures, no contractor wants to be the subject of a product liability, warranty, or negligence lawsuit later down the road.

Thankfully, Congress anticipated this concern and addressed it in 2005 by passing the Public Readiness and Emergency Preparedness Act (“PREP Act”), codified at 42 U.S.C. § 247d-6d.  Since enactment, the PREP Act has been used to issue declarations covering various countermeasures, including therapeutics, diagnostics, devices, vaccines, and constituent materials for pandemic influenza, acute radiation syndrome, smallpox, Botulism, anthrax, Zika, nerve agents, certain insecticides, and Ebola.  And earlier this week, the Secretary of the U.S. Department of Health and Human Services (the “Secretary”) issued a declaration pursuant to the PREP Act specifically for COVID-19 countermeasures.

This post will cover the PREP Act generally before discussing the implications of the COVID-19 declaration.
Continue Reading A Coronavirus Contractor’s Guide to the PREP Act

In the latest World Health Organization daily situation report, as of March 11, 2020, the WHO reported 118,326 COVID-19 cases confirmed and 4,292 deaths worldwide, and the U.S. Centers for Disease Control and Prevention (CDC) reported 938 cases and 29 deaths in the United States.  The same day, WHO characterized COVID-19 as the first global pandemic sparked by a coronavirus.  Additionally, the Secretary of the U.S. Department of Health and Human Services (HHS), issued a Declaration under the Public Readiness and Emergency Preparedness Act (PREP Act) to provide liability immunity for entities against any claim of loss caused by, arising out of, relating to, or resulting from the manufacture, distribution, administration, or use of covered medical countermeasures (MCMs).  Prioritized pathways are now available to expedite review of new, responsive technology proposals for MCMs from diagnostics to therapeutics.

Continue Reading Expanding the Coronavirus Disease 2019 (COVID-19) Response through Diagnostic Development

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. 
Continue Reading Fourth Circuit Embraces Expansive View of Derivative Sovereign Immunity for Government Contractors

By Alex L. Sarria and Marianne F. Kies

The recent settlement of a noteworthy “contractor-on-the-battlefield” case should serve as a cautionary tale to government contractors that perform high-risk work in support of military operations. In Suleiman Abdullah Salim v. James E. Mitchell and John Jessen, No. CV-15-0286, three foreign plaintiffs filed Alien Tort Statute (“ATS”) claims against American contractors who allegedly “designed, implemented, and personally administered” the CIA’s post-9/11 “enhanced interrogation” program.

The district court recently issued an opinion denying the defendants’ motion for summary judgment on the basis of the Political Question Doctrine and Derivative Sovereign Immunity. Less than two weeks later, the contractors agreed to settle the case for an undisclosed amount. The Salim case illustrates why government contractors must proactively assess and mitigate potential tort liabilities before entering into high-risk federal contracts, such as contracts for military logistics support, private security, and intelligence-support services.


Continue Reading CIA Torture Case Is A Cautionary Tale for Contractors on The Battlefield

Last week, in an important decision for contingency contractors supporting U.S. stability operations overseas, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) reaffirmed that the Defense Base Act (DBA) prescribes the exclusive remedies available to employees of government contractors who are injured while working abroad. In doing so, the D.C. Circuit sent injured contractor workers, turned would-be tort plaintiffs, a clear message: federal courts will dismiss tort lawsuits alleging that a DBA-covered government contractor wrongfully−or even intentionally−interfered with an employee’s receipt of DBA benefits.

Enacted in 1941, the DBA establishes a comprehensive workers’ compensation scheme for employees of government contractors who are killed or injured while providing services to the government outside the United States. See 42 U.S.C. § 1651 et seq. The DBA, which incorporates most of the Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. § 901 et seq, includes a provision that makes contractors’ liability under the statute “exclusive”−that is, putative plaintiffs are barred from suing their employers for damages beyond the statutory compensation scheme established by Congress. See id. § 1651(c) (“The liability of an employer . . . shall be exclusive and in place of all other liability . . .”) (emphasis added).

Despite the Act’s broad exclusivity provision, in Brink v. Continental Insur. Co., an estimated class of 10,000 contractor employees who were injured in Iraq and Afghanistan brought a purported class-action lawsuit for $2 billion against dozens of government contractors, alleging that the contractors conspired with their respective insurance carriers to deny the workers DBA benefits. But a three-judge panel of the D.C. Circuit unanimously rejected plaintiffs-appellants’ claims and, in a 17-page opinion, made five key findings that will help government contractors defend similar lawsuits in the future.
Continue Reading The D.C. Circuit’s Message to Injured Government Contractor Employees: ‘There’s an Exclusive Remedy For That’