STENCEL AERO ENGINEERING CORP. v. U.S.

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Argument of Thomas J. Whalen

Chief Justice Warren E. Burger: We will hear arguments next in 76-321, Stencel against the United States.

Mr. Whalen, I think you may proceed.

Mr. Thomas J. Whalen: Mr. Chief Justice, May it please the Court.

This case involves the claim of Stencel Aero Engineering Corporation against the United States under the Federal Tort Claims Act.

The issue in this case is not whether a corporation can sue the United States for the Government’s negligence.

The answer to that is clear.

The United States may be sued.

The issue in this case is rather whether that government’s claim must be barred simply because the damages to the corporation include injuries to serviceman.

Now, the issue in this case arises in the following factual context.

In 1968, Stencel Aero Engineering Corporation entered into a contract with North American Rockwell Corporation to upgrade an ejection system in an F-100D fighter aircraft being used by the Air Force.

In 1973, when Captain John Donham, while flying one of these F-100 fighter aircrafts, had his aircraft catch on fire.

Donham ejected using the system of Stencel Aero Engineering Corporation and successfully ejected and survived.

However, he was injured and there upon filed a claim against both the United States and Stencel in the Eastern District of Missouri.

The Stencel Corporation cross claimed against the United States claiming that the negligence towards the injuries was primarily due to the United States’ negligence in the provision of the requirements, specifications and components which were used by Stencel manufacturing the system which was installed in the aircraft.

United States moved to dismiss both the claim of Donham and the claim of Stencel.

The district court granted both motions on the grounds that Feres versus the United States, a decision of this court controlled.

Donham did not appeal.

Stencel did.

It appealed to the United States Court of Appeals, the eighth circuit.

However, the circuit court affirmed the decision of the district court.

Unknown Speaker: Donham’s case against Stencel is still pending, I take it.

Mr. Thomas J. Whalen: That is correct Your Honor.

To review over the briefs that had been filed in this case…

Unknown Speaker: And Donham’s case against United States is permanently terminated.

Mr. Thomas J. Whalen: Yes Your Honor, it is.

Unknown Speaker: He received the compensation for his injuries from the United States correctly, did he not?

Mr. Thomas J. Whalen: Correct Your Honor.

He received compensation of about 1500 dollars a month under the Military Compensation Act, and he is still receiving those payments.

The review of the briefs in this case indicates that the United States does not really dispute that the claim of Stencel is within provisions of the Federal Tort Claims Act.

The government complains about the ramifications of the pie or rather the ramifications of committing Stencel’s claim in this case.

The government does not dispute that the language of the Federal Tort Claims Act, in sweeping, in broad terms includes the claim of Stencel.

Unknown Speaker: Is that because Missouri law which is applicable here, clearly makes this an action in Tort rather when in place high contract which is an at least some jurisdictions.

Mr. Thomas J. Whalen: Yes, Your Honor in part, but the language of the act itself encompasses the claim.

The law to be…

Unknown Speaker: Would it not encompass the claim if this were a contractual action?

Mr. Thomas J. Whalen: No Your Honor that would be governed by the Tucker Act.

Unknown Speaker: As the Tort.

Mr. Thomas J. Whalen: Yes, Your Honor.

Unknown Speaker: In order to be covered by the statute.

Mr. Thomas J. Whalen: The Federal Tort Claims.

Unknown Speaker: And in some jurisdictions, this law has been changed without my knowledge.

Indemnification is thought of as a quasi contractual obligation.

Mr. Thomas J. Whalen: In some jurisdictions, it is.

Unknown Speaker: And in jurisdiction such as that, you would not have a claim, would you, that is covered by the act?

Mr. Thomas J. Whalen: If I would not – if it is not claim of Tort.

If it is considered a contractual claim, I would not have a claim because the United States, under the Federal Tort Claims Act, only waived its immunity as to Tort.

Unknown Speaker: Right.

Mr. Thomas J. Whalen: That is correct.

Unknown Speaker: And is it, if I may follow-up, is it clear and is it conceded in this case that under Missouri law, this is a claim in tort.

Mr. Thomas J. Whalen: It has not been disputed; I can not say it is conceded, but…

Unknown Speaker: But you submit that the Missouri law is plain.

Mr. Thomas J. Whalen: I submit that the Missouri law is plain on indemnity which is our claim…

Unknown Speaker: Rather than contribution?

Mr. Thomas J. Whalen: We have a problem on contribution under Missouri law, but we are claiming indemnity and in Missouri law we claim…

Unknown Speaker: That you are the minor and that the government is the major tortfeasor, is that it?

Mr. Thomas J. Whalen: That is right Your Honor that is correct…

Unknown Speaker: And that you therefore entitled under the Missouri law to 100% identification of any liability that maybe, you may have incurred, that is your claim under Missouri law?

Mr. Thomas J. Whalen: That is correct Your Honor.

Unknown Speaker: That is the tort claim under Missouri law?

Mr. Thomas J. Whalen: That is correct Your Honor.

Unknown Speaker: In any of the types of jurisdiction, to which my brother Stewart has just referred, Stencel and its dealings with the government could have bargained for a contractual indemnity, could it not?

Mr. Thomas J. Whalen: Yes Your Honor, but I must point out that this case does not involve the contract between Stencel and the government.

This is a contract between North American Rockwell and the government.

Stencel’s contract was with North American Rockwell, but to answer your question, yes this could be a bargain for item between a government contractor and the United States.

Of course if Stencel’s claim were denied in this case, the contractor would make a provision to increase the contract price to cover the possibility that claims to arisen out of injuries to servicemen and government employees or claims which the government would claim it is been immune, so the contract would attempt to take care of that in its contract.

Unknown Speaker: Well, sub contractor can always negotiate that kind of protection with the prime contractor who would then take it into account in his contract with the government.

Mr. Thomas J. Whalen: Yes, Your Honor it could.

Unknown Speaker: In other words, there are mechanisms readily available for total protection?

Mr. Thomas J. Whalen: Financial protection, yes Your Honor, but I think the question…

Unknown Speaker: Is not that all that you are concerned about here?

What are the concerns do you have?

Mr. Thomas J. Whalen: Well, in this case -- I am sorry Your Honor.

Unknown Speaker: Do you have any other concern for your client except his financial protection?

Mr. Thomas J. Whalen: That is all my concern is financial protection, however, I believe that this court has a broader, broader concern and that is that the government, when it acts, should be responsible for the consequences of its act.

So, the government can walk away from its responsibilities to a government contractor, especially where the victim’s of that negligence are going to be government employees and…

Unknown Speaker: Can you really suggest that the government has walked away here when this man is receiving $18,000 a year without any showing of negligence, but merely the showing of the injury?

Mr. Thomas J. Whalen: Well, yes Your Honor, it has not walked away from Donham, but has walked away from its responsibilities to Stencel.

The government in…

Unknown Speaker: But you have conceded that that is a responsibility which you could have contractually protected?

Mr. Thomas J. Whalen: I could have contractually protected if I had a contract with the government, but I do not.

Unknown Speaker: But you could have protected through the prime contractor.

Mr. Thomas J. Whalen: If Your Honor I had that sufficient bargaining power with the general contract, that could have been (Inaudible) in the contract.

We are not in this case dealing with contractual arrangements.

We are dealing with the tort.

If the government does not…

Unknown Speaker: As a matter of Missouri law, could the indemnity claim be asserted by Stencel after the plaintiff’s litigation had ended and suppose plaintiff prevailed in a separate suit against Stencel, would Stencel thereafter have a right to sue an indemnitor?

Mr. Thomas J. Whalen: Under Missouri law, it depends upon who the indemnitor would be.

If the indemnitor had no – in either case under Missouri, there is no requirement of underlying liability between a third party defendant and a plaintiff.

After the action was over under Missouri law, yes Stencel could sue the third party defendant or the indemnitor.

Unknown Speaker: Is it possible that even if you lose this case, you could reassert your claim at a later after judgment?

Mr. Thomas J. Whalen: If I could sue the United States which is the issue in this case, yes I could.

Unknown Speaker: Is it conceivable at least theoretically that you might be able to sue them later even though you could not sue them in the same action on the concern being that if they are brought into the same action, the plaintiff’s recovery might be enhanced by the fact that United States would be in court and its alleged negligence if proved in that case, might be something that would contribute to the plaintiff’s ability to recover.

Mr. Thomas J. Whalen: Yes, Your Honor I could if the basic issue which is before the court was decided in my favor, the answer is yes, I could bring a separate action against United States.

Unknown Speaker: Could not you –- at least -- a time I should know would it take after a judgment was handed against you, liability to this Airman, for you to sue the government in the court of claims under contractual theory, of course contractual theory.

Mr. Thomas J. Whalen: I have no, if I had that right, it is the only place, I could go, not only the court of claims, but we do not have the contractual relationship Your Honor, in this case between Stencel and United States and it is only those actions which I permitted in the court of claims as I read the Tucker Act.

I could not sue in this case the United States in the court of claims.

Court of claims is the only court that has jurisdiction since what I would be claiming for is more than $10,000.

Unknown Speaker: Right and under a contract.

Mr. Thomas J. Whalen: And under a contract, yes.

Unknown Speaker: It seems to me that perhaps it would not take regular ingenuity to frame a complaint, stating cause of action onto a circumstance.

Mr. Thomas J. Whalen: I think it would take more ingenuity than I have because we…

Unknown Speaker: It maybe take more ingenuity than either one of us has to allow you to prevail.

Mr. Thomas J. Whalen: The government does not really dispute that the Stencel’s claim is within the provisions of the Federal Tort Claims Act or that it falls within any of the exceptions and more critically, the government has not found one piece of legislative history indicating that Congress intended to exclude a claim such as Stencel’s.

The government rather says in effect what about the ramifications of allowing Stencel’s claim.

Essentially the ramifications go into two categories.

One, it would disrupt the Military Compensation System which was setup by the Congress.

Let us look at that Military Compensation System.

Military Compensation System is essentially a quid pro quo between the government and the serviceman.

The serviceman gives up his right sue the United States for damages due to the United States’ negligence and in return receives an ample ensured remedy.

Of course Stencel is not a part of that bargain, seeks no benefit and in this case, it can be – if you take the government’s position, it is this.

If Stencel’s claim is barred or should be barred simply because one party to that bargain, the serviceman is suing Stencel for damages and the other party to the bargain, the United States of America says that that claim should be barred.

In other words, the government is saying that the bargain does not hold for Donham, he can sue Stencel, but please, our bargain do not permit anyone to sue us.

That is essentially the government’s position.

I say to this court, that the moment that Donham steps out of the shoes and sues Stencel, he has disrupted the Military Compensation System.

Unknown Speaker: He has not recovered yet, has he?

Mr. Thomas J. Whalen: No, Your Honor.

This a third-party claim.

Unknown Speaker: You do not know whether he will recover.

Mr. Thomas J. Whalen: No, Your Honor, we do not.

But if he does and we claim under the Federal Tort Claims Act, then we have a right to indemnity and in terms of judicial economy having one court, one fact – rather two fact finders in this case, but one litigation to determine all the rights of the parties of an interest in litigation that is Stencel, Donham and United States of America as well as the other defendants in this case, we are not here concerned with…

Unknown Speaker: There is the lack of privity between Stencel and the United States in the contractual area, bar the United States from a suit against Stencel, assuming hypothetically it could show that the injuries to Donham were caused by Stencel’s negligence.

Mr. Thomas J. Whalen: No, Your Honor, it does not.

The United States could introduce its evidence and say that our specifications, our components, our requirements were perfect and we exercised due care in making…

Unknown Speaker: Since the United States is now committed to paying $18,000 a year, probably for the rest of Donham’s life, which will amount to a very substantial sum, is the United States barred from suing Stencel on a claim that Stencel’s negligence has caused this huge damage to the United States government for which it must pay Donham?

Mr. Thomas J. Whalen: Well, Your Honor I think in part it is barred.

I think that question; the question of equitable recoupment was raised before this court in the Standard Oil case many years ago and I think this court found in that case which I believe is analogous that the government could not sue.

But Congress has passed a statute which permits the government to recover for the expenses of the medical services which were provided to Donham in this case and in this case they are considerable.

So that in that event, if all things go badly for Stencel, Donham will collect his military compensation payments.

Stencel will pay damages to Donham.

Donham will recover twice and the government, whom we claim is the principal culprit in the accident that is involved in this case, will not only – not be sued for damages by Stencel, but what we committed to come into court and get that from Stencel, the medical payments that it provided to Donham under the congressional statute and we think that is an outrageous situation.

Unknown Speaker: Mr. Whalen is it not the government’s position that Donham cannot sue the government, he cannot recover, right?

Mr. Thomas J. Whalen: Donham could not -- I am sorry Your Honor.

Unknown Speaker: If you sue on his behalf, you take over his impediment.

Mr. Thomas J. Whalen: Yes Your Honor, if you sue…

Unknown Speaker: What is wrong with that?

Mr. Thomas J. Whalen: We are not suing on his behalf.

We are suing on our own behalf.

Unknown Speaker: How can you sue if you do not sue on behalf of what Donham against you; that is your only damages?

Mr. Thomas J. Whalen: Well, there may also be the attorney fees, but essentially that will be the principal damages, but we are not suing on his behalf.

It is this, Your Honor that we have suffered damages.

The character of the damages means nothing.

We have to pay money to someone.

We the corporation have suffered damage and we claim that the United States is responsible for that.

If Donham was a private citizen and suffered an injury and we sued Stencel and (Inaudible), there is no question and under The Federal Tort Claims Act in Missouri, we would be entitled to sue the United States.

Unknown Speaker: Except where the Feres case says particularly that you cannot.

Mr. Thomas J. Whalen: Your Honor, the Feres case…

Unknown Speaker: Are you going to get to the Feres case?

Mr. Thomas J. Whalen: I am sorry Your Honor.

Unknown Speaker: Are you going to get to that case?

Mr. Thomas J. Whalen: Yes, Your Honor, I will address it now.

The Feres case was basically suit between a serviceman against the United States, the injury sustained incident to his service.

This court found in a Military Compensation System, a congressional intent that Congress intended that that kind of claim by serviceman against the United States was not contemplated by Congress when it enacted the Federal Tort Claims Act and that is all the case holds.

Unknown Speaker: Well, would that apply if this man had sued the United States under the Federal Tort Claims Act, does Feres is apply and what would that mean, he got nothing.

Mr. Thomas J. Whalen: He would get nothing from the government under The Federal Tort Claims Act.

Unknown Speaker: But under this way, he will get sum from the government.

Mr. Thomas J. Whalen: He will get, he has gotten his Military Compensation System…

Unknown Speaker: And he will also get what you give it?

Mr. Thomas J. Whalen: He will get what we are held responsible for…

Unknown Speaker: And which the government will then have to give you.

Mr. Thomas J. Whalen: The government will, if we can prove our case and of course the case of Stencel against the United States is a different case, different facts, different theories of liability.

The fact of the matter is that we the corporation on our claim against the United States is a different claim, it is different in consequence…

Unknown Speaker: Well, if there had not been this accident, could you have sued the United States?

Mr. Thomas J. Whalen: If there had not been this accident, we would have no reason to sue the United States.

Unknown Speaker: Could you?

Mr. Thomas J. Whalen: Yes, Your Honor, we could…

Unknown Speaker: How could you have sued, on what ground?

Mr. Thomas J. Whalen: If a civilian – if we had suffered damage…

Unknown Speaker: If nobody had been injured, could you sue the United States?

Mr. Thomas J. Whalen: No Your Honor.

Unknown Speaker: So, the only way you could sue is because a serviceman is injured as the only ground.

Mr. Thomas J. Whalen: The only reason we can sue Your Honor, if Your Honor please, is if we had suffered damage.

It is different…

Unknown Speaker: As a result of the United States tort, right?

Mr. Thomas J. Whalen: That is what our claim Your Honor as the result of the United States tort.

Unknown Speaker: Mr. Whalen, in your cross claim, you alleged that the after the equipment was delivered, it was in the custody of the United States and I take it you intend to prove and support your cross claim that there was negligence in the government in the cure and maintenance of the system.

Mr. Thomas J. Whalen: As a matter strategy, I probably will not contend that Your Honor because I think that will only lead me into a contribution situation in which I do not think I am as sound as I am in indemnity.

What I am claiming is pre-delivery negligence…

Unknown Speaker: Well, that is in the cross claim, it was dismissed…

Mr. Thomas J. Whalen: Yes, it is Your Honor.

Unknown Speaker: You would draw that allegation.

Mr. Thomas J. Whalen: Not yet Your Honor, I will consider…

Unknown Speaker: What is the issue at the trial if you prevail, what evidence be put in as to whether or not the government was negligent in the way in which it took care of the equipment after it was delivered.

Mr. Thomas J. Whalen: I may submit evidence if I can establish that that will support some claim of Stencel against United States…

Unknown Speaker: Would not Jury interpret such evidence as supporting your claim by the pilot against United States?

Mr. Thomas J. Whalen: I am sorry I do not…

Unknown Speaker: Well, the theory would be that the man was injured because something was defective about the system and the defect was created by the negligent maintenance of the United States?

Mr. Thomas J. Whalen: Yes, that would be a defense of my claim to Donham.

I would say the cause of this accident was the negligence of the United States.

That I believe would be a defense, it would be an absolute…

Unknown Speaker: The jury would be instructed that if that was because there be no recovery at all.

Mr. Thomas J. Whalen: Yes Your Honor, Donham against Stencel.

Unknown Speaker: Or Donham against United States, either one?

Mr. Thomas J. Whalen: Well, Your Honor Donham has already been dismissed as far as…

Unknown Speaker: The United States under the federal…

Unknown Speaker: Right, I understand, but under your concept of the trial, all three parties would be in court, arguing before the court.

Mr. Thomas J. Whalen: Correct Your Honor.

This court has addressed the problem of workmen’s compensation in two prior cases; The Ryan’s and Steve(ph) case and the Treadwell Construction case in which the compensation system was not deemed to be a bar to a claim over.

It is exactly the same situation, if you except as I believe you must, that the Military Compensation System is a form of work…

Unknown Speaker: That was on a warranty theory, was not it which is (Inaudible) at any event it is not tortuous, an applied warranty of workmen like service in the Steve and Ryan contract, was not it?

Mr. Thomas J. Whalen: That is correct Your Honor, but I am trying to direct the court’s attention to the existence of the compensation system, not to the theory of the defendant against the third party defendant, it is correct that the theory of a defendant against the third party defendant, I believe was a breach of workman like service or some…

Unknown Speaker: Warranty of…

Mr. Thomas J. Whalen: Warranty, yes Your Honor.

Unknown Speaker: Let me just go back for a second of the allegation in the cross claim about the negligent maintenance.

How does that support a cross claim as opposed to being a defense to the main action?

Mr. Thomas J. Whalen: If I am able to establish that the substance of law of Missouri permits contribution, then I will attempt to shift some of the liabilities for which we maybe found in our suit involving Donham, will attempt to shift some of that responsibility…

Unknown Speaker: So, that allegation is on a contribution theory as opposed to an indemnity theory?

Mr. Thomas J. Whalen: Yes Your Honor, that is correct.

Unknown Speaker: I see, but you told us earlier, you are in trouble on that contribution theory, are you not?

Mr. Thomas J. Whalen: Yes Your Honor, if the Missouri law applies, but of course we have not had a full development of the case in…

Unknown Speaker: But you have a more doubtful petitioning in respect to…

Mr. Thomas J. Whalen: Yes Your Honor, if Missouri law applies.

Unknown Speaker: Alright.

Mr. Thomas J. Whalen: The military discipline is the second rational which the government relies upon as a serious ramification in this case.

First of all, I would like to point out to the court that military discipline is not an issue in this case and can not be an issue in this case.

This is a case of rising out of a government procurement activity.

The government, however, fears that a decision in favor of Stencel in this case would involve the orders of a field commander and place his judgment and impair his judgment in the exercise of his duties.

However, if a field commander’s order is involved in a case, it is not involved in this case, but if it is involved in another case, and I was defending the defendant, I would make sure that that field commander would be brought into court by subpoena deposition as another method and I would confront in that suit, the plaintiff Donham and his military commander.

So, that if the government is afraid of confrontation as I think this court was concerned in one of its prior decisions, if they are afraid of a confrontation between a field commander and the plaintiff’s serviceman, this suit wants decision against, Stencel will not stop that.

If the government order is relevant, I will bring in the field commander, I will put that order into issue and so the situation as it exists does not -- the denial of Stencel’s claim in this case, does not change that situation.

The orders of a military commander can be brought into question and the Congress so intended.

When the Congress passed the Federal Tort Claims Act, it clearly defined employee to include military serviceman acting in line of duty.

It also provided a specific exception that is if the claim arises out of the combating activities of the United States in time of war, the United States cannot be sued and does not waive the sovereign immunity.

We do not dispute that…

Unknown Speaker: Well, are you familiar with the case of Brooks against the United States?

Mr. Thomas J. Whalen: Yes Your Honor, I have.

Unknown Speaker: Well, what if in this case Donham had simply taken the plane without any instructions from the superior and gone of on a frolic of his own, such that the Feres rational would not have protected the government.

Now, I take that your case then would be stronger, would it not?

Mr. Thomas J. Whalen: The Brooks case, yes Your Honor, there would be no problem, the Brooks case would control the situation.

Donham could sue the government and he could sue us, if he claims on our ejection systems did not work properly.

We on the same facts would bring in the government and of course the question of underlying liability would not be an issue because there would be no…

Unknown Speaker: And the government’s arguments that are available from make against you in this particular case, because of Feres would not be available to them in the Brooks situation.

Mr. Thomas J. Whalen: That is correct Your Honor.

Unknown Speaker: And you are only obstacle in this case is the Feres doctrine, is it not?

Mr. Thomas J. Whalen: We do not believe it is an obstacle, but that is the obstacle which is the government has placed in…

Unknown Speaker: But what is the issue?

That is the only issue, we are not concerned here with the merits of your claims at all, but the issue of the government’s suability is an issue only because of the Feres case, is it not correct?

Mr. Thomas J. Whalen: Yes Your Honor.

Unknown Speaker: There is no other reason?

Mr. Thomas J. Whalen: No other reason, that is correct and we think that the Feres case is simply a case of a serviceman against the United States and even if some commentator say that is really an exception to the Federal Tort Claims Act and it should be treated as an exception and that is as this court has held many, many times, the broad sweeping language indicates a broad way of sovereign immunity and the exceptions to that a broad waiver of sovereign immunity should be narrowly construed.

It’s the philosophy that has been expounded by this court many, many times.

If however, the issue of a field commander’s order does become an issue in the case, if it is that important decision, we believe that Congress has provided, provided for that in the Federal Tort Claims Act, when it provided an exception for discretionary function, that is this is an important decision making and the government is protected in its important government decisions and if a decision we maintain is not important enough to be protected by the discretionary function, then it is not important enough to bar a claim like Stencel’s against the government when the government has the negligent and responsible for the damages that maybe sustained by Stencel in this case.

Finally, Your Honor, I would like to conclude the ramifications which would occur if Stencel’s claims were denied, Stencel’s claims against United States were denied.

First of all, there would be a double recovery by Donham because the government would not worry about a double recovery.

It would not suffer the consequences of a double recovery, but as I mentioned earlier that would stand in the government’s negligence, the government could still under that congressional statute come in and get from Stencel the expenses of the medical expenses incurred in treating Donham.

The government in this case is in affect saying that with respect to our negligence we are not responsible.

We want to be immune from the consequences of our act.

On page 12 our brief, in footnote 4, the government quite candidly states, we owe no duty of care to Stencel.

Your Honor, we are saying that government owes a duty of care, just of any private person, every private person, every citizen has an obligation to every other person to exercise, to care.

Unknown Speaker: Mr. Whalen, I just take interrupt but your double recovery argument, I just do not understand that.

You are not going to be liable for medical expenses, if the medical expenses are all paid by the United States, are you?

Mr. Thomas J. Whalen: Well, Your Honor, yes, I am saying that under the congressional statute…

Unknown Speaker: Maybe recover those from you, but you are not going to have to pay them to the plaintiff, what you are paying, is an entire amount of injury, part of which has owed to the government, part of which is owed to the plaintiff.

You are not paying for the same injury twice, are you?

Mr. Thomas J. Whalen: No, Your Honor, but the government, the government whom I am claiming is responsible for this accident, is going to be entitled under this congressional statute, to sue Stencel to pay for the medical cause of treating Donham.

Unknown Speaker: But if you are right on the facts, they will not prevail on that law suit, will they?

Mr. Thomas J. Whalen: That is correct, they will not.

Mr. Thomas J. Whalen: Thank you, Mr. Whalen, Mr. Martin.

Argument of Thomas S. Martin

Mr. Thomas S. Martin: Mr. Chief Justice and May it please the court.

The issue in this case is whether Congress intended that the same litigation that is barred in Feres would be nevertheless be permitted if brought indirectly by a third party plaintiff.

In my argument, I would hope to touch briefly upon four principal topics.

First the similarity between the barred Feres claim and the claim which petitioner seeks to bring in this case by way of indemnity; second, the propriety of applying a Feres immunity against the third party manufacturer has not received compensation; third the limited scope of the immunity that is claimed here by the government and fourth I would like to briefly address our alternative ground for affirming the Court of Appeals decision, namely that indemnity will not be permitted in the absence of liability running from the United States to the injured party.

Now, turning to our first point..

Unknown Speaker: Your fourth ground is not a matter of Missouri law.

Mr. Thomas S. Martin: It is not a matter of Missouri law.

It is a matter of federal law.

Our first point, petitioner’s cause of action we believe is identical in a practical sense to the serviceman’s claim that this court considered and rejected in Feres.

Now, in Feres the executive tricks of a serviceman was killed in a barrack’s fire, sought to recover tort damages from the United States, and the claim was that the military had negligently corded troops in barracks with an unsafe heating facility.

Now, in Griggs and Jefferson decided with Feres, the claim was that an army doctor had negligently performed medical operations.

Contrary to petitioner’s apparent understanding, there was no field commander’s order involved in any of these cases.

In Feres, there was no plaintiff serviceman going to point a finger at his commander.

Feres had died in the barracks fire that was the cause of action.

So, Feres like this case really involved another party stepping into the place of the plaintiff and bringing a particular litigation.

Now, like petitioners here, the claimants in Feres based their cause of action on the general language of the Tort Claims Act and the absence of any specific exceptions applying to serviceman.

But in Feres the court demonstrated, that in this context, in military context a cause of action cannot be assumed from the general language of the tort claims act.

To find out Congress’ real intent, the court turned to the consequences of the proposed cause of action.

The court saw adverse affects upon military discipline from the litigation of injuries arising out of -- injuries to serviceman under orders and found an additional tort remedy to be inconsistent with the compensation scheme which covered those injuries.

At last we afforded unlikely that Congress would impose the varying standards of state law upon the consequences of federal military actions.

The court denied Feres claim against United States and it did so in very broad language.

It said and quote, “The government is not liable under the Federal Tort Claims Act for injuries to servicemen where those injuries arise out of activity incident to service,” that is exactly of viability that we are talking about here.

Now, the court in Feres appears to realize it was making a difficult judgment with respect to Congress’ intent.

But the court said if we are wrong on this, then Congress has a remedy.

It can change the statute, but in the 25 years, since Feres was decided, Congress made no changes in the statute and we think that suggests strongly that the decision to preclude litigation in this area was in fact correct.

Now, the nature of petitioner’s claim is an indemnity claim for recovery of injuries to serviceman, and therefore, the subject matter of its claim must be the injury to captain Dunham.

Captain…

Unknown Speaker: I could understand your argument, if Stencel as its name was an assignee was suing as assignee or an assignee by operation of law by subrogation then he would not be asserting the serviceman’s claim, but here Stencel is asserting a different claim.

The measure of damages is going to turn out to be the amount they had to pay Donham, but it's a different claim, it's a different theory of recovery.

It's not an assignee if Donham noor it is an assignee by operation of law by subrogation.

Mr. Thomas S. Martin: I agree with you.

Unknown Speaker: It is ...

Mr. Thomas S. Martin: It is not a assignee, it is not a subrogation case.

Unknown Speaker: Then your argument still would I think….

Mr. Thomas S. Martin: That argument would automatically follow.

It's a little bit more difficult than that, but we suggest that sense that Feres must have relied upon the natural of the litigation process that was brought.

In another words, the Court seem to be concerned, at least it has interpreted in the Brown Case and Munise(ph), the Court seems to be concerned with the affects of a Tort suit challenging the actions of military officers and injuries to military personnel under orders and it's the litigation process which we think is what was the court was concerned about.

Now, that litigation process we suggest must be the same by the nature of indemnity claim, not because of subrogation, but because it will have the same aspects.

Let me speak to that….

Unknown Speaker: Stencel is not any order from the government in the sense that it a part of the army, is it not?

Mr. Thomas S. Martin: That’s exactly right, but Stencil’s claim, if we look to it's cross complaint, is that the United States was negligent in causing the injury to captain Donham, that’s the only way it can succeed at least under the theory that has in fact brought.

Unknown Speaker: Theory of Passive v....

Mr. Thomas S. Martin: Theory of Passive v. Active negligence towards captain Donham.

Unknown Speaker: (Inaudible)

Mr. Thomas S. Martin: Exactly that we, the United States negligently designed or negligently maintained this ejection system and as a result we caused captain Donham’s injury.

Now, captain Donham’s suit if he had not been barred would have been exactly the same.

The United States negligently designed or negligently maintained my ejection system and therefore it caused me injury, so that negligence action in terms of its theory is going to be the same.

As Justice Stewart pointed out the damages are going to be the same.

There is no injury as Justice Marshall said.

There is no injury to stand so independent of those damages to captain Donham.

Unknown Speaker: Is it correct that the proof of this case Stencel would have to prove every element essentially, but Donham would have proved if the Tort Claims Act had not been barred by...

Mr. Thomas S. Martin: I do not see how it could avoid that burden Mr. Chief Justice.

Donham in a sense would have to show that there was a duty running from the United States towards captain Donham and that somehow we negligently performed and there was an injury to captain Donham because they shouldn’t be the same.

Unknown Speaker: That is the suit by Donham.

Mr. Thomas S. Martin: The case trotted suit by the Donham.

Unknown Speaker: Sue the United States and suit was dismissed.

Mr. Thomas S. Martin: Sue the United States on exactly these allegations and the case would be dismissed and now, we are going to have if Stencel prevails the exact the same litigation except now the indemnity brings it as opposed to the serviceman himself.

Unknown Speaker: But are you not going to have some of the same issues in the litigations between Donham and Stencel which can be concededly be brought.

Mr. Thomas S. Martin: I think it possible that we could have some of those of issues.

I think it also possible that Stencel may in the absence of a third party recovery possibility settle this kind of suit.

It's true as we recognized in our brief that there could some inroads on the policies which Feres menat to protect, in other words, Feres attempted to protect the military from getting into the business of litigating its decisions.

There will be no determination by a court as there would be in a suit by Stencel, that officer Jackson negligently failed to do something on the particular day.

There will just be determination if it comes about the at all that in fact Stencel did not cause the particular injury here.

We think that significantly different if you have kind of litigation process where you have an advocacy situation, a military officer accused of negligently performing duty I think the court feared that after that litigation there is going to be the questions about the impact on the relationship between the officers who testified, the impact upon on the confidence of the officer who was found negligent, impact upon the confidence of the other officers who might have to make similar judgmental decisions, impact upon those who have to respond, the subordinates to that officer.

The court felt that Congress intended to exclude this litigation and again Congress’ failure to change the rule suggest to me at least that the court was in fact right.

So while we recognized that unlike Feres, the form of plaintiff here is a corporation.

We think it does not alter the more fundamental similarities, the subject matter of the litigation.

In other words, an injury to an active duty serviceman, bailing out of an F-100D fighter aircraft was he was under military orders.

That is the same question.

Who caused that accident?

The theory of liability, Mr. Donham and Stencel both say it is the United States that caused that accident, and so the litigation would be the same.

Litigation process would be attempt to place that responsibility on the military officers who made the decision to get that particular ejection system or maintain that particular ejection system.

Unknown Speaker: Mr. Martin, if I could just interrupt, it seems to me as Mr. Justice Rehnquist suggested that if their defense says there was a negligent maintenance breaks in, I have taken to put in precisely the same evidence to show that it was United States’ responsibility whether or not United States is a party.

Mr. Thomas S. Martin: Again, I say I think it is possible that they could, but of course we would not be a party to the suit, so they…

Unknown Speaker: For what reason will they put any less evidence?

Mr. Thomas S. Martin: Well, first of all, they might settle suit, that is…

Unknown Speaker: Well, that can always happen in anyway.

Mr. Thomas S. Martin: Sure.

Justice John Paul Stevens: I think we have to assume that it is going to go to trial and if it goes to trial, then it seems to me, the evidence will be precisely the same whether you are a party or not?

Mr. Thomas S. Martin: I think that it could be, let me say this Justice Stevens, I think Congress’ determination which this court found in Feres was a general determination to avoid this kind of action as much as possible.

What we are saying really is that Stencel can now bring its suit that would undermine some of the Feres; rational in precluding Donham’s suit and it would undermine some of the rational in precluding Stencel’s suit against the United States.

But I think, the Congress in establishing the rule which we think should be unitary, as to both serviceman and third parties was looking to the broad scope of things and saying that in general, we do not want to encourage third parties against whom are brought to join the United States in every case and to engage in adversary litigation against the United States.

I think Congress was looking to that broad policy and applies here.

Unknown Speaker: Let me back up a little bit here.

In the suit which Donham brings -- will try against Stencel whose negligence will be the focus of the evidence?

Mr. Thomas S. Martin: In a suit that Donham tries against Stencel, it will be trying to prove that Stencel was in fact negligent.

Unknown Speaker: Not the negligence of the United States.

Mr. Thomas S. Martin: Not the negligence of the United States, but then if it can prove that plainly..

Unknown Speaker: So there is no common ground necessarily.

Mr. Thomas S. Martin: Not necessarily it is a common ground.

Unknown Speaker: Between the proof that would be again the Donham against the United States, if the Feres case did not block it and Donham against Stencel, no one will be concerned in that case about the negligence of the United States on the plaintiff side really?

Mr. Thomas S. Martin: Not necessarily.

It is only a possibility.

Unknown Speaker: It would not be relevant at all.

Mr. Thomas S. Martin: Not in terms of plaintiff’s side.

Unknown Speaker: But you can have factual variations all over the law, can you not, in this type of case where you got a clearly injured plaintiff and he is looking for as many solvent defendants as he can to sue to allege some claim of negligence against every conceivable person who make him keep in court.

So that just because your particular factual variant may be quite different from any case that might be brought against the United States, it does not mean that the next case will have that said be equally far distant from it.

Mr. Thomas S. Martin: That is correct, but again I say theses are criticisms that really apply to Feres V. United States.

In Feres the court made a general determination that congress intended generally to preclude these kinds of litigation.

Now, Donham sued against Stencel will on some way implicate those same concerns, but I do not think that undermines Congress’ intent which this court found in Feres in which the congress has sustained.

It would be somewhat bizarre I was to say to allow one rule with respect to Captain Donham that he cannot bring the suit because that might involve litigation process constraint to military and then let Stencel do the exact same thing.

As the court of appeals said it would be simply analogous to preclude the serviceman from getting his recovery for his injury and then allow a third party to have that exact same recovery.

Unknown Speaker: And if he, I suppose your answer would be, if some one were to make, while all of us say it would be an extreme argument, that congress’ fear of litigating military orders was so strong that it actually intended to employ an exception to diversity jurisdiction so that a federal court was to be prohibited from entertaining a suit by Donham against Stencel.

Your reply to that would be you do not have to go that far at least both these exceptions come out of the Federal Tort claims.

Mr. Thomas S. Martin: That is exactly right we were only talking about Federal Tort Claims Act.

I would like to stake for a moment about the propriety, the fairness and the applying the federal rule to a third party government contractor.

Now, in Feres and subsequently in the United States vs. Demco, this court found the presence of a compensation scheme to be an important indicator of Congress’ intent to preclude tort remedies.

Compensation statutes are almost always thought of substitutes for common law tort remedy by the injured party, but another function of a compensation scheme is to limit the liability arising out of a particular activity.

The language of this court in Cooper Stevedoring vs. Kopke, it provides a protective mantle for the employer.

Unlike workman compensation, veteran’s compensation laws provide short compensation for the injured party and a limited liability for the United States and this protective function is especially important here because this is an enormously dangerous business of training and transporting military personnel.

The compensation scheme we think really represents a Congressional balancing of the necessity to limit cause, but the duty and the responsibility to perform, to provide some reparation, an adequate reparation for these servicemen.

Now, that protective function, that balancing of Congress would be just as frustrated by an indirect recovery by way of indemnity as it would be by a direct recovery.

We think it is not likely that the congress intended that the liability of United States would be measured by the compensation scheme plus whatever addition amount might be passed through some third party manufacturer.

The fact that the scheme would be equally violated by direct or indirect recovery suggests to us that fact that petitioner is not a serviceman, does not make any difference for the Feres result.

Now, the petitioner argues that enforcing immunity against a party not governed by compensation scheme is unfair, but this court in other courts have enforced protections to protect mantle of a compensation scheme against third parties to protect what again Cooper Stevedoring called the a result inconsistent with the balance struck by congress.

The commercial setting here of course we think, especially eliminates any unfairness claim.

This is a contract buyer.

He set the terms of his relationships by way of contract.

We think the obligation should be fairly limited to contract in this context.

This is some stranger who is suddenly injured by unforeseen action.

The company risk, first of all we think Stencel will not be held liable in the absence of its own negligence but if it is that is the commercial business risk and it could have allocated some parts of its price to the purchase of insurance or to self insurance and may in fact have done so.

So, we think that to preclude trot indemnity here merely means that those risks that Stencel is talking about will continue to be resolved through the contract price or other contract terms rather than through a kind of litigation that congress intends to preclude.

Stencel has talked about the reverse situation, the unfairness of recovery against, that United States could bring some action for recovery against Stencel.

As Stencil realizes, the only action that United States can bring is for recovery of medical clause under section 2651 of the 42USC and it is important to note that this is a diem minims matter.

We are only talking in that statute about medical clause only medical clause prior to discharge BA medical clause cannot be recovered under the statute under 2651C.

It is not clear at all that that statute…

Unknown Speaker: Prior to Donham’s discharge…

Mr. Thomas S. Martin: Prior to Donham’s discharge only.

Unknown Speaker: Has he been?

Mr. Thomas S. Martin: It is in the appendix as attachment to petitioner’s complaint, across the plane.

Unknown Speaker: Let me ask you something that relates to it I think.

In Stencel’s action against the United States where will that action; how will that fact finding be made by…

Mr. Thomas S. Martin: The fact finding will be made by interrogatory to party depositions.

Unknown Speaker: Well, Court or jury?

Mr. Thomas S. Martin: Excuse me.

Unknown Speaker: Court or jury?

Mr. Thomas S. Martin: Court or jury?

Oh, oh under Tort Claims Act…

Unknown Speaker: It is only a court.

Mr. Thomas S. Martin: Only a court, no jury that is right.

I would like to mention that as – first of all there is no – it is not clear that this statute would permit, this medical statue is limited as it is would permit recovery against a government contract who was in not exact negligent and let me knows that the Air Force’s policy is not to recover even medical cause against a government contract when the liability of that contractor is based upon products liability or non negligence theory.

So, we think that the medical cost recovery is just simply is too diem minims and hypothetical to obstruct the balance of fairness here.

I would like to turn to the third point and the limited nature of the immunity that we do claim here.

Stencel claims that our analysis will preclude every tort action, touching the military.

In fact, our claim od immunity is very narrow.

It only governs situations that are covered by Feres itself.

Only where an injury is to a serviceman are there implications for both the compensation scheme and for military discipline.

Now, because our understanding of Congress’ intent would only bar suits where Feres applies, in many instances criticisms are really addressed to Feres.

Stencel argues that immunity is not merited here or they might be civilian personnel involved or there is a lots of deterrent value but Captain Donham’s claim is barred in precisely the situation because congress set a broad rule, it did not require an inquiry into each and every injury action to determine whether in fact this action merits in someway a congressional immunity.

It’s notable that all parties to this litigation seem to recognize that suit will have an important impact on Federal Interest.

In other words, Stencels’ claim really is in it reply brief that the advantages of deterrents will somehow outweigh the disadvantages of an impact upon compensation scheme and military discipline.

But that is really a policy decision which we think should be reserved for congress.

We think the situation is like United States versus Gilmet.

If you remember in that case The United States sought to bring an indemnity action against one of its government employees and the court said; will that kind of action will have results on the relationship between the government and its employees.

It will have results with respect of fiscal policy, but it is very difficult for a court to determine exactly what those impacts would be and the court denied the cause of action for indemnity in favor of The United States.

Here we think we have the reverse situation.

The petitioner seeks to bring a cause of action is going to have to have an impact on fiscal policy on the compensation scheme, on the military discipline, it is difficult to say precisely what all the impacts would be, what all the variations would be, but this is really a policy weighing judgment.

If Congress wants to change the rule Feres and permit the United States to have liability for injuries to serviceman, Congress can do it.

We think that this is not an appropriate rule change for the court to make at least under the teaching of United States versus Gilmet.

I would like to turn in briefly to the alternative ground for affirming the decision of the Court of Appeals, a ground that does not rest upon the military context at all.

A number of Courts of Appeals have held that neither indemnity nor contribution will be permitted in the absence of liability running from The United States to the injured party.

This is a result which is reached by majority of state courts in workman’s compensation scheme, but where the direct claim of the injured party is barred by Federal Law, we think and the courts have said that the implications of that bar for indemnity or contribution should also be decided as a matter of Federal Law.

And this Federal rule of indemnity would preclude indemnity here because The United States is not liable to the injured party itself.

We believe that this rule is a proper one, is consistent with the purpose of indemnity because indemnity really shifts cause among viable parties.

If the United States is not liable, no shifting should occur.

It also ensures that the courts will not commit a third party recovery under a indemnity theory to override or undermine a congressional decision to impose the sovereign immunity bar and of course it makes fundamental good sense here where recovery would impact upon important Federal interests.

Unknown Speaker: The problem is that the Tort Claims Act incorporates by reference the state law.

You will have very interesting argument, but you are met without the language of statute, are you mot?

Mr. Thomas S. Martin: I agree but the language of the statute and the legislative history which has set up Yellow Cabs, talks in general about the Yellow Cab type situation where wither the injured party…

Unknown Speaker: Was a contribution, was not it?

Mr. Thomas S. Martin: Contribution exactly; either party could have sued the United States and it says that should be decided as the matter of state law.

Now, there is nothing in the legislative history, it is just silent.

There is nothing of legislative history that would require as far as we can see that where a federal law has barred a direct claim of an injured party that the implications of that for indemnity should be decided by looking at state workman’s compensation decisions.

That just totally make sense and I think the courts in an attempt to place a realistic sense of interpretation under the Tort Claims Act have required that the matter be decided at the threshold as a matter of Federal law.

Unknown Speaker: The only reason, the only reason Stencel can see you at all is by virtue of the waiver of immunity contained in the Federal Tort Claims Act which says, which clearly makes the United States liable if a private person would be liable to the claimant in accordance with the law of the place where the act or a mission occurred which in this case is Missouri.

That is the reason I…

Mr. Thomas S. Martin: I agree the language is very difficult but to bring the opposite result Justice Stewart, you have to say that in an indemnity action, the way that the court decides is to look at what the meaning of the Missouri State Workman’s Compensation Law it was because that is the only reference point and that just cannot be true and so I think a reasonable interpretation is that that language is the general rule of where the direct power arises out of Federal Law, the implications must, it is only why we can sense out of the statute.

Unknown Speaker: What does Mr. Whalen have to say about that in response to your question?

Mr. Thomas S. Martin: He did not respond at all to that part of our brief.

Unknown Speaker: I thought he responded to the question here indicating he had no claim under state law.

Mr. Thomas S. Martin: That might be true.

We have argued in our brief, as you know he has no claim under state law under indemnity at all or contribution.

Unknown Speaker: Well, that would be for the merits if you loose here and that would…

Mr. Thomas S. Martin: That would be exactly right and the reason why we are litigating here is not because of Missouri Law but these cases arise all over and other law might be different.

Thank you very much.

Unknown Speaker: Mr. Martin, a very small question.

The pleading refers to a Miller, the defendant Millers manufacturing Company, who is that?

Mr. Thomas S. Martin: I know only that Miller manufacturing was also nameed, i do not know there is specific status but I think my opposition probably more familliar with that.

Thank you.

Chief Justice Warren E. Burger: Thank you gentleman.

Your time is expired, Mr. Whalen.

Thank you Gentleman, the case is submitted.