Transcript

IN THE SUPREME COURT OF THE UNITED STATES

UNITED STATES, Petitioner v. S. A. EMPRESA de VIACAC AEREA RIO GRANDENSE (VARIG AIRLINES); and UNITED STATES, Petitioner v. UNITED SCOTTISH INSURANCE CO., ET AL.

No. 82-1349, No. 82-1350

January 18, 1984

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 10:08 a.m.

APPEARANCES:

KENNETH S. GELLER, ESQ., Off. of the Sol. Gen., Dept. of Justice, Washington, D.C.; on behalf of Petitioner.

RICHARD F. GERRY, ESQ., San Diego, Cal.; on behalf of Respondent.

PROCEEDINGS

CHIEF JUSTICE BURGER: We will hear arguments first this morning in United States v. Varig Airlines and the consolidated case.

Mr. Geller, you may proceed whenever you are ready.

ORAL ARGUMENT OF KENNETH S. GELLER, ESQ., ON BEHALF OF PETITIONER

MR. GELLER: Mr. Chief Justice, and may it please the Court:

The Federal Aviation Administration has been charged by Congress with the responsibility of promoting safety of flight of civil aircraft. The agency fulfills its statutory mandate in two principal ways, one of which is essentially legislative, the other of which can be described as law enforcement.

First, the FAA promulgates regulations prescribing minimum safety standards governing the design, material, construction and performance of civil aircraft. These standards take up more than 500 pages in Title VIX in the Code of Federal Regulations.

The second, the FAA tries to police the aircraft industry's compliance with these safety standards by reviewing design and performance data, conducting tests and deciding whether to certify that particular aircraft are in conformity with its regulations. Congress has made it unlawful to operate an airplane that does not have a current airworthiness certificate issued by the FAA.

These cases were brought under the Federal Tort Claims Act on behalf of the owners and passengers of two airplanes that crashed due to in-flight fires. Respondents sought more than $100 million in damages from the United States on the ground that the FAA was negligent in carrying cut its statutory responsibilities by certifying the airplanes that crashed even though they allegedly did not comply with the Agency's safety standards.

The Ninth Circuit agreed with Respondents' arguments. We have sought certiorari because we believe that Congress could not possibly have intended to expose the United States to tort liability to members of the general public for errors in carrying out its regulatory responsibilities.

Although the issues here are solely ones of law, I think it would be useful to begin by briefly describing the facts of these cases in order to show just how far reaching and unprecedented the Ninth Circuit's judgment in this case really is. The United Scottish Insurance case involves an airplane that was manufactured in the United Kingdom in 1951.

It was sold to an air taxi service known as Air Wisconsin. In 1965 Air Wisconsin contracted with Aerodyne Engineering Corporation for the installation of a gasoline fuel heater, and as required by FAA regulations Aerodyne applied for what is called a supplemental type certificate authorizing the installation of the heater.

In 1966, the following year, the airplane was sold by Air Wisconsin to Respondent Dowdle who owned Catalina-Vegas Airlines, another air taxi service. Between 1966 and the crash of that plane in 1968 Catalina-Vegas inspected its airplane on at least eight occasions including two major yearly inspections of the gasoline heater.

The District Court found that the crash occurred because the gasoline line leading to the heater was not adequately clamped to reduce vibration allegedly in violation of the FAA safety standard prohibiting "excessive vibration in fuel lines". The court held that the FAA was negligent in inspecting the airplane and in issue a supplemental type certificate.

The Court of Appeals affirmed the judgement, as I said a moment ago, agreeing with the District Court that the FAA was liable under California's law as a good samaritan. The Ninth Circuit said that the government had performed a service for the Respondents within the meaning of the Good Samaratin Doctrine and that the government should expect that members of the general public would rely on its certifications of airworthiness.

QUESTION: What was the time lapse between the government's inspection and the accident?

MR. GELLER: The inspection would have taken place in 1965. The accident took place in 1968.

The facts of the Varig case involve conduct by the FAA, Mr. Chief Justice, even more remote than the three years that was involved in United Scottish. The Varig concerns the crash of a Boeing 707 on a flight from Rio de Janeiro to Paris in 1973.

The FAA had issued a type certificate for the Boein 707 in 1958, 15 years prior to the crash. The plane involved in that case had been sold by Boeing to Seaboard Airlines.

In 1969 Seaboard Airlines resold the plane to Varig, which is the Brazilian air carrier. The Brazilian took the plane out of the United States permanently at the point, which had the result of voiding its FAA airworthiness certificate.

Respondent alleged that the crash in that case occurred because the towel disposal area in one of the aft lavatories on the Boeing 707 was not designed to contain fires, allegedly in violation of the FAA regulations, and that the FAA was negligent in 1958, 15 years earlier, in not noticing this defect and in issuing a certificate for the airplane.

QUESTION: What was that certificate? That was the --

MR. GELLER: Type certificate.

QUESTION: That is the first one, is it not?

MR. GELLER: Yes, although the complaint in that case was not too clear as to exactly which certificate they were complaining about. Now we understand from the briefs that Respondents in the Varig case were complaining about the issuances of a type certificate, which was the first certificate.

QUESTION: Are the various certificates cumulative in a sense that if you miss something that you should have caught in the first place you should catch it in the next or not?

MR. GELLER: Well, the Airworthiness Certificate is the final certificate that is issued to each plane as it comes off the assembly line, and the FAA does not inspect each plane.

QUESTION: I understand that.

MR. GELLER: If the FAA, for example, would revoke a type certificate it would have the result of voiding the Airworthiness Certificate. You have to have a valid type certificate in effect to have a valid Airworthiness Certificate.

QUESTION: But an Airworthiness Certificate does not necessarily inspect for what you would inspect for in a type certificate?

MR. GELLER: No.

QUESTION: Mr. Geller, following the original certification of airworthiness, exactly what is the responsibility of the FAA with respect to inspection?

MR. GELLER: With respect to each airplane?

QUESTION: Yes, with respect to each airplane.

MR. GELLER: The FAA does no further inspections of individual airplanes.

QUESTION: It does have some responsibility to make sure that the manufacturer or operator of the aircraft --

MR. GELLER: It has general responsibilities to make certain that the manufacturer is carrying out a program of maintenance, and it has, I am told, regular inspections of air carriers to make sure that they are in general complying with maintenance requirements. But it no longer looks at any particular airplane. That is the responsibility of the air carrier.

QUESTION: There is no further certification of --

MR. GELLER: No further certifications of individual airplanes.

QUESTION: But they do check the maintenance?

MR. GELLER: They check the maintenance of air carriers in general -- that is correct -- but not any specific airplane.

We believe that the decision of the Ninth Circuit is plainly incorrect for four reasons, any one of which would require reversal of the judgment below. First, Congress did not intend to subject the United States to damages liability under the Federal Tort Claims Act for actions arising out of government regulatory activities, that is, for negligence in enforcing the law in requiring that third parties comply with the law.

Moreover, Respondents' claims are barred by the misrepresentation and discretionary function exemptions of the Tort Claims Act. Finally, the FAA's regulatory activities even if they are to be judged against the standards of state tort law do not violate the Good Samaritan Doctrine.

We think the most serious error of the Court of Appeals, certainly the one with the most damaging ramifications is its unprecedented holding that Congress intended to allow the courts to oversee government regulatory or law enforcement activities in the guise of adjudicating Federal Tort Claims Act suits.

QUESTION: Well, Mr. Geller, is it all that unprecedented after the Court's decisions in Indian Towing and Rayonier?

MR. GELLER: I believe so, Justice Rehnquist. I hope to discuss this, but there is, I think, a basic distinction between the sorts of operational activities that were involved in those cases and the regulatory activities that are involved in this case. I do hope to expand on that in just a moment.

It seems clear to us from the legislative history and the language of the Federal Tort Claims Act that what Congress had in mind in passing the Act was a sort of ordinary, common law, garden variety tort such as automobile accidents, malpractice. On the other hand, it seems just as clear to us that Congress did not want the Act to be used as a way of challenging so-called governmental functions.

The legislative history is replete with evidence of Congress' concern that actions, for example, of the FTC or the SEC not be the subject of a challenge under the Federal Tort Claims Act. Congress not only put in the disrectionary function exemption to take care of this problem but also emphasized the point by putting into the Act twice, not once but twice, the express requirement that the United States can only be held liable in circumstances where a "private person under state law would be liable".

This phrase appears not only in 28 U.S.C. 2674, which is the substantive liability provision of the Federal Tort Claims Act, but the precise same phrase appears in 28 U.S.C. 1346(b), which is the grant of jurisdiction to the district courts to hear Tort Claims Act cases. This Court recognized the same basic point in the Feres case, which is one of the first decisions of this Court interpreting the Federal Tort Claims Act, but there the Court held that Congress did not intend to allow the government to be held liable for engaging in activities that are not even remotely analogous to activities that private parties undertake.

The actions of a government agency in enforcing safety legislation pursuant to a program of inspection and certification simply have no counterpart in the private sector. These sorts of regulatory activities are a form of law enforcement.

The FAA, for example, has to make sure that private parties are in compliance with the FAA statute and safety regulations --

QUESTION: Mr. Geller, can a prison guard be sued by an inmate for negligence?

MR. GELLER: Prison guard or the United States?

QUESTION: Prison guard.

MR. GELLER: I assume a prison guard can be sued.

QUESTION: Can the United States?

MR. GELLER: Under the Muniz case the United States can be sued for negligence by a federal prisoner, yes, for the sorts of torts that were involved in that case.

QUESTION: But certainly no private person would ever be sued for running a prison negligently.

MR. GELLER: Well, Muniz is a slightly different case because the Court did an extensive study of the legislative history of the Federal Tort Claims Act in Muniz and determined that unquestionably congress had intended to cover suits by state prisoners. On the other hand, even in Muniz in light of what I said to Justice Rehnquist earlier, even in Minuz just like in Indian Towing and in Rayonier the federal government was itself carrying out some direct service performing some operational function. It is not regulating the conduct of third parties to make sure that they were in compliance --

QUESTION: How about negligent operation of a military aircraft?

MR. GELLER: Negligent operation of a military aircraft? If the United States itself is doing some operations, performing some operations itself --

QUESTION: Well, it is out there carrying out a training mission, and they negligently operate the aircraft and it crashes.

MR. GELLER: Under Feres, of course, the United States could not be sued by any solider, but --

QUESTION: No, but how about --

MR. GELLER: A suit by civilians would be appropriate because the United States is itself --

QUESTION: No private person is ever going to be sued for running a military aircraft.

MR. GELLER: Well, the Court has said in these operational cases that private persons do not have to be engaged in the identical activities. It is sufficient under the Federal Tort Claims Act that they engage in similar sorts of activities.

QUESTION: Well, isn't the parallel more accurately if Northwest Airlines falls on someone's house and then destroys the house, Northwest Airlines is liable. Now, if the Army -- if the Air Force falls on someone's house, there is a private person liability analogy.

MR. GELLER: Precisely, Mr. Chief Justice. That is the point that the Court made in Indian Towing and in Rayonier, but private people do not regulate the affairs of other private people for the purpose --

QUESTION: Yes, but private people make inspections. As a matter of fact, the FAA relies on private people to make inspections for them. I suppose those private inspectors can be sued.

MR. GELLER: Yes, Justice, but that is one of the things that the Ninth Circuit said. I think one of the most damaging statements in the Ninth Circuit's opinion pervades the rest of the opinion in terms of its error was the statement that the Ninth Circuit made that the FAA has a responsibility like private inspectors to inspect every portion of every aircraft. That is plainly incorrect.

There is nothing in the FAA statute, or manuals or regulations that imposes that responsibility on the FAA. Quite the contrary, the FAA has always had the responsibility to do nothing more than spot check or to do as extensive an investigation of any aircraft as it determines is necessary to make certain that the private parties who have the operational responsibilities are complying with the FAA safety standards.

QUESTION: Mr. Geller, there is nothing in the opinions of the Court in Indian Towing and Rayonier and Muniz to suggest that liability turned on direct operational responsibility. Is this something you are just extrapolating from facts in those cases?

MR. GELLER: Justice O'Connor, I believe there is something in those opinions that support precisely what I am saying here. For example, in Indian Towing 350 U.S. at page 64 the Court begins its opinion by saying, "The question here is one of liability for negligence at what this Court has characterized the operational level of government activity."

Four pages later on page 68, the Court repeats, "It is hard to think of any government activity on the operational level or present concern which is uniquely governmental in the sense that it has not at one time or another been privately performed."

So the Court's opinions in those cases do suggest that what the Court had in mind were operational rather than regulatory activities.

QUESTION: Well, but the Court rejected the government's argument of the government function defense in those cases.

MR. GELLER: In those cases, Justice O'Connor, I think a different argument was made and rejected. In terms of -- Those cases involve operational activities. The government had suggested that in the universe of operational activities there should be a distinction made between governmental proprietary activities and uniquely governmental activities.

What the Court said in that case is that when we are dealing with operational activities everything that the government does is governmental, and it is foolish to distinguish between proprietary activities and uniquely governmental activities. This case involves a distinctly different sort of governmental activity which is a regulatory activity.

Private people do not engage in regulatory activities. They do not impose sanctions on other private people. They do not issue certificates to allow other private people to engage in interstate commerce. That is what we have in this case.

QUESTION: Mr. Geller, instead of kind of assuming that these are all either red squares or black squares, would it not be just as accurate to say that Feres and Dalehite was one mode of construction of the Federal Tort Claims Act and that Indian Towing and Rayonier and Muniz was a somewhat different one, and now the government is asking us to kind of return to Feres and Dalehite, which I think is perfectly proper for the government --

MR. GELLER: I think that all of these distinctions are reconcilable, Justice Rehnquist, because I do think there is a basic distinction between operational activities, which were what was involved and what the Court emphasized was involved in Indian Towing and in Rayonier, and regulatory activities in terms of the private person language that Congress twice put into the Federal Tort Claims Act.

QUESTION: But it is almost impossible to reconcile the opinion in Dalehite with the opinion in Rayonier. In fact, Rayonier says that the Dalehite in part is no longer good at all.

MR. GELLER: Only as to the parts of Dalehite that concern operational activities, the fighting of a fire. In fact, speaking of Dalehite I think the precise distinction that I am trying to make here was emphasized by Justice Jackson's opinion in Dalehite.

Dalehite as you mentioned, Justice Rehnquist, involved a suit challenging a number of activities by the government. The Court eventually held that the suit was barred by the discretionary function exemptions of the Federal Tort Claims Act.

Justice Jackson and two other justices dissented in that case on the grounds that what the government had been engaging in there was operational. It was something like what private parties could do. Therefore, Justice Jackson thought the government should be held liable if it acted negligently.

But Justice Jackson went on to point out the sorts of governmental activities that even he and the other dissenters agreed could not be the basis of a Federal Tort Claims Act suit. I will just read one sentence from Justice Jackson's opinion because I think it highlights a distinction we are making here.

Justice Jackson said, "When an official exerts governmental authority in a manner which legally binds one or many he is acting in a way in which no private person could. Such official should be controlled solely by the statutory or administrative mandate and not by the added threat of private damage suits."

So even the dissenters in Dalehite understood this basic distinction between operational activities that the government may engage in or private people may engage in and the quintessentially governmental activities of regulation and law enforcement which is what we have in this case.

QUESTION: Mr. Geller, may I ask you this question. Would the decision of the Ninth Circuit Court of Appeals apply to the Pure Food and Drug Law?

MR. GELLER: We believe that it would because the decision of the Ninth Circuit in terms of its construction of the private person language and the Good Samaritan Doctrine does not rely on any facts that are unique to this case. The Good Samaritan Doctrine requires a showing that the defendant has (1) performed a service for another; and (2) that other people including the general public, according to the Ninth Circuit, are entitled to rely on that service.

If the Ninth Circuit is right about its construction of those terms it would presumably apply to every government regulatory activity because --

QUESTION: Automobile safety.

MR. GELLER: Exactly. The Occupational Safety and Health inspector goes in and inspects a plant and negligently, let's say, fails to detect --

QUESTION: Environmental Protection Agency action?

MR. GELLER: Yes. The Federal Deposit Insurance Corporation, a bank examiner examines the books of a bank and negligently fails to discover that the bank is failing. Presumably under the Ninth Circuit's decision the United States could be sued under the Tort Claims Act by bank depositors or creditors or shareholders under the Good Samaritan Doctrine because according to the Ninth Circuit the United States when it engages in these regulatory activities is performing a service for the public and the public is entitled to rely on it and nothing more need be shown.

I might add that these are not fanciful notions, Justice Powell. There is as we pointed out in our brief a suit pending right now against the United States under the Federal Tort Claims Act for $4 billion challenging on theories similar to those adopted by the Ninth Circuit the government's allegedly negligent inspection and certification of the Three Mile Island nuclear power plant, the Nuclear Regulary Commission's allegedly negligent certification. The government's motion to dismiss in that case was denied on grounds that are quite similar to the Ninth Circuit's decision in this case.

So we believe that --

QUESTION: Mr. Geller, before you go on do the other countries who buy our older airplanes from our airlines, Venezuela, France, England, do they have counterparts to our FAA?

MR. GELLER: We have bilateral treaties with a great many countries that do have similar arrangements. Brazil is one of those countries. Brazil, in fact, issued an Airworthiness Certificate to this plane in 1969 when Varig bought the plane four years prior to the crash. Presumably Varig is the Brazil national airline, and Brazil certified its own plane as airworthy, which adds to the peculiarity of Varig's suing the United States here for a certification that the FAA made in 1958.

QUESTION: It is a reality or assume it is that throughout South America and Africa you will find even old DC-3's that were purchased from our airlines still functioning on shuttle flights. Those planes go back 35, 40 years.

Under the Ninth Circuit opinion would the crash of a DC-3 down in Venezuela or off in Ethiopia open the door to the same kind of liability as is involved here?

MR. GELLER: Presumably, Mr. Chief Justice. There is no limiting principle in the Ninth Circuit's opinion that would not allow it to be extended to that case. Here, for example, the Ninth Circuit found that the public in general is entitled to rely on FAA inspections even though in the Varig case 62 of the plaintiffs are Brazilian residents who were flying from Rio de Janeiro to Paris on a Brazilian airline. Nonetheless, the Court of Appeals found that the reliance aspect of the Good Samaritan Doctrine was satisfied. That is the aspect of the Ninth Circuit's opinion that we find particularly troubling.

If there are no further questions, I would like to reserve the balance of my time.

CHIEF JUSTICE BURGER: Very well.

Mr. Gerry.

ORAL ARGUMENT OF RICHARD F. GERRY, ESQ., ON BEHALF OF RESPONDENT

MR. GERRY: Mr. Chief Justice, and may it please the Court:

The Congres in the Federal Tort Claims Act decided decades ago that the government should and will be liable if a private person in like circumstances would likewise be liable. Liabilty is, of course, limited to a finding of negligence, and legislative, judicial and policy decisions are outside the gamut, but in overzealous performance of their duties the lawyers of the Justice Department try to turn back the clock to the pre-Federal Tort Claims Act era when injured parties would have to go to Congress in private bills as they would if turned away here in order to resolve their problems with the government.

In these cases, each of them, there can be no doubt that there was negligence on the part of government employees which attributed as a proximate cause to the death of 128 people and the total loss of two aircraft. Still, we are here 15 years after one of these accidents and 10 years after the other trying to enforce the liability which the Congress itself decreed more than 30 years ago.

QUESTION: Mr. Gerry, with respect to that last hypothetical I put to your friend, suppose to make it more concrete the Venezuela Airlines bought a DC-3 from Northwest Airlines when those planes were discarded and it has been used in Venezuela for 20, 25 years and then you get the same fact situation you have got here, liability of the FAA of the United States through FAA inspection?

MR. GERRY: Liability only if in the issuance of the original --

QUESTION: I am assuming the same facts as you have in this case.

MR. GERRY: Liability only if in issuance of the original type certificate the FAA or its predecessor, the CAA, was negligent. The fact is --

QUESTION: Even if that was 20 or 25 years ago.

MR. GERRY: The actual facts are, Mr. Chief Justice, at the time of the certification of the DC-3 the CAA did not conduct itself in the same fashion as it did in 1958 when it certified the 707. So I think that such liability would be remote.

Between the time of the certification of the DC-3 and the time of the certification of the 707 the government had continued to permeate the field and to take over the responsibilities that had previously been conducted by private manufacturers. This all started with the private manufacturers doing all of the inspection, all of the decision as to whether or not an aircraft should be released, and then went on to where we presently are or were in 1958 where only after the FAA had inspected each and every part of the aircraft could an aircraft be released to be used by the general public.

So as a practical matter the answer to your question would be no. As a legal matter, if they negligently had done the same in that case as they had in this, I would think the answer would have to be yes because the rule as I understand it in the federal court is that the liability attaches at the time of the impact of the negligence, not at the time of the actual negligence itself.

We are here asking this Court to affirm these cases to send a clear message to the executive branch to accede to the wishes of Congress and to cease clogging the courts with this kind of litigation and to say to the Justice Department when it is clear that negligent errors have been made at the operational level which cause death, injury or destruction of property not to waste more of the public treasury in a futile struggle against the inevitable but to do as private industry and the insurance industry does, out their losses by compromise and settlement and preserve the time of the courts for other possibly more difficult matters.

In these cases --

QUESTION: Well, I doubt that we would have granted certiorari if we did not feel this was an issue of some significance.

MR. GERRY: I agree with the Court, and, Justice Rehnguist, I think it is an issue of high significance. It has been since Union Trust that this Court has made a pronouncement in the aviation field, and I think it is really timely for the Court to again give us guidance in this field. I think that that guidance should be that the --

QUESTION: In your favor.

MR. GERRY: Obviously.

(Laughter)

MR. GERRY: In these cases the negligence of the government employees is obvious, glaring and found by the District Court in findings of fact in the one case and conceded in the other case.

QUESTION: Were these aircraft subject to inspection in the countries to which the airline's purchaser is attached?

MR. GERRY: Yes, they were, Your Honor. I am aware of a question asked of counsel for the government as to whether or not the inspections would have occurred, and there is a finding of fact in the United Scottish case that it is impossible, uneconomical, unreasonable and unfeasible for an owner of an aircraft inspected and certificated by the Federal Aviation Administration to take down the entire aircraft and inspect it completely.

That happens two times where the entire aircraft or a subsequent installation is inspected. When the aircraft is originally certificated then it is totally inspected by the FAA and by the manufacturer also.

QUESTION: In the Scottish case that you are just referring to, what was the time span between the FAA inspection and the accident?

MR. GERRY: About two and a half years, from 1965 to 1968.

QUESTION: The Scottish case?

MR. GERRY: In the Scottish case.

QUESTION: I thought that was the time on the other case.

MR. GERRY: No, the other case was from 1958 at the time of the issuance of the original type certificate for the Boeing 707 and 1968, the time of the -- 1973, the time of the accident, 15 years in that case.

QUESTION: When do you think the negligence occurred in the Varig case?

MR. GERRY: In the Varig case, in the original type certification, Your Honor --

QUESTION: There was not a repetition of that negligence when the plane was given an Airworthiness Certificate?

MR. GERRY: Your Honor --

QUESTION: I just want yes or no.

MR. GERRY: No is the answer.

QUESTION: How about in the Scottish case?

MR. GERRY: It occurred at the time of the initial installation of the fuel line, and there was no --

QUESTION: What kind of a certificate was that?

MR. GERRY: That was a supplemental type certificate.

QUESTION: And again the Airworthiness Certificate, there was no negligence then?

MR. GERRY: Well, the Airworthiness Certificate in the Dove case had initially been issued by the British government --

QUESTION: Yes.

MR. GERRY: -- some time earlier in the fifties. Then when the British government issues a type certificate the American government accepts that type certificate as the Brazilian government accepts ours.

QUESTION: Do you know whether or not the FAA ever delegates to the manufacturer the issuance of the type certificate?

MR. GERRY: They never delegate the issuance of the type certificate, but they do delegate at the present time --

QUESTION: Airworthiness inspection.

MR. GERRY: They delegate some inspection activities to designated representatives called designated --

QUESTION: What kind of certificates are --

MR. WALDRON: They do not issue certificates, Your Honor, at all.

QUESTION: I know they do not, but they are not type inspections that they delegate.

MR. GERRY: They do at the present time delegate inspections that go into making up the type certificate, but they do not delegate the authority for issuance of the type certificate itself. At the time of the Varig aircraft certification there was not this delegation option as far as the type certification of the Boeing 707 according to the testimony so far adduced in the case.

QUESTION: How about in the Scottish case?

MR. GERRY: No. In the Scottish case there is a specific finding of fact that the inspection had to be done under the FAA's manual 8110.4, which the court took judicial notice, had to be done by an FAA inspector. There was testimony by the person who signed that aircraft off, the head of the section, that it had to be done by a FAA inspector, could not be done by a licensed, private person.

QUESTION: I take it you think that does not make any difference anyway.

MR. GERRY: Yes, I do think it may make a difference. Obviously if the inspector has the duty to do it and that inspector is a FAA inspector, then the lability lies with the government.

QUESTION: What if he has the discretion to delegate it to somebody else?

MR. GERRY: No one in the field has that discretion. Only the FAA administrator can delegate.

QUESTION: All right. Suppose there is the discretion to delegate to a non-FAA employee the job of inspection.

MR. GERRY: If they do that --

QUESTION: Will that make a difference in your case?

MR. GERRY: Not in my case.

QUESTION: Of course that did not happen, but what if in some other case it happens. Do you think that would make a difference?

MR. GERRY: I might think it might, but the government in its manual says a DER, who is a designated engineering representative, while performing those duties which are part of his responsibilities as an agent of the administrator for all intents and purposes becomes an employee of the government and thereby may incur liability for the United States if he is negligent. Now whether or not that is true, I do not know, but it seems to be the opinion of the United States on the subject.

QUESTION: Mr. Gerry.

MR. GERRY: Yes, sir.

QUESTION: Is it your argument that the present law exempts the responsibility of the manufacturer to inspect?

MR. GERRY: Absolutely not. Contrary to what the government says --

QUESTION: You seem to be arguing that.

MR. GERRY: No. Contrary to what the government says, I think the manufacturer remains liable, and the --

QUESTION: But the government has got a bigger pouch?

MR. GERRY: This is like any other area where there is more than one tort feasor. They are concurrent joint tortfeasors in this case, and the decision as to who should bear the final risk of loss here should come in the case that will follow this when the government sues for indemnification as its attorneys have publicly said that they would do.

QUESTION: I take it no movement in that direction has yet been taken.

MR. GERRY: It has not, Your Honor. There has been no final judgment and, therefore, no action filed for indemnification by the United States. There has been a publication by attorneys for the FAA which says that that is their intention in cases where the government is found responsible, and under the law of California where we have equitable contribution I would assume that they would sue both for indemnity and for equitable contribution.

QUESTION: Do the FAA attorneys have any jurisdiction over a question of that kind?

MR. GERRY: I do not know, Your Honor.

QUESTION: Only the Attorney General of the United States could make that decision.

MR. GERRY: I agree with you, Your Honor. They were the attorneys, however, responsible for the prosecution of these cases.

As I was saying, Your Honor, there is no doubt about the negligence in these cases. It was found in the United Scottish case to be negligence and also to be a proximate cause.

It was at an operational level. There was no discretion left in --

QUESTION: Well, is there not considerable judgment or discretion in determining what is excessive vibration?

MR. GERRY: I believe that there is judgment, but there is not policy discretion such as that which is provided in the Federal Tort Claims cases, Justice O'Connor. My understanding is that the Federal Tort Claims Act exception found in 2680(a) deals with administrative policy discretion, and that when only a scientific decision such as in Griffin v. United States where obviously there was more discretion, a scientific determination as to whether or not a lot of virus should be permitted to enter the marketplace, where only a scientific or mechanical or operational decision has to be made that that is not the type of discretion talked about in the FTCA.

QUESTION: Mr. Gerry, in the Dalehite case they said that the decision as to how to bag fertilizer was discretionary, did they not?

MR. GERRY: I most respectfully disagree, and I think that we are a long way from Dalehite. I think that --

QUESTION: What do you mean when you say you think we are a long way from Dalehite?

MR. GERRY: Well, I think in those cases that have followed there is been a great deal of this Court's interpretation of what was in Dalehite, and although it has not been overruled in all of its aspects, as it should not be, I think in those aspects where there was only operational negligence such as in fire fighting that this Court has in Rayonier taken care of that problem. If a bagging case come up I suppose the Court would take care of that problem.

QUESTION: Unless maybe it decided to take care of Rayonier and Indian Towing the way you suggest those cases took care of Dalehite. There is a certain sinuosity to judicial construction of statutes over a period of time, is there not?

MR. GERRY: I have found it that way, Your Honor.

(Laughter)

MR. GERRY: We believe that in this case the government is liable under the congressional mandate of the Federal Tort Claims Act. There may also be others liable, but that is for another case and another time.

We think that we have to point out to the Court serious errors in the government's argument and errors in the government's brief. On page 3 of the government's reply brief they say there is nothing that indicates that the design of the Boeing 707 was defective.

I do not know where they have been in the years that this case has been prosecuted because contrary to their statement there is not testimony whatsoever that the lavatory trash container involved in the 707 crash and burn in Paris could contain or meet the requirements of 4(b)381(d), and all of the knowledgeable witnesses agree that the containers were defective.

The NTSB sent an investigator, Mr. Kapustin. Mr. Kapustin looked at what was left of this, looked at several other 707's and he came to the conclusion as set forth in the appendix at page 128 that it needed no expert opinion. You did not even have to be an expert. It was a simple open and shut situation.

The compartments did not meet the requirements. They were not capable of containing fire or smoke.

Mr. Nelson, the FAA's own top person who has been deposed in this case, states that the odds are extremely small that any of the items, that is, any of the 707 ever manufactured after the type certification were not of type design, and the lavatories had been approved that way with the defect in them in the beginning. They were not in compliance with the regulations. These things all appear in his deposition

QUESTION: I suppose it is the inevitable cigarette disposal.

MR. GERRY: It has been, Your Honor. Hopefully some day we will not have cigarettes on airplanes. At the present time because of this and other cases we have new placards. We have an ashtray outside the lavatory as you enter. All of that occurred probably because of this case. Unfortunately sometimes we make these advancements over the dead bodies of the people who suffer from the defective product to begin with.

In order to look at this case, I would like to with the Court look just a little bit at the process that is involved here. The Federal Aviation Agency -- Administration now -- has taken over over the years the entire certification process including the final process in the inspection.

Now in the government's brief -- You may be mislead if you read the brief into thinking that the manufacturing inspector is a representative of the manufacturer. In their brief they suggest that the primary responsibility for all of this remains with the manufacturer, and they cite a statute and a regulation and then go on to say, "Finally, the Agency's operating manual has always stated it is the primary responsibility of manufacturing inspectors to determine that prototype products conform with safety requirement."

In turn, the FAA is merely empowered to make safety inspections. But the manufacturing inspector is an FAA employee who is there in the manufacturer's plant and who according to their manual must -- as they say has the primary responsibility of the manufacturing inspector to determine that prototype products conform with drawing specifications and evaluated.

The manual from 1957 which applies is on file to the Court and clearly shows that they have to look at every process and that in this case they did look at every process but missed this one. Once there is a type certificate issued --

QUESTION: On your theory as I understood your previous response, Mr. Gerry, 25 years after the airplane was built or 30 years the United States could be liable if it falls in Venezuela or Zambisi or some other place.

QUESTION: If it is a design certification.

MR. GERRY: If they were negligent in the beginning, if the manufacturer was negligent in the beginning, they could if that negligence then became operative at that point. Now, in the case of the Boeing 707 all of the aircrafts were manufactured according to the type certificate, and the type certificate permitted huge holes in the lavatory trash container which caused a chimney effect to take the smoke up into the overhead and carry it forward to the pilot's compartment. Those holes were part of the type certification of the aircraft.

Once you get a type certification if you are an aircraft manufacturer you certainly do not want to get back in the mess of bureaucratic bumbling that you were in before and attempt to change that certificate. You cannot make a single change in the aircraft without getting the kind of supplemental type certificate that is involved in the other case, in the United Scottish case where in order to change anything you have to go there.

So once you have got it through all of the design and engineering changes you set in concrete the bad aspects of the design as well as the good aspects. We sometimes find ourselves flying with obsolete unsafe or less safe parts of aircraft because it is so economically and otherwise difficult to get a change.

There are those who believe that --

QUESTION: Well, you do not suggest it would have been difficult to -- If you think this is such a glaring, obvious defect you would not think it would have been very hard to get a change.

MR. GERRY: No, I do not think so in this case, Your Honor, but the incentive is gone. Once you've got a type certificate you remove the incentive to go forward and to continue to change. The incentive is to produce what has already been authorized.

QUESTION: Well, I suppose there is some incentive to produce a safe aircraft.

MR. GERRY: Yes. That is why we have supplemental type certificates and that is why there are issuances of supplemental type certificates.

QUESTION: You have to have proof of negligence, do you not?

MR. GERRY: Absolutely. There is no product defect in the sense of strict liability. We need to prove to a federal judge sitting without a jury --

QUESTION: That a reasonable designer should have known this was a bad deal.

MR. GERRY: That is correct. We have done so. We have done so twice in the United Scottish case.

QUESTION: If technology developed subsequent to the original inspection and certification, it was not generally known at the time of the certification, that would not be the sort of case that you bring here.

MR. GERRY: No, state of the art has always been a defense to a negligence action even if not to a strict lability action. In fact, Your Honor, no knowledgeable attorney would bring an action against the United States at all if there was any other way to go, and wind up here 15 years later or wind up here 10 years later without even having had a case tried. No, as long as there is another economically viable defendant we will go the other way.

QUESTION: The manufacturer was not available?

MR. GERRY: The manufacturer in the United Scottish case went out of business and had only $100,000 worth of insurance. The manufacturer in the Varig case settled the cases with some of the passengers on the aircraft.

The government's brief suggests that in order to rely on the Good Samaritan Doctrine we have to prove that our decedents would have foregone alternative safety precautions. I do not know where they get that and they cite not authority for that novel statement of law.

My understanding is that what is necessary is to show that there was reliance by the people, not that they have to forego, and in this case -- in the United Scottish case there is a finding of the court below of specific and general reliance by the decedents and by the survivors.

QUESTION: You mean the average person that rides on a plane is familiar with this statute?

MR. GERRY: I think the average person that rides on the plane anyplace in the United States and the world, Justice Marshall, is familiar with the government's involvement in the aviation industry, that they --

QUESTION: That the government has to inspect every piece of that plane?

MR. GERRY: I do not think that is so, nor do I think --

QUESTION: Well, you just said so.

MR. GERRY: Well, no --

QUESTION: You said the inspection examines every piece of the plane.

MR. GERRY: I said that.

QUESTION: Well, does the average airplane rider know that?

MR. GERRY: I do not think that --

QUESTION: If so, take me out of the group.

MR. GERRY: I do not think --

QUESTION: I did not know it until this case was filed.

MR. GERRY: I do not think they do, nor did I intend to say that they knew that. What I intended to say, Your Honor, -- I am sorry if I expressed myself badly -- was that the average person riding in an aircraft is aware of the role of the government in the process of aviation, that they are involved.

Also, under the restatement of torts --

QUESTION: Who that rides a plane has read that book that you just read from, the one where you say the inspector does this?

MR. GERRY: The owner of the aircraft --

QUESTION: What is the name of that book?

MR. GERRY: This is the manual procedure type certification --

QUESTION: Does the average plane rider know anything about that book?

MR. GERRY: No, But the owner --

QUESTION: Has the average rider ever heard of that book?

MR. WALDRON: I do not believe so, Your Honor, no. The owner of the aircraft does, and under the restatement of torts section 324A(b), there does not need to be reliance by the average rider of the aircraft. There needs to be reliance only by the owner of the aircraft and in --

QUESTION: Why don't you argue that? You said everybody knows.

MR. GERRY: I did not mean, Your Honor, actual knowledge of each and every particular. I am sorry if I was found to mislead the Court in that.

Also the government is liable if it increases the risk of harm, and in that regard I think that there is a misunderstanding of what that term means. It is not the risk in putting out an aircraft that is less airworthy, but it is the risk of having that aircraft on the market at all.

If the government does their job properly, the government inspectors, the aircraft would not be on the market with the defects in it and, therefore, the risk to the general public including our decedents is greater than it would be otherwise.

There was a statement by counsel that after there is the issuance of the type certificate there are no further inspections of the particular aircraft by the FAA. That, although it is not extremely important to the decision here, is not the total fact in the case. There are additional inspections if there are supplemental type certificate as there were in United Scottish and there was such an inspection so held.

The government has raised a number of defenses in the case including negligent misrepresentation. We had thought that that had been put to rest in Block v. Neal, and the government had said in their reply brief in the petition for certiorari that unless there was proof that the persons in this case had relied on the certificate itself that the misrepresentation defense would not apply.

There is no proof in the case that any of the passengers ever saw or relied upon the certificate itself or on the Airworthiness Certificate that was carried in the airplane. We believe, Your Honor, that the record adequately shows and it has been found in the case that was permitted to go to trial that the government inspectors at the operational level were negligent, that their negligence was a proximate cause of the deaths and destruction of the aircraft here, that that gives rise to liability, that it does not bring into play because of the operational level the descretionary function exception to the Federal Tort Claims Act, and that when the government asks this Court to become the protector of the treasury they should instead go as they were instructed to do in the Indian Towing and Rayonier cases to the Congress and have congressional changes in the bill.

If Congress did not wish to have liability in these cases it can change, and if the Federal Aviation Agency does not wish to be sued in these cases, it does not have to be --

CHIEF JUSTICE BURGER: Your time has expired now.

MR. GERRY: -- this much involved in aviation.

Thank you.

CHIEF JUSTICE BURGER: Do you have anything further, Mr. Geller.

ORAL ARGUMENT OF KENNETH S. GELLER, ESQ., ON BEHALF OF PETITIONER -- REBUTTAL

MR. GELLER: Just a few things, Mr. Chief Justice. I am afraid I do have to respond to certain of the misstatements that Mr. Gerry made.

Let me just respond first to one of the last things he said. Respondent said he does not know where we got this notion that under the Good Samaritan Doctrine the reliance aspect requires a showing that other ways of protecting one's self were not exercised. Let me just refer the Court to the note E to section 324(a) of their statement of torts which says, "The reliance must have induced the defendant to forego other remedies or precautions against the risk."

We cite this in our brief along with cases that have interpreted that provision that support our statement. The Respondents have assured this Court that it need not worry about the peculiar result in this case because the Plaintiffs will always have to show negligence.

Let's be clear what that means. There was no proof in this case, nor could there be in any of these cases that a particular FAA inspector went in, locked at a particular aircraft and determined that it was all right whereas the safety standards show it was not.

The proof in these cases as in this case in particular was the following: An inspection had to be made according to the Ninth Circuit before a certificate could be issued. A certificate was issued.

Subsequently, it was determined that the plane was not in compliance with some safety standards. Therefore, the government had to be negligent in conducting its inspection. It is a res ipsa theory.

Now it falls down for a number of reasons, one of which is that it is based on this fallacious assumption that the government has some obligation under the statute the do a head to toe inspection of every airplane. I think it is important that the Court realize that that is simply not true under the statute or regulations.

The FAA has never done anything more than conduct spot checks in particular cases, and it reserves the right in any particular case to inspect any part of the airplane. It has no obligation under the FAA Act or the regulations to do so.

There was also a grudging admission from Mr. Gerry that the manufacturers do in fact have a nondelegable duty to make an inspection of every part of their equipment to make sure that it is in compliance with the safety regulations and that they can be sued. In this case, for example, Varig did sue Boeing. The passengers did sue Varig and Boein. Aerodyne was sued.

This, I think, precisely shows the distinction between these sorts of regulatory cases and the operational cases that I was referring to earlier because in the operational cases the United States is the only possible defendant, and the Court referred to this, for example, in Rayonier in pointing out why the operational activities in that case were not immune from suit under the Federal Tort Claims Act, one of the things that the Court said was that if the United States, which performed these operations, could not be sued, the plaintiff could not sue anyone.

But in these regulatory cases there will always be by definition a private party, a manufacturer, an operator, or an installer that will have failed to comply with the safety standards, and that operator or manufacturer is liable to people who are harmed. This is a suit against the United States for damages because the United States did not exercise its regulatory authority to make certain that that manufacturer or operator complied with the statute.

Finally, while it may not be terribly significant here I cannot let the record reflect that there was, in fact, negligence in the issuance of the type certificate for that Boeing 707. There is zero proof in this record that the type certificate was in any way faulty.

If in fact --

QUESTION: Did the District Court make any finding?

MR. GELLER: That case has not yet gone to trial.

QUESTION: Oh, the Varig case.

MR. GELLER: The Varig case has not yet gone to trial, but Mr. Gerry has asserted that it is undisputed that there was negligence in that case. That is disputed.

If in fact the 707 that crashed in 1973 had a defect it is far from clear that it was a design defect rather than a production defect or a maintenance defect. Varig completely refurbished the inside of those planes after it took them out of the United States in 1969.

So those are the sorts of problems that would arise in cases like this. There will never be proof of actual negligence. It will be a res ipsa theory, and this ties in with our argument that these are in fact discretionary determinations because under the statute it is clear that the FAA has complete discretion, which airplanes to inspect and how thorough that inspection should be.

QUESTION: Well, not at the type stage.

MR. GELLER: At the type stage, Justice White.

QUESTION: Well, now, not then.

MR. GELLER: Even then, Justice White.

QUESTION: So you disagree with your colleague?

MR. GELLER: Yes, we do. Nothing has changed since 1958. Designated engineering representatives who are not FAA employees who by and large work for the manufacturer have the obligation to inspect the airplane to make sure it is in compliance with the FAA regulations, and the FAA reserves the right to make spot checks.

QUESTION: They do not have any discretion as to whether to have an inspection. It is just who has to do it.

MR. GELLER: The regulations make clear that it is the manufacturer that has no discretion whether to make the inspection. We do not dispute that. The manufacturer has an obligation to inspect its products carefully.

QUESTION: But the FAA cannot issue a type certificate without there having been an inspection by somebody.

MR. GELLER: That is true, but that is far from saying --

QUESTION: I am just saying that part of it is not discretionary.

MR. GELLER: Well, but that is also not the basis for the Respondents' suit in this case. They are not suing us for an invalid inspection performed by Boeing. They are saying the United States was negligent in not conducting a careful enough inspection, and what we are saying is that the decision whether to inspect and how careful that inspection should be under the statute is discretionary.

QUESTION: Is there not evidence as to -- There is no evidence in this record as to who made the inspection in this case?

MR. GELLER: In which of the two cases?

QUESTION: In either one of them?

MR. GELLER: That is correct.

That will be the case in all of these sorts of cases, and that is one of the problems in allowing suits like this to proceed because the United States is not engaging in operational activities. It's merely engaging in regulatory activities to make sure that other people, the private parties --

QUESTION: I would think in a good many cases you could discover who actually made the inspection.

MR. GELLER: Well, even if you could, Justice White, the problem is you will never be able to know precisely what they inspected because they only have a duty to spot check. They may check off a box saying they inspected the fuselage but that will not tell you whether they looked at any particular part.

QUESTION: Well, that is not true at the type stage, is it?

MR. GELLER: Yes, it is, Justice White. In fact, it is most true at the type stage because at the type stage the FAA frequently will get hundreds and hundreds of thousands, especially for an airplane like the 707, of documents, and it could not possibly -- the FAA only has about 300 inspectors -- it could not possibly at the type stage inspect every portion of every airplane. That is the responsibility of the manufacturer and the designated engineering representative who works for the manufacturer.

Thank you.

CHIEF JUSTICE BURGER: Thank you, gentlemen.

The case is submitted.

(Whereupon, at 11:08 a.m., the case in the above-entitled matter was submitted.)