NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ____________
No. 23-2078 ____________
ALLISA D. GAY, Executrix of the Estate of Carl E. Gay, Appellant
v.
A.O. SMITH CORPORATION, et al. ____________
On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civil No. 2-19-cv-01311) District Judge: Honorable William S. Stickman, IV ____________
Submitted Under Third Circuit L.A.R. 34.1(a) on March 7, 2024
Before: JORDAN, PHIPPS, and FREEMAN, Circuit Judges
(Opinion filed: May 24, 2024)
_______________
OPINION * _______________
* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. FREEMAN, Circuit Judge.
As part of his United States Navy training, Carl Gay observed the manufacture and
assembly of equipment at a government-owned research laboratory operated by General
Electric (“GE”). After he retired, he was diagnosed with mesothelioma. He sued GE,
alleging that its actions proximately caused his illness. After his death, his daughter Alissa
Gay became the substitute plaintiff, and the District Court held that her claims against GE
are barred by derivative sovereign immunity. We will affirm.
I
Carl Gay enlisted in the United States Navy in 1946. Between July 1954 and
October 1955, he attended a training course on nuclear-powered submarines. During that
course, he spent ten to fifteen percent of his time visiting the Knolls Atomic Power
Laboratory (“KAPL”) where he observed and learned about the equipment.
The federal government owned KAPL but GE operated it. GE did so pursuant to a
government contract issued under the authority of the First War Powers Act of 1941 and
the Atomic Energy Act of 1946. KAPL’s purpose was to design nuclear reactors for the
United States Navy, and GE’s work there was “subject in all respects to the approval of
the Contracting Officer” from the government. J.A. 293.
The Atomic Energy Commission (“the Commission”) reviewed all plans and
designs at KAPL, including materials specifications, components in the power plant, and
building and facility plans. The contract required GE to hire and train KAPL workers
“subject to the approval of the Contracting Officer.” J.A. 297. During the relevant time
2 period, Admiral Hyman G. Rickover—an officer in the Commission’s Naval Reactors
Branch—directly oversaw KAPL’s operation. In 1952, Rickover reiterated to the vice
president of GE that “the responsibility for the design, development, operation, and other
aspects of [KAPL] is vested in me.” J.A. 363.
In June 2019, Gay was diagnosed with mesothelioma, a cancer that can form around
the lungs due to asbestos exposure. In August 2019, he sued GE, arguing that it exposed
him to asbestos at KAPL despite knowing of its risks.1
GE removed the case to federal court and later moved for summary judgment. The
District Court held that GE had derivative sovereign immunity because it operated KAPL
under the authority and direction of the United States government. On that basis, it granted
summary judgment in GE’s favor. Alissa Gay (who was then the substitute plaintiff)
sought reconsideration, advancing a new argument that derivative sovereign immunity is
inapplicable to matters within a contractor’s discretion. The District Court denied her
motion.
Gay timely appealed the grant of summary judgment and denial of reconsideration.
II2
We exercise plenary review over an order granting summary judgment. Carley v.
Wheeled Coach, 991 F.2d 1117, 1118 (3d Cir. 1993). We review an order denying a
1 Gay also sued over 150 other defendants, none of whom is a party to this appeal. 2 The District Court had jurisdiction pursuant to 28 U.S.C. § 1331. We have appellate jurisdiction pursuant to 28 U.S.C. § 1291.
3 motion for reconsideration for an abuse of discretion. Gibson v. State Farm Mut. Auto.
Ins. Co., 994 F.3d 182, 186 (3d Cir. 2021).
III
As a threshold matter, the parties disagree over the correct derivative immunity
framework in this case. The District Court applied the test from Yearsley v. W.A. Ross
Construction Co., 309 U.S. 18 (1940), which GE argues was the correct test. Gay, on the
other hand, urges us to analyze the case under the military contractor framework from
Boyle v. United Technologies Corp., 487 U.S. 500 (1988).
Both doctrines protect government contractors from liability if certain conditions
are met. But it is an open question whether Boyle immunity is merely the descendant of
Yearsley immunity, or if the two doctrines are distinct. Compare Beaver Valley Power
Co. v. Nat’l Eng’g & Contracting Co., 883 F.2d 1210, 1215 n.4 (3d Cir. 1989) (suggesting
that Yearsley immunity was the predecessor to the modern government contractor defense),
with Campbell-Ewald Co. v. Gomez, 577 U.S. 153, 166–69 (2016) (analyzing a performance
contract under Yearsley without discussing Boyle), and Br. of United States as Amicus
Curiae at 24, Childs v. San Diego Fam. Hous. LLC, 22 F.4th 1092 (9th Cir. 2022) (No.
20-56049), 2021 WL 1897312, at *24 (explaining that the “Yearsley defense” is
“distinct” from the “government contractor defense” outlined in Boyle). We need not
resolve this question, as GE is entitled to sovereign immunity under either test.
4 A
Under Yearsley, a contractor is derivatively immune from liability if (1) its
“authority to carry out the project was validly conferred” by Congress and (2) its work
was “authorized and directed” by the federal government. 309 U.S. at 20–21. But if a
contractor “exceed[s] [its] authority” or fails to “compl[y] with all federal directions,” it
cannot claim Yearsley immunity. Campbell-Ewald, 577 U.S. at 167 & n.7.
Gay claims that GE is not entitled to derivative sovereign immunity because the
government did not “authorize and direct” its failure to warn him about asbestos.
Specifically, he cites testimony from John Roderick, GE’s corporate representative, who
was “not aware of any . . . order from the Navy that would have precluded General Electric
from giving [asbestos] safety warnings to the sailors that were [at KAPL].” J.A. 1807.
But Gay does not dispute that GE’s main activities at KAPL—the design and
manufacture of nuclear reactors and vessels—were authorized and directed by the
government under validly conferred authority. Indeed, the record demonstrates that GE’s
contract with the Navy was “negotiated and executed under the First War Powers Act [of]
1941,” J.A. 290, and later adopted by the Atomic Energy Commission “pursuant to the
authority conferred by the Atomic Energy Act of 1946,” J.A. 14–15. Gay has presented
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ____________
No. 23-2078 ____________
ALLISA D. GAY, Executrix of the Estate of Carl E. Gay, Appellant
v.
A.O. SMITH CORPORATION, et al. ____________
On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civil No. 2-19-cv-01311) District Judge: Honorable William S. Stickman, IV ____________
Submitted Under Third Circuit L.A.R. 34.1(a) on March 7, 2024
Before: JORDAN, PHIPPS, and FREEMAN, Circuit Judges
(Opinion filed: May 24, 2024)
_______________
OPINION * _______________
* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. FREEMAN, Circuit Judge.
As part of his United States Navy training, Carl Gay observed the manufacture and
assembly of equipment at a government-owned research laboratory operated by General
Electric (“GE”). After he retired, he was diagnosed with mesothelioma. He sued GE,
alleging that its actions proximately caused his illness. After his death, his daughter Alissa
Gay became the substitute plaintiff, and the District Court held that her claims against GE
are barred by derivative sovereign immunity. We will affirm.
I
Carl Gay enlisted in the United States Navy in 1946. Between July 1954 and
October 1955, he attended a training course on nuclear-powered submarines. During that
course, he spent ten to fifteen percent of his time visiting the Knolls Atomic Power
Laboratory (“KAPL”) where he observed and learned about the equipment.
The federal government owned KAPL but GE operated it. GE did so pursuant to a
government contract issued under the authority of the First War Powers Act of 1941 and
the Atomic Energy Act of 1946. KAPL’s purpose was to design nuclear reactors for the
United States Navy, and GE’s work there was “subject in all respects to the approval of
the Contracting Officer” from the government. J.A. 293.
The Atomic Energy Commission (“the Commission”) reviewed all plans and
designs at KAPL, including materials specifications, components in the power plant, and
building and facility plans. The contract required GE to hire and train KAPL workers
“subject to the approval of the Contracting Officer.” J.A. 297. During the relevant time
2 period, Admiral Hyman G. Rickover—an officer in the Commission’s Naval Reactors
Branch—directly oversaw KAPL’s operation. In 1952, Rickover reiterated to the vice
president of GE that “the responsibility for the design, development, operation, and other
aspects of [KAPL] is vested in me.” J.A. 363.
In June 2019, Gay was diagnosed with mesothelioma, a cancer that can form around
the lungs due to asbestos exposure. In August 2019, he sued GE, arguing that it exposed
him to asbestos at KAPL despite knowing of its risks.1
GE removed the case to federal court and later moved for summary judgment. The
District Court held that GE had derivative sovereign immunity because it operated KAPL
under the authority and direction of the United States government. On that basis, it granted
summary judgment in GE’s favor. Alissa Gay (who was then the substitute plaintiff)
sought reconsideration, advancing a new argument that derivative sovereign immunity is
inapplicable to matters within a contractor’s discretion. The District Court denied her
motion.
Gay timely appealed the grant of summary judgment and denial of reconsideration.
II2
We exercise plenary review over an order granting summary judgment. Carley v.
Wheeled Coach, 991 F.2d 1117, 1118 (3d Cir. 1993). We review an order denying a
1 Gay also sued over 150 other defendants, none of whom is a party to this appeal. 2 The District Court had jurisdiction pursuant to 28 U.S.C. § 1331. We have appellate jurisdiction pursuant to 28 U.S.C. § 1291.
3 motion for reconsideration for an abuse of discretion. Gibson v. State Farm Mut. Auto.
Ins. Co., 994 F.3d 182, 186 (3d Cir. 2021).
III
As a threshold matter, the parties disagree over the correct derivative immunity
framework in this case. The District Court applied the test from Yearsley v. W.A. Ross
Construction Co., 309 U.S. 18 (1940), which GE argues was the correct test. Gay, on the
other hand, urges us to analyze the case under the military contractor framework from
Boyle v. United Technologies Corp., 487 U.S. 500 (1988).
Both doctrines protect government contractors from liability if certain conditions
are met. But it is an open question whether Boyle immunity is merely the descendant of
Yearsley immunity, or if the two doctrines are distinct. Compare Beaver Valley Power
Co. v. Nat’l Eng’g & Contracting Co., 883 F.2d 1210, 1215 n.4 (3d Cir. 1989) (suggesting
that Yearsley immunity was the predecessor to the modern government contractor defense),
with Campbell-Ewald Co. v. Gomez, 577 U.S. 153, 166–69 (2016) (analyzing a performance
contract under Yearsley without discussing Boyle), and Br. of United States as Amicus
Curiae at 24, Childs v. San Diego Fam. Hous. LLC, 22 F.4th 1092 (9th Cir. 2022) (No.
20-56049), 2021 WL 1897312, at *24 (explaining that the “Yearsley defense” is
“distinct” from the “government contractor defense” outlined in Boyle). We need not
resolve this question, as GE is entitled to sovereign immunity under either test.
4 A
Under Yearsley, a contractor is derivatively immune from liability if (1) its
“authority to carry out the project was validly conferred” by Congress and (2) its work
was “authorized and directed” by the federal government. 309 U.S. at 20–21. But if a
contractor “exceed[s] [its] authority” or fails to “compl[y] with all federal directions,” it
cannot claim Yearsley immunity. Campbell-Ewald, 577 U.S. at 167 & n.7.
Gay claims that GE is not entitled to derivative sovereign immunity because the
government did not “authorize and direct” its failure to warn him about asbestos.
Specifically, he cites testimony from John Roderick, GE’s corporate representative, who
was “not aware of any . . . order from the Navy that would have precluded General Electric
from giving [asbestos] safety warnings to the sailors that were [at KAPL].” J.A. 1807.
But Gay does not dispute that GE’s main activities at KAPL—the design and
manufacture of nuclear reactors and vessels—were authorized and directed by the
government under validly conferred authority. Indeed, the record demonstrates that GE’s
contract with the Navy was “negotiated and executed under the First War Powers Act [of]
1941,” J.A. 290, and later adopted by the Atomic Energy Commission “pursuant to the
authority conferred by the Atomic Energy Act of 1946,” J.A. 14–15. Gay has presented
no evidence that GE deviated from the Navy’s instructions or exceeded its contractual
authority. Therefore, we conclude that GE was entitled to derivative sovereign immunity
under Yearsley.
5 B
Even if Boyle were the proper analytical framework,3 the result would be the same.
In Boyle, a case involving the procurement of military equipment, the Supreme Court held:
Liability for design defects in military equipment cannot be imposed, pursuant to state law, when (1) the United States approved reasonably precise specifications; (2) the equipment conformed to those specifications; and (3) the supplier warned the United States about the dangers in the use of the equipment that were known to the supplier but not to the United States.
487 U.S. at 512.
The first element is satisfied here. As discussed above, the Navy was deeply
involved in the planning and designing process for all equipment at KAPL. And all of
GE’s proposals related to KAPL required government approval.
The second element is also satisfied. Gay alleges that GE failed to warn sailors
about asbestos, not that GE failed to adhere to any of the Navy’s design specifications.
The crux of Gay’s argument is that the Navy gave no specifications about warnings—not
that GE contravened them.
Finally, the third element is also met. While the record contains evidence
suggesting that both GE and the Navy were aware of some dangers posed by asbestos, it
3 Boyle primarily applies to cases about design defects in military procurement contracts, while this case focuses on negligence in a performance contract. See Boyle, 487 U.S. at 502 (“This case requires us to decide when a contractor providing military equipment to the Federal Government can be held liable under state tort law for injury caused by a design defect.”). The Supreme Court’s decision in Campbell-Ewald highlighted this distinction. There, the Court considered a contractor’s claim of derivative sovereign immunity in executing a performance contract without mentioning Boyle. See Campbell- Ewald, 577 U.S. at 166–69.
6 does not demonstrate that GE knew more than the Navy. See Papp v. Fore-Kast Sales
Co., 842 F.3d 805, 814–15 (3d Cir. 2016) (concluding that the third element was satisfied
because the defendant “did not have any superior knowledge that it withheld from the
government”). GE therefore could not have notified the government of any dangers that
the government was unaware of.
For these reasons, we conclude that GE would be entitled to government
contractor immunity under Boyle.
IV
Lastly, the District Court did not abuse its discretion in denying Gay’s motion for
reconsideration. To prevail on a motion for reconsideration, the movant must demonstrate
“(1) an intervening change in the controlling law; (2) new evidence that was not available
when the court issued its order, or (3) the need to correct a clear error of law or prevent
manifest injustice.” Gibson, 994 F.3d at 190.
In her motion, Gay argued that GE can claim derivative sovereign immunity only
if the government specifically directed it to engage in the tort, leaving the contractor with
no discretion to behave otherwise. But neither this Court nor the Supreme Court has
defined derivative sovereign immunity so narrowly. In Yearsley, it was enough that the
contractor’s work was “done pursuant to a contract with the United States Government,
and under the direction of the Secretary of War and the supervision of the Chief of
Engineers of the United States.” 309 U.S. at 19. Likewise, it is enough here that GE
carried out its obligations according to the terms of a contract with the Navy and pursuant
7 to government oversight. See Campbell-Ewald, 577 U.S. at 167 n.7 (“Critical in Yearsley
was . . . the contractor’s performance in compliance with all federal directions.”).
Moreover, even if derivative immunity could apply only when a contractor lacks
discretion, Gay still would not prevail. The undisputed facts show that the government
closely scrutinized and controlled GE’s operations at KAPL. Admiral Rickover exercised
responsibility and control over the facility’s management, and GE was required to adhere
to the government’s specifications at all times. The District Court therefore did not abuse
its discretion in denying Gay’s motion for reconsideration.
* * *
For the foregoing reasons, we will affirm the judgment of the District Court.