Federal contractors occasionally find themselves at the receiving end of a lawsuit filed by and individual that has been injured by the company’s allegedly wrongful conduct. Although insurance coverage may provide a certain level of protection from such liability, coverage is not always a certainty. As a result, contractors have made creative arguments over the years in an effort to avoid liability for large claims. For example, in some circumstances, the contractor may be able to avoid liability if the injury to a third party resulted from the contractor’s adherence to specifications in the contract.

In a recent case, the U.S. Ninth Circuit Court of Appeals addressed another attempt by a federal contractor to avoid liability for the consequences of its tortuous (wrongful) conduct. In United States v. E.I. Du Pont De Nemours Company, Inc., 2005 WL 2008457 (C.A.9, August 23, 2005), a federal contractor argued that it was an agent of the United States government, and therefore entitled to certain immunities from suit to which the U.S. government is entitled.

In general, the U.S. government, as a sovereign entity, may only be sued by private citizens to the extent it permits itself to be sued. In the Federal Torts Claims Act (“FTCA”) the government waives, to a limited extent, its sovereign immunity from tort claims.

The FTCA retains certain protections for the federal government that make it more difficult and perhaps burdensome for private citizens to file and pursue tort claims against federal agencies. For example, the FTCA prohibits certain tort claims altogether and requires that tort claims be administratively adjudicated by the federal agency before a suit may be filed in court.

In E.I. Du Pont, the federal contractor cited language in the FTCA that extended the Act’s coverage to “persons acting on behalf of a federal agency in an official capacity.” The contractor contended that it was a “person,” and therefore fell within the scope of protections and limited immunities afforded by the FTCA. The contractor relied primarily on the Dictionary Act, 1 U.S.C. § 1, which generally defines “person” to include corporations and companies, unless the context of the statute in question indicates otherwise.

The Ninth Circuit held that the FTCA suggested a contrary interpretation. The court noted that throughout the FTCA, use of the term “persons” includes only natural persons and not corporations or artificial entities. In addition, according to the court, several contextual provisions of the FTCA indicate that Congress meant “persons” to apply only to natural persons. The court added that extending the term “persons” to include artificial entities would “substantially frustrate” the FTCA’s purposes. Accordingly, the court found that the federal contractor was not a “person” under the FTCA, and therefore not entitled to its protections from liability.

Although the ruling was unfavorable for contractors, new arguments will likely continue to be developed in case law addressing tort claims against federal contractors.

Andrew P. Hallowell is a partner in the Washington law firm Piliero, Mazza & Pargament. He can be reached at ahallowell@pmplawfirm.com.