Lockheed Aircraft Corp. v. United States

Background

An airplane manufacturer paid a settlement after a C-5A military plane crash killed nearly 150 people, including a civilian Navy employee. The Government had already paid death benefits to the employee’s survivors under the Federal Employees’ Compensation Act (FECA). The employee’s administrator sued the manufacturer for a defective product, the manufacturer sued the United States for indemnity under the Federal Tort Claims Act, and the District Court sided with the manufacturer. A federal appeals court reversed that ruling, finding FECA barred the manufacturer’s indemnity claim.

Reasoning

The Supreme Court considered whether FECA’s exclusive-liability language was meant to stop unrelated third parties from suing the United States for indemnity. Relying on statutory history and a prior case (Weyerhaeuser), the Court said the statute was aimed at employees and those claiming for them, not unrelated third parties. The Court rejected the Government’s argument that broad wording in FECA automatically included third parties and declined to abolish indemnity claims without a congressional change. It reversed the appeals court and sent the case back for further proceedings.

Real world impact

The decision means companies, contractors, and insurers who pay judgments for injuries to federal employees may be able to seek repayment from the United States in some cases. The ruling is not a final determination of indemnity rights; lower courts must decide the substantive claims and the amounts owed.

Dissents or concurrances

Justice Rehnquist dissented, arguing the ruling increases Government exposure and that longstanding limits on third-party recovery should prevail to protect the Government’s limited liability under FECA.