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How Government Contractors Can Escape Lawsuits – Derivative Sovereign Immunity

On Behalf of | Oct 9, 2015 | Government Contracts

The United States Government generally enjoys sovereign immunity from lawsuits unless that immunity is waived. Government contractors that perform “discretionary functions” under government contracts should be aware that they could be immune from suit under the doctrine of derivative sovereign immunity.This type of immunity generally protects government contractors performing delegated discretionary governmental acts when they are sued for taking those protected acts. To qualify for derivative sovereign immunity, a government contractor must show that its actions involved an element of judgment or choice, and that its decisions were based on considerations of public policy. See Berkovitz v. United States, 486 U.S. 531, 536-37 (1998).

In an ongoing case before the Norfolk U.S. District Court, a group of government contractors are using the doctrine of derivative sovereign immunity to try to reduce their legal liability. The contractors are defendants in a military family’s lawsuit for mold contamination in their leased military home. The defendants are comprised of property management companies, the family’s landlord, and a construction company that performed demolition and repairs in the family’s home. See Federico, et al. v. Lincoln Military Housing LLC, et al., No. 2:12cv80 (E.D.Va. Norfolk, Aug. 31, 2015).

In Federico, the defendants developed a mold remediation plan with the Navy pursuant to a public private venture. The defendants argued in a recent Motion for Judgment that their acts taken in accordance with the plan are discretionary functions, and therefore they are protected from the military family’s suit based on derivative sovereign immunity.

The District Court agreed that acts taken in accordance with the plan are likely protected by derivative sovereign immunity, but the family alleges that the companies failed to follow the plan entirely, not that the plan was defective. As a result, the District Court denied the defendants Motion for Judgment on derivative sovereign immunity, but the litigation is ongoing, and the sovereign immunity will “add a gloss on each claim” according to the District Court. No. 2:12cv80, Dkt. No. 515 at 24.

Government contractors should always remain mindful of the interplay between their role as private contractors and companies performing delegated work for the United States Government. Distinctions in a contractor’s scope of work could mean the difference between extensive legal liability and derivative sovereign immunity protection.

Katie Lipp is a Senior Associate Attorney and head of the construction practice at Berenzweig Leonard LLP. She can be reached at [email protected].

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