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Government Immunity
for Professional Independent Contractors

Three-part test

The Wisconsin Court of Appeals affirmed the trial court. In doing so, it adopted for Wisconsin a three-part test similar to that annunciated by the U.S. Supreme Court in Boyle v. United Technologies Corp., ⁹ under federal tort statutes. Strand had cited to Boyle as persuasive authority in both the trial court and court of appeals.

In Boyle plaintiff attempted to sue the designer of a military helicopter after an accident in which a helicopter crashed into water. The occupant could not extract himself because the escape hatch opened outward and was blocked by the water's pressure. The defendant designer argued that it should be entitled to immunity for the design decision because the military dictated the specifications of the escape hatch. Instead of announcing a blanket rule extending immunity to all aspects of work performed by government contractors, the court set forth a three-part test that contractors must meet to be conferred with governmental immunity under federal tort statutes: 1) the U.S. approved reasonably precise specifications; 2) the equipment conformed to those specifications; and 3) the supplier warned the U.S. about dangers in the use of the equipment that were known to the supplier but not to the United States. ¹⁰

Following the rationale of Boyle, the District II Wisconsin Court of Appeals, in an opinion written by Judge Richard Brown, "adopt[ed] a form of governmental contractor immunity applicable to parties who contract with municipal or state authorities and are directed to perform certain tasks under that contract." ¹¹ The court held that "an independent professional contractor who follows official directives is an 'agent' for the purposes of § 893.80(4), Stats., or is entitled to common law immunity" ¹² provided the professional contractor can meet a three-part test similar to that used for claims against federal contractors. To avail themselves of the defense, contractors must show that: 1) the governmental authority approved reasonably precise specifications; 2) the contractor's actions conformed to those specifications; and 3) the contractor warned the supervising governmental authority about the possible dangers associated with those specifications that were known to the contractor but not to the government officials. ¹³ The court affirmed the summary judgment granted to Strand.

Cause and effect

During the various arguments in Estate of Lyons, the parties, including the DOT as amicus curiae, discussed the effect of granting the design firm immunity rather than having it answer in court for the decision to reduce the length of the vertical curve for the bridge design.

The DOT objected to a blanket holding that contractors performing work for governmental entities are always "agents" as that term is used in the governmental immunity statute. The DOT expressed concerns that a broad ruling that contractors are agents would implicate the government and taxpayers with duties to both represent and indemnify independent contractors in civil suits. Having hired an independent firm to exercise and implement these governmental decisions, the government would, in a sense, be insuring the contractor's work. This was a duty the taxpayers did not want to assume.

However, the DOT supported Strand on its argument that immunity should apply in this case. To hold Strand liable for merely facilitating a governmental directive for which the directing state officer was immune could effectively remove the benefits of governmental immunity granted to the governmental officers making a discretionary decision. State and local governments make widespread use of independent contractors to execute certain governmental functions. The immunity for government officers making discretionary decisions could effectively be removed if independent contractors facilitating such decisions can be held liable in tort. As the appeals court noted, if the contractors facilitating a governmental directive can be held liable for a discretionary governmental act, the contractors would be subjected to increased risks and associated costs, and ultimately would pass those costs on to the contracting government, effectively eliminating the taxpayer benefits secured by the immunity statutes. ¹⁴ The court also cited the fact that it would be "fundamentally unfair" to hold a contractor liable for injuries caused by a defective design when the governmental authority was responsible for its development. ¹⁵

In practice

Attorneys should advise clients doing work as government contractors to document well any deviation from existing standards or practices. This would include identifying the existing standard or practice, identifying the specific deviation from the standard or practice requested by the government principal, outlining potential costs and risks associated with such deviation, and obtaining a written directive from the government principal for the deviation.

In Lyons the claim involved problems with the vertical curve standards and lines-of-sight. There, the cost issue concerned additional fill and work on the adjoining roadways. In other instances the need to condemn additional real estate may be required to design a roadway for the "proper" travel speed, or, with respect to jails, the "best" prison locks/doors may be prohibitively expensive. These may be costs government representatives do not wish the public to incur. A designer in that situation should work closely with the government and carefully document its files to show consideration of alternatives. If the government chooses a less expensive alternative in writing, the designer will have a well-documented file to show that different alternatives were explored, and government officials entrusted with the power to make decisions in their quasi-legislative capacity made the discretionary (and immune) decision to deviate from the standard or state-of-the-art. This documentation also will alert the government principal to take safety precautions, such as a sign warning drivers that an upcoming curve must be negotiated at a slower than normal travel speed for that roadway.

Most design decisions involve costs and benefits. To implement the "safest" design may be cost-prohibitive. This is especially true for public improvements. Certainly, topography and land ownership constrain the government's ability to have the "safest" possible road, with no hills or curves. Thus, safety benefits must necessarily be traded for making the project cost-feasible. A contractor involved with such a project should thoroughly document the standards, alternatives, and safety concerns at the time of the project to avail itself of this extension of immunity.

Conclusion

For the first time under Wisconsin law, governmental immunities were extended to shield a professional independent contractor from liability for work performed on a government project. Government officers entrusted to make cost-benefit decisions for the good of the citizens have immunity for their official acts as a matter of law. A professional independent contractor implementing a reasonably precise governmental directive can document its concerns with the government principal and enjoy the same immunity given the government officer. By merely implementing an otherwise immune governmental decision, the contractor will not have to risk liability solely because of its status as a private entity.

Endnotes

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¹ Estate of Lyons v. CNA Ins. Cos., 207 Wis. 2d 448 (Ct. App. 1996), rev. denied.

²Wis. Stat. § 893.80(4).

³ Wis. Stat. § 893.80(4). ("No suit may be brought against . . . [government] officers, officials, agents or employees for acts done in the exercise of legislative, quasi-legislative, judicial or quasi-judicial functions.") (Emphasis and bracketed material added.)

⁴See Wis. Stat. §§ 893.80(l) (a), 893.82(3); Smith v. Wisconsin Physician's Serv., 152 Wis. 2d 25 (Ct. App. 1989).

⁵ 52 Wis. 2d 479 (1974).

⁶81 Wis. 2d 42 (1977).

⁷ Lister v. Bd. of Regents, 72 Wis. 2d 282, 299 (1976).

⁸ Slip Op. at 11, Circuit Court of Walworth Co., Case No. 93-CV-122.

⁹ 487 U.S. 500 (1988).

¹⁰ Id. at 512.

¹¹ Estate of Lyons, supra note 1 at 459.

¹² Id. at 459-60.

¹³ Id.

¹⁴ Id. at 457 (citing Vanchieri v. New Jersey Sports and Exposition Auth., 104 N.J. 80, 514 A.2d 1323 (1986)).

¹⁵ Id.