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Keene Corp. v. United States


decided: February 10, 1983.


Plaintiff Keene Corporation appeals from a final judgment of the United States District Court for the Southern District of New York (Gerard L. Goettel, Judge), dismissing Keene's amended complaint for lack of subject matter jurisdiction, and from an order denying Keene's motion for reargument.

Lumbard, Oakes and Winter, Circuit Judges.

Author: Winter

WINTER, Circuit Judge:

Keene Corporation appeals from a judgment dismissing its complaint for lack of subject matter jurisdiction entered by Judge Gerard L. Goettel, United States District Court for the Southern District of New York. The gravamen of Keene's complaint is that the United States is liable under various legal theories for the costs of more than 14,000*fn1 personal injury and wrongful death actions against Keene, arising from occupational exposure to asbestos fibers contained in thermal insulation products manufactured or sold by a Keene affiliate.*fn2 On appeal, Keene urges that jurisdiction over this action exists under the Federal Tort Claims Act ("FTCA"), 28 U.S.C. §§ 1346(b) and 2671-2680 (1976) or, alternatively, under the general maritime and admiralty jurisdiction of the United States, 28 U.S.C. § 1333 (1976), the Suits in Admiralty Act, 46 U.S.C. §§ 741-752(1976), the Extension of Admiralty Jurisdiction Act, 46 U.S.C. § 740 (1976), and the Public Vessels Act, 46 U.S.C. §§ 781-790 (1976).*fn3

Keene's amended complaint alleges that the United States is liable to it for all costs arising out of the more than 14,000 actions. However, it has made no attempt to categorize the actions against it on the basis of individual characteristics, such as the role played by the United States, the employment relationship of the claimants, the circumstances under which they came into contact with asbestos, or the theory or theories of liability. Some of Keene's allegations, moreover, use terms such as "most" or "typically" in describing the actions against it.

For example, the complaint alleges that the government played the following roles relating to the actions against it: a seller of asbestos fiber, a purchaser of asbestos insulation, a designer or specifier of insulation products, an employer of the claimants or their employers, an inspector of the claimants' workplace, and a promulgator and enforcer of health regulations. In the case of any particular claim against Keene, however, the government may have played only one of these roles. Similarly, Keene alleges only that "most" of the claimants were "either employees of the defendant working in U.S. naval shipyards or employees working in private shipyards under contract to the U.S. Navy, an agency of the United States." According to Keene, the claimants "typically" assert that they worked with or around thermal insulation products bearing asbestos and that in the course of their work, they were exposed to and inhaled air-borne asbestos fibers, causing asbestosis or other injuries. "Typically," the complaint alleges, the workers were involved in shipyards, some working on shipboard, some on land, while still others were exposed to asbestos in the course of installing insulation in "power plants and other industrial and commercial plants, including refineries." The government sold Keene some of, but apparently not all, the asbestos used in its products, and Keene's asbestos-containing products were sold under contract both to the government and to others. On the basis of these allegations, Keene asserts against the United States twenty-three causes of action, sounding in negligence, breach of warranty, strict liability, and unjust enrichment.

Keene has denied the allegations of all 14,000 complaints and has not yet been subjected to a final judgment of liability. It has, however, settled some of the claims and incurred expenses in the defense of others. Relying upon the doctrines of indemnification, contribution and apportionment, Keene argues that the government is liable for any and all damages it may sustain as a result of the lawsuits against it.

The unusual nature of the complaint and the legal problems it raises stem from the sheer volume and diversity of claims brought against Keene. Keene's counsel asserts, and we have no reason to doubt it, that Keene simply cannot afford to hire local counsel and defend each case in the many state and federal judicial districts in which actions have been brought against it. Presumably, it also cannot afford the discovery necessary to analyze and categorize each action so that some semblance of order can be brought to its complaint or even to implead the government as a third party defendant in actions pending in federal district courts.

As the complaint before us stands, potentially dozens of materially different factual combinations are within its allegations. Looking at the more specific allegations, the government may have played at least six different roles involving at least three different categories of claimant/employees, who came into contact with Keene asbestos products in at least three different work settings. Some of Keene's products were sold to the government, some to others. Some were manufactured with asbestos purchased from the government, some with asbestos purchased elsewhere. The complaint is not limited even to these variables, however, since the words "most" and "typically" strongly imply the existence of actions with other factual patterns. Twenty-three separate causes of action against the government are alleged.

The complaint thus literally alleges dozens of factual combinations, e.g., (1) The government purchased insulation from Keene containing asbestos procured from a private producer; the insulation was used in a private shipyard under contract to the government where employees of the shipyard were in contact with it on land; (2) A refinery purchased insulation from Keene containing asbestos procured from a private producer; employees of the refinery came into contact with it in circumstances covered by government health regulations; (3) A refinery purchased insulation from Keene containing asbestos purchased from the government; employees of the refinery came into contact with it; (4) A factory purchased insulation from Keene containing asbestos procured from a private producer; the product used asbestos pursuant to government specifications and employees of the factory came into contact with it; and so on. Each combination of facts, moreover, may raise a different legal issue so far as to the government's liability to Keene or our jurisdiction is concerned.

Were this an action against a private party, the sufficiency of the notice given by the complaint would obviously be a serious issue. Since the United States is the defendant, however, and actions against it are permissible only where sovereign immunity has been waived, we must first address the government's challenge to our jurisdiction. We agree with Judge Goettel, whose efforts in reducing this suit to order we much appreciate, that "Keene has attempted to do too much at one time, with too little jurisdiction," Keene Corp. v. United States, No. 80 Civ. 401, mem. op. at 22 (S.D.N.Y. Sept. 30, 1981). We affirm his dismissal of the complaint for substantially the reasons stated in his opinion.


The Federal Tort Claims Act, 28 U.S.C. §§ 1346(b) and 2671-2680, requires that a claimant against the federal government file an administrative claim with the appropriate agency prior to institution of suit. Thus, 28 U.S.C. § 2675(a) provides in pertinent part:

An action shall not be instituted upon a claim against the United States for money damages for injury or loss of property or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, unless the claimant shall have first presented the claim to the appropriate Federal agency and his claim shall have been finally denied by the agency in writing and sent by certified or registered mail . . . . The provisions of this subsection shall not apply to such claims as may be asserted under the Federal Rules of Civil Procedure by third party complaint, cross-claim, or counterclaim.

Keene contends that it has met the administrative filing requirements or, alternatively, that no administrative filing was necessary because its suit is "in the nature of a third party action."

In September 1978, Keene filed a Notice of Claim with eight federal agencies;*fn4 four months later, in January 1979, it filed an Amended Notice of Claim.*fn5 The Amended Notice contained a list of lead plaintiffs and docket numbers for roughly a thousand lawsuits.*fn6 It described the claims against Keene as contending generally that the company had sold products containing asbestos fiber without adequate warning of the dangers posed by asbestos and stated that "many if not all of the Asbestos Claims against Keene arise out of the primary fault of United States of America." The Amended Notice stated five separate claims based on (1) the government's role as supplier of asbestos; (2) its role as employer of shipyard workers who were exposed to asbestos fibers on the job; (3) the government's failure to take precautions or warn workers regarding the dangers of asbestos after it required the use of asbestos in insulating products it purchased; (4) the failure of the government to make safety inspections of facilities using asbestos; and (5) "any other theory that will support a claim against the United States of America for Damages."

Keene did not link any of the one thousand appended claims with one or another of these grounds of liability. It simply asserted that

to the extent that Keene settles or has settled any such claim and to the extent that Keene has been or is held liable in any court or administrative tribunal or has incurred costs and expenses, including attorneys' fees, costs of insurance and the cost of executive time with respect to or in connection with such Asbestos Claims, then the United States of America is liable to Keene for indemnity, contribution or both. "Damages" as used herein includes all such settlements, judgments, indemnity, contribution, costs, expenses, insurance premiums, attorneys' fees, the cost of executive time, and such other and further relief as is just and proper.

The Amended Notice then stated,

The present amount of such Damages applicable to each of the claims set forth below is the sum of $1,088,135. This sum certain does not include other Damages of which Keene is not presently aware.

Later, the Amended Notice again asserted

that the United States of America is indebted to Keene for Damages in the sum of $1,088,135 and in an additional amount yet to be ascertained.

The requirement that a notice of claim be filed is jurisdictional and cannot be waived. House v. Mine Safety Appliances Co., 573 F.2d 609, 617 (9th Cir.), cert. denied, 439 U.S. 862, 99 S. Ct. 182, 58 L. Ed. 2d 171 (1978). Moreover, because the FTCA constitutes a waiver of sovereign immunity, the procedures set forth in Section 2675 must be adhered to strictly. Three-M Enterprises, Inc. v. United States, 548 F.2d 293, 295 (10th Cir. 1977); Brown v. General Services Administration, 507 F.2d 1300, 1307 (2d Cir. 1974), aff'd, 425 U.S. 820, 48 L. Ed. 2d 402, 96 S. Ct. 1961 (1976).

Since Keene has filed no Notice of Claim regarding the vast majority of the suits against it,*fn7 it is clear that no jurisdiction exists under the FTCA as to these claims. As to the remaining claims, the government also contends that the Amended Notice is defective because it failed to state a sum certain, 28 C.F.R. § 14.2 (1980), and because it does not provide sufficient information to permit an investigation, see 28 C.F.R. § 14.4 (1980), as required by regulations promulgated pursuant to 28 U.S.C. § 2672.*fn8

While there is a conflict among the courts concerning whether the administrative filing requirements of Section 2675 -- which are jurisdictional in nature -- should be read in the light of regulations issued under 28 U.S.C. § 2672,*fn9 courts seem agreed that the statement of damages in any Notice of Claim must contain a sum certain. See, e.g., Adams v. United States, supra note 9, 615 F.2d at 291 n.15 (Section 2672 regulations do not apply to Section 2675 but the claimant still must state a sum certain). Section 2675 is designed, in conjunction with Section 2672, to provide a procedure under which the government may investigate, evaluate and consider settlement of a claim. This purpose requires that the Notice of Claim provide sufficient information both to permit an investigation and to estimate the claim's worth. It seems clear to us that a claim which includes "an additional amount yet to be determined," which may dwarf the sum stated, is a request for damages so indefinite as to fail to satisfy the statutory purpose. Faced with a reservation as to future damages which may entail huge sums, government officials cannot possibly evaluate the claim with a view to settlement.

Keene suggests that the Court may strike as surplusage the reservation as to future claims, Erxleben v. United States, 668 F.2d 268 (7th Cir. 1981); Fallon v. United States, 405 F. Supp. 1320, 1322 (D. Mont. 1976). However, Keene failed to satisfy statutory purpose even as to its $1,088,135 claim because it did not specify the amount of indemnity or contribution it demanded for each underlying lawsuit. Where separate claims are aggregated under the FTCA, the claimant must present the government with a definite damage amount for each claim. Kantor v. Kahn, supra note 9, 463 F. Supp. at 1164. Only with a breakdown on a claim by claim basis can the government evaluate the underlying merits of the claims against it in order to decide whether to settle or to litigate.

Keene's Amended Notice is insufficient on yet a second ground. The generality of the statement claiming liability on the part of the government failed to provide sufficient information regarding the nature and merits of Keene's claim so far as liability is concerned. The burden is on the claimant to provide this information, Kantor, supra, and that burden is not met simply either because the government is generally familiar with asbestos litigation or because the case names and docket numbers are appended to the Notice. Keene's Notice does no more than create an opportunity for the government to sift through the record of each of the lawsuits named. That is not sufficient notice to enable the government to evaluate its exposure so far as liability is concerned.

The problem of the sufficiency of notice in this case is more than a question of technical niceties. Keene's laundry list of potential variables makes it impossible for the government -- or a court -- to evaluate Keene's action against the government. Dozens of different combinations of material facts are possible under the complaint, and the exposure of the government on liability may vary enormously between them, yet, short of a detailed examination of each action against Keene, the government cannot evaluate that exposure. Keene's failure even to organize the individual suits by general category simply makes it impossible for the government to respond to Keene's suit. We are aware that the cost of ordering the thousands of actions brought against Keene may be staggering. The FTCA, however, does not authorize us to balance relative means or relative hardships but places the burden on the claimant to provide sufficient details of the claim made against the government.

Keene contends that it is excused from the filing requirement because its suit is in the nature of a third party complaint, 28 U.S.C. § 2675. However, under Fed. R. Civ. P. 14, a third party action is one in which a defendant asserts a claim against a non-party to the original action for all or part of the plaintiff's claim against him. Since Keene is the original complainant in this suit, its action is not within Rule 14. See generally, 6 C. Wright & A. Miller, Federal Practice and Procedure §§ 1441, 1453-55 (1971). We perceive no reason to read the FTCA's reference to third party actions as including more than is encompassed by Rule 14.*fn10


The Suits in Admiralty Act ("SIAA"), 46 U.S.C. §§ 741-752, and the Public Vessels Act ("PVA"), 46 U.S.C. §§ 781-790, waive sovereign immunity in the area of maritime torts. Under the SIAA the United States waives sovereign immunity with respect to cases in which "if such vessel were privately owned or operated, or if such cargo were privately owned or possessed, or if a private person or property were involved, a proceeding in admiralty could be maintained." 46 U.S.C. § 742. The PVA waives sovereign immunity with respect to "damages caused by a public vessel of the United States." 46 U.S.C. § 781. Keene argues that even if we lack jurisdiction over its claim under the FTCA,*fn11 federal jurisdiction exists in admiralty.

Admiralty jurisdiction in tort exists when the wrong (1) took place on navigable waters ("situs") and (2) "bear[s] a significant relationship to traditional maritime activity" ("status"). Executive Jet Aviation, Inc. v. City of Cleveland, 409 U.S. 249, 254-61, 34 L. Ed. 2d 454, 93 S. Ct. 493 (1972); Foremost Insurance Co. v. Richardson, 457 U.S. 668, 102 S. Ct. 2654, 73 L. Ed. 2d 300, 50 U.S.L.W. 4778, 4780 (1982) (approving application of Executive Jet test outside the context of aviation torts); see also Kayfetz v. Walker, 404 F. Supp. 75, 76 (D. Conn. 1975) (Lumbard, Circuit Judge).*fn12

The Amended Complaint states that "most of the claimants [against Keene] were involved in installing high temperature thermal insulation around pipes and boilers on naval ships, on vessels in navigable waters, and in power plants and other industrial and commercial plants, including refineries." Admiralty jurisdiction clearly does not extend to those workers who were exposed to asbestos in power plants, refineries, and other land-based commercial facilities, and even if the other workers were exposed to asbestos in a maritime situs, see White II, supra note 12, 662 F.2d at 242 (Widener, J., concurring), it is impossible to determine which of the underlying actions would be properly heard in admiralty, and which not, without a case by case evaluation. Where a group is composed of workers with and without maritime status, admiralty jurisdiction does not exist as to the group. Brown v. United States, No. H-76-434, slip op. at 21-22 (D. Conn. July 23, 1979). Keene now offers to make such an individualized showing in an evidentiary hearing before the district court. Since Keene refused several previous opportunities to individualize the claims against it, we believe this offer comes too late. Moreover, Keene has not met the second prong of the Executive Jet test, the status requirement, and a hearing on individualized situs would be futile.

Keene argues that the fact that its products were ultimately installed and used on shipboard is, by itself, sufficient to meet the status test of Executive Jet. However, Keene's argument makes the geographic location of a tort decisive as a matter of law and thus effectively collapses the situs and status test, a result Executive Jet expressly seeks to avoid.

In Kelly v. United States, 531 F.2d 1144, 1146 (2d Cir. 1976), we stated that the status test is satisfied when the " acts and omissions . . . . sufficiently relate to traditional maritime activity," whether land-based or not. Under the Kelly decision, two elements are critical in this case. First, Keene does not allege that its insulation was designed specifically for maritime use. Indeed, it appears from the complaint that it was used in a variety of land-based plants and refineries. Second, many of the roles attributed to the government and allegedly giving rise to Keene's causes of action -- the government's sale of asbestos to Keene, its specification of asbestos as a component of insulation it purchased from Keene, its alleged breach of its duty to inspect the work place, its obligations as a promulgator of health regulations -- do not bear a significant relationship to traditional maritime activities such as "navigation and commerce." See Kayfetz v. Walker, 404 F. Supp. at 76. These roles seem even less intimately connected with such activities than contracts for shipbuilding, contracts to supply materials for ship construction and warranties arising under such contracts, which are non-maritime, see, e.g., North Pacific Steamship Co. v. Hall Brothers Marine Railway and Shipbuilding Co., 249 U.S. 119, 126-27, 63 L. Ed. 510, 39 S. Ct. 221 (1919); White v. Johns-Manville Corp., 662 F.2d 243, 247 (4th Cir. 1981) ("White I"); G. Gilmore and C. Black, The Law of Admiralty 26 (2d ed. 1975), and contracts for services to a vessel laid up and out of navigation, also non-maritime status. G. Gilmore and C. Black, The Law of Admiralty at 26. Indeed, a tort arising out of work on an uncompleted vessel has been held to fall outside admiralty jurisdiction. Hollister v. Luke Construction Co., 517 F.2d 920, 921 (5th Cir. 1975) (per curiam). General allegations that the contacts with asbestos took place in shipyards or even aboard launched vessels are thus insufficient to establish admiralty jurisdiction. These defects in the complaint are fatal as well to Keene's argument that its contractual breach of warranty and indemnity claims sound in admiralty. The government's sale of asbestos to Keene is a contract lacking in maritime flavor, as is, absent further specification, Keene's provision of insulation to the government.

Viewed as a whole, therefore, Keene's claims fail to implicate traditional concepts of maritime law such as seaworthiness, cargo damage, salvage, or the like. We expressly decline to follow the reasoning of the Fourth Circuit in White II, 662 F.2d at 239-240 (holding that the personal injury claims of shipyard workers engaged in installation of asbestos insulation are cognizable in admiralty), White I, 662 F.2d at 249 (holding the manufacturers' third party complaint against the workers' employer also fell within admiralty jurisdiction), and Glover v. Johns-Manville Corp., 662 F.2d 225, 232 (4th Cir. 1981) (insofar as it held that admiralty jurisdiction might exist over manufacturers' indemnity claims against the government under the SIAA or PVA) and, as well, the reasoning of the Fifth Circuit in Sperry Rand Corp. v. Radio Corporation of America, 618 F.2d 319 (5th Cir. 1980) (holding that an action for indemnity or contribution could be brought in admiralty against a manufacturer whose products were implicated in a grounding of a vessel and a collision upon navigable waters even though the articles in question were not designed specifically for marine use).*fn13


Our rejection of Keene's claims in no sense reflects either a lack of sympathy for its predicament or a belief that Keene's counsel might have somehow remedied the fatal defects in its complaint. The very volume and diversity of claims which have placed Keene in its unfortunate position also preclude the wholesale adjudication of its essentially individual, retail claims against the government. Upholding Keene's complaint might well "put the government's feet to the fire" in order to provoke a legislative solution to the burgeoning asbestos litigation, but it would also do violence to established processes of the judicial system and well established principles relating to the FTCA and admiralty jurisdiction.




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