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Contractors In War Zone Face Legal Front Print
By Jonathan Karp - Wall Street Journal - March 8, 2007

Private Firms Like Blackwater Could be Held Liable for Casualties During Military Tasks

The surge in private contractors serving alongside U.S. troops in war zones could potentially leave those companies exposed on a dangerous legal front:
liability claims.

A 1950 Supreme Court ruling bars American soldiers and their relatives from suing the government over injuries or death resulting from military service. Separate rulings largely protect defense companies against lawsuits seeking damages because of defective weapons.
But as the nation's military increasingly outsources front-line tasks like security and transportation, the extent of a contractor's liability when things go wrong is emerging as a serious issue. The quandary comes amid a broader policy debate over how to define the role of private contractors in a war effort and a push in Congress to tighten laws that govern the conduct of such contractors.

One case that could have repercussions for the military-support industry and the Pentagon involves affiliates of Blackwater USA, a closely held company that does everything from guard U.S. officials in Iraq to provide global security-consulting services. Relatives of three U.S. soldiers killed in a November 2004 airplane crash in Afghanistan have sued units owned by Blackwater's parent company, Prince Group LLC, for alleged negligence while operating a transport flight for the Pentagon.

The twin-engine propeller plane, flown by one of those units, Presidential Airways Inc., under the call sign "Blackwater 61," was ferrying the three soldiers and 400 pounds of mortar rounds on a routine flight between military bases when it failed to climb out of a canyon in the Hindu Kush mountains.

The plaintiffs, led by a serving Army colonel whose husband died in the plane crash, argue that for-profit contractors should be liable under civil tort law. Blackwater's lawyers contend that contractors should receive sovereign immunity from prosecution because they operate under military chain of command in battle zones. Last September, a federal judge in Florida refused to dismiss the case. Final briefs are due next week in an appellate court that will decide whether the suit can go to trial.

"If this case is allowed to proceed, then defense contractors definitely would face a very different environment," says Michael Socarras of McDermott, Will & Emery LLC and lead trial lawyer for the Blackwater affiliates. "Here is what is so alarming about the case: Never before has tort liability been applied to operations on the battlefield."

Never before, however, have private contractors been so ubiquitous on the battlefield, and Blackwater has come to epitomize the trend.

Blackwater, which was founded in 1997 by former Navy SEALs to train elite U.S. forces, has its own fleet of helicopters and planes, a database of thousands of former servicemen it can call on for missions and some 1,200 employees currently deployed overseas, mostly in Iraq, a company spokeswoman says. At least 23 Blackwater employees have died there.

A separate lawsuit is pending against Blackwater in state court in North Carolina over the deaths of four of its security guards who were ambushed in Fallujah, Iraq, in March 2004. The suit alleges wrongful death and "fraudulent misrepresentation in contract."

"Other than that they deny the allegations, Blackwater and Presidential Airways do not comment on pending litigation, as a matter of company policy and due process," says Mr. Socarras, the trial lawyer.

Congress has stepped up efforts to regulate the work of the estimated 100,000 contractors employed by the U.S. government or Western companies in Iraq. Lawmakers have imposed the Uniform Code of Military Justice on civilian workers, extending the threat of court martial for criminal misconduct. A new House bill aims to clarify rules for arms-bearing contractors and make individuals more legally accountable for their conduct.

But when it comes to corporate liability, the law hasn't caught up with the Pentagon's reliance on contractors to augment its war efforts. The so-called Blackwater 61 case probes those gaps, and the outcome could hinge on whether the company's aviation affiliates are deemed to be government employees, as opposed to commercial entities under contract to the Pentagon.

Had the military been flying the transport plane, the plaintiffs wouldn't have grounds to sue, because of the government's immunity from service-related liability claims. The government also has immunity under a federal tort-law exception for claims arising specifically from "combatant activities.."

U.S. District Judge John Antoon ruled that Blackwater's aviation affiliates weren't entitled to either protection. While contractors have received immunity under the "combatant activities" exemption, that immunity has been limited to product-liability claims, rather than allegations of "negligence by contractors in the provision of services," he wrote.

Judge Antoon also rejected Blackwater's argument that the matter was beyond the judiciary's authority because it involved second-guessing policy choices, such as military operations and decision making. The allegations, he wrote, didn't implicate military tactics.

By contrast, federal judges in Texas and Georgia have dismissed four tort lawsuits against Halliburton Co. stemming from ambushes of truck convoys in Iraq because the courts ruled that the Army had been responsible for planning and security.

In the Blackwater 61 case, no hostilities occurred during the flight from a military base near Kabul to one near Farah in western Afghanistan. According to a transcript of the cockpit voice recorder, the two pilots weren't sure if they were flying in the right valley, but otherwise they were upbeat.

"This is fun," the co-pilot said at one point. He joked that he shouldn't be enjoying the mission "'cause we're getting paid too much to be havin' fun,"
the transcript shows. Minutes later, the pilots struggled in vain to climb out of the valley; the plane stalled and crashed.

Corporate defense lawyers say that contractors shouldn't be punished for errors during combat-support operations. "If the government can't be sued when troops make a wrong turn, why should a contractor be sued when it makes the same or similar decision?" says David Hammond, a lawyer with Crowell & Moring LLP.

In their appeal, the Blackwater affiliates argue that war-casualty liability would undermine military discipline because contractors might not carry out missions for fear of being sued, and raise prices for "war work."

Blackwater is forging ahead with business, and seeking liability protection for undisclosed services under a law intended to encourage private companies to develop counterterrorism systems. Presidential Airways continues work for the Pentagon, which last month awarded it a $14.4 million contract for transport flights in Afghanistan.
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