On behalf of the Professional Services Council (PSC), this past week Covington filed an amicus brief in the U.S. Supreme Court in support of the petitioner in The GEO Group, Inc. v. Menocal (No. 24-758). The brief urges the Court to grant certiorari and, ultimately, to hold that government contractors are entitled to immediately appeal a district court’s denial of derivative sovereign immunity under the collateral order doctrine.
Nearly a century ago, the Supreme Court in Yearsley v. W.A. Ross Construction Co., 309 U.S. 18 (1940), recognized that contractors are entitled to derivative sovereign immunity for actions taken pursuant to federal directives. Under Yearsley, contractors are immune from suit when: (1) the contractor performs acts pursuant to a valid authorization of Congress, and (2) the contractor does not exceed the scope of that authority.
In recent years, appellate courts have embraced an expansive view of Yearsley immunity and reaffirmed the breadth of that immunity. However, when a district court denies a contractor’s claim of immunity, the appellate courts are split as to whether such denial can be immediately appealed under the collateral order doctrine. Following the Tenth Circuit’s decision in Menocal, the circuits are now split 5-3, with the majority rejecting the right to an immediate appeal. The practical import of that rejection is that contractors who may be immune from suit are forced to fully litigate a case, through discovery and trial, prior to gaining the right to appellate review.
As explained in the amicus brief, the rule adopted by the Tenth Circuit harms federal contractors and the government. By delaying resolution of a threshold immunity defense, the holding dramatically increases contractor litigation costs, which may reduce the number of contractors willing to participate in the procurement process, resulting in less competition and higher costs. Given the government’s reliance on contractors to support a variety of vital government functions, the ruling creates unwarranted uncertainties and risks that will damage the government’s ability to efficiently and effectively serve the public.
The Supreme Court is likely to consider the Menocal petition in April. If the Court were to grant review, resolution of the circuit split would have profound implications for the contracting community.