Hercules, Inc. v. United States

Summary

The Court, in an opinion by Chief Justice Rehnquist joined by Justices Scalia, Kennedy, Souter, Thomas, and Ginsburg, affirmed the Federal Circuit on different grounds. The manufacturers could not recover their Agent Orange litigation expenses and settlement payments through an implied warranty of Government specifications or implied contractual indemnification. The specifications warranty protects contractual performance, not postperformance third-party liability, and the alleged contracting circumstances did not establish an implied-in-fact indemnity agreement. Section 707 of the Defense Production Act provides immunity rather than indemnification. Justice Breyer, joined by Justice O'Connor, dissented, arguing that the Federal Circuit's causation analysis improperly relied on hindsight and that further proceedings were necessary to determine whether the parties implicitly allocated the relevant risks to the Government. Justice Stevens did not participate.