Government contractors, while performing work under their federal contracts, may enjoy a form of “derivative sovereign immunity” from private litigation provided certain prerequisites are met. However, as explained in a recent Supreme Court case, no immunity may be had from suits by allegedly injured third parties when “a contractor violates both federal law and the Government’s explicit instructions.”
In Campbell-Ewald Co. v. Gomez, No. 14–857 (Jan. 20, 2016), the U.S. Navy contracted with Campbell-Ewald Company (Campbell) to develop a multimedia recruiting campaign. The recruiting campaign included the sending of text messages to young adults, but only if those individuals had “opted in.” Campbell’s subcontractor compiled a list of over 100,000 potential 18- to 24-year-old recipients and then the subcontractor transmitted the Navy’s message to all of the recipients. Many of the individuals on the list, however, had not opted in and were outside of the intended target audience. One recipient, Jose Gomez, who alleges that he did not consent to receive text messages and, at age 40, was not in the Navy’s targeted age group. filed a nationwide class action, alleging that Campbell violated the Telephone Consumer Protection Act (TCPA) because it was vicariously liable for the actions of its subcontractor.
The majority opinion explained that “‘[G]overnment contractors obtain certain immunity in connection with work which they do pursuant to their contractual undertakings with the United States.’ That immunity, however, unlike the sovereign’s, is not absolute. . . . When a contractor violates both federal law and the Government’s explicit instructions, as here alleged, no ‘derivative immunity’ shields the contractor from suit by persons adversely affected by the violation.” Slip Op. at 12 (citations omitted). Hence, because Campbell deviated from the Navy’s explicit directions on “opt in” and target age group requirements and also violated the TCPA, Campbell could not invoke sovereign immunity as a defense to the class action litigation.