The Supreme Court’s deliberations in Hencely v. Fluor Corp. may have profound effects on derivative sovereign immunity claims for government contractors and could especially reshape risk exposure for contractors operating in combat zones and other high-risk environments. In that case, Winston Hencely, a U.S. soldier, claimed that Fluor Corporation’s subcontractor negligently supervised the subcontractor’s Afghan local national employee who detonated a suicide bomb at Bagram Airfield in 2016, killing six and injuring Hencely. On appeal, the Fourth Circuit held that the federal government “occupies the field” in warfare and therefore preempts state tort claims.   

The Supreme Court is examining whether the Federal Tort Claims Act’s (FTCA) combatant activities or “uniquely federal interest” exceptions may extend to private contractors or provide a basis for total preemption in overseas armed conflict. As the Court considers the scope of immunity under its precedent in Boyle v. United Technologies and the FTCA, U.S. government contractors could face increased exposure to state tort liability (and potentially foreign law) that has historically been preempted by federal law. Understanding these doctrines is critical for contractors assessing their risk profile and contract pricing when operating in risky environments. 

The Supreme Court heard oral argument on November 3, 2025, and the transcript can be found here. A summary of the key takeaways is as follows:

  • Oral arguments revealed skepticism about the balance between protecting military effectiveness and ensuring accountability for contractor misconduct:  
  • Justice Kavanagh seemed to view overseas armed conflict as the exclusive dominion of federal law (Hencely Arguments, p. 58-59, 61).  
  • Justice Kagan and Justice Sotomayor, however, questioned whether accountability for a breach of contract or violation of military directives could truly encroach on federal interests (Hencely Arguments, p. 12, 55, 58, 88). 
  • Multiple justices expressed concerns about whether 50 states could regulate operations on military bases or in overseas combat zones (Hencely Arguments, p. 7, 10).
  • Should the Supreme Court narrow immunity protections, the implications will extend far beyond individual lawsuits. Contractors will need to reassess their risk management frameworks. Justice Gorsuch articulated this tension, asking: “How important is it for the military to have contractors not fearful of liability versus how important is it for the military to have contractors who don’t injure military members?” (Hencley Arguments, p. 50).  

Key Takeaways Based on the Oral Argument: 

  • The Boyle Test Under Scrutiny: The Court may narrow or clarify when compliance with government “specifications” provides immunity from state tort claims.  
  • Rising Compliance and Operational Costs: If the Court narrows contractor immunity, contractors will need to invest in more robust vetting, supervision, and threat assessment procedures to meet state tort standards. More generally, contractors will need to carefully discern how the mosaic of military directives in a combat zone could affect their exposure to legal action in the U.S. 
  • Elevating the Stakes for Contract Negotiations: Contractors may need to negotiate more explicit allocations of responsibility for functions that state law affects, along with robust indemnification clauses, to mitigate exposure in combat zones.  
  • Market Impacts: Increased litigation risk and associated costs may force smaller contractors out of combat zones entirely, potentially reducing competition and straining the government’s ability to maintain its contractor workforce in critical areas. 

Drawing on extensive experience supporting contractors operating in combat zones and austere environments, Fluet’s Government Contracts, Litigation + Investigations, and International Trade Practices are closely monitoring this related cases and are ready to assist clients in navigating these complex issues.