Anyone familiar with the original Star Wars movies might wonder why the Empire saw the destruction of the Death Star at the conclusion of “A New Hope,” with its massive cost and fatally-flawed construction, and thought, “Hey, let’s build a second one at twice the price?” Given that the Death Star cost the equivalent of $825 quadrillion (according to Forbes), building a second one would seem fiscally irresponsible — if not wholly insane — from a certain point of view. However, revelations in the last two Star Wars films, “Rogue One” (2016) and “The Last Jedi” (2017), cast significant doubt on this long-accepted punchline. Based on some factual revelations from these movies, it’s entirely possible, even likely, that the Empire received a second Death Star free of charge — assuming the Dark Side’s lawyers had an appreciation for construction law contract principles as applied more recently in a galaxy not so far away.
To understand how the liability could have been shifted, we need to take an, ahem, empirical, look at how Imperial construction projects work in the Star Wars galaxy, the Death Star design and construction process, and the common law and statutory principles at play here.
[SPOILERS ABOUND BELOW – DON’T SAY WE DIDN’T WARN YOU]
A. The Death Star May Have Been a Public-Private Partnership.
While it is common in the real world for public projects, including military construction projects, to be completed wholly or in part by private companies, the Star Wars galaxy has always been vague on this issue until recently.
For background, in this galaxy, the current go-to for public works is the use of a public-private partnership (known as “PPP” or “P3”). This construction project delivery method cleverly utilizes a long-term partnership between the governmental owner and a private developer for the design, build, financing, operation, and maintenance of a substantial public improvement work. Typically, a P3 project is built on public land and involves the construction and operation of public infrastructure with a projected revenue stream that is used to help secure and repay the project costs over time. (We assume that the Star Wars galaxy has an Outer Space Treaty similar to ours, providing that space and celestial bodies cannot be claimed by nations, and are thus public spaces). Although P3 projects often involve financing by the private developer (often called “concessionaire”), the final project usually remains under public ownership. While P3 projects are most commonly associated with infrastructure projects like roads, bridges, tunnels, railways, hospitals, schools, and the like, there have also been military applications — particularly in military housing, transportation, and (in certain instances) tactical vehicles, aircraft, and weaponry.
Plot points in “The Last Jedi” lend further credibility to the conclusion that Luke Skywalker’s galaxy operates just like this, at least with respect to how the galactic government completes public works and military projects.
“The Last Jedi” established how the First Order (as successor-in-interest to the Empire) acquired its ultimate weapons. During the search for a master codebreaker, Resistance fighters Finn and Rose come across the morally ambiguous “DJ”, played wonderfully by Benicio del Toro. In just a few scenes, he reveals that a complex system of private contractors selling raw materials as well as “fully armed and operational” military technology supports the First Order’s military and governmental power. Not only that, but these private individuals and companies are paid for completing these contracts. This is made even clearer when DJ, who betrays Rose and Finn later in the movie, provides some additional software coding to the First Order so that they may detect the Resistance ships through hyperspace in exchange for credits and a new transport ship.
While these are relatively minor plot points, they have immense implications in the structure of the public-private contracts in the Star Wars galaxy. Since the Death Star is effectively a weapons system, a ship, and a moon-sized barracks built in a public space, it has sufficient public-private aspects that it may have been developed as a P3. That said, even if the Death Star was not an explicit public-private partnership, the existence of private military contracting opens up an entire new world (galaxy?) when it comes to contractual responsibility for defects in the final product.
“Rogue One,” the stand-alone anthology film about the Rebellion’s successful theft of the complete plans for the first Death Star, provides some critical revelations about the weapon system’s design and construction. In the opening scene, we learn that Galen Erso had originally been a voluntary private contractor for the Empire to develop the Death Star, though he is ultimately kidnapped and compelled to return and complete the project. Setting aside the coercive nature of the subsequent contract negotiations, the material fact is that Galen Erso was contracted as a private citizen to complete the project, not as an employee of the government.
To understand how this relates to the second Death Star, we have to look at the contractual terms of the first Death Star project.
B. Be Careful Not to Choke on Your Assignment of Risk in Design and Construction of the Death Star.
In typical construction projects, the prime contract documents assign the scope of risk to one or more of three groups of parties: the owner/developer (the Empire), the design professionals (Galen Erso and his team), and the general contractor and its subcontractors. There are usually a wide array of modifications, exclusions, and indemnity provisions that further complicate the obligations of the parties. And when projects become as large and complex as the Death Star, these contracts become similarly large and complex. But rather than try to drill down to all the complexities, we will focus on three key issues that are most relevant: inspections, defect discovery, and warranties.
All construction projects involve both internal and external inspections. External inspections are generally statutory/regulatory in nature, and intended to ensure compliance with building codes and the approved plans. Internal inspections are generally contractual obligations assumed by one or more of the parties based on the contract provisions. Typically, the general contractor is obligated to inspect its work as well as the work of its subcontractors to ensure it meets the construction specifications and comports with the construction drawings. Well-drafted prime contracts require the general contractor to notify the owner of errors, omissions, or other conflicts within the various contract documents. In practice, this encompasses the design documents, specifications, and construction drawings. These duties are limited to such errors and omissions that the general contractor discovers, or should have reasonably discovered, during the construction process. Finally, once work is completed, the general contractor’s work is subject to some form of contractually defined warranty against defective worksmanship, which includes compliance with the other contractual obligations, including inspections and discovery of defects. The warranty period is contract-specific, though generally lasts at least one year.
(Obviously, the assignment of much of the risk discussed above plays out in additional insurance policies and indemnity agreements that may or may not be project-specific or based on contractor or owner controlled insurance programs. However, that analysis would require more knowledge about insurance laws in the Star Wars galaxy, something Rian Johnson did not get around to in Episode VIII. Perhaps the Solo film will get into insurance rules when Han drops his shipment at the first sight of an Imperial cruiser, but until then, we will table that issue.)
The big reveal of “Rogue One,” however, was that Galen Erso intentionally designed the Death Star with a fatal structural flaw and made significant efforts to ensure the Rebellion knew about it. Galen Erso was successful in hiding the design flaw and as seen spectacularly at the end of “A New Hope,” neither the general contractor that won the contract for the Death Star project, nor any of the relevant subcontractors, noticed the flaw during construction. And here is where the great disturbance in the work force from “The Last Jedi” changes how the Empire paid for the second Death Star.
C. I Find Your Lack of Liability Exclusions Disturbing.
Construction contracts always contain liability exceptions for things like acts of war (or terrorism, depending on what the legal status of the Rebellion would be). To many project owners, exclusions may be viewed as the path to the Dark Side.
For military contracts, there are certain limitations on liability of private contractors for design and manufacture of military equipment since such equipment is generally subjected to extreme conditions, like say, IEDs, X-wing wingtip lasers and proton torpedoes. See Boyle v. United Technologies Corporation, 487 U.S. 500, 512 (1988); Snell v. Bell Helicopter Textron, Inc., 107 F.3d 744, 747 (9th Cir. 1997). Similarly, the Homeland Security Act of 2002 created a comparable type of exemption for alleged defects in approved anti-terrorism technologies under the SAFETY Act. See 6 U.S.C. § 442(d). The general underlying principle is that private contractors cannot be held liable for alleged design or construction defects so long as the designs specifications were reasonably precise, the equipment conformed to the design, and the usage dangers associated with the design are disclosed to the government.
Perhaps, in this galaxy, that would be the end of the potential liability. However, there are two unique aspects to the Death Star that change this analysis. First, as Admiral Motti (look him up) pointed out right before getting choked out by Darth Vader, the Death Star is the “ultimate power in the universe.” From this, we can reasonably infer the Death Star had specific design specifications to withstand direct attack by known weapons of the Rebel Alliance once construction was complete (yes, the second Death Star needed a shield generated from the forest moon of Endor, but that space station was not completed, only fully armed and operational). Second, we know that the design defect was placed intentionally and supposedly was “so small and powerful, [the Empire] will never find it.”
Based on these facts, we safely can assume that: (1) the Empire’s specifications would not have agreed to any act of war or terrorism exception post-completion; and (2) the Death Star’s design defect was not part of the Empire’s specifications. Additionally, the warranty provisions in the prime contract likely would have included some explicit statement that the Death Star was warranted to withstand any and all known military weapons available to the Rebel Alliance upon final completion for a certain period of time (any lawyer worth their imperial credits would draft a separate schedule identifying these weapons). Given that the Death Star lasted less than a year, there is little chance that it survived the warranty period. Also, given that the Death Star was destroyed by two proton torpedoes fired from a single X-wing fighter (the primary fighter jet of the Rebel Alliance), it is likely these weapons would have been included in the warranty schedule. With this in mind, we can reasonably conclude that the Empire was not on the hook for the construction costs of the second Death Star.
D. So Who Shot First (in Terms of Final Liability)?
Ultimate liability for the flawed Death Star will depend on who had the final duty to inspect the work and identify design and construction defects during the project, and whether that party should have reasonably identified the fatal defect. Both sides will have an interesting argument.
On the one hand, there is no question that Galen Erso’s design was defective, and intentionally so. Thus, there seems a clear basis for liability against the design professionals. Additionally, since the defect was so small, it would likely qualify as a latent defect if you had the evidence.
On the other hand, the general contractor almost certainly assumed a duty to inspect and notify the Empire of any design defects it discovered in the shop drawings used for construction. The general contractor would also have a contractual obligation to construct to the Empire’s specifications. Thus, if the defect was something that a reasonably skilled contractor ought to have discovered, the liability shifts to the general contractor. As we know, the design defect is supposedly hidden, which should absolve the general contractor from most liability. However, since Director Krennic killed all the design professionals, and the only other pieces of evidence of the design intent (Galen Erso’s message and the full Death Star schematics) were ironically destroyed by the Death Star during its first firing test on Jedha and subsequent destruction of the Imperial records installation on Scarif, it might be difficult to prove intent, or even the existence of a design defect. Obviously both sides would seek out expert opinions, but faced with the dearth of design evidence, the likely outcome would be liability against the general contractor.
E. Imperial Law Is Not As Forgiving As Darth Vader.
As for the appropriate remedy, given that the Death Star did not conform to the Empire’s specifications and did not survive its warranty period, the general contractor would likely be liable. However, the Empire might have multiple remedies. The most straightforward remedy would be an award of damages. Alternatively, depending on the contractual language, the Empire might be able to get a judgment compelling specific performance, including construction of the second Death Star. (Of course, contractual provisions in the real world cannot compel actual labor as a constitutional prohibition on indentured servitude and contracts provide for an alternative remedy if the general contractor refuses to complete the corrective or warranty work.) That said, the Empire does not appear to have the same constitutional limitations and it is entirely possible that an Imperial court would order the Death Star general contractor to satisfy its contractual obligations. In either case, assuming there were sufficient physical resources, the Empire got its second Death Star for free.
As for the later Starkiller Base developed by the First Order as the sole surviving faction of the Empire, that project would likely have bigger issues dealing with environmental groups after revealing that the First Order literally destroyed stars to fuel that weapon. But whether that project passes muster is a question for another episode.
Michael R. Hogue is a senior associate with Greenberg Traurig’s San Francisco and Las Vegas offices and focuses his practice on construction and real estate law, representing owners and commercial developers in contracting, litigation, and debt restructuring and bankruptcy matters for medium and large-scale projects. He is also an unapologetic devotee to the geek triumvirate: Star Wars, Doctor Who, and Batman. Although only occasionally one with the force, he is definitely a madman with a box. When necessary, he is also a night-stalking, crime-fighting vigilante, and a heavy metal rapping machine.
Katharine is a litigation associate in Greenberg Traurig’s San Francisco office. Her practice focuses on commercial litigation matters, particularly contract, fraud, breach of fiduciary duties, and employee mobility issues. She is an avid fan of Star Wars, Lord of the Rings, Game of Thrones, and a Wrinkle in Time. She spends her free time hoarding books, taking her dog, Abby, to the beach, and working out the rules of True American and Cones of Dunshire. She is still upset about midi-chlorians.