Petition for Writ of Certiorari — White v. M/V Testbank
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Supreme Court, U.S. |
tt. BD |
SA- 1308 MAY 18 1985
, ALEXANDER L. STEVAS
ee
IN THE
Supreme Court of the United States
October Term, 1984
STATE OF LOUISIANA, EX REL.
WILLIAM J. GUSTE, JR., ATTORNEY GENERAL
OF THE STATE OF LOUISIANA, ET AL,
JAMES WHITE d/b/a
BLUE WAVE OYSTER CO., ET AL,
Petitioners,
VS.
M/V TESTBANK, HER ENGINES, TACKLE,
APPAREL, HER OWNERS, ETC., ET AL,
Respondents,
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
WALTER J. LEGER, JR.
MICHAEL J. MESTAYER
Leger & Mestayer
600 Carondelet Street
Ninth Floor
New Orleans, La. 70130
(504) 588-9043
Counsel for Petitioners
QUESTIONS PRESENTED FOR REVIEW
i Does Robins Dry Dock & Repair
Co. vw. Flint, 273 U. S. 303, S86 $. Ct.
134, 72 L. Ed. 290 (1927), make physical
damage to a _ proprietary interest a
requisite to recovery for economic losses
in cases of unintentional maritime tort?
Ze When a negligent collision
between vessels results in the _ loss
overboard of highly toxic chemicals,
viz., pentachlorophenol (PCP) which
contains dioxin, and the loss of such
soluble substance into the waterway
prompts responsible governmental agencies
to close the waterway (to facilitate
cleanup and to mitigate environmental
damages by the avoidance of the effect
shipping activities would have upon the
rate of solution of the highly toxic
substance) and to suspend the
pe ee
extraction of aquatic life forms from
such waters and those downstream waters
which were potentially polluted by the
hazardous chemical (obviously for reasors
of public health and safety), does Robins
Dry Dock, supra, any other decision of
this Court, any statute of the United
States or any principal cf admiralty or
maritime law deny to a person who is
directly damaged by the closure of the
waterway or of the fishing grounds a
right to recover his economic losses
simply because he sustained no concurrent
"physical damage to a proprietary inter-
est" by the tortious conduct which
polluted or caused the closure of the
waters upon which he is economicaliy
dependent for his livelihccd?
ae If Robins Dry Dock, supra, can
reasonably be construed to require
-ii-
“physical damage to a proprietary inter-
est,"' as a line of cases in the Fifth
Circuit has held, should the rationale of
that case be followed, without reconsid-
eration by this Court of the impact of
tort principals which have evolved in
land-based mass disasters or hazardous
conditions negligentiy produced by
similar means on land, when the
non-physical economic damages sustained
by the numerous plaintiffs in this case
are directly attributable to the maritime
tort and the application of the so-called
“Robins Rule" results in grave injustices
which are contrary to the public policy
of having tortfeasors repair the damages
of their negligent acts which proximately
cause injury to the rights, persons or
property of another?
-iii-
4. If the true focus of Robins Dry
Dock is the limitation of liability to
the reasonably foreseeable consequences
of one's negligent acts or omissions,
should the legal concept of "foreseeabil-
ity" be used to avoid liability to
innocent victims of a maritime tort,
whose damages are merely economic and not
physical, when the consequence of pol-
lution or closure of the waterway, with
resulting economic loss by persons not
physically injured in their persons or
property, was the natural and probable
result of a collision with a _ vessel
carrying hazardous cargo of the nature of
that involved in this case?
a. Should a cause of = action,
similar to that for a public nuisance, be
denied to persons having a particular
damage, different in kind from. the
damages sustained by the general public,
under the maritime tort jurisdiction of
the courts of the United States?
INTERESTED PARTIES
The following listed persons were
parties below and have an interest in the
outcome of this case.
(a’ Partenreederei M/S CHARLOTTA
(b) Fortune Sea Transport Corporation,
Panama, S.A.
(c) The London Steam-Ship Owners' Mutual
Insurance Association, Ltd.
(d) The United Kingdom Mutual Steamship
Assurance Azsociation (Bermuda,
Ltd.)
(e) Vulcan Materials “ompany
(f) Nichimin Canada, Inc.
(g) Societe Xylochimie, a/k/a/ A. lL.
Ordre De Zylochimie
(h) The Bank Line, Ltd.
(i) Katy Stevedores, Inc., d/b/a James
J. Flanagan Stevedores
(j) Plaintiffs/Appellants who are
seafood wholesalers and retailers,
marinas, bait and tackle’ shops,
vessel suppliers, and fishing and
navigation service related busi-
nesses, represented by "Plaintiffs'
Committee"
-V-
<<
(k)
(1)
(m)
(n)
(o)
(p)
(q)
(r)
(s)
(t)
(u)
(v)
(w)
(x)
(y)
(z)
(aa)
(bb)
(cc)
(dd)
(ee)
James White, d/b/a Blue Wave Oyster
Co.
Anthony Venturella
Robert Oakman
Frank Slavich
Danny Slavich
Terry Robin
Kenneth Fox
LaFrance Oyster Growers
Macario A. Lauzon
Roy J. Lauzon d/b/a Oyster Pearl Co.
Caboats, Inc.
Carlo Venturella
Bayou Oyster Co., Inc.
R. C. Berthelot and Jerry K.
Berthelot
Gulf Outlet Marina, Inc.
GOM Boat Launch
Gator Snow Balls and Ice House
Chalmette Marina
Touche, Inc.
Gulf Outlet Fuel & Marine, Inc.
William Mark Boegel, d/b/a Murphy's
Seafood
-vi-
TABLE OF CONTENTS
Statement of Issues Presented
Statement of Interested parties
Table of Authorities Cited
Petition
Opinions Below
Grounds on which Jurisdiction
Invoked
Constitutional and Statutory
Provisions Involved
Jurisdiction Below
Reasons for Allowance of the
Writ
1. Either decision below
conflicts with Robins
D Dock & Repair Co.
v. Flint, 275 U.S. 303
(1927), or that decision
in unfair, inconsistent
with current tort concepts
and should be reconsidered
by this Court.
- Decision below conflicts
with this Court's decision
in Aktieselskabet Cuzco v.
The Sucarseco, oD.
» and Union Oil
Co. v. Oppen, 50I, F. 2d
558 (oth ET - 1974), to
vii
19
21
21
Page
the extent it denies
recovery for purely econom-
ic loss in the absence of
physical damage to a pro-
prictary interest. 4)
3. Decision below rejected
nuisance merely to persons
—— by a maritime tort,
which important issue of
federal law has not been,
but should be, decided by
the Court. 50
Conclusion
Proof Of Service. 51
Apendix:
Appendix A - Fifth Circuit en
banc decision below A-1l
Appendix B - Fifth Circuit
Panel Decision below
Appendix C - District Court
decision below
Appendix D - Judgment of Court
below en blanc
TABLE OF AUTHORITIES CITED
Page
Cases:
Aktiese!lskabet Cuzco v. The 36,37
Sucarsecc, 38,40
294 U.S. 394, 55 S.Ct. 467, 41
79 L.Ed. 942 (1935)
Akron Corp. v. M/T CANTIGNY, 30,31
706 F2Zd I51, reh. den. 37,38
711 F. 24 105% (sth Cir. 1983)
Carifornis v. Sierra Club, 43,44
1775, 68 L.Ed.2d 101 (1981)
Cargill, Inc. v. Offshore 30
Logistics, Inc.,
Ere F. 20 212 (5th Cir. 1980)
Dick Meyers Towing Service, Inc. 28,29
v. United States 30,42
, th Cir. 1978)
Federal Commerce & Nav. Co. v. 29
NIAN
528 F.2d 907 (2 Cir. 1975),
cert. den.
G25 U.S. 975, 96 S.Ct. 2176,
48 L.Ed.2d 799 (1976)
Fort Worth & Rio'Grande Ry. 39
Co. v. Hancock,
Tx.Civ.App. 1926)
Hampton v. North Carolina 39 ,40
Pulp Co.,
223 N.C. 535, 27 S.E. 2d 538
(1943)
ix
The Hine v. Trevor,
TE Usds CCS BALL) 555, 19
L.Ed. 451 (1867)
Kaiser Alum. & Chem Corp v.
Marshland Dredging Co.,
435 F. 26 937 (3 Cir. ids2)
Kinsman Transit Co., Petition of,
388 F. 2d 821 (2 Cir. 1968)
Louisville & N.R.R. Co. v.
M/V BAYOU LACOMBE,
5907 F. 2d 469 (5 Cir.1979)
Masonite Corp. v. Steede,
198 Miss. 530, 23 So.2d 756
(1945)
Moragne v. States Marine
Lines, Inc.
96 0.8... 375,96 S.46.. 1772,
26 L.Ed.2d 339 (1970)
Pennsylvania v. Wheeling &
Belmont Bridge Co.,
54°U.S. (13 HOw.) 518, 14
L.Ed. 249 (1852)
Rederi A/B Soya v. Evergreen
Marine Corp.,
1972 A.M.C 1555 (E.D.Va.1971),
adopted per curiam, 1973 A.M.C.
538 (4th Cir. 1972)
Page
46
30
29
28,30
31
39,40
47
44,48
29
Robins Dry Dock & Repair Co.
v. Flint,
Z13 Uses 303, 46 S.Ct. 134,
72 L.Ed. 290 (1927)
State of La. ex rel. Guste v.
M/V TESTBANK,
752 F. 2d 1019 (5th Cir.1985)
(en banc)
State of La. ex rel Guste v.
M/V_ TESTBANK,
728 F.2d 748 (5th Cir.1984)
State of La. ex rel Guste v.
M/V TESTBANK,
924 F. Supp 1170 (E.D.La.1981)
Taylor v. Carryl,
SL U.e. tae mow.) 563, 15 LB,
1928 (1858)
Union Oil Co. v. Oppen,
501 F.2d 558,05 Cie 1974)
Vicksburg Towing Co. v.
Mississippi Marine Transp.
O.,
609 F. 2d 176 (5 Cir. 1980)
xi
4,18
46
26,37
38,39
40,45
30
Page
CONSTITUTIONAL AND STATUTORY
AUTHORIES :
United States Constitution:
Ast Il, §Z eL.i, U.S. Gonst. 5
United States Code:
28 U.S.C. § 1291 20
26 U.8.C. ¢ i332 19,20
28 U.S.C. § 1333 a5a0 .
33 U.S.C. § 401 et seg 42,43
46 U.S.C. § 588 47
46 U.S.C. § 761 et seq 47
FEDERAL RULES OF CIVIL PROCEDURE:
Rule 54(b), F.R.C.P. 20
Louisiana Civil Code:
Ast 273i}, be. G5. 6
Louisiana Revised Statutes of 1950:
La.R.S. 30:1051 et seq 19
La.k.8. 3622022 6
La.R.S. 30:1054 7
La.R.S. 30:1074 11,20
Miscellaneous Texts and References:
Harper & James, The Law of 29
Torts, 505-510 (1956)
James, Limitations on Liability 29
for Economic Loss Caused by
Negligence: A Pragmatic
a Ge 25 Vand. L.Rev. 43
xii
No.
IN THE
SUPREME COURT OF THE UNITED STATES
October Term, 1984
STATE OF LOUISIANA, EX REL.
WILLIAM J. GUSTE, JR., ATTORNEY GENERAL
OF THE STATE OF LOUISIANA, ET AL,
JAMES WHITE d/b/a
BLUE WAVE OYSTER CO., ET AL,
Petitioners,
VS.
M/V TESTBANK, HER ENGINES, TACKLE,
APPAREL, HER OWNERS, ETC., ET AL,
Respondents,
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
TO THE HONORABLE, THE CHIEF JUSTICE OF
THE UNITED STATES AND THE ASSOCIATE
JUSTICES OF THE UNITED STATES SUPREME
COURT:
Undersigned counsel, representing
the parties through a Plaintiff's Commit-
tee with regard to some 41 consolidated
federal civil actions arising out of a
collision between vessels in the
Mississippi River Gulf Outlet in the
Eastern District of Louisiana, petitions
for a writ of certiorari on behalf of
each plaintiff with whom the defendant,
M/V SEA DANIEL, has not settled to review
the judgment of the United States Court
of Appeals for the Fifth Circuit in this
case.
* The petitioners in this case, various
seafood wholesalers and retailers, marinas,
bait and tackle shops, vessel suppliers, end
fishing and navigation’ services, are
specifically identified in that portion of
this petition setting forth the interested
parties. This reference to the list of
interested parties is intended to incorporate
in this paragraph the identity of each
petitioner herein represented by and through
the Plaintiffs' Committee.
'
th
t
OPINIONS BELOW
The majority and dissenting
opinions of the United States Court of
Appeals for the Fifth Circuit en banc,
offically reported at 752 F.2d 1019 sub
nom. State of La. ex rel Guste v. M/V
TESTBANK, are annexed as Appendix A, at
p. | A-l, post. The majority and
concurring opinions of the Panel of the
said Court of Appeals, officially
reported at 728 F.2d 748, are annexed
hereto as Appendix B, at p. A-168. The
opinion of the United States District
Court for the Eastern District of
Louisiana, granting a motion for a
summary judgment to the owners of the
vessels involved in the collision and
spill of PCP in the Mississippi River
Gulf Outlet (MRGO ) against all
plaintiffs except commercial oystermen,
shrimpers, crabbers and fishermen who
had been making commercial use of the
waters which had been closed to. such
extraction of aquatic life, is reported
at 524 F. Supp. 1170, and is annexed
hereto as Appendix C, at p. A-180.
GROUNDS ON WHICH THE SUPERVISORY
JURISDICTION OF THIS COURT IS INVOKED
The judgment of the Court of Appeals
for the Fifth Circuit, a copy of which is
appended hereto at p. A-199 and marked
"Appendix D,'' was made and entered on the
llth day of February, 1985. No petitions
for rehearing were sought to review this
en banc decision of the said Court of
Appeals. The jurisdiction of this Court
is invoked under the provisions of 28
-
U.S.C. §1254(1).
CONSTITUTIONAL PROVISIONS, STATUTES
——_ AND REGULATIONS INVOLVED
Art.
lil, Section 2, Clause 1, U. S.
Constitution:
28 U.
"The judicial Power shall
extend to all Cases, in Law and
Equity, arising under. this
Constitution, the Laws of the
United States, and Treaties
made, or which shall be made,
under their Authority,--to all
Cases affecting Ambassadors,
other public Ministers and
Consuls;--to all Cases of
admiralty and maritime Juris-
diction;--to Controversies to
which th United States shall be
a Party;--to Controversies
between two or more
States;--between a State and
Citizens of another
State; --between citizens of
different States ,--between
citizens of the same State
claiming Lands under Grants of
different States, and between a
State, or the Citizens thereof,
and foreign States, Citizens or
Subjects."
S.C. §1333:
"The district courts shall have
original jurisdiction, exclu-
sive of the courts of the
States, of:
(1) Any civil case of admiral-
ty or maritime jurisdiction,
saving to suitors in all cases
all other remedies to which
they are otherwise entitled."
Art. 2315, La. Civil Code:
"Every act whatever of man that
causes damage to another
obliges him by whose fault it
happened to repair it.
The right to recover damages to
property caused by an offense
or quasi offense is a property
right which, on the death of
the obigee, is inherited by his
legal, instituted, or irregular
heirs, subject toe the community
rights of the surviving
spouse."
La. R. S. 30:1052:
"The legislature finds’ and
declares that:
(1) The maintenance of a
healthful and safe environment
for the people of Louisiana is
a matter of critical state
concern.
Cz)... &e is necessary and
desirable for the protection of
the public welfare and property
of the people of Louisiana that
there be maintained at all
lids
times, both now and in the
future, clean air and water
resources, preservation of the
scenic beauty and ecological
regimen of certain free flowing
streams, and strictly enforced
programs for the safe_ and
sanitary disposal of solid
waste, for the management of
hazardous waste, for the
control of hazards due _ to
natural and man-made radiation,
considering sound policies
regarding emp Lloyment and
economic development in
Louisiana.
(3) It is necessary and
essential to the success of the
regulatory program established
in this Chapter that the
enforcement procedures include
unannounced regular inspections
of all facilities which may be
regulated by this Chapter or
any facility in violation of
this Chapter." ....
La. R. S. 30:1054:
"The following terms as used in
this Chapter, unless the
context otherwise requires or
unless redefined by a particu-
lar Part hereof, shall have the
following meanings:
(1) "Commission" means’7 the
Environmental Control Commis-
sion.
(2) “Department means_ the
Department of Environmental
Quality.
(3) “Implementation plan"
means any pollution control or
other environmental regulatory
plan prepared by a state agency
in compliance with the terms of
the Clean Air Act, the Federal
Water Pollution Control Act,
the Resource Conservation and
Recovery Act, or other federal
environmental legislation.
(4) "Secretary" means the
secretary of the Department of
Environmental Quality.
(5) "Member" means a member of
the Environmental Control
Commission.
(6) “Commission secretary"
means the secretary of the
Department of Environmental
Quality serving in his capacity
as secretary of the Environ-
mental Control Commission.
(7) “Variance” means a special
authorization granted by a
person for a limited period of
time which allows that person a
specified date for compliance
with a requirement pursuant to
the provisions of this Chapter.
(8) "Person" means any indi-
vidual, municipality, public or
oi.
private corporation, partner-
ship, firm, the United States
Government, and any agent or
subdivision thereof or _ an
other judicial person, whic
shall include, but not be
limited to, trusts, joint stock
companies, associations, the
state of Louisiana, political
subdivisions of the state of
Louisiana, commissions, and
interstate bodies.
(9) “Natural resources commit-
tees" means the natural re-
sources committees of the House
of Representatives and Senate
of the Louisiana Legislature.
(10) "Discharge" means’ the
placing, releasing, spilling,
penne draining, pumpimg,
eaking, seeping, emitting, or
other escaping of pollutants
into the air, water, subsurface
water, or ground as the result
of a — act or omission; or
the placing of pollutants into
pits, drums, barrels, or
similar containers under
conditions and circumstances
that leaking, seeping, drain-
ing, or escaping of the pollu-
tants can be reasonably antic-
ipated.
(11) "Response fund" means the
Fnvironmental Emergency’ Re-
sponse Fund created in R.S.
30:1149.
Text of par. (12) as amended by
Acts 1983, No. 97, §1.
(12) “Abandoned site fund" mean
the Abandoned Hazardous Waste
Site Fund created by R. S.
30:1149.
For text of par. (12) as
amended by Acts 1983, No. 467,
§l, see post.
Text of ‘<= (12) as amended by
Acts 1983, No. 467, §1.
(12) "Abandoned site fund"
shall mean the Hazardous Waste
Site Cleanup Fund as created by
R. S. 30:1149 and formerly
known as the Abandoned Hazard-
ous Waste Site Fund.
For text of par. (12) as
amended by Acts 1983, No. 97
§1, see ante. ae
(13) "Pollution source" means
the immediate site or location
of a discharge or potential
discharge, including such
surrounding property necessary
to secure or quarantine the
area from access by the general
public.
(14) “Facility” means a
pollution source, or any public
or private property or facility
where an activity is conducted
which is required to be
sie
regulated under this Chapter
and which does or has_ the
potential to do any of the
following:
(a) Emit air contaminants into
the atmosphere.
(b) Discharge pollutants into
waters of the state.
(c) Use of control radioactive
materials and waste.
(d) Transport, process, or
dispose of solid wastes.
(e) Generate, transport,
treat, store, or dispose of
hazardous wastes.
(15) "Pollutant" means those
elements or compounds defined
or identified s hazardous,
toxic, or noxious, or as
hazardous, solid, or radioac-
tive wastes under this Chapter
and regulations, or by the
secretary or commission,
consistent with applicable laws
and regulations."
La. R. S. 30:1074:
"ene Except as provided in
Subsection (2) of this Section,
any person having an interest,
which is or may be adversel
affected, may commence a civil
action on his own behalf
oe
against any person whom he
alleges to be in violation of
this Chapter or of the regu-
lations promulgated hereunder.
The action must be brought
either in the district court in
the parish in which the vio-
lation or alleged violation
occurs or in the district court
of the domicile of the alleged
violator and shall be afforded
preferential hearing by the
court."
* * * *
(3) Provided, however, that
ncething herein shall be con-
strued to limit or deny any
person's right to injunctive or
other extraordinary and ordi-
nary relief under the Louisiana
Civil Code or otherwise under
Louisiana law, other than this
Part.
(4) The enforcement, proce-
dures, and remedies’ herein
provided for shall be in
addition to any such procedures
and remedies authorized under
the laws of this state."
~ o
STATEMENT OF THE CASE
\
Following the collision in the
Mississippi River Gulf Outlet (MRGO)
between the M/V SEA DANIEL and the M/V
TESTBANK on July 22, 1980, forty-one
complaints were filed and consolidated
tor proceedings to be had before Honor-
able Peter Beer United States District
Judge in the Eastern District of
Louisiana. The varicus parties plaintiff
included the State of Louisiana on the
relation of the Attorney General, commer-
cial fishermen, crabbers, shrimpers,
oystermen, shipping interests, marina and
boat rental operators, wholesale and
retail seafood enterprises, seafood
restaurants, tackle and bait shops, and
recreational fishermen.
Since these proceedings were had in
the LTistrict Court, the M/V SEA DANIEL,
«tS
an inbound bulk carrier, has been de-
termined to have been liable for the
collision.
On the evening of July 22, 1980, the
M/V SEA DANIEL collided with the outbound
container vessel, M/V TESTBANK. That
collision occurred at Mile 41 of the
MRGO, a man-made ship channel which is 66
miles long and serves as a_e short-cut
between New Orleans and the Gulf of
Mexico.
When the vessels collided, a cloud
of hydrobromic acid mist enveloped the
ships and that cloud was propelled by the
winds to and beyond Shell Beach,
Louisiana, a fishing settlement downwind
and down-stream from the collision. The
hydrobromic acid was part of the cargo of
the container ship, M/V TESTBANK. Also
aboard the container ship was a container
eT
which was loaded with approximately
twelve tons of pentachlorophenol (PCP),
which was packaged in individual fifty-
pound bags. PCP contains dioxin, a very
toxic chemical which is a _ recognized
carcinogen and also has been established
to produce birth defects. a 28 the
substance which caused the envirormental
panic of Love Canal, New York and Times
Beach, Missouri, as well as the MRGO.
The container of PCP was lost overboard
as a result of the collision between the
M/V SEA DANIEL and the M/V_ TESTBANK.
Significantly, this was the largest PCP
spill in United States history.
That evening, Civil Defense and
local authorities upon learning of the
nature of the substance spilled into the
MRGO, evacuated all residents within a
10-mile radius of the collision. The
is.
Coast Guard closed the MRGO to navigation
so that vessel traffic would not stir up
any PCP that had settled on the bottom of
the channel. Health officials suspended
all fishing, shrimping, and associated
activities on the MRGO and within about
400 square miles of surrounding Louisiana
waterways and marshes. Seafood and
shellfish caught in the area was embar-
goed. The closure of the MRGO and
suspension of fishing in it and _ the
surrounding waterways and marshes were
not lifted until mid-August 1980.
As a direct consequence of the
closure of the MRGO and ban on the taking
of food resources from the affected
waters, serious economic damages occurred
to the fishing industry and its support-
ing businesses in the affected areas.
For example, since the fishermen,
so
crabbers, shrimpers and oystermen were
unable to perform their occupations, the
marinas which usually supplied them bait,
ice, launch facilities and fuel, as well
as tackle and other supplies used in that
industry, were unable to perform their
services to that industry. Because the
vessels were not permitted to fish and
catch shell fish in the affected areas,
the wholesale purchasers and processors
of the catches were unable to conduct
their businesses. Because of the closure
of the MRGO, shipping had to be re-routed
through the Mississippi River. Some
vessels, which were already in the MRGO,
had to turn around, return to the
Mississippi River and use that longer,
slower route in order to carry on their
cargo operations. Some shippers, who had
situated their businesses with easy
eo
access to the MRGO, had to make their way
through the Industrial Cana. locks into
the Mississippi River, all of which added
costs to the ships which had not been
contemplated when the cargo contract were
confected. In those cases where the
ships had contractual provisions covering
those costs, the added costs were in-
flicted upon the shippers.
The district court granted summary
judgment in all cases except those urged
by commercial fishermen, crabbers,
oystermen and shrimpers who routinely
operated in and around the closed area. 1
The Court of Appeals for the Fifth
Circuit affirmed that judgment .“ And the
Fifth Circuit en banc confirmed the
3
judgment of the Parel.
e 524 F.Supp. 1170
ee 728 F.2d 748 (per curiam)
+; 752 F.2d 1019 (en banc)
itn
JURISDICTION BELOW
Petitioners sought damages in the
district court, urging that the collision
and ensuing damages were maritime torts
within the Federal Courts constitution-
ally conferred general maritime jurisdic-
tion. Jurisdiction of the district court
also existed under 28 U.S.C. §1333.
Moreover, claims were made against the
vessels, alleging state law causes of
action sounding in public nuisance for
pollution and obstruction of the
waterway, under the diversity of citizen-
ship jurisdictional provisions of 28
U.S.C. §1332(a)(2-3). Also alleged under
Louisiana law were claims that’ the
pollution caused by the collision between
the M/V SEA DANIEL and M/V TESTBANK was
proscribed by The Louisiana Environmental
Affairs Act of 1980, La. R.S. 30:1051 et
id.
seq., which created a private right of
action in La. R.S. 30:1074, and that
petitioners were entitled to pursue their
damages attributable to the acts in
violation of the Louisiana law in the
Federal Courts under the provisions of 18
U.S.C. §1332(a) (2-3).
The District Court's summary judg-
ment did not provide for a disposition of
the entire case. As to those parties
whose complaints had been dismissed, the
Court expressly determined, pursuant to
Rule 54(b), F.R.C.P., that there was no
just reason for delay in making those
summary judgments final and appealable
and directed entry of a final judgment.
The Court below thus had jurisdiction
over the appeal pursuant to 28 U.S.C.
§1291.
-20-
REASONS FOR ALLOWANCE OF THE WRIT
The Fifth Circuit has developed a
line of decisions, ostensibly
predicated upon this Court's deci-
sion in Robins Dry Dock & Repair
Co.V. Fein, 292: We. Oa Bee SE ws
Ct. 134, 72 L. Ed 290 (1927), which
is not required by Robins and which
states such an unfair restriction
upon recovery by innocent victims of
maritime torts that this Court, in
the exercise of its supervisory
responsibility over lower Federal
Courts, ought to exercise its power
of supervision and correct’ the
judgment of the Court below.
pad
In Robins Dry Dock & Repair Co. v.
Flint, 273 U. &. 303, 58 &. Ct. i398, 72
L. Ed 290 (1927), this Court considered a
claim for damages caused by the repair
facility while the vessel was in port for
periodic repairs. The payment of the
hire of the vessel was suspended during
such repairs and until the vessel was
wine in proper state for service. 275
U. 3. et 307, 46 6. Ct. a i. Fee
repair contractor had no nretice of the
wt.
charter party until after it had damaged
the vessel and caused it delay in resum-
ing the carriage of goods at sea. 275 U.
5S. et 37, 86 8 Ges @6 tans The
charterer filed suit, claiming that the
repair contract was a stipulation pour
autri, i.e., a contract made for the
benefit of the charterer and was inci-
dental to the charter party. This Court
“held to the contrary, noting that the
charterer was not a party to the contract
or a beneficiary thereof. Ibid. This
Court, quoting the Court of Appeals, said
the charterer was “not entitled to sue
for a breach of [the repair contract]
"even under the most liberal rules that
permit third parties to sue on a contract
made for their benefit.'"
This Court then turned to the tort
claim made by the charterer. It said
32%
(275
135):
U. S. at 308, 309, 48 S. Ct.
* * ‘*But as there was a
tortious damage to a chattel it
is sought to connect the claim
of the [charterer] with that in
some way. The damage was
material to them only as it
caused the delay in making the
repairs, and that delay would
be a wrong to no one except for
the petitioner's contract with
the owners. The injury to the
propeller was no wrong to the
[charterer] but only to those
to whom it belonged. But
suppose that the [charterer's]
loss flowed directly from that
source. Their loss arose only
through their contract with the
owners-and while intentionally
to bring about a breach of
contract may give rise to a
cause of action, * * *, no
authority need be cited to show
that, as a general rule, at
least, a tort to the person or
property of one man does not
make the tort-feasor liable to
another merely because’ the
injured person was under a
contract with that other
unknown to the doer of the
wrong. * * * (Citations omit-
ted.)
-23-
at
The Court of Appeals had ruled in favor
of the charterer upon the basis that (275
U. S. at 309, 48 S. Ct. at 135):
if the whole loss occasioned by
keeping a vessel out of use
were recovered and divided a
part would go to the
[charterer]. It seems to have
been thought that perhaps the
whole might have been recovered
by the owners, that in that
event the owners would have
been trustees for the
[charterer] to the extent of
the [charterer's] share, and
that no injustice would be done
to allow the [charterer] to
recover [its} share by direct
suit. * * *
This Court then said (ibid):
But jwstice does not permit
that the [repair contractor] be
charged with the full value of
the loss of use unless there is
some one who has a claim to it
as against the [repair contrac-
tor). * * *
This Court then rejected the theory of
standing to sue the repair contractor,
either in contract or tort, on the basis
of the “suggestion that if some one else
=-2he
had recovered it he would have been bound
to pay over a part by reason of his
personal relations with the [charterer]."
This Court then noted (275 U. S. at
309-310, 48 S. Ct. at 135-136):
The whole notion of such a
recovery is based on_ the
supposed analogy of bailees who
if allowed to recover the whole
are chargeable over, on what
has been thought to be a
misunderstanding of the old law
that the bailee alone could sue
for a conversion and _ were
answerable over for the chattel
to their bailor. Whether chis
view be historically correct or
not there is no analogy to the
present case when the owner
recovers upon a contract for
damage and delay. * * *
From this Court's holding in Robiris
Dry Dock, especially the language that
"[t]he injury to the propeller was no
wrong to the [charterer] but only to
those to whom it belonged" and_ the
"general rule” stated therein that "a
tort to the person or property of one man
Mts
does not make the tort-feasor liable to
another merely because the injured person
was under a contract with that other
unknown to the doer of the wrong (empha-
sis added), the Fifth Circuit has stated
the "Robins rule" to be that no person
may recover in maritime tort for an
economic damage to property nut owed by
him, but in which he has a property right
to its use for economic gain, and has
limited recovery to cases in which the
person damaged can show “physical damage
to a proprietary interest."
The Court below has treated Robins
Dry Dock as an expression of limitation
of liability to persons whose ownership
interests in the damaged property is
foreseeable, rather than, as we see that
case, to be an equitable decision prohib-
iting double recovery against the
~26-
tort-feasor when the owner has already
been compensated for the whole loss.
The Robins Dry Dock case had pro-
ceeded through the lower courts on the
momentum of the contract law theories and
the primary focus of the arguments to
this Court was the contract law theory.
This Court said (275 U. S. at 308, 48 S.
Ct. at 135):
* * *But as the case has been
discussed here and below
without much regard to the
pleadings we proceed to consid-
er the other grounds upon which
it has been thought that a
recovery could be maintained.
Our adversarial system of justice derives
its strength from the view that vigorous
argument by the opposing parties to a
neutral tribunal is most likely to bring
about a just judgment considering all
aspects of the case. There was not such
a method of adjudication followed in the
x, oe
Robins Dry Dock case, with the result
that the tort law claims were decided on
the basis of contract law theories of
standing. In several of the cases in
which the Fifth Circuit has based its
decision in a tort case upon this Court's
decision in Robins Dry Dock, it has
expressed doubt about the wisdom of the
principals upon which it is predicated.
For example, in Louisville & N.R.R. Co.
v. M/V BAYOU LACOMBE, 597 F. 2d 469, 472
(Sth Cir. 1979), Circuit Judge Wisdom,
who wrote the major dissent in this case
when it was considered en banc, wrote:
That question is governed by
Robins. Whatever the wisdom of
the traditional rule of non-
liability for negligent acts
causing economic loss, Robins
reflects the state of the law
in this circuit. * * *
See, also, Dick Meyers Towing Service,
Inc. v. United. States, 5/77 F. 26. 36ees
m=
1025 (5th Cir. 1978). In that regard,
the Fifth Circuit does not stand alone.
Federal Commerce & Nav. Co. v. M/V
MARATHONIAN, 528 F. 2d 907, 908 (2nd Cir.
Beree a eee ees See UU. S. 975, 96 S.
Ct. 2176, 48 L. Ed. 2d 799 (1976); Rederi
A/B Soya v. Evergreen Marine Corp., 1972
A.M.C. 1555 (E.D. Va. 1971), adopted per
curiam, 1973 A.M.C. 538 (4th Cir. 1972).
See, also, James, Limitations on Liabil-
ity for Economic Loss Caused by Negli-
gence: A Pragmatic Approach, 25 Vand. L.
Rev. 43, 56 (1972); 1 Harper & James, The
Law of Torts 505-510 (1956). In Petition
of Kinsman Transit Co., 388 F. 2d 821,
823 (2nd Cir. 1968), the Court refused to
ground its decision on Robins Dry Dock,
as the district court held, because it
"hesitate[d] to accept the ‘negligent
interference with contract' doctrine in
-29-
ii ii
the absence of satisfactory reasons for
differentiating contractual rights from
other interests which the law protects,"
and proceeded to adjudicate that case on
traditional tort doctrine involving
issues of proximate cause, foreseeabil-
ity, remoteness, etc.
The Fifth Circuit based its decision
in the instant case on its prior de-
cisions in Kaiser Alum. & Chem. Corp. v.
Marshland Dredging Co., 455 F. 2d 957
(Sth Cir. 1972); Dick Meyers Towing
Service, Inc. v. United States, supra;
Louisville & N.R.R. Co. v. M/V BAYOU
LACOMBE, supra,; Vicksburg Towing Co. v.
Mississippi Marine Transp. Co., 609 F. 2d
176 (5th Cir. 1980); Cargill, Inc. v.
Offshore Logistics, Inc., 615 F. 2d 212
(Sth Cir. 1980); and Akron Corp. v. M/T
CANTIGNY, 706 F. 2d 151, reh. den., 711
." -
Bu . 24-2034. - (5th Circ... -1965). As the
dissent below points out, those cases are
extensions of Robins Dry Dock and not
strict applications thereof. See Part
I(B) of Judge Wisdom's dissent, Appendix
A, post, at pp. A-@s-A-%. The applica-
tion of Robins Dry Dock which has been
applied against petitioners is’ that
version established in Akron Corp. v M/T
CANTIGNY, supra, 706 F. 2d 153:
Robins stands for the proposi-
tion that a party may not
recover for economic losses not
associated with physical
damages. * * * The _ rule's
purpose is to prevent limitless
liability for negligence and
the filing of law suits of a
highly speculative nature.
This Court noted in BAYOU
LACOMBE, supra, that '"[wlJhat-
ever the wisdom of the tradi-
tional rule of nonliability for
negligent acts causing economic
loss, Robins reflects the state
of law in this circuit,” 597
F, 26 472
3
The Court below, in the instant case,
expressed the view that trial courts are
incapable of applying traditional tort
concepts to such massive damage sit-
uations as presented by the instant case,
not because of their inability to supply
a judgment in each individual case, but
because "[rleview of the foreseeable
consequences of the collision of the SEA
DANIEL and TESTBANK demonstrates the wave
upon wave of successive economic conse-
quences and the managerial role plain-
tiffs would have us assume."' Appendix A,
Part IV of Opinion of Court en banc, pp.
A-#0 -A- 4. The Court below also
expressed doubt in the ability of judges
and juries to reach uniform results in
such mass disaster cases: ‘
* * *Plaintiffs concede, as do
2ll who attack the requirement
of physical damage, that a iine
would need to be drawn --
>
somewhere on the other side,
each plaintiff would say in
turn, of its recovery. Plain-
tiffs advocate not only that
the lines be drawn elsewhere
but also that they be drawn on
an ad hoc and discrete basis.
The result would be that no
determinable measure of the
limit of foreseeability would
precede the decision on liabil-
ity. We are told that when the
claim is too remote, or too
tenuous, recovery will be
denied. Presumably, then, as
among all plaintiffs suffering
foreseeable economic loss,
recovery will turn on a judge
or jury's decision. There will
be no rationale for the differ-
ing results save the "judgment"
of the trier of fact.
Concededly, it can "decide" all
the claims presented, and with
comparative if not absolute
ease. The point is not that
such a process cannot be
administered but rather that
its judgments would be much
less the products of a deter-
minable rule of law. [In this
important sense, the resulting
decisions would be judicial
products only in their draw
upon judicial resources.
Significantly, as in this very case,
liability could be established by
$e
consolidation of cases arising out of the
same event with several proceedings to
establish the particular individual's
entitlement to receive reparation based
upon traditional concepts of tort respon-
sibility and estimation of damages. To
abandon innocent victims of such disas-
trous consequences, merely because they
might be troublesome to the courts, is a
sad indictment of the federal judicial
system. There are rules of procedure
available to the trial judge, and there
is the appellate remedy, to correct the
occasional, or even frequent, aberrant
judgment of the fact finder.
If Robins Dry Dock had been properly
received and applied by the lower ccurts,
it would have stood for the propositions
that a tortfeasor is not to be subjected
unfairly to the prospect of recovery by
jthn
multiple parties for the same foreseeable
consequences of his negligent act and
that, where the damage to a particular
individual was "legally unforeseeable"
and payment has been made to the person
whose damages were foreseeably contem-
plated in law, the tortfeasor is not the
party from whom the damaged person should
be allowed to recover.
If Robins Dry Dock is not reasonably
so limited in its scope, it permits the
tortfeasor to escape liability for
foreseeable damages to someone merely
because that someone enjoyed the property
rights which have been adversely affected
by virtue of a contract rather’ than
through a proprietary interest. Given
the choice between imposing the loss upon
the innocent victim or the tortfeasor, a
fair system of law would impose the
-35-
reparation of damages upon the person
causing those damages, with traditional
tort limitations of proximate cause,
foreseeability, etc.
If Robins Dry Dock does not stand
for the limited proposition urged herein,
then this Court should reconsider that
opinion and bring it into line with
current legal tort doctrine.
ri The jurisprudence of the Fifth
Circuit, ostensibly predicated upon
Robins Dry Dock, is inconsistent, in
that part which denies recovery for
purely economic loss without phys-
ical damage to a proprietary inter-
est, with jurisprudence of this
Court, viz., Aktieselskabet Cuzco v.
The SUCARSECO, 294 U. S. 394, 55 S.
Ct. oer, i L. Ed. 942 (1935), and
is in conflict with Union or Co. vs
Oppen, 501 F. 2d
roar. and Carbone v. My
Del Rig, 209 F. 2d 178 (Sth co
As pointed out in Union Oil Co. v.
Oppen, 501 F. 2d 558, 567 (9th Cir.
St.
1974), this Court, in The SUCARSECO case
sustained a claim for purely economic
loss, unaccompanied by any physical
injury to the person or property of the
claimant, when an owner of cargo sought
reimbursement from the negligent vessel
which collided with the vessel carrying
its cargo, thus requiring the cargo owner
under its contract with the vessel to pay
general average contribution. As noted
by the Ninth Circuit, “the right of the
Cargo owners to have their’ general
average contribution restored springs
directly from the tort and was in no
sense derivative or parasitically depen-
dent upon the presence of a physical
injury.” 501 F. 2d 567. We read the
case against The SUCARSECO the same way.
The Fifth Circuit's position, finally
crystallized in Akron Corp. v. M/T
iin
CANTIGNY, supra, and the present case,
that a party may not recover for economic
losses not associated with physical
damage to a proprietary interest, is
squarely in conflict with The SUCARSECO
and Union Qil Co. v. Oppen, supra.
The Oppen case makes a very good
point why it is inequitable and unjust to
deprive a person of a damage remedy
against a person who negligently causes
grave economic loss while providing a
full remedy to a person with physical
damage to person or property, no matter
how slight (501 F. 2d 567):
Frequently the magnitude of the
economic loss so far overshad-
ows that of the physical injury
as to warrant the assertion
that the general rule, barring
recovery absent a physical
injury, is but a formalism. * *
* (Citation omitted.)
To the extent the physical injury is a
benchmark of proximate cause, it is
Ss
suggested that it is not the only such
means of measurement. As the Oppen Court
noted, supra, 501 F. 2d at 567-568:
This much abridged catalogue of
exceptions and qualifications
to the general rule [stated in
Robins Dry Dock, supra] can be
brought to a close x S Vastiine
of our analysis ling
attention to only cases in
which pollution of a stream has
enabled one whose business is
injured thereby to recover his
lost profits. For example, in
Fort Worth & Rio Grande Ry. Co.
v. Hancock, 286 S. W. 335 (Tx.
Civ. App. 1926), the plaintiff,
who operated a swimming pool in
the channel of a river, was
permitted to recover’ lost
profits which had resuited from
the defendant's negligent
pollution of the river.
Similarly, downstream riparian
owners, engaged in operating a
business dependent upon fish-
ing, have been permitted to
recover for the injury to their
business caused by pollution of
the stream. See, Masonite
Corp. v. Steede, 198 Miss. 530,
o.2d 756 (1945);
Hampton v. North Carolina Pulp
O., . . , . .
538 (1943). It should be noted
that in each of these cases the
plaintiff was a riparian owner,
=%6.
and in the latter two there was
no indication that the defen-
dant's conduct was- merely
negligent and not intentional.
However, in neither Masonite
nor Hampton does there appear
any recognition that~ mere
negligence would have absolved
the defendants. Both assumed
the existence of a nuisance
which could well have rested
upon the defendants' negligent
conduct. * * * £(Citation
omitted. )
As shown in the next Part of these
reasons for allowing a writ of
certiorari, the damages sought by the
non-vessel-owner petitioners are directly
attributable to the nuisance created by
the pollution of the MRGO and its subse-
quent closure of over 400 square miles of
prime Louisiana fishing grounds.
If Robins Dry Dock can be read to
state a hard and fast rule that there can
be no award of damages for economic loss
in the absence of direct physical injury
to a proprietary interest, the subsequent
-40-
decision of Aktieselkabet Cuzco v. The
SUCARSECO, supra, has abrogated that rule
sufficiently to permit recovery of purely
economic losses in the absence of phys-
ical injury to a proprietary interest in
some cases, and Union Oil Co. v. Oppen,
supra, clearly indicates that an excep-
tion exists in circumstances, as here,
where the economic damage is caused by
pollution.
This Court should exercise its
supervisory jurisdiction to square Robins
Cry Dock with The SUCARSECO and the
judgment below with Union Oil Co. v.
Oppen, supra.
LF The Court below has rejected the
concept of a nuisance remedy to
persons damaged by a maritime tort,
which important question of federal
law has not been, but should be,
decided by this Court.
wits
Petitioners urged in the trial court
and the Court of Appeals that their
claims of economic losses are cognizable
in maritime tort because the pollution
from the collision constituted a public
nuisance, and violated the Rivers and
Harbors Appropriation Act of 1899 (33
U.S.C. §401 et seq.) and Louisiana law.
The Court below rejected each of
these asserted causes of action on the
grounds:
(1)
* * *Our decisions under Robins
have emphasized the nature of
the interest harmed rather than
the theory of recovery. As we
noted in Dick Meyers Towing,
"(rlephrasing the claim as a
public nuisance claim does not
change its essential charac-
tar.° Dick Meyers, 577 F. 2d
at 1025. 2.4. us we conclude
that plaintiffs may not recover
for pure economic losses under
the public nuisance theory in
maritime tort. ( «Os
)
~42~
pre-existing remedies under
(2)
Plaintiff's arguments that
the Rivers and Harbors Appro-
priation Act affords them any
avenue of relief are foreclosed
by Supreme Court decision
[citin California v. Sierra
Club, R51 Domo eee. 20h S. Ct.
bere 2 68 Ed. 2d 101
(1981)).* * * ( r. 2d )
(3)
Plaintiffs also urge that
their economic losses are
recoverable as state law claims
in negligence, nuisance or
under the Louisiana Environ-
mental Affairs Act of 1980.
Because established principles
of general maritime law govern
the issue of recovery in this
case, we reject these state law
theories. ( > 20 )
While plaintiffs must acknowledge
that California v. Sierra Club, supra,
holds that the Rivers and Harbors Appro-
priation Act of 1899 granted a right of
action only to the Federal Government,
that Act did not deprive persons their
at.
state laws
for obstruction and/or pollution of
navigable waterways. In Pennsylvania v.
Wheeling & Belmont Bridge Co., 54 U. S.
(13 How.) 518, 14 L. Ed. 249 (1852), as
explained by this Court in the Sierra
Club case at footnote 7, 101 S. Ct.
1780-81, it was recognized that a state
law public nuisance action existed but
was not federalized by the Wheeling
Bridge case. The Wheeling Bridge case,
although not federalizing a common law
public nuisance remedy, clearly demon-
strates that when jurisdiction exists in
the Federal Courts in a situation where
State law is applicable, the Federal
Courts may apply the public nuisance law
to remedy a wrong to an appropriate
plaintiff.
Federal law has not deprived a state
cause of action for a public nuisance on
ain
navigable waterways. The public nuisance
cases cited by the Ninth Circuit in Union
Oil Co. v. Oppen, supra, clearly estab-
lishes that State courts may effectively
deal with such causes of action. There
is a diversity of citizenship >f the
defendants, which gives Federal Courts
the authority - in fact requires them -
to apply State law in causes of action
cognizable in State courts. The only
impediment to the public nuisance cause
of action in this case, then, would be if
maritime tort law precludes such a remedy
since the Constitution of the United
States, i969 Ast. Tit, $2, Gh. 1, states
that the judicial power of the United
States shall extend "to all cases of
admiralty and maritime jurisdiction."
But that jurisdiction is not exclusive
and is concurrent with the courts of the
=45-
states where the common law also provided
a remedy. See, e.g., The Hine v. Trevor,
71 U. S. (94 Wall.) 555, 18 L. Ed. 451
(1867); Taylor v. Carryi, 61 U. &. (20
How.) 583, 15 L. Ed. 1928 (1858).
It is clear that Congress’ may
pre-empt the states with regard to
navigable waters since they fall under
Federal jurisdiction under the Interstate
Commerce Clause and the grant of judicial
power to the Federal courts in all
admiralty and maritime cases. But it has
not done so in any effort to deprive the
causes of action asserted under state law
by the petitioners herein.
Even if Federal maritime jurisdic-
tion, guided exclusively by federal law,
controlled maritime torts of the type
asserted herein, we submit that federal
maritime law does not deprive petitioners
-46-
of a maritime tort cause of action
sounding in public nuisance.
In Moragne v.-States Marine Lines,
aun, gee VU. S. 3735, 90 S. Ct. 1772, 26
L. Ed. 2d 339 (1970), this Court under-
took to fashion a remedy, where maritime
tort law had failed to provide one, in
the case of a wrongful death upon inland
waters of the United States. This Court
looked to the law of the numerous states
of this federal republic, as well as
federal law covering similar situations
in extra-territorial waters. This Court
reasoned that, since all of the states
have wrongful death statutes and since
the Death on the High Seas Act, 46 U.S.C.
§761 et seq., and the Jones Act, 46
U.S.C. §688, established no _ federal
public policy contrary to granting a
federal remedy for wrongful death in
LaT«
inland waters, the maritime tort law
should adopt the cause of action for
wrongful death in inland waters.
Since no federal statute prohibits
it, and this Court has long recognized
the propriety of state public nuisance
actions where navigable waters are
involved, viz., Pennsylvania v. Wheeling
and Belmont Bridge Co., supra, there is
no sensible reason for denying a cause of
action in a maritime tort case simply
because the tort occurred in the
navigable waters. Navigable waters are
subject to pollution, both by land and by
vessels, and there is heightened public
concern about such health hazards in this
nation, especially on the Mississippi
River from which numerous’ states. and
innumerable towns and cities draw their
water supplies. There is no good reason,
~-48<
based in public policy or otherwise, for
immunizing negligent vessels from the
reparation of economic losses due to
environmental damages when a land-based
business would readily be held liable.
Should this Court decide that, for
some reason, it should not adopt the
public nuisance remedy under the federal
maritime jurisdiction, then we would
suggest that this Court adopt the hybrid
nuisance action envisioned by Circuit
Judge Wisdom's dissent in the Court
below. The element of "particular
damage" different from the general
population would be added as an essential
element of a tort cause of action. That
would reasonably accomplish the ob-
jections of limiting liability to the
foreseeable, direct consequences of a
person's negligence and not unfairly
-49-
force innocent victims living near
navigable waters from having to absorb
their damages for which they are in no
way responsible.
CONCLUSION
For the foregoing reasons, this
Court should grant a writ of certiorari
in this case and, after plenary review,
declare that plaintiffs have stated a
cause of action upon which they can
recover their proven economic losses due
to the vessel collision in this case.
Respectfully Submitted:
GER & MESTAYER
600 Carondelet Street
Ninth Floor
New Orleans, La. 70130
Telephone;:, (504) 588-9043
PROOF OF SERVICE
I, Walter J. Leger, Jr., one of the
counsel of record for petitioners, and a
member of the Bar of the Supreme Court of
the United States, hereby certify that,
on the 13th day of May, 1985, I served
three copies of the Petition for Writ of
Certiorari on each opposing counsel, as
follows:
he On the M/V SEA DANIEL, by
mailing three copies in a duly addressed
envelope, with first-class postage
prepaid to Walter Carroll, Esq.
2. On the M/V TESTBANK, by mailing
three copies in a duly addressed
envelope, with first-class postage
prepaid, to J. Dwight LeBlanc, Jr., Esq.
itn
It is further certified that all
parties required to be served have been
served, and that the list of such parties
is as set forth above.
orn or oners
600 Carondelet Street
Ninth Floor
New Orleans, La. 70130
(504) 588-9043
APPENDI%X
INDEX TO APPENDIX
Appendix A - En Banc Decision,
United States Court of Appeals
for the Fifth Circuit A-1l
Appendix B - Original Panel
Opinion, United States Court
of Appeals for the
Fifth Circuit A-168
Appendix C - Original Opinion
and Order, United States
District Court, Eastern
District of Louisiana A-180
Appendix D - Judgment,
United States Court of
Appeals for the Fifth
Circuit, En Banc A-199
APPENDIX A
[Caption]
* * * * * *“ * *
United States Court of Appeals,
Fifth Circuit.
Feb. 11, 1985.
Appeals from the United States
District Court for the Eastern District
of Louisiana.
Before CLARK, Chief Judge, WISDOM,
GEE, RUBIN, REAVLEY, POLITZ, RANDALL,
TATE, JOHNSCN, WILLIAMS, GARWOOD, JOLLY,
HIGGINBOTHAM, DAVIS and HILL, Circuit
Judges.
PATRICK E. HIGGINGBOTHAM, Circuit
Judge:
We are asked to abandon physical
damage to a proprietary interest as a
pre-requisite to recovery for economic
loss in cases of unintentional maritime
1
tort. We decline the invitation.
I
In the early evening of July 22,
1980, the M/V SEA DANIEL, an irbcund bulk
carrier, and the M/V TESTBANK, an out-
bound container ship, collided at
approximately mile forty-one of the
Mississippi River Gulf outlet. At
impact, a white haze enveloped the ships
until carried away by prevailing winds,
and containers aboard TESTBANK' were
damaged and lost overboard. The white
haze proved to be hydrobromic acid and
the contents of the containers which went
overboard proved to be approximately
twelve tons of pentachlorophenol, PCP,
We do not address intentional tort or
ultrahazardous activity such as blasting.
assertedly the largest such spill in
United States history. The United
States Coast Guard closed the outlet to
navigation until August 10, 1980 and all
fishing, shrimping, and related activity
was temporarily suspended in the cutlet
and four hundred square miles. of
surrounding marsh and waterways.
Forty-one lawsuits were filed and
consolidated before the same judge in the
Eastern District of Louisiana. These
suits presented claims of _ shipping
interests, marina and boat rental
operators, wholesale and retail seafood
enterprises not actually engaged in
fishing, seafood restaurants, tackle and
bait shops, and recreational fishermen.
They proffered an assortment of liability
theories, including maritime tort,
private actions pursuant to’ various
A-3
sections of the Rivers & Harbors
Appropriation Act of 1899 and rights of
action under Louisiana law. Jurisdiction
rested on the proposition that’ the
collision and contamination were
maritime torts and within the court's
maritime jurisdiction. See 28 U.S.C.
§1333.
Defendants moved for summary
judgment as to all claims for economic
loss unaccompanied by physical damage to
property. The district court granted the
requested summary judgment as to all such
claims except those asserted by
commercial oystermen, shrimpers, crabbers
and fishermen who had been making a
commercial use of the embargoed waters.
The district court found these commercial
fishing interests deserving of a special
protection akin to that enjoyed by
A-4
seamen. See State of Louisiana ex rel.
Guste v. M/V Testbank, 524 F.Supp. 1170,
1173-74 (E.D.La.1981).?
On appeal a panel of this court
affirmed, concluding that claims for
economic loss unaccompanied by physical
damage to a proprietary interest were not
recoverable in maritime tort. 728 F.2d
748 (5th Cir. 1984). The panel, as did
the district court, pointed to’ the
doctrine of Robins Dry Dock & Repair Co.
V, Faamt, aio U.S. 303, 48° §.Ct.: 134, 72
L.Ed. 290 (1927), and its development in
. Stated more generally, the summary
judgment denied the claims asserted by shipping
interests suffering losses from delays or
rerouting, marina and boat operators, wholesale
and retail seafood enterprises not actually
engaged in fishing, shrimping, crabbing or
oystering in the area, seafood restaurants,
tackle and bait shops, aand_ recreational
fishermen, oystermen, shrimpers and crabbers.
The rights of commercial fishermen who survived
summary judgment are not before us.
this circuit. Judge Wisdom specially
concurred, agreeing that the denial of
these claims was required by
precedent justification but urging
re-examination en banc. We then took
the case en banc for that _ purpose.
After extensive additional briefs and
oral argument, we are unpersuaded that
we ought to drop physical damage to a
proprietary interest as a prerequisite
to recovery for economic loss. To the
contrary, our reexamination of the
history and central purpose of this
pragmatic restriction on the doctrine of
foreseeability heightrns our commitment
to -2£, Ultimately we conclude that
without this limitation foreseeability
loses much of its ability to function as
a rule of law.
RAR at aratt eatcaeh tates
oS AS ees as
ae
Renee
ee
bi
II
Plaintiffs” first argue that the
"rule" of Robins Dry Dock is that "a tort
to the property of one which results in
the negligent interference with
contractual relationships of another does
not state a claim," and that so defined,
Robins Dry Dock is here inapplicable.
Next and relatedly, plaintiffs urge that
physical damage is not a prerequisite to
recovery of economic loss where the
damages suffered were foreseeable.
Third, plaintiffs argue that their
claims are cognizable in maritime tort
because the pollution from the collision
constituted a public nuisance and violated
the Rivers and Harbors Appropriation
3 The arguments of plaintiffs are not
uniform, but their differences are largely in
emphasis and focus.
A-/7
Act of 1899, as well as Louisiana law.
Defendants urge the opposite: that
Robins Dry Dock controlls these cases;
that the physical damage limitation on
foreseeability ought to be retained; and
that plaintiffs stated no claim for
" either as a nuisance
"federal pollution,'
or under the Rivers and Harbors Act.
Finally, defendants reply that state law
is not applicable to this maritime
collision case and in any event provides
plaintiffs no claim.
Iil
The meaning of Robins Dry Dock v.
Fiint, 272 U.6: 363, 933.08. 228, 72
L.Ed. 290 (1927)(Holmes, J.) is the flag
all litigants here seek to capture. We
turn first to that case and to its
historical setting.
A-8
Robins broke no new ground but
instead applied a principle, then settled
both in the United States and England,
which refused recovery for negligent
interference with "contractual rights."
Stated more broadly, the prevailing rule
denied a plaintiff recovery for economic
loss if that loss resulted from physical
damage to property in which he had no
proprietary interest. See, e.g., Byrd v.
English, 117 Ga. 191, 43 S.E. 419 (1903);
Cattle v. Stockton Waterworks Co., 10
GO.B. 833, 43% - 4Gih. -287S). See also
James, Limitations on Liability for
Economic Loss Caused by Negligence: A
Pragmatic Appraisal, 25 Van.L.Rev. 43,
44-46 (1972) (discussing history of the
rule); Carpenter, Interference with
Contract Relations, 41 Harv.L.Rev. 728
(1928). Professor James explains this
A-9
limitation on recovery of pure economic
loss: "The explanation... is a
pragmatic one: the physical consequences
of negligence usually have been limited,
but the indirect economic repercussions
of negligence may be far wider, indeed
virtually open-ended."" James, supra, at
45.
Decisions such as Stockton
illustrate the application of this
pragmatic limitation on the doctrine of
foreseeability. The defendant
negligently caused its pipes to leak,
thereby increasing the plaintiff's cost
in performing its contract to dig a
tunnel. The British court, writing
fifty-two years before Robins, denied the
plaintiff's claim. The court explained
that if recovery were not contained, then
in case suchs as Rylands v. Fletcher, 1
L.R.-Ex. 265 (1866), the defendant would
be liable not only to the owner of the
mine and its workers “but also to
every workman and person employed in the
mine, who in consequence of its stoppage
made less wages than he would otherwise
have done." [4 a8: “6374 See also
Societe Anonyme de Remorquage a Helice v.
Bennets, [1911] 1 K.B. 243.
=
In Robins, the time charterer of a
steamship sued for profits lost when the
defendant dry dock negligently damaged
the vessel's propeller. The propeller
had to be replaced, thus extending by
two weeks the time the vessel was laid
up in dry dock, and it was for the loss
of use of the vessel for that period
that the charterer sued. The Supreme
A-11
Court denied recovery to the charterer,
noting:
no authority need be cited
to show that, as a general
rule, at least, a tort to the
person or property of one man
does not make the tort-feasor
liable to another merely
because the injured person was
under a contract with that
other unknown to the doer of
the wrong. (citation omitted).
The law does not spread its
protection so far.
275 U.S. at 309, 88 §.Ce. at 435.
Justice Holmes did not st»op with this
delphic language, but with a citation to
three cases added a further signal to his
meaning:
A good statement, applicable
here, will be found in Elliott
Steam Tug Co., Ltd. v. The
Shipping Controller, [1922] l
% F 157 139, 140; Byrd v.
English, 117 Ga. 192, 73 S.B
OF The Federal No. 2, (C.C.A.
(1927] 21 F.2d 313.
Id.
A-12
The plaintiff in Elliott Steam Tug
was a charterer of a tug boat who lost
profits when the vessel was requisitioned
by the admiralty under wartime
legislative powers. In applying an
indemnity statute that authorized
recovery, the court noted that’ the
charterer could not have recovered at
common law: "(t]he charterer in
collision does not recover profits, not
because the loss of profits during
repairs is not the direct consequence of
the wrong, but because the consumer law
rightly or wrongly does not recognize him
as able to sue for such an injury to his
mere contractual rights."" Id. at 140.
(emphasis supplied). In Byrd v. English,
recovery of lost profits was denied when
a utility's electrical conduits were
negligently damaged by defendant, cutting
A-13
off power to plaintiff's printing plant.
In The Federal No, 2, the third case
cited by Justice Holmes, the defendant
tug negligently injured plaintiff's
employee while he was working on a barge.
The Second Circuit denied the employer
recovery from the tug for sums paid to
the employee in maintenance and cure.
The court (Manton, Swan and Augustus
He» ~ xplained:
it is too indirect to insist
that this may be _ recovered,
where there is neither’ the
natural right nor legal
relationship between the
appellant and the tug, even
though the alleged right of
action be based upon
negligence.
21 F.2d at 314.
™,
The principle that there could be no
recovery for economic loss absent
physical injury to a proprietary interest
A-14
was not only well established when Robins
Dry Dock was decided, but was remarkably
resilient as well. Its strength is
demonstrated by the circumstance that
Robins Dry Dock came ten years after
Judge Cardozo's shattering of privity in
MacPherson v. Buick Motor Co., 217 N.Y.
362, 333:- 8.8, 3ORe €aFn6) « See also
Glanzer v. Shepard, 233 N.Y. 236, 135
B.8. 273 (€i0ae). Indeed this limit on
liability stood against a sea of change
in the tort law. Retention of this
conspicuous bright-line rule in the face
of the reforms brought by the increased
influence of the school of legal realism
is strong testament both to the rule's
utility and to the absence of a more
4 The
"conceptually pure" substitute.
push to delete the restrictions. on
recovery for economic loss lost its
support and by the early 1940's had
failed. See W. Prosser, Law of Torts,
§129, at 938-940 (4th ed. 1971). In sun,
it is an old sword that plaintiffs have
here picked up.
4 Professor Carpenter's article, supru at
p. 5, came within months of Robins Dry Dock, and
sounded the drumbeat for change with arguments
similar to those now urged. What is relevant
here is that the courts did not follow Professor
Carpenter's call to abandon the physical injury
requirement. As Professor James pointed out:
The failure of the movement to gain
momentum takes on added significance
when it is put into context. It
coincided with a veritable ground swell
in the law of negligence that pushed
liability for physical injuries toward
the full extent of what was foreseeable
and shattered ancient barriers to
recovery based on limitations
associated with privity of contract and
similar restrictive concepts.
James, supra, at 47 (citing 2 Harper & James §§
18.3, 18.5 chs. 27-29 (1956 & Supp.1968);
Prosser, The Fall of the Citadel, 50 Mim. L.
Rev. 791 (1966); Wade, Strict Tort Liability of
Manufacturers, 19 Sw.L.J. 5 (1965).
A- 16
ate
Plaintiffs would confine Robins to
losses suffered for inability to perform
contracts between a plaintiff and others,
categorizing the tort as a species of
interference with contract. When seen in
the historical context described above,
however, it is apparent that Robins Dry
Dock represents more than a limit on
recovery for interference with
contractual rights. Apart from what it
represented and certainly apart from what
it became, its literal holding was not
so restricted. If a time charterer's
relationship to its negligently injured
vessel is too remote, other claimants
without even the connection of a contract
are even more remote.
It is true that the steamship
company had proceeded in libel and the
A-17
lower courts had sustained recovery on
contract principles. The Robins court,
however, pushed the steamship company's
contract argument aside and directly
addressed its effort to recover in tort.
The language and the cases the Robins
court pointed to as "good statement[s]"
of the r -inciple make plain that the
charterer failed to recover its delay
claims from the dry dock because the
court believed them to be too remote.
Notably, although the dry dock company
did not know of the charter party when
it damaged the propeller, delay losses
by users of the vessel were certainly
foreseeable. Thus Robins was a
pragmatic limitation imposed by the
court upon the tort doctrine of
foreseeability.
In a sense, every claim of economic
injury rests in some measure on an
A-18
interference with contract or prospective
advantage. It was only in this sense
that profits were lost in Byrd v. English
when the electrical power to plaintiffs
printing plant was cut off. The printing
company's contractual right to receive
power was interfered with, and in turn,
its ability to print for its customers
was impinged. That the printing company
had a contract with the power company
did not make more remote the
relationship between its loss of profits
and the tortious acts. To the contrary,
the contract reduced this remoteness by
defining an orbit of predictable injury
smaller than if there were no contract
between the power company and_ the
printer. When the loss is economic
rather than physical, that the loss
caused a breach of contract or denied an
A-19
expectancy is of no moment. i= -s
plaintiff connected to the damaged
chattels by contract cannot’ recover,
others more remotely situated are
forclosed a fortiori. Indisputably, the
Robins Dry Dock principle is not as
easily contained as plaintiff would have
it. We turn to our application of the
principle, its application in other
circuits, and the tort law of our Gulf
states before returning to the doctrine
itself.
”
This circuit has consistently
refused to allow recovery for economic
loss absent physical damage to a
proprietary interest. In Kaiser
Aluminium & Chemical Corp. v. Marshland
Dredging Co., Imnc., 455 F.2d 957 (5th
Cir. 1972), the plaintiff lost gas
supplies when the defendant negligently
broke a gas pipeline. We held that
because the interference with Kaiser's
business was only. negligently inflicted,
recovery was precluded as a matter of
law. In Dick Meyers Towing Service, Inc.
¥. Outed States, 5/7 F.2d 1023 (5th Cir.
1978), we denied recovery to a tug boat
operator for damages suffered when a lock
on Alabama's Warrior River was closed as
a result of defendant's negligence. We
explained:
The law has traditionally been
reluctant to recognize claims
based solely on harm to the
interest in contractual
relations or business
expectancy. The critical
factor is the character of the
interest harmed and not the
number of parties involved.
Id. at 1025.
We denied recovery to the Louisville
Railroad for its loss suffered when the
A-21
M/V BAYOU LACOMBE damaged a bridge that
the railroad had a contract right to use.
Louisville & Nashville R. R. Co. v. M/V
BAYOU LACOMBE, 597 F.2d 469 (5th Cir.
1979). We rejected the railroads's
argument that its right to use the
damaged bridge was a property right
sufficient to support recovery,
concluding’ that ations its label,
recovery was sought for loss of an
economic expectancy. Id. at 474.
In Vicksburg Towing Co. wv.
Mississippi Marine Transport Co., 609
F.2d 176 (5th Cir. 1980) (Politz, J.), we
sustained recovery by an owner of a dock
leased to another for damages to the dock
caused by defendant's negligence. We
asserted that the distinction between
recovery by an owner when his property
was damaged and recovery by others, as
A-22
applied in Robins, Dick Meyers, and M/V
BAYOU LACOMBE, was “meaningful, real and
dispositive." Id. at 177.°
-5-
Nor has this circuit been the sole
guardian of the Robins Dry __ Dock
principle. Rederi A/B Soya v. Evergreen
Marine Corp., 1972 A.M.C. 13599;
(E.D.¥a,1971), 0€6°¢, 1972 A.M.G.- 336
(4th Cir. 1972), was a case factually
similar to Robins. There the Fourth
Circuit adopted the opinion of the
district court that had denied on the
> The Eleventh Circuit has applied the
Robins Dry Dock rule as developed in our ow
circuit. See Kingston Shipping Co. v. Roberts,
667 F.2d 34 (llth Cir. 1982) (owners of vessels
delayed when ship channel was blocked due to
maritime collision could not recover economic
losses?. That court recently considered
abandoning the Robins Dry Dock doctrine but did
not do so. See Hercules Carriers, Inc. v.
Florida, 720 F.2¢ 1201 (11th Cir. 1983), aff'd b
an equally divided court, 728 F.2d 1359 (llt
Cir.1984) (en banc), cert, denied, -- U.S. --,
105 S.Ct 128, 83 L.Ed2d 69.
A-23
basis of Robins a time charterer's claim
for profits lost when his leased vessel
was negligently damaged. An identical
result was reached in Federal Commerce &
Navigation Co. v. M/V MARATHONIAN, 528
F.2d 907 (2d Cir. 1975), cert. denied,
425 U.S. 975, 96 S.Ct. 2176, 48 L.Ed.2d
799 (1976).
In Henderson v. Arundel Corp., 262
F.Supp. 152 (D.Md. 1966), aff'd, 384 F.2d
998 (4th Cir. 1967), the court applied
Robins to deny claims by seamen for wages
lost when the vessel on which they worked
was negligently damaged in a collision.
Courts in the First and Sixth Circuits
have applied Robins in similar fashion.
See, e.g., Hayes v. Luckenbach S.S. Co.,
92 F.Supp. 684 (D.Mass. 1950), and Casado
A- 24
v. Schooner Pilgrim, Inc., 171 F.Supp. 78
(D.Mass. 1959) (seamen denied recovery of
wages lost when vessel was negligently
damaged); Complaint of Great Lakes Towing
Co., 395 F.Supp. 810 (N.D.Ohio 1974)
(dockworkers denied recovery of wages
lost when dock was negligently damaged) .°
The court in General Foods Corp. v.
United States, 448 F.Supp. 111 (D.Md.
1978), faced a situation similar to that
presented to us in M/V BAYOU LACOMBE. A
ship collided with a railroad bridge over
the Chesapeake and Delaware Canal,
forcing General Foods to ship by truck
6 We note that both the Ninth and
Eleventh Circuits have permitted crewmembers of a
fishing boat to recover for their share of the
lost catch when the vessel was negiigently’
damaged. See Carbone v. Ursich, 209 F. 2d 178,
181-82 (9th Cir. 1953); Miller Industries v.
Caterpillar Tractor Co., 733 F. 2d 813, 818-20
(llth Cir. 1984). Both courts recognized,
however, that such recovery was an exception to
the general rule.
A-25
goods moving to and from one of its
plants. Relying on Robins Dry Dock, the
court denied General Foods recovery for
these additional costs. The court
discussed Robins, the decisions applying
its rule, as well as decisions which
assertedly undermined the doctrine and
concluded:
Imposition of liability in the
present case involves precisely
the limitless type of liability
which courts have consistently
considered excessive for
negligence. Neither the case
law nor the sound. policy
considerations on which the
decisions are bottomed support
plaintiff's claims for its
economic losses. Even assuming
General Foods is a foreseeable
plaintiff, “the law does not
spread its protection so far."
Id. at 116.
Plaintiffs urge that the decisions
in Petition of Kinsman Transit Co., 388
F.2d 821 (2d Cir. 1968) (Kinsman II), and
Union Oil Co. v. Oppen, 501 F.2d 558 (9th
Cir. 1974), support their arguments that
the Robins Dry Dock principle should be
abandoned. We disagree. The policy
considerations on which both those
decisions are bottomed confirm our
opinion that pragmatic limitations on the
doctrine of foreseeability are both
desirable and necessary.
In Kinsman "an unusual concatenation
of events on the Buffalo River" resulted
in a disaster which disrupted river
traffic for several months.’ Because of
the disruption, the plaintiffs incurred
7 Kinsman Il, 388 F.2d at 822. Judge
Kaufman briefly summarized the facts of Kinsman
as follows:
[A]s result of the negligence of the Kinsman
Transit Company and the Continental Grain
Company the S.S. MacGilvray Shiras broke
loose from her moorings and careened stern
first down the narrow, S-shaped river
A-27
extra expenses in fulfilling their
contracts to supply and transport wheat
and corn. In a previous panel decision
arising out of the same facts, the court
had rejected the defendants’ arguments
that recovery by such plaintiffs should
be disallowed because their injuries were
not foreseeable. Judge Friendly stated
that while "[floreseeability of danger
[was] necessary to render conduct
negligent," it was not required that the
defendants envision the precise harm
resulting from their conduct before
chamnel. She struck the S.S. Michael K.
Tewksbury, which in tum broke loose from
her moorings and drifted down-stream
followed by the Shiras-until she crashed’
into the Michigan Avenue Bride. The bride
collapsed and its wreckage, together with
the Tewksbury and the Shiras, formed a dam
which caused extensive flooding and an ice
jam reaching almost 3 miles upstream. As a
result of this disaster, transportation on
the river was disrupted [for] a period of
about 2 months.
Id.
A-28
liability could be imposed. Petition of
Kinsman Transit Co., 338 F.2d 708, 724
(2d Cir. 1964) (Kinsman I).
In Kinsman II the defendants argued
that the plaintiffs' claims should be
denied because there was no cause of
action for negligent interference with a
contractual right. The court dismissed
the claims, but did so on the basis that
the damages were too remote.° Thus,
Judge Kaufman wrote:
We...prefer to leave the rock-strewn
path of "negligent interference with
contract" for more familiar tort
terrain. Cargill and Cargo Carriers
argue broadly that they suffered damage
as a result of defendants’ negligence
and we will deal with their claims in
these terms instead of on the more
esoteric "negligent interference"
ground.
Having determined our course, we
nevertheless conclude that recovery was
properly denied on the facts of this
case because the injuries to Cargill
and Cargo Carriers were too "remote" or
"indirect" a consequence of defendants'
negligence.
388 F.2d at 824
plaintiffs argue, Kinsman supports using
foreseeability to determine whether their
claims are cognizable in maritime tort.
We think the opinion itself answers that
contention. While rejecting any bright
line rule, the court recognized that
foreseeability was not a panacea and that
limits on that concept should _ be
maintained.
[I]t was a foreseeable
consequence of the negligence
.. that the river would be
dammed.... It may be that the
specific manner was not
foreseeable in which the
damages to Cargill and Cargo
Carriers would be incurred but
such strict foreseeability ...
has not been required. [Yet]
"somewhere a point will be
reached when courts will agree
that the link has become too
tenuous (citation
omitted). We believe that this
point has been reached with the
Cargill and Cargo Carrier
claims.
In the final analysis, the
circumlocution whether posed in
terms of "foreseeability,"
A-30
"duty," "proximate cause,"
"remoteness," etc. seems
unavoidable....
[W]e return to Judge Andrews'
frequently quoted statement in
Paseerer§ 64.4. 16 S66 all aoa
question of expediency ... of
fair judgment, always keeping
in mind the fact that’ we
endeavor to make a rule in each
case that will be practical and
in keeping with the general
understanding of mankind."
Kinsman II, 388 F.2d at 824-25.
As we explain in Part IV of this
opinion, we disagree with a case-by-case
approach because we think the value of a
rule is significant in these maritime
decisions. Kinsman II's general analysis
of the problem, however, recognizing as
it does the need for the imposition of
limitations on recovery for the
foreseeable consequences oti an act of
negligence, is compatible with our own.
9 See Marine Navigation Sulphur Carriers,
Inc. v. Lone Star Industries, Inc., 638 F.2d /00
(4th Cir. 1931), (following Kinsman II and
A-31
In Union Oil, vast quantities of raw
crude were released when the defendant
oil company negligently caused an oil
spill. The oil was carried by wind,
wave, and tidal currents over large
stretches of the California coast
disrupting, among other things,
commercial fishing operations. While
conceding that ordinarily there is no
recovery for economic losses
unaccompanied by physical damage, the
court concluded that commercial fishermen
were foreseeable plaintiffs whose
interests the oil company had a duty to
protect when conducting drilling
operations. The opinion pointed out that
disallowing claims for purely economic injuries
suffered when the defendant's vessel collided
with a bridge.)
the fishermen's losses were foreseeable
and direct consequences of the spill,
that fishermen have historically enjoyed
a protected position under maritime law,
and suggested that economic
considerations also supported permitting
recovery.
Yet Union Oil's holding was
carefully limited to commercial
fishermen, plaintiffs whose economic
losses were characterized as "of a
particular and special nature." Union
Oil, Den: F.26..at 570, The Union Oil
panel expressly declined to "open the
door to claims that may be asserted by
other[s] ... whose economic’ or
personal affairs were discommoded by the
oi1 spill" and noted that the general
rule denying recovery for pure economic
loss had "a legitimate sphere within
which to operate."" Id.
10
10
Judge Sneed wrote:
Noting said in this opinion is intended
to suggest, for example, that ¢very
decline in the general commercial
activity of every business in the Santa
Barbara area following the occurrences
of 1969 constitutes a legally
cognizable injury for which the
defendants may be responsible. The
plaintiffs in the present actions
lawfully and directly make use of a
resource of the sea, viz, its fish, in
the ordinary course of their business.
This type of use is entitled to
protection from negligent conduct by
the defendants in their drilling
operations. Both the plaintiff; and
defendants conduct their business
operations away from land and in, on
and under the sea. Both must carry on
their commercial enterprises in a
reasonably prudent manner. Neither
should be permitted negligently to
inflict commercial injury on the other.
We decide no more than this.
501 F.2d at 570-71.
A substantial argument can be made that
commercial fishermen possess a_ proprietary
interest in fish in waters they normally harvest
sufficient to allow recovery for their loss.
Whether the claims of commercial fishermen ought
to be analyzed in this manner or simply carved
A-34
In sum, the decisions of courts in
other circuits convince us that Robins
Dry Dock is both a widely used and
necessary limitation on recovery for
economic losses. The holdings in Kinsman
and Union Oil are not to the contrary.
The courts in both those cases miede plain
that restrictions on the concept of
foreseeability ought to be imposed where
recovery is sought for pure economic
losses.
aa
Jurisprudence developed in the Gulf
states informs our maritime
decisions.
from the rule today amnounced, in the fashion of
Union Oil, or allowed at all, we leave for later.
That is, today's decision does not foreclose free
consideration by a court panel of the claims of
commercial fishermen.
It supports the Robins rule. Courts
applying the tort law of Texas, Georgia,
Florida. Alabama, Mississippi and
Louisiana have consistently denied
recovery for economic losses negligently
inflicted where there was no physical
damage to a proprietary interest.
In Rodriquez v. Carson, 519 S.W.2d
214 (Tex.Civ.App.-Amarillo 1975, writ
ref'd 4.%.0.), the plaintiff truck driver
sued for wages he lost when his
employer's truck was damaged by _ the
defendant's negligence. The court denied
recovery on the ground that there was no
duty to the truck driver and explained
its decision in terms similar to the
Robins rule:
[W]e find no breach of a duty
owed to appellant by appellee
with respect’ to the injury,
i.e., the absence of a truck
for appellant to drive. If
A-36
there were any obligation in
this respect, it would arise by
reason of some relationship or
agreement between the appellant
and his employer. The
appellant did not suffer any
bodily injuries, and in the
absence of any showing that he
had any vested interest in the
truck he did not suffer any
injury to personal property.
Id. at 216. Similarly, in Morse v.
Piedmont Hotel, 110 Ga.App. 509, 139
S.E.2d 133 (1964), the court denied
recovery to a plaintiff jewelry salesman
who alleged that because the hotel had
negligently lost his employer's
merchandise--goods for which he was
responsible--he lost his job and could no
longer obtain insurance policies
necessary for employment as a jewelry
salesman. The court reasoned that such
indirect economic losses were not
recoverable where the plaintiff had no
property interest in the lost jewels and
thus refused to permit recovery for
negligent interference with the
salesman's business interests. In Ethyl
Corp. Vv. Balter, 386 So.2d 1220
(Fla.Dist.Ct.App. 1980), cert. denied,
452 U.S. 955, 101 S.Ct. 3099, 69 L.Ed.2d
965 (1981), the court stated that it was
well-settled in Florida that there was no
liability in negligence for interference
with economic interests such as
contractual or business’ relationships:
"There is no such thing as a cause of
action for interference which is only
negligently or consequentially effected.”
Id. at 1224. The courts of Alabama and
Mississippi also refuse recovery for
wrongful interference with contractual or
business interests where the offensive
conduct is unintentional. See, e.g.
Purcell Co., Inc. v. Spriggs Enterprises,
Inc., 431 So.3d 515, 533 (Ala. 1983);
Cranford v. Shelton, 378 So.2d 652, 655
(Miss. 1980).
The Supreme Court of Louisiana
recently considered abandoning the Robins
rule in PPG Industries, Inc. v. Beam
Dredging, Inc., 447 So.2d 1058 (La.
1984), where a customer of a pipeline
owner sued a dredging contractor who
negligently damaged the pipeline. The
customer's claim was denied. The court
explained Robins as based on a policy of
avoiding - multiplicity of action and
unforseeable extensions of liability.
Id. at 1060-61. The court then used
those policy considerations to conclude
that under a risk-duty analysis. the
“moral, social and economic’ values
involved" did not warrant extending a
duty, and hence liability, to those who
might suffer indirect economic losses
from an act of negligence. The court did
not purport to make a rule for every
case, but did suggest that it was “highly
unlikely" that indirect economic losses
of third parties should ever be
recoverable in negligence. Id. at 1061.
IV
Plaintiffs urge that the requirement
of physical injury to a proprietary
interest is arbitrary, unfair, and
illogical, as it denies recovery for
foreseeable irjury caused by negligent
acts. At its bottom the argument is that
questions of remoteiess ought to be left
to the trier of fact. Ultimately the
question becomes who ought to
decide-judge or jury-and whether there
will be a rule beyond the jacket of a
A-40
given case. The plaintiffs contend that
the "problem" need not be_ separately
addressed, but instead should be handled
by "traditional" principles of tort law.
Putting the problem of which doctrine is
the traditional one aside, their
rhetorical questions are flawed in
several respects.
Those who would delete the
requirement of physical damage have no
rule or principle to substitute. Their
approach fails to recognize limits upon
the adjudicating ability of courts. We
do not mean just the ability to supply a
judgment; prerequisite to this
adjudicatory function are preexisting
rules, whether the creature of courts or
legislatures. Courts can decide cases
without preexisting normative guidance
{
A-41
but the result becomes less judicial and
more the product of a managerial,
legislative or negotiated function. !}
Review of the foreseeable
consequences of the collision of the SEA
DANIEL and TESTBANK demonstrates the wave
upon wave of successive economic
consequences and the managerial role
plaintiffs would have us assume. The
vessel delayed in St. Louis may be unable
” As Professor Henderson put it:
\
When asked, cajoled, and finally forced
to try to solve unadjudicable problems,
courts will inevitably respond in the
only manner possible-they will begin
exercising managerial authority and the
discretion that goes with it. Attempts
will be made to disguise the
substitution, to preserve appearances,
but the process which evolves should
(and no doubt eventually will) be
recognized for what it is-not
adjudication, but an elaborate,
expansive masquerade.
Henderson, Expand ie the Neg igence Concepts
Retreat From the e o ; A 9 ;
4/6-// (19/6).
A-42
to fulfill its obligation to haul from
Memphis, to the injury of the shipper, to
the injury of the buyers, to the injury
of their customers. Plaintiffs concede,
as do all who attack the requirement of
physical damage, that a line would need
to be drawn -- somewhere on the other
side, each plaintiff would say in turn,
of its recovery. Plaintiffs advocate not
only that the lines be drawn elsewhere
but also that they be drawn on an ad hoc
and discrete basis. The result would be
that no determinable measure of the limit
of foreseeability would precede’ the
decision on liability. We are told that
when the claim is too remote, or too
tenuous, recovery will be denied.
Presumably then, as among all plaintiffs
suffering foreseeable economic loss,
recovery will turn on a judge or jury's
A- 43
decision. There will be no rationale
for the differing results save’ the
"judgment" of the trier of fact.
Concededly, it can "decide" all the
claims presented, and with comparative if
not absolute ease. The point is not that
such a process cannot be administered but
rather that its judgments would be much
less the products of a determinable rule
of law. In this important sense, the
resulting decisions would be judicial
products only in their draw upon judicial
resources.
The bright line rule of damage to a
proprietary interest, as most, has the
virtue of predictability with the vice of
creating results in cases at its edge
that are said to be "unjust" or "unfair."
Plaintiffs point to seemingly perverse
results, where claims the rule allows and
those it disallows are juxtaposed--such
as vessels striking a dock, causing minor
but recoverable damage, then lurching
athwart a channel causing great but
unrecoverable economic loss. The answer
is that when lines are drawn sufficiently
sharp in their definitional edges to be
reasonable and predictable, such
differing results are the inevitable
result--indeed, decisions are the desired
product. But there is more. The line
drawing sought by plaintiffs is no less
arbitrary because the line drawing
appears only in the outcome--as_ one
claimant is found too remote and another
is allowed to- recover. The true
difference is that plaintiffs' approach
would mask the results. The present rule
would be more candid, and in addition, by
making results more predictable, serves a
A-45
‘iia
normative function. It operates as a
rule of law and allows a court to
adjudicate rather than manage. !4
V
That the rule is identifiable and
will predict outcomes in advance of the
ultimate decision about recovery enables
it to play additional roles. Here we
agree with plaintiffs that economic
analysis, even at the rudimentary level
of jurists, ic hetegul both in the
identification of such roles and _ the
essaying of how the roles play. Thus it
is suggested that placing all the
12 Fuller, The Forms and Limits of
Adjudication, 92 Harv.L.Rev. 353, 396 (1978).
This case illustrates how our technocratic
tradition masks a deep difference in attitudes
toward the roles of a judiciary. The difference
between the majority and dissenting opinions is
far more than a choice between competing maritime
rules. The majority is driven by the principal
of self ordering and modesty for the judicial
role; the dissent accepts a role of management
which can strain the limits of adjudication.
A-46
consequence of its error on the maritime
industry will enhance its incentive for
safety. While correct, as far as such
analysis goes, such in torrorem benefits
have an optimal leval. Presumably, when
the cost of an unsafe condition exceeds
its utility there is an incentive to
change. As the costs of an accident
becomes increasing multiples of its
utility, however, there is a point at
which greater accident costs lose
meaning, and the incentive curve
flattens. When the accident costs are
added in large but unknowable amounts the
value of the exercise is diminished.
With a disaster inflicting large and
reverberating injuries through the
“economy, as here, we believe the more
important economic inquiry is that of
relative cost of administration, and in
A- 47
maritime matters administration quickly
involves insurance. Those economic
losses not recoverable under the present
rule for lack of physical damage to a
proprietary interest are the subject of
first party or loss insurance. The rule
change would work a shift to the more
costly liability system of third party
insurance. For the same reasons that
courts have imposed limits on the concept
of foreseeability, liability insurance
might not be readily obtainable for the
types of losses asserted here. As
Professor James has noted, "[s]Jerious
practical problems face insurers’ in
handling insurance against potentially
wide, open-ended liability. From an
insurer's point of view it is not
practical to cover, without limit, a
liability that may reach catastrophic
A-48
proportions, or to fix a_ reasonable
premium on a risk that does not iend
itself to actuarial measurement." James,
supra, at 53. By contrast, first party
insurance is feasible for many
businessman who might be affected by a
disruption of river traffic or by a halt
in fishing activities can protect against
that eventuality at a relatively low cost
since his own potential losses are finite
and readily discernible. Thus, to the
extent that economic analysis informs our
decision here, we think that it favors
retention of the present rule.
VI
Plaintiffs argue alternatively that
their claims of economic losses are
cognizable in maritime tort because the
pollution from the collision constituted
a public nuisance, and violated _ the
A-49
Rivers and Harbors Appropriation Act of
1899 and Louisiana law. We look to each
in turn.
ate
Plaintiffs seek to avoid the Robins
rule by characterizing their claims as
damages caused by a public nuisance.
They suggest that when a defendant
unreasonably interfers with public rights
by obstructing navigation or negligently
polluting a waterway he creates a public
nuisance for which recovery is available
to all who have sustained "particular
13 Plaintiffs argue that the Supreme
Court, in Pennsylvania v. Wheeli & Belmont
Bride Co., 54 v5. (13 How.) 518, iu L.Ed. 249
(1852), recognized a federal cause of action for
public nuisance caused by the obstruction of
navigable waterways. As a threshold matter, we
note that the Court has apparently foreclosed
this line of reasoning in California v. Sierra
Club, 451 U.S. 287, 296 n. 7, IOI S.Ct. 1775,
T780 n. 7, 68 L.Ed. 2d 101 (1981):
A-50
damages."" As defined at common law such
damages are those which are substantially
greater than the presumed-at-law damages
suffered by the general public as a
result of the nuisance. See generally
Restatement (Second) of Torts, §§821B,
Respondents suggest that the Wheeling Court
held that federal courts were regularly
available to entertain actions for muisance
brought by private parties with respect to
obstructions of navigable rivers. But
nothing in the opinion supports that view.
The discussion in that case of the common
law of muisance is based on the Court's
position that it was entitled to consider,
state as well as federal issues in the cause
before it. Indeed, that the opinion did not
establish a general federal law of muisance
with respect to navigable waters was a point
reiterated in Willamette [Iron Bridge Co. v.
Hatch, 125 UWS. I, 15-17, 98 S.Ct. SII
318-319, 31 L.Ed. 629 (1888) }. In short,
althcugh there may have been a common-law
muisance cause of action for obstructions of
navigable waterways. Wheeling Bridge did
not federalize that law. Respondents have
cited no decision by this Court that did.
In any case, our treatment of the nuisance
issue, infra, means that plaintiff here
cannot recover whether or not they have a
substantive claim for muisance umder the
federal law.
A-51
821C (1977); Prosser, Private Action For
Public Nuisance, 52 Va.L.Rev. 997 (1966).
Characterizing the problem as one of
public nuisance, however, does not
immediately solve the problems with
plaintiffs' damage claims for pure
economic losses. As Dean Prosser has
explained, "courts have not always found
it at all easy to determine what is
sufficient ‘particular damage’ to support
[a] private action [for a _ public
nuisance}, and some rather fine lines
have been drawn in the decisions." WwW.
Prosser, Law of Torts §88 (4th ed. 1971).
In drawing such lines today we are
unconvinced that we should abandon the
physical damage limitation as a
prerequisite to recovery for economic
loss.
The problem in public. nuisance
theory of determining when private
damages are sufficiently distinct from
those suffered by the general public so
as to justify recovery is as difficult,
if not more so, as determining which
foreseeable damages are too remote to
justify recovery in negligence. In each
case it is a matter of degree, and in
each case lines must be drawn. With
economic losses such as the ones claimed
here the problem is to determine who
among an entire community that has been
commercially affected by an accident has
sustained a pecuniary loss so great as to
justify distinguishing his losses from
similar losses suffered by others. Given
the difficulty of this task, we see no
jurisprudential advantage in permitting
the use of nuisance theory to skirt the
Robins rule.
Were we to allow plaintiffs recovery
for their losses under a public nuisance
theory we would permit recovery for
injury to the type of interest that, as
we have already explained, we have
consistently declined to protect.
Nuisance, as Dean Prosser has explained,
is not a separate tort subject to rules
of its own but instead is a type of
damage. W. Prosser, Law of Torts §87
(4th ed. 1971). Our decisions under
Robins have emphasized the nature of the
interest harmed rather than the theory of
recovery. As we noted in Dick Meyers
Towing, "[rJephrasing the claim as a
public nuisance claim does not change its
essential character." Dick Meyers, 577
F.2d at 1025 n. 4. Thus we conclude that
A-54
plaintiffs may not recover for pure
economic losses under a public nuisance
theory in maritime tort.
me
Plaintiffs' arguments that’ the
Rivers and Harbors Appropriation Act
affords them an avenue of relief are
foreclosed by Supreme Court decision.
Plaintiffs suggest that both Section 10
of the Act, which’ prohibits’ the
obstruction of navigable waters, and
Section 13 of the Act, which prohibits
the deposit of refuse into navigable
waters, have been violated, and that such
violations provide a basis for civil
i iii a i |
14
liability. In California v. Sierra
Club, 451 U.S. 287, 101 S.Ct. 1775, 68
L.Ed.2d 101 (1981), the Court held thet
the Rivers and Harbors Appropriation Act
did not authorize private actions to be
brought for violation of its provisions.
Accordingly, plaintiffs' claims under the
Rivers and Harbors Act may not’ be
maintained. +?
pe we
Plaintiffs also urge that their
economic losses are recoverable as state
m Section 10 of the Rivers and Harbors
Appropriation Act of 1899 provides in part:
The creation of any obstruction not
affirmatively authorized by Congress, to the
navigable capacity of any of the waters of
the United States is prohibited, and it
shall not be lawful to ... excavate or fill,
or in any manner to alter or modify the
course, location, condition, or capacity of,
any port, roadstead, haven, harbor, canal,
lake, harbor or refuge or inclosure within
the limits of any breakwater, or of the
channel of any navigable water of the United
A~ 56
law claims in negligence, nuisance or
under the Louisina Environmental Affairs
Act of 1980. Because established
principles of general maritime law govern
the issue of recovery in this case, we
reject these state law theories.
States, unless the work has been recommended
by the Chief of Engineers and authorized by
the Secretary of the Amny prior to beginning
the same.
33 U.S.C. § 4063.
Section 13 of the Act provides in part:
It shall not be lawful to throw, discharge
or deposit, or cause, suffer, or procure to
be thrown, discharged, or deposited either
from or out of any ship, barge, or other
floating craft of any kind, or from the
shore, wharf, manufacturing establishment,
or mill of any kind, any refuse matter of
any kind or description whatever other than
that flowing from streets and sewers and
passing therefrom in a liquid state, into
any navigable water of the United States, or
into any tributary of any navigable water
from which the same shall float or be washed
into such navigable water; and it shall not
be lawful to deposit, or cause, suffer, or
procure to be deposited material of any kind
in any place om the bank of any navigable
A-57
ees Aiea \
The claims all involve a collision
on a navigable waterway of the United
States and the resulting damages, and
hence are within the admiralty and
maritime jurisdiction of the federal
courts. See, e.g., Foremost Insurance i
Co. v. Richardson, 457 U.S. 668, 102
water, or on the bank of any tributary of
any navigable water, where the same shall be
liable to be washed into such navigable
water, either by ordinary or high tides, or
by storms or floods, or otherwise, whereby
navigation shall or may be impeded or
obstructed...
33 U.S.C. §407
15 While the Court in California v. Sierra
Club addressed only the question whether a
private cause of action should be implied umder
Section 10, we think the Court's’ decision
requires a conclusion that private actions may
not be brought under Section 13 either. Both
sections were enacted to insure the Federal
Government's ability to prevent the obstruction
of navigable waterways. We find the Court's
analysis of Section 10 under Cort v. Ash, 422
U.S. 66, 95 S.Ct. 2080, 45 L.ED.2d 26 (1975)
equally applicable to Section 13.
A-58
S.Ct. 2654, 73 L.Ed.2d 300 (1982). Under
the Admiralty Extension Act our
jurisdiction extends to the claims for
shoreside damages as well as to those
directly involving the waterway .!°
It is well-settled that the invo-
cation of federal admiralty jurisdiction
results in the application cf federal
admiralty law rather than state law.
See, e.g., Kosick v. United Fruit Co.,
365 U.S. 7S1, 81 $.Ct. 8866, 6 L.Ed.2d@ 56
(1961); Freeport Sulphur Co. v. S/S
Hermosa, 526 F.2d 300, 302 n. 2
16 The Admiralty Extention Act provides in
The admiralty and maritime jurisdiction
of the United States shall extend to
and include all cases of damage or
injury, to person or property, caused
by a vessel on navigable water,
notwithstanding that such damage or
injury be done or consummated on land.
46 U.S.C. § 740
A- 59
(Sth Cir. 1976). While our maritime
decisions are informed by common law
developments in the state courts, there
is no requirement, as in diversity cases,
that state law be adopted. Indeed the
federal interest in protecting maritime
commerce is often best served by the
establishment of uniform- rules of
conduct. We believe that such is the
case here. The Robins rule has proved to
be a workable and useful tool in our
maritime jurisprudence. To permit
recovery here on state law grounds would
undermine the principles we seek to
preserve today. Accordingly, we decline
to adopt plaintiffs' state law claims as
theories of recovery.
VII
In conclusion, having re-
examined the history and central
ee ee
purpose of the doctrine of Robins Dry
Dock as developed in this circuit, we
remain committed to its teaching.
Denying recovery for pure economic losses
is a pragmatic limitation on the doctrine
of foreseeability, a limitation we find
to be both workable and useful. Nor do
we find persuasive plaintiffs’ arguments
that their economic losses are
recoverable under a= public nuisance
theory, as damages for violation of
federal statutes, or under state law.
Accordingly, the decision of the
district court granting summary judgment
to defendants on all claims for economic
losses unaccompanied by physical damage
to property is AFFIRMED.
GEE, Circuit Judge, with whom CLARK,
Chief Judge, joins, concurring:
A-61
Both the majority opinion and the
dissent do our Court proud, joining a few
others on that relatively short list of
truly distinguished and thoughtful legal
writings of which it or any court can
boast Neither opinion, however,
confronts explicitly what is for me the
overarching issue in the appeal. That
issue, a legal one only in the bragibat
sense and only implicitly presented, is
perhaps best addressed in a _ brief
collateral writing such as this will be.
The issue to which I refer is, who
should deal with questions of such
magnitude as the rule for which the
dissent contends would, again and again,
draw before the courts? An oil spill
damages hundreds, perhaps thousands, of
miles of coastal area. A cloud of
noxious industrial gas leaks out, kills
A-62
thousands, and injuries thousands more.
A commonly-used building material is
discovered, years after the fact, to
possess unforeseen lethal qualities
affecting thousands who have worked with
it. The long-term effects of inhaling
coal dust are found to be disabling to a
significant proportion of veteran miners.
None of these illustrations is fanciful;
each has arisen in recent times. and
presented itself for resolution to our
body politic. Congress’ has dealt
effectively with Black Lung; it has
signally failed to deal with the ravages
of asbestosis--a scourge, I suspect, far
more general and wwidespread--and a
swelling wave of individual asbestosis
claims, to be resolved on a case by case
basis, pushes slowly through our court
system, threatening to inundate it and to
A-63
eens ix
consume in punitive damage awards to
early claimants the relatively meager
assets available to compensate’ the
general class affected, many of whom have
not yet suffered ~ onset of symptoms. 2?
It is my thesis that the
dispute-resolution systems of courts are
poorly equipped to manage disasters of
such magnitude and that we should be wary
of adopting rules of decison which, as
would that contended for by the dissent,
encourage the drawing of their broader
aspects before us.
An exhaustive study of the
deficiencies of applying a mechanism
originally deveoped to decide who owns
\
title to Blackacre, or whether it was
See Jackson v. Johms-Manville Sales
Corporation, 750 F.2d 1314, at 1329, (th Cir.
TORS) (en banc) (Clark, Ch.J., dissenting).
A-64
Smith or Jones who ran the stop sign in
his wagon, to the management of general
disasters is beyond either the demands of
this writing or the competence and
available time of its writer. For
today, a few observations and
illustrations must serve.
I have already noted the probably
consequences of attempting to compensate,
on a case by case basis, the victims of
asbestosis, a class temporally deployed
across decades and comprising an open end
extending no man knows how far into the
future: the compensatory bucket may well
be emptied by punitive damages and
expenses of litigation long before remote
members are even in a position to line up
For an overview of allied questions,
see Sowell, Knowledge and Decisions. 229 et seq.
(1980).
for a compensatory drink. Even
considering compensatory damages alone
for early claimants, compassionate
juries--keenly aware that large
percentages of any award that they make
will go for an individual's attorneys’
fees and other expenses of his
litigation--will likely insure’ that
little of the limited pot will remain to
succor late comers. Asbestosis and like
disasters cry out for treatment by
measures and procedures less limited than
those available to such institutions as
we.
For courts of their nature proceed
deductively, reasoning from general
principles to particular outcomes. in
individual disputes. This is so even
where class actions are concerned,
actions that can offer a partial, but
A-66
only a_ partial, relief from the
limitations of case by case adjudication,
as the situation of the late-maturing
asbestosis claims that I have instanced
illustrates. Such a system as ours works
tolerably well in the traditional case
for which it was developed, where the
stakes are limited to who owns the farm
or to some other finite benefit. Its
deficiencies become immediately and
painfully apparent, however, when the
consideration of factors inherently
extraneous to the dispute becomes
necessary or desirable to resolving it.
Of these factors, perhaps the most often
encountered is that of financial reality.
The limited resources available to
compensate asbestosis victims are only a
particular illustration of the intrusion
of this factor. The more general problem
arises whenever individual courts
contemporaneously grant sweeping awards
against the same entity, perhaps a
governmental one, in unconnected causes.
However jsut each particular award may
be, the cumulative effect--produced by
individual proceedings to which questions
of fiscal limitations and necessary
trade-offs are foreign and irrelevant--
may be irrational. It follows that we
should decline to adopt rules of decision
which set ourselves such tasks, tasks
that are of their nature beyond our
competence to deal with justly. Because
I believe that the well-intentioned rule
advanced for adoption by the dissent is
such a one, and that the rule of the
majority roughly and approximately
restrains us to matters within the
competence of ouwz procedures, I join in
the majority opinion.
A- 68
To the contrary of my _. brother
Rubin's observations in separate
dissent--with many of which I do not
disagree--it is precisely the absence of
"physical injury to proprietary interest"
that persuades me we should not embark on
the course advocated by the main dissent.
For it is just that indefinable which
would engage us in the business of
massive and general resource allocation,
one which I have triec to suggest that we
as courts are ill-equipped to conduct.
If the rule which Judge Wisdom
espouses were one written in stone, Il
would be the first to enforce it by
whaterever means and procedures,
inadequate or no, were available. That
is not the question. The question is
whether we should ourselves adopt such a
rule and then proceed to apply it. My
A- 69
answer is that since I do not believe we
are capable of administering such a
procedure justly, we should not set
ourselves the task. Nor am I so clear as
my dissenting brethren seem to be about
where the high ground lies in these
premises. Extending theories of
liability may not always be the more
moral course, especially in such a case
as this, where the extension, in the
course of awarding damages to unnumbered
claimants for injuries that are
unavoidably speculative, may well visit
destruction on enterprise after
enterprise, with the consequent loss of
employment and productive capacity which
that entails.
JERRE S. WILLIAMS, Circuit Juaze,
concurring specially:
A-70
My brother Higginbotham in his
opinion for the Court correctly points
out in footnote 10 that the issue of
liability to the commercial fishermen who
were financially injured because of this
ship collision and resultant spillage is
not before us and is an undecided issue
in this Circuit.
I am not in serious disagreement
with the Court's approach on this issue
as set out in the footnote. I write for
purposes of emphasis more than to differ.
My concern is that I have considerable
doubt that commercial fishermen’ can
establish a proprietary interest in the
right to fish in their fishing waters.
Certainly the common legal synonym for
"proprietary interest" is "ownership", as
legal lexicons attest. Yet the bright
line rule of the Court's opinion places
A-71
emphasis upon a requisite proprietary
interest.
It would be preferable, in my view,
to have the rule include aé_e clear
recognition that the rights of commercial
fishermen were more accurately defined by
the Court in Union Oil Co. v. Oppen, 501
F.2d 558 (9th Cir. 1974), one of the
cases discussed by Judge Higginbotham.
The Court agreed that ordinarily there is
no recovery for economic losses
unaccompanied by physical damage. It
found, however, that commercial fishermen
were foreseeable plaintiffs whose
interests the oil company had a duty to
protect when conducting its operations
which resulted in the spillage. The rule
that should prevail was effectively
stated by Judge Sneed in that case in the
quotation set out in Judge Higginbotham's
A- 72
opinion. I repeat it here for emphasis:
Nothing said in this opinion is
intended to suggest, for
example, that every decline in
the general commercial activity
of every business in the Santa
Barbara area following’ the
occurrences of 1969 constitutes
a legally cognizable injury for
which the defendants may be
responsible. The plaintiffs in
the present action lawfully and
directly make use of a resource
or tne sea, viz, its fish, in
the ordinary course of their
business. This type of use is
entitl-d to protection from
negligent conduct by the
defendants in their drilling
operations. Both the
plaintiffs and defendants
conduct their business
operations away from land and
in, on and under the sea. Both
must carry on their commercial
enterprises in a _ reasonably
prudent manner. Neither should
be permitted negligently to
inflict commercial injury on
the other. We decide no more
than this. (Emphasis added.)
501 F.2d at 570.
The commercial fishermen properly recover
because their livelihood comes from a
"resource" of the water which was
A- 73
polluted. Yet, physical property owned
by them was not damaged and it is
doubtful that a proprietary interest
could have been shown.
I recognize that the Court's opinion
in footnote accepted Union Oil as a
possible alternative analysis as to the
rights of the commercial fishermen. I
write to give it greater emphasis than is
to be found in the footnote reference and
to stress it as the more realistic
alternative than a proprietary interest
analysis. I would prefer that the rule
be stated with enough additional breadth
to allow recovery for those who are
damaged because they make their living
out of a "resource" of the water.
I concur fully in the result in this
case because I am in full agreement with
the decision of the Court as to all the
claimants who are before us. But I have
the reservation expressed above as to the
rule of law which is stated in the
Court's opinion.
GARWOOD, Circuit Judge, concurring
specially:
I join in the affirmance of the
judgment below substantially for the
reasons so well stated in Judge
Higginbotham's cogent opinion, with which
I am in general agreement. I
particularly agree with its analysis of
the insufficiency of the proximate cause,
foreseeability and remoteness
formulations to alone provide an adequate
guide for distinguishing, on a normative,
pre-event basis, between the classes of
cases in which recovery will be allowed
and those in which it will not. And I
concur, for the reasons ably stated by
Judge Higginbotham, in the view that
physical harm to or invasion of a
proprietary interest is generally an
appropriate condition for recovery of
negligently caused economic loss, and
that thr "particular damage" theory of
public nuisance law, at least if broadly
read, is not an adequate substitute, as
it suffers in this respect from
deficiencies analogous to those of the
proximate cause, foreseeability and
remoteness formulations. As the Court's
opinion correctly states, to allow
appellants "recovery for their losses
under a public nuisance theory ... would
permit recovery for injury to the type of
A- 76
interest that ... we have consistently
declined to protect." And I believe we
wisely leave to one side the claims of
the commercial fishermen, who are not
before us. I write separately only to
explicitly suggest what seems implicit in
the Court's opinion, namely, that the
physical harm or invasion requirement may
not be inflexible or without exception,
and that, in certain unusual instances, a
relatively restrictive application of the
public nuisance theory of damage or
invasion different kind, rather’ than
degree, or something analogous thereto,
may be an appropriate substitute. I am
Except for the vessel operators (and
the recreational fishermen, who suffered no
economic loss), the injury suffered by all
appellants consists of interference, not with
their prospective economic relations with others,
either as suppliers or customers. As to the
vessel operators, in my view their situation is
aptly described in Kinsman II;
A-77
in full accord with the desirability of a
general rule in accordance with the
principles stated by Judge Higginbothan,
and for the reasons he _ articulates.
However, we need not in this case either
foreclose, or define the precise contours
of, possible rare exceptions.
WISDOM, Circuit Judge, with whom
ALVIN B. RUBIN, POLITZ, TATE, and
JOHNSON, Circuit Judges, join dissenting.
"To anyone familiar with N.Y. traffic
there can be no doubt that a
foreseeable result of an accident in
the Brooklyn Battery Tunnel during rush
hour is that thousands of people will
be delayed. A driver who negligently
caused such an accident would certainly
be held accountable to those physically
injured in the crash. But we doubt
that damages would be recoverable
against the negligent driver in favor
of truckers or contract carriers who
suffered provable losses because of the
delay or to the wage earmer who was
forced to ‘clock in' an hour late. And
yet it was surely foreseeable that
among the many who would be delayed
would be truckers and wage earners."
388 F.2d 821 at 825 n. 8.
A-78
Robins is the Tar Baby of tort law
in this circuit. And the brier patch is
far away. This Court's application of
Robins is out of step with contemporary
tort doctrine, works substantial
injustice on innocent victims, and is
unsupported by the considerations that
justified the Supreme Court's 1927
decision.
Robins was a tort case grounded on a
contract. Whatever the justification for
the original holding, this Court's
requirement of physical injury as a
condition to recovery is an unwarranted
step backwards in torts jurisprudence.
The resulting bar for claims of economic
loss unaccompanied by any physical damage
conflicts with conventional tort
principles of foreseeability and
proximate cause. I would analyze the
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plaintiffs' claims under these
principles, using the "particular damage"
requirement of public nuisance law as an
additional means of limited claims.
Although this approach requires a
case-by-case analysis, it comports with
the fundamental idea of fairness that
innocent plaintiffs should receive
compensation and negligent defendants
should bear the cost of their tortious
acts. Such a result is worth the
additional costs of adjudicating these
claims, and this rule of tLiability
appears to be more economically
efficient. Finally, this result would
relieve courts of the necessity of
manufacturing exceptions totally
inconsistent with the expanded Robins
rule of requiring physical injury as a
prerequisite to recovery.
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I. ALTERNATE STATEMENT
OF THE CASE
A. Factual Background
On July 22, 198, at 8:44 p.m., the
inbound bulk carrier M/V Sea Daniel
collided with the outbound container ship
M/V Testbank at Mile 41 of the
Mississippi River Gulf Outlet Channel.
This channel is a 66-mile, man-made
shortcut between New Orleans and the Gulf
of. Mexico. Immediately following the
collision, a cloud of hydrobromic acid
mist enveloped the ships from ruptured
containers onboard the Testbank. The
prevailing winds carried the acid cloud
to Shell Beach, Louisiana, a little town
downwind of the collision. The collision
damaged several containers on the
Testbank, which were then lost overboard.
One of these containers held about twelve
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tons of pentachlorophenol (PCP) in
fifty-pound bags. This was the largest
PCP spill in United States history.
The same day, Civil Defense and
local authorities evacuated all residents
within a _ten-mile radius of the
collision. The Coast Guard closed the
Outlet to vessel navigation.“ Health
officials suspended all fishing,
shrimping, and associated activities on
the Outlet and within about 400 square
: Pentachlorophenol (PCP) is toxic to
both human and marine life in even moderate
quantities. PCP contains dioxin, which has been
tentatively linked to cancer in humans an other
mammals. This PCP is. not phencyclidine
[(phenylcyolohexyl) piperidine], or “angel dust",
which is also designated by the initials PCP.
2 The Coast Guard feared that vessel
traffic would stir up PCP that had settled on
the bottom of the Channel.
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miles of surrounding Louisiana waterways
and marshes. They also embargoed seafood
and shellfish caught in the area and
widely broadcast notice of this embargo.
The closure and suspensions’ lasted
through mid-August.
The commercial fishing industry in
the area sustained serious losses,
primarily from the depressed market in
that industry in southern Louisiana.
Other businesses suffered losses.
Numerous parties filed suit against the
vessels and their owners, seeking
compensation for their expenses and their
lost profits caused by the collision,
pollution, and bans to navigation and
fishing. The claimants may be classified
as follows:
(1) commercial fishermen, crabbers,
oystermen, and shrimpers who routinely
operated in and around the closed area;
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(2) fishermen, crabbers, oystermen,
and shrimpers who engaged in these
practices only for recreation;
(3) operators of marinas and boat
rentals, and marine suppliers;
(4) tackle and bail shops;
(5) wholesale and retail seafood
enterprises not actually engaged in
fishing, shrimping, crabbing, or
oystering in the closed area;
(6) seafood restaurants;
(7.). cargo terminal operators;
(8) an operator of railroad freight
cars seeking demurrage;
(9) vessel operators seeking
expenses (demurrage, crew costs, tug
hire) and losses of revenues caused by
the closure of the outlet.
In its decision and judgment entered
in State of Louisiana ex rel. Guste v.
M/V_ Testbank, E.D. La. 1981, 524 F.Supp.
1170, aff'd, 728 F.2d 748 (per curiam),
the district court dismissed the claims
of shipping interests, marine and boat
rental operators, wholesale and retail
A-84
seafood enterprises not actually engaged
in fishing, seafood restaurants, tackle
and bail shops, and recreational
fishermen. On February 22, 1982, a panel
of this Court heard oral argument, and
that panel affirmed the decision of the
district court, holding that it was bound
by Robins and by Akron Corp. v. M/T
Cantigny, 5 Cir. 1983, 706 F.2d 151 (per
curiam). See State of Louisiana ex rel.
Guste v. M/V Testbank, 5 Cir. 1984, 728
F.2d 748 (per curiam). Now a majority of
our Court en banc has affirmed that
determination.
B. The Fifth Circuit's Extensions of
Robins
This Court's most recent extension
of Robins, and one that is squarely on
point with the present case, is Akron
Corp. v. M/T Cantigny, 5 Cir. 1983, 706
A-85
F.2d 151 reh'g denied, 5 Cir. 1983, 711
F.2d 1954. In Akron, a ship grounded in
the Southwest Pass of the Mississippi
River, blocking large vessel traffic from
entering or leaving the river for several
days. Owners and charterers of vessels
blocked by the closure of the pass sued
for demurrage, additional fuel expenses,
tug hire, pilot fees, and other delay
expenses. This Court denied recovery:
"Robins stands for the
proposition that a — may
not recover for economic losses
not associated with physical
damages. id. The rule's
purpose is to prevent limitless
liability for negligence and
the filing of law suits of a
highly speculative nature.
This court noted in Bayou
Lacombe [5 Cir. 1979, 597 F.
469, ] that ‘{wlhatever the
wisdom of the traditional rule
of nonliability for negligent
acts causing economic loss,
Robins reflects the state of
law in this circuit,' 597 F.2d
at 472."
A-86
106 F.2d at 153 (emphasis added).
In Dick Meyers Towing Service, Inc.
v. United States, 5 Cir. 1978, 577 F.2d
1023, cert. denied, 1979, 440 U.S. 908,
99 §.Ct. 1215, 59 L.Ed.2d 455, this Court
denied recovery for losses after
navigation on the Black Warrior River in
Alabama was completely halted for five
months by a faulty lock near the Bankhead
Dam. Meyers sued for recovery of the
loss of towing business sustained as a
result of the closing of the river. This
Court affirmed the district court's
denial of recovery, relying on Robins and
Kaiser Aluminum & Chemical Corp. v.
Marshland Dredging Co., 5 Cir. 1972, 455
F.2d 957:
"The law has traditionally been
reluctant to recognize claims
based solely on harm to the
interest in . contractual
relations or business
A-87
expectancy.... In consequence,
as stated in Kaiser Aluminum, a
plaintiff may not recover for
interference with his
contractual relations unless he
shows that the interference was
intentional or knowing. While
the wisdom of that traditional
reluctance is open to debate,
the rule based upon it is too
well-settled to be overturned
by a panel of this court."
577 F.2d at 1025.°
Finally, in Louisville and Nashville
Railroad Co. v. M/V Bayou Lacombe, 5 Cir.
3 In Kaiser Aluminum, 5 Cir. 1972, 455
F.2d 957, the Court denied a plaintiff's claim
for damages after it had to close a portion of
its facility when a barge negligently severed a
gas supply pipeline owned by a third party. The
denied recovery:
"We agree that recovery by Kaiser is
precluded as a matter of law because there
is (1) no contention that the interference
with Kaiser's contract rights was
intentional; (2) no evidence that Marshland
had knowledge of the existence of the
contract between Kaiser and Sugar Bowl Gas,
and (3) no showing of facts, by affidavit or
otherwise, in opposition to the motion for
summary judgment, sufficient to create a
genuine issue for trial, of anything more
than merely the negligent interference with
rights.
Id. at 958.
A-88
1979, 597 F.2d 469, L & N_ Railroad
sought recovery for loss of use of a
railroad bridge damaged by the Bayou
Lacombe. Although L & N did not own the
bridge, it sought to place itself in the
same position as the owner of the bridge
through its contractual agreement with
the bridge's actual owner. The Court
found that the agreement placed no
ownership interest in the L & UN.
Therefore, under Robins, as construed by
this Court, L & N had no right to
recover: the damages allegedly
sustained were losses of an economic
expectancy and not proprietary
losses. Id. at 474.7
4 ‘The Eleventh Circuit has followed this
Court. In Kingston Shipping Co. v. Roberts, 11
Cir. 1982, 66/ F.2d 34 (per curiam), cert.
denied, 1982, 458 U.S. 1108, 102 S.Ct. 3487, 73
L.Ed.2d 1369, that Court stated flatly: ''Robins
made clear that a party may not recover for
economic losses not associated with physical
A-89
The enduring appeal of Robins,
despite its inapplicability to cases
such as this one, seems to spring from
the administrative convenience of a
"conspicuous bright-line rule" and from
"the virtue of predictability". Majority
opinion at xx. In a frequently cited
extension of Robins, an Ohio Court of
damages.'" Id. at 35. The court denied any
recovery for losses that shippers incurred after
a vessel's wreckage blocked in the port of Tampa.
In Hercules Carriers v. Florida, 11
oF 1983, 720 F.2d 1201 (per curiam), = ee.
ollowing King ston, barred recovery by
vessels trappe ampa Bay. Judge Thomas Clark
concurred specially, calling for en banc
reconsideratrion of King ston. Judge Clark stated
that Robins is essentially a contract, not a tort
case. According to ‘Judge Clark, Robins merely
held that when A is prevented by C's negligence
from fulfilling his contract with B, B can sue A
for breach of contract, but not C for negligence.
Where there is no A for B to sue in contract,
Judge Clark argued that Robins should not bar
suit against C. He urged the court to reject the
physical/economic distinction for injuries in
favor of the usual ('"foreseeability'' and
"remoteness'' rules of tort law. The Eleventh
Circuit reheard Hercules en banc, but affirmed by
A-90
Appeais was remarkably candid in its
justification for relying on _ Robins.
Stevenson v. East Oil & Gas Co., Ohio Ct.
App. 1946, 73 N.E.2d 200. In Stevenson a
defendant negligently obstructed a
factory building, necessitating a
large-scale lay-off. The court felt that
it would be impossible to draw a workable
line of liability between workers out of
their jobs and restaurant owners
supplying the workers' lunches:
an evenly divided court (6-6). 11 Cir. 1984, 728
F.2d 1359 (en banc). Because no_ opinions
accompany the affirmance, we do not know if the
six affirming judges voted to affirm because they
found that the result was mandated by Robins,
because they believed the physical damage rule
was a good rule, or because they found the
plaintiff's damages too remote umder_ even
traditional tort doctrine.
A-91
73 iN.
"While the reason usually given
for the refusal to permit
recovery in this class of cases
is that the damages are
‘indirect’ or are ‘too remote’
it is our opinion that the
principal reason that’ has
motivated the courts in denying
recovery in this class of cases
is that to permit recovery for
damages in such cases would
open the door to a mass of
litigation which might very
well overwhelm the courts so
that in the long run while
injustice might result in
special cases, the ends of
justice are conserved by laying
down and enforcing the general
rule so well stated by Mr.
Justice Holmes...."
E.2d at 202.
5
For a discussion of Stevenson and the
denial of recovery because of a judicial desire
to prevent potentially wlimited liability for
A-92
Our notions of proximate cause and
foreseeability are admittedly less
adequate in truncating a chain of claims
where the conduit through which the harm
passes is contract. If a contract
between A and B provides sufficient nexus
for B to recover after A'‘'s_ physical
injury, then it is difficult to
distinguish C's contract with B, or
D's contract with C. In short, one
Third-Party Economic Injuries--A Problem in
Analysis, 20 U.Chi.L.Rev. 283, 286-87 (1953).
Courts also worry about the possibility
of double counting damages if parties removed
from the physically damaged plaintiff were
allowed to recover. Justice Holmes summarized
the law of damages as follows: "The general
tendency of the law, in regards to damages at
least, is not to go beyond the first step."
Southern Pacific Co. v. Darnell-Lumber Co., 1918,
24> U.S. 331, 933, 30 Sct. OO, O2 L.Ed. 451.
See Illinois Brick (2. @, Illinois, 1977, 431
U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707, holding
that direct purchasers may recover treble damages
from an antitrust wrongdoer, but indirect
purchasers may not. Robins avoided doubiec
counting of damages by allowing only the injured
party to recovery.
A-93
contract seems as good as the next for
establishing proximate cause and
foreseeability once the first claim is
allowed. Robins resolves this dilemma by
disallowing all third party claims based
solely upon a contractual relationship
with the injured party.°
There are sound reasons for such a
rule. Courts recognized tHat once they
permit recovery for economic loss to
parties linked in a serial chain of
contracts, defining a stopping point
becomes nearly impossible. In Robins,
6 the problem of limiting claims
here is akin to limiting fire spreading from one
house to another from a defendant's negligent
spark. er You at fiane Aieel sensmein ter abe
burning structure, a rule consistent with Robins.
Ryan v. New York Central R. R., N.Y. 1866, 35
fe) a recovery for the
first structure burned. Webb v. Rome W. & A.R.
Co., N.Y. 1872, 49 N.Y. 420. Other jurisdictions
have rejected the Ryan rule altogether. See
Prosser, Wade & Sc , Torts: Cases and
Materials 332 (7th ed. 1982).
A-94
for example, the shipowner had settled
his claim against the drydocker,
apparently for the rents the shipowner
would not have received from_ the
charterer had there not been = an
additional delay. Robins, 2 Cir. 1926,
13 F.2d 3, 4. Had Justice Holmes imposed
liability again in the Robins appeal for
the charterer's lost profits, the
tort-feasor would have been required to
make good the still better bargain of the
charterer. Similarly, if the charterer
had a contract with parties on shore to
clean the charterer's catch, the drydock
would have been required to make good on
this bargain as well. This iteration of
compensation could conceivably run
without limit. Liability would accrue
"in an indeterminate amount for an
indeterminate time to an indeterminate
A-95
class". Ultramares Corp. v. Touche, N.Y.
1931, 255 N.Y. 170, 179, 174 N.E. 441,
444 (Cardozo, C.J.).’ In limiting
recovery in a chain of contractual
relations, the Supreme Court drew the
line after the first claim for damages.
Justice Holmes had thus fashioned a rule
in claims arising from a chain of
contracts that would avoid a multiplicity
of actions and prevent a vast extension
q Judge Merhige recognized this
difficulty in the litigation concerning the
contamination of the Chesapeake Bay from the
dumping of the toxic chemical Kepone: ‘“[T]he set
of potential plaintiffs seems almost infinite”.
Pruitt v. Allied Chemical ., E.D.Va. 1982,
° ‘ ° ‘ ruling on a motion to
dismiss the action for failure to state a claim,
Judge Merhige allowed the ciaims of both the
fisherman and the marina-operators (as
"surrogates" for recreational fishermen), and
disallowed the claims of boat salesmen.
A-96
8
of liability. As one commentator
observed:
"In a situation of this type,
total recovery for all lost
profits might amount to an
enormous sum, and the Robins
Court may have thought that
liability of this magnitude
would unduly discourage
ony ne useful but risky
undertakings. However, by
arbitrarily cutting off
liability after the most
proximately-related party, the
courts following Robins have
indicated their doubt that the
traditional limits of the duty
concept, the doctrine of
proximate cause, and the jury's
discretion are adequate to
prevent excessive recovery.
For the sake of certainty,
these courts have sacrificed
the fairness of a case-by-case
determination of the
appropriateness of recovery."
Justice Holmes attempted
throughout his judical career to _ restrict
liability as much as possible. See G. Gilmore,
The Death of Contract 14-17 (1974). This concern
for limiting liability is out of step with
contemporary tort doctrine.
A-97
Note, Negligent Interference with
Contract: Knowledge as a Standard for
Recovery, 63 Va.L.Rev. 813, 820 (1977).
II. THE INAPPLICABILITY OF
ROBINS DRYDOCK TO THIS CASE
Whatever the pragmatic justification
for the original holding in Robins, the
majority has extended the case beyond the
warrant of clear necessity in requiring a
physical injury for a_e recovery of
economic loss in cases such as the one
before the court. Robins’ prevented
plaintiffs who were neither proximately
nor foreseeably injured by a tortious act
or product from recovering solely by
claiming a contract with the iniured
party. The wisdom of this rule is
apparent. This rule, however, has been
expanded now to bar recovery. by
plaintiffs who would be allowed _ to
A-98
recover if judged under’ conventional
principles of foreseeability and
proximate cause.”
A. The Precise Holding of Robins
Applies Only to Claims for Negligent
Interference with Contract.
Because the centerpiece of this
litigation has been Robins, 1°
the holding
of this oft-cited case merits scrutiny.
A ship's time charterer was required
9 A plaintiff might be able to
recover under public nuisance for blockage of the
channel through which his ship was to sail. See
note 31 and accompanying text. Yet umder this
Court's extensions of Robins, the plaintiff's
claim would be dismissed.
A-99
a aad
|
under contract to turn the vessel over to
a dry dock for maintenance. The
charterer owed no rent during the time
the ship was under repair. The
drydocker, who had contracted with the
owner of the ship for the work,
negligently damaged the ship's propeller.
During the additional delay caused by
repairs to the propeller, the charterer
lost expected profits from the use of the
ship. The charterer sued the shipyard
for these economic losses. The Supreme
Court denied relief, holding that the
shipyard's damage to the_ propeller
wronged only the owner of the ship. The
Court further held that the charterer had
lost merely the benefit of his contract
for hire and had suffered no legally
cognizable claim:
A-100
"(The plaintiff's] loss arose
only through [its] contract
with the owners--and while
intentionally to bring about a
breach of contract may give
rise to a cause of action, no
authority need be cited to show
that, as a general rule, at
least, a tort to the person or
property of one man does not
make the tort-feasor liable to
another merely because’ the
injured person was under a
contract with that other,
unknown to the doer of the
wrong. The law does not spread
its protection so far."
275 U.S. at 308-09, 48 S.Ct. at 135, 72
L.Ed. at 292 (citations omitted).
Robins held only that 3 ie
defendant's negligence injuries party A,
and the plaintiff suffers loss’ of
expected income or profits because it had
a contract with A, then the plaintiff has
no cause of action based on the
defendant's negligence.
A-101
B. Difficulties with Subsequent
Extensions
It is a long step from Robins to a
rule that requires physical damage as a
prerequisite to recovery in maritime
tort. The majority believes that the
plaintiff's lack of any contractual
connection with an injured party, taken
with the Robins rule, forcloses
liability: “If a plaintiff connected to
the damaged chatttels by contract cannot
recover, others more remotely situated
are foreclosed a _ fortiori." Majority
opinion at xx. This conclusion follows
readily from the reasoning that if
uninjured contracting parties are barred
from recovery, and if contracting parties
have a closer legal relationship than
non-contracting parties, then a party who
is not physically injured and who does
A-102
oe "
eS se oe
not have a contractual relation to the
damage is surely barred.
This argument would be sound in
instances where the plaintiff suffered no
loss but for a contract with the injured
party. We would measure a plaintiff's
connection to the tortfeasor by the only
line connecting them, the contract, and
disallow the claim under Robins. In the
instant case, however, some of the
plaintiffs suffered damages whether or
not they had a contractual connection
with a party physically injured by the
tortfeasor. These plaintiffs do not need
to rely on a contract to link them to the
tort: The collision proximately caused
their losses, and those losses were
foreseeable. These plaintiffs are
therefore freed from the Robins rule
concerning the recovery of those who
A-103
suffer economic loss because of an injury
to a party with whom they § have
contracted.
Because Robins provides an overly
restrictive bar on recovery, courts have
over the years developed a number of
exceptions. ++ The traditional exceptions
allow recovery for certain husband-wife
a Commentators have long criticized
the Robins rule, usually for the reason that
negligent interference with contract is more
appropriately treated under traditional
principles of negligence. See Harper,
Interference with Contractual Relations, 47
Nw.U.L. Rev. 5/3, 335-59 (1953) ; James ,
Limitations on Liability for Economic Loss Caused
by Negligence: A Fe tic Appraisal, 25
Vand.L.Rev. 43, 56-57 Co70, Note, Negligent
Interference with Economic Expectancy: Te vs
Tor Recovery, 16 Stan.L.Rev. 664, 669-92 (1964);
Note, Negligent Interference with Contract:
Knowledge as a Standard for Recovery, 63
Va.L.Rev. 013, 818-23 (1977); Comment ,
Foreseeability of Third-Party Economic
Injuries--A Problem in Analysis, 20 U.Chi.L.Rev.
283, 286 (1953).
The rule is also heavily critized
because it denies recovery when the “pragmatic
objections" have little or no application:
A-104
12
claiis, recovery for negligent
interference with contract when the
interference results from a_e tangible
injury to the contractor's person or
property, !° and recovery for persons
employed on fishing boats to recover for
lost income when the employment contractr
is disrupted by a third party's negligent
injury to the ship or equipment. /*
“In other cases there will be just a single
loss, although the plaintiff's identity and
possibly the time of his injury are clouded
by umcertainty. When that is the case,
liability shouid not be denied on the basis
of the pragmatic objections, and when all
the elements usually required for an action
grounded on negligence are present, it is
submitted that liability should be imposed.”
James, ra, at 57-58 (footnotes omitted)
(emphasis oiies)
ass Another exception allowed a master
to recover damages as a result of the loss of his
servant's services through negligent injury.
Mineral Industries, Inc. v. George, N.Y.Sup.Ct.
1965, 44 Misc.2d 764, 255 WY.S-74 114. Although
the notion of master-servant has fallen into
dispute, Nemo Foundations, Inc. v. New River Co.
1971, 155 W.Va. 149, I8I SE. 2d 687, courts have.
A-105
Many opinions go beyond’ these
traditional exceptions, both in the
Fifth Circuit and in other courts. Our
own Court has allowed a plaintiff to
recover the added costs of performing
a contract caused by a defendant's
expanded the common law rule that a consortium
resulting from torts committed against his wife.
A wife can now recover damages for loss of
consortium when her husband is injured. See W.
Prosser, Handbook of the Law of Torts §125, at
888-90 94th ed. 1981). Contracts were protected
at common law against interference by torts such
as fraud and — slander. Note, Tortious
Interference with Contractual Relations in the
Nineteenth Century: Ihe Transformation of
Pro , Contract, and Torts, 93 Harv.L.Rev.
TS10. retI=12 (1980) -
13 See Newlin v. New pene Tel. &
Tel. Co., Mass 1944, Mass. . a ie
, allowing recovery for mushrooms ruined by
cold after the temperature control was
iriterrupted by a telephone company's severance of
power lines.
14 Th :
e exception was purportedly
grounded on old admiralty cases that allowed
recovery, cases which Robins had not explicitly
overruled. See Carbone v. Ursich, 9 Cir. 1953,
209 F.2d 178, 179-80.
A-106
‘ aus ” Dae? Pe ©
Suet eal “iui Ste bhai mt elaine od
15
negligence, and has employed _ this
exception for maritime torts. !® This
Court also allowed a plaintiff to
recover added costs in J. Ray McDermott
& Co. vw. & &, Beero, 5 Git. Siz, 4533
F.2d 1202, when ae prime contractor
recovered liquidated damages to a
subcontractor after a vessel negligently
drepped anchor on or near the pipelines
15 In In re _ Lyra Shipping Oo.,
E.D.La. 1973, 360 F.Supp. 1188, the defendant
negligently blocked a canal, forcing the two
plaintiffs to incur transportation costs not
contemplated in their contracts. The court
allowed recovery for wasted fuel and other costs,
whether these were borne directly by the carrier
or indirectly through the contract by the
shipper:
"I believe that both the _ statutory
‘muisance' doctrine and ordinary maritime
tort law provide viable bases for recovery
in this case. Under either rationale, it is
plausible to argue that plaintiffs ..., who
incurred such additional expenses as extra
fuel costs, wages, and the like can recover
those damages upon proper proof, and I so
hold."
A-107
which the contractor was constructing
17
across a river bottom. Canadian cases
have also allowed recovery of additional
expenses. 18
Although the majority says that
this Court has not " been the sole
Id. at 1191. The court noted in dictum, however,
that shipper could not recover for the profit he
would have earned had the contract been
completed. Id. at 1192 n. 4.
The Lyra court's award of damages is
consistent th a narrow reading of Robins.
Strictly construed, Robins held only that the
charterer would not recover for the prospective
income or profits that he would have received had
he been able to use the ship. The question
therefore naturally arises if a plaintiff could
recover for added costs rather than lost profits.
In a search for exceptions to Robins, some courts
have held that the case applies only to lost
profits. See Note, Negligent Interference with
Contract: Knowledge as a Standard for Recovery,
63 Va.L.Rev. 813, 820 (1977).
16 in In re China Union Lines, Ltd.,
S.D.Tex. %°97, 285 F.Supp. 426. In that case,
the M/V Urion Reliance negligently collided with
the M/V Berean in the Houston slip channel, and
the channel was closed for two days. The court
in China Union allowed the plaintiff to recover
for loss of profits, additional fuel and other
A-108
guardian oof the Robins Dry __ Dock
19
principle", the majority's support is
reminiscent of the Potemkin Village set
up for Catherine the Great to visit. In
both the Second and the Fourth Circuits
courts have recently limited the
applicability of the Robins rule in
maritime torts.
supplies consumed, additional crew hire paid, tug
hire incurred to turn the vessel, debt time for
longshoremen ordered in Houston, and other
substantial expenses. The Court found that the
vessel's owner owned a duty to all those using or
seeking to use the ship channel not to obstruct
their passage. The court also held that a
collision in the narrow channel would delay
traffic, and that plaintiffs could recover
damages that were incurred because they were
denied normal access to the channel.
17 the Court noted that had the
subcontractor sued in his own right, the suit
would be barred as an action for lost profits
under a contract:
"The present case is not a suit by
McWilliams for the lost profits which it
might have earned from the use of the
dredges had they not been detained by the
delay in the backfilling. To such a suit
Robins would squarely apply. The case at
bar is a suit by the "owner" of the pipeline
A-109
The Second Circuit's opening volley
on Robins was Petition of Kinsman Transit
Co., 2 Cir. 1968, 388 F.2d 821 (Kinsman
II), which has effectively limited the
applicability of Robins to a small number
of maritime torts. See Federal Commerce
& Navigation Co. v. M/V_ Marathonian,
S.D.N.Y. 1975, 392 F.Supp. 908, aff'd, 2
Cir. 1975, 528 F.2d 907 (per curiam),
cert. denied, 1976, 425 U.S. 975, 96
ee SE a ee ae en
S.Ct. 2176, 48 L.Ed.2d 799. The ‘mport
of Kinsman II was to establish
project seeking reimbursement of expenses
incurred under its subcontract when the
project was delayed."
453 F.2d at 1204.
If is difficult to distinguish McDermott
from Kaiser Alum. & Chem. Cor . Vv. Marshland
Dredging Co.. iY. F.2d 957 (per
curiam). In Marshland, the Court cited Robins
and then denied recovery after the defendant's
dredging operation punctured a high-pressure gas
line to the plaintiff's plant, causing the plant
to shut down.
A-110
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3
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:
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5
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>
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foreseeability as the test for liability
instead of the requirement of physical
injury .2° The court rejected the
requirement of physical damages without
even bothering to distinguish Robins,
and instead relied on customary
negligence principles. Id.
18
In Dominion T. of Canada Ltd. v.
L.R.McDoald & Sons, Ltd., rTS71}-3 Ont. 627, the
court explicitly discussed the distinction
between added costs and lost profits. The
defendants in Dominion Tape negligently caused a
power failure that forced the plaintiff to cease
manufacturing midway through a working day. The
plaintiff paid his employees for the lost time,
as required by their employment contract. The
judge allowed recovery for the “positive outlays"
to the idled workers, id. at 630, but refused to
permit recovery for the "mere deprivation of an
opportunity" to earn profit from the employees’
work, id. at 629.
19 The references in the first
paragraph of discussion are to Rederi A/B Soya v.
Evergreen Marine Co E.D.Va. 1971, 1972 y os c.
1555, atid, 4 Cir. 1972, 1972 A.M.C. 538, and
Federal Commerce & Navigation Co. v. M/V
Marathonian, 2 Cir. 19/5, 528 F.2d 90/7, cert.
denied, 1976, 425 U.S. 975, 96 S.Ct. 2176, L8
L.Ed.2d 799.
A-111
at 823-34. Although the Court in
Kinsman II found that the damages were
tco "“tenucus and remote" to = allow
recovery, the opinion represents’ an
important departure from Robins because
the Court is willing to rely on a
case-by-case application of proximate
cause principles rather than the blanket
bar of Robins .“! There is therefore no
basis fv. e majority to say that
Kinsman II s “general analysis ... is
compatible with our own".
20 See Petition of Kinsman Transport,
2 Cir. 1968, 388 F.2d 821, leaving “rock-strewn
path of 'negligent interference with cortract.'"’
In Kinsman II, the Second Circuit held: "Cargill
and Cargo Carriers argue broadly that they
suffered damage as a result of defendants’
negligence and we will deal with their claims in
these terms instead of on the wore esoteric
‘negligent interference' ground." Id. at 824,
Instead, this idssent argues that many of the
plaitiffs here are entitled to recover under
conventional analyses of negligence, proximate
causation, and foreseeability. See id. at 823,
A-112
Federal Commerce & Navigation Co.
v. M/V Marathonian, S.D.N.Y. 1975, 392
F.Supp. 908, aff'd, 2 Cir. 1975, 528
F.2d 907 (per curiam), cert. denied,
1976, 425 U.S. $75, 96 §.Ct. 2176, 48
L.Ed.2d 799, also belies ae blanket
approval of Robins in the Second
Circuit. In Marathonian, both’ the
district court and the court of appeals
reluctantly dismissed the plaintiffs'
claims, but made it clear that the
explaining, "[Wle hesitate to accept’ the
negligent interference with contract’ doctrine
in the absence of satisfactory reasons for
differentiating contractual rights from other
interests which the law protects”.
21 See Note, Negligent Interference
with Contract: Knowledge as a Standard for
Recove 63 Va.L.Rev. 313. 822 (1977) ("Recently
seeeat” courts have joined in the attack on
Robins..... In re Kinsman Transit Co. is the,
Teading case In this movement™.)
A-113
|
holding was narrow and was compelled by
Robins in "instances involving’ the
factual contours of that case". In its
opinion, the district court stated:
"([Wlere this Court now free to
write upon a tabula rasa and
not constrained by the weight
of precedent, we would reject
the aaa interference with
contract doctrine in favor of a
negligence-causation-foreseeab-
ility amalysis, such as _ that
adopted by Chief Judge Kaufman
in Petition of Kinsman Transit
GOs. . , od
Cir. 1968)....
ve * * * * * *
"In the instant case, however,
we feel found by the Supreme
Court's decision in Robins. We
believe that the Robins
decision must be adhered to by
the lower federal courts, at
least in instances involving
the factual contours of that
case, namely the negligent
interference with a time
charterer's contract rights by
third parties, until such time
as the Supreme Court directs
otherwise.’
392 F.Supp at 913, 915.7?
A-114
In the Fourth Circuit, District
Judge Merhige held a chemical company
liable for economic losses suffered by
commercial fishermen, local boat, and
tackle and bait shop owners, but not for
losses sustained by the plaintiffs who
purchased and marketed seafood from
commercial fishermen. Those’ losses,
although foreseeable, were too indirect.
Pruitt v. Allied Chemical Corp., E.D.Va.
1981, 523 F.Supp. 975.
22 Marathonian applied to the rights
of time charters, a factual situation more
difficult te distinguish from Robins than was
that of Kinsman II. Moreover, this [imitation of
Robins to time charterers comports with generally
accepted notions of faimess--despite the usual
harshness of the Robins rule--because time
charterers can easily contract with the ship's
owner, who would be entitled to recovery, for
their protection. In Robins, for example, the
shipowner settled its claim against the shipyard;
the charterer could have contracted for a share
of any such damages. Application of the Robins
rule to the original context and to the facts of
Marethonian therefore comports with a sense of
fundamental faimmess.
A-115
|
Finally, the ramparts have _ been
breached in the Ninth Circu'’t. Although
the majority says that Union Oil Co. v.
Oppen, 9 Cir. 1974, 501 F.2d 558, is "not
contrary" to our Court's affirmation of
the Robins rule, a close reading of Oppen
indicates that this is incorrect. In
Oppen, mishap i. 1969 at an offshore oil
drilling platform introduced hundreds of
thousands of gallons of oil into the
ocean off the coast of Santa Barbara,
California. Although a strict
application of the extensions of Robins
would have barred all recovery, the Ninth
Circuit allowed fishermen to recover for
the loss of their livelihood. After
acknowledging the "widely recognized
principle" that a plaintiff could not
recover for the negligently induced loss
of "a prospective pecuniary advantage",
A-116
id. at 563, the Court noted the many
exceptions to this rule, "in which
defendants engaged in certain
professions, businesses, or trades have
been held liable for economic losses
resulting from the negligent performance
of tasks within the course of their
callings", id. 566. The Court regarded
the real question to be whether Union
owed a duty to the fishermen. This in
turn depended on whether Union could
foresee a risk of harm to fishermen:
[W]e can not escape the conclusion
that under California law’ the
presence of a duty on the part of
the defendant in this case would
turn substantially on
foreseeability. That being the
crucial determinant, the question
must be asked whether the defendants
A-117
Ce
could reasonably have foreseen that
negligently conducted drilling
operations might diminish aquatic
life and thus injure the business of
commercial fishermen. We believe
the answer is yes.
Id. at 569 (emphasis added) .*>
Recently, the Robins holding has
been undermined in Louisiana. In PPG
Industries, Inc. v. Bean Dredging,
La.1984, 447 So.2d 1058, the Court held
23 Judge Sneed also based his holding
on the traditional deference accorded to
fishermen under maritime law:
"This long recognized rule [the right of
fishermen to recover their share of the
prospective catchj is no doubt a
manifestation of the familar principle that
seamen are the favorites of admiralty and
their economic interests entitled to the
fullest possible legal protection. These
considerations have given rise to a special
right comparable to that of a master to sue
for the loss of services of his servant...."
Id. at 567 (quoting Carbone v. Ursich, 9 Cir.
1963, 209 F.2d 179, 182). Judge Ely dissociated
himself from the "unnecessary" maritime section
of the opinion. Id. at 571.
A-118
ihc are ai ld
that the dredging contractor who damaged
a natural gas lime was not liable for
the added expenses incurred by the only
use of the line. But the Court did not
rely on a bright-line physical damage
requirement, and criticized earlier
Louisiana cases for "taking a mechanical
approach to [an] unreasoned conclusion".
Id. at 1060. The Court said that
the applicability of Robins. allowed the
fishermen to recover--a result that all on our
Court seem to agree with--but the opinion fails
to draw a very convincing line between the rights
of fishermen and the rights of others who draw
their living from the water. Certainly the
injury from the oil spill to others who make
their living upon the water, such a boat charters
who are unable to put to sea, is as foreseeable
and as direct as the injury tc the fishermen. It
is therefore unclear why these parties should not
also be entitled to recovery. The court did
attempt to distinguish fishermen in that they
"lawfully and directly make use of a resource of
the sea, viz, its fish, in the ordinary course of
their business’. Id. at 570. Yet, if those who
make use of a "resource of the sea"' are entitled
to recovery, then it seems a fortiori that those
who meke use of the sea itself in their
I would go further bins. Bppen repudiating
A-119
although Robins is usually cited for the
proposition that negligent interference
with contract is not a tort, Robins is
better justified as responding to the
need to prevent multiple actions and
unforeseeable liability. The Court went
on to hold that the particular risk at
issue in the case-the risk of shutting
down the plaintiff's factory-was not
encompassed by the defendant's duty of
care. Justice Calogero dissented,
business--a boat charterer, for example--would be
entitled to recovery. Nor can Oppen's restricted
recovery be explained in terms of special
property rights in the fish. No one owns a wild
animal, or fish, until achieving capture, and
under this rule, the fishermen had no rights to
the fish superior to those of Union Oil. See
Epstein, Nuisance Law: Corrective Justice and
Its Utilitarian Constraints, 8 J.Legal Stud. 49
(1979). After reminding us that no one owns a
wild animal wntil after achieving capture, he
argues:
"[S]Jo it is with unowned fish in en. The
plaintiffs who do not own the fish camot
A-120
jit deishisas
Conaiatinn
arguing that the risk was within the
duty, but he first "applaud[ed] the
majority's... abandoning the per_ se
exclusion of [economic] damages
which our court have heretofore
adopted on the heels of Robins." Id.
at 1062.
One cannot deny that Robins's policy
of limiting the set of plaintiff who can
recover for a person's negligence and
4
complain if the Union Oil Company captures
them. As they cannot complain of capture,
they camnot complain of destruction after
capture. As they cannot complain of it
before capture. No theory of tortious
liability can make up the plaintiffs'
deficit attributable to their want of
ownership."
Id. at 52. See also Posner. Some Uses and Abuses
of Economics in Law, 46 U.Chi.L.
(1979),
A-121
damage to physical property provides a
“bright line" for demarcating the
boundary between recovery and
nonrecovery. Physical harm suggests 4
proximate relation between the act and
the interference. At bottom, however,
the requirement of a tangible injury is
artificial because it does not comport
with accepted principles of tort law.
Mrs. Palsgraf, although physically
injured, could not recover. Many other
The court's stopping point is no more
logical t tht of courts that have followed
Robin's extensions. Today, the majority has
difficulty in justifying recovery to all other
parties. This difficuity highlights 's
failure to have a conceptually tenable erie
point for the imposition of liability amd the
denial of recovery. If is consistent with
Robin's extensions, it is only because Oppen
attempts to limit liability om as arbitrary a
basis as Robin's progeny.
A-122
ee ee ee et mee
plaintiffs although physically
, 24
uninjured, can recover.
The inapplicability of Robins to
plaintiffs who have been proximately and
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