Petition for Writ of Certiorari — Consolidated Aluminum Corp. v. C. F. Bean Corp.

Supreme Court of the Cited States

October Term, 1987

CONSOLIDATED ALUMINUM CORPORATION,

Petitioner,

Ws

C. F. BEAN CORPORATION, BEAN DREDGING

CORPORATION, AMERICAN EMPLOYERS

INSURANCE COMPANY, OCEAN MARINE

INDEMNITY COMPANY, LTD., ST. PAUL FIRE

AND MARINE INSURANCE COMPANY,

HIGHLAND INSURANCE COMPANY and

ARKWRIGHT-BOSTON MANUFACTURERS

MUTUAL INSURANCE COMPANY,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FIFTH CIRCUIT

DONALD C. WINSON

(Counsel of Record) -

HowarD D. SCHWARTZ

Rosert L. BYER

JENNIFER WILSON HEWITT

ECKERT SEAMANS CHERIN & MELLOTT

42nd Floor, 600 Grant Street

Pittsburgh, Pennsylvania 15219

(412) 566-6000

Of Counsel

James E. HUGHES

CONSOLIDATED ALUMINUM

CORPORATION

I

QUESTION PRESENTED

In admiralty, is a negligent tortfeasor liable for harm

which its conduct was a substantial factor in causing where

the risk of general harm to a class of which plaintiff was a

member was foreseeable but the tortfeasor could not have

foreseen the extent of the harm or the manner of its

occurrence?

li

STATEMENT UNDER RULE 28.1

Petitioner Consolidated Aluminum Corporation is a

wholly-owned subsidiary of Alusuisse of America, Inc.

Alusuisse of America is wholly-owned by Swiss Alumin-

ium, Ltd. and Lonza, Ltd.

ill

TABLE OF CONTENTS

Page

SE ne 5 Ze l

Ey a l

Lec UR te eneseseeesecees l

Reasons for Granting the Writ .................... 4

I. The Fifth Circuit’s Decision Conflicts With

Decisions In Other Circuits And Is Contrary

To Modern Concepts Of Tort Law, As Set

Forth In The Restatement (Second) Of Torts . 4

A. The Fifth Circuit’s Decision Conflicts

With Admiralty Decisions In The Sec-

Om Ame Tee COCeiee.. oa ccc ccsces. 5

B. Analytical Confusion Regarding Duty,

Foreseeability And Legal Or Proximate

Re iar rr a eee eo i al wh i 9

C. Modern Concept Of Legal Cause, As Set

Forth In The Restatement (Second) Of

ee Na. Saeed wen 6-8-8 12

II. This Court Has Never Addressed The Proper

Standard For Legal Cause In A Maritime

et Sah ee wad ek aad me wos 15

en cha ee ee eae eke 17

ee eens os we pda eee mew ned A-]

iV

TABLE OF AUTHORITIES

CASES

Page

Avery v. United States, 829 F.2d 817 (9th Cir. 1987). ..11

Barber Lines A/S v. M/V Donau Maru,

op wb fi” ee ees oe 15

Consolidated Aluminum Corp. v. C. F. Bean Corp.,

reese pepe. — os A... Reena 15

Cruickshank & Co., Ltd. v. Sorros, 765 F.2d 20

EE os eer edn wnd da ween sows bees 11

East River Steamship Corp. v. Transamerica _

Delaval Inc., 476 U.S. 858 (1986) .............. 15

Fitzgerald v. United States Lines Co.,

Sr es so 5 as oa hea ee hs 15

Kermarec v. Compagnie Generale Transatlantique,

pe te er rere 1, 10

Lindsay v. McDonnell Douglas Aircraft Corp.,

GD Fe re Gs Fe aa cn ccc kaeaeeasccn 11

The Lottawanna, 88 U.S. (21 Wall.) 558 (1874) ....... 5

Louisiana ex rel. Guste v. M/V Testbank,

752 F.2d 1019 (Sth Cir. 1985), cert. denied, —

U.S. a ss ok bc Gees ce we 15

Moragne vy. States Marine Lines, Inc.,

Be BEE as cap us case en deaa wes 5, 10, 15

Palsgraf v. Long Island Railroad Co.,

B08 TA... Fas BE PE. Fe Fe ov once we ccccns 9

Pan-Alaska Fisheries, Inc. v. Marine Construction

& Design Co., 565 F.2d 1129 (9th Cir. 1977)..... 11

Pastore v. Taiyo Gyogyo, K.K., 571 F.2d 777

Cee EE x vo dS bse ons mee ae » ee

Patentas v. United States, 687 F.2d 707

COE Da ka & vn ae ys eankk acces 11

Petition of Kinsman Transit Co., 338 F.2d

708 (2d Cir. 1964), cert. denied, 380

OLE FR Ch 96.3 on dc eee eee 5, 8, 9, 10

Protectus Alpha Navigation Co., Ltd. v. North

Pacific Grain Growers, Inc., 767 F.2d 1379

Coe Oe, Sa a vs bk vsvscse tees 11

Robins Dry Dock & Repair Co. v. Flint,

STS UI Bee CET v0 640s seta tinea 15

Spinks v. Chevron Oil Co., 507 F.2d 216

(FO Ee. CPi isn vos ectesxdae eee 11, 12

Workman v. New York City, 179 U.S. 552 (1900)...... 5

AUTHORITIES

RESTATEMENT (SECOND) OF TorTS § 9 (1965) .......... 12

RESTATEMENT (SECOND) OF TorTS § 281 (1965)......... 15

RESTATEMENT (SECOND) OF TorTs § 431 (1965) ..10, 12, 13

RESTATEMENT (SECOND) OF TorTs § 433 (1965)......... 12

RESTATEMENT (SECOND) OF Torts § 435 (1965) ..10, 13, 14

RESTATEMENT (SECOND) OF Torts § 435,

mapertirs TaN Tene én nah hake kdsesceree 10

TREATISES

J. Dooley, 1 MODERN Tort Law (1982) .............. 8

F. Harper, F. James, Jr. & O. Gray,

3 THE Law oF Torts (2d ed. 1986) ...... prin 8, 10

C. Morris & C. Morris, Jr., MORRIS ON TORTS

(2 OB, Se soko s Koa aS 10

W. Prosser & W. Keeton, Torts § 43 (Sth ed. 1984) ..10

vi

Page

Law Review ARTICLES

Currie, Federalism and the Admiralty: The Devil's Own

Mess, 1960 Sup. Cr. Rev. 158 (1960)... .......... 5

Green, Proximate Cause in Texas Negligence

FY ) SF &. FPP Tree 10

Harper, The Foreseeability Factor in the Law

of Torts, 7 Notre Dame Law. 468 (1932) ......... s

OPINIONS BELOW

The opinion of the Court of Appeals for the Fifth

Circuit is reported at 833 F.2d 65 and is reprinted in the

appendix (“App.”) at App. A. The opinion of the United

States District Court for the Western District of Louisiana

is reported at 639 F. Supp. 1173 and is reprinted at App. B.

A prior opinion of the court of appeals reversing summary

judgment against Petitioner is reported at 772 F.2d 1217

and is reprinted at App. C. The opinion of the district

court granting summary judgment is unreported and 1s

reprinted at App. D.

JURISDICTION

The court of appeals entered judgment on December

3, 1987 (App. E) and denied a timely petition for rehearing

on January 5, 1988. (App. F) Petitioner invokes this

Court's jurisdiction under 28 U.S.C. § 1254(1).

STATEMENT OF THE CASE

In this admiralty action,' petitioner Consolidated Alu-

minum Corporation (“Consolidated”) sought damages

from respondents C.F. Bean Corporation and Bean Dredg-

ing Corporation (collectively “Bean™) caused by Bean's

negligent rupturing of a high-pressure natural gas pipeline

while performing maintenance dredging of a navigable _

river.’

‘Petitioner invoked the district court's jurisdiction under 28 U.S.C.

§ 1333 and 46 U.S.C. § 740. Petitioner also invoked the district court's

diversity jurisdiction under 28 U.S.C. § 1332, but principles of admi-

ralty law control even where jurisdiction of a maritime tort case 1s based

upon diversity. Kermarec v. Compagnie Generale Transatlantique, 358

U.S. 625 (1959).

"The remaining respondents are Bean's imsurance carners, who

were joined as parties pursuant to Loursiana’s direct action statute.

2

Consolidated owned an aluminum reduction plant

near Lake Charles, Louisiana. The plant’s sole source of

energy was natural gas, which it obtained from a pipeline

running under the Calcasieu River. (772 F.2d at 1219,

App. C 3-5)

On April 5, 1980, Bean was dredging the river pursu-

ant to a contract with the Army Corps of Engineers. The

contract had alerted Bean to the presence and location of

14 gas pipelines within the scope of its dredging contract,

including the pipeline which Bean negligently ruptured.

This pipeline also was marked with two warning signs in

the river. (639 F. Supp. at 1176-78, App. B 4-5, 9; PX-2 at

1-7) Bean struck and ruptured the pipeline while dredging.

Within minutes, the rupture deprived Consolidated’s

plant, located six miles from the rupture site, of the gas

volume and pressure required to prevent a “freeze-up” of

molten aluminum, causing extensive physical damage to

Consolidated’s plant. (772 F.2d at 1219, App. C 5; 639

F. Supp at 1178-79, App. B 10-11; Tal Transcript (“Tr.”)

735-48, 1098-99)

Bean conceded that its conduct was negligent. (Tr.

524) At the time of its negligence, Bean did not have spe-

cific knowledge of the existence of Consolidated’s plant or

that Consolidated’s plant was connected to the pipeline.

(639 F. Supp. at 1182, App. B 20) However, at the time of

its negligence, Bean knew that many industrial plants were

located in the Lake Charles vicinity and that the pipeline

might service one or more of these plants, many of which

were clearly visible from the rupture site. (PX-47 at 5-6,

111-12; Tr. 605-07; PX-20, PX-22, PX-23)

‘In fact, at least 16 major industrial facilities, including Consoli-

dated’s aluminum manufacturing plant, were located within a seven-

(Continued on next page)

3

After a bench trial in the Western District of Louisi-

ana, the district court held that because Bean did not know

of Consolidated’s connection to the pipeline, Consoli-

dated’s damage was an unforseeable consequence of Bean’s

negligence. Therefore, the district court entered judgment

in favor of Bean on Consolidated’s claim. (639 F. Supp. at

1183, App. B 21)

The Fifth Circuit affirmed. The court reasoned that

Bean should not be held liable to Consolidated, because a

reasonably thoughtful person would not have foreseen that

Consolidated would have suffered the precise harm in

question as a result of Bean’s negligent conduct, even

(Continued)

mile radius of the Calcasieu River at the point of the rupture. (Tr. 599-

604, PX-48) By 1980, the Lake Charles area had a reputation for 20 or

more years as an industrial area and it was know” as one of the fore-

most petrochemical and refining centers in the Gulf Coast area. (Tr.

263, 604-05) It was also widely known in 1980 that natural gas was

being used as a primary source of fuel not only in all the plants in and

around the Lake Charles area but throughout the whole Gulf Coast area.

(Tr. 607-09) The natural gas was supplied to the plants in the Lake

Charles area by a network of pipelines that ran throughout the area,

including the 14 gas pipelines identified in Bean's contract as crossing

under the Calcasieu River. (Tr. 609-10)

‘The district court initially entered summary judgment in favor of

Bean and against Consolidated, holding that under Robins Dry Dock &

Repair Co. v. Flint, 275 U.S. 303 (1927), Consolidated could not recover

for what the district court characterized as Bean's negligent inierference

with Consolidated’s gas supply contract. (App. D 6) The Fifth Circuit

reversed, holding that the district court had mischaracterized Consoli-

dated’s cause of action and that because Consolidated had sustained

physical harm to its plant as the result of Bean's negligence, the “bright

line” rule of Robins Dry Dock did not preclude recovery. (772 F.2d at

1218: App. C 2) The Court of Appeals remanded the case to the district

court with a direction that the trial court decide Consolidated’s claim

under traditional tort principles, including foreseeability and duty, as

applied in admiralty. (/d. at 1224; App. C 16)

|

4

though it was foreseeable that Bean’s negligence would

result in harm to the pipeline. (833 F.2d at 68, App. A 7)

REASONS FOR GRANTING THE WRIT

I. The Fifth Circuit’s Decision Conflicts With Decisions

In Other Circuits And Is Contrary To Modern Con-

cepts Of Tort Law, As Set Forth In The Restatement

(Second) Of Torts.

The decision of the Fifth Circuit creates a conflict

among the circuits and injects substantial analytical confu-

sion into the law of admiralty regarding the scope of a

tortfeasor’s duty and the closely related question of liabil-

ity for unforeseeable consequences.

As acknowledged by the Fifth Circuit, the existence of

a duty depends upon whether “harm of a general sort to

persons of a general class might have been anticipated by a

reasonably thoughtful person... .” (833 F.2d at 68; App.

A7) However, according to the Fifth Circuit, the inability

of this “reasonably thoughtful person” to have anticipated

the precise sequence of events flowing from the negligent

act places that sequence of events and the resulting harm

“beyond the pale of general harm” and therefore makes

them unforeseeable and outside the scope of the actor’s

duty. (/d.)

In so holding, the Fifth Circuit confuses the concept of

“foreseeability,” as it relates to a reasonably thoughtful

person’s anticipation of the risk of some general harm

required in order to impose a duty, with the related but

different question of whether the particular method, man-

ner and extent of harm is so highly extraordinary that a

negligent actor should be relieved of liability even though

the actor’s conduct was a substantial factor in causing the

5

harm. The Fifth Circuit’s handling of these historically and

intellectually nettlkesome questions creates a conflict

among the circuits, is contrary to admiralty’s policy of

uniformity and its remedial nature, Moragne vy. States

Marine Lines, Inc., 398 U.S. 375, 387 (1970), and conflicts

with the modern concept of legal cause, as set forth in the

Restatement (Second) of Torts.

A. The Fifth Circuit’s Decision Conflicts With Admiralty

Decisions In The Second And Third Circuits.

This Court has long recognized the important policy

of uniformity in the law of admiralty. Moragne, 398 U.S.

at 402 (1970); Workman v. New York City, 179 U.S. 552,

558 (1900); The Lottawanna, 88 U.S. (21 Wall.) 558, 575

(1874). See generally Currie, Federalism and the Admi-

ralty: The Devil’s Own Mess, 1960 Sup. Ct. Rev. 158

(1960). The Fifth Circuit’s decision in this case evidences a

retreat from that policy in a critical area of maritime law

already beset by confusion.

The cornerstone of the Fifth Circuit’s opinion is the

inability of a reasonably thoughtful person to have fore-

seen the precise sequence of events and harm to Consoli-

dated caused by Bean’s negligence. (833 F.2d at 68, App.

A 7) Therefore, under the holding of the Fifth Circuit, the

foreseeability of the precise manner and extent of harm

sustained by a plaintiff determines the tortfeasor’s duty

and its parameters.

Such a holding is in direct conflict with the Second

Circuit’s landmark admiralty decision in Petition of Kins-

man Transit Co., 338 F.2d 708 (2d Cir. 1964), cert. denied,

380 U.S. 944 (1965), and the admiralty decision of the

Third Circuit in Pastore v. Taiyo Gyogyo, K.K., 571 F.2d

777 (3d Cir. 1978). The Second Circuit held in Kinsman

6

that liability exists for unforeseeable consequences directly

resulting from a tortfeasor’s negligence so long as the harm

resulting therefrom, “although other and greater than

expectable, is of the same general sort that was risked.” 338

F.2d at 724. Likewise, the Third Circuit in Pastore,

approaching the issue from the perspective of proximate

cause, also concluded that liability exists even when the

precise manner of the occurrence of the harm was not

foreseeable as long as it can be said that the conditions

encountered were not “so unusual” as to require a finding

of “no proximate cause as a matter of law.” 571 F.2d at

782.

In Kinsman, a negligently moored ship had parted

from its moorings and set in motion a remarkably complex

chain of events eventually resulting in a damming of the

Buffalo River and the collapse of both towers of a draw-

bridge.* The Second Circuit imposed liability for, among

other things, the resulting flood damage, even after

acknowledging that the precise consequences of the vari-

ous parties’ negligence could not have been fairly foreseen.

338 F.2d at 726.

‘About three miles upstream from the drawbridge, the Shiras,

owned by Kinsman, was negligently moored at a dock when her stern

lines parted and she drifted into the current. Traveling down the S-

shaped river, she struck the bow of the Tewksbury causing the latter's

mooring lines to part and the Tewksbury followed the Shiras stern first

down the river. A call was placed to the drawbridge crew and, although

just a little more than two minutes was needed to elevate the bridge, it

was just being raised some 30 minutes later when the Tewksbury

crashed into its center, causing the south tower of the bridge to fall. The

Shiras then became wedged against the Tewksbury, substantially dam-

ming the flow and causing water and ice to back up and flood installa-

uons on the bank with consequent damage as far as nearly three miles

upstream. Subsequently, the north tower of the bridge collapsed, dam-

aging adjacent property. Kinsman, 338 F.2d at 712-13.

j

[W]e would find it difficult to understand why one

who had failed to use the care required to protect

others in light of the expectable forces should be exon-

erated when the very risks that rendered his conduct

negligent produced other and more serious conse-

quences to such persons than were fairly foreseeable

when he fell short of what the law demanded.

Foreseeability of danger is necessary to render conduct

negligent; where as here the damage was caused by

just those forces whose existence required the exercise

of greater care than was taken... the incurring of con-

sequences other and greater than foreseen does not

make the conduct less culpable or provide a reasoned

basis for insulation.

Id. at 723-724. (citations omitted) (footnote omitted).

Athough employing a different analytical framework,

the conclusion of the Third Circuit in Pastore—that

unforeseeability of the precise manner of the harm’s occur-

rence will not prevent liability from attaching—is consis-

tent with the holding in Kinsman, but contrary to the Fifth

Circuit’s position in this case. In Pastore, a longshoreman,

who had been unloading cargo from a ship, discarded a

cigarette butt in the ship’s hold, resulting in a fire. A city

fireman fell off a ladder that had been lowered into the

hold and injured himself. The stevedore, who had

employed the longshoreman, successfully argued in the

district court that the fire was not the proximate cause of

the injury since the vessel’s crew had negligently failed to

warn the fireman that the ladder was resting not on what

appeared to be the deck, but rather on an unstable pile of

frozen meat. In the district court’s view those were “unu-

sual and unforeseen circumstances” relieving the stevedore

from liability. 571 F.2d at 782.

8

In reversing, the Third Circuit agreed that “[t]he pre-

cise way in which the plaintiff fell was, perhaps, not clearly

foreseeable.” Jd. Nonetheless, the court concluded the cir-

cumstances were not “so unusual” as to find “no proxi-

mate causation as a matter of law.” Jd.

The resulting harm was a more remote consequence of

the negligent conduct in Kinsman and Pastore than it was

in this case. Certainly, a reasonable dredger could foresee

the risk of some general harm to those serviced by the high

pressure natural gas pipelines in the area from a disruption

of the supply of natural gas resulting from the rupture of

one of those pipelines even though a reasonably thoughtful

person might not foresee the precise customer which

would suffer the harm or the precise nature of that harm or

the manner by which it would occur. Nevertheless, the

Fifth Circuit refused to impose liability for precisely the

same rationale which the Second Circuit had rejected in

Kinsman as “difficult to understand.” Kinsman, 338 F.2d

at 723.

Therefore, the decision of the Fifth Circuit is in con-

flict with both the Second Circuit and the Third Circuit on

the issue of what must be foreseeable—a risk of some

general harm versus the specific consequences—in order to

impose liability in admiralty.®

‘The Fifth Circuit’s decision in this case also is contrary to tradi-

tional concepts of tort law, pursuant to which a risk of some general

harm is all that must be foreseeable and not the specific consequences

resulting from the negligent conduct. See J. Dooley, | MODERN Tort

Law, § 3.10 at 30 (1982); F. Harper, F. James, Jr. & O. Gray, 3 THE Law

OF Torts, § 18.2 at 669-670 (2d ed. 1986); Harper, The Foreseeability

Factor in the Law of Torts, 7 Notre Dame Law. 468, 470 (1932).

9

B. Analytical Confusion Regarding Duty, Foreseeability

And Legal Or Proximate Cause.

As the Second Circuit in Kinsman correctly

acknowledged:

[t]he weight of authority in this country rejects the

limitation of damages to consequences foreseeable at

the time of the negligent conduct when the conse-

quences are “direct,” and the damage, although other

and greater than expectable, is of the same general sort

that was risked.

338 F.2d at 724.

Nevertheless, Judge Friendly’s opinion for the court in

Kinsman observed:

[t]his does not mean that the careless actor will always

be held for all damages for which the forces that he

risked were a cause in fact. Somewhere a point will be

reached -when courts will agree that the link has

become too tenuous—that what is claimed to be con-

sequence is only fortuity.

Id. at 725.

In grappling with this policy issue the Second Circuit

conceded that, although ‘agreement in result” might be

achieved in a particular factual situation, such agreement

“might not be paralleled by similar unanimity in reason-

ing.” Id.

This “agreement in result” but lack of “unanimity in

reasoning,” emanating from the seminal case of Palsgraf v.

Long Island Railroad Co., 248 N.Y- 339, 162 N.E. 99

(1928), and its multi-faceted progeny, is discussed in depth

10

in Kinsman, 338 F.2d at 721-26,’ and is reflected in the

Kinsman and Pastore decisions. The existence of such con-

fusion is contrary to the strong admiralty traditions of

simplicity and practicality, Kermarec, 358 U.S. at 631, and

results in a breakdown of admiralty’s tradition of uniform-

ity. Moragne, 398 U.S. at 402 (citing The Lottawanna,

supra).

Recognizing the analytical confusion in the areas of

duty, foreseeability and causation, the American Law

Institute attempted to clarify the law and adopt modern

concepts to be used in analyzing these problems in its

influential Restatement (Second) of Torts. See, e@.g.,

RESTATEMENT (SECOND) OF TorTs § 435, Reporter’s Notes at

150-51 (1966). Under the Restatement (Second) of Torts

analysis, once the requirement of a risk of general harm to

the plaintiff or a class of which plaintiff is a member is

established (in other words, the establishment of a duty)

and the actor’s conduct is both negligent and a substantial

factor in bringing about that harm, the unforeseeability of

the extent of the harm or the manner in which it occurred

will not prevent liability from attaching. RESTATEMENT (SEC-

OND) OF Torts, § 435(1) (1965).

As is readily apparent, Section 435(1) of the Restate-

ment parallels the language of Kinsman. Compare RESTATE-

MENT (SECOND) OF Torts § 435(1) with Kinsman, 338 F.2d

at 724, 726. Kinsman recognized that “a point will be

reached when courts will agree that the link has become

too tenuous.” /d. at 725. The Restatement in Section

435(2) attempts to bring clarity to this issue by making the

7See generally F. Harper, F. James, Jr. & O. Gray, 3 THe Law oF

Torts, § 18.1 at 650, § 18.2 (2d ed. 1986); C. Morris & C. Morris, Jr.,

Morris ON TorTS at 161-67 (2d ed. 1980); W. Prosser & W. Keeton,

Torts § 43 at 284-90 (Sth ed. 1984); L. Green, Proximate Cause in

Texas Negligence Law, 28 Tex. L. Rev. 755 (1950).

11

question of responsibility for such unforeseeable conse-

quences an issue for the court under a determination of

legal cause. Under the Restatement, as discussed in the

next section, the court employs a hindsight test of foresee-

ability pursuant to which the events have to be “highly

extraordinary” in order for the actor’s conduct not to be

deemed the legal cause of the harm. RESTATEMENT (SECOND)

oF Torts, § 435(2) (1965).8

The legal cause analysis of the Restatement was

adopted into the law of admiralty in the Fifth Circuit in

Spinks v. Chevron Oil Co., 507 F.2d 216 (Sth Cir. 1975).°

In Spinks, the Fifth Circuit, speaking through Judge Wis-

dom, pertinently observed, “[t]he concept of proximate

cause often obscures the true analysis of a tort. A court

makes a policy judgment on the limits of liability when

causation in fact has been established.” 507 F.2d at 222. As

noted by Spinks, “[i]t would be anamalous to allow an

overly strict interpretation of proximate cause to defeat the

remedial purposes of admiralty tort law.” Jd. at 223. Typi-

fying the analytical confusion which exists in this area, the

Fifth Circuit in this case failed to employ the Restate-

ment’s legal cause analysis. Indeed, the court did not dis-

cuss or even cite Spinks or the Restatement.

‘In Pastore, the Third Circuit confirmed its holding of liability by

reference to the hindsight standard of legal cause reflected in the

Restatement (Second) of Torts, § 435(2). Pastore, 571 F.2d at 783.

*The federal courts frequently refer to the Restatement (Second) of

Torts in admiralty cases. See, e.g., Avery v. United States, 829 F.2d 817,

819 (9th Cir. 1987); Cruickshank & Co., Ltd. v. Sorros, 765 F.2d 20, 25

(2d Cir. 1985); Protectus Alpha Navigation Co., Ltd. v. North Pacific

Grain Growers, Inc., 767 F.2d 1379 (9th Cir. 1985); Patentas v. United

States, 687 F.2d 707, 713-17 (3d Cir. 1982); Pan-Alaska Fisheries, Inc. v.

Marine Construction & Design Co., 565 F.2d 1129, 1135 (9th Cir. 1977);

Spinks v. Chevron Oil Co., 507 F.2d 216 (Sth Cir. 1975); Lindsay vy.

McDonnell Douglas Aircraft Corp., 460 F.2d 631, 636-637 (8th Cir.

1972).

12

The lack of “unanimity of reasoning” reflected both

among and within the circuits as respects the maritime tort

concepts of duty, foreseeability and causation should not

exist in an area of such traditions and important concern

as admiralty. This Court, as discussed later in this Petition,

has not directly addressed these issues. Accordingly, this

case provides the appropriate vehicle for this Court to

clarify the proper analysis of the issues of duty, foreseeabil-

ity and legal cause in admiralty.

C. Modern Concept Of Legal Cause, As Set Forth In The

Restatement (Second) Of Torts.

As noted in Spinks, “[b]ecause of strong policy consid-

erations in admiralty, legal cause analysis [under the

Restatement (Second) of Torts] is particularly suited to

maritime tort law.” 507 F.2d at 223.

Under the analysis promulgated in the Restatement

(Second) of Torts, the concept of legal cause is used to

determine the circumstances under which a defendant who

has engaged in negligent conduct towards the plaintiff or a

class of which plaintiff is a member will be held liable for

the harm resulting from such conduct. See RESTATEMENT

(SECOND) OF Torts § 9 (1965). In order for such negligent

conduct to be a legal cause of the harm, the conduct must

be a substantial factor in causing the harm, /d. § 431(a),

and there must be “no rule of law relieving the actor from

liability because of the manner in which his negligence has

resulted in the harm.” Jd. § 431(b).

On this record, there can be no dispute that Bean’s

concededly negligent conduct was, under the standards of

the Restatement, id. § 433, a substantial factor in causing

the harm to Consolidated. (772 F.2d at 1222, App. C 12)

13

Rather, the issue in this case, which the Fifth Circuit con-

fused with other concepts,!° is whether Bean’s inability, at

the time of its negligence, to foresee the specific manner

and extent of the harm to Consolidated, a member of the

class served by the high pressure natural gas pipeline, gives

rise to a rule of law relieving it “from liability because of

the manner in which [its] negligence has resulted in the

harm.” Jd. § 431(b).

The Restatement (Second) of Torts provides the

answer to that question in § 435:

Foreseeability of Harm or Manner of Its Occurrence

(1) If the actor’s conduct is a substantial factor in

bringing about harm to another, the fact that the actor

neither foresaw nor should have foreseen the extent of

the harm or the manner in which it occurred does not

prevent him from being liable.

(2) The actor’s conduct may be held not to be a legal

cause of harm to another where after the event and

looking back from the harm to the actor’s negligent

conduct, it appears to the court highly extraordinary

that it should have brought about the harm.

The Fifth Circuit’s opinion in this case is irreconcil-

able with the modern concept of legal cause under the

‘The Fifth Circuit’s opinion in this case also speaks of “the antici-

pation of harm of a general sort to persons of a general class,” and in so

doing appears on the verge of properly articulating the standard for

initially determining the existence of a duty on the part of the defen-

dant. (833 F.2d at 67-68: App. A 4-7) (citing F. Harper, The Foreseeabil-

ity Factor in the Law of Torts, 7 Notre Dame Law. 468, 482 (1932)

(emphasis in original)). See also note 6, above. However, the rest of the

Fifth Circuit opinion evidences general confusion over foreseeability as

it relates to the concepts of duty and legal cause. The way in which the

Fifth Circuit resolves these issues clearly is at odds with the Second

Circuit, the Third Circuit and the Restatement.

14

Restatement. First, the Fifth Circuit treated the issue of

whether a reasonably thoughtful person could have fore-

seen the extent of the harm or manner in which it occurred

as being relevant to the concept of duty, rather than to the

analysis of legal cause. Second, and more important, in

fashioning its requirement, unprecedented in admiralty, of

such specific foreseeability, the Fifth Circuit reached a

result in conflict with Kinsman and Pastore and inconsis-

tent with Restatement (Second) of Torts § 435(1), pursuant

to which the unforeseeability of specific consequences does

not preclude negligent conduct from being the legal cause

of the harm.

Finally, by determining whether the particular conse-

quences were foreseeable by a reasonably thoughtful per-

son at the time of Bean's negligence, the Fifth Circuit

adopted a prospective approach to the determination of

foreseeability rather than the approach of Section 435(2) of

the Restatement, under which a tortfeasor’s conduct is a

legal cause of the harm notwithstanding “the manner in

which [the] negligence has resulted in the harm,” id.

§ 431(b), except where, by Aindsight, “it appears to the

court highly extraordinary that it should have brought

about the harm.” /d. § 435(2). In adopting the hindsight

approach to legal cause under § 435(2), the Restatement

makes it clear that it is the court, as a matter of policy,

which determines whether there is anything so highly unu-

sual in the extent of the harm or the manner of its occur-

rence so as to release the tortfeasor from liability.

Because of the remedial policies of maritime tort law

and this Court’s important role in fostering these policies,

this Court should grant certiorari to resolve the conflict in

the circuits and to establish both an “agreement in result”

15

and “unanimity in reasoning” as respects the concepts of

duty, foreseeability and causation in admiralty.

Il. This Court Has Never Addressed The Proper Stan-

dard For Legal Cause In A Maritime Tort Action.

This Court has recognized the “substantial law-creat-

ing function” of the federal judiciary as a whole, and this

Court in particular, in the formulation of admiralty law.

Fitzgerald v. United States Lines Co., 374 U.S. 16, 20

(1963). This Court has also noted admiralty’s remedial and

uniform nature. Moragne v. States Marine Lines, 398 U.S.

375, 387 (1970). The Fifth Circuii opinion furthers neither

of these well-settled objectives of the law of admiralty.

Instead, with its overly-restrictive approach toward liabil-

ity, the Fifth Circuit opinion undermines and evidences a

retreat from the traditionally broad remedial purpose of

admiralty law, in a manner which creates conflict among

the circuits.'!

"The concern expressed by this Court in East River Steamship

Corp. v. Transamerica Delaval Inc., 476 U.S. 858 (1986), a product

liability case, that the concept of foreseeability might be “an inadequate

brake” on liability, 476 U.S. at 874, does not exist with respect to the

elements of a cause of action for negligence under the Restatement. See

Restatement (Seconp) of Torts § 281 (1965). Unlike a strict habuility

claim where a duty is owed to the public generally, a maritime tort

analyzed under the Restatement requires the establishment of a legally

protected interest. Restatement (Secon) oF Torts § 281(a) (1965). The

requirement of a legally protected interest serves as a pragmatic limita-

tion on a tortfeasor’s liability by excluding liability for unintentional

invasions which result solely in economic loss. See Robins Dry Dock &

Repair Co. v. Flint, 275 U.S. 303 (1927). Consolidated Aluminum Corp.

v. CF. Bean Corp., 772 F.2d 1217, 1222-24 (Sth Cir. 1985), Barber

Lines A/S v. M/V Donau Maru, 764 F.2d 50, 51-54 (ist Cir. 1985);

Louisiana ex rel Guste v. M/V Testhank, 752 F.2d 1019, 1021-25 (Sth

Cir. 1985), cert. denied, _.. U.S. —__., 106 S. Ct. 3271 (1986). “While

the number of plaintiffs suffering only economic harm from a aegligent

(Continued on next page)

16

This Court has never before expressly decided the

standards for legal cause in an admiralty tort action. Given

the importance of uniformity in the law of admiralty and

the important role of this Court in determining the princi-

ples to be applied in such cases, we respectfully suggest that

this case would be appropriate for review by this Court in

order to decide the proper role of foreseeability in the

determination of the concepts of duty and legal cause in

negligence actions cognizable in admiralty.

(Continued)

act 1s indeterminate and perhaps infinite, the number of potential plain-

tiffs suffering physical harm is generally neither as indeterminate nor as

possibly infinite.” Consolidated, 772 F.2d at 1223.

17

CONCLUSION

For the above reasons, Consolidated respectfully

requests this Court to grant this petition and issue a writ of

certiorari to the United States Court of Appeals for the

Fifth Circuit.

April 4, 1988

Respectfully submitted,

Donacp C. WINSON

(Counsel of Record)

Howarpd D. SCHWARTZ

Ropert L. Byer

JENNIFER WILSON Hewiit

ECKERT SEAMANS CHERIN & MELLOTI

42nd Floor, 600 Grant Street

Pittsburgh, Pennsylvania 15219

(412) 566-6000

Of Counsel

James E. HUGHES

CONSOLIDATED ALUMINUM

CORPORATION

A-l

APPENDIX A

CONSOLIDATED ALUMINUM CORP.,

Plaintiff-Appellant,

v.

C.F. BEAN CORP., et al.,

Defendants-Appellees.

No. 86-4657.

United States Court of Appeals,

FIFTH CIRCUIT.

Dec. 3, 1987.

Appeal from the United States District Court for the

Western District of Louisiana.

Before THORNBERRY, REAVLEY and POLITZ,

Circuit Judges.

POLITZ, Circuit Judge:

This case returns after remand, 772 F.2d 1217 (Sth

Cir. 1985), with Consolidated Aluminum Corporation

appealing a benchtrial judgment rejecting its claims against

C.F. Bean Corporation and Bean Dredging Corporation

(collectively Bean), 639 F. Supp. 1173 (W.D.La. 1986).

Consolidated seeks recovery for physical damage to its

aluminum manufacturing facilities and for attendant eco-

nomic loss caused by the interruption of its supply of natu-

ral gas. Its gas supply was suddenly terminated when a

Bean dredge negligently ruptured a Texaco pipeline, caus-

ing Texaco to close the nearest valves to stem the flow of

escaping gas. In the first appeal Consolidated sought and

secured reversal of a summary judgment in favor of Bean.

A-2

The district court initialiy concluded that the rule of Rob-

ins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 48 S.Ct.

134, 72 L.Ed. 290 (1927), as expanded by this court in

Louisiana ex rel. Guste v. M/V TESTBANK, 752 F.2d

1019 (Sth Cir. 1985) (en banc), cert. denied, sub nom.

White v. M/V TESTBANK, US. , 106 S.Ct. 3271,

91 L.Ed.2d 562 (1986), mandated a summary dismissal.

We concluded that the “bright line” rule of Robins Dry

Dock and TESTBANK “does not reach the instant case

and that a plaintiff's claim of negligence for physical dam-

ages to equipment in which the plaintiff has a proprietary

interest should be analyzed under tort principles applied

by this Court in admiralty.” 772 F.2d at 1218.

Background

The facts are set forth in detail in our prior decision

and in the opinion on remand. We note only the most

salient. On April 5, 1980, around 7:00 A.M., Bean was

dredging the Calcasieu River Ship Channel near Lake

Charles, Louisiana, pursuant to a contract with the United

States Corps of Engineers. The contract warned Bean of

the location of Texaco’s twelve-inch, high-pressure, natural

gas pipeline, which traversed the channel to service a

nearby PPG Industries, Inc. plant. Bean had submitted a

plan for dredging in the vicinity of structures and utilities

crossing or adjacent to the channel. The plan comported

with industry safety practices but the dredging crew failed

to follow its procedures. As a result of the crew's negligent

lapse, the dredge’s cutterhead struck and ruptured the Tex-

aco pipeline, allowing the escape of a large amount of gas.

The rupture caused an immediate drop in the pressure

in the pipeline. To stem the flow, Texaco closed the nearest

upline block valves. Unfortunately for Consolidated,

A-3

whose aluminum reduction plant was located approxi-

mately six miles from the rupture site, the closing of the

valves cut off its supply of natural gas. The sudden termi-

nation of natural gas flow, Consolidated’s only energy

source for its electrical generators, caused substantial phys-

ical damage to Consolidated’s plant and work-in-progress,

plus an estimated equal amount of economic loss.

Consolidated’s aluminum reduction plant is the small-

est in the United States. It has the unique distinction of

having only one energy source for the generation ~~ t*e

electricity used in its operation. The record reflects t >t

aluminum reduction plants follow the universal practi» of

having a readily-available, alternate energy source. his

practice avoids the risk of the very damages that Co oli-

dated sustained as a result of the unprogrammec 1

down. When the plant near Lake Charles, Louisian as

built, a calculated judgment was made—no a!-crnate

energy source, such as fuel oil, was provided, despite the

fact that the generators installed could operate on either

natural gas or fuel oil.

Consolidated filed suit against Bean and Texaco, and

their insurers, and the Corps of Engineers, alleging tort and

contract claims, and invoking admiralty and diversity

jurisdiction. Consolidated’s claims against Bean were first

dismissed, as noted, on the motion for summary judg-

ment. We remanded for reconsideration by the trial court

and application of traditional tort principles, including

“foreseeability and the related concept of legal duty.” 772

F.2d at 1224.

After trial, the district court awarded Texaco judg-

ment against Bean for damage to its pipeline and for the

value of the gas lost. Consolidated’s demands against Bean

A-4

were rejected on findings and conclusions that its damages

were unforeseeable and, consequently, were not within the

protected ambit of the duty imposed on Bean to dredge in

a non-negligent manner. Consolidated appeals. We affirm.

Analysis

The analysis of a maritime tort is guided by general

principles of negligence law. Casaceli v. Martech Int’l.,

Inc., 774 F.2d 1322 (Sth Cir. 1985); Daigle v. Point Land-

ing, Inc., 616 F.2d 825 (Sth Cir. 1980). Under those princi-

ples a tortfeasor is accountable only to those to whom a

duty 1s owed. Watz v. Zapata Offshore Co., 431 F.2d 100

(Sth Cir. 1970); 57 Am.Jur.2d Negligence § 33 (1971).

Determination of the tortfeasor’s duty, and its param-

eters, is a function of the court. Green, Proximate Cause in

Texas Negligence Law, 28 Tex.L.Rev. 775 (1950). That

determination involves a number of factors, including

most notably the foreseeability of the harm suffered by the

complaining party. Prosser and Keeton on Torts, Duty § 53

(Sth ed. 1984); Green, The Duty Problem in Negligence

Cases, 28 Col.L.Rev. 1014 (1928); 29 Col.L.Rev. 255

(1929). The foreseeability factor persuaded the trial court.

We also find that factor decisive. The critical inquiry is the

foreseeability of the injury to Consolidated resulting from

Bean’s negligent dredging operation. The answer to that

question largely defines the duty, if any, owned by Bean to

Consolidated.

“Duty... 1s measured by the scope of the risk that

negligent conduct foreseeably entails.” Harper & James,

The Law of Torts, Scope of Duty in Negligence Cases § 18.2

at 655 (2d ed. 1986). The duty “may be owed only with

respect to the interest that is foreseeably jeopardized by the

negligent conduct, and not to other interests even of the

A-5

same plaintiff which may in fact happen to be injured.” Id.

at 660 (interpreting dicta in Palsgraf v. Long Island Rail-

road Co., 248 N.Y. 339, 347, 162 N.E. 99, 101 (1928)).

For, as the eminent commentator and scholar Wex S.

Malone observed in his Ruminations on Cause-in-Fact,

collected in his Essays on Torts, p. 172 (1985), first pub-

lished 9 Stan.L.Rev. 60 (1956):

All rules of conduct, irrespective of whether they

are the product of a legislature or are a part of the

fabric of the court-made law of negligence, exist for

purposes. They are designed to protect some persons

under some circumstances against some risks. Seldom

does a rule protect every victim against every risk that

may befall him, merely because it is shown that the

violation of the rule played a part in producing the

injury. The task of defining the proper reach or thrust

of a rule in its policy aspects is one that must be

undertaken by the court in each case as it arises

(emphasis in original).

Foreseeability obviously marks the limits placed on a

defendant’s duty; the precise meaning of the concept is

vital. As negligence law developed in England the concept

became “whether any ordinarily prudent man would have

foreseen that damage would probably result from his act.”

F. James & R. Perry, Legal Cause, 60 Yale L.J. 761, 786

(1951) (quoting 8 W. Holdsworth, A History of English

Law 450 (2d ed. 1937)). Modern courts have given the

concept varying meanings.! One scholar assigned an

'For example, see, Words and Phrases, Foreseeability (1953) (“rea-

sonable anticipation that harm or injury is a likely result of acts or

omissions.” Emery v. Thompson, 148 S.W.2d 479, 480, 347 Mo. 494

(1941)); Words and Phrases, Foreseeability (1987) (“that which is objec-

tively reasonable to expect, not merely what might conceivably occur.”

Augenstine v. Dico Co., Inc., 481 N.E.2d 1225, 1228, 90 Ill.Dec. 314,

(Continued on next page)

A-6

almost generic definition, “the anticipation of harm of a

general sort to persons of a general class.” Harper, The

Foreseeability Factor in the Law of Torts, 7 N.D.Law. 468,

482 (1932) (emphasis in original).

Foreseeability guided our decision in Republic of

France v. United States, 290 F.2d 395 (Sth Cir.1961) in

which a fire in the ship’s cargo of fertilizer grade ammo-

nium nitrate was followed by an explosion. The explosion

was unprecedented; there was no general knowledge of the

explosive nature of nitrate when exposed to fire. Although

the vessel owners were negligent in handling the fire, we

exonerated them from liability for the injuries caused by

the explosion, concluding that because of the unknown

volatility of the cargo, the ship-owners reasonably could

not have foreseen that explosion. We held that to be found

liable a defendant must have “knowledge of a danger, not

merely possible but probably . . .”” 290 F.2d at 401 (quoting

Dalehite v. United States, 346 U.S. 15, 42, 73 S.Ct. 956,

971, 97 L.Ed. 1427 (1953) (citations omitted) ).

Other commentators muse that ‘“‘foreseeabil-

ity... includes whatever is likely enough in the setting of

modern life that a reasonably thoughtful person would

(Continued)

317, 135 ILApp.3d 273 (Ist Dist. 1985)); ““whether the injury or an

injury similar in general might reasonably have been anticipated as a

natural and probably result of negligent act or acts.” Geo. D. Barnard

Co. vy. Lane, 392 S.W.2d 769, 771 (Tex.Civ.App.1965): “consequence

which is probable according to ordinary and usual experience.” Wyatt v.

Motsenbocker, 360 S.W.2d 543, 546 (Tex.Civ.App.1962); “one which

prudent man would anticipate as likely to result from an act” Firestone

Tire & Rubber Co., Inc. v. Lippincott, 383 So.2d 1181, 1182 (Fla.

App.1980); “anticipation of a general category of harm which in ordi-

nary experience might be expected to flow from a particular type of

negligence.”’ Garrett v. United States, 501 F. Supp. 337, 339

(D.C.Ga.1980).

A-7

take account of it in guiding practical conduct.” Harper &

James, The Law of Torts, Scope of Duty in Negligence

Cases § 18.2 at 657-59 (2d ed. 1986).

We perceive a harm to be the foreseeable consequence

of an act or omission if harm of a general sort to persons of

a general class might have been anticipated by a reasonably

thoughtful person, as a probable result of the act or omis-

sion, considering the interplay of natural forces and likely

human intervention.

Applying this definition, we are not persuaded that

Bean could have anticipated that is failure to follow safe

dredging practices would likely result in physical damage

to the equipment and work-in-progress at Consolidated’s

aluminum reduction plant several miles away. The harm

was not of a general sort expected to follow from the fail-

ure to dredge carefully in proximity to a gas pipeline.

Injury to property and persons from the escaping gas, or

from a fire which might have ensued, would be examples

of consequences that would be foreseeable.2 The damages

sustained by Texaco obviously were foreseeable. But the

damage arising from the loss of natural gas supply, in turn

causing the shut down of electric turbines, in turn causing

a loss of electric power vital to the aluminum reduction

process, with the ultimate result being substantial damage

to equipment and product-in-process, goes beyond the pale

of general harm which reasonably might have been antici-

pated by negligent dredgers.

Of interest is the rejection of the claims of PPG Industries, Inc. for

its loss incurred in purchasing replacement gas at a higher cost during

the period of repair of the pipeline. The PPG plant was adjacent to the

channel and was the entity being served by the lateral pipeline. The

Louisiana Supreme Court concluded that this risk was outside of the

duty imposed on Bean. PPG Industries, Inc. v. Bean Dredging, 447

So.2d 1058 (La.1984).

A-8

We find no error in any factual finding or legal conclu-

sion inherent in the trial court’s ruling that the damages

suffered by Consolidated were not foreseeable and, as such,

not within the reach of the duty imposed on Bean to per-

form its dredging operations in a non-negligent manner.

The judgment of the district court is therefore

AFFIRMED.

B-1

APPENDIX B

CONSOLIDATED ALUMINUM

CORPORATION

v.

C.F. BEAN CORPORATION, et al.,

Civ. A. No. 81-0500.

United States District Court,

W.D. LOUuISANA,

LAKE CHARLES DIVISION.

July 16, 1986.

OPINION

VERON, District Judge.

Plaintiff, Consolidated Aluminum Corporation (here-

inafter referred to as Consolidated) filed suit seeking lost

profits and damages allegedly sustained by its aluminum

manufacturing plant located south of Lake Charles, Louisi-

ana. The alleged damages occurred when the natural gas

supply to the plant was shut off due to a dredging barge

breaking the pipeline which supplied the natural gas.

Named as defendants were: C.F. Bean Corporation and

Bean Dredging Corporation (hereinafter collectively

referred to as Bean), the owners/operators of the dredge;

Bean’s insurers; and Texaco, Inc. (hereinafter referred to as

Texaco), the owners of the pipeline. Texaco subsequently

filed a third-party claim against the United States through

the United States Army Corps of Engineers (hereinafter

referred to as Corps of Engineers), as the party with pri-

mary responsibility for the dredging operations, tendering

B-2

the Corps of Engineers to Consolidated as a direct defen-

dant. Additionally Texaco has asserted a cross-claim

against Bean for the cost of repairing its pipeline and the

value of the natural gas lost due to the rupture of the

pipeline by Bean. Texaco also seeks indernnification or

contribution from Bean for any amount it might be

required to pay to Consolidated. Texaco has filed a claim

against the United States through the Corps of Engineers

contending that the Corps of Engineers is liable for Bean's

actions because it failed to properly supervise and control

Bean's activities, and that the Corps of Engineers is inde-

pendently liable because it failed to select a competent

contractor to dredge the Calcasieu River Ship Channel.

Bean has filed a cross-claim against Texaco, seeking

indemnification or contribution in any amount for which

it may be cast.

This Court acting upon Bean’s motion for summary

judgment originally granted that summary judgment as to

Bean on the grounds that, under Robins Dry Dock &

Repair Co. v. Flint, 275 U.S. 303, 48 S.Ct. 134, 72 L.Ed.

290 (1927), no cause of action exists in tort for negligent

interference with contract.' The United States Fifth Circuit

Court of Appeals, 772 F.2d 1217, reversed the summary

judgment and remanded, finding that “the bright line” rule

of Robins Dry Dock did not apply in the instant case and

Stating that the plaintiff's claim of negligence should be

analyzed under tort principles applied by this Court in

admiralty.

‘Final judgment under Fed.R.Civ.P. 54 was entered and all further

proceedings in the case were stayed pending outcome of appeal to the

Fifth Circuit.

B-3

The issues of liability and quantum of damages have

been bifurcated with the latter being reserved for resolu-

tion at a future date.

On remand, after hearing the testimony, reviewing the

stipulations and pleadings, and weighing all of the evi-

dence presented at trial on the merits, the Court makes the

following:

FINDINGS OF FACT

1.

Consolidated is and was at all pertinent times a New

York corporation doing business within this District. Bean

(collectively) is and was at all pertinent times a Louisiana

corporation. Texaco is and was at all pertinent times a

Delaware corporation doing business within this District.

The United States is and was at all pertinent times a sover-

eign nation as to which venue properly lies within this

District.

2.

In 1963, Texaco laid a natural gas pipeline in order to

provide natural gas service to one customer, PPG Indus-

tries, Inc. This pipeline consisted of two segments: a six-

inch line known as the “Big Lake Line” or the “Hackberry

Line,” running from the Hackberry area south of Lake

Charles, Louisiana to a valve manifold known as “Point

C”™; and, a twelve-inch line known as the “PPG Lateral,”

running from Point C to the PPG plant located across the

Calcasieu River.

The Corps of Engineers issued a permit (no. LMNOD

(Calcasieu River) 287) to Texaco allowing Texaco to con-

struct the twelve-inch pipeline across the Calcasieu River

B-4

at Mile 31.9 Station No. 1683 + 90. The permit set forth

the guidelines to be followed in laying and maintaining the

pipeline crossing. The permit additionally provided in

Clause (g), as one of the conditions for issuance:

That the United States shall in no case be liable for

any damage or injury to the structure or work herein

authorized, which may be caused by or result from

future operations undertaken by the Government for

the conservation or improvement of navigation or for

other purposes and no claim or right to compensation

shall accrue from any such damage.

That pipeline was laid and maintained in accordance with

the requirements of the Corps of Engineers permit.

4.

In 1965, Texaco connected an unused sixteen-inch

production line, known as the “Evangeline Pipeline,” to

the PPG lateral. Natural gas was then transported through

the Evangeline Pipeline.

5.

By contract dated September 20, 1968, a Gas Sales

and Purchase Contract was executed between Texaco and

Consolidated’s predecessor in interest, Gulf Coast Alumi-

num Corporation. In accordance therewith, a pipeline was

laid from Point C southward to Consolidated’s plant,

located south of Lake Charles. The gas contract provided

that Consolidated would purchase its plant’s requirements,

up to a stated maximum, and in any case, not less than a

specific quantity of gas, from Texaco.

6.

On December 14, 1979, Bean, who at all times held

itself out to the public as an expert, independent dredging

B-5

contractor, entered into Construction Contract No.

DACW 29-80-C-0063 with the United States Army Engi-

neer District, New Orleans for maintenance dredging of

the Calcasieu River and Pass from Mile 15.5 to Mile 36,

along with other areas unimportant to this litigation. For

the area surrounding Texaco’s pipeline crossing, the con-

tract specifications called for dredging to a minus forty feet

MLG (mean low gulf) over a four hundred foot project

width of the bottom with one foot allowable over-dredging

and side slopes of one to three feet.

7.

General provision |2 of the contract provides in perti-

nent part:

The Contractor shall, without additional expense to

the Government, be responsible . . . for all damages to

persons or property that occur as a result of his fault

or negligence. He shall take the proper safety and

health precautions to protect the work, the workers,

the public and the property of others... .

And, the technical provisions of the contract provides:

1-10.1 The Contractor shall exercise caution when

working in the vicinity of structures and utilities cross-

ing or adjacent to the channel or disposal areas.

Repair of any damage resulting from excessive or

improper excavation in the bottom or side slopes of

the channel will be the responsibility of the Contrac-

tor. Where dredging to the theoretical section might

endanger any structure, the Contracting Officer may

reduce the required excavation in the vicinity of such

structure.

B-6

1-10.2 The Contractor shall provide at least project

dimensions over all utility crossings by whatever

approved method the Contractor elects to use. The

Contractor shall submit for approval by the Con-

tracting Officer a detailed plan of operation at each

pipeline or utility crossing where construction surveys

indicated project channel does not exist. The plan

shall contain emergency measures to be taken in the

event of an accident. The Contractor shall notify the

owners of pipelines or utilities at least 3 days prior to

operating within 150 feet of a pipeline or utility.

1-10.3 The following structures or utilities are

located within the limits of the work. The vertical

clearances listed below were furnished by the utility

owners at the time permits were issued and are not the

result of a survey made by the Government. It will be

the responsibility of the Contractor to verify these

locations and clearances.

9.

The correct location of Texaco’s pipeline was pro-

vided in the contract as well as Texaco’s address.

10.

On January 14, 1980, Bean provided the Corps of

Engineers with a general plan for safe dredging around and

over utility crossings like Texaco’s pipeline, which was

approved by the Corps of Engineers. Among other things

this plan provided that:

The owners of each pipeline and/or utility lines will be

contacted at least seven (7) days before by phone and

by letter to have a crew come out and mark and verify

the elevations of respective lines and give all informa-

tion to the Dredge Superintendent.... [Bean] will

B-7

request that a representative be on board the dredge to

witness the depths and swing of the dredge.

This plan further provided that the dredge was to advance

to within twenty-five feet of the pipeline and then tie off

the cutter. This plan reflected the typical and customary

practice in the dredging industry.

11.

Dredging began on January 14, 1980. On March 24,

1980, Bean added its Dredge No. 32 (the dredge involved

in this matter) to the project. The dredge was 202 feet long,

49 feet in width, and contained a 56 foot cutter ladder, to

which the cutter was attached. The dredge maintained a

crew of approximately 45 men.

12.

Mr. Elton McCabe, a project manager for Bean, was in

charge of and had overall supervision of Bean’s dredges

operating pursuant to the dredging contract, including

Dredge No. 32.

13.

Captain Adloph Pontiff was the Dredge Superinten-

dent of Dredge No. 32 during all pertinent times, and as

such, Pontiff supervised and controlled the operation of

Dredge No. 32, including all employees aboard the vessel.

On board the dredge, he had total authority and discretion

in running the dredging operations.

14.

Pontiff had only occupied the position of Dredge

Superintendent for approximately three months prior to

the accident. This was the second dredging project that

B-8

Pontiff worked on in the capacity of dredge superinten-

dent, and the first of those projects that involved dredging

in the vicinity of utility and pipeline crossings. However,

Pontiff had worked on dredges for many years in various

other capacities.

15.

Dredge No. 32 began work above the Texaco pipeline

crossing and worked its way down river. The method of

dredging employed by Dredge No. 32 was the “box” cut

method whereby the dredge dredges beyond the channel

limits, controlling the width of the cut by reading degrees

of the dredge’s swing, thus “feeling for the bank” of the

channel.

16.

Though this method of dredging may or may not be a

proper procedure in areas free of utility crossings, it is

contrary to sound and generally accepted dredging practice

in areas proximate to utility crossings such as the area

around the Texaco pipeline.

17.

The sound and generally accepted dredging practice to

be employed especially in areas where utility crossings are

located is to stake or mark the channel so that the dredge

will be able to maintain proper alignment on the centerline

of the channel. Buoys, stakes or markers are required in

order to mark the centerline and toes (edges) of the chan-

nel so that those persons operating the dredge will know

how much of a swing to make.

B-9

18.

Bean, through its Dredge No. 32, failed to follow the

standard dredging practice as described in Finding of Fact

No. 17.

19,

Dredge No. 32 struck and ruptured the Texaco pipe-

line at approximately 7:00 A.M. on April 5, 1980. The

point of rupture was located 34 feet east of the eastern toe

of the channel.

20.

On the evening before the dredge reached the pipeline

crossing, Pontiff left instructions with the leverman on

watch to call him when the dredge was 50 feet before the

pipeline. The leverman misunderstood Pontiff instruc-

tions. He thought that Pontiff was to be called when the

dredge spuds were within 50 feet of the line, at which point

the cutterhead would have already crossed the line.

Instructions were relayed by him to the other leverman to

proceed over the Texaco pipeline. Consequently, Pontiff

was not summoned before the cutterhead started across

the line.

21.

~ The exact location of the pipeline was well delineated

by fully visible and legible signs stating: WARNING/DO

NOT ANCHOR OR DREDGE. Bean was also put on

notice of the correct location of the pipeline by provisions

contained in the dredging contract.

pam

Bean failed to notify Texaco that the pipeline was

being dredged over by Dredge No. 32, as mandated by the

B-10

dredging contract and Bean’s general plan, in order that a

Texaco representative may be present during that proce-

dure, although the evidence reveals that Bean in fact

attempted to contact Texaco.

23.

Safe dredging practice requires that when a utilities

owner is not present and the exact location of the crossing

is unknown, dredging be suspended in the area of the

crossing and that the dredge pass over the crossing, resum-

ing dredging a safe distance beyond the crossing. Safe

dredging practice, as well as the provisions of the general

plan, also requires that a dredge tie Ou is cutterhead when

it approaches within twenty-five feet of utility crossing.

24.

It is evident that Dredge No. 32 failed to undertake

any of those safety practices recognized in Finding of Fact

No. 23.

25.

The rupture in the natural gas pipeline allowed a

mammoth amount of gas to be released from the line,

sending mud, silt and water spraying fifty feet into the air.

26.

The rupture of the pipeline caused pressure in the

pipeline to immediately drop. At 9:15 A.M. of the same

day, Texaco was forced to shut off the gas flow at a block

valve located on the Evangeline Line. The effect of closing

this valve was to completely cut off the flow of natural gas

to Consolidated’s plant.

B-i 1

27.

The break in the pipeline was repaired by Texaco and

a full gas supply was restored to Consolidated on April 15,

1980.

28.

Consolidated’s plant consisted inter alia of the follow-

ing facilities: (A) An electrically operated aluminum reduc-

tion pot line containing 71 operating smelting pots wherein

alumina and bath materials are heated and melted in an

electrolytic process by which molten aluminum is pro-

duced. Each pot utilizes 24 carbon anodes weighing in

excess of a thousand pounds each which are suspended

above the pots and project downward into the molten

bath. The bottom of each pot consists of cathode blocks on

which the aluminum is produced. (B) A gas fired coke

calciner approximately 180 feet in length which is lined

with refractory brick and refractory material. In this

calciner green coke is subject to temperatures, which in

portions of the calciner exceed 2,500 degrees Fahrenheit,

and the green coke is thereby refined into calcined coke.

(C) A power plant which utilizes natural gas to produce

electric energy for plant operations. The power plan con-

sists of three gas fired jet turbines, three steam boilers and

two steam turbines, as well as associated electric

generators.

29.

Because of the reduction in gas pressure and gas sup-

ply, Consolidated sustained physical damages to its equip-

ment and work in process at the plant and attendant eco-

nomic damages. These physical damages inc!ude:

(A) Freezing (solidifying) of the liquid bath materials and

liquid aluminum in the reduction pots; (B) Cracking and

B-12

air burning of anodes in the reduction pots; (C) Cracking

of cathode blocks in the reduction pots; (D) Air burning of

side wall blocks in the reduction pots; (E) Burning of

breaker bars in the reduction pots; (F) Loss of useful life of

the reduction pots; and (G) Loss and cracking of calciner

refractory materials.

30.

Consolidated’s Lake Charles plant had no back-up or

secondary source of power whatsoever. It was unique in

this respect. The testimony of Mr. John Fitzgerald, for-

merly of Kaiser Aluminum, and Mr. Dwight Keller, for-

merly with Reynolds Aluminum, made it clear that the

Consolidated Lake Charles Plant, with no secondary

source or back-up, was unique in the aluminum industry.

No other aluminum reduction plant is fed with power

from only one source. Consolidated’s situation was

unheard of in the aluminum industry. Energy is the critical

element in the aluminum industry. It is such 4 critical

factor that a constant and continuing source(s) of it must

exist. Consolidated’s arrangement for gas delivery from

Texaco only, with no secondary source or back-up, was

inadequate.

31.

Mr. William Boyer, Consolidated’s executive in

charge of the original planning and construction of the

plant, explained the reasons behind this peculiar situation.

Mr. Boyer, in order to get the plant built, had to obtain

power at a cost of no more than 4.0 mills per kilowatt-

hour. Mr. Boyer went to great lengths to explain the ulti-

mate cost to Consolidated of even a | mill increase in

power cost. But with the Texaco contract cost, including

B-13

the cost of the power plant to convert that gas into electric-

ity, Mr. Boyer was able to arrange a power cost right at the

4.0 mills per kilowatt-hour budget. Consolidated would

spend no more. Boyer did not even consider the cost of an

oil storage tank for a back-up to fuel his turbines. That

cost, estimated by Boyer to be $200,000, was prohibitive.

Consolidated’s gas turbines were designed to operate on

liquid fuel oil as well as on natural gas, but Consolidated

never made the necessary implementations. It was

explained that the Lake Charles plant was at a considerable

“disadvantage” because of its size. It was the smallest alu-

minum reduction plant in the United States. It did not

have the production to “spread the cost” of other and

suitable alternatives.

32.

Considering the actual delivery of Texaco’s gas, even

Mr. Boyer did not expect a “fail safe” system. Although he

believed that Texaco’s “vast distribution system” was a

reliable one, Boyer did not evaluate any of the risks to his

plant in the event of an interruption in Texaco’s “vast”

pipeline system.

33.

Mr. William Kinney was employed as a construction

inspector by the Corps of Engineers and was the primary

field representative of the Corps of Engineers on this par-

ticular project. One of Kinney’s responsibilities was to

monitor the work done by Bean to insure compliance with

the dredging contract. Kinney’s office was aboard one of

Bean’s dredges (not Dredge No. 32). Kinney visited each

dredge on the project two or three times a week.

34.

Kinney was not aboard the Dredge No. 32 at the time

of the allision with the pipeline. He noted on previous

occasion that the Dredge No. 32 was not using stakes,

buoys, or markers in dredging; however, the dredge at that

time was not operating in the vacinity of a utility crossing,

and Kinney had no reason at that time to believe that the

dredge would not follow the prescribed methods for dredge

over and around utility crossings.

35.

The Corps of Engineers’ permit issued prior to the

construction of the original pipeline from the Hackberry

Area to PPG required that where the PPG Lateral (Texaco

pipeline) passed beneath the proposed Calcasieu Ship

Channel, it should lay at a depth fifty feet below Mean Low

Gulf for that area where the pipeline would be beneath and

coextensive with the deepest portion of the Ship Channel

(four hundred feet). The measurements were based upon

the theoretical location of the Ship Channel inasmuch as it

had not yet been dredged with the PPG Lateral was laid.

Once the Ship Channel began to slope upward, it was the

requirement that the Texaco pipeline remain ten feet

beneath the side slopes of the channel, the ten feet being

measured along a line perpendicular to the side slopes.

Surveys performed following the accident established that

the Texaco pipeline was clearly marked and buried to its

required depth or greater, particularly in the area of the

break.

36.

Prior to April 5, 1980, there was no block valve in the

Texaco pipeline system between the east bank of the Calca-

sieu River and the point at which the Evangeline Line tied

B-15

into the Texaco pipeline so as to enable Texaco to isolate

the section of the pipeline which crossed the channel in the

event of a rupture of the pipeline.

37.

As a result, in the instant situation, Texaco was forced

to close a block valve on the Evangeline Line and a block

valve at Point C in order to isolate the rupture occurring in

the Calcasieu River. The result of this was that the natural

gas supply to Consolidated’s plant was cut off.

38.

There was conflicting expert testimony presented at

trial by the parties regarding whether or not sound engi-

neering practices dictated that Texaco should have had a

block valve located on the east bank of the channel cross-

ing so that it could have been closed instead of the valve

located on the Evangeline Line. Had such a block valve

existed, Consolidated would have continued to receive a

flow of natural gas.

3D.

Mr. Roger Craddock, testifying as Consolidated’s

expert witness, maintained that sound engineering practice

required the placement of such a block valve on the east

bank of the channel. However, Craddock admitted that no

government regulation or industry standards code require

such a placement of a valve.

40.

On the other extreme, Mr. Johnny Atwood, testifying

as Texaco’s expert witness, stated that all reasonable

design precautions were taken by Texaco and all applicable

B-16

industry standards, government codes and sound engineer-

ing practices had been conformed with in designing and

constructing the pipeline.

41.

Consolidated also points to the fact that Texaco, sub-

sequent to the accident, installed a block valve on the east

bank of the channel crossing and suggests that Texaco

should have installed the valve prior to the allision. How-

ever, Mr. Atwood testified that the valve was added after

the repairs to the pipeline were made as merely a precau-

tion against the possibility that the ends of the pipeline

might pull away from the clamps used to reconnect them.

42.

After careful reflection, this Court agrees with the

expert opinion of Atwood and accepts his conclusions as to

reasonableness of Texaco’s design and construction of the

pipeline system.

DISCUSSION OF LAW AND RULING

This Court has jurisdiction of this action as an admi-

ralty and maritime claim, as well as under diversity of

citizenship jurisdiction, and venue is proper in the West-

ern District of Louisiana.

The issues presented for resolution by this Court are:

whether the various parties owed any duties of care; to

whom those duties were owned if any existed; whether any

of these duties were breached; and what damage resulted as

a consequence of those breaches, if any, occurred.

B-17

CONSOLIDATED’S CLAIM AGAINST BEAN

The Fifth Circuit, in denying a rehearing on its rever-

sal of this Court’s summary judgment, aptly characterized

the situation presented to this Court on remand:

Our discussion of the Robins Dry Dock/

TESTBANK line of cases showed that the ‘pragmatic

limitation upon the tort doctrine of foreseeability,

State of Louisiana, ex rel. Guste vy. M/V TESTBANK,

752 F.2d 1019, at 1023 (Sth Cir. 1985), established by

these cases, is inapplicable to the instant case because

the plaintiff Consolidated unquestionably suffered

physical harm to its own property. We further con-

clude the mere existence of a contract between Texaco

(whose property suffered the most immediate harm

from the defendant's dredging) and Consolidated does

not create a legal bar to Consolidated’s claim against

Bean for negligent dredging. We in no way intimated

that Consolidated could recover for ‘negligent interfer-

ence with contract.’ Nor did we hold that summary

judgment for the defendant would necessarily be

improper on the facts of the instant case. Rather, we

remanded because the district court expressly omitted

to review the issue of foreseeability with regard to

negligent dredging. We expressly declined to reach the

question of ‘whether Consolidated’s claim of negli-

gence would withstand scrutiny under a foreseeability

test,” 772 F.2d at 1218 n. 2, and left the application of

traditional tort principles, including foreseeability and

the related concept of legal duty, for the trial court to

determine on remand at 1224.

Consolidated Aluminum Corp. v. C.F. Bean Corp., 772

F.2d 1217 at 1224 (5th Cir.1985).

This Court must now consider the legal duty owed by

Bean, the scope of that duty, to whom it was owed, and the

B-18

foreseeability of Consolidated’s harm. Foreseeability is

defined as “...the reasonable anticipation that harm or

injury is a likely result of acts or omissions.” Blacks Law

Dictionary, 5th ed. The issues of whether Bean owes a duty

to Consolidated, and whether the conduct of Bean in

regard to Consolidated was negligent, turn on whether

Bean could have reasonably anticipated the risk of physical

harm (as well as economic) to Consolidated.

[A] tort to the person or propety of one man does

not make the tortfeasor liable to another merely

because the injured person was under a contract with

that other, unknown to the doer of the wrong. [Robins

Dry Dock], 275 U.S. [303] at 309, 48 S.Ct. [134] at

135.

Cargill, Inc. v. oxford and Sunderland, Ltd., 782

F.2d 496 and 498 (Sth Cir.1986).

In PPG Industries, Inc. v. Bean Dredging, 447 So.2d

1058 (La. 1984), a case involving the same accident as that

in the instant case, the Louisiana Supreme Court, when

confronted with PPG's claim for indirect losses and addi-

tional fuel costs resulting from the rupture of Texaco’s

pipeline, held that the particular risk, that being the risk of

shutting down the PPG plant, was not encompassed by

Bean’s duty not to negligently damage Texaco’s pipeline.

Id. 1059-1060.

The Louisiana Supreme Court, as was suggested to

this Court by the Fifth Circuit in the instant matter,

applied duty-risk analysis. Finding that PPG’s losses were

indirect, that Court stated that:

[T}here is clearly an ease of association in the

present case between the rule of law which imposes a

duty not to negligently damage property belonging to

B-19

another and the risk of injury sustained by [PPG]

because of the damage to its property. As noted, how-

ever, a rule of law is seldom intended to protect every

person against every risk. It is much more difficult to

associate the same rule of law, in terms of the moral,

social and economic values involved, with the risk of

injury and the economic loss sustained by the person

whose only interest in the pipeline damaged by the

tortfeasor’s negligence arose from a contract to

purchse gas from the pipeline owner. It is highly

unlikely that the moral, social and economic consider-

ations underlying the imposition of a duty not to neg-

ligently injure property encompass the risk that a third

party who has contracted with the owner of the

injured property will thereby suffer an economic loss.

Id. at 1061.

This Court recognizes that the PPG case involved

what appeared to be only economic losses; however, this

Court is of the firm opinion that the rationale, espoused by

the Louisiana Supreme Court therein, applies as well to the

instant matter relating to the physical damage suffered by

Consolidated.

Here, the duty owned by Bean is the same as that

found in the PPG case. Clearly, the evidence shows that

Bean owed a duty to conduct its dredging operations in a

reasonable manner so as to avoid causing physical damage

to owners of pipelines located in the area of the dredging

operations. Breach of that duty would create a recognizable

harm to a pipeline owner such as Texaco.

In Diamond State Tel. Co. v. Atlantic Refining Co.,

205 F.2d 402 (3rd Cir.1953), a case involving an allision

between a tanker and a telephone cable laying across a ship

channel, the Third Circuit found that:

B-20

Here we have the unforeseeable libellant, a mari-

time instance of the landlubber’s unforeseeable plain-

tiff. The scope of the Yeager’s duty is not to be deter-

mined by what we know now but by what those

aboard her knew or should have known as they

approached the flotilla. They knew that there were one

or more vessels ahead of them and that any

unseamanlike navigation on their part would subject

those vessels to an unreasonable risk of harm. Thus,

they had a duty to navigate so as not to create such

risk, and they did. They could not possibly have fore-

seen that poor navigation would have subjected libel-

lant’s cable to an unreasonable risk of harm because

they neither knew nor should have known that the

cable was there. Thus, as to the cable, there was no

duty and, consequently, could be no negligence. /d. at

407.

Though somewhat factually dissimilar to this case, the

rationale expressed by the Court is applicable here.

In the instant matter, though Bean had knowledge of

the pipeline crossing or at least should have had the knowl-

edge, Bean could not have possibly foreseen that its

improper dredging practices would have subjected Consol-

idated’s plant, so remotely located, to an unreasonable risk

of harm because Bean did not know, nor should it have

known of Consolidated’s connexity to the pipeline. Thus

as to Consolidated’s plant, there was no duty and therefore

no negligence on the part of Bean.

Consolidated, however, is not a pipeline owner.

Neither is Consolidated an owner of any property near the

site of the rupture of Texaco’s pipeline, unlike PPG whose

plant was located proximate to the pipeline. Consoli-

dated’s damage occurred only because Texaco was unable

B-21

to deliver the natural gas as was contracted for by Consoli-

dated and Texaco. Only after that natural gas supply was

interrupted did the physical damage to Consolidated’s

facilities occur. Consolidated’s plant was located more

than six miles away from the point of rupture, on a differ-

ent body of water, and “upstream” in Texaco’s gas distri-

bution system. It is clear that Bean had no knowledge of

Consolidated’s connexity to the Texaco pipelinne. There

was nothing to even suggest that Bean reasonably antici-

pated or should have reasonably anticipated that a rupture

of the Texaco pipeline would cause such physical damage

to such a remotely located plant. Consolidated was so far

outside the zone of any obvious danger from Bean’s dredg-

ing that no reasonable person would have anticipated that

Consolidated would suffer physical harm as a result of

Bean’s dredging. In comparison to the PPG case, the possi-

bility, of physical harm involved here was much more

remote and attenuated than the mere possibility of eco-

nomic loss.

For the foregoing reasons, this Court finds that the

physical damage sustained by Consolidated was an unfore-

seeable consequence of the rupture of Texaco’s pipeline by

Bean, and therefore, Bean is not liable.

However, we will also address the issue of whether

Consoidated is entitled to punitive damages from Bean in

the event the appellate court disagrees with our conclusion

that Bean was not negligent in its conduct toward Consoli-

dated and is not liable to Bean.

Under general maritime law, punitive damages may

be recovered when a wrongdoer has acted willfully and

with gross disregard for the plaintiffs rights. Complaint of

Merry Shipping, Inc. 650 F.2d 622 at 625 (Sth Cir. 1981). In

B-22

the instant matter, this Court is unable to conclude that the

conduct of Bean and/or its employees was willful and in

gross disregard for the rights of Consolidated. Pontiff gave

instructions that he was to be notified when the dredge

approached within fifty feet of the pipeline crossing. These

instructions may have been ambiguous and could have

been misunderstood by the crew. As a result, the cut-

terhead had already started across the pipeline when Pon-

tiff was notified. Though this conduct may have consti-

tuted negligence, it cannot be said that it was willful and in

gross disregard of Consolidated’s rights.

Additionally, the principle or master cannot be case

for punitive damages for the willful or reckless act of an

agent or employee unless the act was committed with the

approval and knowledge of the principle. McGuffie v.

Transworld Drilling Co., 625 F.Supp. 369, 371 (Sth

Cir.1985). Even assuming that Pontiff and/or the crew of

Dredge No. 32 acted willfully and with gross disregard for

Consolidated’s rights, Bean, as master or principal, would

not be liable for punitive damages arising as a result of that

conduct. Pontiff had total authority and discretion in run-

ning the dredging operations. Bean had provided a plan of

dredging which met all requirements of established safety

practice. It is readily apparent that Bean expected and

depended upon Pontiff to carry out that plan. There is

nothing in the record to indicate that Bean, as a routine

and continuing practice, allowed, approved or had knowl-

edge of dredging operations conducted in a contravention

of submitted dredging plant and accepted dredging

practices.

We now address the other various claims made tn this

case.

B-23

ALL CLAIMS AGAINST THE UNITED STATES?

The evidence presented at trial and herein previously

outlined in this Court’s findings of fact, clearly reveals that

Bean acted as an independent contractor of the United

States. Equally clear is the rule of law which provides that

a contractee is generally not liable for the torts of an inde-

pendent contractor. Kirk v. United States, 270 F.2d 110, at

116 (9th Cir.1959). Nor does the fact that the United States

retains the right to inspect work under construction to see

that the provisions of the contract are carried out, and also

the right to stop work if they are not, provide sufficient

basis to hold the United States liable for damage resulting

from negligence of the contractors in the peformance of the

contractor. Jd. at 116-117. Additionally the issuance of

regulations relating to safety does not render the United

States liable for an independent contractor’s negligence.

Market Insurance Company vy. United States, 415 F.2d 459,

at 463 (Sth Cir.1969).

Therefore, it is the conclusion of this Court that the

United States is not liable for damages occasioned by the

fault of Bean to any party to this suit.

It is to be additionally noted that Texaco cannot

recover its own damages from the United States on an

*Consolidated has cited for our consideration the case of City of

Vew Orleans. Etc. y. United States, 501 F.Supp. 164 (E.D.La. 1980) as

the only precedent for liability of the United States. However, this

decision was subsequenily reversed by the United States Fifth Circuit

Court of Appeals in 1981 on other grounds in an unpublished opinion

(665 F.2d 350) and the appeallate court did not address the issue of

whether the United States, through the Corps of Engineers, could in fact

be held liable for the torts of a dredging contractor. As such this Court

does not feel compelled to follow the ruling of the District Court in City

of New Orleans. but. instead chooseds to follow the established law of

the United States as analyzed in the text of this opinion.

B-24

independent basis of liability in light of Clause (g) of the

Corps of Engineers permit granting Texaco permission to

lay its pipeline across the Calcasieu River which provides:

That the United States shall in no case be liable for

any damage or injury to the structure or work herein

authorized, which may be caused by or result from

future operations undertaken by the Government for

the conservation or improvement of navigation or for

other purposes and no claim or fight to compensation

shall accrue from any such damage.

The courts of this nation have upheld the validity of

this clause which disclaims liability on the part of the

United Stetes for any damage or injury to a structure

authorized by a Corps of Engineers permit. See Boston

Edison Co. v. Great Lakes Dredge and Dock Co., 423 F.2d

891 (1st Cir.1970); Pacific Northwest Bell Tel. Co. v. United

States, 549 F.2d 1313 (9th Cir.1977), cert. denied 434 U.S.

820, 98 S.Ct. 62, 54 L.Ed.2d 76 (1977).

TEXACO’S CLAIM AGAINST BEAN

This Court now turns its attention to Texaco’s cross-

claim against Bean for the costs of repairing its pipeline

and the value of the natural gas lost due to the breaking of

the pipeline by Bean.

‘It is well established that there is a presumption

of fault against a moving vessel that strikes a statutory

object, such as a dock or navigational aid.’ Freeport

Sulphur Co. v. S/S HERMOSA, 368 F.Supp. 952, 953

(E.D.La.1973); Brown & Root Marine Operators, Inc.

v. Zapata Off-Shore Co., 377 F.2d 724 (Sth Cir.1967).

‘In admiralty, this presumption does more that merely

require the ship to go forward and produce some evi-

dence on the presumptive matter. The moving vessel

B-25

must show that it was without fault or that the colli-

sion was occasioned by fault of the stationary object or

was the result of inevitable accident.’ Patterson Termi-

nals, Inc. v. S/S JOHNANNES FRANS, 209 F.Supp.

705, 707 (E.D.Pa.1962), citing Carr v. Hermosa

Amusement Corp., Ltd., 137 F.2d 983, 985 (9th

Cir.1943). We have held that ‘[t]he burden is heavily

upon the vessel asserting [the inevitable accident]

defense.’ “Such vessels ‘must exhaust every reason-

able possibility which the circumstances admit and

show that in each they did all that reasonable care

required.’” Brown & Root Marine Operators, Inc.,

supra, 377 F.2d at 725. Bunge Corp. v. M/V FUR-

NESS BRIDGE, 558 F.2d 790 at 793-794 (Sth

Cir.1977), cert. denied 435 U.S. 924, 98 S.Ct. 1488, 55

L.Ed.2d 518 (1978) (footnote omitted).

The presumption applies to an instance where the

fixed object happens to be a submerged pipeline. Marathon

Pipeline Company v. Drilling Rig Rowan/Odessa, 527

F.Supp. 824 (E.D.La.1981), affd. on other grounds, 699

F.2d 240 (Sth Cir.1983), cert. denied sub nom. 464 U.S.

820, 104 S.Ct. 82, 78 L.Ed.2d 92 (1983), reversed on other

matters, 761 F.2d 229 (Sth Cir.1985). A pipeline owner is

not guilty of any fault or neglect which contributed to

damage sustained by the pipeline when it is struck by a

vessel, where the pipeline is properly laid in accordance

with required permits. /d. at 831.

In the instant case, it is undisputed that the Bean

dredge struck Texaco’s pipeline, and it is abundantly clear

that Bean knew or should have known where the pipeline

was located. The location of the pipeline was specifically

stated in the dredging contract and the actual traversal of

the channel by the pipeline was clearly marked by warning

signs situated directly across the pipeline. Bean certainly

B-26

owed a duty to Texaco to exercise caution in dredging

around the pipeline.

Bean attempted, at trial, to overcome the presumption

of fault by asserting that Texaco’s pipeline was not laid in

accordance of the requirements of the Army Corps of Engi-

neers permit, and that this was in fact the cause of the

allision between the Bean dredge and the pipeline. How-

ever, the evidence, as reflect-«’ in the Findings of Fact,

reveals that the pipeline was indeed laid according to per-

mit requirements, and that it was covered by the requisite

ten feet of cover at the point where the dredge struck it.

Even if this Court were to assume that the pipeline was

mislaid as Bean contends, the evidence clearly establishes

that Bean did not follow the requirements for dredging

over and around Texaco’s pipeline, and that Bean’s course

of conduct would have resulted in an allision with the

pipeline regardless of the pipeline’s exact location.

Bean has not met its burden of overcoming this pre-

sumption of its fault. This Court alsd notes, as previously

stated, that Bean was negligent and breached its duty to

Texaco. This Court therefore concludes that Bean is liable

to Texaco for the costs of repairing the pipeline and the

value of the natural gas lost due to the rupture.?

Though punitive damages are available under general

maritime law, they are not warranted in this instance.

Bean’s conduct was certainly eggregious; however, there is

no evidence to suggest that Bean acted willfully or wan-

tonly. See discussion of punitive damages under this

Court’s discussion of CONSOLIDATED’s CLAIM

AGAINST BEAN.

*The issue of quantum has been reserved for resolutation at a later

date. 639 F.Supp.—27

B-27

CONSOLIDATED’S CLAIM AGAINST TEXACO

Consolidated also makes a claim against Texaco alleg-

ing that Texaco did not act in a reasonable and prudent

manner in protecting Consolidated form the possibility of

a break in the pipeline because it failed to install a bypass

valve on the upstream bank of the river so that the valve

could be closed in the event, such as this, of a rupture of

the pipeline, thus allowing the continuing flow of natural

gas to Consolidated’s plant.

However, the evidence presented at trial shows that

Texaco was under no duty to place such a bypass valve on

the upstream bank of the river. Texaco’s expert witness,

Mr. Johnny Atwood, a well-qualified natural gas expert,

testified that all reasonable design precautions had been

taken by Texaco, and that the Texaco pipeline system was

designed and constructed in conformity with all applicable

industry standards, government orders and sound engi-

neering practices. And though Consolidated’s own expert,

Mr. Roger Craddock, testified that he was of the opinion

that the pipeline was not built in accordance with sound

engineering practices, he also admitted that no government

regulation or industry standards code required the place-

ment of any bypass valve different from the existing layout

of the pipeline. Mr. Atwood also testified that the purpose

of the subsequent addition of a valve during the repair of

the ruptured pipeline was merely a precaution taken in the

event the ends of the ruptured pipeline pulled away from

the clamps used to repair the rupture, and that such a

subsequent addition did not imply that a valve should

have been installed prior to the accident.

There is also no evidence to indicate that Texaco

breached any other duty owed to Consolidated. Indeed,

B-28

Texaco did not have a duty to guard Consolidated against

the unexpected negligence of a third party (Bean). This

Court finds that Texaco acted in a reasonable and prudent

manner in all respects, and is accordingly not liable to

Consolidated in any manner.

CONCLUSION

For the foregoing reasons, judgment is entered in

favor of Texaco and against Bean for the costs of repairing

its pipeline-and the amount of gas lost due to the rupture.

All other claims involved are here DISMISSED.

Bean is hereby ORDERED to prepare a judgment in

accordance with this opinion, subject to federal Rule of

Civil Procedure 54(b).

C-]

APPENDIX C

CONSOLIDATED ALUMINUM CORPORATION,

Plaintiff-Appellant,

Vv.

C.F. BEAN CORPORATION, et al.,

Defendants-Appellees.

No. 84-4195.

United States Court of Appeals,

FIFTH CIRCUIT.

Oct. 7, 1985.

Opinion on Rehearing and Rehearing En Banc

Dec. 6, 1985.

Appeal from the United States District Court for the

Western District of Louisiana.

Before JOHNSON, JOLLY, and HILL, Circuit

Judges.

JOHNSON, Circuit Judge:

Consolidated Aluminum Corporation (Consolidated)

sues C.F. Bean Corporation (Bean) for physical damages

and economic losses that occurred shortly after a dredge

owned and operated by Bean ruptured a Texaco natural

gas pipeline. The Texaco pipeline supplied Consolidated’s

aluminum processing plant with natural gas. The resulting

interruption in the supply of gas to Consolidated’s plant

caused extensive damage to the physical equipment at the

plant that Consolidated employed for processing

aluminum.

C-2

The district court granted Bean’s motion for summary

judgment on Consolidated’s claim of negligence for dam-

ages to the plant’s equipment.' The district court held that,

under Robins Dry Dock & Repair Co., v. Flint, 275 US.

303, 48 S.Ct. 134, 72 L.Ed. 290 (1927), no cause of action

exists in tort for negligent interference with contract, even

where a plaintiff has sustained physical damages arising

out of the interference with contract. This Court has inter-

preted Robins Dry Dock to hold that recovery is barred to a

plaintiff who asserts a claim for economic loss unaccompa-

nied by physical damage to property in which the plaintiff

has a proprietary interest. Louisiana ex rel. Guste v. M/V

TESTBANK, 752 F.2d 1019 (Sth Cir.) (en banc), petition

for cert. filed, 53 U.S.L.W. 3839 (May 28, 1985). After

careful consideration of the stipulated facts of this appeal

and this Court's interpretation of Robins Dry Dock in

TESTBANK, we hold that the “bright line” rule of Robins

and 7TESTBANK does not reach the instant case and that a

plaintiffs claim of negligence for physical damages to

equipment in which the plaintiff has a proprietary interest

should be analyzed under tort principles applied by this

Court in admiralty.? Accordingly, the summary judgment

in favor of Bean on Consolidated’s negligence claim is

reversed and the case is remanded.

'The district court entered a final judgment under Fed.R.Civ.P. 54

and stayed all further proceedings in the case pending appeal to this

Court. Record at 3.259-60.

>The limited nature of this appeal deserves special emphasis. As

noted in more detail later in this opinion, see infra at 1220-1221, the

district court explicitly declared that it was resting its opinion on a

theory of negligent interference with contract and that no findings were

made as to whether Consolidated’s claim of negligence would withstand

scrutiny under a foreseeability test. Accordingly, those questions are not

reached on this appeal.

C-3

I. Facts and Procedural Histery

A. Stipulated Facts on this Appeal

For the district court’s use in ruling upon Bean's

motion for summary judgment, Bean, its insurers,’ and

Consolidated entered into a stipulation of facts. These stip-

ulated facts will be summarized here.

Consolidated owned and operated an aluminum

reduction plant near Lake Charles, Louisiana. This plant

contained the following facilities:

a. An electrically operated aluminum reduction pot

line containing 7! operating smelting pots wherein

alumina and bath materials are heated and melted in

an electrolytic process by which molten aluminum is

produced. Each pot utilizes 24 carbon anodes weigh-

ing in excess of 1000 pounds each which are sus-

pended above the pots and project downward into the

molten bath. The bottom of each pot consists of cath-

ode blocks on which the aluminum ts produced.

b. A gas fired coke calciner approximately 180 feet in

length which is lined with refractory brick and refrac-

tory material. In this calciner green coke is subject to

temperatures, which in portions of the calciner exceed

2500 degrees Fahrenheit, and the green coke is thereby

refined into calcined coke.

c. A power plant which utilizes natural gas to produce

electric energy for plant operations. The power plant

‘Consolidated sued both C.F. Bean Corporation, Bean Dredging

Corporation, and their insurers. The stipulation of the parties recog-

nized that C.F. Bean Corporation and Bean Dredging Corporation

should be collectively referred to as “Bean™ for the purposes of consid-

ering the motion for summary judgment and the appeal from the dis-

trict court's ruling thereon. Record at 3.39. Following the parties’ stipu-

lation, we also refer to both companies and their insurers as “Bean.”

C-4

consists of three gas fired jet turbines, three steam

boilers and two steam turbines, as well as associated

electric generators.

Record at 3.39-40. To supply the power plant with gas

necessary for the power plant’s operation, Consolidated

had entered into a Gas Sale and Purchase Agreement with

Texaco. Other than Consolidated’s contractual interest,

Consolidated had no ownership interest in the Texaco

pipeline. Bean had no knowledge of this contract between

Consolidated and Texaco prior to the accident in question.

On April 5, 1980, Bean was conducting maintenance

dredging operations in the Calcasieu River Ship Channel

under a contract with the United States Army Corps of

Engineers. This contract between Bean and the Corps of

Engineers specifically warned Bean of the presence and

location of the Texaco pipeline:

1-10. WORKING IN THE VICINITY OF STRUC-

TURES AND UTILITY CROSSINGS

1-10.1 The Contractor [Bean] shall exercise caution

when working in the vicinity of structures and utilities

crossing or adjacent to the channel....

af ~ ~

1-10.3 The following structures or utilities are located

within the limits of the work..... It will be the

responsibility of the Contractor to verify these loca-

tions and clearances.

Utility or Address

Structure Owner Station Elevation of Owner

12° gas Texaco, 1683 -50.0 MLG P.O. Box 60252,

pipeline Inc. +90 N.O., La. 70160

Record at 3.232-33.4

During the performance of Bean’s work, the cut-

terhead of one of the dredges owned and operated by Bean

struck and ruptured the Texaco pipeline. Within minutes,

the rupture of the Texaco pipeline caused a reduction in

gas pressure and supply to Consolidated’s power plant,

located approximately six miles from the pipeline rupture

in the Calcasieu River.’ As a result of this loss of supply,

the amount of natural gas flowing to Consolidated’s plant

fell below the minimum required to operate Consoli-

dated’s plant powerhouse. Because of the reduction in gas

pressure and supply, Consolidated sustained heavy physi-

cal damages:

a. Freezing (solidifying) of the liquid bath materials

and liquid aluminum in the reduction pots;

b. Cracking and air burning of anodes in the reduction

pots;

c. Cracking of cathode blocks in the reduction pots;

d. Air burning of sidewall blocks in the reduction pots;

e. Burning of breaker bars in the reduction pots;

f. Loss of useful life of the reduction pots; and

g. Loss and cracking of calciner refractory materials.

4As noted above, however. Bean did not specifically know that the

Texaco pipeline served Consolidated’s plant.

‘The parties dispute in their briefs whether the harm to Consoli-

dated’s plant occurred immediately or whether the harm occurred only

after Texaco shut down a main gas line to repair the rupture. Given the

procedural posture of the instant case, this Court has not attempted to

resolve this factual dispute and has assumed, for purposes of this

appeal, that the rupture caused a reduction in gas supply “within

minutes.”

C-6

Record at 3.42-43. Indeed, the resulting physical damage

was so heavy that the parties stipulated the physical

damages to Consolidated’s plant at a value of $2.3 mil-

lion. Consolidated contends that it suffered total physical

and economic damages amounting to approximately $4.6

million. Full natural gas supply was not restored to Con-

solidated until ten days later on April 15, 1980.

B. Procedural History

Consolidated filed its complaint against C.F. Bean

Corporation, Bean Dredging Corporation, their insurers,

and Texaco to claim damages for physical and economic

losses resulting from the interruption of gas services at

Consolidated’s plant. Consolidated’s complaint alleged

three grounds of recovery: (1) an action against Bean and

Texaco on grounds of negligent or intentional acts or omis-

sions leading to the injury; (2) an action against Bean on

the grounds that Consolidated could recover as a third-

party beneficiary under the Bean-Army Corps of Engineers

contract; and (3) an action in contract against Texaco

based on the Texaco-Consolidated Gas Sale and Purchase

Agreement.® Texaco, in turn, impleaded the United States

through the Department of the Army and its Corps of

Engineers, claiming that the United States was also respon-

sible for the negligent dredging which caused the rupture of

the Texaco natural gas pipeline. Jurisdiction was based on

the Admiralty Extension Act, 46 U.S.C. § 740, and on

diversity, 28 U.S.C. § 1332.

*As noted above, see supra at 1218 n. 1, all further proceedings in

the district court were stayed pending appeal on the district court's

granting of summary judgment in favor of Bean on Consolidated’s tort

action against Bean. Any questions arising from Consolidated’s other

alleged causes of action are not presented to this Court on this appeal.

C-7

At the time set for trial, the United States raised the

issue of Robins Dry Dock concerning the claims by Consol-

idated, through Texaco, against the United States. After

consideration of the issue, the district court then permitted

Bean to reopen a prior summary judgment motion by

Bean based on the same grounds. As noted above, Consoli-

dated and Bean entered inio a stipulation of facts for the

district court’s use in considering Bean’s renewed motion

for summary judgment.’

In its opinion, the district court held that Consoli-

dated’s action for negligent dredging against Bean was

barred by Robins Dry Dock and its progeny in this Court.

The district court’s opinion, however, also contained state-

ments which could be construed as stating that the district

court also held that Consolidated was an unforeseeable

plaintiff when its cause of action was considered in light of

common law tort principles. See Record at 3.247 (““Consol-

idated’s extensive physical and economic damages were

too remote and not foreseeable as a result of Bean’s negli-

gence’). Concerned about a possible ambiguity in the dis-

trict court’s opinion, Consolidated filed a motion urging

the district court to clarify its holding so that the matter

would be more clearly presented to this Court on appeal.*

Consolidated’s motion noted, “Had the issue of foresee-

ability been before the [District] Court, Consolidated

The stipulation also noted that Texaco had invoked as a defense

the force majeure provision in Consolidated’s action in contract against

Texaco based on the Consolidated-Texaco Gas Sale and Purchase

Agreement.

*We commend the practice of the parties in stipulating the facts

clearly and in clearing up any possible ambiguity in the district court's

opinion. Although the district court's holding, when read as a whole, 1s

remarkably precise, the action by Consolidated relieved this Court of

any doubt in the matter. The parties are also commended for their

thorough presentation of the issue presented.

C-8

would have presented a substantial volume of evidence

showing that harm to customers served by the pipeline was

a foreseeable consequence of the pipeline rupture.” Record

at 3.251. The motion in subparagraphs 3(b)-(e) then

pointed out several issues of fact which bore on the ques-

tion of foreseeability and which had been referred to in the

district court’s opinion but which were not contained in

the stipulation of facts. In response to Consolidated’s

motion, the district court supplemented its original

opinion:

The Court has granted summary judgment in

favor of Bean and against Consolidated on Consoli-

dated’s cause of action for negligence against Bean, on

the basis of the Court's holding, as a matter of law,

that no cause of action exists for negligent interference

with contract, even where the plaintiff has sustained

physical damages arising out of the interference with

contract. The Court has made no findings of fact with

respect to the issue of foreseeability or the other issues

listed in paragraph 3(b)-(e) of Consolidated’s motion.

Record at 3.257-58.

Il. The Merits

The district court granted summary judgment in

Bean’s favor on Consolidated’s claim of Bean’s negligence

in its dredging operations. Summary judgment ts appropri-

ate only if the full record discloses “that there is no genu-

ine issue as to any material fact and that the moving party

is entitled to judgment as a matter of law.” Fed.R. Civ.P

56(c). In considering whether to grant a motion for sum-

mary judgment, the district court must view the evidence

in the light most favorable to the party resisting the

C-9

motion. The standard of review on appeal is the same.

Simon v. United States, 711 F.2d 740 (Sth Cir.1983).

Since Consolidated’s contractual right to receive natu-

ral gas from Texaco was interrupted by Bean’s negligent

remture of the Texaco pipeline, the district court character-

ized Consolidated’s action against Bean for negligence as

an action for negligent interference with contract. Record

at 3.240, 3.244. While Consolidated recognizes that purely

economic losses flowing from negligent interference with

contract are not recoverable as a matter of law, see, e.g.,

TESTBANK, Consolidated argues that the presence of

physical damages to property in which Consolidated has a

proprietary interest (i.e., physical damages to its own

plant) requires that this case be considered under tort prin-

ciples of foreseeability. Consolidated asserts that it will

present evidence on foreseeability if Consolidated is

allowed to proceed to trial. Record at 3.251. Bean, on the

other hand, argues that the distinction of physical damages

in the instant case is of no significance and that this case is

governed by cases in this Court holding that no cause of

action exists for economic damages resulting from negli-

gent interference with a contractual right.

In arguing that the district court’s summary judgment

should be sustained, Bean relies heavily on Robins. In

Robins, a ship had been delivered to the defendant for

repairs. Under the terms of a contract between the ship’s

owner and the time charterers, the time charterers were not

obliged to pay rent while the ship was being repaired. The

defendant, who had contracted with the owner of the ship

for the repair work, negligently damaged the ship’s propel-

ler. During the additional delay caused by repairs to the

propeller, the time charterers lost expected profits from the

use of the ship. The time charterers sued the defendant for

C-10

these economic losses. The Supreme Court rejected the

claim. The only item physically damaged was the propel-

ler, and “‘[t]he injury to the propelier was no wrong to the

[time charterers] but only to those to whom it belonged.”

Robins, 275 U.S. at 308, 48 S.Ct. at 135. The Court went

on to note that the time charterers had lost only the benefit

of their contract for hire and that “a tort to the person or

property of one man does not make the tort-feasor liable to

another merely beacuse 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.” /d.

at 308-09, 48 S.Ct. at 135 (citations omitted).

Taken by itself, Robins, however, is of somewhat lim-

ited applicability in that it holds “only that if a defendant’s

negligence injures party 4, 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.” TESTBANK, 752 F.2d at 1040

(Wisdom, J., dissenting). In the instant case, the plaintiff

Consolidated sues not solely for any lost income or other

economic loss from the interruption of its supply of natural

gas (e.g., due to being forced to pay higher prices for an

alternative supply) but instead for physical losses, as well

as attendant economic damages, to its own property which

occurred as a result of the interruption of Consolidated’s

supply of gas “within minutes” of the pipeline’s rupture.

Thus, unlike the time charterers in Robins, Consolidated’s

Suit centers on the physical damages it sustained resulting

from the incident.

Thus, if a rule based on Robins which bars Consoli-

dated’s claim per se is to ve found, it must lie in the

interpretation that this Court and other jurists have given

to Robins. Recently, this Court, sitting en banc, conducted

C-11

an exhaustive study of Robins and its progeny. In

TESTBANK, this Court reviewed a summary judgment

entered against a host of plaintiffs who claimed purely

economic losses arising out of a spill of a toxic chemical in

the Mississippi River Gulf outlet. Reviewing this Court’s

interpretation of Robins? and the cases cited by Justice

Holmes in his opinion in Robins, the Court determined

that Robins is not based on whether a plaintiffs harm is

“foreseeable” or “remote” in a factual sense but instead on

“the character of the interest harmed” for which a plaintiff

seeks relief. TESTBANK, 752 F.2d at 1022-24 (quoting

Dick Meyers Towing Service, Inc. v. United States, 577

F.2d 1023, 1025 (Sth Cir.1978), cert. denied, 440 U.S. 908,

99 S.Ct. 1215, 59 L.Ed.2d 455 (1979)). The “character of

the interest harmed” for which the plaintiffs sought relief

in TESTBANK was solely economic. Jd. at 1021. Given

this character of the interest harmed, the Court reaffirmed

the holding of this Court that “physical damage to a pro-

prietary interest [is] a prerequisite to recovery for eco-

nomic loss in cases of unitentional maritime tort.” Jd. at

1020. The Court emphasized that to abandon the physical

injury requirement would impose a “limitless type of lia-

bility,” id. at 1025 (quoting General Foods Corp. v. United

States, 448 F.Supp. 11 (D.Md.1978)), and the result would

be “‘wave upon wave of successive economic conse-

quences.” /d. at 1028. The Court also noted the corre-

sponding difficulty to courts in managing such economic

*Perhaps most notably, the 7ESTBANK Court observed that in

Kaiser Aluminum & Chemical Corp. v. Marshland Dredging Co., 455

F.2d 957 (Sth Cir.1972)(per curiam), the plaintiff lost gas supplies when

the defendant dredging company broke a gas pipeline owned by Sugar

Bowl Gas Company. Kaiser sought only economic losses for shutdown

expenses and production losses. The Court held that because such eco-

nomic losses were only negligently inflicted, recovery was precluded as a

matter of law.

C-12

claims on a discrete basis under traditional tort principles.

Id. at 1028. Thus, where the character of the interest

harmed was solely economic, the Court held that no recov-

ery could be allowed under Robins as a “pragmatic limita-

tion upon the tort doctrine of foreseeability.” Jd. at 1023.

In the instant case, this “pragmatic limitation upon

the tort doctrine of foreseeability” does not apply. Rather,

Consolidated plainly suffered physical harm to property in

which it has a proprietary interest—i.e., its own equipment

for deriving aluminum. Thus, 7ESTBANK does not apply.

See Domar Ocean Transportation, Ltd. v. M/V ANDREW

MARTIN, 754 F2.d 616 (Sth Cir.1985)(“‘maritime tort

damages for economic loss can be awarded only when the

plaintiff has suffered physical damage to a proprietary

interest’). Further, Beans’s characterization of the physical

harm in this case as a “negligent interference with con-

tract’’ tends to obscure more than to illuminate. Unlike the

claimant in Robins, Consolidated does not seek recovery

solely for the loss of a contractual expentancy. While

Bean’s alleged negligence certainly interfered with Consoli-

dated’s contractual arrangement with Texaco, it cannot be

gainsaid that, under the stipulated facts on this appeal,

Bean’s negligence also led to Consolidated’s physical dam-

ages. While the presence of the Consolidated-Texaco con-

tract is relevant to the question of foreseeability, its pres-

ence in the causal chain does not bar recovery.!°

'°Indeed, the Court in TESTBANK noted that a contractual rela-

tionship can make the plaintiffs harm more foreseeable. In discussing

Byrd v. English, 117 Ga. 191, 192, 43 S.E. 419 (1903), a case involving a

printer’s recovery for lost profits resulting from the defendant’s negli-

gent interruption of the plaintiffs electrical power, the Court stated,

That the printing company had a contract with the power company

did not make more remote the relationship between its loss of

(Continued on next page)

C-13

The Court’s result in the instant case is consistent with

the opinions of other courts and commentators. In accord

with this Court’s rule in TESTBANK, the Restatment (Sec-

ond) of Torts, for example, notes that there has been no

general recognition of liability for a negligent interference

with contract absent physical injury to a plaintiff's proprie-

tary interest.'' The authors explain that courts generally

have been reluctant to allow claims for such economic

losses because of the difficulty in limiting a defendant’s

liability. Restatement (Second) of Torts § 766C, Comment

a. Where plaintiffs have suffered physical harm to their

own property, however, these authorities recognize that

the rationale for applying the rule foreclosing relief for

(Continued)

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 expectancy is of no

moment.

752 F.2d at 1023-24

"Section 766C states:

Negligent Interference with Contract or Prospective Contractual

Relation.

One is not liable to another for pecuniary harm not deriving from

physical harm to the other, if that harm results from the actor’s

negligently

(a) causing a third person not to perform a contract with the other,

or

(b) interfering with the other’s performance of his contract or mak-

ing the performance more expensive or burdensome, or

(c) interfering with the other’s acquiring a contractual relation with

a third person.

Restatement (Second) of Torts § 766C.

C-14

economic harm does not apply. While the number of

plaintiffs suffering oniy economic harm from a negligent

act is indeterminate and perhaps infinite, the number of

potential plaintiffs suffering physical harm is generally

neither as indeterminate nor as possibly infinite. See Com-

ment, Foreseeability of Third-Party Economic Injuries—A

Problem in Analysis, 20 U.Chi.L.Rev. 283, 298 (1953);

Pearlman, /nterference with Contract and Other Economic

Expectancies: A Clash of Tort and Contract Dectrine, 49

U.Chi.L.Rev. 61, 71-72 (1982). Thus, commentators have

stated that a plaintiff is not barred from recovery where the

plaintiff has suffered physical harm to his own person or

property. The Restatement authors explain:

b. Physical harm to the other. The rule stated in this

Section [766C] applies when the plaintiff suffers only

pecuniary loss, such as the loss of the financial benefits

of a contract or of prospective trade or financial loss

through being put to additional expense. If there is

physical harm to the person or land or chattels of the

plaintiff, the rule stated in this Section does not apply

and there may be recovery for negligence that results

in physical harm because of the nonperformance of a

contract with the plaintiff. This recovery is of course

subject to the usual rules governing liability for

negligence.

Restatement (Second) of Torts § 766C, Comment b (cita-

tions omitted).'? Likewise, Professors Prosser and Keeton

'2The distinction that this Court has drawn (as exhibited in

TESTBANK) between physical and economic damages has also been

drawn by other courts. See, e.g., Barber Lines A/S vy. M/V Donau Maru,

764 F.2d 50 (1st Cir.1985). Likewise, state courts have made a similar

distinction. In Stop & Shop Cos. v. Fisher, 387 Mass. 889, 444 N.E.2d

368 (1983), the plaintiff sought damages for loss of business revenues

(Continued on next page)

C-15

distinguish instances in which a plaintiff recovers for phys-

ical damages from the rule denying relief for economic

losses resulting from negligent interference with contract.

W. Prosser & W. Keeton, Prosser and Keeton on the Law of

Torts, § 129, at 1000 n. 27 (Lawyers’ ed. 1984).

(Continued)

allegedly caused by the defendant’s negligent collision with a draw-

bridge. Although the plaintiff had no proprietary interest in the draw-

bridge, the plaintiff alleged that it suffered economic losses due to the

loss of potential customers who could not cross the drawbridge and

reach the plaintiff's store. The court distinguished an earlier Massachu-

setts case, Newlin v. New England Telephone & Telegraph Co., 316

Mass. 234, 54 N.E.2d 929 (1944), on the basis that Newlin involved

physical harm to the plaintiff's own property caused by the interruption

of plaintiffs supply of electricity from the power company. On an

appeal from the trial court’s sustaining of a demurrer, the court in

Newlin allowed recovery for the loss of plaintiffs mushrooms which

resulted when the defendant’s telephone pole fell and severed an electri-

cal power line supplying plaintiff's electrical apparatus for controlling

temperature. Similarly, courts generally have recognized, albeit in dicta,

that a distinction exists between cases in which a plaintiff sustains

physical damages and those in which only economic damages are

claimed. See, e.g., Akron Corp. v. M/T CANTIGNY, 706 F.2d 151, 153

(Sth Cir.1983) (per curiam); Louisville & N. R.R. v. M/V VAYOU

LACOMBE, 597 F.2d 469, 473-74 (Sth Cir.1979); Nebraska Innkeepers,

Inc. v. Pittsburgh-Des Moines Corp., 345 N.W.2d 124, 126 (lawa 1984).

Moreover, to the extent that Louisiana law is relevant to the instant

case, it is consistent with this writing. In PPG Industries, Inc. v. Bean

Dredging Corp., 447 So.2d 1058 (La.1984), the court was confronted

with PPG’s claims for economic losses only arising out of the same

dredging accident as that which occurred in the instant case. The court

did not apply a rule of per se exclusion, as that contained in Robins, but

instead held that PPG’s claim for economic losses was not recoverable

under a duty risk analysis. The court emphasized that its holding turned

largely on the economic character of PPG’s loss. 447 So.2d at 1061.

III. Conclusion

We therefore conclude that the district court erred in

granting summary judgment in favor of Bean. The “prag-

matic limitation upon the tort doctrine of foreseeability,”

derived from Robins and TESTBANK, does not apply to

the instant case. While defendant Bean urges this Court to

determine “[uJnder a traditicnal tort analysis [that] Con-

solidated’s harm [is]... too remote,” Bean’s Brief at 12,

we leave the determination of the foreseeability of Consoli-

dated’s injury for the trial court to determine on remand.

Likewise, application of other tort law principles applied in

admiralty are left for the trial court on remand as ques-

tions calling for the determination of such principles are

not presented on this appeal.

REVERSED AND REMANDED

ON PETITION FOR REHEARING

WITH SUGGESTION FOR

REHEARING EN BANC

PER CURIAM:

The petition for panel rehearing is DENIED. In view

of the petition’s suggestion that the panel opinion inadver-

tently creates “a brand new theory of recovery for negligent

interference with a contract where physical damage occurs

solely from the loss of anticipated contract benefits,” we

take this opportunity to reemphasize the limited nature of

the appeal and the narrowness of our holding.

Our discussion of the Robins Dry Dock/TESTBANK

line of cases showed that the “pragmatic limitation upon

the tort doctrine of foreseeability,” State of Louisiana, ex

rel, Guste v, m/v TESTBANK, 752 F.2d 1019, at 1023 (Sth

Cir, 1985), established by these cases, is inapplicable to the

C-17

instant case because the plaintiff Consolidated unquestion-

ably suffered physical harm to its own property. We further

conclude that the mere existence of a contract between

Texaco (whose property suffered the most immediate harm

from the defendant's dredging) and Consolidated does not

create a legal bar to Consolidated’s claim against Bean for

negligent dredging. We in no way intimated that Consoli-

dated could recover for “negligent jinterference with con-

tract.” Nor did we hold that summary judgment for the

defendant would necessarily be improper on the facts of

the instant case. Rather, we remanded because the district

court expressly omitted to review the issue of foreseeability

with regard to negligent dredging. We expressly declined to

reach the question of “whether Consolidated’s claim of

negligence would withstand scrutiny under a foreseeability

tes.” 772 F.2d at 1218 n. 2, and left the application of

traditional tort principles, including foreseeability and the

related concept of legal duty, for the trial court to deter-

mine on remand, at 1224.

Thus, the petition for rehearing is DENIED, and no

member of this panel nor Judge in regular active service on

the Court having requested that the Court be polled on

rehearing en banc (Federal Rules of Appellate Procedure

and Local Rule 35), the suggestion for rehearing en banc ts

DENIED.

‘es

D-|

APPENDIX D

IN THE

United States District Court

For

THE WESTERN District OF LOUISIANA

LAKE CHARLES DIVISION

CONSOLIDATED

ALUMINUM CORP.

— CIVIL ACTION

NO. 81-0500

C. F. BEAN CORPORA-

TION, et al

February 8, 1984

EARL E. VERON

UNITED STATES DISTRICT JUDGE

RULING ON DEFENDANT, C. F. BEAN’S

MOTION FOR SUMMARY JUDGMENT

Plaintiff, Consolidated Aluminum Corporation (here-

inafter “Consolidated”’), the owner of an aluminum pro-

duction plant, had a contract with defendant/third-party

plaintiff Texaco, Inc., for the delivery of natural gas. On

April 5, 1980, the delivery of those services was allegedly

negligently interfered with when Texaco’s submerged pipe-

line was ruptured by the cutterhead of Dredge 32, owned

by Bean Dredging Corporation (hereinafter “Bean’’),

which was performing ship channel maintenance dredging

pursuant to a contract with the United States Army Corps

of Engineers, Consolidated filed a complaint against both

D-2

Bean and Texaco, and Texaco filed a third-party complaint

against the United States.

Consolidated seeks recovery for Bean’s alleged negli-

gent dredging which ruptured Texaco’s gas pipeline

thereby causing physical damage to Consolidated’s plant

with resulting economic losses. Bean brings the instant

motion arguing that, as a matter of law, Consolidated can-

not recover physical or economic losses for negligent inter-

ference with the Texaco-Consolidated gas contract.

Although no case has so held, Consolidated argues that

once physical damage is suffered from negligent interfer-

ence with a contract, that resulting economic damages are

also recoverable.

After analyzing the pleadings, the applicable caselaw

and hearing extensive oral argument, the court now holds

that Consolidated was an unforeseeable plaintiff as to

Bean’s alleged negligent interference with the pipeline con-

tract, and thus that Consolidated’s damages were too

remote and unforeseeable to justify recovery.

THE ROBINS DRY DOCK RULE AND

BASIC TORT PRINCIPLES

In Robins Dry Dock & Repair Co. v. Flint, 275 U.S.

303 (1927), a time charterer sued a ship repairer to recover

for loss of use arising from the repairer’s negligence and

resulting delays in the vessel's release. The court ultimately

held:

The injury to the propeller was no wrong to the

respondents [Flint, et al] but only to those to whom it

belonged. But suppose that the respondent’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

D-3

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... .

275 U.S. at 308-309 (citations omitted). The “Robins Dry

Dock Rule” basically holds that a tort feasor is not liable

for economic damages to third parties merely because the

tort feasor’s original “victim” had a contract with such

third parties.

Many courts have adhered to Robins Dry Dock, in

admiralty and in other areas. See, e.g. Louisville & NR.

Co. v. M/V Bayou LaCombe, 597 F.2d 469 (Sth Cir. 1979);

Kaiser Aluminum & Chemical Corp. v. Marshland Dredg-

ing Co., 455 F.2d 957 (Sth Cir. 1971) and Forcum-James

Co., Inc. v. Duke Transportation Co., 231 La. 953, 93 So.2d

228 (1957). The rule has also garnered criticism. See Fed-

eral Commerce & Navigation Co., Ltd., v. M/V

Marathonian, 392 F.Supp. 908 (S.D.N.Y. 1975), aff'd. 528

F.2d 907 (2nd Cir. 1975), cert. denied, 425 U.S. 975 (1976)

and PPG Industries, Inc. v. Bean Dredging Corp. 419 So.2d

23 (La. App. 3rd Cir. 1982), writ. granted, So.2d

(La. 1984) (A companion to the instant case).

Plainuff Consolidated argues that the Restatement

(2d) of Torts adopts the Robins Dry Dock rule in § 766 c¢,

but that this proviso exists at comment b to that section:

If there is physical harm to the person or land or

chattels of the plaintiff, the rule stated in this Section

does not apply and there may be recovery for negli-

gence that results in physical harm because o/ the non-

performance of a contract with the plaintiff. ... When

recovery is allowed, the loss of expected profits or

D-4

other pecuniary loss may, in an appropriate case, be

recovered as “parasitic” compensatory damages.

Comment b then contains an illustration based on Newlin

v. New England Telephone & Telegraph Co., 316 Mass.

234, 54 N.E. 2d 929 (1944), wherein defendant's negligence _

broke a power line supplying plaintiff's mushroom cellars,

resulting in frozen and lost crops. The Massachusetts court

allowed the grower to recover for his physical damages

(lost crops) as a result of electricity interruption. Bean dis-

tinguishes New/in by pointing out that the case never dis-

cusses or even cites Robins Dry Dock. Bean also correctly

observes that Vew/in only involves the issue of whether the

defendant—pole owners owed a duty to protect the plain-

ulffs mushroom plant, considering that the errant pole

was but “a short distance from the plant.” 54 N.E. at 940.

In any event, Kaiser Aluminum & Chemical Corp. v.

Marshland Dredging Co., 455 F.2d 957 (Sth Cir. 1971)

presents a strikingly analogous situation to that of the case

at bar. There, defendant's dredge negligently dropped an

anchor which punctured a gas pipeline owned and oper-

ated by Sugar Bowl Gas Company. The accident caused

interruption of gas service to Kaiser's production plant and

resulting expenses and production losses. Kaiser had a

contract with Sugar Bow! Gas for gas service. The trial

judge granted defendant-dredger’s motion for summary

judgment based on Robins Dry Dock. The Fifth Circuit

affirmed, agreeing that Kaiser's recovery was precluded, as

a matter of law. Consolidated would distinguish this case

arguing that it suffered “physical” damages in addition to

economic losses.

In fact, as a supplement to the motion for summary

judgment, the parties stipulated that Consolidated experi-

enced $2.3 million worth of physical damages (due to the

D-5

freeze up of aluminum pots and the processes stoppage)

because of gas-line interruption. (See Attachment 1.)

Regardless of any physical damages Consolidated suf-

fered, caselaw clearly holds that a tort-feasor is not liable

for such indirect damages, as in this situation, unless his

actions were intentional and not merely negligent. See gen-

erally Morse v. Piedmont Hotel Co., 110 6a. App. 509, 139

S.E. 2d 133 (1964); Byrd v. English, 117 6a. 191, 43 S.E.

419 (1903): Hercules Carriers, Inc. v. State of Florida, et

al, 720 F.2d 1201 (11th Cir. 1983) and Restatement (2d)

of Torts, § 766. Basically, Consolidated’s only damages

concerned its interests in maintaining gas delivery. Their

interest arose only from its contract with Texaco. Bean,

furthermore, owed no duty to Consolidated to deliver the

gas and lacking express knowledge, Bean owed Consoli-

dated no duty of refraining from interfering with Consoli-

dated’s gas delivery interests. Consolidated had no prop-

erty rights in Texaco’s pipeline, which was the only interest

directly damaged by Bean’s negligence. Morse v. Piedmont

Hotel, supra, for example, would hold that Bean has no

duty to protect Comsolidated’s interest in its gas contract

with Texaco. Plaintiff can cite no cases to the contrary.

Consolidated’s physical damages, no matter how

great, were indirect.. Consolidated suffered no direct physi-

cal harm or diminu'tion in its property values. Fifth Circuit

law does not recognize claims based solely on harm to

contractual or business expectations with another. See

Cargill. Inc. v. Offshore Logistics, supra, 1615 F.2d 212

(Sth Cir. 1980) and Vicksburg Towing Co. v. Mississippi

Marine Transport Co., 609 F.2d 176 (Sth Cir. 1980).

D-6

Unquestionably, the prevailing rule (and especially in

Louisiana) is that a plaintiff may not recover indirect dam-

ages arising from negligent interference with another’s

property. Rather, recovery for interference with property

must be intentional before recovery, as direct damages, is

allowed. As the Restatement of Torts points out,

‘“...[T]hus far there has been no general recognition of

any liability for negligent interference, whether it is inter-

ference with a third-person’s performance of his contract

with the plaintiff, or with the plaintiffs performance of his

own contract.” Restatement Second of Torts, 766 (c), com-

ment (a).

Courts and commentators have stressed various fac-

tors in refusing to grant such damages for negligent inter-

ference with a contract: (1) the variable nature of contrac-

tual relations, (2) the fear of undue burdens on defendant’s

freedom of action, (3) the probable disproportion between

damages recoverable and the extent of defendant’s fault

and (4) the defendant’s inability to foresee all possible

plaintiffs having contracts with the victims of their torts.

Implicit in the Robins Dry Dock rule is a recognition that a

limit must exist to a tort feasor’s liability for the potential

‘snowball effect” of his negligence on the rest of the world.

Various theories are presented in the law to allow limits to

defendant’s liability for damages which are a cause in fact

of his negligence. Some have analyzed the problem in

terms of foreseeability and duty-risk. Other theories have

stressed legal duty and remoteness of injury. The common

thread in all of these is that without any direct damage to

the victim’s person or property, recovery is denied. As

noted by the Second Circuit, in the classic case where a

ship wreck with a bridge interrupted river traffic:

D-7

[SJuch limiting principles must exist in any system of

jurisprudence, for cause and effect succeed one

another with the same certainty that night follows day,

and the consequences of the simplest act may be

traced over an ever widening canvas with the passage

of time....

On the previous appeal we stated aptly: ‘somewhere a

point will be reached when courts will agree that the

link has become too tenuous—that what is claimed to

be consequence is only tortuity.’ 338 F.2d at 725. We

believe that this point has been reached with the Car-

gill and Cargo Carriers claims. Neither the Gillies nor

the Farr[s] suffered any direct or immediate damage

for which recovery is sought. The instant claims

occurred only because the downed bridge made it

impossible to move traffic along the river. Under all

the circumstances of this case, we hold that the con-

nection between the defendants’ negligence and the

claimants’ damage is too tenuous and remote to per-

mit recovery. ‘The law does not spread its protection

so far.” Holmes, J., in Robins Dry Dock, supra, 275

U.S. at 309, 48 S.Ct. at 135. :

Petition of Kinsman Transit Co., 388 F.2d 821 824-825 (2d

Cir. 1968).

CONCLUSIONS

Here we must reach the same conclusion as in Petition

of Kinsman Transit Co., supra., Consolidated’s extensive

physical and economic damages were too remote and not

foreseeable as a result of Bean’s negligence. Bean’s negli-

gence operated only as to Texaco and affected Consoli-

dated only as a result of Texaco’s contract with Consoli-

dated. We can not depart from the Robins Dry Dock rule in

this case. The rule, afterall, works well in the commercial

D-8

world. For example, a third-party in Consolidated’s situa-

tion can obtain appropriate property or business interrup-

tion insurance and can employ emergency back-up power

sources for its fragile aluminuzation processes. Third-par-

ties can also protect themselves through contract provi-

sions with suppliers. :

If this court were writing on a clean slate, we might

depart from established tort principles and sympathetically

allow Consolidated some recovery here. However, it seems

that Consolidated suffered physical damages from the gas-

interruption solely because of the fragileness of the alumi-

num-making process. Alternatively, other industries suffer-

ing power interruption are not as adversely affected. Per-

haps Consolidated’s “physical damages argument” against

the Robins Dry Dock rule is merely “a distinction without

a difference” as plaintiff argues.

For the foregoing reasons, judgment is granted in

favor of Bean, rejecting Consolidated’s claims against

them. The court deeems that a F.R.Civ.P. 54(b) judgment

iS appropriate at this time. Bean’s counsel is to prepare this

judgment and submit it to the court within 10 days, with

copies mailed to all parties in the action.

THUS DONE AND SIGNED at Lake Charles, Loui-

siana, this 8th day of February, 1984.

/s/ EARL E. VERON

e464 CGE 8S 8 © 4 US 6 See Se eS Se 6 SS

Earl E. Veron

United States Distnct Judge

E-1|

APPENDIX E

IN THE

United States Court of Appeals

FOR THE FIFTH CIRCUIT

No. 86-4657

D.C. Docket No. CI-81-0500-LC

CONSOLIDATED ALUMINUM CORPORATION,

Plaintiff-Appellant,

versus

C.F. BEAN CORPORATION, ET AL.,

Defendants-A ppellees.

Appeal from the United States District Court for the

Western District of Louisiana

Before THORNBERRY, REAVLEY, and POLITZ,

Circuit Judges.

JUDGMENT ~

This cause came on to be heard on the record on

appeal and was argued by counsel.

ON CONSIDERATION WHEREOF, It is now here

ordered and adjudged by this Court that the judgment of

the District Court in this cause is affirmed.

IT IS FURTHER ORDERED that plaintiff-appellant

pay to defendants-appellees the costs on appeal, to be

taxed by the Clerk of this Court.

December 3, 1987

ISSUED AS MANDATE: JAN 15, 1988

F-1]

APPENDIX F

IN THE

United States Court of Appeals

FOR THE FIFTH CIRCUIT

No. 86-4657

CONSOLIDATED ALUMINUM CORPORATION,

Plaintiff-Appellant,

versus

C.F. BEAN CORPORATION, ET AL.,

Defendants-Appellees.

Appeal from the United States District Court for the

Western District of Louisiana

ON SUGGESTION FOR REHEARING EN BANC

(Opinion December 3, 5 Cir., 1987, F.2d )

(January 5, 1988)

Before THORNBERRY, REAVLEY and POLITZ,

Circuit Judges.

PER CURIAM:

() Treating the suggestion for rehearing en banc as a

petition for panel rehearing, it is ordered that the petition

for panel rehearing is DENIED. No member of the panel

nor Judge in regular active service of this Court having

requested that the Court be polled on rehearing en banc

(Federal Rules of Appellate Procedure and Local Rule 35),

the suggestion for Rehearing En Banc is DENIED.

( ) Treating the suggestion for rehearing en banc as a

petition for panel rehearing, the petition for panel rehear-

ing is DENIED. The judges in regular active service of this

F-2

Court having been polled at the request of one of said

iudges and a majority of said judges not having voted in

favor of it (Federal Rules of Appellate Procedure and Local

Wule 45). the suggestion for Rehearing En

DENIED

Sarit 1S

ENTERED POR THE COURT