Opposition Brief — Stanton v. Bayliner Marine Corp.

(5) Supreme Court, U.S.

\ FILED

No. 93-1980 JUL 5 1994

OFFICE OF THE CLERK

In The

Supreme Court of the United States

Octoker Term, 1994

¢

JAMES H. STANTON, WINNIFRED STANTON,

and their marital community,

and ALBANY INSURANCE COMPANY, et al.,

Petitioners,

BAYLINER MARINE CORPORATION,

Respondents.

¢

On Petition For Writ Of Certiorari

To The Supreme Court Of The State Of Washington

¢

BRIEF IN OPPOSITION OF

BAYLINER MARINE CORPORATION

+

Dexter A. WASHBURN*

Newe.t D. SmitH

MIKKELBORG, Broz, WELLS & FRYER

1001 Fourth Avenue Plaza

Suite 3600

Seattle, Washington 98154

(206) 623-5890

Attorneys for Respondent

Bayliner Marine Corporation

*Coumsel of Record

July 1, 1994

QUESTIONS PRESENTED FOR REVIEW

Respondent Bayliner submits that the real issues for

review are as follows:

1. Is there a conflict between two or more United

States Courts of Appeals or any state courts of last resort

with respect to Petitioners’ principal issue of whether

East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S.

858 (1986) applies to a recreational vessel?

2. Whether this Court should defer to the Washing-

ton State Supreme Court’s decision that the federal inter-

est in having a uniform maritime law of products liability

with respect to the East River rule, outweighs any interest

the State of Washington may have in applying a conflict-

ing state rule?

3. Is review premature where Petitioners still have a

remedy available to them against another party?

TABLE OF CONTENTS

Page

I, INTRODUCER « ic4ck acne eee ta 1

II. COUNTER-STATEMENT OF THE CASE ..... 2

III. KEASONS FOR DENYING THE WRIT....... +

A.

There Is No Conflict Between Any Federal

or State Appellate Courts on Petitioners’

Principal Issue of Whether East River

Applies To Non-Commercial Vessels... ..

The Court Need Not Reach Petitioners’

Second Issue of Whether the State and

Federal Interests Should be Balanced in

Resolving Conflicts Between State and

Marition® LAW < <.ix cnt k cee cake ie was eee

The Issues Are Not Sufficiently Important

to Warrant this Court’s Attention........

Review is Premature Because Petitioners

Still Have a Remedy for their Warranty

Claims Against the Dealer ..............

Petitioners Misstate the Law When They

Suggest That There is no Strong Federal

Interest in the Uniformity of Maritime

Products Liability Law ..................

The Rationale of East River is not Limited

to Cosneries Ce oS Povey ensk tess

A Unique Washington Maritime Rule of

Economic Loss, Applicable Only to Recre-

ational Vessels, Would Interfere With the

Uniform Maritime Legal System and

Unfairly Prejudice Washington Boat Man-

WRCTIRIE so ss sx ican Bnet enetereuteent

TV. COMCLARISRA 0 vscvcccssesbinenusanepassenes

11

12

13

iii

TABLE OF AUTHORITIES

Page

CASES

Aloe Coe v. Clark Equipment, 816 F.2d 110 (3d Cir.

1987), cert. denied, 484 U.S. 853 (1987)............. 17

Anderson v. Whittaker Corp., 692 F. Supp. 764 (W.D.

Mich. 1988), aff'd in part, rev'd in part on other

grounds, 894 F.2d 804 (6th Cir. 1990) ............ 8, 13

Best v. Honeyweii !nc., 491 F. Supp. 269 (D. Conn.

1980), aff'd, 679 F.2d 872 (2d Cir. 1981) ........... 13

Betancourt v. W. D. Schock Corp., 907 F.2d 1251 (1st

UNG 8 Sei oul ek cee bee 64 U ned e6ad cscs ess 5

Butler v. American Trawler, 707 F. Supp. 29 (D. Me.

1989) aff'd, 887 F.2d 20 (1st Cir. 1989)............. 17

Casa Clara Condominium Ass’n, Inc. v. Charley Top-

pino & Sons, Inc., 620 So.2d 1244 (Fla. 1993)..... ~ ae

Collins v. Miller, 252 U.S. 364 (1920)................. 11

Complaint of American Export Lines, Inc., 620 F.

SE SI CORA R. RO e os hese ven sa dnwweineas css 13

Consumers Power Co. v. Mississippi Valley Struc.

Steel Corp., 636 F. Supp. 1100 (E.D. Mich. 1986) ..... 6

Dairyland Ins. Co. v. General Motors Corp., 549

I, Ns as oso kos cu ee sha keedeecessres 5

Danforth v. Acorn Structures, Inc., 608 A.2d 1194

oe ad pe vires 6454's 404 be peRAa ds duos 00% 5

Delta Marine v. Whaley, 813 F. Supp. 414 (E.D.N.C.

ARSE S ey Oia ee ere re gn 13

East River S.S. Corp. v. Transamerica Delaval, Inc.,

Co PN | ee ere are passim

iv

TABLE OF AUTHORITIES — Continued

Page

Employers Ins. of Wausau v. Suwannee River Spa

Lines, Inc., 866 F.2d 752 (5th Cir. 1989). ..........5. 6

Flynt v. Oktio, 451 US. GID (1961) .... 220s esc ee ses 12

Foremost Ins. Co. v. Richardson, 457 U.S. 668 (1982) ..8, 14

Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358,

ee Fei. | rope rrr ror ry err 14, 16

In Re Amoco Cadiz, 699 F.2d 909 (7th Cir. 1983)...... 13

Ingram River Equipment v. Pott Ind., 816 F.2d 1231

SU AG PUMPER sas sccswieuschetabangbssneegiens so’ 13

Jig the Third Corp. v. Puritan Marine Ins. Underwri-

ters Corp., 519 F.2d 171 (5th Cir. 1975), cert.

embed, SI US. FOG CRs oo ves aware cov csenes 13

Karshan v. Mattituck Inlet Marina and Shipyard, Inc.,

785 F. Supp. 363 (E.D.N.Y. 1992)............. 5, 9, 10

Kossick v. United Fruit Co., 365 U.S. 731 (1961)....... 17

Lewinter v. Genmar Industries, Inc., 1993 AMC 939

(ae. ee GR. BPs scsi enceseencansiar nese. 5, 9

Pennsylvania Glass Sand v. Caterpillar Tractor, 652

ees ek Ee |) ererrrerr err Tee eeeereeee 17

Pope & Talbot v. Hawn, 346 U.S. 406 (1953) .......... 17

Rem Cole Co. v. Clark Equipment, 386 Pa. Super. 401,

ee Be Pk | rerrr rrr rT Terr Te eT TEA Tee 17

Richard O’Brien Companies v. Challenge-Cook Bros.,

Inc., 672 F. Supp. 466 (D. Colo. 1987) .............. 6

Rocky Mountain Helicopters, Inc. v. Bell Helicopter

Textron, Inc., ___ F.3d ___, 1994 W.L. 178134 n.2

oe | Sere rr rr re ree 17

Vv

TABLE OF AUTHORITIES - Continued

Page

Seely v. White Motor Company, 45 Cal.Rpt. 17, 63

Cal 2d 9, M03 PAd B65 CUS vic cvc nec baccssscuve 15

Sherman v. Johnson & Towers Baltimore Inc., 760 F.

sue. 499 td. MA Wee ences seca sckadvees 5, 6, 10

Simone v. Genmar Industries, 1989 AMC 2627

CERI. S.. Be ocd has hs oe Le 5, 9

Sisson v. Hatteras Yachts, Inc., 1991 W.L. 47543, 778

S. Siege, See Cr Seer BPs be kos sks dedesdane 5, 10

Sisson v. Ruby, 497 U.S. 358 (1989) ............ 8, 14, 18

Waggoner v. Town and County Mobile Homes, Inc.,

Ce Fiaee Ge es Be ei tae einen’ 5

Washington Water Power Co. v. Graybar, 112 Wn.2d

ODEs; FEO Cee LOPE CHMOD 66a os ud eeawhn cs da beann cs 7

Wyatt v. Cadillac Motor Car Division, 145 Cal. App.

Ol ED, Ue Wo WU CRW s 6 vs 00 be chee edusancees 16

STATUTES

Washington Product Liability Act (Chapter 7.72

EE 5463 50d ehh ak ieee ors eee Cees 7

OTHER AUTHORITIES

J. Scowcroft, Case Notes, Journal of Maritime Law

and Commerce, Vol. 22, No. 2 (April, 1991), 299,

A Pee Rr Eee Mer aren te hee ene 14

M. Harrington, Almost Full Circle: Admiralty Juris-

diction Over Pleasure Craft, Journal of Maritime

Law & Commerce, Vol. 24, No. 3 (July 1993) 453,

Ce IS vic 0 6 Ses kkk kee A ee ee be awk 9

R. Stern, E. Gressman, S. Shapiro and K. Geller,

Supreme Court Practice § 4.3, p. 167 (7th ed. 1993) ..6, 12

xe

I. INTRODUCTION

Petitioners’ first question is whether East River S.S.

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

should apply to recreational vessels. Since East River was

decided in 1986, only one appellate court (the subject

Washington Supreme Court decision) and four reported

trial court decisions have directly addressed this iss»e. Of

these cases all but one have decided that East River does

apply to recreational vessels. Because there is only one

appellate decision addressing the issue, there is no con-

flict for this Court to resolve.

In East River this Court in effect makes a fundamental

policy statement about risk of loss for maritime negli-

gence or products liability actions: absent a contractua’

modification, the risk of pure economic loss is on the

buyer, who is then expected to obtain appropriate insur-

ance protection. In the two subject cases the vessel

buyers, with or without explicit bargaining over risk of

loss, did procure insurance protection, thereby effectuat-

ing the East River policy. Thus the anomaly, that the

claims at issue here are subrogation claims in which the

subrogee, Albany Insurance, contends that this court

should disregard its presence, ignore the fact that it

received a premium for the risk it undertook, repudiate

the policy underlying East River, and fashion a unique

rule of law for the State of Washington, when the Wash-

ington Supreme Court has declined to do so. The sole

reason given is that both vessels were engaged in recre-

ational uses at the time of their casualties.

Petitioners’ second question, whether the Washing-

ton Supreme Court erred in ruling that state law is pre-

empted regardless of the balance of state and federal

interests, is not before the Court because the Washington

Supreme Court did balance state and federal interests

and concluded that the federal interest in the uniformity

of federal maritime law dominates. This Court should

defer to the Washington Supreme Court’s assessment that

the Washington state interests are not paramount when

balanced against federal maritime interests.

Finally, the Petition should be denied because review

is premature. Petitioners still have the potential of a full

remedy on their warranty claims against the dealer,

Olympic Boat Sales, Inc.

Il. COUNTER-STATEMENT OF THE CASE

This matter arises out of an affirmance by the Wash-

ington Supreme Court of a trial court order granting

partial summary judgment in two consolidated suits

brought by Albany Insurance on its subrogated interests

for monies paid for the constructive total losses of two

nearly identical 45-foot yachts, manufactured by Bayliner

Marine Corporation (Bayliner).

One of the vessels had been purchased by the Stan-

ton Investment Company, ostensibly for the business pur-

poses of charter service and entertaining clients, and for

recreational use by the Stantons. The other vessel was

purchased by a private party.

The subject vessels were each involved in groundings

at cruising speed (12-15 knots) on well-marked and char-

ted shoals and rocks. One of the groundings occurred in

Canadian waters. No one was injured in either incident.

In each case the force of driving the vessel onto rocks

tore away or ground-off parts of the skeg keel.! Peti-

tioners contend that the keel should have been capped,

apparently believing the keel could then be torn away

without disturbing the integrity of the hull.

Bayliner’s expert witness, a yacht designer, averred

that (1) the hull and keel design met industry standards,

(2) the design is consistent with the configuration illus-

trated in the American Bureau of Shipping Classification

criteria, (3) the design specifications meet or exceed ABS

strength criteria, (4) the configuration serves a useful

purpose in providing for drainage and collection of con-

densate, spills, and unwanted liquids inside the hull, and

(5) the design does not present a danger to reasonable

and foreseeable use.

Both casualties occurred relatively close to shore and

in both cases the passengers were evacuated before the

vessels became submerged. According to Coast Guard

records, it took the Stanton vessel 27 minutes to partially

sink, with the Stantons having been transferred within 12

minutes of the initial report of grounding. The other

vessel never did sink because it was firmly grounded on

1 The skeg keel is an integrally-molded portion of the ves-

sel’s one-piece fiberglass hull extending a maximum depth of 14

inches below the bottom of the hull; it is approximately 7 inches

wide. The interior space formed by the skeg keel serves as a

sump for the bilge pumps.

a rock ledge. Though the owners and their passengers

were evacuated by helicopter, they could have safely

waited until the completion of the ebbing tide and then

walked to shore.

Albany brought suit on its subrogation interests as

the insurer for the two vessels. The suits alleged negli-

gence, products liability, and breach of warranty against

Bayliner and the dealer, Olympic Boat Sales, Inc. (Olym-

pic Boat), for allegedly manufacturing and selling vessels

that could not survive being run hard aground without

incurring serious flooding as a result of damage to the

keel.

Ill. REASONS FOR DENYING THE WRIT

A. There Is No Conflict Between Any Federal or

State Appellate Courts on Petitioners’ Principal

Issue of Whether East River Applies To Non-

Commercial Vessels.

This case is neither of national importance nor is it

ripe for review by this Court. The court below is the only

appellate court to decide whether East River should apply

to non-commercial vessels.

As a practical matter the issue of whether to apply

East River to a recreational vessel most often, if not

always, arises in the context of a subrogation claim by the

insurance carrier of an expensive yacht. The economics of

damages to smaller vessels such as ski or “bass” boats

will not support such litigation because of the relatively

small monetary amounts involved. Not unsurprisingly,

the specific issue presented to the Court for review has

been reported in court proceedings on only five occasions

and has not been presented to any federal court of

appeals nor has it come before any state court of last

resort with the exception of the Washington State

Supreme Court.

With one exception, the courts that have specifically

addressed the issue of whether East River applies to recre-

ational vessels have uniformly held that the reasoning

underlying the East River decision applies equally to com-

mercial and consumer situations and have applied the

East River holding to recreational vessels. Karshan v. Mat-

tituck Inlet Marina and Shipyard, Inc., 785 F. Supp. 363

(E.D.N.Y. 1992); Sisson v. Hatteras Yachts, Inc., 1991 W.L.

47543 (N.D. Ill. 1991), 778 F. Supp. 959 (N.D. Ill. 1991);

Lewinter v. Genmar Industries, Inc., 1993 AMC 939 (Cal.

Super. Ct. 1993); see also, Betancourt v. W. D. Schock Corp.,

907 F.2d 1251, 1255 (1st Cir. 1990) (applied East River to

sailboat re: statute of limitations); Simone v. Genmar Indus-

tries, 1989 AMC 2627 (S.D.N.Y. 1989) (in dicta stated that

East River applied to a recreational vessel); contra, Sher-

man v. Johnson & Towers Baltimore Inc., 760 F. Supp. 499 (D.

Md. 1990). In addition to these maritime cases, the Wash-

ington Supreme Court also cited three land-based cases

that held that East River applies to consumer products.

Danforth v. Acorn Structures, Inc., 608 A.2d 1194, 1200

(Del. 1992); Waggoner v. Town and County Mobile Homes,

Inc., 808 P.2d 649 (Okla. 1990); Dairyland Ins. Co. v. General

Motors Corp., 549 So.2d 44 (Ala. 1989); accord, Casa Clara

Condominium Ass‘n, Inc. v. Charley Toppino & Sons, Inc.,

620 So.2d 1244 (Fla. 1993) (decided after the Washington

Supreme Court opinion).

Petitioners inaccurately contend that there are four

cases which have held that East River should not apply to

non-commercial vessels. Only in Sherman, supra, was the

court specifically asked to apply East River to a non-

commercial vessel. The other three opinions cited by Peti-

tioners deal with plaintiffs engaged in commerce and

discuss East River’s application to non-commercial prod-

ucts only in dicta.2 Only Employers Ins. involves maritime

facts. Of the cases cited by Petitioners, only Sherman is on

point and adopts their theory that East River should apply

exclusively to commercial vessels.

The only appellate court which has directly

addressed the specific issue of whether to apply East

River to a recreational vessel is the Washington Supreme

Court. The only conflicting opinion on point is the district

court opinion in Sherman, supra. The only contrary appel-

late decision is Employers Ins., supra, which is inconsistent

only in dicta. To justify the grant of certiorari there should

be a real conflict on the same matter of law or fact, “not

merely an inconsistency in dicta or in the general princi-

ples utilized.” R. Stern, E. Gressman, S. Shapiro and K.

Geller, Supreme Court Practice § 4.3, p. 167 (7th ed. 1993).

Because there is no conflict amongst the appellate courts,

certiorari should not be granted.

B. The Court Need Not Reach Petitioners’ Second

Issue of Whether the State and Federal Interests

Should be Balanced in Resolving Conflicts

Between State and Maritime Law.

Petitioners at page 32 state their second issue: “The

Washington Supreme Court erred in ruling that state law

2 Employers Ins. of Wausau v. Suwannee River Spa Lines, Inc.,

866 F.2d 752 (5th Cir. 1989); Richard O’Brien Companies v. Chal-

lenge-Cook Bros., Inc., 672 F. Supp. 466 (D. Colo. 1987); Consumers

Power Co. v. Mississippi Valley Struc. Steel Corp., 636 F. Supp. 1100

(E.D. Mich. 1986).

~

is preempted without the need to balance state and fed-

eral interests.”

This issue need not be reached because the Washing-

ton Supreme Court did specifically balance the respective

federal and state interests, stating:

. assuming arguendo that there was no con-

flict of laws, the determination of whether the

Graybar rule disrupts federal maritime harmony

depends on the balance of federal and state

interest involved. (Citations omitted) Washing-

ton’s interest in providing a remedy for these

plaintiffs does not outweigh federal interests in

maritime uniformity. A-59, A-60.

The Washington Supreme Court detailed the basis of

its reasoning. The court engaged in statutory interpreta-

tion of the Washington Product Liability Act (RCW 7.72),

observing that it was the intention of the Washington

State legislature to provide a remedy for personal injuries

and to protect businesses located in the State of Washing-

ton “from the substantially increasing product liability

insurance costs and unwarranted exposure to product

liability litigation.” A-61-A-63. The court recognized that

there was a state interest in protecting a manufacturer

and a lessened state interest to protect the consumer from

purely property loss. The court also acknowledged that it

had recognized the East River decision as being the admi-

ralty rule in Washington Water Power Co. v. Graybar, 112

Wn.2d 847, 774 P.2d 1199 (1989), and that neither legisla-

tive action nor its prior decisions would support a find-

ing that Washington’s interest in deterring the

manufacture and dissemination of dangerous products

outweighs the need for a uniform maritime law of prod-

ucts liability. Id.

The Washington Supreme Court also examined the

extent of the federal interests in a uniform maritime rule.

In doing so, the court appropriately reviewed Sisson v.

Ruby, 497 U.S. 358 (1989) and Foremost Ins. Co. v. Rich-

ardson, 457 U.S. 668 (1982) in which this Court found

maritime jurisdiction in actions involving recreational

vessels in order to further the uniformity of rules of

maritime liability as between commercial and non-com-

mercial vessels. A-63. The Washington S:preme Court

quoted Sisson v. Ruby as stating “the need for uniform

rules of maritime conduct and liability is not limited to

navigation, but extends at least to any other activities

traditionally undertaken by vessels, commercial or non-

commercial.” Sisson v. Ruby, supra, 497 U.S. at 367. A-63.

The court also cited Anderson v. Whittaker Corp., 692 F.

Supp. 764, 767 (W.D. Mich. 1988), aff'd in part, rev'd in part

on other grounds, 894 F.2d 804 (6th Cir. 1990) for the policy

consideration that “there is a strong federal interest in

providing uniform standards for the design and manufac-

ture of products that have the potential to affect tradi-

tional maritime activities.” A-67. After carefully

reviewing this Court’s and lower federal court opinions

addressing the need for uniformity of maritime law, the

Washington Supreme Court concluded that federal inter-

ests in having a uniform economic loss rule for maritime

products liability outweighed any relevant state interests.

A-63-A-67.

eeepeeues =

The Washington Supreme Court did engage in the

“interest analysis” that Petitioners have asked for and con-

cluded, based on its interpretation of the Washington Prod-

uct Liability Act, prior federal and Washington state court

opinions and public policy considerations, that Washington's

interests do not predominate over the federal maritime inter-

ests involved. Because the Washington Supreme Court did

balance state and federal interests, this Court need not reach

the issue of if and when “interest analysis” is indicated and

should defer to the Washington Supreme Court’s own

assessment of its state’s interests, particularly where the

Washington court concluded that the federal interests pre-

dominate.

C. The Issues Are Not Sufficiently Important to

Warrant this Court’s Attention.

The issue of whether or not East River should apply

to recreational vessels has arisen in only five reported

decisions, despite the fact that there are over 16 million

recreational vessels in the United States.* Because most

recreational vessels are insured or do not have sufficient

value to warrant litigation, typically the few cases that

actually come before the courts involve large expensive

yachts. See, e.g., Karshan, supra ($480,000, 50-foot Chris-

Craft which sustained $90,000 in damage); Lewinter v.

Genmar Industries, supra (61-foot motor yacht); Simone v.

3 M. Harrington, Almost Full Circle: Admiralty Jurisdiction

Over Pleasure Craft, Journal of Maritime Law & Commerce, Vol. 24,

No. 3 (July 1993) 453, 498 n.259, referencing Statistical Abstract

of the United States, Nos. 395, 397 and 989 (1992).

10

Genmar Industries, supra (“large motor yacht”); Sherman v.

Johnson, supra (“yacht”).

With respect to recreational vessels being covered by

insurance, Karshan observed:

. in a maritime context, vessel owners can,

and generally do, insure against losses to the

value of the vessel, see [East River, 476 U.S.] at

871, 106 S. Ct. at 2302, and .. . “(s)ociety need

not presume that a customer needs special pro-

tection” id. at 871-872, 106 S. Ct. at 2302. Indeed,

in the instant case Karshan is insured and,

except as to its deductible, the real plaintiff in

interest is his insurance carrier. “The increased

cost to the public that would result from holding

a manufacturer liable in tort for injury to the

product itself is not justified.” Id. at 872, 106 S.

Ct. at 2302. Karshan, 785 F. Supp. at 366.

Sisson v. Hatteras, supra, involved a 56 foot Hatteras

motor yacht. The suit was brought as a subrogation

action by American Home Assurance Company. The

court, recognizing that under East River there was no tort

claim for economic losses to the vessel itself, stated:

There is no reason to believe that he would not

be able to pursue whatever contractual remedies

he may have against the seller for economic

losses due to the destruction of the ULTORIAN

or that he was not otherwise protected by insur-

ance. Sisson v. Hatteras, supra, 1991 W.L. 47543 at

SD. &.

The two vessels which are the subject of this action

were both 45 foot Bayliner yachts, each costing well over

$200,000. Both vessels were insured by Albany Insurance.

11

Petitioners’ principal issue of whether the East River

economic loss rule applies to recreational vessels arises

infrequently and usually, if not always, in the context of

expensive yachts, whose owners have insurance and

other remedies under breach of contract or warranty

causes of action against the dealer. The few recreational

vessel cases where the issue of the application of East

River does arise, do not warrant the attention of this

Court, particularly where there has not yet been a conflict

between any appellate courts.

D. Review is Premature Because Petitioners Still

Have a Remedy for their Warranty Claims

Against the Dealer.

Petitioners’ actions were brought against both

Bayliner and the dealer who sold the owners their boats,

Olympic Boat. The subject opinion recognizes that Peti-

tioners can still pursue their remaining warranty claims

against Olympic Boat at trial. A-28 n.1, A-29, A-67.

This Court has observed that for certiorari to be

granted the underlying judgment “should be final not

only as to all parties, but as to the whole subject matter

and as to all causes of action irwwolved.” Collins v. Miller,

252 U.S. 364, 370 (1920).

The only exception that might apply is:

.. . [w]here the federal issue has been finally

decided in the state courts with further proceed-

ings pending in which the party seeking review

here might prevail on the merits on non federal

grounds, thus rendering unnecessary review of

12

the federal issue by this Court, and where rever-

sal of the state court on the federal issue would

be preclusive of any further litigation on the

relevant cause of action rather than merely con-

trolling the nature and character of, or deter-

mining the admissibility of evidence in, the state

proceeding still to come. In these circumstances,

if a refusal immediately to review the state-court

decision might seriously erode federally policy,

the Court has entertained and decided the fed-

eral issue, which itself has been finally deter-

mined by the state courts for purposes of the

state litigation. Flynt v. Ohio, 451 U.S. 619, 621,

622 (1981).

However, here, as in Flynt, there is “no identifiable

federal policy that will suffer if the state . . . proceeding

goes forward.” Flynt, 451 U.S. at 622. Rather, the identifia-

ble tederal interest is in the uniformity of maritime law,

which is served by denying certiorari.

Although the parties did stipulate to the finality of

the trial court’s decision for purposes of state court

appellate review, the test is not whether under local rules

of practice the judgment is final, rather whether the

record shows that the adjudication is sufficiently final to

warrant the exercise of this Court’s jurisdiction. See R.

Stern, Supreme Court Practice, § 3.3, pgs. 93-94.

E. Petitioners Misstate the Law When They Sug-

gest That There is no Strong Federal Interest in

the Uniformity of Maritime Products Liability

Law.

Petitioners at pages 51-54 suggest that because a

contract for the construction of a vessel is non-maritime

13

and subject to state law, there is no strong interest in the

uniformity of maritime product liability law. To the con-

trary, East River observed that state law only extends to a

plaintiff's breach of warranty action. East River, 476 US.

at 872, 872 n.7. The decision makes it very clear that in a

maritime action grounded upon negligence or products

liability, federal maritime law applies. Even though a

maritime plaintiff’s breach of contract and warranty

claims are governed by state law, concerns for uniformity

and federal supremacy require that maritime tort claims

for negligence and products liability be governed by fed-

eral maritime law.4

F. The Rationale of East River is not Limited to

Commercial Cases.

Petitioners rely upon two principal arguments for the

proposition that East River should be limited to vessels

that are engaged in commercial service: (1) East River's

repeated use of the word “commercial” and (2) a per-

ceived inequality in bargaining power between recre-

ational vessel purchasers and boat manufacturers.

4 East River, supra; accord, Ingram River Equipment v. Pott

Ind., 816 F.2d 1231 (8th Cir. 1987); In Re Amoco Cadiz, 699 F.2d

909, 914 (7th Cir. 1983); Jig the Third Corp. v. Puritan Marine Ins.

Underwriters Corp., 519 F.2d 171, 174 (5th Cir. 1975), cert. denied,

424 U.S. 954 (1976); Delta Marine v. Whaley, 813 F. Supp. 414

(E.D.N.C. 1993); Anderson v. Whittaker, 692 F. Supp. at 768, 768

n.2; Complaint of American Export Lines, Inc., 620 F. Supp. 490,

513, 514 (S.D.N.Y. 1985); Best v. Honeywell Inc., 491 F. Supp. 269,

271 (D. Conn. 1980), aff'd, 679 F.2d 872, 874 (2d Cir. 1981).

14

Though East River does use the term “commercial,”

the decision does not confine its rationale to commercial

facts nor is there any persuasive argument provided that

would justify limiting its application to commercial cases.

Rather, as explained by the Washington Supreme Court,

the East River policy concerns apply equally well to con-

sumer cases. The court observed that the primary consid-

erations in East River were to separate tort and contract

actions, and that the vessel owner can and typically does

further protect himself by insurance, both considerations

apply equally to recreational vessels. A-46. The court also

recognized the problems inherent in trying to make dis-

tinctions between commercial and non-commercial situa-

tions. A-49, A-51; see Foremost, 457 U.S. at 675-676.5

Before this appeal, Petitioners’ counsel of record, Mr.

Scowcroft, in reviewing Sisson v. Ruby, supra, in part

explained the references in East River to the vessels being

in “commerce” as establishing the maritime nexus neces-

sary for federal maritime jurisdiction. J. Scowcroft, Case

Notes, Journal of Maritime Law and Commerce, Vol. 22, No.

2 (April, 1991), 299, 305-306.

Petitioners’ second contention that there may be

unequal bargaining power between recreational vessel

buyers and manufacturers is inapplicable to this case.

Such an analysis applies only in situations where a large

disparity in bargaining power creates overreaching con-

tract provisions. Henningsen v. Bloomfield Motors, Inc., 32

> Petitioners’ suggestion at pp. 11 and 23 that recreational

vessels are analogous to automobiles, was argued by the dissent

and rejected by the majority in Foremost. See Foremost, 457 U.S. at

682, 682 n.7.

15

N.J. 358, 161 A.2d 69 (1960). Here there are no allegations

that Bayliner is seeking to enforce any unconscionable

contract terms nor is there any suggestion of industry-

wide overreaching in the setting of warranty provisions.

On the contrary, there is a large variety of different recre-

ational vessel manufacturers and dealers with whom a

buyer can shop to obtain his best terms. Moreover, in this

case, the owners each had a one year express warranty on

their vessels, and each was able to secure insurance.

Petitioners at pages 11 and 27 indulge in the sweep-

ing generality that recreational vessels owners do not

have the sophistication or bargaining power to negotiate

warranties or to evaluate their risks of property loss. To

the contrary, yachts of a sufficient value to warrant litiga-

tion for solely property loss range in value from approx-

imately $100,000 to millions of dollars. (See discussion

infra at 9, 10).6 In the context of these expensive yachts

the owners have an equal ability to protect themselves

when compared to buyers of commercial vessels, both in

shopping for and negotiating warranties and in ade-

quately insuring their vessels against property damage.

Many of the larger yachts are custom built, where all of

the contract provisions would be specifically negotiated.

A case of significance for the analysis in East River,

Seely v. White Motor Company, 45 Cal.Rpt. 17, 63 Cal.2d 9,

403 P.2d 145 (1965), distinguished the concern for the

potential of unequal bargaining power as can be done in

this case:

6 Several Washington yards specialize in building expen-

sive luxury yachts; a recently completed yacht cost over $21

million.

16

Unlike the defendant in Henningsen (citation

omitted) White is not seeking to enforce an

industry-wide disclaimer of liability for per-

sonal injuries. Here, plaintiff, whose business is

trucking, could have shopped around until he

found the truck that would fulfill his business

needs. He could be fairly charged with the risk

that the product would not match his economic

expectations, unless the manufacturer agreed

that it would. Seely, 403 P.2d at 151, 152.7

7 The reasoning adopted by the Seely case further demon-

strates the logic of not limiting East River to commercial situa-

tions:

He (manufacturer) cannot be held for the level of

performance of his products in the consumer’s busi-

ness unless he agrees that the product was designed

to meet the consumer’s demands. A consumer should

not be charged at the will of the manufacturer with

bearing the risk of physical injury when he buys a

product on the market. He (consumer) can, however,

be fairly charged with the risk that the product will

not match his economic expectations unless the man-

ufacturer agrees that it will. Even in actions for negli-

gence, a manufacturer’s liability is limited to

damages for physical injuries, and there is no recov-

ery for economic loss alone. Seely, 403 P.2d at 151,

citing Wyatt v. Cadillac Mctor Car Division, 145 Cal.

App. 2d 423, 302 P.2d 665 (1956) (a consumer action

involving complaints about a personal automobile).

17

G. A Unique Washington Maritime Rule of Eco-

nomic Loss, Applicable Only to Recreational

Vessels, Would Interfere With the Uniform Mar-

itime Legal System and Unfairly Prejudice

Washington Boat Manufacturers.

If this Court were to grant the relief Petitioners ask

for and hold that the State of Washington should have a

unique rule governing economic loss for non-commercial

vessels,® there would be a direct affect on Bayliner in its

ability to compete with out-of-state manufacturers.

Bayliner and other State of Washington manufacturers

could be sued in Washington state for greater products

liability exposures than their competitors situated in

other states or countries, thereby increasing their costs.

Such a unique Washington rule would also have the effect

of impermissibly encouraging forum shopping. See, Pope

& Talbot v. Hawn, 346 U.S. 406, 411 (1953); Butler v. Ameri-

can Trawler, 707 F. Supp. 29, 31 (D. Me. 1989) aff'd, 887

F.2d 20 (ist Cir. 1989).

The issue of recovery for economic loss in products

liability cases involving non-commercial vessels is not

“peculiarly a matter of state and local concern.” Kossick v.

8 The “risk of harm” test that Petitioners seek to apply is a

minority view which has not been adopted in any maritime

cases. See Rocky Mountain Helicopters, Inc. v. Bell Helicopter Tex-

tron, Inc., __ F.3d ___, 1994 W.L. 178134 n.2 (10th Cir. 1994); Casa

Clara, 620 So.2d at 1245 n.2. The principal case relied upon by

the Washington Supreme Court in Graybar, supra, in adopting

the risk of harm test, Pennsylvania Glass Sand v. Caterpillar Trac-

tor, 652 F.2d 1165 (3d Cir. 1981), has been overruled. Aloe Coe v.

Clark Equipment, 816 F.2d 110 (3d Cir. 1987) cert. denied, 484 U.S.

853 (1987); see Rem Cole Co. v. Clark Equipment, 386 Pa. Super.

401, 563 A.2d 128 (1989).

18

United Fruit Co., 365 U.S. 731, 741 (1961). Bayliner boats

and yachts are distributed throughout the world. Recre-

ational vessels, like the two involved here, routinely

travel in the Pacific Northwest between Washington, Ore-

gon and Canada (one of the two subject vessels grounded

in Canada). They also travel from other locations in the

United States to Mexico, the Caribbean and Canada and

state to state on the Western and Eastern seaboards, Ches-

apeake Bay, Gulf of Mexico, Great Lakes, and on the

Mississippi River. As an example, the yacht in Lewinter,

supra, sustained its hull failure in waters off Jamaica.

Because of the high mobility of recreational vessels and

their potential effect on maritime commerce, it is neces-

sary to have uniform rules of maritime tort liability. Sis-

son v. Ruby, supra; Foremost, supra.

IV. CONCLUSION

Certiorari should be denied because (1) there is no

conflict between the federal circuit courts of appeals or

state courts of last resort, (2) this Court should defer to

the Washington Supreme Court’s subordination of its

own state interests to the federal need for uniformity of

maritime tort law, (3) certiorari is premature because the

warranty remedies against the dealer have not yet been

resolved, and (4) the Washington State Supreme Court

carefully analyzed the applicable law and made the right

decision.

Respectfully submitted,

Dexter A. WASHBURN*

Newetit D. SmitH

MIKKELBORG, Broz, WELLS & FRYER

*Counsel of Record Attorneys for Respondent