Document: 520 U.S. 875117 S.Ct. 1783138 L.Ed.2d 76 SARATOGA FISHING COMPANY, Petitioner,v.J.M. MARTINAC & COMPANY and Marco Seattle Inc. No. 95-1764. Supreme Court of the United States Argued Feb. 18, 1997. Decided June 2, 1997 Syllabus * In East River S.S. Corp. v. Transamerica Delaval Inc., 476 858, 106 2295, 90 865, this held that an admiralty tort plaintiff cannot recover for physical damage a defective product causes to "product itself,'' but can "other property.'' The parties here agree itself'' consists at least ship as built outfitted by its original manufacturer sold initial user. Respondent J.M. Martinac Co. fishing vessel M/V Saratoga, installing hydraulic system designed respondent Joseph Madruga, Initial User, bought new, added extra equipment, used ship, resold it petitioner Saratoga Fishing Co., Subsequent who until caught fire sank. suit against respondents, District found had been defectively awarded damages, including damages loss equipment Madruga. Ninth Circuit reversed, holding was part when Fishing, and, reason, itself caused harm. Held: Equipment User before he is property,'' not This in injury itself, even though physical, kind "economic loss,'' which law did provide compensation. U.S., 871, S.Ct., 2302. Reasoning " [c]ontract law, warranty particular, well suited'' setting responsibilities seller fails perform intended function, id. 872-873, 2303, that, given availability warranties, courts should ask job contract might better, ibid. Circuit's recovery be denied because could have asked creates immunity beyond set any relevant precedent. Had remained User's hands, equipment's recovered tort, there no suggestion state or federal these results would change with subsequent sale. Indeed, other things being equal, rule diminishes liability resale diminish basic incentive defective-product law: encourage manufacture safer products. provides unsatisfactory answer question why series resales progressively immunize from foreseeable otherwise fall upon it, since does directly manufacturer, likely more difficult consumer offer appropriate on While nothing prevents user/reseller offering warranty, respondents explained ordinary rules manufacturer's supplanted merely may theory incur overlapping liability. affect River's component part, vessel-as placed stream commerce distributors-that "product'' Nor impose too great potential distributor. It maintains liability, after sale, despite presence User. Pp. ____-____. 69 F.3d 1432, reversed. BREYER, J., delivered opinion Court, REHNQUIST, C. STEVENS, KENNEDY, SOUTER, GINSBURG, JJ., joined. O'CONNOR, filed dissenting opinion. SCALIA, opinion, THOMAS, Keith Zakarin, San Diego, CA, petitioner. Daniel B. Macleod, respondents. Justice BREYER Court. 1 issue us concerns limits property product. 865 (1986), itself''; case all asks how corner treats destruction (a skiff, net, spare parts) user first sale then later Is loss? Or recover? We conclude Hence (assuming requirements are satisfied) admiralty's permit recovery. 2 arises out engine room flood led sinking January 1986. must assume one significant cause accident. About 15 years accident, installed system, new Madruga equipment-a seine various parts-and tuna fishing. 1974, petitioner, continued use 1987, sank, brought Martinac. 3 designed, (adjusted reflect Fishing's own partial fault). Those included purchase ship. 4 equipment. 1445 (C.A.9 1995). A majority noted held, Applying distinction between harm concluded loss. judge believed launched into Martinac, builder. Consequently, granted certiorari resolve uncertainty about proper application River. now judge. II 5 facts show: (1) Component Supplier (2) provided (the system) Manufacturer, incorporated manufactured ship), (3) Manufacturer (4) adding using (Saratoga Fishing). applicable general maritime "an amalgam traditional common-law rules, modifications those newly created rules,'' drawn both sources. River, supra, 2299; see also Fitzgerald Lines 374 16, 20, 83 1646, 1650, 10 720 (1963); Kermarec Compagnie Generale Transatlantique, 358 625, 630, 79 406, 409-410, 550 (1959). context purely commercial. particular requires interpret Court's decision River: term case, include User? does: When places item selling under Items therefore characterizations. 6 arose intersection two principles govern many commercial cases involving principle area ordinarily (but exceptions) permits others chain distribution defects. See Restatement (Second) Torts §402A (1965); W. Keeton, D. Dobbs, R. Owen, Prosser Keeton Law §101 (5th ed.1984); 867, 2300. second economic losses, say, lost profits. (Third) Torts: Products Liability §6, Comment d (Proposed Final Draft, Preliminary Version, Oct. 1996); e.g., Rardin T D Machine Handling, 890 F.2d 24, 27-30 (C.A.7 1989). favored principle, 7 reasoned value suffers harm-say, destroys exploding-is very much like work properly all. id., 870, 2301-2302. such cases, function intended. Id., 2303. buyer negotiate contract-a warranty-that will terms compensation failure. If obtains receive product's loss, whether explodes just refuses start. obtain lower price return. Given better. Ibid.; Seely White Motor 63 Cal.2d 9, 18-19, 45 Cal.Rptr. 17, 403 P.2d 145, 151 (1965) (en banc). 8 required define looking purchased, warrant. Since warrant nets, all, product, stands outside reach our view, however, pushes boundary principle's rationale. 9 For thing, precedent we found. State often distinguishes items conjunction purchased (or distributors) (following River) former physically harmed dangerously Thus owner chicken farm, example, chickens killed house ventilation failed, suffocating 140,000 inside. A.J. Decoster Westinghouse Electric Corp., 333 Md. 245, 634 A.2d 1330 (1994). warehouse building roof. Air Lines, CEI Industries Ill., 148 Ill.App.3d 332, 102 Ill.Dec. 1, 499 N.E.2d 558 (1986). And prior (not unlike us) charterer, adds expensive seismic engine. Nicor Supply Ships Assocs. General Motors 876 501 (C.A.5 conceded hands tort. Tr. Oral Arg. 29-30. federal) sale-that is, than us, suggests deny farmer, chickens, coop, denial simply makes scope turn what seems, important respect, fortuity, namely (who equipment) resells One purpose determine losses recoverable aim, safe-product incentives. some incentive. That circumstance justification. resales, replacement additions ever items, greater extent it? 11 question-because sharing risks harm-is satisfactory use. because, suggested, distributor.) Cf. Peterson Idaho First Nat. Bank, 117 724, 727, 791 1303, 1306 (1990); Tillman Vance 286 Or. 747, 755-756, 596 1299, 1304 (1979). Moreover, consumer-a reseller-to sells akin distributor's) make initially distribute) extent, normally know less involve. Tillman, 755, P.2d, 1303-1304; Peterson, 726-727, 1305-1306. seem reseller warrant, ship's engine; time passes, ages, undergoes modification, passes through users resellers. 12 Of course, warranty. But neither anything prevent apportioning their items-say, totally separate property-that say exploding engine, cause. No court has thought mere possibility precluded property. Similarly, absence showing business practice user/resellers comparable typically sellers products, argument extending replacing correspondingly weak. governing contract. 13 Respondents arguments. First, they reasoning proves much. They argue if itself. courts, following Shipco Avondale Shipyards, 825 925, 928 1987); also, National Union Fire Ins. Pittsburgh Pratt Whitney Canada, 107 Nev. 535, 539-542, 815 601, 604-605 (1991). As said 14 ""Since simplest machines parts, [a contrary] require finding "property damage' virtually every where Such eliminate strict products liability.''' 2300 (quoting Northern Power Engineering Caterpillar Tractor 623 324, 330 (Alaska 1981)). Our here, rule, relations among users, manufacturers, suppliers different here. buy depend upon, seek warranties primary skill, assembly workable components marketable whole. King Hilton-Davis, 855 1047, 1052 (C.A.3 1988); 929; Ins., 541, 605. manufacturers allocate work, thereby ensuring incentives defects destroy King, 1054; cf. 930. There reason think systematically control quality or, said, responsibility user-added similar ways. Regardless, suggest user, Airlift Int'l, McDonnell Douglas 685 267 1982); supra; 1989); maintain distinction. 16 Second, do so. host principles, foreseeability, proximate cause, loss'' doctrine already do, continue to, limit another satisfied, exist anyway 17 distributor chain) Rather, language, —(We speaking, played causal role accident harm.) miscellaneous 18 Reversed. 19 dissenting. 20 I disagree grant SCALIA-and reasons states-that affirm judgment Appeals. 21 whom THOMAS joins, 22 adopted so-called denies purchaser action sustained result only personal injuries 871-875, 2302-2304. present involves relative detail holding: whether, circumstances, property'' plaintiff-purchaser himself, earlier ownership leading back manufacturer. communications navagational electronics she constitute (for available) available). 23 my case. By decided, wealth lower-court development draw opinions taking three distinct positions economic-loss rule. 868-871, 2300-2302. confident decision, knowing broke little ground; endorsed tested decades enunciation Chief Traynor 145 (1965). contrast, sets sail uncharted seas. Not single (other review) addressed precise presented: status made feel uncomfortable plying unknown waters were skilled navigators. first-hand experience transactions. Better followed state-court pilots proceed own-and even, perhaps, lead aground. With disclaimer, admission am modestly resolution Court's, proceeded (reluctantly) discussion merits. 24 rather straightforward facts-according Court- quite simple, showing: . User.'' Ante, __. What disclose Madruga-the "Initial User''-was perhaps boat entrepreneur designing, assembling distributing described "fully equipped tuna-fishing machines.'' isolated tuna-fisherman third seven steel-hull seiners commissioned. She specifically seiner, her construction Martinac's shipyard supervised personally engineer Madruga's employ. negotiated over specifications ordered numerous changes during course construction. certainly functional boat, yet capable performing task specially designed. arguably still larger machine complete seine, electronic equipment; marketing. 25 points out, record engaged never raised considered. Brief 33, n. 28. disregards (neither resolving nor remanding consideration) deems irrelevant. Under test, understand fixed User,'' modifying reselling recommend 26 driven take position concern "a initial-user embraces person additional uses it. seiners, fact briefly enable plainly vessel? put commonplace terms: Why car whose catches entire vehicle able dealer-added hi-fi stereo "demo,'' brand new? 27 generally avoids making either above "fortuities'' called "last-402A-seller rule.'' last words (1964), "engaged product.'' predictability expected approach, ensure remedies uniform regard end-users, avoid seemingly irrelevant last-402A-seller consistent principal considerations underlying desirability invoking protection contract-warranty infeasible. Defining originally covered (persons covering product; user-sellers not). 28 appears me superior today, reality most produce same result. Each essentially attempts differentiate left market distribution. doubt, leaving ought so momentous event hand. So long entity (and consideration commercial, opposed consumer, transactions, ante, __) seems difference "402A seller'' not. Commercial entities suffer, purchase, disparity bargaining power impossible them unable insure portions upstream owners. circumstances inadequate interfere private ordering importing liability-that purchased. 2302-2303. 29 recognition reality, impressive line decisions, applying damaged remainder See, Pulte Home Osmose Wood Preserving, 60 734, 741-742 (C.A.11 1995) (Florida law); American Eagle Technologies 48 142, 144-145 (Texas law) Transport America, International Business Machines 30 953, 957 (C.A.8 1994) (Minnesota 1051-1053 1988) (Pennsylvania law), cert. denied, 488 1030, 109 839, 971 (1989); 928-929 1987) (federal 485 1007, 108 1472, 99 701 (1988). Although holdings precisely point (since purchaser-user product), rationale decisions tension supports "object-of-the-bargain'' rest premise look bargained determining 1051 ("In "injures itself' purposes plaintiff.''); 928; Eagle, 145; Casa Clara Condominium Assn. Charley Toppino Sons, 620 So.2d 1244, 1247 (Fla.1993) ("The character determines remedies, plaintiff, defendant.''); Fox Loftus, Riding Choppy Waters Economic Loss Doctrine Ten Years Later, 64 Def. Couns. J. 260, 264, (1997) (citing observing [t]he trend defining loss' focus defendant agreed provide''). These purchaser-oriented approach belief, correct, accord policy judgments Third explained: "As read plaintiff's nature available remedies. benefit bargain sole undesirable consequences affording remedy addition contract-based sufficient outweigh limited interest having relief claims. struck plaintiff. his injured loss.'' F.2d, 1051. 31 undoubtedly be-and been- conceived of. recent article describes current regarding projects follows: 32 "There growing jurisdictions broadly formerly considered property.' Courts follow utilized rationales: 33 "°There property' extends within confines "Other direct consequential contemplation subject negotiations parties. 34 "°The phrase type reasonably expect, foreseeability consequence failure issue. 35 "°No damaged, allegedly structure damaged. 36 "°Losses inferior "economic' "property.''' 264-265 (footnotes omitted). 37 combinations rules. adopt "integrated unit'' exception announces today. 38 confessed above, confidence ability correct choice experienced come rest. inclined let struggle somewhat longer, hope develop consensus refer Put choice, select proposed object purchaser's bargain. Appeals below, accordingly judgment. 39 respectfully, indeed diffidently, dissent. syllabus constitutes prepared Reporter Decisions convenience reader. Detroit Timber Lumber 200 321, 337, 282, 287, 50 L.Ed. 499.

Category: 7