Opinion ID: 446789
Heading Depth: 1
Heading Rank: 1

Heading: alternate statement of the case

Text: 101 On July 22, 1980, at 8:44 p.m., the inbound bulk carrier M/V Sea Daniel collided with the outbound container ship M/V Testbank at Mile 41 of the Mississippi River Gulf Outlet Channel. This channel is a 66-mile, man-made shortcut between New Orleans and the Gulf of Mexico. Immediately following the collision, a cloud of hydrobromic acid mist enveloped the ships from ruptured containers onboard the Testbank. The prevailing winds carried the acid cloud to Shell Beach, Louisiana, a little town downwind of the collision. The collision damaged several containers on the Testbank, which were then lost overboard. One of these containers held about twelve tons of pentachlorophenol (PCP) in fifty-pound bags. 1 This was the largest PCP spill in United States history. 102 The same day, Civil Defense and local authorities evacuated all residents within a ten-mile radius of the collision. The Coast Guard closed the Outlet to vessel navigation. 2 Health officials suspended all fishing, shrimping, and associated activities on the Outlet and within about 400 square miles of surrounding Louisiana waterways and marshes. They also embargoed seafood and shellfish caught in the area and widely broadcast notice of this embargo. The closure and suspensions lasted through mid-August. 103 The commercial fishing industry in the area sustained serious losses, primarily from the depressed market in that industry in southern Louisiana. Other businesses suffered losses. Numerous parties filed suit against the vessels and their owners, seeking compensation for their expenses and their lost profits caused by the collision, pollution, and bans to navigation and fishing. The claimants may be classified as follows: 104 (1) commercial fishermen, crabbers, oystermen, and shrimpers who routinely operated in and around the closed area; 105 (2) fishermen, crabbers, oystermen, and shrimpers who engaged in these practices only for recreation; 106 (3) operators of marinas and boat rentals, and marine suppliers; 107 (4) tackle and bait shops; 108 (5) wholesale and retail seafood enterprises not actually engaged in fishing, shrimping, crabbing, or oystering in the closed area; 109 (6) seafood restaurants; 110 (7) cargo terminal operators; 111 (8) an operator of railroad freight cars seeking demurrage; 112 (9) vessel operators seeking expenses (demurrage, crew costs, tug hire) and losses of revenues caused by the closure of the outlet. 113 In its decision and judgment entered in State of Louisiana ex rel. Guste v. M/V Testbank, E.D.La.1981, 524 F.Supp. 1170, aff'd, 728 F.2d 748 (per curiam), the district court dismissed the claims of shipping interests, marine and boat rental operators, wholesale and retail seafood enterprises not actually engaged in fishing, seafood restaurants, tackle and bait shops, and recreational fishermen. On February 22, 1982, a panel of this Court heard oral argument, and that panel affirmed the decision of the district court, holding that it was bound by Robins and by Akron Corp. v. M/T Cantigny, 5 Cir.1983, 706 F.2d 151 (per curiam). See State of Louisiana ex rel. Guste v. M/V Testbank, 5 Cir.1984, 728 F.2d 748 (per curiam). Now a majority of our Court en banc has affirmed that determination.
114 This Court's most recent extension of Robins, and one that is squarely on point with the present case, is Akron Corp. v. M/T Cantigny, 5 Cir.1983, 706 F.2d 151 reh'g denied, 5 Cir.1983, 711 F.2d 1054. In Akron, a ship grounded in the Southwest Pass of the Mississippi River, blocking large vessel traffic from entering or leaving the river for several days. Owners and charterers of vessels blocked by the closure of the pass sued for demurrage, additional fuel expenses, tug hire, pilot fees, and other delay expenses. This Court denied recovery: 115 Robins stands for the proposition that a party may not recover for economic losses not associated with physical damages. Id. The rule's purpose is to prevent limitless liability for negligence and the filing of law suits of a highly speculative nature. This court noted in Bayou Lacombe [5 Cir.1979, 597 F.2d 469] that '[w]hatever the wisdom of the traditional rule of nonliability for negligent acts causing economic loss, Robins reflects the state of law in this circuit,' 597 F.2d at 472. 116 706 F.2d at 153 (emphasis added). 117 In Dick Meyers Towing Service, Inc. v. United States, 5 Cir.1978, 577 F.2d 1023, cert. denied, 1979, 440 U.S. 908, 99 S.Ct. 1215, 59 L.Ed.2d 455, this Court denied recovery for losses after navigation on the Black Warrior River in Alabama was completely halted for five months by a faulty lock near the Bankhead Dam. Meyers sued for recovery of the loss of towing business sustained as a result of the closing of the river. This Court affirmed the district court's denial of recovery, relying on Robins and Kaiser Aluminum & Chemical Corp. v. Marshland Dredging Co., 5 Cir.1972, 455 F.2d 957: 118 The law has traditionally been reluctant to recognize claims based solely on harm to the interest in contractual relations or business expectancy.... In consequence, as stated in Kaiser Aluminum, a plaintiff may not recover for interference with his contractual relations unless he shows that the interference was intentional or knowing. While the wisdom of that traditional reluctance is open to debate, the rule based upon it is too well-settled to be overturned by a panel of this court. 577 F.2d at 1025. 3 119 Finally, in Louisville and Nashville Railroad Co. v. M/V Bayou Lacombe, 5 Cir.1979, 597 F.2d 469, L & N Railroad sought recovery for loss of use of a railroad bridge damaged by the Bayou Lacombe. Although L & N did not own the bridge, it sought to place itself in the same position as the owner of the bridge through its contractual agreement with the bridge's actual owner. The Court found that the agreement placed no ownership interest in the L & N. Therefore, under Robins, as construed by this Court, L & N had no right to recover. The damages allegedly sustained were losses of an economic expectancy and not proprietary losses. Id. at 474. 4 120 The enduring appeal of Robins, despite its inapplicability to cases such as this one, seems to spring from the administrative convenience of a conspicuous bright-line rule and from the virtue of predictability. Majority opinion at 1029. In a frequently cited extension of Robins, an Ohio Court of Appeals was remarkably candid in its justification for relying on Robins. Stevenson v. East Oil & Gas Co., Ohio Ct.App. 1946, 73 N.E.2d 200. In Stevenson a defendant negligently obstructed a factory building, necessitating a large-scale lay-off. The court felt that it would be impossible to draw a workable line of liability between workers out of their jobs and restaurant owners supplying the workers' lunches: 121 While the reason usually given for the refusal to permit recovery in this class of cases is that the damages are 'indirect' or are 'too remote' it is our opinion that the principal reason that has motivated the courts in denying recovery in this class of cases is that to permit recovery of damages in such cases would open the door to a mass of litigation which might very well overwhelm the courts so that in the long run while injustice might result in special cases, the ends of justice are conserved by laying down and enforcing the general rule so well stated by Mr. Justice Holmes.... 73 N.E.2d at 202. 5 122 Our notions of proximate cause and foreseeability are admittedly less adequate in truncating a chain of claims where the conduit through which the harm passes is contract. If a contract between A and B provides sufficient nexus for B to recover after A 's physical injury, then it is difficult to distinguish C 's contract with B, or D 's contract with C. In short, one contract seems as good as the next for establishing proximate cause and foreseeability once the first claim is allowed. Robins resolves this dilemma by disallowing all third party claims based solely upon a contractual relationship with the injured party. 6 123 There are sound reasons for such a rule. Courts recognize that once they permit recovery for economic loss to parties linked in a serial chain of contracts, defining a stopping point becomes nearly impossible. In Robins, for example, the shipowner had settled his claim against the drydocker, apparently for the rents the shipowner would have received from the charterer had there not been an additional delay. Robins, 2 Cir.1926, 13 F.2d 3, 4. Had Justice Holmes imposed liability again in the Robins appeal for the charterer's lost profits, the tortfeasor would have been required to make good the still better bargain of the charterer. Similarly, if the charterer had a contract with parties on shore to clean the charterer's catch, the drydock would have been required to make good on this bargain as well. This iteration of compensation could conceivably run without limit. Liability would accrue in an indeterminate amount for an indeterminate time to an indeterminate class. Ultramares Corp. v. Touche, N.Y. 1931, 255 N.Y. 170, 179, 174 N.E. 441, 444 (Cardozo, C.J.). 7 In limiting recovery in a chain of contractual relations, the Supreme Court drew the line after the first claim for damages. Justice Holmes had thus fashioned a rule in claims arising from a chain of contracts that would avoid a multiplicity of actions and prevent a vast extension of liability. 8 As one commentator observed: 124 In a situation of this type, total recovery for all lost profits might amount to an enormous sum, and the Robins Court may have thought that liability of this magnitude would unduly discourage socially useful but risky undertakings. However, by arbitrarily cutting off liability after the most proximately-related party, the courts following Robins have indicated their doubt that the traditional limits of the duty concept, the doctrine of proximate cause, and the jury's discretion are adequate to prevent excessive recovery. For the sake of certainty, these courts have sacrificed the fairness of a case-by-case determination of the appropriateness of recovery. 125 Note, Negligent Interference with Contract: Knowledge as a Standard for Recovery, 63 Va.L.Rev. 813, 820 (1977). 126