Court Opinion

ID: 9791617
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:14:37.476541+00
Date Added: 2024-06-11T07:37:37.330548
License: Public Domain

Utter, J.
(dissenting) — I dissent. The majority reasons that state law will control "in the absence of a federal statute, a judicially fashioned admiralty rule, or a need for uniformity in admiralty practice”. Majority, at 82 (quoting Bohemia, Inc. v. Home Ins. Co., 725 F.2d 506, 510 (9th Cir. 1984)). There is no assertion that a federal statute is involved. Thus, the only questions at issue in this case are whether a judicially fashioned admiralty rule conflicts with state law and whether application of state law will jeopardize uniformity in admiralty law in such a way as to void its applicability. Since the answer to both questions is no, I would hold that noncommercial plaintiffs in admiralty are not prevented under federal admiralty law from recovering under the Washington products liability act (WPLA) for the value of a product itself when a defect in the product endangers people and damages property other than the product itself.
The majority’s holding proceeds first on the mistaken premise that federal and state law conflict. They do not. Both laws permit recovery in product liability for the value of a purchased product where the transaction is of a non*89commercial nature and the product endangers people and damages property other than the product itself.
In Washington, the WPLA governs product liability claims. RCW 7.72. The WPLA imposes liability on manufacturers where a claimant’s "harm” is proximately caused by a manufacturer. RCW 7.72.030. "Harm” does - not include direct or consequential "economic loss”. RCW 7.72.010(6). By adopting a narrow definition of "economic loss”, the court in Washington Water Power Co. v. Graybar Elec. Co., 112 Wn.2d 847, 774 P.2d 1199, 779 P.2d 697 (1989) unanimously preserved the right of consumers to treat damage to a product itself as compensable "harm” under the WPLA if the damage does not constitute "economic loss” as determined by a "risk of harm” analysis. Risk of harm analysis looks to the nature of the defect, the type of risk, and the manner in which the injury arose. Graybar, 112 Wn.2d at 861. The majority concedes that state law might afford the Stantons and Henry recovery under the WPLA.
The majority asserts that despite the otherwise controlling effect Graybar would have on land-based actions, majority at 87, Graybar should not apply in cases involving federal admiralty jurisdiction. The majority’s holding is premised on a misapprehension of the scope of East River S.S. Corp. v. Transamerica Delaval Inc., 476 U.S. 858, 90 L. Ed. 2d 865, 106 S. Ct. 2295 (1986). It improperly views the Court of Appeals decision as creating an "exception” to the East River rule. Majority, at 79. Under the guise of merely applying East River’s holding, the majority in fact expands East River. By doing so it artificially creates a conflict between state and federal admiralty law where none exists.
The majority extends East River in two significant ways. First, it extends the East River doctrine to noncommercial relationships. The plain holding of East River is as follows: "a manufacturer in a commercial relationship has no duty under either a negligence or strict products-liability theory to prevent a product from injuring itself’. (Italics mine.) East River, 476 U.S. at 871. The reasons for distinguishing between commercial and noncommercial relationships for *90liability purposes have been widely acknowledged. The East River Court itself reasoned "the commercial user stands to lose the value of the product, risks the displeasure of its customers who find that the product does not meet their needs, or, as in this case, experiences increased costs in performing a service.” (Italics mine.) East River, 476 U.S. at 871.9 The plaintiffs currently before the court are consumers who bought their yachts in noncommercial transactions for the demonstrated purpose of pleasure boating, not for transporting cargo or for otherwise performing commercial services;10 Furthermore, Bayliner, the manufacturer of the yachts, is alleged to manufacture and design such yachts for recreational use. Clerk’s Papers, at 145. The holding of East River therefore does not apply to this case.
Various cases are cited by the majority to support its holding that East River should be extended to noncommercial cases. Majority, at 76-79. These decisions are not controlling, as they are holdings from other jurisdictions. Furthermore, at least one court has recognized that East River does not extend to noncommercial relationships. See Sherman v. Johnson & Towers Baltimore, Inc., 760 F. Supp. 499 (D. Md. 1990) (concluding that because the plaintiffs *91and the defendant were not in a commercial relationship, the East River rule did not preclude claim in tort).
The majority inappropriately extends East River in a second significant manner by extending East River to scenarios involving grave risk to people and damage to property other than the product itself. In East River, neither people nor other property was injured or even endangered. Indeed, the East River Court expressly noted "[i]n the traditional 'property damage’ cases, the defective product damages other property. In this case, there was no damage to 'other’ property.” East River, 476 U.S. at 867. East River therefore does not categorically prohibit recovery for damage to a product itself. The court neither formulated a principle nor expressed an opinion on the proper rule for cases involving injury or risk to people and property other than the product itself. Therefore, federal and state law do not conflict, and state law will control if it does not excessively jeopardize federal harmony.
Here the majority commits its second error, concluding that even if there were no conflict of laws, the federal interest in uniformity outweighs the state interest in permitting recovery where risk of harm analysis deems injury to a product itself to be noneconomic.
The need for uniformity requires a balancing of federal interests against state interests. However, "[t]he Constitution tolerates some disharmony in admiralty law . . . states may supplement admiralty law, and states’ supplementation of admiralty law necessarily creates some discord in that law”. Pacific Merchant Shipping Ass’n v. Aubry, 918 F.2d 1409, 1424 (9th Cir. 1990). Accordingly, the balancing test should be applied in order to determine whether the state law "unduly disrupts harmony in the federal admiralty system”. Pacific Merchant, 918 F.2d at 1424.
Critical to this balancing test is an identification of some degree of uniformity in federal admiralty law against which state interests can be measured. However, the courts sitting in admiralty are themselves split regarding whether noncommercial plaintiifs may recover for the value of a product *92itself if people are not endangered and no property other than the product itself is damaged. Moreover, courts in admiralty are silent as to whether plaintiffs, whether noncommercial or commercial, can recover for the value of a product itself when people are endangered and property other than the product itself is damaged. In this context, it is inappropriate for the court to claim that recognition of the state remedy would disrupt federal uniformity.
In an attempt to identify a uniformity in federal law against which state interests must be unfavorably examined, the majority asserts that commercial and noncommercial vessels must be treated uniformly under admiralty law. Majority, at 86. The law it cites for this proposition, however, does no more than hold that commercial and noncommercial ships must be treated identically for the purpose of determining whether a case is subject to admiralty jurisdiction. See Sisson v. Ruby, 497 U.S. 358, 111 L. Ed. 2d 292, 110 S. Ct. 2892 (1990); Foremost Ins. Co. v. Richardson, 457 U.S. 668, 73 L. Ed. 2d 300, 102 S. Ct. 2654 (1982). The rules governing jurisdiction are not the same as those governing the application of substantive law. See Bell v. Hood, 327 U.S. 678, 90 L. Ed. 939, 66 S. Ct. 773 (1946). To the extent Sisson and Foremost might encourage courts to treat commercial and noncommercial relationships identically for purposes of substantive law, such viewpoint is dicta and, as such, not controlling. The federal interest in uniformly denying recovery to noncommercial plaintiffs whose lives were endangered and who suffered damage to property other than the product itself is nonexistent, and the need to preserve an alleged uniformity in admiralty law is thus weak at best.
Juxtaposed against this silence in federal law is a clearly articulated state interest in favor of recognizing a possible WPLA claim in this context. As the Court of Appeals noted:
Whatever federal interest in uniformity exists, it is outweighed by Washington’s concern to ensure the personal safety of its citizens, to deter the manufacture and dissemination of dangerous products, and to exercise its authority over tortfeasors acting within its jurisdiction. The WPLA, whose very application is at issue in this case, itself attests to those interests.
*93Stanton v. Bayliner Marine Corp., 68 Wn. App. 125, 132, 844 P.2d 1019 (1992). Since state law does not interfere with the uniform application of admiralty law, I would agree with the Court of Appeals that our state’s interests outweigh the interest in an alleged uniformity in federal admiralty law and that Washington law should apply.
There is no conflict between federal admiralty law and state law on the facts of these consolidated cases. Neither does the need for a uniform federal admiralty law outweigh the state interest in recognizing a claim involving endangerment of human life and damage to property other than the product itself. The rule in Washington Water Power Co. v. Graybar Elec. Co., 112 Wn.2d 847, 774 P.2d 1199, 779 P.2d 697 (1989) thus applies and the Court of Appeals should be affirmed. I would remand the case for a determination of whether the Stantons and Henry state a claim under the WPLA and the risk of harm approach adopted by Graybar. Because there is no need to consider whether commercial or noncommercial plaintiffs in admiralty are prevented by federal admiralty law from recovering under the WPLA where life and property were neither injured nor endangered, I do not reach those issues.
Brachtenbach, Smith, and Johnson, JJ., concur with Utter, J.
Kéconsideration denied March 10, 1994.

See also East River S.S. Corp. v. Transamerica Delaval Inc., 476 U.S. 858, 873, 90 L. Ed. 2d 865, 106 S. Ct. 2295 (1986) (citing Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 161 A.2d 69 (1960)); Sherman v. Johnson & Towers Baltimore, Inc., 760 F. Supp. 499 (D. Md. 1990); W. Page Keeton, Dan B. Dobbs, Robert Keeton, & David G. Owen, Prosser and Keeton on Torts § 101, at 708 (5th ed. 1984), at 98 (Supp. 1988); Bungert, Compensating Harm to the Defective Product Itself—A Comparative Analysis of American and German Products Liability Law, 66 Tulane L. Rev. 1179, 1249-51 (1992); Jones, Product Defects Causing Commercial Loss: The Ascendancy of Contract over Tort, 44 U. Miami L. Rev. 731, 754-56 (1989-1990).

Although one of the purchasers was a corporate entity, there was no evidence the purchase was part of a commercial relationship. The touchstone of whether a transaction is "commercial” is not whether a purchaser is a corporate entity but rather whether the transaction involves commercial attributes, including relatively proportionate bargaining power. See generally East River, 476 U.S. at 872-73. Additionally, I disagree with the majority’s implication that the presence of insurers is of consequence in bringing this case within the scope of East River. The insurers possessed neither bargaining power regarding the purchase of the yachts nor commercial use for the yachts.