Union Oil Company v. James J. Oppen and John J. Masterson
501 F.2d 558
9th Cir.
1974
Check Treatment

*1 remanding judgment for a new hearsay error, we trial because court to certi-

instruct the district first

fy Judicial Court question of whether Ricker’s

Maine the comply Maine stat-

failure to with the and sanita- utes on victualer’s licenses any. recovery of

tion licenses bars its Society

judgment against either quantum In so meruit.

contract or in question in

certifying, may it frame the appropriate it

such manner as deems any relat- ask additional and should also necessary questions in order it deems ed applicable jury as to the instruct

principles law. Hence of Maine ex- inquire and what

wish to whether jury entitled to

tent Maine would be license in

consider the lack of either termining there substantial

whether

performance Obvious- contract. ly, if court determines the Maine

recovery grounds, then is barred both new trial.17 will be no for a

there need further

Reversed and remanded

proceedings inconsistent

opinion. al., et

UNION OIL COMPANY Appellants,

James J. OPPEN and John J. Master al., Appellees. son et

No. 72-2855. Appeals,

United States Court

Ninth Circuit.

June (argued),

Max K. Jamison Robert K. Smith,-of Wrede, McCutchen, Alfred T. preme Schein, Although Lehman several other issues raised Bros. v. were parties, light 40 L.Ed.2d 215 we do not reach them disposition. (Apr. 29, 1974) of our the Maine court (Me.1974), Edgar, A.2d 668 White v. fully support instant certification case. *2 Kreps, approved Allyn the Verleger Shea, district Black, which was & O. alia, pro- Ker, Stipulation, Boudreau, Jr., inter This Frank G. court. E. Girard Gregg, Douglas Zahm, the of certain vided for cases, consolidation C. H. Richard attorneys’ fees, special Bond, Snyder, the use of George of A. Sam C. authority Schell, masters, O’Melveny Myers, the allocation of & Walter O. plaintiffs among Kelley, Goethals, for the various counsel Thomas B. J. Richard Jr., of any negotia- Roose, respect to Newby, Jr., control of with B. J. Miles W. preservation Angeles, Cal., of Delamer, the for tions and certain Los & Schell rights plaintiffs and on behalf of both appellants. defendants. (argued), Thomas W. McCord James present ap- purposes Luddy, Bodkin, the the Crehan, M. Breslin & however, important provi- Cal., peal, Oppen the most Angeles, J. Los James Cal., Stipulation Barbara, are those which (argued), L. in this Paul sions Santa Moriarity Tepper, the extent deal with the facts and with Tepper, North & agreed Cook, of the to Hollywood, Cal., to which pay defendants have W. Ronald damages. Barbara, plaintiffs Parma, for Price, the Postel & Santa Stipulation Cal., of the appellees. The relevant relating the to as follows: facts reads January 28, 1969, OPINION about oil be- On or gan escape to under and near Union SNEED, ELY and Circuit Before Company Oil of California’s Platform Judges, District and SOLOMON* “A” on the located Outer Continental Judge. of the States the San- Shelf United undersigned ta Channel. The Barbara SNEED, Judge: Circuit agree following the is a fair growing out This is another respect facts statement the spill the oil Barbara Santa the Barbara Channel occurrence Santa plaintiffs commercial fishermen. are (hereinafter “occurrence”): alleges complaints the Each of their brought operations on been under conducted cause of action has A. Certain provisions the Continental Platform “A” resulted in the release Outer Lands Act of unascertained amounts crude § Shelf U.S.C. joined seq.; oil from 1331 et defendants the ocean floor underneath enterprise, day-to-day opera- in an and near “A”. Platform the control and tion of which was within B. Such crude oil release was car- management of defendant'Un- under ried and natural forces winds ion to drill for oil in Oil tides various areas of ocean’s Channel; waters of the Barbara Santa and in some surface towards during commencing period on adjacent lines. instances coast January 28, 1969, quanti- or about vast An amount of C. unascertained ties oil of raw crude were released damage oc- resulted from said by wind, subsequently carried wave currence. tidal currents over vast stretches Paragraph Stipulation, California; coastal waters of Southern undertaking sets out defendants’ consequence plaintiffs and that as damages, provides pay as follows: injuries have various suffered damages sought. are rests Jurisdiction provide In order a basis for 28 U.S.C. 43 U.S.C. § § disposition referenced of the above 1333(b). agreed by undersigned claims May parties pay On counsel for all defendants that will persons Stipulation to this suit entered into a above referenced and/or * Solomon, Oregon, sitting Judge, Honorable Gus J. Senior United States District District of by designation. alleged Does diminution are, reason or who plaintiffs who become, aquatic Barbara life of joinder subsequent herein from compensable to have resulted legally claimed hereto, Channel parties all legally cogni- legally constitute a occurrence arising damages compensable to the Commercial the aforemen- caused zable Fishermen claimants? as such occurrence tioned following pursuant determined judge to hold then went on district *3 however, that provided provisions; question a must be answered that such hereby not will payment assumed the result, he This in the affirmative. as and such claim such amount way exceed out, dependent on pointed in no is their contractors or said proprie- plaintiffs the a have defendants whether responsiblue in the of, tary in, ownership the sea for interest damages Payment negligence. of said As life in the Santa Barbara Channel. operate as persuant hereto shall judge it, a loss of saw “the the district prospective assignment de- to said claims advantage of said occa- economic punitive or for claim alleged fendants. No exemplary the diminishment sioned damages asserted shall be quantities life the of available sea damages award- shall be and such the recov- formed sufficient basis for added). (emphasis negligence.” ed. ery under the law May moved the defendants In judge order the The district certified summary judgment partial before interlocutory proper subject for an as a plain- special to strike from the masters petitioned appeal, and the defendants damage prayers item of tiffs’ “that appeal to under this for leave Court usually ‘ecological dam- denominated as 1292(b). petition The was U.S.C. § age’.” specifically, More the defendants granted, is now us the issue before sought prayers to from the eliminate properly de- the court whether district consisting element of the motion. hold nied defendants’ We profits lost of the reduction as result properly inter- court that the district fishing potential of in the commercial preted paragraph Stipulation, the 3 of may the Barbara Channel which denying and that its the action by the occurrence. have been caused proper. fendants’ motion was long- According defendants, to the such ecological damage compensa- is term not I. thus not within ble under the law and is undertaking in the as set forth their Applicable Law Stipulation. proper law Determination of special The motion denied was partial motion for which summary judgment defendants’ recog- masters order which brief judged turns is to be resulting injuries “an nized that from analytically complex less to ‘but out [plain- interference defendants with significant functionally one-would than right public to fish tiffs’] imagined. plaintiffs assert have As compensable. legally waters” were complaints, in their these cases into court defendants then went district brought under Outer Continental object order, again moved this (“Lands Act”), Lands 43 U.S. Shelf Act summary judgment. partial for a seq. et Pursuant Section C. § Act, 1333(a)(1) is Once more the motion law was denied. federal judge applicable order ob- his the district first made “to subsoil Stipula- paragraph served 3 of the Continental Shelf seabed the Outer although carefully tion, phrased, fixed had and to all artificial islands and practical liabili- there- effect of a confession of be erected structures However, negligence. Continuing, ty tort Su- on. . . .” as accepted judge preme pointed Rod- the defendants’ statement out Casualty issue, rigue viz: v. Aetna “activity” whose relation- nized that L.Ed.2d activity ship adopted to traditional maritime is (1969), law state injured to be examined was that surrogate the Act law under for federal party, “ap- the tortfeasor. that of state such law extent drilling reason, for oil the fact plicable inconsistent platforms fixed located over the from laws.” Federal other ap- is not itself a 1333(a)(2). Thus, outer Continental Shelf when U.S.C. § activity was held Act, traditional maritime law plied state context refusing federally basis for not to constitute a enforced. law federal becomes classify wrong maritime as a tort. 89 S.Ct. 395 U.S. apparent briefs It determine in order to It follows that analysis ad- parties did not applicability admiralty law concluding point beyond vance necessary case, in facts of this appeared no in- that, to be there since plaintiffs’ quire reduction whether a law, the law of Cali- *4 federal consistent anticipated profits, what for caused controlling. However, fornia was purposes present must assume to be we Oppen opinion v. In- Aetna Court’s defendants, the conduct (9th F.2d surance significant relationship to tradi bears a Cir., 1973), parties’ makes clear activity. itWere neces tional maritime necessarily analysis not determinative sary for to be decided dis this issue before us. remains of issue There pose case, of our inclination would yet possibility e. that admi- a third relationship —i. to hold a does that such exclusively applicable ralty law is fishing ways, exist. numerous controversy. present As said industry part clearly of traditional a Insurance, the Lands does not Aetna Act activity; and assert other maritime possibility. eliminate this repudiation a of would wise amount history. For exam much of maritime Executive Jet The Aviation, City Cleveland, ple, treated as sea of fishermen have been Inc. enforcing purposes for 34 L.Ed.2d 454 men 93 S.Ct. fishing rights against (1972), vessel and its has instructed us that the deter- owner; g., Compa admiralty juris- Point Fish of whether the see e. Old mination (4th Cir., ny Haywood, federal 109 F.2d 703 diction of the courts embraces (W.D. R-3, depends, only 1940) ; F.2d tortious act on the The Z place tort, Wash.1927). also also 46 U.S.C. but on whether See §§ Black, wrong significant 531-534; The Law bears relation- Gilmore (hereinafter ship activity. Admiralty traditional maritime Robinson, Black); Acting Id. at 493. as 93 S.Ct. on this cited Gilmore Admiralty (1939);1 instruction, and the vessels this Court Aetna Insur- object of fed hqld ance that an to maritime been have themselves designed legislation an interference to afford their vessels and with their eral right navigation, resulting many which the benefits from owners here, spill provides same which is to maritime ves oil involved law otherwise cognizable See, g., generally. tort constituted a maritime 46 U.S.C. e. § sels holding, Act).2 admiralty. reeog- Mortgage (The Ship In so it was practice “working lay” 1. mari- The traditional ties of such fishermen from on —- sharing proceeds activity. i. e. of a catch —does time rights cause the of fishermen to be distin guishable promote respects purpose in certain Act was to from those of The seamen, generally shipping private other who as well as to work for investment wages. example States, protect One of this which was would be the the United post-World vulnerability lay principal in the maritime of credit liens source suppliers. period. generally See Gilmore and I Gilmore and Black at n. War See Canfield, However, differences, these also in our Black at 568-92. view, Ship Mortgage sufficient 22 Mich.L.Rev. to remove Act of the activi- preference required have nexus with maritime law as and which Our activity. it Thus, motion maritime defendants’ traditional the law which the summary appear partial judgment that an which oc- is to be here, strengthened sea, curs in the when Section as is measured is the properly cogni- closely 1333(a)(2) should not be held to be Act Lands provisions under the of the Lands as a zable examined. The use of state law surrogate Act. limited to for federal law is and seabed “that subsoil are, however, We not driven to the Shelf, of the outer and arti Continental choice between and the maritime law islands structures erect ficial fixed law of California. far as our re- So thereon, ed which would be within the reveals, search neither has made forum area of the if its boundaries were State ruling precise a definitive issue margin extended seaward to the outer before consequence, us. As a be- ” outer Continental . Shelf necessary come for us to fair- examine a (emphasis added). 1333(a) 43 U.S.C. ly § large body authorities, drawn such, sea, as is not mentioned jurisdictions secondary numerous Act; nor in our view in was it sources, in re- order to reach what we Quite understandably tended to be. state gard proper as the resolution of this dis- law, only which can intrude to a limited pute. In that the same authorities and traditionally subject extent in matters must be examined and evaluated sources admiralty jurisdiction, see Askew v. regard process without to whether this Waterways Inc., Operators, American is characterized of ad- examination *5 325, 411 U.S. 93 1590, S.Ct. 36 L.Ed.2d miralty California, law or the law of we (1973); Florida, 280 v. Skiriotes 313 body are convinced that under either of 76-77, 924, 69, U.S. 61 S.Ct. 85 L.Ed. special law the actions of the masters (1941); 1193 Manchester v. Massachu judge denying and the in the de- district 240, setts, 559, 139 U.S. 11 S.Ct. L.Ed. 35 summary partial fendants’ motion for (1891), 159 not was intended to embrace judgment were correct. activity. traditional maritime Moreover, fre maritime law itself Rodrigue quently statutory As looks to both the Casualty supra,

Aetna has in- decisional law of the states for sources dicated, enacting the Lands Act Con- principles. from which to fashion its gress drilling platforms chose to treat Moragne Lines, as See Marine States ships artificial subject rather Inc., islands than as 1772, 398 L.Ed. 90 26 admiralty jurisdiction to (new in or- (1970) 2d 339 maritime cause of der to afford the wrongful imple workers on such is- action for death to be protections lands the to which mented reference to other federal law would statutory otherwise be entitled law); reason of and state and decisional citizenship adjacent their By Shutler, Oil, states of Pollution the Sea —subject, course, to (1970); federal enforce- Houston Com L.Rev. power gov- ment and the ment, Sea, of the federal Oil Pollution of the (1969). ernment to make inconsistent laws and Harv.Int.L.J. Al regulations. However, though in order to serve in some instances this derivative purpose, necessary it not application us assistance entail to requiring diversity read the Act as principles, that state state law unlike our pur- jurisdiction law be treated as federal law for requirement there is no —al poses determining consequences suggested beit some scholars have such a sea, torts which occur in admiralty— and on the for certain course areas coverage amended, however, permitted Prior inclusion Ship Mortgage Act, subject fishing general 46 U.S.C. 911 et § certain vessels seq. coverage 27, 1935, such that its excluded limitations. Act C. of June “practically fishing ; entire commercial 49 Stat. 424 46 § U.S.O. supra fleet.” Gilmore and Black As advantage than the loss of economic adopted. Robert- law be that state cognizable “legally inju- is not a son, Admiralty 194-201 and Federalism “legally ry” compensable.”3 and thus therein. the authorities cited proceed event, any a we shall strength. argument has It Their to the believe faithful that we manner upon proposition that a rests con- disposing spirit law in tort of California compensa- trary rule, would allow reason us. the issue before tion for all losses of advan- purposes say that for content we are tages negligence, caused defendant’s regard irrelevant it as case we of this subject claims defendant designated as an our efforts are whether upon speculative inju- based remote and exposition admiralty law or law he ries which could foresee of California. According- practical sense of the term. ly, it has been stated as some cases II. general rule that plaintiffs duty Recovery Loss in fendant owes seek- for Pure Economic ing compensation injuries.4 In Negligence: for such Rule. The General cases, in- other of the the courts have support motion for Defendants proximate voked the doctrine of cause to by pointing summary judgment partial yet result;5 and in reach the same recognized principle widely third class of cases the “remoteness” against defend- lies no cause action directly the economic is relied loss plain- negligence prevents the ant whose deny recovery.6 consequence obtaining pecuni- prospective tiff from is nor- these cases is that a defendant Prosser, g., ary advantage. See, Law e. mally to defend relieved of the burden (hereinafter 1971) (4th ed. of Torts Prosser); against claims, such and the courts Harvey, Losses Economic class of cases the resolution of which Negligence, Rev. 50 Can.Bar particularly difficult. (1972); Note, Rev. Can.Bar Negligence ; applied (1971) Note, Economic rule has been Thus, Loss, variety Jour. 255 117 The Solicitors’ wide negligent of situations. *6 Negligent bridge (1971); Note, Interference con- destruction necting island, Expectancy: The Case with the mainland an with Economic (1964). Recovery, to the which caused a of business for 16 Stan.L.Rev. 664 loss (Second) Torts, plaintiff who a merchant on the is- See also Restatement the de- 14, land, As held to be Tent.Draft No. 766B. has been actionable. § Company, it, of the Oil 41 see diminution v. Sun A.2d fendants Rickards 267, (1945). plaintiff in the Barbara Channel 89 A sea life 23 N.J.Misc. occurence, which, engaged printing it must the in has been commercial caused against remembered, negli- the de- is attributable to recover a held unable gent engaged negligence who, in reason fendants’ contractor while Stipulation, no more parties’ pursuant a with a consists to contract excavation 4. 3. defendants’ oil N.E. opinion Attorney R. Co. v. Perpetual trine to the 191, 286 (2d See, We R., “ultrahazardous Cir., 1927) ; (K.B.1951) 43 S.E. 419 477 decline to reach the issue e. Ross 160 Mo. g., General (1932) ; Byrd Trustee facts Towboat The Federal No. drilling operations (Austr.). presently 87, Chelsea (1903) for Co., applicability activity” Co., 60 S.W. 1058 New South Wales 85 Commw.L.R. v. ; Moving & 280 before Brink v. Wabash English, 2, Mass. us. 21 F.2d 313 of whether express constitute Trucking this doc- 282, 117 (1901) 237, 182 Ga. v. ; 5. Towboat morguage supra particularly v. B. 243 with Economic Chelsea Recovery, works (1934). See, See, Oakes, Co., note e. e. (1910) ; g., Moving Co., g., supra a Helice L.R. 10 191 4; Northern States The Federal supra Note, a discussion of this La at 674—75. Expectancy: Minn. Cattle & Q.B. v. Bennetts note Societe Trucking Negligent 453 88, 4; Byrd v. 2, supra (1875). Anonyme Stockton 253 N.W. 371 Contracting The Case Co. [1911] Interference v. area, v. English, note Water de 1 K. Ross Re Co. see for 4; 564 liability. area, issue is power In the line this party, the

third cut negligently J. Whittall & 264 which Byrd R. Ct.), 419 Shields) [1959] (1964). 245; (1903); (Ct.App.1960). aff’d v. the Ont. English, But Seaway Ltd. v. [1959] plaintiff’s injures 177, contra, see Sons, 17 S. C. M. Sharp, Hotels 117 Ga. Ont. a third Ld., D.L.R.2d J. W. A defendant presses depended. 581, [1970] Ltd. 108 Sol.J. Moore (U. K.) 191, person enti 21 D.L.R.2d 292 v. 3 43 S.E. (North Gragg, All E. (High v. who 453 W. ble. losses tions. with chased article to purchaser indicate negligent manufacturer, rely heavily purchaser usually caused Defendants couched purchaser’s is not can on California no such recover in tort from the failure of the perform privity, terms reasonable recovery with present in accordance for cases which whether whom expecta- action possi- pur- the a by services tled to life-care medical Seely Motor White v. person but plaintiff the third is liable to Cal.Rptr. P.2d 145 Cal.2d plaintiff. Fifield Manor not to the plaintiff, example, (1965), who Finston, 632, Cal.Rptr 377, Cal.2d purchased truck for use his had (subrogation also P.2d business, sought from the to recover party’s third claim riot denied because representing manufacturer dry assignable). operators of a profits repairs and lost both the cost admiralty char dock are not liable perform to defects attributable placed by ship, its owners terers of truck as well as ance of the dry dock, pre price purchase he had ship’s propeller de where viously ex paid. had The manufacturer prived the charterer use pressly “to free the truck warranted ship. Repair Dry Robins Dock & Com in material and workman defects from ship pany Flint, U.S. use and service” under normal L.Ed. 290 Mr. Justice liability “to thereunder limited its had making Holmes, writing opinion, ob factory any part or good its at ” per “. served that . . a tort to The trial parts . . . thereof. property one man does son recovery lost permitted court another make the tort-feasor merely liable to paid portion previously profits injured person was because price, purchase denied recov but of the ery other, un a contract under appeal, repairs. On for the cost wrong.” 275 to the doer of the known manufacturer contended at 48 S.Ct. damage trial court allowed award permissible under exceeded that had applying the of cases citation liability tort, theory of strict extended, but rule could be *7 theory superseded the law of war had abridged to em- sufficient collection is ranty of Green in reason California operates in a phasize point it Products, Inc., 59 Power man v. Yuba settings. purposes variety wide Cal.Rtpr. 697, P.2d 897 57, Cal.2d analysis, however, one further our (1962).7 ap- setting rule has in been Supreme held of California being Court plied requires mention—that warranty did dealing products the abandonment with of the law area governing defining war- rules Oreenman, . . . the California developed meet privity consumer, were ranties in not held that a cannot prod- transactions needs of commercial a defective the manufacturer with govern manu- theory properly be invoked to uct, based under a could not recover injured liability injuries to those warranty personal facturer’s for on breach of products rules those unless defective a result of as he had sustained which product’s purposes such opinion, for serve the also In its malfunction. imposed. cog- liability damages were indicated such court 701, Cal.Rptr. 63, at liability tort, and in Cal.2d at in nizable under strict doing at 901. P.2d that: so stated aspects of function.8 The second is that this re- to the commerical extend aspects, cogently straint has been being criticized as As to those a transaction. recovery unnecessary appropriate on to an ac- must be based was held that warranty warranty principles commodation of bility. and tort lia- law and Franklin, liability When Col- in tort. Inasmuch Worlds on strict Liability Seely lide Theories and had warranted : Disclaimers the defendant Cases, “free from defects Defective Product 18 Stan.L. that the truck workmanship 974, under normal Rev. 1002-03 recov- by material and damages ery service,” allowed of economic an losses sustained use and consumer, privity ultimate even held to have been absent trial court were true, negligent manufacturer, may the with a observed or proper. This was allowance, desirable; though not have not be but court, its even liability warranty event, would not doctrine of strict make had the been principles applicable. ob- The court’s redundant. in tort been by dictum, upon was bolstered servation place in this III. the defendants which great reliance, that under which stated Exceptions Some Rule. General pure losses are economic law California concerning Seely scope Doubt in an action based not recoverable negligence. strengthened dictum is when the numer- The dictum consists exceptions qualifications ous to the following statement: general rule are considered. charged at should not be A consumer recognizes recovery Prosser that a for the manufacturer the will of pure negligence economic losses has physical bearing the risk of permitted been in instances in which buys product on the mar- he when special exists “some relation there be- in actions Even . . . ket. for parties.” tween the Prosser at 952. liability negligence, a manufacturer’s plaintiff The failure of the to obtain a physical in- is limited to for telegraph compa- contract because of a ny’s recovery juries and there is negligent message transmission loss alone. legally cognizable, been held to be Cal.Rptr. at at 63 Cal.2d example “spe- and is cited as an added). (emphasis P.2d at 151. relationship” Id., qualification. at cial McQuilkin 952, n. 79. See also v. Postal things concerning be said Two should Telegraph Cal.App. Cable scope of lia- court’s reference the bility (1915) (injury from lost 151 P. negligence. is that it The first advantageous must not be re- contract having been made must understood as uncertain). examples mote and Other unavoidable under- in the context of an negligent which have been cited taking spheres in fix the field gratuitous promise perform failure to liability products within which warran- insurance, obtain liability operate. were to ties and strict acting upon application delay an re- not made Too much should Prosser, n. insurance. See scope liability imposed on the straint negligence it has been devel- for oped when development preserving purpose Califor- A more recent for the *8 right recover, ab- can nia law involves the within which warranties area language sufficiently Supreme does broad contain 8. The dictum of the California ap- suggest Seely above, Seely, quoted distinction between has been in Court recovery may applica- deny recovery warranty plied by in the and tort this Court setting, plaintiff beyond products setting liability we are of the view ble where the expands reading unduly brought negligence our deci- in rather that such a action liability. theory the reasons outlined sion that case. For See than under a strict text, apply Co., Bright Goodyear so we therefore decline to 463 Tire & Rubber v. 1972). opinion (9 it. While our F.2d 240 Cir. 566 650, (1958). privity, whose 49 Cal.2d at 320 P.2d at from a defendant 19

sent negligent proper at- It is thus obvious that California does failure to obtain blindly party has follow the of a third rule testation of the will bequest rely. deprived plaintiff which the defendants here granted improper- which had been ly step It is but a short from these two Biakanja Irving, v. 49 attested will. body California cases to a ing of law exist- ap- 647, (1958). P.2d On Cal.2d 320 16 country both in Brit- and peal Supreme California, Court of ish Commonwealth which defendants plaintiff’s pure economic loss engaged professions, in certain business- legally cognizable injury, a held to be a es, trades have held liable for been subsequently position re- which has been resulting negli- economic losses from the Hamm, Cal.2d Lucas v. 56 affirmed gent performance of tasks within 583, Cal.Rptr. 821, P.2d 685 15 364 callings. course of their One Common- (1961) (recovery denied because wealth scholar “in has stated that negligence). absence of (cid:127) proper person may case a recover eco- approach adopted the Califor- negligence nomic loss caused par- Biakanja nia persons bankers, such as commission stating ticularly After instructive. agents, agents, accountants, real estate question before it was “whether surveyors, valuers, analysts, insurance duty fendant was under a to exercise brokers, brokers, government stock em- protect plaintiff due care to doctors, ployees, architects, car salesmen plain- and was liable caused insured, who undertake to have cars car negligence though tiff his even testers, cheques.” drawers contract,” privity were not the Harvey, Negli- Economic Losses court stated: gence, 580, 50 Can.Bar Rev. 603-04 spe- The determination whether Byrne Hedley also, & Co. held cific case defendant will be Ltd. v. Heller A. & Partners Ltd. [1964] privity person not in liable a third C. 465. policy is a matter of and involves the The American cases reflect a similar balancing among factors, of various development. There are numerous cases which are the extent to which indicating that economic losses transaction to affect the was intended negligence pension recovered for the foreseeability plaintiff, harm to consultants, accountants, architects, at- degree him, certainty torneys, public, notaries test hole drill- plaintiff injury, the closeness suffered ers, abstractors, inspec- title termite the defend- the connection between tors, engineers, surveyors, soil real injury suffered, ant’s conduct brokers, checks, estate di- drawers attached to the de- moral blame trustees, corporations, rectors bailees conduct, policy fendant’s and the preventing public weighers.9 harm. future App.2d Inc., 730, Cal.Rptr. (1964) (title Busch, v. 41 Gediman Anheuser 299 F.2d 345 abstractor) ; Cir., 1962) consultant) ; Hardy Carmichael, (2nd (pension v. 207 Cal. 537 App.2d 218, Cal.Rptr. Factors, F.Supp. (1962) (ter Levin, 24 85 Rusch Inc. v. 284 475 inspector) (D.C.R.I.1968) (accountant) ; ; mite M. Miller v. Central United States Co. (S.D. Sanitary Cal.App.2d Rogers Rogers, F.Supp. Dist., Contra v. & 161 132 Costa 198 Cal.Rptr. ; Cal.1958) (architect) Hamm, 305, (1961) (soil engineer) ; 18 13 Lucas v. 56 Karr, 821, 685, Cal.App.2d 535, 583, Cal.Rptr. v. Roberts 178 3 Cal.2d 15 364 P.2d Cal. Rptr. (1960) Granberg denied, (surveyor) ; 98 v. cert. 82 S.Ct. Biakanja Turnham, Cal.App.2d (1962) (attorney) ; v. 333 P.2d 423 L.Ed.2d 525 (1958) (1958) (real broker) ; Irving, estate Hawkins v. 320 P.2d 16 Cal.2d ; Bertran, Co., (notary public) Gagne Oakland Ins. & 165 Cal. 43 Cal. Title Guar. (test App.2d 116, (1958) (title (1954) 331 P.2d 742 ab 2d P.2d 15 hole drill stractor) er) ; ; Flack, Park Bank v. Arena Auto Ins. State Northwestern Title Co. Auction, Ill.App.2d 235, Cal.Rptr. (ti Inc., Cal.App.3d 134, N.E.2d *9 (drawer check) Ryan abstractor) ; Giomi, (1965) ; v. v. 230 Cal. 158 tle Viotti

567 legal- Recovery pure the economic loss that case was whether owners negli- shipped cargo, on a which ulti- ly vessel to the defendant’s attributable mately vessel, recognized gence in tradi- collided with defendant’s also been has general average settings. Thus, fisher- could recover for maritime tional at under a contribution when both vessels were who worked men in Scotland damaged. arrangement profit-sharing both were The fault and Su- damaged by preme the de- Court held in the affirmative. of a trawler owner Although cargo permit- physically negligence dam- was been fendant’s have collision, aged appears the antic- this fact ted to recover their fishing bearing ipated profits venture even to have had no on the Court’s of the though Main v. Leask Session). More suffered [1910] important, S.C. 771 physical however, (Ct. injury. of Court resolution of the issue. cargo recognized owners to have their right Rather, general average sprang contribution di- reached restored the fact Circuit rectly precisely in an ad- from the tort in no conclusion and was sense same Ursich, parasitically dependent miralty proceeding. or’ Carbone v. derivative Cir., injury. Rio, (9th presence physical F.2d 178 of a The Del 209 1953). doing, apply to In so we refused right to for economic recover teaching Dry Dock of Robins parasitic losses which to an Company supra, Repair Flint, v. to occurring person property or were with which the fishermen situation questioned. g., Reynolds e. Bank v. confronted, and observed: Savings of American National Trust and right long recognized This rule [the Association, 49, 53 Cal.2d P.2d 926 345 .their share of fishermen recover (1959) (loss destroyed airplane use prospective is no doubt catch] negligence defendant’s held to be re- principle manifestation of the familar coverable). Furthermore, this is admi- that seamen are the favorites of though magni- frequently even ralty en- interests and their economic tude economicloss so far overshad- legal possible pro- titled to fullest physical injury ows that of the as to have tection. These considerations warrant the assertion that right given compara- special rise barring recovery physical rule, absent a for the ble to that of a master to sue Harvey, injury, is but a formalism. See servant, or the loss of right of his services supra 585, 594-95. to sue of a husband or father abridged catalogue This much of ex- of wife or for the loss of services ceptions gener- qualifications child. brought pur- al rule can be a close F.2d at 209 poses analysis by calling of our attention pollution to several cases which Another instance in which a claim for by any loss, unaccompanied stream has enabled one whose business injured person proper thereby physical his lost recover recognized profits. ty example, claimant, Fort & has been Worth Railway Company admiralty Rio v. Han- under is illustrated Grande law (Tex.Civ.App.1926) Sucarseco, cock, 286 Aktieselskabet v. The S.W. 335 Cuzco swimming plaintiff, operated 394, L.Ed. 942 who 294 U.S. 79 pool river, per- (1935). the channel of a before the Court issue (trustee) ; (Iowa 1969) (ac Kanne, New York Int’l Products Co. v. 170 N.W.2d 395 Corp. R., countant) ; Shatterproof Erie R. 244 N.Y. 155 N.E. 662 Glass (1927) (bailee) ; Shepard, James, Glanzer v. 46 A.L.R.3d S.W.2d (1922) (public ; (Tex.Civ.App.1971) (accountant) Durham N.Y. 135 N.E. weigher). generally Freeman, Opinion Co., See, Mill & Elevator 202 S.W. Wichita corpo Professionalism, (Tex.Civ.App.1918) (director Duke Letters L.J. Doyle ration) ; Phenix Nat’l v. Chatham & Bank, N.E. 253 N.Y. *10 drilling operations, profits had which conduct rea- lost which mitted to recover negligent sonably foreseeably could and have been defendant’s from the resulted anticipated Similarly, a diminution of the down- to cause pollution river. engaged op- aquatic owners, Barbara riparian life in the Chan- stream erating injury dependent upon nel plaintiffs’ fish- area thus cause to a business permitted to ing, recover for business. have been by business caused their finding duty exists, In that such a we pollution See Mason- of the stream. by are influenced the manner which Steede, Corporation Miss. ite ap- the proached Court of California has (1945); Hampton v. 23 So.2d duty in tort issue law. Pulp Company, N.C. North 535, Carolina holding child, mother of a killed that the It should S.E.2d 538 by negligent operation the defendant’s these noted in each of cases that automobile, anof could recover for emo- owner, plaintiff riparian awas tional though and shock even disturbance was no indication the latter two there within the she was not zone merely that conduct was the defendant’s physical impact, the court Dillon v. However, negligent and not intentional. Legg, Cal.Rptr. 72, 68 Cal.2d Hampton in neither nor does Masonite (1968) P.2d 912 stated that: recognition appear mere there negligence have absolved the duty, in the Defendant owes a sense Both assumed existence fendants. damages, potential liability of a only which could well have rest- nuisance respect those with risks or upon negligent ed con- the defendants’ hazards whose likelihood made the duct. at See Prosser unreasonably conduct dangerous, negligent, hence in the first instance. Moreover, plaintiffs’ ri- as status (See Legal Keeton, Cause the Law parians improper the not make does 18-20; Seavey, (1963) of Torts Mr. excep- of these cases classification Law of of, Justice Cardozo and the Torts to, qualifications tions or (1939) 372; Seavey, Harv.L.Rev. rule which is relied defend- Principles of Torts 56 Harv.L. present action. The ants. 72.) sought Rev. were in each anticipated profits was the loss Harper prevail- state the and James pure—a loss as term is ing obligation view. The turns permit ripari- normally To understood. offending conduct whether ‘the fore- anship loss or- to transmute this into an seeably unreasonably great involved dinary property purpose for the loss to the interests some- risk harm allowing recovery does no How- harm. one actor. other than the ever, harm done if fact would be obligation to refrain from [T]he plaintiffs in this case are particular conduct is owed riparian deprive held to owners was only foreseeably en- those who them of the comfort these authorities dangered only the conduct provide. respect risks or to those hazards un- whose likelihood made conduct IV. Duty, dangerous. in other reasonably forclosed on its judgment. defendants’ whether the defendants refrain from It is plaintiffs, merits thus by precedent The Instant Action. motion for As we see apparent the issue commercial presented partial summary conduct it, owed fishermen, the issue we are examining duty risk bly omitted.) words, Law of ing Since the chief element [*] obligation entails.’ whether defendant is measured Torts, [*] negligent (2 Harper [*] supra, is the fore- plaintiff [*] conduct owes a & p. in determin- scope [*] James, The 1018; foreseea- duty [*] fns.

5fiQ *11 seeability risk, suggested that factor will number of scholars have that liability every by prime concern case. be of losses occasioned torts inherently apportioned should be Because intertwined in a manner that gation foreseeability must necessarily such be duty adjudicated or obli- will an optimum best contribute to the achievement of allocation of resources. See case-by-case g., Calabresi, only upon Accidents, basis. e. a The Cost of (1970) (hereinafter Calabresi); 69-73 739-740, Cal.Rptr. at at Cal.2d Coase, Cost, The Problem of Social 3 J. 441 P.2d at 919-920. Law & Econ. 1 optimism, This it is true that the earlier deci- While theory, be would that which would be sion of the California by perfect system. achieved market “foreseeability Biakanja does not accord determining whether the cost of an commanding position of the risk” the injured accident should be borne Legg, Dillon v. which it was afforded in party shifted, part, be in whole or in escape we can not the conclusion approach requires this the court to fix presence under duty law the California identity party of can who avoid part on the of the defendants cheaply. fixed, the costs most Once this substantially this case would turn on liability. determination then controls being foreseeability. That crucial out, fixing however, It turns determinant, question must be asked identity cheapest best or reasonably cost- whether the defendants could might avoider is negligently more difficult than be have foreseen that conducted imagined. In order to drilling might facilitate this de- operations diminish suggests termination, Calabresi several aquatic injure life and thus business helpful guidelines. The first these of commercial fishermen. We believe rough require would signed dangers yes. calculation de- pol- the answer is potential to exclude as cost-avoid- lution were are known even groups/activities ers which could those school children. The defendants under- only extremely avoid accident costs at an stood the risks of their business and high expense. reasonably Calabresi at 140-43. should have foreseen the easy While apply scope responsibilities. concrete of its To assert sense, guideline suggest this does that the unable defendants were to fore- imposition spill directly the upon of oil resulting costs see that conduct in a groups such spill the consumers of substantial aquatic oil could diminish staple groceries is not a sensible solu- injure plain- life and thus guideline, tion. potential this suppose degree Under lia- tiffs is to bility ignorance resolved pollution becomes into a choice be- of oil effects tween, level, good ultimate an the consum- not in accord with sense. products ers of fish and those of derived An other examination factors operations. from the defendants’ total Biakanja only strengthens mentioned our conclusion that the defendants in goes choice, To refine this Calabresi plaintiffs. duty this case owed a Thus, guidelines provide on to additional the fact that the flows di- which, proven instance, have rectly escaping from the action of oil on helpful. sug- none example, too he sea, the life in the Askew v. American gests an evaluation of the administrative Waterways Inc., Operators, at party costs which be each forced public’s 5,n. deep to bear in order to avoid the accident disapproval injuries to the environ- costs. He also Calabresi 143-44. strong policy preventing ment attempt states that should made to injuries, point such all to existence of a impose avoid an allocation which will required duty. groups some costs on those or activities The same conclusion reached when nor neither consume fish utilize approached the issue before products us is from those derived defendants standpoint Recently of economics. operations from their Bar- plaintiff pecuniary at 144-50. On serted bara Channel. Calabresi is a way us, particular special nature, the record we have loss of a before evaluating the administrative limited relative class commercial fisher- recog- However, they represent. we do men costs involved. probable imposing nize that it liability course, must, This be estab- on the defendants some proceedings lished in the that will follow accident costs this case appeal. To do this it must be *12 by nor borne those who neither eat fish spill shown that the oil did in fact di- petroleum products use the derived from aquatic minish life, and that this dimi- operations the* Bar- defendants’ profits nution plaintiffs reduced the bara. would have realized from their commer- guideline, however, fishing spill. Calabresi’s final cial in the absence of the unmistakably points to the profits defendants This reduction of must be estab- guide- certainty the best cost-avoider. Under lished with and must not be line, speculative that remote, conjectural. the loss should be allocated to See party McCormick, error in Damages, who can best correct (1935). 97-101 be, allocation, by acquiring if such there burdens, These are not small nor can activity party by to which the has been be eased our abhorrence of mas- spills. made liable. Calabresi at 150-52. sive oil All that we do here tois buy capacity plaintiffs permit if plaintiffs “to out” the attempt prove great is, essence, the burden is too case, reject their urged and to the idea approach. upon real focus of Calabresi’s byus the defendants that a barrier On this basis there no contest—the to such an exists in effort the form of negligent capacity superior. the rule that defendants’ interference with advantage an economic is not actionable. holding Our the defendants are duty under a Finally, commercial fisherman to it must be understood that drilling production conduct holding their our open in this does not reasonably prudent manner so as to may the door to claims that be asserted negligent aquat by avoid the those, diminution of other than commercial fisher- by life men-, ic is not foreclosed fact personal whose economic or affairs negligence the defendants’ consti by could were January spill discommoded the oil public tute a nuisance under California general 28, 1969. The rule Contrary urged law. to the situation that ex legit- us defendants has a Oppen isted in v. Aetna Insurance Com sphere operate. imate Nothing within which to pany, supra, in which we held that an opinion said in this intended right public’s interference with the suggest, example, every de- navigation navigable in the waters activity cline in the commercial private did every California not vest a cause business the Santa Barbara of action following those who lost the use of area the occurrences of 1969 private pleasure craft, their in the case legally cognizable injury constitutes a plaintiffs now before us the injury assert an respon- for which the defendants enterprises, their commercial plaintiffs present sible. The ac- Sunday pisca not to their “occasional lawfully directly tion make use pleasure.” right torial Id. at 260. The sea, fish, resource of the viz. its of commercial fishermen to recover for ordinary course of their This business. injuries to their businesses caused type protection of use is entitled to pollution public rec waters has been conduct defendants ognized on drilling numerous occasions. operations. their Both the supra; Corporation Steede, Masonite plaintiffs defendants conduct Hampton Pulp Company, operations North Carolina away business from land and upra; Prosser, in, Private Action for on and under the sea. Both must s Nuisance, Public carry enterprises 52 Va.L.Rev. their commercial reasonably 1013-16 here as- prudent manner. Neither negligently permitted to inflict should be on the other. We

commercial this.

cide no more than

Affirmed. Judge (concurring):

ELY, Circuit Since, how- in the result. I concur par-

ever, filed the written briefs admiralty no discussion ties contain law, parties be- all I conclude that that, stipulation, thé under their

lieved by appli- controversy resolvgd relating law of California’s cation myself therefore disassociate torts. I my Sneed’s Brother from opinion *13 of ad- with the law

which deals

miralty. as con- comments I those view

stituting to our dis- unnecessary dictum appeal.

position of the Petitioner, SOKOLOFF, F.

Martin Attorney SAXBE,

William General Jr., Bartels, United States and John R. Administrator, Drug Ad- Enforcement Department of Jus- ministration tice, Respondents.

No. Docket 74-1313. Appeals,

United States

Second Circuit.

Argued June July 25,

Decided