In Re Ballard Shipping Company, Etc. v. Beach Shellfish

32 F.3d 623, 25 Envtl. L. Rep. (Envtl. Law Inst.) 20141, 1994 A.M.C. 2705, 39 ERC (BNA) 1115, 1994 U.S. App. LEXIS 22063, 1994 WL 424736
CourtCourt of Appeals for the First Circuit
DecidedAugust 18, 1994
Docket94-1059
StatusPublished
Cited by53 cases

This text of 32 F.3d 623 (In Re Ballard Shipping Company, Etc. v. Beach Shellfish) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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In Re Ballard Shipping Company, Etc. v. Beach Shellfish, 32 F.3d 623, 25 Envtl. L. Rep. (Envtl. Law Inst.) 20141, 1994 A.M.C. 2705, 39 ERC (BNA) 1115, 1994 U.S. App. LEXIS 22063, 1994 WL 424736 (1st Cir. 1994).

Opinion

BOUDIN, Circuit Judge.

This appeal presents the question whether federal maritime law preempts Rhode Island legislation affording expanded state-law remedies for oil pollution damage. In an able opinion, the district court held that the remedies were preempted. Discerning the law in this area is far from easy; one might tack a sailboat into a fog bank with more confidence. Yet guided in part by an important Supreme Court decision rendered after the district court's decision, we are constrained to reverse in part and to remand for further proceedings.

The basic facts of the ease are not in dispute. On June 23, 1989, the M/V World Prodigy, an oil tanker owned by Ballard Shipping Co., ran aground in Narragansett Bay, Rhode Island, spilling over 300,000 gallons of heating oil into the bay. The wreck occurred when the ship strayed from the designated shipping channel and collided with a rock near Brenton Reef, about a mile south of Newport at the mouth of the bay. The oil slick prompted the State of Rhode Island to close Narragansett Bay to all shell-fishing activities for a period of two weeks during and after cleanup operations.

State authorities charged the captain of the ship with entering the bay without a local pilot on board in violation of state law. Both the captain and Ballard also pleaded guilty to criminal violations of the Federal Water Pollution Control Act, see 33 U.S.C. § 1319(c). The captain and owner were fined a total of $30,500 and $500,000, respectively. In addition, Ballard agreed to pay $3.9 million in compensation for federal cleanup costs, $4.7 million for state cleanup costs and damage to natural resources, $500,000 of which was to be available to compensate individuals, and $550,000 to settle claims for lost wages by local shellfishermen.

A number of claimants filed suit against Ballard in Rhode Island. Ballard responded on December 22, 1989, by bringing a petition in admiralty for limitation or exoneration from liability. 46 App.U.S.C. § 185. “[T]he court of admiralty in [a limitation of liability] proceeding acquires the right to marshal all claims, whether of strictly admiralty origin or not, and to give effect to them by the apportionment of the res and by judgment in 'personam against the owner, so far as the court may decree.” Just v. Chambers, 312 U.S. 383, 386, 61 S.Ct. 687, 690, 85 L.Ed. 903 (1941). In the present case, several claimants reasserted their claims in the admiralty action.

The claimants in the present appeal are a group of shellfish dealers who allege severe economic losses arising from the two-week hiatus in shellfishing activities, which suspended their operations during the busiest time of the shellfishing season. They alleged negligence under the general maritime law and the common law of Rhode Island, as well as a claim for economic losses pursuant to the Rhode Island Environmental Injury Compensation Act, R.I.Gen.Laws ch. 46-12.3 et seq. (“the Compensation Act”).

On June 17, 1992, Ballard moved to dismiss the shellfish dealers’ claims on the basis of the Supreme Court’s decision in Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 48 S.Ct. 134, 72 L.Ed. 290 (1927), which held that compensation for economic losses standing alone is unavailable in admiralty *625 cases. The district court granted the motion, holding that Robins preempted the contrary provisions of the state’s Compensation Act, which expressly provides for recovery of purely economic losses arising from an oil spill. In re Complaint of Ballard Shipping Co., 810 F.Supp. 359 (D.R.I.1993). The dealers now appeal from that dismissal.

We first address the federal claims brought under the general maritime law. The Constitution grants the federal courts authority to hear “all Cases of admiralty and maritime Jurisdiction.” U.S. Const. Art. Ill, § 2. The parties agree that the dealers’ federal claims fall within this group because the spill occurred on navigable waters and arose out of traditional maritime activity. See Executive Jet Aviation, Inc. v. City of Cleveland, 409 U.S. 249, 93 S.Ct. 493, 34 L.Ed.2d 454 (1972). Admiralty jurisdiction brings with it a body of federal jurisprudence, largely uncodified, known as maritime law. See East River S.S. Corp. v. Transamerica Delaval, 476 U.S. 858, 864, 106 S.Ct. 2295, 2298-99, 90 L.Ed.2d 865 (1986).

The dealers assert that their businesses were injured when the World Prodigy spill prevented local fishermen from harvesting shellfish in Narragansett Bay and thereby precluded the dealers from purchasing the shellfish and reselling them to restaurants and other buyers. The dealers’ maritime-law claims are thus purely for economic losses, unaccompanied by any physical injury to their property or person. Those federal claims, as the district court held, are squarely foreclosed by Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 48 S.Ct. 134, 72 L.Ed. 290 (1927).

In Robins, the charterer of a vessel sued a repair company that negligently damaged the vessel while it was in dry dock, alleging that the resulting delay caused the charterer to lose profits that it would have otherwise derived from the use of the ship. Justice Holmes wrote for the Court in holding that the suit could not be maintained:

[N]o authority need be cited to show that, as a general rule, at least, a tort to the person or property of one man does not make the tort-feasor liable to another merely because the injured person was under a contract with that other unknown to the doer of the wrong.... The law does not spread its protection so far.

275 U.S. at 309, 48 S.Ct. at 135.

Justice Holmes’s pronouncement could have been read merely as negating a claim of negligent interference with contract. See Getty Refining and Marketing Co. v. MT FADI B, 766 F.2d 829, 831-32 (3d Cir.1985). Instead, Robins has generally been taken to establish the broader rule that purely economic losses arising from a tort, but unaccompanied by physical injury to anything in which the plaintiff has a proprietary interest, are not compensable under federal maritime law. See, e.g., State of Louisiana ex rel. Guste v. M/V Testbank, 752 F.2d 1019, 1022 (5th Cir.1985) (en banc), cert. denied, 477 U.S. 903, 106 S.Ct. 3271, 91 L.Ed.2d 562 (1986). Our circuit adopted this broader reading in Barber Lines A/S v. M/V Donau Maru, 764 F.2d 50, 51-52 (1st Cir.1985), and, in any event, the secondary nature of the economic injury here — which is akin to interference with contract — would likely bring this case within even a narrow reading of

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32 F.3d 623, 25 Envtl. L. Rep. (Envtl. Law Inst.) 20141, 1994 A.M.C. 2705, 39 ERC (BNA) 1115, 1994 U.S. App. LEXIS 22063, 1994 WL 424736, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-ballard-shipping-company-etc-v-beach-shellfish-ca1-1994.