Maritime and Industry Injury Cases Quite Complex

The Town of Vidalia and the Parish of Concordia have the honor and distinction of being the beneficiary and location, respectively, of the largest prefabricated power plant in the world and the first hydroelectric power plant in the State of Louisiana. In 1990 the Sidney A. Murray Jr. hydroelectric station was prefabricated at the Avondale Shipyard in New Orleans, and floated 208 miles upriver to its current location: 40 miles south of Vidalia. The facility sits one mile north of the Army Corp of Engineers Old River Control Complex between the Mississippi River and the Red Atchafalaya River, producing 192 megawatts by utilizing the flow of 170,000 cubic feet per second of water past eight hydroelectric turbines. The project is remarkable not just because it is the first hydroelectric plant in Louisiana, and the largest prefabricated hydroelectric plant on the planet; but it is also the product of a multinational collaboration, it produces clean and renewable energy for Vidalia, and the town of Vidalia is a co-licensee of the project. In addition to the obvious benefits of clean and renewable energy and the employment that the Sidney A Murray Jr. project bestows on Vidalia and the Parish of Concordia; the citizens of Vidalia also benefit from “stabilized energy rates” that they receive with the operation of the plant.

Catalyst Old River Hydroelectric Limited Partnership v. Ingram Barge Co.; American River Transportation Co. is a particularly interesting case for those living in Concordia Parish because it is a maritime tort case involving the Sidney A. Murray Hydroelectric Plant. The case is important because it includes a review of the standards for damage requirements established in Robins Drydock and Repair Co. v. Flint 275 U.S. 303 (1927) and reaffirmed in Louisiana ex. rel. Guste v. M/V TESTBANK 752 F.2d 1019 (5th Cir. 1985). After reviewing Robins and TESTBANK, the 5th Circuit then applies the Robins test to the particular facts of the case. This will be a two part discussion: the first part will identify and discuss the test developed in Robins and evaluated in TESTBANK. The second part will discuss how the 5th Circuit applied the Robins test to the facts of the Catalyst case.

In 1927 the United States Supreme Court decided Robins Dry Dock and Repair Co. v. Flint. This case established “the general proposition that claims for pure economic loss are not recoverable in tort.” This decision has profoundly impacted not just maritime tort law, but general negligence law as well; with extremely broad implications and applications that resound to this day, over 80 years later. ” No single decision in American tort law has more dominated the analysis of liability for pure economic loss than Robins Dry Dock Repair Co. v. Flint.” Justice Holmes “denied the plaintiff, a time charterer recovery for financial loss which resulted from the defendant’s interference with the plaintiff’s use of the chartered vessel.” The following hints at the scope of the effects of the decision.

“As many have noted, this denial of liability went sharply against the current of the overwhelming tendency of modern negligence law ‘that pushed liability for physical injuries toward the full extent of what was foreseeable and shattered ancient barriers to recovery based on limitations associated with privity of contract and similar restrictive concepts’. Yet in the face of modern negligence law and notwithstanding that Robins was a case of admiralty, the decision remains, overwhelmingly, the majority view and represents the longest standing and most influential statement in American tort law of what has come to be called ‘the economic loss rule’”.

In the present case, the 5th Circuit articulates the Robins rule in the following: “It is well settled under the general maritime law that there can be no recovery for economic loss absent physical damage to or an invasion of a proprietary interest.”

To resolve the issue in Catalyst, the 5th Circuit has to apply the Robins rule to the facts of the case. An analysis of the application of this rule to the facts will be discussed later. However, the Court very succinctly makes the relevance of Robins to Catalyst clear in the following statement in, and about, Catalyst:

“the question in this case is whether Catalyst suffered such damage to its proprietary interest in its hydroelectric station as to satisfy this test and justify the recovery of the economic damages Catalyst seeks in this court.”

As the above quotation about Robins makes clear, the Robins decision “remains, overwhelmingly, the majority view” that has existed since 1927. Curiously and serendipitously, the same court deciding Catalyst, the 5th Circuit of Louisiana, “engaged in an extensive debate over the continued vitality of Robins and concluded (despite five dissenters) that it remained good law.” In the State of Louisiana ex. rel. Guste v. M/V TESTBANK (1985) two ships collided on the Mississippi River, resulting in a toxic chemical release and the closure of an outlet on the Mississippi River for approximately 19 days. A variety of entities were adversely affected by this closure which compelled those adversely affected to file numerous lawsuits. These lawsuits were “consolidated before the same judge in the Eastern District of Louisiana”. The defendants were granted summary judgment “on all claims for economic loss unaccompanied by physical damage to property.” On appeal an en banc panel of the 5th Circuit affirmed the decision.

In TESTBANK, the 5th Circuit reaffirmed Robins; articulating specifically that “physical damage to a proprietary interest is a prerequisite to recovery for economic loss in cases of unintentional maritime tort.” The 5th Circuit described the rule in Robins as a pragmatic rule that prevents “open ended liability” in cases where “a plaintiff has no proprietary interest in property that is physically damaged.” The court recognized the Robins rule as effective in helping the trier of fact to avoid arbitrary judgments by having a “bright line rule” that places a “determinable measure on the limit of foreseeability” and that “allows for extensive losses….to be spread over first party or loss insurance.” The court emphasized the pragmatic effects and benefits of the Robins rule in TESTBANK.

In Catalyst the 5th Circuit revisited both the Robins decision (by applying the rule) and its own decision in TESTBANK (the reaffirmation of the Robins rule). The Court relied upon Robins and TESTBANK as precedents for Catalyst, creating consequences for the Parish of Concordia and the town of Vidalia. In Catalyst, the 5th Circuit cites Kaiser Aluminum and Chemical Corp. v Marshland Dredging Co,. 455 F.2d 957 (1972), Dick Meyers Towing Service, Inc. v. United States, 577 F. 2d 1023 (1978), and Louisville & Nashville Railroad Co. v. M/V BAYOU LACOMBE, 597 F. 2d 469 (1979) as examples of the “consistent application of the rule stated by the majority in TESTBANK ‘that there can be no recovery of economic loss absent physical injury to a proprietary interest.’ ”
A significant dimension of Catalyst is the review of Robins and TESTBANK standards for recovery. Considering the influence of Robins and the fact that this rule was perpetuated and reemphasized in TESTBANK, the combination of these cases provide powerful precedents that will demonstrate their influence in Catalyst. The application of these precedents to the facts of Catalyst will be very interesting and compelling.