Little Fish, Big Pond: Limitations on Defendant’s Duty to Third Parties

Louisiana crawfish are farmed in rice ponds and, beginning in 1999-2000, farm raised crawfish crop allegedly suffered a dramatic decline caused by the pesticide ICON. The pesticide, manufactured and sold by Bayer CropScience L.P., coated the rice seed used in the rice ponds. The plaintiffs resell the crawfish or process them for tail meat and claimed that they suffered economic loss when ICON rice drastically reduced the number of crawfish they could buy and process.

As crawfish buyers and processors, the plaintiffs asserted that they played “an essential and necessary role in the creation, preservation and perpetuation” of the Louisiana crawfish industry. In fact, they supported this contention with evidence indicating that, among other things, they create a market for all “peeler” crawfish, sell bait to crawfish farmers and provide loans to crawfish farmers. Plaintiffs filed suit in federal court and, on appeal, the Court analyzed whether a third party could recover for their economic losses.

The “economic-loss rule” bars recovery in tort when a party suffers economic loss unaccompanied by harm to his own person or property in most jurisdictions. However, Louisiana courts have adopted a modified version of the “economic-loss” rule. Louisiana courts adhere to the traditional rule but use policy considerations to determine the reach of the rule. The courts consider if there is an “ease of association” between the “rule of conduct, the risk of injury and the loss sought to be recovered.” This inquiry is done on a case-by-case basis. Additionally, in such negligence cases, the court applies a duty-risk analysis in determining whether or not to impose liability. In order to prevail under the duty-risk analysis, the plaintiff must show that (1) the defendant had a responsibility to conform his conduct to a specific standard, (2) the defendant failed to adhere to that standard, (3) the defendant’s conduct actually caused the plaintiff’s injuries, (4) the defendant’s conduct was the legal cause of the plaintiff’s injuries and (5) actual damages.

In the case at hand, the Court held that the ease of association between the damaged crawfish and the plaintiff’s economic loss was too attenuated since the plaintiffs did not possess an enforceable right to the crawfish. Also, the Court disagreed with the plaintiff’s assertion that they were entitled to recover because of the symbiotic relationship between the Buyers/Processor and the crawfish farmers since the analysis is not based solely on foreseeability. Finally, despite the fact that the defendant’s negligence cause severely affected crawfish farmers in the industry, a plaintiff’s right to recovery is not related to the economic harm caused by the defendant’s conduct.

This case highlights the complex analysis Louisiana courts apply in third party recovery claims. It requires balancing the need to impose responsibility on the tortfeasor for damages for an indeterminate time to an indeterminate class and the need to limit such liability. Thus, any individual or company involved in this type of litigation should consult seasoned attorneys, such as those at the Berniard Law Firm to assist with claims and help minimize liability or maximize the amount of damages.