Ballard Shipping Co. v. Beach Shellfish

Citation32 F.3d 623
Decision Date03 May 1994
Docket NumberNo. 94-1059,94-1059
Parties, 1994 A.M.C. 2705, 63 USLW 2124, 25 Envtl. L. Rep. 20,140 In re BALLARD SHIPPING COMPANY, etc., Plaintiff, Appellee, v. BEACH SHELLFISH, et al., Claimants, Appellants. . Heard
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

Thomas M. Bond with whom David B. Kaplan and The Kaplan/Bond Group, Boston, MA, were on brief, for appellants.

John J. Finn with whom Thomas H. Walsh, Jr., Marianne Meacham and Bingham, Dana & Gould, Boston, MA, were on brief, for appellee.

Before SELYA, Circuit Judge, BOWNES, Senior Circuit Judge, and BOUDIN, Circuit Judge.

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 case 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 shellfishing 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. Sec. 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. Sec. 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 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. III, Sec. 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 Robins.

Several courts have recognized exceptions to Robins, but none of the familiar examples apply in this case. 1 The district court so held, and the dealers do not challenge that conclusion on appeal. Accordingly, we agree that plaintiffs' federal claims for purely economic losses under the general maritime law are barred. The appeal thus turns upon the extent to which Robins bars the states from permitting a different result under state law pursuant to the exercise of the state's police powers.

Although the Judiciary Act of 1789 vested "exclusive original cognizance of all civil causes of admiralty and maritime jurisdiction" in the federal courts, the act added a provision "saving to suitors, in all cases, the right of a common law remedy, where the common law is competent to give it." 1 Stat. 76-77. The modern version of the statute saves "all other remedies to which [suitors] are otherwise entitled." 28 U.S.C. Sec. 1333. The upshot is that an injured party may have claims arising from a single accident both under federal maritime law and under state law, whether legislation or common law. See G. Gilmore & C. Black, Jr., The Law of Admiralty Sec. 1-13, at 37 (2d ed. 1975). State remedies under the savings to suitors clause may be pursued in state court or, where there is a basis for federal jurisdiction, in federal court.

Whether a state claim is litigated in a federal court or a state forum, "the extent to which state law may be used to remedy maritime injuries is constrained by a so-called 'reverse-Erie ' doctrine which requires that the substantive remedies afforded by the States conform to governing federal maritime standards." Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207, 223, 106 S.Ct. 2485, 2494, 91 L.Ed.2d 174 (1986) (citations omitted). How far this conformity requirement extends, and whether it preempts the dealers' state-law claims, are the central issues in this case.

On appeal, the dealers mainly stress their claims under Rhode Island's Compensation Act. The Compensation Act provides generally that owners or operators of seagoing vessels may be held liable for harms arising from negligence of the owner, operator or agents or from the violation of Rhode Island pilotage and water pollution laws. See R.I.Gen.Laws Secs. 46-12.3-2, 46-12.3-3. The statute also contains the following specific provisions regarding economic loss:

(a) A person shall be entitled to recover for economic loss ... if the person can demonstrate the loss of income or diminution of profit to a person or business as a result of damage to the natural resources of the state of Rhode Island caused by the violation of any provision [of the piloting or water pollution laws] by the owner or operator ... of the seagoing vessel and/or caused by the negligence of the...

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