Port Authority of NY & NJ v. Arcadian Corp.
| Decision Date | 18 August 1999 |
| Docket Number | No. 98-5045,98-5045 |
| Citation | 189 F.3d 305 |
| Parties | (3rd Cir. 1999) PORT AUTHORITY OF NEW YORK AND NEW JERSEY, Appellant, v. ARCADIAN CORP; DYNO NOBEL INC, f/k/a, <A HREF="#fr1-*" name="fn1-*">* Ireco Incorporated; HYDRO AGRI NORTH AMERICA, INC |
| Court | U.S. Court of Appeals — Third Circuit |
On Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 96-cv-01635) District Judge: Honorable William G. Bassler
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William B. McGuire, Esquire (Argued), Marianne Espinosa Murphy, Esquire, George G. Campion, Esquire, Tompkins, McGuire & Wachenfeld, 100 Mulberry Street, Gateway Four, Newark, NJ 07102
Samuel J. Pace, Jr., Esquire (Argued), Leslie M. Cyr, Esquire, Dugan, Brinkmann, Maginnis & Pace, 1880 John F. Kennedy Boulevard, 14th Floor, Philadelphia, PA 19103, Attorneys for Appellant
Richard D. Shapiro, Esquire, Hellring, Lindeman, Goldstein & Siegal, One Gateway Center, 8th Floor, Newark, NJ 07102
Philip T. Bruns, Esquire, Jennifer Horan Greer, Esquire, Andrew L. Pickens, Esquire, Gibbs & Bruns, L.L.P., 1100 Louisiana, Suite 5300, Houston, TX 77002, Attorneys for Appellee Arcadian Corporation
Andrew T. Berry, Esquire, Kevin J. Connell, Esquire, McCarter & English, 100 Mulberry Street, Four Gatewary Center, Newark, NJ 07101-0652
John T. Montgomery, Esquire (Argued), Michael P. Allen, Esquire, Douglas Hallward-Driemeier, Esquire, Ropes & Gray, One International Place, Boston, MA 02110-2624, Attorneys for Appellee Hydro Agri North America, Inc.
Peter N. Perretti, Jr., Esquire, Glenn A. Clark, Esquire, Riker, Danzig, Scherer, Hyland & Perretti, One Speedwell Avenue, Morristown, NJ 07962-1981, Attorneys for Appellee Dyno Nobel Inc.
Before: ROTH and STAPLEON, Circuit Judges HOEVELER,1 District Judge
This case arises from the February 26, 1993, terrorist detonation of an explosive device under the World Trade Center in New York City, which caused six deaths, many injuries and massive property damage. Plaintiff-appellant, the Port Authority of New York and New Jersey, owner of the World Trade Center, sued defendants, manufacturers of fertilizer products, on theories of negligence and products liability, alleging that the terrorists used defendants' fertilizer products to construct the explosive device.
The District Court, in a thorough and well-reasoned opinion, granted defendants' motion to dismiss for failure to state a claim upon which relief may be granted under Fed. R. Civ. P. 12(b)(6). Plaintiff appealed. We find that it was appropriate, in light of the record, for the District Court to dismiss the action under Rule 12(b)(6). Specifically, we agree with the District Court that as a matter of law defendants owed no duty to plaintiff and that the World Trade Center bombing was not proximately caused by defendants' actions. Furthermore, we reject plaintiff's argument that the issues of duty and proximate causation were jury issues not properly decided by the court on a Rule 12(b)(6) motion. Accordingly, we will affirm the judgment of the District Court.
The Port Authority of New York and New Jersey is the owner of the World Trade Center in New York City. On February 26, 1993, a bomb, which had been fabricated by terrorists out of ammonium nitrate, urea, and nitric acid, exploded in an underground parking garage at the World Trade Center, causing six deaths, many injuries and massive property damage.
The ammonium nitrate, urea, and nitric acid used in the bomb were allegedly sold in New Jersey, and the bomb was allegedly assembled in New Jersey by New Jersey residents. Defendants Hydro-Agri North America, Inc., and Dyno Nobel Inc., formerly known as Ireco, Inc., are alleged to have manufactured, designed, marketed, distributed and/or sold the ammonium nitrate used by the terrorists. Defendant Arcadian Corporation is alleged to have manufactured, designed, marketed, distributed and/or sold the urea used by the terrorists.
The ammonium nitrate and urea, alleged to have been purchased by the terrorists, were sold in prill form, i.e., a white, round, hardened droplet about the size of the tip of a ball point pen. The prills were manufactured to be used as fertilizer. The ammonium nitrate prills can be rendered explosive by the addition of fuel oil or other sensitizing substances; the urea prills can be rendered explosive by the addition of nitric acid and water (forming urea nitrate). The terrorists are alleged to have rendered the prills explosive by adding these substances. Defendants point out that, as conceded in the Amended Complaint, the prills are not explosive in and of themselves.
Plaintiff alleges that defendants knew or should have known that the ammonium nitrate and urea could easily be made into explosives and that terrorists had used them prior to the bombing at the World Trade Center, but nevertheless defendants failed to take appropriate steps to render their products non-detonable. Specifically, plaintiff points to two incidents. First, an explosion of ammonium nitrate over fifty years ago destroyed two ships docked at Texas City, Texas, killing 468 persons and causing extensive damage in the city. Second, more than thirty years ago, anti-war protesters used ammonium nitrate to bomb the Mathematics Research Building at the University of Wisconsin, leading to injuries, death and property damage.
Plaintiff alleges that defendants had the means to reduce the danger of their products. In 1968, Samuel Porter patented a process that rendered ammonium nitrate fertilizers non-detonable. The process called for adding five to ten percent of diammonium phosphate, a high grade of fertilizer, to ammonium nitrate at a nominal additional cost. When the patent was made available to ammonium nitrate manufacturers, one of the explicit purposes was to deter the criminal use of ammonium nitrate in bombs. In 1985, the Porter patent entered the public domain, making the process available to all manufacturers free of license or royalty.
Plaintiff alleges that the danger of these products prompted governments here and abroad to attempt to regulate their manufacture and distribution. Specifically, in response to the University of Wisconsin bombing, several states introduced legislation to require that all ammonium fertilizers be desensitized by a chemical agent (as described in the Porter patent) to reduce, if not eliminate, the explosive properties of ammonium nitrate. The legislative efforts were allegedly well publicized, including within the fertilizer industry, but plaintiff asserts that various fertilizer manufacturers resisted the legislation, leading to its ultimate defeat.
In addition, in 1975, the European Economic Community Council issued a directive that established (1) strict standards for the formulation of solid ammonium nitrate and (2) detonation tests that could be required by member countries to ensure that fertilizer sold in those countries had a low potential for use as explosive. Belgium, Denmark, Germany and the Netherlands prohibited the sale of certain ammonium nitrate fertilizers. France mandated that all ammonium nitrate fertilizer be tested by detonation.
Three years prior to the EEC directive, terrorist bombings in Northern Ireland and the Republic of Ireland prompted the United Kingdom and Ireland to enact regulations that were even more stringent. Those regulations limited the amount of nitrate that could be used in fertilizer products and required the addition of calcium, sulfates, and other materials to reduce their detonability.
Information about urea and the means to desensitize it was allegedly similarly well known, yet not utilized, prior to the World Trade Center bombing. It was allegedly known that the addition of phosphate and other additives to urea prills would decrease or eliminate their use as explosive and energetic materials. Explosives made of urea nitrate were allegedly used in the Middle East, South America, Pakistan and the United States prior to the World Trade Center bombing. In 1992, the sales of urea and ammonium nitrate fertilizer were banned in Peru as a result of the extensive use of urea and ammonium nitrate prills in explosives set off by the Shining Path terrorists.
Plaintiff filed this action on February 26, 1996, in the Superior Court of New Jersey in Essex County. Defendants removed the actions to the United States District Court for the District of New Jersey on the grounds of diversity of citizenship. Plaintiff filed an Amended Complaint before defendants responded to the original Complaint, in order to correct the name of one of the defendants.
The Amended Complaint asserts three grounds for holding defendants liable. Count I, a claim of negligence, asserts that defendants "negligently failed to design, manufacture, market, distribute and/or sell [ammonium nitrate or urea prills] with a formulation" that would either "render them less detonable or non-detonable" or "decrease or eliminate their explosive properties." Count II, a claim in strict liability, asserts that defendants are liable because the ammonium nitrate and urea prills were "unreasonably dangerous and defective when they left the respective control of each of the Defendants." Count III asserts that defendants are liable because they "failed to provide guidelines, instructions, and/or warnings to their distributors, retailers, dealers or other suppliers to confirm that buyers in the general and unrestricted public market have legitimate and lawful purposes for use of Defendants' products."
Defendants filed a Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6). The District Court granted the motion and dismissed the Complaint with prejudice. See Port Authority of New York & New Jersey v. Arcadian Corp., 991 F. Supp. 390 (D.N.J. 1997). P...
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