briefed and orally argued Yangming's motion.
In addition to their legal arguments, the parties have devoted substantial energy and paper to characterizing the web of business relationships surrounding Pier 7. On this motion for summary judgment, of course, I must resolve all factual disputes in Holt Marine's favor. Fed. R. Civ. P. 56(c); Gans v. Mundy, 762 F.2d 338, 340 (3d Cir. 1985). Bearing this standard in mind, I consider below the nature of Holt Marine's relationship to Pier 7 and the significance of that relationship under Robins Dry Dock.
Both Yangming and Holt Marine presume that Robins Dry Dock bars Holt Marine from recovering on its counterclaim unless Holt Marine had a proprietary interest in Pier 7 at the time of the accident. Consequently, both parties treat the nature of Holt Marine's interest in the pier as the primary issue for purposes of deciding Yangming's motion.
Pier 7's owner was, at all relevant times, Holt Hauling and Warehousing Systems. In July 1976, Holt Hauling leased Pier 7 to Pierpoint Management Corporation. The lease agreement (which is attached as Exhibit A to Holt Marine's answer to Yangming's motion for summary judgment) is triangular: it involves Holt Hauling as landlord, Pierpoint as tenant, and Retla Steamship Company as the chief supplier of shipping business to the pier. (In response to questions from the bench at oral argument, the parties stated that Retla is Pierpoint's corporate parent.) Pierpoint was to operate and maintain the pier, pay utilities, and indemnify Holt Hauling for any liabilities incurred because of Pierpoint's activities. Rent was to be paid according to the tonnage of Retla cargo unloaded at the pier: base rental was $300,000 per year (based on $2 per short ton on the first 150,000 tons of steel and wood products to be unloaded), plus $1 for every short ton over 150,000 which might be unloaded.
Shortly after Pierpoint leased the pier from Holt Hauling, Pierpoint and Holt Marine entered into an informal agreement permitting Holt Marine to use Pier 7 under certain conditions. Under this agreement, Holt Marine was permitted to use Pier 7 to unload cargo from vessels which it had chartered or which it had otherwise induced to unload cargo at Pier 7, to the extent that such use did not interfere with Pierpoint's use of the pier.
Holt Marine was not, during the period covered by this agreement, the only stevedore working at Pier 7. Pierpoint employed Cooper Stevedoring to unload Retla vessels; in addition, Cooper was free to bring in other vessels for unloading as long as it did not interfere with Retla business.
In May 1977, Pierpoint made Holt Marine "our exclusive sub-contractor of certain terminal services contemplated at Pier 7."
Holt Marine was henceforth to "perform all customary terminal services" as to both Retla vessels and Holt-induced vessels.
Under this revised arrangement, Holt Marine was free to arrange to berth vessels as long as its berthing arrangements were consistent with the needs of Retla vessels. In order to implement this limitation, Holt Marine was kept apprised of when Retla vessels would be docking at Pier 7.
Holt Marine was not required to give Pierpoint advance notice of its plans to berth non-Retla vessels, but did so "as a courtesy."
In return for this largely unrestricted use of Pier 7, Holt Marine agreed to pay Pierpoint according to the volume of cargo unloaded at the pier. No base rental was charged; payment was strictly according to business volume.
In addition to its payment obligations, Holt Marine agreed to assume (1) Pierpoint's routine maintenance obligations under Pierpoint's lease agreement with Holt Hauling, and (2) Pierpoint's liability insurance obligations under that lease agreement. Finally, Holt Marine was obliged to pay the cost of any utilities it required to perform its stevedoring services.
The accident which gave rise to this lawsuit occurred while the Ming Joy, a Retla vessel, was being off-loaded at Pier 7. Holt Marine performed stevedoring services for the Ming Joy, as it apparently did for all other Retla vessels using Pier 7.
Both Yangming and Holt Marine assume that Robins Dry Dock bars recovery for negligently inflicted harm to a non-proprietary interest. For the reasons that follow, I find this a correct statement of the rule which Robins Dry Dock lays down. The parties further presume that, in order to apply that test to this case, I must look to the state law of New Jersey to determine whether Holt Marine had a "property" interest in Pier 7. This is incorrect. Robins Dry Dock and the cases which follow it establish a federal common law limitation on maritime tort recovery. The scope of that limitation turns not on the fine points of state property law but on the judicial economy concerns which spawned the limitation and which give it content. In order better to explain how those concerns apply in this case, I begin by briefly discussing Robins Dry Dock and the broader doctrine which it created. Then, I turn to the nature of the interests to which Robins Dry Dock applies, in light of the purposes which its doctrine serves. Finally, I return to the particular circumstances of this case, which present, in my view, a difficult problem in the application of Robins Dry Dock's sensible but sometimes confining limitation.
In Robins Dry Dock, the time charterers of a vessel
sued the defendant dry dock for lost profits occasioned by the defendant's alleged negligence in repairing a damaged ship's propeller. At the time of the damage, the vessel was up for regular repairs for which the vessel's owner had contracted with the dry dock. The damage to the propeller required the ship to remain in dry dock an extra two weeks. The time charterers sought to recover for loss of use of the vessel during this two-week period.
The Supreme Court found that the time charterers had no claim for relief against the dry dock:
The contract of the petitioner [dry dock] with the owners [of the vessel] imposed no immediate obligation upon the petitioner to third persons . . ., and whether the petitioner performed it promptly or with negligent delay was the business of the owners and of nobody else. But as there was a tortious damage to a chattel it is sought to connect the claim of the [respondent time charterers] with that in some way. The damage was material to them only as it caused the delay in making the repairs, and that delay would be a wrong to no one except for the petitioner's contract with the owners. The injury to the propeller was no wrong to the respondents but only to those to whom it belonged. But suppose that the respondent's loss flowed directly from that source. Their loss arose only through their contract with the owners -- and while intentionally to bring about a breach of contract may give rise to a cause of action, . . . no 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.
275 U.S. at 308-09. The Court noted that the time charterers had no property interest in the vessel, and that, unlike a demise charterer, the time charterers did not even have "possession" of the vessel. Id. at 308. Consequently, the Court held, if the claimants had a legally protected interest in the nonnegligent repair of the vessel's propeller, "it must be worked out through their contract relations with the owners." Id.
The Court's holding in Robins Dry Dock was potentially quite narrow. The opinion repeatedly notes that the time charter was "unknown" to the assertedly negligent dry dock, id., and on its facts it does not appear automatically to insulate all economic expectancies from the protection of maritime tort law.
A closer analysis of Justice Holmes' opinion, however, leads to the conclusion that the case casts a longer shadow.
Holmes cited three cases as providing "a good statement" of the applicable principle. Id. at 309 (citing Elliott Steam Tug Co., Ltd. v. The Shipping Controller,  1 K.B. 127, 139, 140; Byrd v. English, 117 Ga. 191, 43 S.E. 419 (1903); The Federal No. 2, 21 F.2d 313 (2d Cir. 1927)). The first of these cases, Elliott Steam Tug, stated that at common law the time charterer could not recover even direct injuries to "his mere contractual rights" in the chartered vessel. 1 K.B. at 140 (quoted in Louisiana ex rel. Guste v. M/V Testbank, 752 F.2d 1019, 1022 (5th Cir. 1985) (en banc)). Byrd v. English denied recovery to a printing plant which had temporarily lost electrical power due to the defendant's negligent damaging of a utility's electrical equipment. Finally, in The Federal No. 2, the court denied recovery to the employer of a person injured by defendant for the loss occasioned by the employee's injury, on the ground that such a claim was simply "too indirect." 21 F.2d at 314.
As the majority of the Fifth Circuit sitting en banc has recently concluded, it is inconsistent with the cases on which Holmes relied to conclude that Robins Dry Dock states a narrow, fact-specific principle. See Testbank, supra, 752 F.2d at 1023-24. Those cases fairly support the proposition that negligently inflicted injuries to purely economic interests are simply not compensable, even though directly and foreseeably caused by the defendant's negligence. However tenuous or unforeseeable the connection between the damaged propeller in Robins Dry Dock and the time charterers' lost profits, the link between the defendant's negligence and the claimant's loss in a case such as Byrd v. English is direct and foreseeable. If one who negligently damages power lines cannot be held liable for the obvious consequences of such damage to the homes and businesses affected, it must be because the claimants' economic interests are of a kind that does not receive the protection of tort law against accidental harms. It follows that Robins Dry Dock ought sensibly to be read to establish an exception to maritime tort liability for negligently caused harm to such interests. Testbank, supra, 752 F.2d at 1024-25.
Although Robins Dry Dock was greeted somewhat critically, see Carpenter, Interference with Contract Relations, 41 Harv. L. Rev. 728, 738-42 (1928), it has proved surprisingly resilient. Two courts of appeal have confirmed its vitality only this year. Barber Lines A/S v. M/V Donau Maru, 764 F.2d 50 (1st Cir. 1985); Testbank, supra. It has also found recent application in this district. Getty Refining and Marketing Co. v. M/T Fadi B, 595 F. Supp. 452 (E.D. Pa. 1984) (Van Artsdalen, J.). And some current academic comment reflects awareness that valid reasons can be advanced for a Robins-style limitation on tort recovery for harm to non-proprietary interests. See, e.g., Rizzo, A Theory of Economic Loss in the Law of Torts, 11 J. Legal Studies 281 (1982); Note, Negligent Interference With Contract: Knowledge as a Standard for Recovery, 63 Va. L. Rev. 813 (1977). But see James, Limitations on Liability for Economic Loss Caused by Negligence: A Pragmatic Appraisal, 25 Vand. L. Rev. 43 (1972) (criticizing Robins Dry Dock rule as resting on pragmatic concerns that have been cast aside in other areas of tort law). Those judges and scholars who have most recently examined the issue have recognized the need to apply some such limitation in order to protect scarce judicial resources. Many accidents produce economic ripples which affect a theoretically infinite number of parties, each of whom may have to alter his behavior to his detriment because of the negligence of the party who brought about the initial injury. Each of these injured parties suffers a real loss for which tort law ought, in a perfectly just world, to provide redress. Yet compensating everyone who suffers some economic disadvantage from an accident would require both a staggering commitment of judicial resources -- as courts struggle to determine the connection between the accident and each claimant's monetary loss -- and a consequent risk of increasingly arbitrary, ad hoc decisionmaking at the margins. The Fifth Circuit's discussion in Testbank is instructive:
The vessel delayed in St. Louis may be unable to fulfill its obligation to haul from Memphis, to the injury of the shipper, to the injury of the buyers, to the injury of their customers. Plaintiffs concede, as do all who attack the requirement of physical damage, that a line would need to be drawn -- somewhere on the other side, each plaintiff would say in turn, of its recovery. Plaintiffs advocate not only that the lines be drawn elsewhere but also that they be drawn on an ad hoc and discrete basis. The result would be that no determinable measure of the limit of foreseeability would precede the decision on liability. We are told that when the claim is too remote, or too tenuous, recovery will be denied. Presumably then, as among all plaintiffs suffering foreseeable economic loss, recovery will turn on a [judge's] or jury's decision. There will be no rationale for the differing results save the "judgment" of the trier of fact. Concededly, it can "decide" all the claims presented, and with comparative if not absolute ease. The point is not that such a process cannot be administered but rather that its judgments would be much less the products of a determinable rule of law.
752 F.2d at 1028. Such unpredictability is of course most costly to the parties most often affected by the Robins Dry Dock rule -- businesses which must plan and insure against contingent liabilities. The "victims" of Robins Dry Dock's limitation on recovery may thus be its real beneficiaries, for they exchange an especially dicey tort compensation system for the greater certainty of first-party insurance and/or contractual indemnification. See Barber Lines v. M/V Donau Maru, supra, slip op. at 12-14; Rizzo, supra, 11 J. Legal Studies at 391-97.
For these reasons, Robins Dry Dock's prudent limitation on tort recovery remains good law almost six decades after Justice Holmes rendered his decision.
See, e.g., Barber Lines, supra; Testbank, supra; Kingston Shipping Co. v. Roberts, 667 F.2d 34 (11th Cir. 1982); Getty Refining & Marketing Co. v. M/T Fadi B., supra; In re Williamson Leasing Co., 577 F. Supp. 890 (E.D. Mo. 1984); General Foods Corp. v. United States, 448 F. Supp. 111 (D. Md. 1978). I turn now to a consideration of the nature of the interest which Robins Dry Dock exempts from the protection of maritime tort law.
The standard formulation of the Robins Dry Dock rule is that "physical damage to a proprietary interest [is] a prerequisite to recovery for economic loss in cases of unintentional maritime tort." Testbank, supra, 752 F.2d at 1020. See also Barber Lines, supra, at 51 (plaintiffs cannot recover damages for "negligently caused financial harm, even when foreseeable, except in special circumstances"; the "most common such special circumstance" is "physical injury to the plaintiffs or to their property"). Cf. Venore Transportation Co. v. M/V Struma, 583 F.2d 708, 710 (4th Cir. 1978) (Robins Dry Dock embodies "the principle that one who unintentionally but negligently damages the property of another is not liable to others who may suffer economic loss because the owner is unable to perform contractual commitments to those others").
The issue in this case is whether Holt Marine had a "proprietary interest" in Pier 7 at the time of the accident.
Robins Dry Dock has been most commonly applied where a facility used for commerce or transportation has been negligently damaged, thereby harming all those who would have used the facility during the time it undergoes repair. See, e.g., Barber Lines, supra (Robins Dry Dock bars claim by vessel delayed in using Boston Harbor due to defendant vessel's oil spill); Testbank, supra (businesses which had suffered economic losses due to the negligent contamination of the Mississippi River had no claim against those who caused the contamination); Hercules Carriers, Inc. v. Florida, 720 F.2d 1201 (11th Cir. 1983) (per curiam) (Robins Dry Dock bars claim by vessels delayed in proceeding into Tampa Bay against vessel which hit a bridge and thereby blocked the entrance to the bay); Dick Meyers Towing Serv. v. United States, 577 F.2d 1023 (5th Cir. 1978) (per curiam) (tugboat operator cannot recover against United States for negligent construction of canal lock whose failure forced curtailment of tugboat's business operations); Louisville & Nashville R.R. v. M/V Bayou Lacombe, 597 F.2d 469 (5th Cir. 1979); (Robins Dry Dock bars claim by railroad for loss of use of bridge struck by defendant vessel, even though railroad had contractual right to use bridge along with bridge's owner); Getty Refining & Marketing Co. v. M/T Fadi B., 595 F. Supp. 452 (E.D. Pa. 1984) (operator of marine terminal cannot recover for loss of use of terminal against ship whose negligent inspection of its hull caused delays in unloading cargo at terminal); General Foods Corp v. United States, 448 F. Supp. 111 (D. Md. 1978) (Robins Dry Dock bars claim for added cost of transporting goods due to incapacitation of railroad bridge resulting from vessel's collision with bridge). See also In re Williamson Leasing Co., 577 F. Supp. 890 (E.D. Mo. 1984) (Robins Dry Dock bars claims of railroad employees for lost wages against vessel which collided with railroad bridge and caused a ninety-one-day shutdown in the railroad); Complaint of Great Lakes Towing Co., 395 F. Supp. 810 (N.D. Ohio 1974) (Robins Dry Dock bars action by dockworkers for wages lost when dock was negligently damaged); Henderson v. Arundel Corp., 262 F. Supp. 152 (D. Md. 1966), aff'd, 384 F.2d 998 (4th Cir. 1967) (Robins Dry Dock bars claims by seamen for wages lost when ship was negligently damaged); Casado v. Schooner Pilgrim, Inc., 171 F. Supp. 78 (D. Mass 1959) (same). Adjudicating the economic loss claims in these cases would require expensive and duplicative litigation after every collision involving a frequently used facility. Robins Dry Dock's application serves to limit the pool of potential plaintiffs to those with the strongest interests in the thing damaged. Parties wishing to use a bridge or harbor are free to contract with the owners of these facilities for indemnity, or to otherwise insure against the risk that the facility will be unavailable.
It would serve no purpose to limit recovery to those who, under state property law, "owned" the facility in question. Owners (as in this case) may be absentees, having little to do with the day-to-day management of their property. Consequently, some other party, having a stronger possessory interest and more closely involved in ordinary management and maintenance of the property, may be better able to protect the property by promptly discovering damage, identifying those responsible, and bringing suit against them.
Cf. J. Ray McDermott & Co. v. The SS Egero, 453 F.2d 1202 (5th Cir. 1972). The cases have responded to this concern by taking a practical approach to the question whether a particular plaintiff's interest is one which falls outside Robins Dry Dock's proscription, looking not to formalistic doctrines of property law but to whether the particular plaintiff had possession and control of the damaged property.
A trio of Fifth Circuit decisions illustrates the point. In Louisville & Nashville R.R. v. M/V Bayou Lacombe, 597 F.2d 469 (5th Cir. 1979), the court found that the plaintiff railroad could not recover for loss of use of a bridge which the defendant vessel had struck. The railroad invoked a long-standing contractual right to use the bridge, and argued that that right constituted an easement. Since an easement was a "proprietary" interest, the argument went, Robins Dry Dock did not apply to bar the railroad's claim. 597 F.2d at 471-72. Judge Wisdom, writing for a unanimous panel, concluded that, under Alabama law, the interest which plaintiff held was not, in fact, an easement, but was wholly contractual. Id. at 473. He went on to state that "even if the Alabama courts would classify the plaintiff's rights in the bridge as a form of property interest created by virtue of its contract with the owner, that interest would form too slender a reed upon which to base a right of recovery despite Robins." Id. The critical point, according to the court, was that plaintiff's interest did not include possession or control of the bridge:
It is clear that the plaintiff's right to use the bridge has none of the incidents of ownership . . . that would justify recovery for damage to physical property . . . . Louisville & Nashville never had possession or control of Southern's property . . . . The bridge is maintained entirely by Southern's employees; Louisville & Nashville has no obligation to repair the bridge or contribute to the cost of repairs in the event of damage by a third party.