Pruitt v. Allied Chemical Corp.
16 ERC 2014, 12 Envtl. L. Rep. (Envtl. Law Inst.) 20170, 523 F. Supp. 975 (1981)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Parties who suffer purely economic loss without direct physical harm to their property due to a defendant's negligence may recover damages if they have a direct dependence on the damaged resource or if they serve as a necessary surrogate for a class of directly harmed individuals who are unlikely to sue.
Facts:
- Allied Chemical Corporation allegedly discharged the chemical agent Kepone into the James River.
- The Kepone pollution subsequently spread into the Chesapeake Bay.
- The pollution contaminated the marine life within the Bay.
- Numerous plaintiffs, including commercial fishermen, seafood wholesalers, retailers, processors, distributors, restauranteurs, and owners of marinas, boat and tackle shops, relied on the Bay's marine life and aquatic activities for their livelihoods.
- These plaintiffs suffered economic harm, such as lost profits and wages, due to the seafood contamination and a decline in demand and activity related to the Bay.
Procedural Posture:
- A diverse group of plaintiffs, whose businesses are connected to the Chesapeake Bay, sued Allied Chemical Corporation in the United States District Court for the Eastern District of Virginia.
- The plaintiffs asserted claims based on negligence, products liability, nuisance, and admiralty law, among others.
- Defendant Allied Chemical Corporation filed a motion to dismiss nine counts of the complaint for failure to state a claim upon which relief can be granted as to all plaintiffs except those directly engaged in harvesting marine life (commercial fishermen).
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Under Virginia tort law, may businesses that suffer purely economic losses, but no physical damage to their own property, recover damages from a defendant who negligently polluted a public waterway on which their businesses depend?
Opinions:
Majority - Merhige, District Judge.
No, for plaintiffs in the commercial seafood distribution chain beyond the initial harvesters, but Yes, for plaintiffs whose businesses directly support the sportfishing industry. The court established that while the general rule bars recovery for purely indirect economic harm, exceptions are necessary to ensure a polluter does not escape liability for destroying a public resource. The court dismissed the claims of seafood wholesalers, retailers, distributors, processors, and restauranteurs, finding their damages insufficiently direct and to avoid double-counting the harm suffered by the fishermen. However, the court allowed the claims of marina, boat, and tackle shop owners to proceed. It reasoned that these businesses serve as effective 'surrogate plaintiffs' for the thousands of individual sportsfishermen whose individual claims would be too small or difficult to prove, thereby ensuring the polluter is held accountable for the damage to the sportfishing industry.
Analysis:
This decision is significant for creating a nuanced exception to the traditional economic loss rule, which generally bars recovery for purely financial losses not accompanied by physical injury to person or property. The court moved beyond a rigid application of the rule, employing a pragmatic, policy-driven analysis focused on social utility and preventing a tortfeasor from externalizing the costs of environmental damage. By introducing the concept of 'surrogate plaintiffs' for the sportfishing industry, the court established a new framework for evaluating economic loss claims in environmental tort cases, potentially influencing future courts to permit recovery for plaintiffs who can demonstrate a similarly direct and essential link to a damaged public resource.
Unlock the full brief for Pruitt v. Allied Chemical Corp.