East River Steamship Corporation v. Transamerica Delaval Inc.

PETITIONER: East River Steamship Corporation
RESPONDENT: Transamerica Delaval Inc.
LOCATION: Southhampton County Circuit Court

DOCKET NO.: 84-1726
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Third Circuit

CITATION: 476 US 858 (1986)
ARGUED: Jan 21, 1986
DECIDED: Jun 16, 1986

ADVOCATES:
Robert Frederick Smith - on behalf of the respondent
Robert Eugene Smith - on behalf of the respondent
Thomas E. Durkin, Jr. - on behalf of the petitioners

Facts of the case

Transamerica Delaval Inc. designed and manufactured propulsion systems for four supertankers. The propulsion systems eventually failed due to design and manufacturing flaws. Only the propulsion systems themselves were damaged - no other part of the ship was damaged, and no one was injured.

East River Steamship and the other companies that had purchased the supertankers sued Transamerica under the negligence and products-liability doctrines of tort law, a branch of law that deals with injuries not covered by contractual agreements. They sought compensation for the cost of repairing the ships as well as for the income they lost while the ships were out of service. The district court, however, granted summary judgment to Transamerica. It held that the injuries were not covered by tort law because only the propulsion systems themselves had been injured, and that the case therefore dealt with the product's warranty rather than tort law. The Third Circuit Court of Appeals heard the case en banc and affirmed the district court's decision.

Question

When a product fails as a result of design and manufacturing flaws, damaging only itself and causing only economic harm, can the owner of the product bring suit against the manufacturer under the negligence or products-liability doctrines of tort law?

Media for East River Steamship Corporation v. Transamerica Delaval Inc.

Audio Transcription for Oral Argument - January 21, 1986 in East River Steamship Corporation v. Transamerica Delaval Inc.

Warren E. Burger:

Mr. Durkin, I think you may proceed whenever you are ready.

Thomas E. Durkin, Jr.:

Mr. Chief Justice, may it please the Court:

All of the circuits that have addressed most of the questions that are here under consideration indicate agreement on certain aspects.

One, all circuits agree that admiralty law is applicable to this type of claim.

All of the circuits also indicate their full agreement that strict liability in torts is applicable in admiralty cases.

Four of the five responding circuits had enunciated a rule relative to the damages that are pleadable and collectible in a strict liability and tort claimed under admiralty.

One circuit assumes a different posture.

Before I address specifically the question involved, I would most respectfully invite the Court's attention to two or three, quote, "facts" as set forth in the opinion here under consideration and of the Third Circuit which do not seem to comport with the record upon which those particular findings were made.

And the most grievous, if I may refer to it as such, is the references in the opinion written by Judge Hunter that the one ship involved, the Bay Ridge, never left the dock.

Indulge me for a moment to succinctly outline the differing factors of the first of the three ships and the Bay Ridge.

The episode all started by the problem that was encountered by the Stuyvesant.

At the time the Stuyvesant encountered that particular problem, there was then under construction at a shipyard in Brooklyn the Bay Ridge.

The shipyard that constructed the four of these supertankers was the same.

The supplier of the turbines that were installed in these particular supertankers was also the same.

Now, at the time the Stuyvesant experienced its problem, there was a decision made... The basis for the decision I will review very shortly... that the circumstances required an exchange of the ring that was then at the Bay Ridge, and have it transported for installation into the Stuyvesant.

Thereafter, as far as the Bay Ridge was concerned, there was manufactured a ring different than the original four rings, which newly constructed ring incorporated the recommendations of these plaintiffs' experts, and that ring was thereafter installed in that Bay Ridge.

It is that plaintiff's position relative to the Bay Ridge that at the time that Bay Ridge left that shipyard and while it was en route to its destination, the problem encountered by that ship had absolutely nothing whatsoever to do with the manufacture of the ring.

What happened, at the time that properly constructed ring was being installed in that turbine of the Bay Ridge, some of the appurtenances that had to be installed in order for that turbine to be functional, more specifically a guardian stern bow, was installed in reverse and this installation occurred under the supervision of the representatives of Delaval.

As a result of that valve being installed in reverse, improper steam got into that turbine and it was the improper steam that got into that turbine that caused the disintegration of the components of that particular turbine.

At the time of the episode with the Bay Ridge, when that ring was taken out it was thereafter, it being the first ring, it was thereafter installed in the Stuyvesant.

Now, it may be appropriate now to note that the opinion of the Third Circuit, the Third Circuit made mention on page 7, part of it is carried over to page 8 of its opinion, that the plaintiff did not seek to order a new part from Delaval but in lieu of doing that, obtained the ring out of the Bay Ridge.

Byron R. White:

Are you asking us to make some factual determinations in this Court that... don't we take the facts as we find them in the court of appeals opinion, or not?

Thomas E. Durkin, Jr.:

Well, on the point that I just mentioned, I thought if the fact would be a fact obtainable from the record and the specific circumstance, in the court of appeals opinion... the court of appeals expressly states that it's making its findings on a hypothesis that that ship never left the pier.

That ship not only left the pier, but that ship was in the middle of the ocean when it encountered this difficulty, when it was in total distress.

And that was never a circumstance--

Byron R. White:

I don't know that you... I thought we were just going to deal with the questions you raised in the petition for certiorari.

Thomas E. Durkin, Jr.:

--I am, sir, but there are two.

That one has to do with the question of the negligence, and the other has to do with the specific circumstance of the applicability of strict liability and tort.

Now, what is suggested by the question that's submitted, factually outlined, is this.

May the manufacturer of a turbine, which turbine is to be the power unit of a 225,000 [= DWT] ton tanker, represent to the shipyard that if that manufacturer can supply a turbine to that particular ship so as for that ship to acquire propulsion, and thereafter when that ship is completed and that ship is sold and that ship is chartered, should that charterer as was the fact here, be responsible without redress to collect in damage approximately two million dollars paid by these plaintiffs to this defendant, Delaval, for that defendant then to do that which that defendant was obligated to at the time of the particular initial construction.