Saratoga Fishing Company v. J. M. Martinac & Company - Oral Argument - February 18, 1997

Saratoga Fishing Company v. J. M. Martinac & Company

Media for Saratoga Fishing Company v. J. M. Martinac & Company

Audio Transcription for Opinion Announcement - June 02, 1997 in Saratoga Fishing Company v. J. M. Martinac & Company

Audio Transcription for Oral Argument - February 18, 1997 in Saratoga Fishing Company v. J. M. Martinac & Company

William H. Rehnquist:

We'll hear argument now in Number 95-1764, Saratoga Fishing Company v. J. M. Martinac & Company.

Mr. Zakarin.

Keith Zakarin:

Mr. Chief Justice, may it please the Court:

The task before the Court in this case is to now make explicit what East River requires but necessarily left implicit, a definition of the product itself which is true to the principles of East River and is capable of uniform application by the Federal courts sitting in admiralty.

The product itself is the thing sold by the original seller or manufacturer to the original buyer of that thing.

If that product self-destructs, its loss can only be recovered in contract.

East River teaches so.

Property destroyed by the defect which is not the product itself is recoverable in tort.

The Ninth Circuit in its final opinion, the last of three, has damaged that balance, and that balance must now be set aright.

Sandra Day O'Connor:

Mr. Zakarin, is it not possible in contract suit to recover also damages for property that it is clear would be at risk if the item sold were destroyed?

Keith Zakarin:

Justice O'Connor--

Sandra Day O'Connor:

I mean, there's some leeway, is there not, under a contract theory?

Keith Zakarin:

--Justice O'Connor, that depends, of course, upon the existence both of privity and the scope of the contract at issue.

There may or may not be privity and there may or may not be recovery.

Nevertheless, the principles which drive the existence of strict liability, the necessity to make manufacturers responsible to produce safe goods put into the stream of commerce, counsel a broader interpretation of recovery.

Sandra Day O'Connor:

Well, but even in the East River situation where you're dealing with commercial sellers, if you would... you may not want to concede that, but assuming we're dealing with a commercial seller and a commercial buyer, does East River indicate that a contract recovery, if it were available for these other things, should be applied?

Keith Zakarin:

Ordinarily, the answer is... the answer is that East River is silent as to the recovery in a particular contract of those items.

It may be, under Hadley v. Baxendale and cases in particular State jurisdictions, that a contract could permit broader recovery than for the item itself, governed, of course, by the doctrine of foreseeability.

Nevertheless, East River speaks to a limitation and a balance between tort and contract which permit tort recovery for those other items where contract does not permit it.

William H. Rehnquist:

Well, do you think East River meant to not go as far as, say, Hadley v. Baxendale would?

Keith Zakarin:

The standards for recovery of damages are different in tort and in contract, and I do not believe that East River necessarily sets those parameters.

East River does say quite correctly that recovery in contract will be governed by foreseeability as to those items governed by contract, the product itself.

William H. Rehnquist:

That's Hadley v. Baxendale, too, is it not?

Keith Zakarin:

Yes, Mr. Chief Justice.

That's the rule.

Keith Zakarin:

But that is, of course, the measure of contract recovery and not of tort recovery.

Tort recovery is necessarily those things... those damages proximately caused by the defect.

In this case--

William H. Rehnquist:

Which is a more relaxed standard of foreseeability, is it not?

Keith Zakarin:

--Yes, Mr. Chief Justice, it is indeed, but that relaxed standard is important in the area of unreasonably dangerous and defective products, since the manufacturer may not always be able to foresee, unlike a contracting party, the scope of damage that its product may cause.