In a case that may impact some of the litigation rising from the Gulf Oil Spill, the Florida Supreme Court last week ruled in favor of a group of commercial fishermen who alleged damages arising from pollution in the Tamp Bay. See Howard Curd, et al. v. Mosaic Fertilizer LLC, (No. SC08-1920 Fla. 6/17/2010). The issue on appeal -- which the court took as a certified issue of great public importance -- was whether Florida law permits commercial fishermen to recover for economic losses proximately caused by the negligent release of pollutants, despite the fact that the fishermen do not own any property damaged by the pollution.
The defendant owned/operated a phosphogypsum storage area near Archie Creek in Hillsborough County. The storage area included a pond enclosed by dikes, containing waste water from a phosphate plant. The dike gave way and pollutants were allegedly spilled into Tampa Bay.
The fishermen claimed that the spilled pollutants resulted in a loss of underwater plant life, fish, bait fish, crabs, and other marine life. They did not claim an ownership in the damaged marine and plant life, but claimed that it resulted in damage to the reputation of the fishery products the fishermen were able to catch and sought to sell.
The lower court concluded that the state statute on water pollution did not permit a claim by these fishermen for monetary losses when they did not own any real or personal property damaged by the pollution. After initially permitting the fishermen to proceed on their claims of negligence and strict liability, the lower court ultimately ruled that these claims were not authorized under the economic loss rule. The court reasoned that an action in common law either through strict liability or negligence was not permitted because the fishermen did not sustain bodily injury or property damage. The strict liability and negligence claims sought purely economic damages unrelated to any damage to the fishermen's property. Accordingly, the court further reasoned that Mosaic did not owe the fishermen an independent duty of care to protect their purely economic interests.
The state supreme court disagreed. The court pointed to a number of factors on the statutory claim: it expressly protected public and private interests; it is to be liberally construed to effect the purposes set forth in the state statute and the Federal Water Pollution Control Act. Moreover, the Florida Legislature found and declared that escape of pollutants “poses threats of great danger and damage . . . to citizens of the state, and to other interests deriving livelihood from the state.” Also, under the definition of statutory damages cited above, one can recover for damages to real or personal property and for damages to natural resources, including all living things. Finally, not owning property affected was not a listed defense to the cause of action in the act.
The lower court found that the economic loss rule barred the common law claims, as the fishermen's negligence and strict liability claims sought purely economic damages unrelated to any damage to the fishermen's property. Second, Mosaic did not owe an independent duty of care to protect the fishermen's expectation of profits. The supreme court found instead that neither the contractual nor products liability economic loss rule was applicable to this situation. The parties to this action were not in contractual privity. Moreover, the defendant in this case was not a manufacturer or distributor of a defective product that has caused damage to itself. Rather, plaintiffs brought traditional negligence and strict liability claims against a defendant who had allegedly polluted Tampa Bay and allegedly caused them injury.
Turning to the issue whether Mosaic owed an independent duty of care to protect the fishermen's purely economic interests—that is, their expectations of profits from fishing for healthy fish, the court found Mosaic did owe a duty of care to the fishermen, a duty that was not shared by the public as a whole. The court admitted that as a general principle of common law negligence, some courts have not permitted recovery for purely economic losses when the plaintiff has sustained no bodily injury or property damage. See Union Oil Co. v. Oppen, 501 F.2d 558, 563 (9th Cir. 1974) (noting “the widely recognized principle that no cause of action lies against a defendant whose negligence prevents the plaintiff from obtaining a prospective pecuniary advantage”). The reasoning behind this general rule is that if courts allowed compensation for all losses of economic advantages caused by a defendant's negligence, a defendant would be subject to claims based upon remote and speculative injuries that it could not foresee. Such courts have concluded that the negligent defendant owes no duty to plaintiffs for such losses.
The Florida court concluded that the defendant here did owe a duty of care to these commercial fishermen, and that the commercial fishermen thus had a cause of action sounding in negligence. Under Florida law, the question of whether a duty is owed is linked to the concept of foreseeability. In the present case, the duty owed by Mosaic arose out of the nature of Mosaic's business and the special interest of the commercial fisherman in the use of the public waters. The court concluded that Mosaic's activities created an appreciable zone of risk within which Mosaic was obligated to protect those who were exposed to harm. Mosaic's business involved the storage of pollutants and hazardous contaminants. It was foreseeable, said the court, that were these materials released into the public waters, they would cause damage to marine and plant life as well as to human activity in the water.
Further, the commercial fishermen had a special interest within that zone of risk, an interest not shared by the general community, found the state supreme court. The fishermen were licensed to conduct commercial activities in the waters of Tampa Bay, and were dependent on those waters to earn their livelihood. Mosaic's activities placed the fishermen's peculiar interests directly within the zone of risk created by the presence of its facility. As a result, Mosaic was obligated to exercise prudent foresight and take sufficient precautions to protect that interest.
As pointed out in the dissent, the majority opinion decided the case for a more narrow class than those bringing the suit -- and more narrowly than the claims they alleged. Although Curd's proposed class consisted of “all fishermen and those persons engaged in the commercial catch and sale of fish,” the majority's decision did not extend to distributors, seafood restaurants, fisheries, fish brokers, or the like whose incomes may also have been affected by the alleged pollution. Additionally, the majority only addressed economic harm that allegedly resulted from the depletion of marine life and the resulting inability to harvest the commercial fishermen's usual yield—not from harm to reputation as alleged in the complaint. The fishermen presumably must still prove all of the elements of their causes of action, including damages.