Does BP owe damages to businesses which were never hit by the oil? My Prof. Lofty Becker would have had a field day on this one – I can imagine him, hands clasped just below his bow tie, twiddling his thumbs and saying, “hypo:” Damn it, if I had my life to do over again, I’d have gone into teaching. But that was then, this is now. If you like knotty problems, check out this marvelously written article by DAVID SEGAL. It’s so good it only increases my anger at the Time’s owners/editors because they have such talented writers, and they’re blowing it. Anyway, here’s a taste, but you truly should read the whole thing.
Are they right? Should companies like TradeWinds collect damages from an oil spill even if their beaches were never sullied? Put another way, should BP have to pay for economic hardship caused by the public’s reaction to the oil, even if that reaction was utterly irrational?
The answers involve a sum of money that can safely be described as staggering. The aftermath and legal wranglings of the BP fiasco have focused so far on commercial interests — like fishing, shrimping and food processing — that relied directly on the gulf for their livelihoods. For the most part, these are people in Louisiana, Mississippi and Alabama.
What has scarcely been noted, however, is that virtually oil-free Florida just might hoover up the bulk of BP’s settlement money. The company has set aside $20 billion for a fund intended to make whole both private enterprises (for lost earnings) and the states and the federal government (for cleanup costs), with a promise to throw additional money in the pot if more is needed to cover legitimate claims.
But what if every business in Florida’s $60 billion-a-year tourist trade stands up and demands compensation for what it would have earned this summer had the spill not happened?
And what if hotels, restaurants, gas stations, miniature-golf courses, amusement parks, grocery stores, retailers, movie theaters and others want more than just those losses? What if they demand future lost revenue, too — money that would have come to Florida next year, and the year after, but won’t because people who spent their summer vacations in, say, South Carolina decided that they liked it enough to go back?
None of this should be very hard to imagine — because it’s happening. According to the estimates of plaintiffs’ lawyers, more than 100,000 entities in Florida will make what are known as proximity claims, which are based on arguments of indirect harm.
Already, the sheer number of Florida claims is outpacing those of Louisiana, among claimants who have provided addresses of where they suffered damages to the Gulf Coast Claims Facility, which is administering the BP fund: 35,500 versus just over 31,000, as of last week. Even businesses in Miami and Key West are lawyering up.
It’s the kind of conundrum that scholars have been puzzling over for a very long time.
ON the morning of Aug. 24, 1924, a 43-year-old homemaker named Helen Palsgraf stood on the Jamaica Station platform of the Long Island Rail Road in Queens, waiting for a train. When it arrived, a man struggling to climb aboard was given an assisting push by a railroad employee on the platform and a pull by another employee on the train. That caused the man to drop the package he was carrying, a newspaper wrapped around some fireworks.
What happened in the next few seconds was described the next day in The New York Times as a “short-lived pyrotechnics display,” though it sounds more like a scene from a Looney Tunes reel. The fireworks exploded, and the shock reportedly toppled a scale on the platform some distance away, which fell on Ms. Palsgraf.
She sued the railroad over her injuries and won $6,000, roughly $75,000 in today’s dollars. But her victory didn’t last. It was reversed by the New York Court of Appeals, and the majority opinion in the 4-to-3 decision was written by the future Supreme Court justice Benjamin N. Cardozo.
To win a tort claim, as every law student knows, a plaintiff needs to prove that a defendant was negligent and owed the plaintiff a duty — in Ms. Palsgraf’s case, a duty not to be harmed. Chief Judge Cardozo was skeptical that railroad employees had acted negligently, because the package carried by the passenger didn’t outwardly appear to be dangerous. But, more important, he dismissed Ms. Palsgraf’s claim because she was “outside the zone of foreseeable danger” and therefore was not owed a duty.
The key finding was this: The further away a plaintiff is from the defendant — physically, or as part of a causal chain — the harder it is to win a lawsuit.
This opinion, in Palsgraf v. Long Island Railroad Co., became a central touchstone of American tort law, one with such abiding force in legal culture that a re-enactment of the 1924 accident, performed with Legos, is now posted on YouTube.