Indiana Harbor Belt Railroad Co. v. American Cyanamid Co., 916 F.2d 1174

7^th Cir. 1990

1990

Chapter

14

Title

Common Law Strict Liability

Page

593

Topic

Abnormally Dangerous Activities

Quick Notes

Hazardous chemical leaks from freight train car at switching yard.  Switching yard is suing for decontamination expenses.

Issue

o         The question whether the shipper of a hazardous chemical by rail should be strictly liable for the consequences of a spill or other accident to the shipment en route?  Depends.

Procedure

Trial

o         Trial court entered judgment of $981,022.75 against Cyanamid.

7^th circuit

o         Reversed and remanded.  Case for strict liability was not made.

Facts

Reason

Rules

o         Pl - Indiana Harbor Belt Railroad Co (Switching Co)

o         Df - American Cyanamid Co (Shipper)

What happened?

o         Switching company noticed that fluid was gushing from a car.

o         Switching company had to take decontamination measures that cost $981,022.75.

Charges

o         One count of the two-count complaint charges Cyanamid with having maintained the leased tank car negligently.

o         The other count asserts that the transportation of acrylonitrile in bulk through the Chicago metropolitan area is an abnormally dangerous activity, for the consequences of which the shipper (Cyanamid) is strictly liable to the switching line, which bore the financial brunt of those consequences because of the decontamination measures that it was forced to take.

Negligence vs. Strict Liability

o         Negligence

o        The baseline common law regime of tort liability is negligence.

o        When it is a workable regime, because the hazards of an activity can be avoided by being careful (which is to say, non-negligent), there is no need to switch to strict liability.

o         Strict Liability

o        Sometimes, however, a particular type of accident cannot be prevented by taking care but can be avoided, or its consequences minimized, by shifting the activity in which the accident occurs to another locale, where the risk or harm of an accident will be less ((e)), or by reducing the scale of the activity in order to minimize the number of accidents caused by it ((f)).

o        By making the actor strictly liable -- by denying him in other words an excuse based on his inability to avoid accidents by being more careful -- we give him an incentive, missing in a negligence regime, to experiment with methods of preventing accidents that involve not greater exertions of care, assumed to be futile, but instead relocating, changing, or reducing (perhaps to the vanishing point) the activity giving rise to the accident.

Stronger the case for strict liability

o         The greater the risk of an accident ((a)) and the costs of an accident if one occurs ((b)), the more we want the actor to consider the possibility of making accident-reducing activity changes; the stronger, therefore, is the case for strict liability.

Weakening the case for strict liability

o         If an activity is extremely common ((d)), like driving an automobile, it is unlikely either that its hazards are perceived as great or that there is no technology of care available to minimize them; so the case for strict liability is weakened.

The leak was not caused by the acrylonitrile it was caused by carelessness.

o         It was caused by carelessness -- whether that of the North American Car Corporation in failing to maintain or inspect the car properly, or that of Cyanamid in failing to maintain or inspect it, or that of the Missouri Pacific when it had custody of the car, or that of the switching line itself in failing to notice the ruptured lid, or some combination of these possible failures of care.

Allocative Approach

o        The courts emphasis is on picking a liability regime (negligence or strict liability) that will control the particular class of accidents in question most effectively.

o        This looks for the most efficient way to change behavior.

Distributive Approach

o        The focus is on finding the deepest pocket and placing liability there.

o        i.e., The Df - is a huge corporation, the railroad it a small company, so the Df should absorb the loss.

Court - Case for strict liability has not be made

o         Pl - attorney only thought that it was important Cyanamid introduced the product into the stream of commerce.

o         Pl failed to prove the chemical could be rerouted around all the metropolitan areas in the country.

o         Pl ignore transportation

o         Pl made no effort to track the incident.

o         Judgment reversed.

Posner thing is law and economics

Rules

Main factor emphasized -  Factor C The inability to eliminate the risk by exercise of reasonable care

o        If the risks CAN be eliminated by reasonable care, then use negligence

o        If the risks CANNOT be eliminated by reasonable care, then use strict liability.

o         By making the actor strictly liable -- we give him an incentive to experiment with methods of preventing accidents [by] relocating, changing, or reducing (perhaps to the vanishing point) the activity giving rise to the accident.

Stronger the case for strict liability

o         The greater the risk of an accident ((a)) and the costs of an accident if one occurs ((b)), the more we want the actor to consider the possibility of making accident-reducing activity changes; the stronger, therefore, is the case for strict liability.

Weakening the case for strict liability

o         If an activity is extremely common ((d)), like driving an automobile, it is unlikely either that its hazards are perceived as great or that there is no technology of care available to minimize them; so the case for strict liability is weakened.

Allocative Approach

o        The courts emphasis is on picking a liability regime (negligence or strict liability) that will control the particular class of accidents in question most effectively.

o        This looks for the most efficient way to change behavior.

Distributive Approach

o        The focus is on finding the deepest pocket and placing liability there.

o        i.e., The Df - is a huge corporation, the railroad it a small company, so the Df should absorb the loss.

Class Notes