ELR Citation: ELR 20140
No(s). 94-1059 (1st Cir. Aug 18, 1994)

The court holds that the federal admiralty rule that economic losses are not recoverable absent physical harm precludes shellfish dealers' federal claims for economic damages resulting from an oil spill in Narragansett Bay, Rhode Island, but that the federal rule does not preempt the dealers' state-law economic damage claims under the Rhode Island Environmental Injury Compensation Act (RIEICA). The dealers assert that their businesses were injured when an oil spill prevented local fishers from harvesting shellfish in the Bay, thereby precluding the dealers from purchasing shellfish for resale to their buyers. The court first holds that federal case law bars the dealers' federal claims for purely economic losses under the general maritime law. Applying a three-pronged test established by federal case law for determining whether state legislation affecting maritime commerce is valid, the court next holds that the Admiralty Clause of the U.S. Constitution does not preempt the RIEICA. The court holds that the first prong—whether the legislation contravenes the essential purpose expressed by an act of Congress—is irrelevant because no act of Congress directly governs the case. Turning to the second prong, the court next holds that the RIEICA does not materially prejudice a rule that originated in or had exclusive application in admiralty. Although the RIEICA departs from the maritime rule against recovery of economic losses that rule is not a "characteristic feature" of general maritime law. Applying the third prong of the test, the court holds that the RIEICA does not interfere with the proper harmony and uniformity of maritime law in its international and interstate relations. The court holds that rigid national uniformity in maritime legislation is not required, rather, the preemption issue ordinarily requires a delicate accommodation of federal and state interests. The court holds that Rhode Islands' interest avoiding pollution in its navigable waters and on its shores, and in redressing injury to its citizens from such pollution, outweighs the federal interest in protecting maritime commerce by limiting remedies. That Congress has enacted the Oil Pollution Act, which almost certainly provides for recovery of purely economic damages in oil spill cases, is compelling evidence that Congress views neither expansion of liability to cover purely economic losses nor enactment of comparable state oil pollution regimes as excessive burdens on maritime commerce.

[The district court's opinion is published at 23 ELR 21241.]

Counsel for Appellee
John J. Finn, Thomas H. Walsh Jr.
Bingham, Dana & Gould
150 Federal St., Boston MA 02110

Counsel for Appellants
Thomas M. Bond, David B. Kaplan
The Kaplan/Bond Group
P.O. Box 1404, Boston MA 02205
(617) 261-0080

Before SELYA,Circuit Judge, BOWNES, Senior Circuit Judge, and BOUDIN, Circuit Judge.