The economic bias in tort law

University of Illinois Law Review

Volumn 2008, Issue 5, 2008, Pages 1573-1622

  Perry, Ronen ^a  

^a UNIVERSITY OF HAIFA   (Israel)

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EID: 55349085796     PISSN: 02769948     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (385)

1. RESTATEMENT (THIRD) OF TORTS: ECONOMIC TORTS AND RELATED WRONGS (Council Draft No. 2, 2007);
2. see also Ellen M. Bublick, Economic Torts: Gains in Understanding Losses, 48 ARIZ. L. REV. 693, 693-95 (2006) (introducing the Restatement project).
3. See, e.g., PURE ECONOMIC LOSS (Willem H. van Boom et al. eds., 2004);
4. PURE ECONOMIC LOSS IN EUROPE (Mauro Bussani & Vernon Valentine Palmer eds., 2003);
5. see also EUROPEAN GROUP ON TORT LAW: PRINCIPLES OF EUROPEAN TORT LAW § 2:102(4) (2005), available at http://www.egtl.org/ principles/pdf/PETL.pdf ("Protection of pure economic interests or contractual relationships may be more limited in scope.").
6. The term "relational interests" is well known in the American literature. See, e.g., Leon Green, Relational Interests, 29 ILL. L. REV. 460, 462 (1934) (defining relational interests as "interests in relations with other persons"). The term "relational economic loss" was first used in Canada, following the seminal work of Bruce Feldthusen.
7. See BRUCE FELDTHUSEN, ECONOMIC NEGLIGENCE 199-280 (2d ed. 1989) (synthesizing the cases dealing with relational economic loss); see also Can. Nat'l Ry. Co. v. Norsk Pac. S.S. Co., [1992] 91 D.L.R.4th 289, 291 (Can.);
8. ALLEN M. LINDEN, CANADIAN TORT LAW 440-43 (7th ed. 2001). It is now frequently used in other common-law jurisdictions. See, e.g., SEAS Sapfor Forests Proprietary, Ltd. v. Elec. Trust of S. Austl., (1996) S. Austl. Sup. Ct. 5718; Landcatch, Ltd. v. Int'l Oil Pollution Comp. Fund, [1999] S.C. 101 (H.L.) (appeal taken from Scot.) (U.K.);
9. ROBBY BERNSTEIN, ECONOMIC LOSS 131 (1993);
10. PETER CANE, THE ANATOMY OF TORT LAW 164 (1997);
11. CLERK & LINDSELL ON TORTS 271-77 (Margaret R. Brazier ed., 17th ed. 1995);
12. THE LAW OF TORTS IN NEW ZEALAND 262 (Stephen Todd ed., 2d ed. 1997);
13. Karen Hogg, Relational Loss, the Ex clusory Rule and the High Court of Australia, 3 TORT L. REV. 26 (1995);
14. Ronen Perry, Relational Economic Loss: An Integrated Economic Justification for the Exclusionary Rule, 56 RUTGERS L. REV. 711 (2004).
15. See, e.g., Louisville & Nashville R.R. v. M/V Bayou Lacombe, 597 F.2d 469, 474 (5th Cir. 1979) (denying liability for extra cost incurred by railway company when defendant negligently damaged a railway bridge owned by a third party); Louisville & Nashville R.R. v. Arrow Transp. Co., 170 F. Supp. 597, 600 (N.D. Ala. 1959) (same); Gypsum Carrier, Inc. v. The Queen, [1977] 78 D.L.R.3d 175, 198-99 (Can.) (same). But cf. Can. Nat'l Ry., 91 D.L.R.4th at 289 (allowing recovery for extra cost incurred by railway company in similar circumstances).
16. 275 U.S. 303 (1927).
17. Id. at 309.
18. See infra notes 20-29 and accompanying text.
19. See infra Part II.
20. See Mark Geistfeld, The Analytics of Duty: Medical Monitoring and Related Forms of Economic Loss, 88 VA. L. REV. 1921, 1927-30 (2002) (discussing that distinction).
21. Nowadays, relational emotional harm, as opposed to relational economic loss, is recoverable in most common-law jurisdictions. See Ronen Perry, The Role of Retributive Justice in the Common Law of Torts: A Descriptive Theory, 73 TENN. L. REV. 177, 198-201 (2006) (summarizing relevant law).
22. Liability for emotional harm has been discussed from critical perspectives. See, e.g., Leslie Bender, Feminist (Re)Torts: Thoughts on the Liability Crisis, Mass Torts, Power, and Responsibilities, 1990 DUKE L.J. 848, 851-53;
23. Martha Chamallas, The Architecture of Bias: Deep Structures in Tort Law, 146 U. PA. L. REV. 463, 491-503 (1998).
24. See RESTATEMENT (SECOND) OF TORTS §§ 927(1), 928(a), 929(1)(a) (1979) (setting the principles for compensation for physical harm to property).
25. See id. § 924(c).
26. This loss is also recoverable. See id. § 924(b).
27. SCM, Ltd. v. W.J. Whittall & Son, Ltd., [1970] 3 All E.R. 245, 248 (C.A.) (Eng.).
28. See, e.g., Nat'l Steel Corp. v. Great Lakes Towing Co., 574 F.2d 339, 343 (6th Cir. 1978) ("[In case of] an interference with the use of plaintiff's property, the plaintiff is entitled to recover the value of the use during the interference, or the value of the amount paid for a substitute."); People Express Airlines Inc. v. Consol. Rail Corp., 495 A.2d 107, 109 (N.J. 1985) ("[A] defendant who negligently injures a plaintiff or his property may be liable for all proximately caused harm, including economic losses."); Caltex Oil (Austl.) Pty. Ltd. v. Dredge "Willemstad," (1976) 136 C.L.R. 529, 544-45 (Austl.): Elliott Steam Tug Co. v. Shipping Controller, [1922] 1 K.B. 127, 140 (Eng.); see also RESTATEMENT (SECOND) OF TORTS §§ 924(d), 927(2), 928(b), 929(1)(b) (1979) (setting the principles for compensation for consequential economic losses).
29. 52 Mass. (11 Met.) 290, 291 (1846).
30. 275 U.S. 303 (1927).
31. Id. at 309. For further discussion of this case, see Henry D. Gabriel, Testbank: The Fifth Circuit Reaffirms the Bright Line Rule of Robins Dry Dock and Fails to Devise a Test to Allow Recovery for Pure Economic Damages, 31 LOY. L. REV. 265, 267-71 (1985);
32. Victor P. Goldberg, Recovery for Pure Economic Loss in Tort: Another Look at Robins Dry Dock v. Flint, 20 J. LEGAL STUD. 249 (1991);
33. David R. Owen, Recovery for Economic Loss Under U.S. Maritime Law: Sixty Years Under Robins Dry Dock, 18 J. MAR. L. & COM. 157 (1987).
34. See, e.g., Ballard Shipping Co. v. Beach Shellfish, 32 F.3d 623, 625 (1st Cir. 1994); Barber Lines A/S v. M/V Donau Maru, 764 F.2d 50, 51 (1st Cir. 1985); La. ex rel. Guste v. M/V Testbank, 752 F.2d 1019, 1021, 1023-24 (5th Cir. 1985); In re Oriental Republic Uru., 821 F. Supp. 950, 954 (D. Del. 1993); In re Cleveland Tankers, Inc., 791 F. Supp. 669, 677 (E.D. Mich. 1992); Gen. Foods Corp. v. United States, 448 F. Supp. 111, 114 (D. Md. 1978).
35. See, e.g., Steele v. J & S Metals, Inc., 335 A.2d 629, 630 (Conn. Super. Ct. 1974); PPG Indus., Inc. v. Bean Dredging, 447 So. 2d 1058, 1060-61 (La. 1984); Messina v. Sheraton Corp. of Am., 291 So. 2d 829, 830-31 (La. Ct. App. 1974); Ferguson v. Green Island Contracting Corp., 355 N.Y.S.2d 196. 197-99 (N.Y. App. Div. 1974).
36. See, e.g., Barber Lines, 764 F.2d at 51-52;
37. In re Cleveland Tankers, 791 F. Supp. at 677.
38. Barber Lines, 764 F.2d at 56-57;
39. Testbank, 752 F.2d at 1030-31; Dick Meyers Towing Serv. v. United States, 577 F.2d 1023, 1025 n.4 (5th Cir. 1978); Rickards v. Sun Oil Co., 41 A.2d 267, 269 (N.J. 1945).
40. See, e.g., Ballard Shipping, 32 F.3d at 627-28; In re Nautilus Motor Tanker Co., 900 F. Supp. 697, 703 (D.N.J. 1995).
41. See, e.g., Taira Lynn Marine Ltd. No. 5 v. Jays Seafood, Inc., 444 F.3d 371, 377-81 (5th Cir. 2006); Getty Ref. & Mktg. Co. v. M/T Fadi B, 766 F.2d 829, 832-33 (3d Cir. 1985); Barber Lines, 764 F.2d at 51-52;
42. Testbank, 752 F.2d at 1021-28; Hercules Carriers, Inc. v. Florida, 720 F.2d 1201, 1202 (11th Cir. 1983); Akron Corp. v. M/T Cantigny, 706 F.2d 151, 152-53 (5th Cir. 1983); Kingston Shipping Co. v. Roberts, 667 F.2d 34, 35 (11th Cir. 1982); Marine Navigation Sulphur Carriers v. Lone Star Indus., Inc., 638 F.2d 700, 702 (4th Cir. 1981); Cargill, Inc. v. Offshore Logistics, Inc., 615 F.2d 212, 213-14 (5th Cir. 1980); Louisville & Nashville R.R. v. M/V Bayou LaCombe, 597 F.2d 469, 472-74 (5th Cir. 1979);
43. Dick Meyers Towing Serv., 577 F.2d at 1024-25; Kaiser Aluminum & Chem. Corp. v. Marshland Dredging Co., 455 F.2d 957, 958 (5th Cir. 1972).
44. See infra Part III.C.
45. See, e.g., Conn. Mut. Life Ins. Co. v. N.Y. & New Haven R.R., 25 Conn. 265, 275 (1856); Koskela v. Martin, 414 N.E.2d 1148, 1151 (Ill. App. Ct. 1980); Gosch v. Juelfs, 701 N.W.2d 90, 91 (Iowa 2005); 532 Madison Ave. Gourmet Foods Inc. v. Finlandia Ctr. Inc., 750 N.E.2d 1097, 1103 (N.Y. 2001); Aikens v. Balt. & Ohio R.R., 501 A.2d 277, 278-79 (Pa. Super. Ct. 1985).
46. People Express Airlines v. Consol. Rail Corp., 495 A.2d 107, 116 (N.J. 1985). This authority was subsequently followed in Alaska. See Mattingly v. Sheldon Jackson Coll., 743 P.2d 356, 359-61 (Alaska 1987).
47. RESTATEMENT (SECOND) OF TORTS § 766C (1979) ("One is not liable to another for pecuniary harm not deriving from physical harm to the other . . . .").
48. [1875] All E.R. 220, 223 (Q.B.) (Eng.) ("[T]he question arises, can the plaintiff sue in his own name for the loss which he has sustained in consequence of the damage which the defendants have done to the property of [a third party], causing the plaintiff to lose money under his contract? We think he cannot.").
49. [1877-78] 3 App. Cas. 279, 289 (H.L.) (appeal taken from Scot.) (U.K.) (rejecting the contention that "where damage is done by a wrongdoer to a chattel [or person] not only the owner of that chattel [or the injured person], but all those who by contract with the owner [or person] have bound themselves to obligations which are rendered more onerous, or have secured to themselves advantages which are rendered less beneficial by the damage done to the chattel [or the person], have a right of action against the wrongdoer").
50. [1932] All E.R. 1, 10-11 (H.L.) (appeal taken from Scot.) (U.K.).
51. See, e.g., Konstantinidis v. World Tankers Corp. (The World Harmony), [1965] 2 All E.R. 139, 155-56 (P.) (Eng.) (stating that the Donoghue line of cases restricts the duty to one's neighbor "to avoid injuring him either in his person or in his property"); Weller & Co. v. Foot & Mouth Disease Research Inst., [1965] 3 All E.R. 560, 563 (Q.B.) (Eng.) (holding that plaintiff must show direct injury to their person or property to warrant relief).
52. Hedley Byrne & Co. v. Heller & Partners, [1963] 2 All E.R. 575 (H.L.) (appeal taken from Eng.) (U.K.).
53. Id. at 595.
54. See The World Harmony, [1965] 2 All E.R. at 155 (holding that Hedley Byrne is inapplicable to cases of relational economic loss): Weller, [1965] 3 All E.R. at 570 (observing that Hedley Byrne did not affect the common-law principle that a duty of care which arises from a risk of direct injury to person or property is owed only to those whose person of property may foreseeably be injured by a failure to take care); Margarine Union GmbH v. Cambay Prince S.S. Co. (The Wear Breeze), [1969] 1 Q.B. 219, 250-51 (Eng.) (same).
55. [1977] 2 All E.R. 492 (H.L.) (appeal taken from Eng.) (U.K.).
56. Id. at 498 ("First one has to ask whether, as between the alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter, in which case a prima facie duty of care arises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise . . . .").
57. Candlewood Navigation Corp. v. Mitsui OSK Lines, Ltd. (The Mineral Transporter). [1985] 2 All E.R. 935, 942 (P.C.) (appeal taken from N.S.W.).
58. Leigh & Sillavan, Ltd. v. Aliakmon Shipping Co. (The Aliakmon), [1986] 2 All E.R. 145, 153-54 (H.L.) (appeal taken from Eng.) (U.K.).
59. The Mineral Transporter, [1985] 2 All E.R. at 945;
60. The Aliakmon, [1986] 2 All E.R. at 154-55.
61. [1990] 2 All E.R. 908 (H.L.) (appeal taken from Eng.) (U.K.).
62. The Mineral Transporter, [1985] 2 All E.R. at 945;
63. The Aliakmon, [1986] 2 All E.R. at 154-55.
64. Administration of Justice Act, 1982, c. 53, § 2 (Eng.); see infra notes 267-81 and accompanying text.
65. Robertson v. Turnbull, 1982 S.L.T. 96, 109 (H.L.) (Scot.); Landcatch, Ltd. v. Int'l Oil Pollution Comp. Fund, [1999] 2 Lloyd's Rep. 316, 328, 333-34 (Sess.) (Scot.); Dynamco, Ltd. v. Holland & Hannen & Cubitts, Ltd., 1972 S.L.T. 38, 39 (Sess.) (Scot.); Reavis v. Clan Line Steamers, Ltd., [1925] S.C. 725, 732 (Sess.) (Scot.).
66. Irish Paper Sacks, Ltd. v. John Sisk & Son (Dublin), Ltd., [1972] Ir. H. Ct. (unreported).
67. [1992] 91 D.L.R.4th 289 (Can.).
68. Id. at 289.
69. Id. at 299-303, 316.
70. Id. at 308.
71. Id. at 345-53, 354-55 (discussing policy concerns that legitimize the exclusionary rule).
72. Id. at 356-57 (explaining that the court should adhere to the general rule in the absence of certain policy reasons).
73. Id. at 358-91.
74. Id. at 367-71; see also id. at 378-79 ("[A] test for recovery of economic loss . . . whether 'contractual relational' economic loss or otherwise - should be flexible enough to meet the complexities of commercial reality and to permit the recognition of new situations in which liability ought, in justice, to lie as such situations arise.").
75. Id. at 371.
76. Id. at 375-77.
77. See id. at 387, 391 (preferring to determine liability by asking whether the defendant can "reasonably foresee that a specific individual, as distinct from a general class of persons, will suffer financial loss" as a result of his conduct).
78. [1996] 137 DL.R.4th 129 (Can.).
79. Id. at 137.
80. Id. at 137-39 (deciding that a company is not entitled to recovery of purely economic loss arising from the loss of a principal shareholder and employee).
81. [1997] 153 D.L.R.4th 385 (Can.).
82. Id. at 405.
83. Id. at 409.
84. Id. at 411-13.
85. Id. at 428.
86. See, e.g., Martel Bldg. Ltd. v. Canada, [2000] 2 S.C.R. 860, 877-79, 2000 SCC 60 (Can.) (interpreting Bow Valley as introducing a "presumptive exclusionary rule"); Bruce Feldthusen, Pure Economic Loss in the High Court of Australia: Reinventing the Square Wheel?, 8 TORT L. REV. 33, 41 n.42 (2000) ("These decisions reduce the authority of, if not overrule, the judgment of McLachlin J in [CNR].");
87. Daniel Kalderimis, Contractual Economic Loss in New Zealand - "Who, Then, Is My Neighbour" Really?, 29 VICTORIA U. WELLINGTON L. REV. 193, 209 (1999) ("Although [McLachlin's judgment was] phrased in the language of compromise, a closer analysis reveals a total capitulation.").
88. In later cases courts assumed the existence of a presumptive exclusionary rule. See, e.g., Livingstone v. Canada, 2004 ABCA 236, ¶ 2 (Alta. C.A.), available at http://www.canlii.org/en/ab/abca/doc/2004/ 2004abca236/2004abca236.pdf.
89. See, e.g., Brown v. Heathcote County Council, [1986] 1 N.Z.L.R. 76, 79 (C.A.).
90. Mainguard Packaging Ltd. v. Hilton Haulage Ltd., [1990] 1 N.Z.L.R. 360 (H.C. Christchurch); N.Z. Forest Prods. Ltd. v. Attorney-Gen., [1986] 1 N.Z.L.R. 14 (H.C. Auckland).
91. [1990] 1 N.Z.L.R. 646 (C.A.).
92. Id. at 646.
93. Id. at 679 (Richardson, J., dissenting); id. at 687 (Casey, J., dissenting).
94. Id. at 672 (Cooke, President); id. at 685 (Somen, J., concurring); id. at 691-92 (Bisson, J., concurring).
95. [1999] 1 N.Z.L.R. 1, 29-35 (C.A.).
96. See also Feldthusen, supra note 66, at 41 ("The New Zealand Court of Appeal has yet to rule conclusively, but seems at least implicitly to recognise relational claims as distinct.").
97. (1976) 136 C.L.R. 529 (Austl).
98. J.A. Smillie, Negligence and Economic Loss, 32 U. TORONTO L.J. 231, 232-33 (1982).
99. (1976) 136 C.L.R. at 555 (Gibbs, J., concurring); id. at 593 (Mason, J., concurring). Judge Stephen preferred the test of proximity. Id. at 574-76. Judge Jacobs opined that relational economic loss should be recoverable if it resulted from a "physical effect" of the wrong on the person or property of the plaintiff. Id. at 597, 599. Judge Murphy believed that the general principles of tort law were equally applicable to relational loss cases. Id. at 606.
100. See, e.g., San Sebastian Prop. Ltd. v. Minister, (1986) 162 C.L.R. 341, 355 (Austl.); Council of the Shire of Sutherland v. Heyman, (1985) 157 C.L.R. 424, 497-98 (Austl.).
101. See, e.g., SEAS Sapfor Forests Proprietary, Ltd. v. Elec. Trust of S. Austl., (1996) S.A.S.C. 5718.
102. (1999) 198 C.L.R. 180 (Austl.).
103. Id. at 203.
104. Justice Callinan specifically spoke of foreseeability and proximity. Id. at 321-26. Justice Gummow with whom Chief Justice Gleeson concurred, spoke of a "close relationship" but meant the same thing. Id. at 254.
105. Id. at 194-95 (Gleeson, C.J.); id. at 202 (Gaudron, J.); id. at 203-04, 221-22, 230-31, 233-35 (McHugh, J.); id. at 255-56 (Gummow, J.); id. at 288-90 (Kirby, J.); id. at 303-05 (Hayne, J.); id. at 326-27, 331 (Callinan, J.).
106. Id. at 202 (Gaudron, J.); id. at 204, 225-30, 236 (McHugh, J.): id. at 259-60 (Gummow, J.); id. at 328 (Callinan, J.); see also Feldthusen, supra note 66, at 34, 46-48.
107. See, e.g., Fortuna Seafoods Prop. Ltd. v. Ship "Eternal Wind," (2005) Queensl. C.A. 405, available at http://cclsr.law. unimelb.edu.au/judgements/states/qld/2005/november/2005qca405.htm (allowing recovery for relational economic loss under unique circumstances).
108. See, e.g., Barber Lines A/S v. M/V Donau Maru, 764 F.2d 50, 54 (1st Cir. 1985); John G. Fleming, Tort in a Contractual Matrix, 3 TORT L. REV. 12, 18-19 (1995);
109. Jane Stapleton, Duty of Care and Economic Loss: A Wider Agenda, 107 LAW Q. REV. 249, 266, 285 (1991).
110. The particulars of the interaction between the plaintiff and a third party are irrelevant from a corrective justice perspective, so these "fairness" arguments should be classified as distributive.
111. See David Howarth, Economic Loss in England: The Search for Coherence, in CIVIL LIABILITY FOR PURE ECONOMIC LOSS 27, 48 (Efstathios K. Banakas ed., 1996).
112. Can. Nat'l Ry. Co. v. Norsk Pac. S.S. Co., [1992] 91 D.L.R.4th 289, 374 (Can.) (McLachlin, J.) (criticizing this argument).
113. Id. at 351 (La Forest, J.); id. at 374 (McLachlin, J.).
114. Id. at 351.
115. William Bishop & John Sutton, Efficiency and Justice in Tort Damages: The Shortcomings of the Pecuniary Loss Rule, 15 J. LEGAL STUD. 347, 366 (1986).
116. A time-charterer is not in possession of the chartered ship. THOMAS J. SCHOENBAUM, ADMIRALTY AND MARITIME LAW § 9-5 (3d ed. 2001).
117. The Mergus, (1947) 81 Lloyd's List L.R. 91 (Eng.).
118. See, e.g., Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 309 (1927) (holding that a time-charterer is not entitled to compensation for economic loss consequent upon a negligent infliction of harm to the ship); Candlewood Navigation Corp. v. Mitsui OSK Lines, Ltd. (The Mineral Transporter), [1985] 2 All E.R. 935, 938-40 (P.C.) (appeal taken from N.S.W.) (same); Bow Valley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Co., [1997] 153 D.L.R.4th 385, 411-13 (Can.) (holding that contractual users of an oil rig who agreed to keep paying hire in case of injury are not entitled to recover). But cf. Venore Transp. Co. v. M/V Struma, 583 F.2d 708, 711 (4th Cir. 1978) (allowing a time-charterer of a negligently damaged ship to recover for the hire it had to pay during the repairs).
119. I elaborate on a slightly different version of the contractual protection argument in Section II.C below.
120. Christopher Harvey, Economic Losses and Negligence - the Search for a Just Solution, 50 CAN. BAR REV. 580, 582 (1972);
121. Robert Hayes, The Duty of Care and Liability for Purely Economic Loss, 12 MELB. U. L. REV. 79, 95 (1979);
122. Philip S. James, The Fallacies of Simpson v. Thomson, 34 MODERN L. REV. 149, 160 (1971);
123. Stephen R. Perry, Protected Interests and Undertakings in the Law of Negligence, 42 U. TORONTO L.J., 247, 263-66 (1992);
124. C.S.C. Sheller, Pride and Precedent: Economic Loss - the Search for a New Bright Line, 1995 LLOYD'S MAR. & COM. L.Q. 203, 216;
125. L.L. Stevens, Neg ligent Acts Causing Pure Financial Loss: Policy Factors at Work, 23 U. TORONTO L.J. 431, 455 (1973);
126. A.B. Wilkinson & A.D.M. Forte, Pure Economic Loss - a Scottish Perspective, 30 JURID. REV. 1, 15 (1985).
127. See, e.g., Hazel Carty, The Economic Torts and English Law: An Uncertain Future, 95 KY. L.J. 845 (2007) (discussing the economic torts in English law).
128. See Peter Cane, Economic Loss and the Tort of Negligence, 12 MELB. U. L. REV. 408, 415-16 (1980).
129. See, e.g., Bow Valley Husky, [1997] 153 D.L.R.4th at 404 ("[E]conomic interests have customarily been seen by the common-law courts as less worthy of protection than either bodily security or property.");
130. P.S. Atiyah, Negligence and Economic Loss, 83 LAW Q. REV. 248, 269 (1967); Cane, supra note 100, at 414; Hayes, supra note 98, at 80, 83;
131. Fleming James, Jr., Limitations on Liability for Economic Loss Caused by Negligence: A Pragmatic Appraisal, 25 VAND. L. REV. 43, 54 n.45 (1972); James, supra note 98, at 160; Stevens, supra note 98, at 449, 454, 457.
132. See, e.g., Mark Geistfeld, Reconciling Cost-Benefit Analysis with the Principle that Safety Matters More than Money, 76 N.Y.U. L. REV. 114, 125 (2001) (observing, inter alia, that physical injury is more disruptive to the pursuit of one's life plan than is the loss of money, and that if no amount of money is equivalent to a human life, then safety interests apparently dominate ordinary economic interests).
133. See Harvey, supra note 98, at 584 n.22; James, supra note 98, at 160.
134. Cf. O.W. Holmes, The Path of the Law, 10 HARV. L. REV. 457, 477 (1897) ("A thing which you have enjoyed and used as your own for a long time, whether property or an opinion, takes root in your being and cannot be torn away without your resenting the act and trying to defend yourself, however you came by it.").
135. At this stage, I do not have empirical evidence to support this intuition, but nor do I know of any contradicting data. I hope to substantiate my intuition empirically in a future article.
136. Courts may allow recovery for an impairment of the sentimental value in cases of property damage, regardless of the market value. See, e.g., Campbell v. Animal Quarantine Station, 632 P.2d 1066, 1068 (Haw. 1981); Rodrigues v. State, 472 P.2d 509, 520-21 (Haw. 1970).
137. Roger B. Godwin, Negligent Interference with Economic Expectancy: The Case for Recovery, 16 STAN. L. REV. 664, 692 (1964).
138. W. Bishop, Economic Loss in Tort, 2 OXFORD J. LEGAL STUD. 1, 1 (1982).
139. See, e.g., Robert D. Cooter, Three Effects of Social Norms on Law: Expression, Deterrence, and Internalization, 79 OR. L. REV. 1, 16 (2000).
140. Bishop, supra note 108, at 4. This view is now firmly established in the academic literature. See, e.g., WILLIAM M. LANDES & RICHARD A. POSNER, THE ECONOMIC STRUCTURE OF TORT LAW 251 (1987);
141. RICHARD A. POSNER, TORT LAW: CASES AND ECONOMIC ANALYSIS 467-68 (1982);
142. STEVEN SHAVELL, ECONOMIC ANALYSIS OF ACCIDENT LAW 138-39(1987); Feldthusen, supra note 66, at 50-51;
143. Bruce Feldthusen & John Palmer, Economic Loss and the Supreme Court of Canada: An Economic Critique of Norsk Steamship and Bird Construction, 74 CAN. B. REV. 427, 436, 439 (1995);
144. Israel Gilead, Tort Law and Internalization: The Gap Between Private Loss and Social Cost, 17 INT'L REV. L. & ECON. 589, 593-94 (1997);
145. Victor P. Goldberg, Recovery for Economic Loss Following the Exxon Valdez Oil Spill, 23 J. LEGAL STUD. 1, 19-22, 31-32, 36-37 (1994);
146. Andrew W. McThenia & Joseph E. Ulrich, A Return to Principles of Corrective Justice in Deciding Economic Loss Cases, 69 VA. L. REV. 1517, 1531 (1983);
147. Richard A. Posner, Common-Law Economic Torts: An Economic and Legal Analysis, 48 ARIZ. L. REV. 735, 736-37 (2006) [hereinafter Posner, Common-Law Economic Torts]; Sheller, supra note 98, at 216.
148. Cf. Posner, Common-Law Economic Torts, supra note 110, at 737 ("Most retail establishments operate most of the time with a bit of excess capacity in order to handle peak demands.").
149. Bishop, supra note 108, at 14-15.
150. Id. at 17.
151. Producers and consumers may well hold larger than optimal inventories out of fear of negligent interruptions of production. This means that negligent interruptions cause true social costs (the cost of holding the additional inventory). However, I think that since nonnegligent interruptions are usually more frequent than negligent ones, and since there are other commercial reasons for holding inventories, the impact of negligent interruptions on inventory strategies is not considerable. I will naturally revise some of my conclusions if this assumption is found to be inconsistent with empirical data.
152. Perry, supra note 3, at 733-45. I am having second thoughts about my original conclusion and intend to discuss it further, but this is irrelevant here.
153. Gilead, supra note 110, at 604-05.
154. See, e.g., SCM, Ltd. v. W.J. Whittall & Son, Ltd., [1970] 3 All E.R. 245, 249-50 (C.A.); British Celanese, Ltd. v. A.H. Hunt (Capacitors), Ltd., [1969] 2 All E.R. 1252, 1258-61 (Q.B.) (Eng.).
155. See Geistfeld, supra note 9, at 1928 n.27.
156. Bishop, supra note 108, at 12.
157. Id.
158. Id.; see also Feldthusen & Palmer, supra note 110, at 439, 445.
159. Cf. Feldthusen & Palmer, supra note 110, at 439 (observing that the economic distinction calls for reconsidering the law concerning consequential losses).
160. See Donald Harris & Cento Veljanovski, Liability for Economic Loss in Tort, in THE LAW OF TORT: POLICIES AND TRENDS IN LIABILITY FOR DAMAGE TO PROPERTY AND ECONOMIC LOSS 45, 52-53 (Michael Furmston ed., 1986).
161. See BERNSTEIN, supra note 3, at 163; Bruce Feldthusen, Economic Loss in the Supreme Court of Canada: Yesterday and Tomorrow, 17 CAN. BUS. L.J. 356, 378-79 (1991);
162. Posner, Common-Law Economic Torts, supra note 110, at 740; Smillie, supra note 77, at 239, 241; see also Can. Nat'l Ry. Co. v. Norsk Pac. S.S. Co., [1992] 91 D.L.R.4th 289, 301 (Can.) (La Forest, J.) ("[I]n such cases, the right of action of the property owner already puts pressure on the defendants to act with care. The deterrent effect of tort law, to the extent that it survives the advent of widespread insurance, is already present.").
163. To the extent that relational losses are not true social costs, no resources should be invested in preventing them.
164. The difference in frequency is of course unknown, but it is presumably small.
165. See Perry, supra note 3, at 753-56.
166. Caltex Oil (Austl.) Pty. Ltd. v. Dredge "Willemstad," (1976) 136 C.L.R. 529, 544 (Austl.).
167. The company will incur this expenditure regardless of the legal rule if the cost of production using the alternative means of transportation is lower than the market price. However, exclusion of liability is still justified, because imposing liability is tantamount to subsidizing inefficient activity.
168. Barber Lines A/S v. M/V Donau Maru, 764 F.2d 50, 55 (1st Cir. 1985).
169. Hayes, supra note 98, at 114.
170. Spartan Steel & Alloys, Ltd. v. Martin & Co., [1972] 3 All E.R. 557, 563-64 (C.A.) (Eng.).
171. Bishop, supra note 108, at 23-24.
172. Id. at 17-18. However, one may say that if workers of the damaged factory find alternative employment they displace other workers (or potential workers). See Mario J. Rizzo, The Economic Loss Problem: A Comment on Bishop, 2 OXFORD J. LEGAL STUD. 197, 205 (1982).
173. Bishop, supra note 108, at 18-19.
174. Goldberg, supra note 110, at 17.
175. Gilead, supra note 110, at 591-92.
176. SHAVELL, supra note 110, at 144-46.
177. Goldberg, supra note 110, at 17.
178. I refer here to measures that may only prevent the financial loss, not to those which can prevent the accident itself.
179. However, the law may allow recovery if they do not take the necessary measures to tow another ship. See, e.g., Domar Ocean Transp., Ltd. v. M/V Andrew Martin, 754 F.2d 616, 619 (5th Cir. 1985) (holding that where a barge is injured, and the owner of the barge is also the owner of the tugboat, the owner can recover for loss of profits from using the barge and the tugboat alike).
180. Barber Lines A/S v. M/V Donau Maru, 764 F.2d 50, 54 (1st Cir. 1985); La. ex rel. Guste v. M/V Testbank, 752 F.2d 1019, 1029 (5th Cir. 1985); Bow Valley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Co., [1997] 153 D.L.R.4th 385, 404 (Can.); Can. Nat'l Ry. Co. v. Norsk Pac. S.S. Co., [1992] 91 D.L.R.4th 289, 350 (Can.); Feldthusen & Palmer, supra note 110, at 437, 443-44 (detailing the advantages of first-party insurance); James, supra note 101, at 52-53 (same); Ann O'Brien, Limited Recovery Rule as a Dam: Preventing a Flood of Litigation for Negligent Infliction of Pure Economic Loss, 31 ARIZ. L. REV. 959, 968 (1989) (same); Smillie, supra note 77, at 235, 241-42 (same); Stevens, supra note 98, at 461-62 (same);
181. Note, Negligent Interference with Contract: Knowledge as a Standard for Recovery, 63 VA. L. REV. 813, 817 n.34 (1977) (same).
182. See also Recent Cases, Interference with Business or Occupation - Commercial Fishermen Can Recover Profits Lost as a Result of Negligently Caused Oil Spill - Union Oil Co. v. Oppen, 501 F.2d 558 (9th Cir. 1974), 88 HARV. L. REV. 444, 449 (1974) ("[I]t is arguably more efficient for potential plaintiffs to obtain first-party insurance on their own limited interests than for potential defendants to obtain insurance in vast amounts for all possible types of economic loss.").
183. See also Michael MacGrath, The Recovery of Pure Economic Loss in Negligence - An Emerging Dichotomy, 5 OXFORD J. LEGAL STUD. 350, 375 (1985) ("[F]irst party insurance . . . tends to be more readily available at more reasonable rates because of the absence of the high cost of litigation or arbitration . . . .").
184. Can. Nat'l Ry., [1992] 91 D.L.R.4th at 352, 354; Feldthusen, supra note 66, at 48-49; James, supra note 101, at 54-55. Ambiguous liability formulas (such as "proximity") frequently result in double insurance.
185. As opposed to the effect of indeterminate number of victims, discussed below.
186. PETER CANE, TORT LAW AND ECONOMIC INTERESTS 458 (2d ed. 1996). Some say that most arguments in favor of first-party insurance are also valid with regard to property damage.
187. See, e.g., Margaret Jacobs, No Liability for Economic Loss?, 36 MOD. L. REV. 314, 316 (1973). It is unnecessary to discuss this argument here.
188. Gen. Foods Co. v. United States, 448 F. Supp. 111, 113 (D. Md. 1978) ("Such suits . . . would produce serious problems in litigation, particularly in the areas of proof and apportionment of damages."); John G. Rich, Negligent Interference with Prospective Economic Advantage - J'Aire Corp. v. Gregory, 1980 UTAH L. REV. 431, 434; Note, supra note 142, at 817 (observing that uncertainty in measurement of economic loss is used to justify exclusion of liability).
189. Stromer v. Yuba City, 37 Cal. Rptr. 240, 243 (1964); Conn. Mut. Life Ins. v. N.Y. & New Haven R.R., 25 Conn. 265, 274 (1856); People Express Airlines, Inc. v. Consol. Rail Corp., 495 A.2d 107, 110 (N.J. 1985); Ferguson v. Green Island Contracting Corp., 355 N.Y.S.2d 196, 198 (N.Y. App. Div. 1974); Spartan Steel & Alloys, Ltd. v. Martin & Co., [1972] 3 All E.R. 557, 564 (C.A.) (Eng.); O'Brien, supra note 142, at 967; Rich, supra note 148, at 434; Kelly M. Hnatt, Note, Purely Economic Loss: A Standard for Recovery, 73 IOWA L. REV. 1181, 1183, 1191 (1988); Note, supra note 142, at 817.
190. See Robert L. Rabin, Tort Recovery for Negligently Inflicted Economic Loss: A Reassessment, 37 STAN. L. REV. 1513, 1525 (1985).
191. Leadfree Enters., Inc. v. U.S. Steel Corp., 711 F.2d 805, 808 (7th Cir. 1983); Godwin, supra note 107, at 693; Rabin, supra note 150, at 1525.
192. Kinsman Transit Co. v. City of Buffalo, 388 F.2d 821, 823 (2d Cir. 1968) ("Here, as elsewhere, the answer must be that courts have some expertise in performing their almost daily task of distinguishing the honest from the collusive or fraudulent claim.").
193. See Rabin, supra note 150, at 1525.
194. Candlewood Navigation Corp. v. Mitsui OSK Lines, Ltd. (The Mineral Transporter), [1985] 2 All E.R. 935, 945 (P.C.) (appeal taken from N.S.W.) ("[The exclusionary rule] has the merit of drawing a definite and readily
195. See Gabriel, supra note 19, at 265; Stapleton, supra note 87, at 256.
196. Can. Nat'l Ry. Co. v. Norsk Pac. S.S. Co., [1992] 91 D.L.R.4th 289, 335 (Can.); O'Brien, supra note 142, at 967; Smillie, supra note 77, at 254.
197. La. ex rel. Guste v. M/V Testbank, 752 F.2d 1019, 1028-29 (5th Cir. 1985) ("[The exclusionary rule] operates as a rule of law and allows a court to adjudicate rather than manage.").
198. Gabriel, supra note 19, at 278, 284 ("[The exclusionary rule] does not provide certainty that the potential claimants excluded are the least meritorious."); Sheller, supra note 98, at 209.
199. No liability at all is probably the most certain rule and the easiest to apply.
200. For example, allowing recovery for the cost of using a substitute for the injured object, either by the primary victim or the relational victims, is easier to apply than the traditional dichotomy, because liability for consequential loss of profits may raise serious problems with respect to causation and quantification.
201. 174 N.E. 441 (N.Y. 1931).
202. Id. at 444. This case was a negligent misrepresentation case. Id. at 442.
203. See Barber Lines A/S v. M/V Donau Maru, 764 F.2d 50, 54 (1st Cir. 1985); In re Waterstand Marine. Ltd., No. 87-1516, 1988 U.S. Dist. LEXIS 3242, at *12-13 (E.D. Pa. 1988); Pruitt v. Allied Chem. Corp., 523 F. Supp. 975, 979-80 (E.D. Va. 1981); Byrd v. English, 43 S.E. 419, 420 (Ga. 1903).
204. See Champion Well Serv., Inc. v. NL Indus., 769 P.2d 382, 385 (Wyo. 1989) (holding that an employer cannot recover economic losses consequent upon a negligent infliction of harm to its key employee).
205. See, e.g., PPG Indus., Inc. v. Bean Dredging, 447 So. 2d 1058, 1061-62 (La. 1984); Smillie, supra note 77, at 241 (illustrating that interruption of production in one factory may cause economic loss to those who supply it with raw materials, those who distribute the products, and those who purchase its products).
206. See, e.g., Stevenson v. E. Ohio Gas Co., 73 N.E.2d 200, 203-04 (Ohio Ct. App. 1946).
207. See Smillie, supra note 77, at 241.
208. E.g., Can. Nat'l Ry. Co. v. Norsk Pac. S.S. Co., [1992] 91 D.L.R.4th 289, 302 (Can.); Stapleton, supra note 87, at 255.
209. E.g., Owen, supra note 19, at 163.
210. W. PAGE KEETON ET AL., PROSSER & KEETON ON THE LAW OF TORTS 1001 (5th ed. 1984).
211. Hayes, supra note 98, at 114 ("[I]t is appropriate that the risk should be shared around."); O'Brien, supra note 142, at 968; Perry, supra note 3, at 761-63; Posner, Common-Law Economic Torts, supra note 110, at 738; Note, supra note 142, at 817 n.34 ("A single act easily can interfere with numerous contracts. Denial of recovery may effectively spread the loss over the contractors rather than concentrating it on the individual tort-feasor."); cf. Spartan Steel & Alloys, Ltd. v. Martin &. Co., [1972] 3 All E.R. 557, 564 (C.A.) (Eng.) ("[I]n such a hazard as this, the risk of economic loss should be suffered by the whole community who suffer the losses - usually many but comparatively small losses - rather than on the one pair of shoulders, that is, on the contractor on whom the total of them, all added together, might be very heavy.").
212. Dundee Cement Co. v. Chem. Labs., Inc., 712 F.2d 1166, 1172 (7th Cir. 1983); Stevenson v. E. Ohio Gas Co., 73 N.E.2d 200, 203 (Ohio Ct. App. 1946); Caltex Oil (Austl.) Pty. Ltd. v. Dredge "Willemstad," (1976) 136 C.L.R. 529, 562-63 (Austl.) (Stephen, J., concurring); Bow Valley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Co., [1997] 153 D.L.R. 4th 385, 404 (Can.); O'Brien, supra note 142, at 966; Rich, supra note 148, at 434; Smillie, supra note 77, at 231; Stevens, supra note 98, at 452; Recent Cases, supra note 143, at 449; Hnatt, supra note 149, at 1183, 1191; Note, supra note 142, at 817.
213. Barber Lines A/S v. M/V Donau Maru, 764 F.2d 50, 54 (1st Cir. 1985).
214. Caltex, (1976) 136 C.L.R. at 606 (Murphy, J., concurring);
215. Christopher V. Panoff, In re the Exxon Valdez, Alaska Native Class v. Exxon Corp.: Cultural Resources, Subsistence Living, and the Special Injury Rule, 28 ENVTL. L. 701, 711-12 (1998); Wilkinson & Forte, supra note 98, at 21.
216. Can. Nat'l Ry. Co. v. Norsk Pac. S.S. Co., [1992] 91 D.L.R.4th 289, 352-53, 355 (Can.) (La Forest, J., dissenting); Geistfeld, supra note 9, at 1933-35, 1937-38, 1943, 1950 (applying this argument to emotional and economic losses): Sheller, supra note 98, at 205.
217. See supra notes 101-07 and accompanying text.
218. Dominion Tape of Can., Ltd. v. L.R. McDonald & Sons, Ltd., [1971] 21 D.L.R.3d 299, 300 (Can.) ("[A] judgment pompously engrossed which cannot be executed for want of sufficient assets on the part of the judgment debtor [turns the trial] into a futile exercise . . . .").
219. Phoenix Prof'l Hockey Club, Inc. v. Hirmer, 502 P.2d 164, 165 (Ariz. 1972) (holding that imposition of liability for relational losses "could impose a severe penalty on one guilty of mere negligence"); Aikens v. Balt. & Ohio R.R., 501 A.2d 277, 279 (Pa. Super. Ct. 1985) (observing that imposition of such liability "would create a disproportion between the large amount of damages that might be recovered and the extent of the defendant's fault"); Caltex, (1976) 136 C.L.R. at 551, 562-63, 591; Can. Nat'l Ry., [1992] 91 D.L.R.4th at 365-66; Leigh & Sillavan, Ltd. v. Aliakmon Shipping Co. (The Aliakmon), [1986] 2 All E.R. 145, 154 (H.L.) (appeal taken from Eng.) (U.K.); RESTATEMENT (SECOND) OF TORTS § 766C cmt. a (1979) ("[C]ourts apparently have been influenced by . . . the probable disproportion between the large damages that might be recovered and the extent of the defendant's fault."); Gabriel, supra note 19, at 266; Hayes, supra note 98, at 82; O'Brien, supra note 142, at 967; Rich, supra note 148, at 434; Smillie, supra note 77, at 231; Recent Cases, supra note 143, at 448; Hnatt, supra note 149, at 1183, 1193;
220. Comment, Foreseeability of Third Party Economic Injuries - A Problem in Analysis, 20 U. CHI. L. REV. 283, 296, 298 (1953); Note, supra note 142, at 817; see also Rabin, supra note 150, at 1534, 1538 (asserting that abhorrence of disproportionate penalties for wrongful behavior is the most plausible explanation for judicial reluctance to allow recovery for pure economic loss).
221. But cf. Geistfeld, supra note 9, at 1931-32 (criticizing this type of argument).
222. La. ex rel. Guste v. M/V Testbank, 752 F.2d 1019, 1029 (5th Cir. 1985); Harris & Veljanovski, supra note 123, at 53. The natural limit of the injurer's liability equals its individual ability to pay. Sometimes a limit on the extent of liability is set by law. See, e.g., 46 U.S.C. app. § 183(a) (2000); Limitation of Liability for Maritime Claims Act, 1989, art. 6g, No. 151 (Austl.); Marine Liability Act, 2001 S.C., ch. 6, §§ 24-34 (Can.); Merchant Shipping Act, 1995, c. 21, § 191 (Eng.); SCHOENBAUM, supra note 94, at 808-33.
223. See Phoenix Prof'l Hockey Club, 502 P.2d at 165 ("undue burden on freedom of action"); Aikens, 501 A.2d at 279 (using similar language); Godwin, supra note 107, at 676 (using similar language); McThenia & Ulrich, supra note 110, at 1520 n.17 ("unduly limiting freedom of action for fear of incurring such liability"); O'Brien, supra note 142, at 967-68 ("limit a potential tortfeasor's commercial freedom"); Rich, supra note 148, at 435 ("unduly restrict the freedom to conduct one's affairs without worrying excessively about the effect it will have on the economic relations of others"); Note, supra note 142, at 817 ("unduly restrict the freedom of action of potential tortfeasors").
224. Dundee Cement Co. v. Chem. Labs., Inc., 712 F.2d 1166, 1171 (7th Cir. 1983) ("crushing, virtually open-ended liability"); Leadfree Enters., Inc. v. U.S. Steel Corp., 711 F.2d 805, 808 (7th Cir. 1983) ("crushing liability on a tortfeasor"); Can. Nat'l Ry., [1992] 91 D.L.R.4th at 365-66 ("To permit all economic loss related to a negligent act to be recovered would be to subject potential defendants to liability which . . . may cripple their ability to do business."); Feldthusen, supra note 66, at 49 ("ruinous liability"); Hnatt, supra note 149, at 1194 ("[T]he burden of excessive liability could cause economic or social dislocation."); Smillie, supra note 77, at 231 ("curtailment of productive activity"); Recent Cases, supra note 143, at 449 ("[T]he resulting liability might be so great as to cause economic or social dislocation.").
225. See SHAVELL, supra note 110, at 240 (showing how an injurer whose "assets are lower than the harm they may cause" can be in a better position without insurance); cf. Harris & Veljanovski, supra note 123, at 53 (noting that potential defendants may underinsure if they believe they are judgment proof or to discourage litigation).
226. See BERNSTEIN, supra note 3, at 200-01; FRANCIS TRINDADE & PETER CANE, THE LAW OF TORTS IN AUSTRALIA 371-72 (3d ed. 1999); Stapleton, supra note 87, at 254-55.
227. See Posner, Common-Law Economic Torts, supra note 110, at 737-38.
228. James, supra note 101, at 55-57.
229. David W. Robertson, Recovery in Louisiana Tort Law for Intangible Economic Loss: Negligence Actions and the Tort of Intentional Interference with Contractual Relations. 46 LA. L. REV. 737, 753-54, 759 (1986); Stapleton, supra note 87, at 264.
230. Leigh & Sillavan, Ltd. v. Aliakmon Shipping Co. (The Aliakmon), [1986] 2 All E.R. 145, 154 (H.L.) (appeal taken from Eng.) (U.K.).
231. See, e.g., Seaway Hotels, Ltd. v. Cragg (Can.), Ltd., [1959] 21 D.L.R.2d 264 (Can.); Mainguard Packaging Ltd. v. Hilton Haulage Ltd., [1990] 1 N.Z.L.R. 360 (H.C. Christchurch); N.Z. Forest Prods. Ltd. v. Attorney-Gen., [1986] 1 N.Z.L.R. 14 (H.C. Auckland).
232. See, e.g., Bishop, supra note 108, at 2 (explaining that the loss-spreading rationale cannot justify denial of recovery where there is only one victim); Basil S. Markesinis, Compensation for Negligently Inflicted Pure Economic Loss: Some Canadian Views, 109 LAW Q. REV. 5, 10 (1993) (observing that in Judge La Forest's discussion of loss spreading in CNR "no specific reply was given for those accidents which involved only one victim").
233. Gabriel, supra note 19, at 266, 282.
234. Cf. John Summers, Comment, The Case of the Disappearing Defendant: An Economic Analysis, 132 U. PA. L. REV. 145, 145, 150 (1983) (observing that if the injurer is insolvent, or it is too costly for the victim to bring an action against the injurer, then from the perspective of the victim, the injurer has "disappeared"; the victim will receive no compensation).
235. Can. Nat'l Ry. Co. v. Norsk Pac. S.S. Co., [1992] 91 D.L.R.4th 289, 384 (Can.) (Stevenson, J., concurring) ("[French law has] no categorical rule preventing the recovery of pure economic loss . . . . Yet, the French civil law system works well; insurance is not impossible to get; business is conducted as anywhere else in the world."); Bernard Rudden, Torticles, 6 TUL. CIV. L.F. 105, 107 (1991) (observing that "the French seem to ignore almost all of Cardozo's warnings without suffering ill effects").
236. Mario J. Rizzo, A Theory of Economic Loss in the Law of Torts, 11 J. LEGAL STUD. 281, 283 (1982).
237. Id.
238. Id.
239. Feldthusen & Palmer, supra note 110, at 444-45.
240. Rizzo, supra note 194, at 301.
241. See, e.g., Rickards v. Sun Oil Co., 4 A.2d 267, 269 (N.J. 1945) (no recovery for relational economic loss despite the unfeasibility of channeling); see also Rabin, supra note 150, at 1535 n.72 (asserting that the theory cannot explain cases in which recovery was denied even though the victims' losses could not be channeled through a third party).
242. See Rizzo, supra note 194, at 297 (demonstrating this point in his analysis of Weller & Co. v. Foot & Mouth Disease Research Inst., [1965] 3 All E.R. 560 (Q.B.) (Eng.).
243. Can. Nat'l Ry. Co. v. Norsk Pac. S.S. Co., [1992] 91 D.LR.4th 289, 351, 374 (Can.); CANE, supra note 147, at 455; William Bishop, Economic Loss: Economic Theory and Emerging Doctrine, in THE LAW OF TORT: POLICIES & TRENDS IN LIABILITY FOR DAMAGE TO PROPERTY AND ECONOMIC LOSS 73, 75 (Michael Furmston ed., 1986).
244. See, e.g., Byrd v. English, 43 S.E. 419, 420 (Ga. 1903).
245. Bishop, supra note 201, at 74.
246. Cf. id. at 76 (arguing that the class action suit is "the ultimate consolidating device"); Harris & Veljanovski, supra note 123, at 55 (explaining that the threat of litigation is necessary to deter potential wrongdoers).
247. Bishop, supra note 201, at 74.
248. Harris & Veljanovski, supra note 123, at 70 n.37.
249. FED. R. CIV. P. 20(a)(1) ("Persons may join in one action as plaintiffs if [A] they assert any right to relief jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and [B] any question of law or fact common to all plaintiffs will arise in the action."). In certain cases a class action under FED. R. CIV. P. 23 will be the appropriate solution.
250. Harris & Veljanovski, supra note 123, at 70 n.38.
251. Atiyah, supra note 101, at 274-75.
252. Junior Books, Ltd. v. Veitchi Co., [1982] S.L.T. 492, 502 (H.L.) (appeal taken from Scot.) (U.K.).
253. Id.; see also Caltex Oil (Austl.) Pty. Ltd. v. Dredge "Willemstad," (1976) 136 C.L.R. 529, 570 (Stephen, J., concurring).
254. See supra note 4 and accompanying text.
255. Cf. Corpus Christi Oil & Gas Co. v. Zapata Gulf Marine Corp., 71 F.3d 198, 202-03 (5th Cir. 1995) (holding that a company that used a pipeline under contract with its owner cannot recover loss of profits incurred following a negligent infliction of harm to that pipeline).
256. See, e.g., In re Canal Barge Co., 323 F. Supp. 805, 823 (N.D. Miss. 1971) (allowing bridge lessee to recover for increased operating costs and loss of revenue following damage to the bridge).
257. Id. (holding that the bridge owner is entitled to compensation for the cost of repair).
258. See, e.g., Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 308-09 (1927) (holding that a person with a contractual right of use in property negligently damaged by the defendant cannot recover for lost profits); Fed. Commerce & Navigation Co. v. M/V Marathonian, 392 F. Supp. 908 (S.D.N.Y. 1975), aff'd, 528 F.2d 907 (2d Cir. 1975) (same); Rederi A/B Soya v. Evergreen Marine Corp., 1972 A.M.C. 1555, 1562-66 (E.D. Va. 1971), aff'd, 1973 A.M.C. 538 (4th Cir. 1972) (same); Candlewood Navigation Corp. v. Mitsui OSK Lines, Ltd. (The Mineral Transporter), [1985] 2 All E.R. 935, 938-40 (P.C.) (appeal taken from N.S.W.).
259. Cf. Bosnor, S.A. de C.V. v. Tug L.A. Barrios, 796 F.2d 776, 783 (5th Cir. 1986) (finding that a demise charterer of a vessel, being in possession of the vessel, is entitled to compensation for loss of profits when the vessel is injured).
260. Eg., Henderson v. Arundel Corp., 262 F. Supp. 152, 159-60 (D. Md. 1966) (holding that a defendant whose negligence caused damage to plaintiffs' workplace is not liable for their lost wages); Adams v. S. Pac. Transp. Co., 123 Cal. Rptr. 216, 216-18 (Ct. App. 1975) (same); Willis v. Ga. N. Ry. Co., 314 S.E.2d 919, 919-20 (Ga. Ct. App. 1984) (same); Local Joint Executive Bd. of Las Vegas v. Stern, 651 P.2d 637, 638 (Nev. 1982) (same); Aikens v. Balt. & Ohio R.R., 501 A.2d 277, 278-79 (Pa. Super. Ct. 1985) (same); cf. Stevenson v. E. Ohio Gas Co., 73 N.E.2d 200, 203-04 (Ohio Ct. App. 1946) (holding that workers whose workplace was shut down following a nearby conflagration cannot recover for lost wages).
261. Cf. George A. Hormel & Co. v. Maez, 155 Cal. Rptr. 337, 338, 341 (1979) (allowing the owner of an injured factory to recover for wages paid to idled employees).
262. Cf. Smillie, supra note 77, at 241 (assuming the availability of business interruption insurance for a different purpose); Stevens, supra note 98, at 462-63 (same).
263. See Mark E. Battersby, Insurance Essentials: Figuring Out What Kinds and How Much Insurance You Need, PA. LAW., Jan.-Feb. 2007, at 42, 45 (stating that the premium is usually based on annual income).
264. Bishop, supra note 108, at 2.
265. See Shirley R. Brener, Comment, Outgrowing Impossibility: Examining the Impossibility Doctrine in the Wake of Hurricane Katrina, 56 EMORY L.J. 461, 497 (2006).
266. See 2 JEFFREY W. STEMPEL, STEMPEL ON INSURANCE CONTRACTS § 22.02 (3d ed. 2006);
267. William H. Danne, Annotation, Business Interruption Insurance, 37 A.L.R.5th 41 § 16 (1996);
268. Jeffrey W. Stempel, A Mixed Bag for Chicken Little: Analyzing Year 2000 Claims and Insurance Coverage, 48 EMORY L.J. 169, 214-15 (1999).
269. 44A AM. JUR. 2D Insurance § 1768 (2007).
270. See Mauro Bussani et al., Liability for Pure Financial Loss in Europe: An Economic Restatement, 51 AM. J. COMP. L. 113, 117 n.13 (2003).
271. See GORDON J.R. HICKMOTT, PRINCIPLES AND PRACTICE OF INTERRUPTION INSURANCE 3-4 (1982).
272. See, e.g., Richard A. Posner, The Economic Approach to Law, 53 TEX. L. REV. 757, 763-64 (1975) (explaining that important elements of tort law "can best be understood as attempts, though rarely acknowledged as such, to promote an efficient allocation of resources").
273. Cf. MORTON J. HORWITZ, THE TRANSFORMATION OF AMERICAN LAW 1780-1860, at 253-54 (1977) ("As political and economic power shifted to merchant and entrepreneurial groups in the postrevolutionary period, they began to forge an alliance with the legal profession to advance their own interests through a transformation of the legal system.");
274. see also Charles J. McClain, Legal Change and Class Interests: A Review Essay on Morton Horwitz's The Transformation of American Law, 68 CAL. L. REV. 382, 391-92 (1980) ("The Horwitz thesis is therefore one that posits orchestrated and purposive legal change.").
275. Richard L. Abel, A Critique of Torts, 37 UCLA L. REV. 785, 799 (1990).
276. Id. at 823.
277. Id. at 803. Abel consequently argued that property loss should not be compensated. Id. at 823.
278. Id. at 803; Matthew Diller, Tort and Social Welfare Principles in the Victim Compensation Fund, 53 DEPAUL L. REV. 719, 731-32 (2003) (noting that "higher-earning victims receive greater awards than lower earners").
279. See, e.g., Chamallas, supra note 11, at 464-65 (observing that women of all races and minority men continue to receive significantly lower damage awards than white men in personal injury and wrongful death suits); see also id. at 481-82 (contending that estimates of work-life expectancy and the amount the plaintiff would have earned each year are gender- and race-biased); Martha Chamallas, Civil Rights in Ordinary Tort Cases: Race, Gender, and the Calculation of Economic Loss, 38 LOY. L.A. L. REV. 1435, 1438-39 (2005) (same);
280. Lucinda M. Finley, The Hidden Victims of Tort Reform: Women, Children, and the Elderly, 53 EMORY L.J. 1263, 1280 (2004) (noting that "women, minorities, and the poor receive lesser amounts of economic loss compensation than more economically well off white men").
281. Abel, supra note 230, at 823.
282. Id. at 799.
283. John C.P. Goldberg, Two Conceptions of Tort Damages: Fair v. Full Compensation, 55 DEPAUL L. REV. 435, 437, 438-46 (2006).
284. In fact, even current law does not truly abide by the principle of full compensation. Most notably, the prevailing litigant is ordinarily not entitled to collect attorneys' fees from the loser. See Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 247 (1975).
285. Abel, supra note 230, at 803-04 ("The jury, therefore, must simulate a market in sadomasochism by asking what they would charge to undergo the victim's misfortune. Tort law thus transforms an involuntary past sacrifice (injury) into future gain (damages), reflecting bourgeois notions of delayed gratification and an instrumental view of the self.").
286. See, e.g., Rodriguez v. Bethlehem Steel Corp., 525 P.2d 669 (Cal. 1974).
287. See, e.g., Dillon v. Legg, 441 P.2d 912 (Cal. 1968).
288. Abel, supra note 230, at 805-06.
289. Id. at 823.
290. Chamallas, supra note 234, at 1437-38.
291. Abel, supra note 230, at 800.
292. Chamallas, supra note 11, at 503-04, 519-20; see, e.g., Fein v. Permanente Med. Group, 695 P.2d 665, 681 n.17 (Cal. 1985) ("The first priority of the tort system is to compensate the injured party for the economic loss he has suffered.").
293. Chamallas, supra note 234, at 1437; Finley, supra note 234, at 1281-82, 1313 (observing that noneconomic loss damages are more important for women, racial minorities, and the elderly, who may suffer little economic loss, and that several types of injuries that are disproportionately suffered by women do not affect women in primarily economic terms).
294. Abel, supra note 230, at 803.
295. Id. at 809.
296. Id.
297. HORWITZ, supra note 229, at 85-101.
298. Id. at xv-xvi.
299. See William E. Nelson, From Fairness to Efficiency: The Transformation of Tort Law in New York, 1920-1980, 47 BUFF. L. REV. 117, 217-20 (1999) (demonstrating the dominance of the Hand formula).
300. But cf. Ronen Perry, Re-Torts, 59 ALA. L. REV. (forthcoming 2008) (challenging the dominance of the Hand formula).
301. United States v. Carroll Towing Co., 159 F.2d 169, 173 (2d Cir. 1947).
302. Section 3 of the RESTATEMENT (THIRD) OF TORTS: LIABILITY FOR PHYSICAL HARM (Proposed Final Draft No. 1, 2005) embraced this formula.
303. See, e.g., Stephen R. Perry, Cost-Benefit Analysis and the Negligence Standard. 54 VAND. L. REV. 893, 894 (2001);
304. Kenneth W. Simons, The Hand Formula in the Draft Restatement (Third) of Torts: Encompassing Fairness as Well as Efficiency Values. 54 VAND. L. REV. 901, 902 (2001).
305. Cf. Heidi M. Hurd. Is It Wrong to Do Right When Others Do Wrong?, 7 LEGAL THEORY 307, 307 (2001) ("[T]he Hand Formula appears to allow rights violations in the name of utility or wealth maximization . . . ."): Perry, supra note 255, at 897 ("[A]n understanding of negligence that permitted one person unilaterally to impose substantial risks on others simply because the costs of prevention were too high is very unlikely to be acceptable from a non-consequentialist perspective.").
306. Richard W. Wright, Justice and Reasonable Care in Negligence Law, 47 AM. J. JURIS. 143, 162 (2002) (observing that the Third Restatement allows, indeed requires, a person to engage in conduct that imposes even very serious risks on others as long as the benefits the person expects to obtain from the conduct outweigh the risks to those others).
307. Economically powerful sectors have more holdings and higher income, so their expected loss from exposure to a particular risk is higher. Cf. Tsachi Keren-Paz, An Inquiry into the Merits of Redistribution Through Tort Law: Rejecting the Claim of Randomness, 16 CAN. J.L. & JURISPRUDENCE 91, 95-96 (2003) (illustrating the regressive nature of the Hand formula). Keren-Paz misses a crucial point, though. The inverse ratio between potential victims' economic power and their exposure to risk exists even under a rule of strict liability. As explained above, expected liability is determined by expected loss, so potential injurers who expose others to risk in pursuance of their goals will choose to endanger economically weaker parties even under strict liability.
308. Abel, supra note 230, at 820-21.
309. Including those attributable to third parties' negligence. See, e.g., Nelson v. Hall, 165 Cal. App. 3d 709, 714, 715 (1985) (holding that a veterinary assistant bitten by a dog in the course of treatment cannot sue its owners, because in choosing to engage in this occupation he assumed the risk of being bitten); Cooper v. City of N.Y., 619 N.E.2d 369, 372 (N.Y. 1993) ("[Individuals who elect to join the uniformed services do so with knowledge of the dangers attendant upon those occupations and the distinct possibility that they might be hurt in the course of their employment.") (quoting Pascarella v. City of N.Y., 538 N.Y.S.2d 815, 820 (N.Y. App. Div. 1989)); Kenavan v. City of N.Y., 517 N.E.2d 872, 874 (N.Y. 1987) (holding that firefighters assume the risk of injuries caused by third parties' negligence in the course of duty). Sometimes it is said that firefighters, police officers, and the like are compensated for taking the risk through their salaries and workmen's compensation schemes. See, e.g., Walters v. Sloan, 571 P.2d 609, 612-13 (Cal. 1977) (holding that a police officer injured while performing official duties cannot recover for a negligent act which created the occasion for the officer's employment: "Firemen and policemen are paid for the work they perform including preparation for facing the hazards of their professions . . . ."); Krauth v. Geller, 157 A.2d 129, 131 (N.J. 1960) ("[T]he fireman should receive appropriate compensation from the public he serves, both in pay which reflects the hazard and in workmen's compensation benefits for the consequences of the inherent risks of the calling.").
310. Comment, The Creation of a Common Law Rule: The Fellow Servant Rule, 1837-1860, 132 U. PA. L. REV. 579, 579, 588, 590 (1984).
311. Farwell v. Boston & Worcester R.R., 45 Mass. 49, 57 (1842) ("[H]e who engages in the employment of another for the performance of specified duties and services, for compensation, takes upon himself the natural and ordinary risks and perils incident to the performance of such services. . . . [including] perils arising from the carelessness and negligence of those who are in the same employment.").
312. Buckley v. City of N.Y., 437 N.E.2d 1088, 1089 (N.Y. 1982) ("[T]he rule simply reflected a 19th century bias by the courts in favor of business . . . ."); Comment, supra note 261, at 593-94.
313. MARK A. GEISTFELD, PRINCIPLES OF PRODUCTS LIABILITY 231-33 (2006) (criticizing this practice).
314. See, e.g., Ciofalo v. Vic Tanney Gyms, Inc., 177 N.E.2d 925, 926-27 (N.Y. 1961) (giving effect to a gymnasium membership contract whereby members assume full responsibility for any injuries they incur at the gymnasium, including those caused by the owner's negligence); Baschuk v. Diver's Way Scuba, Inc., 618 N.Y.S.2d 428, 429 (N.Y. App. Div. 1994) (holding that a liability release signed by a student in a scuba diving course was enforceable to absolve the course sponsor from consequences of all negligence).
315. See, e.g., Tunkl v. Regents of Univ. of Cal., 383 P.2d 441 (Cal. 1963) (invalidating exemption clause due to unequal bargaining power); Johnston v. Fargo, 77 N.E. 388 (N.Y. 1906) (same).
316. Warren A. Seavey, Liability to Master for Negligent Harm to Servant, 1956 WASH. U. L.Q. 309, 311; Comment, supra note 178, at 291.
317. Inland Revenue Comm'rs v. Hambrook, [1956] 2 Q.B. 641, 666 (C.A.) (Eng.).
318. Administration of Justice Act, 1982, c. 53, § 2(c)(i) (Eng.).
319. See, e.g., Phoenix Prof'l Hockey Club, Inc. v. Hirmer, 502 P.2d 164, 164-65 (Ariz. 1972); Cravens/Pocock Ins. Agency, Inc. v. John F. Beasley Constr. Co., 766 S.W.2d 309, 311-12 (Tex. App. 1989).
320. Comm'r for Rys. (N.S.W.) v. Scott (1959) 102 C.L.R. 392, 410-18 (Austl.).
321. Kneeshaw & Spawton's Crumpet Co. v. Latendorff, [1965] 54 D.L.R.2d 84, 87-89 (Alta.); Genereux v. Peterson Howell & Heather (Can.) Ltd., [1972] 34 D.L.R. 3d 614, 620-27 (Ont. C.A.): Nugent v. Bd. of Rosetown Sch. Unit No. 43, [1979] 79 D.L.R. 3d 394, 397-99 (Sask. C.A.).
322. Green, supra note 3, at 465-66; Evans Holbrook, The Change in the Meaning of Consortium, 22 MICH. L. REV. 1, 2 (1923);
323. Susan G. Ridgeway, Loss of Consortium and Loss of Services Actions: A Legacy of Separate Spheres, 50 MONT. L. REV. 349, 354 (1989);
324. Kevin Lindsey, Note, A More Equitable Approach to Loss of Spousal Consortium, 75 IOWA L. REV. 713, 713 (1990); Comment, supra note 178, at 292.
325. Administration of Justice Act, 1982, c. 53, § 2(a) (Eng.).
326. See TRINDADE & CANE, supra note 184, at 536-37.
327. See, e.g., Family Relations Act, R.S.B.C., ch. 128, § 123 (1996) (B.C.); Equality of Status Act, R.S.M., ch. E-130, § 1(1)(c) (1987) (Man.).
328. The seminal case was Hitaffer v. Argonne Co., 183 F.2d 811 (D.C. Cir.). See also Lindsey, supra note 273, at 714, 718.
329. Green, supra note 3, at 479; Ridgeway, supra note 273, at 354-55.
330. Administration of Justice Act, 1982, c. 53, § 2(b) (Eng.).
331. Ridgeway, supra note 273, at 351, 362.
332. Id. at 351. There are very few exceptions. See, e.g., Ferriter v. O'Connell's Sons, Inc., 413 N.E.2d 690, 693 (Mass. 1980) (allowing recovery for loss of parental consortium).
333. Ridgeway, supra note 273, at 352-53; Francis Bowes Sayre, Inducing Breach of Contract, 36 HARV. L. REV. 663, 663-64 (1923);
334. Thomas W. Tucker, Sources of Louisiana's Law of Persons: Blackstone, Domat, and the French Codes, 44 TUL. L. REV. 264, 267 (1970).
335. Godwin, supra note 107, at 666-67; Ridgeway, supra note 273, at 353; John Fabian Witt, Toward a New History of American Accident Law: Classical Tort Law and the Cooperative First-Party Insurance Movement, 114 HARV. L. REV. 690, 746 (2001).
336. Comment, supra note 178, at 292; see also Stevens, supra note 98, at 447 ("[A] master retained a proprietary right in his servant . . . .").
337. Chamallas, supra note 11, at 527 ("[T]he husband owned the services of the wife, in much the same way that the master owned the services of his servant."); Jacob Lippman, The Breakdown of Consortium, 30 COLUM. L. REV. 651, 653 (1930) ("[B]oth wife and servant are considered chattels . . . . [The relationship] gave to the husband a proprietary interest in [his wife] . . . ."); Ridgeway, supra note 273, at 355 ("[T]he law recognized the father as master and the child as his capital asset."); Seavey, supra note 267, at 310 ("[T]he husband or father was in possession of the spouse or daughter."); Stevens, supra note 98, at 444 ("[A man has] certain proprietary rights in his wife."); Lindsey, supra note 273, at 713 ("[The wife was] the property of her husband . . . . a party injuring a wife . . . infringed on the husband's proprietary interest.").
338. Cf. Chamallas, supra note 11, at 501 (explaining that the old claims were "given only to the dominant party"); Green, supra note 3, at 484 (noting that a child did not have a cause of action when a parent was injured).
339. See Seavey, supra note 267, at 310 ("It is seldom that an interest which has been protected by the law loses its protection.").
340. Yarmouth Sea Prods. Ltd. v. Scully, 131 F.3d 389, 397-99 (4th Cir. 1997); Miller Indus. Inc. v. Caterpillar Tractor Co., 733 F.2d 813, 820 (11th Cir. 1984); Carbone v. Ursich, 209 F.2d 178, 181-82 (9th Cir. 1953); Van Camp Sea Food Co. v. Di Leva, 171 F.2d 454, 454 (9th Cir. 1948).
341. Carbone, 209 F.2d at 182 ("This long recognized rule is no doubt a manifestation of the familiar principle that seamen are the favorites of admiralty and their economic interests entitled to the fullest possible legal protection."); see also Note, supra note 142, at 822 (referring to Carbone as a "seaman's exception").
342. Henderson v. Arundel Corp.. 262 F. Supp 152, 159-60 (D. Md. 1966).
343. See, e.g., Boat Dianne Lynn Inc. v. C & N Fishing Corp., 729 F. Supp. 1400, 1401 (D. Me. 1989); Casado v. Schooner Pilgrim, Inc., 171 F. Supp. 78, 79-80 (D. Mass. 1959).
344. Aktieselskabet Cuzco v. Sucarseco, 294 U.S. 394, 401-02 (1935).
345. Id. at 403-05; Morrison S.S. Co. v. Owners of Cargo Lately Laden on S.S. Greystoke Castle, [1946] 2 All E.R. 696 (H.L.) (appeal taken from Eng.) (U.K.).
346. Morrison, [1946] 2 All E.R. at 710.
347. Union Oil Co. v. Oppen, 501 F.2d 558, 570 (9th Or. 1974).
348. Other victims are not entitled to recover. La. ex rel. Guste v. M/V Testbank, 752 F.2d 1019, 1028-29 (5th Cir. 1985); see, e.g., In re The Exxon Valdez, 767 F. Supp. 1509, 1516 (D. Alaska 1991).
349. Channel Star Excursions, Inc. v. S. Pac. Transp. Co., 77 F.3d 1135, 1138 (9th Cir. 1996) ("Union Oil is limited to the environmental sphere; if it is under admiralty law, it can only be said to have carved out a unique exception to the Robins Dry Dock rule by placing a duty on oil drillers to fish and the marine ecosystem.").
350. See Testbank, 752 F.2d at 1027 n.10; Pruitt v. Allied Chem. Corp., 523 F. Supp. 975, 978 (E.D. Va. 1981). This, of course, is a clear fiction. See McThenia & Ulrich, supra note 110, at 1525-28.
351. For example, Italy has a strong socialist tradition. See, e.g., Robert Leonardi, Representation in Italy: Institutionalized Tradition and Electoral Choice, 9 J. INTERDISC. HIST. 559, 559 (1979) (book review);
352. Giacomo Sani, Political Traditions as Contextual Variables: Partisanship in Italy, 20 AM. J. POL. SCI. 375, 385-86, 388-89 (1976). Relational economic losses are apparently recoverable under the same principles applied to consequential losses.
353. See Mauro Bussani & Vernon Valentine Palmer, The Liability Regimes of Europe - Their Façades and Interiors, in PURE ECONOMIC LOSS IN EUROPE 120, 133-35 (Mauro Bussani & Vernon Valentine Palmer eds., 2003).
354. For example, it appears that German law does not allow recovery for relational economic losses in tort law. B.S. MARKESINIS, THE LAW OF TORTS: A COMPARATIVE INTRODUCTION 59 ff (3d ed. 1997). But one should bear in mind that Section 823(1) of the German
355. See B. S. Markesinis, An Expanding Tort Law - The Price of A Rigid Contract Law, 103 LAW. Q. REV. 354 (1987).
356. 1958 CONST. 1 (Fr.), available at http://www.conseil- constitutionnel.fr/textes/constit.htm ("La France est une République indivisible, laïque, démocratique et sociale. Elle assure l'égalité devant la loi de tous les citoyens . . . .").
357. Id. art. 2.
358. John C. Reitz, Political Economy as a Major Architectural Principle of Public Law, 75 TUL. L. REV. 1121, 1127 (2001).
359. Id. at 1128.
360. ALBERTO ALESINA & FRANCESCO GIAVAZZI, THE FUTURE OF EUROPE: REFORM OR DECLINE 2 (2006). The authors explain that "'Europe' means continental Western Europe, because [in] many dimensions Europeans have, vis-à-vis the United Kingdom, reactions that are similar to those elicited by the United States." Id. at 9.
361. CODE CIVIL [C. CIV.] art. 1382 (Fr.), translated in THE FRENCH CIVIL CODE 253 (John H. Crabb trans., 1977).
362. Id. at art. 1383.
363. Id. at art. 1151.
364. See Bussani & Palmer, supra note 299, at 127.
365. KONRAD ZWEIGERT & HEIN KÖTZ, INTRODUCTION TO COMPARATIVE LAW 617 (Tony Weir trans., 3d ed. 1998);
366. see also Christian Lapoyade Deschamps, La Réparation du Préjudice Économique Pur en Droit Français, in CIVIL LIABILITY FOR PURE ECONOMIC LOSS 89, 89 (Efstathios K. Banakas ed., 1996) (observing that French law does not treat purely economic loss as a distinct problem);
367. Lara Khoury, The Liability of Auditors Beyond Their Clients: A Comparative Study, 46 MCGILL L.J. 413, 453 (2001) ("[Purely economic loss] has never been categorically excluded or treated separately.");
368. D. Marshall, Liability for Pure Economic Loss Negligently Caused - French and English Law Compared, 24 INT'L & COMP. L.Q. 748, 749 (1975) ("[E]conomic loss is not treated in French law as a specific problem.").
369. Bussani & Palmer, supra note 299, at 127.
370. Paul Esmein, Le nez de Cléopâtre ou les Affres de la Causalité, D. 1964 Chron. 205, ¶ 20 ("Un dommage doit être dit indirect quand la personne qui en demande réparation le subit par répercussion d'un autre dommage, subi par une autre personne.").
371. Cour de cassation, Chambre sociale [Cass. soc.] [high court of general jurisdiction, social chamber], Nov. 27, 1964, Gaz. Pal. 1965, 1, 133; Cour de cassation, Deuxième chambre civile [Cass. 2e civ.] [high court of general jurisdiction, second civil chamber], Nov. 14, 1958, Gaz. Pal. 1959, 1, 31.
372. Cour de cassation, Chambre sociale [Cass. soc.] [high court of general jurisdiction, social chamber], Nov. 27, 1964, Gaz. Pal. 1965, 1, 133; Cour d'appel [CA] [regional court of appeal] Colmar, Apr. 20, 1955, JCP 1955 II 8741.
373. Cour d'appel [CA] [regional court of appeal] Colmar, 2e ch., Apr. 20, 1956, JCP 1956 IV 128 ("la baisse sensible du chiffre d'affaires de la société qui peut, apparamment, en résulter, ne peut être considérée comme un dommage direct susceptible de donner lieu à reparation").
374. Bussani & Palmer, supra note 299, at 127, 130-31; Jacques Herbots, Economic Loss in the Legal Systems of the Continent, in THE LAW OF TORT - POLICIES & TRENDS IN LIABILITY FOR DAMAGE TO PROPERTY AND ECONOMIC LOSS 137, 143, 152 (Michael Furmston ed., 1986); Khoury, supra note 310, at 452.
375. Cour de cassation, Deuxième chambre civile [Cass. 2e civ.] [high court of general jurisdiction, second civil chamber], May 8, 1970, D. 1970 Somm., 203. Cf. J.E. Constr. v. General Motors, [1985] C.A. 275, 279 (Que.); Joly v. Ferme Ré-Mi Inc., [1974] C.A. 523 (Que.).
376. Cour de cassation, Deuxième chambre civile [Cass. 2e civ.] [high court of general jurisdiction, second civil chamber], Apr. 28, 1965, D.S. 1965, 777, Esmein.
377. Cour de cassation, Deuxième chambre civile [Cass. 2e civ.] [high court of general jurisdiction, second civil chamber], Mar. 19, 1980, JCP 1980 IV 216.
378. Cour d'appel [CA] [regional court of appeal] Rouen, Dec. 17, 1987, D.M.F. 1988, 488.
379. Cour d'appel [CA] [regional court of appeal] Colmar, Apr. 20, 1955, JCP 1955 II 8741.
380. Tribunal de grande instance [T.G.I] [ordinary court of original jurisdiction] Nanterre, Oct. 22, 1975, Gaz. Pal. 1976, 1, 392, Valon.
381. Tribunal de grande instance [T.G.I] [ordinary court of original jurisdiction] Bastia, Dec. 8, 1976, D.S. 1977, Jur. 427; see also Goldberg, supra note 110, at 2 n.7 (stating that similar claims were allowed following the Amoco Cadiz oil spill in 1978).
382. See Marshall, supra note 310, at 752.
383. Deschamps, supra note 310, at 96-97; Herbots, supra note 316, at 143; Marshall, supra note 310, at 760.
384. Bow Valley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Co., [1997] 153 D.L.R.4th 385, 404 (Can.).
385. This difference is evident with regard to other doctrines as well. For example, the French Cour de cassation, as opposed to Anglo-American courts, found that the general principle of respondeat superior applied to cases of "fellow servant." See Comment, supra note 261, at 579, 585.