In Saratoga Fishing Co., the Supreme Court exercised its authority over admiralty law to render what may become an influential decision in an obscure but important area of products liability law. As a general rule, tort law does not permit plaintiffs to recover economic losses. Finding no meaningful distinction between a product that damages itself and a product that simply fails to work, courts have generally held that losses due to a product damaging itself are economic in nature and therefore not recoverable in tort actions. Damages due to personal injury and injury to other property are, however, not considered economic in nature and are therefore generally recoverable in tort.In Saratoga Fishing Co., the Supreme Court considered what constitutes other property for purposes of the "economic loss" rule. The case arose out of an engine room fire and flood that led to the sinking of a fishing vessel. The owner of the vessel sued the builder of the boat and the manufacturer of the hydraulic system installed by the builder to recover, among other things, for the loss of certain smaller boats, nets and other objects added to the boat by its first owner. Reasoning that original manufacturers can anticipate and spread the risk of harm to components added to their products after sale better than user/resellers adding those components, the majority held that components added to a product after its initial sale are "other property" for purposes of the economic loss rule and that plaintiffs may therefore recover in tort harm suffered as a result of damage to such components.
In dissent, Justice Scalia and two other Justices adopted a slightly different standard. Under this standard, plaintiffs would not be permitted to recover damages to components added by a reseller who is actively engaged in the sale of the product in question. Finding that the defendant in this case was actively engaged in the sale of the boats, the dissent found the harm to the components added by the defendant to be economic in nature. In so doing, however, Justice Scalia noted that his rule was quite similar to the majority's and would in most cases produce the same result. Thus, all nine Justices agreed that, in most cases, damages to components added to a product after its initial sale are recoverable in product liability actions.
The NAM filed an amicus brief urging the Court to rule that the "economic loss rule" applies in maritime product liability cases to cut off tort liability for damage to "other property" on the ship, since that property was part of the benefit of the bargain when the ship was bought. The only remedy for loss should be a contract claim negotiated with the seller. Joint brief with Raychem Corp. filed 12/30/96.