Indiana Harbor Belt Railroad Co. v. American Cyanamid Co.
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''Indiana Harbor Belt Railroad Co. v. American Cyanamid Co.'', 916
F.2d The ''Federal Reporter'' () is a case law reporter in the United States that is published by West Publishing and a part of the National Reporter System. It begins with cases decided in 1880; pre-1880 cases were later retroactively compiled by We ...
1174 (
7th Cir. The United States Court of Appeals for the Seventh Circuit (in case citations, 7th Cir.) is the U.S. federal court with appellate jurisdiction over the courts in the following districts: * Central District of Illinois * Northern District of Ill ...
1990), is a decision of the
United States Court of Appeals for the Seventh Circuit The United States Court of Appeals for the Seventh Circuit (in case citations, 7th Cir.) is the U.S. federal court with appellate jurisdiction over the courts in the following districts: * Central District of Illinois * Northern District of Il ...
authored by
Judge A judge is a person who presides over court proceedings, either alone or as a part of a panel of judges. A judge hears all the witnesses and any other evidence presented by the barristers or solicitors of the case, assesses the credibility an ...
Richard Posner Richard Allen Posner (; born January 11, 1939) is an American jurist and legal scholar who served as a federal appellate judge on the U.S. Court of Appeals for the Seventh Circuit from 1981 to 2017. A senior lecturer at the University of Chica ...
. The case has subsequently become a staple of first year
Torts A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable ...
courses taught in American law schools, where the case is used to address the question of when it is better to use
negligence Negligence (Lat. ''negligentia'') is a failure to exercise appropriate and/or ethical ruled care expected to be exercised amongst specified circumstances. The area of tort law known as ''negligence'' involves harm caused by failing to act as a ...
liability or
strict liability In criminal and civil law, strict liability is a standard of liability under which a person is legally responsible for the consequences flowing from an activity even in the absence of fault or criminal intent on the part of the defendant. ...
.


Background

American Cyanamid American Cyanamid Company was a leading American conglomerate which became one of the nation's top 100 manufacturing companies during the 1970s and 1980s, according to the Fortune 500 listings at the time. It started in fertilizer, but added ...
was a
manufacturer Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of secondary sector of the economy. The term may refer to a ran ...
that produced chemicals, including
acrylonitrile Acrylonitrile is an organic compound with the formula and the structure . It is a colorless, volatile liquid although commercial samples can be yellow due to impurities. It has a pungent odor of garlic or onions. In terms of its molecular ...
, which is used in making
acrylic fiber Acrylic fibers are synthetic fibers made from a polymer (polyacrylonitrile) with an average molecular weight of ~100,000, about 1900 monomer units. For a fiber to be called "acrylic" in the US, the polymer must contain at least 85% acrylonitr ...
s,
plastics Plastics are a wide range of synthetic polymers, synthetic or semi-synthetic materials that use polymers as a main ingredient. Their Plasticity (physics), plasticity makes it possible for plastics to be Injection moulding, moulded, Extrusion, e ...
,
dyes A dye is a colored substance that chemically bonds to the substrate to which it is being applied. This distinguishes dyes from pigments which do not chemically bind to the material they color. Dye is generally applied in an aqueous solution and ...
, pharmaceutical chemicals, and other products. In January 1979, American Cyanamid wanted to ship acrylonitrile from its
plant Plants are predominantly photosynthetic eukaryotes of the kingdom Plantae. Historically, the plant kingdom encompassed all living things that were not animals, and included algae and fungi; however, all current definitions of Plantae exclud ...
in
Louisiana Louisiana , group=pronunciation (French: ''La Louisiane'') is a state in the Deep South and South Central regions of the United States. It is the 20th-smallest by area and the 25th most populous of the 50 U.S. states. Louisiana is borde ...
to its plant in
New Jersey New Jersey is a state in the Mid-Atlantic and Northeastern regions of the United States. It is bordered on the north and east by the state of New York; on the east, southeast, and south by the Atlantic Ocean; on the west by the Delaware ...
.''Indiana Harbor Belt Railroad Co. v. American Cyanamid Co.'', 916 F.2d 1174, 1175 (7th Cir. 1990) It therefore
leased A lease is a contractual arrangement calling for the user (referred to as the ''lessee'') to pay the owner (referred to as the ''lessor'') for the use of an asset. Property, buildings and vehicles are common assets that are leased. Industrial ...
a
tank car A tank car ( International Union of Railways (UIC): tank wagon) is a type of railroad car (UIC: railway car) or rolling stock designed to transport liquid and gaseous commodities. History Timeline The following major events occurred in t ...
from the North American Car Corporation, filled it with 20,000 gallons of liquid acrylonitrile, and the
Missouri Pacific Railroad The Missouri Pacific Railroad , commonly abbreviated as MoPac, was one of the first railroads in the United States west of the Mississippi River. MoPac was a Class I railroad growing from dozens of predecessors and mergers. In 1967, the railroad ...
then picked up the car from the Louisiana plant. Missouri Pacific Railroad delivered the car to the
Indiana Harbor Belt Railroad The Indiana Harbor Belt Railroad is a Class III railroadSurface Transportation BoardThe Belt Railway Company of Chicago -- Trackage Rights Exemption -- Indiana Harbor Belt Railroad Company January 9, 2002 in the United States. Ownership The IHB ...
, a
Chicago (''City in a Garden''); I Will , image_map = , map_caption = Interactive Map of Chicago , coordinates = , coordinates_footnotes = , subdivision_type = Country , subdivision_name ...
-area
switching railroad A switching and terminal railroad is a freight railroad company whose primary purpose is to perform local switching services or to own and operate a terminal facility. Switching is a type of operation done within the limits of a yard. It genera ...
, who were to switch the car to
Conrail Conrail , formally the Consolidated Rail Corporation, was the primary Class I railroad in the Northeastern United States between 1976 and 1999. The trade name Conrail is a portmanteau based on the company's legal name. It continues to do busin ...
for final delivery to the New Jersey plant. However, several hours after the car arrived at the Blue Island
Rail Yard A rail yard, railway yard, railroad yard (US) or simply yard, is a series of tracks in a rail network for storing, sorting, or loading and unloading rail vehicles and locomotives. Yards have many tracks in parallel for keeping rolling stock or u ...
in
Riverdale, Illinois Riverdale is a village in Cook County, Illinois, Cook County, Illinois, United States. The population was 10,663 at the 2020 census. The village shares its name with the bordering Riverdale, Chicago, Riverdale neighborhood in Chicago. Geography ...
(on Riverdale's border with
Blue Island, Illinois Blue Island is a city in Cook County, Illinois, located approximately south of Chicago's Loop. Blue Island is adjacent to the city of Chicago and shares its northern boundary with that city's Morgan Park neighborhood. The population was 22,558 ...
), Indiana Harbor Belt Railroad employees noticed that acrylonitrile was gushing out of the car because the lid on the outlet was broken. Concerned because acrylonitrile is
flammable A combustible material is something that can burn (i.e., ''combust'') in air. A combustible material is flammable if it ignites easily at ambient temperatures. In other words, a combustible material ignites with some effort and a flammable mat ...
, highly
toxic Toxicity is the degree to which a chemical substance or a particular mixture of substances can damage an organism. Toxicity can refer to the effect on a whole organism, such as an animal, bacterium, or plant, as well as the effect on a subst ...
, and possibly a
carcinogen A carcinogen is any substance, radionuclide, or radiation that promotes carcinogenesis (the formation of cancer). This may be due to the ability to damage the genome or to the disruption of cellular metabolic processes. Several radioactive substan ...
, local officials ordered an evacuation until the leak could be stopped and the car moved to a remote part of the rail yard. Worried that the leak may have resulted in
soil contamination Soil contamination, soil pollution, or land pollution as a part of land degradation is caused by the presence of xenobiotic (human-made) chemicals or other alteration in the natural soil environment. It is typically caused by industrial activity ...
and
water contamination Water pollution (or aquatic pollution) is the contamination of water bodies, usually as a result of human activities, so that it negatively affects its uses. Water bodies include lakes, rivers, oceans, aquifers, reservoirs and groundwater. Water ...
, the
Illinois Environmental Protection Agency The Illinois Environmental Protection Agency (Illinois EPA) of the state of Illinois is the primary body concerned with the protection of the environment for the state. The Illinois EPA's mission is "to safeguard environmental quality, consistent ...
subsequently ordered Indiana Harbor Belt Railroad to clean up the site. Indiana Harbor Belt Railroad ultimately spent approximately $980,000 on cleaning up the rail yard. Indiana Harbor Belt Railroad brought suit against American Cyanamid seeking to recover the cleanup costs from American Cyanamid. The suit set forth two legal theories: (1) that American Cyanamid had
negligently Negligence (Lat. ''negligentia'') is a failure to exercise appropriate and/or ethical ruled care expected to be exercised amongst specified circumstances. The area of tort law known as ''negligence'' involves harm caused by failing to act as a ...
maintained the leased car; and (2) that, since American Cyanamid was involved in an abnormally dangerous activity, it was
strictly liable In criminal and civil law, strict liability is a standard of liability under which a person is legally responsible for the consequences flowing from an activity even in the absence of fault or criminal intent on the part of the defendant. ...
for the consequences of a spill or other accident to the shipment en route. American Cyanamid moved to dismiss Indiana Harbor Belt Railroad's strict liability claim against it, but the district judge denied this motion. Indiana Harbor Belt Railroad therefore moved for
summary judgment In law, a summary judgment (also judgment as a matter of law or summary disposition) is a judgment entered by a court A court is any person or institution, often as a government institution, with the authority to adjudicate legal disputes ...
and won. The district judge then dismissed Indiana Harbor Belt Railroad's negligence claim so that American Cyanamid could appeal the strict liability decision to the Seventh Circuit.


Opinion

Circuit Judge Posner begins by stating that this case presents a
case of first impression A precedent is a principle or rule established in a previous legal case that is either binding on or persuasive for a court or other tribunal when deciding subsequent cases with similar issues or facts. Common-law legal systems place great value ...
so there is no
precedent A precedent is a principle or rule established in a previous legal case that is either binding on or persuasive for a court or other tribunal when deciding subsequent cases with similar issues or facts. Common-law legal systems place great valu ...
directly governing the disposition of the case, and leaving the court to decide the case on the basic principles underlying
Illinois Illinois ( ) is a U.S. state, state in the Midwestern United States, Midwestern United States. Its largest metropolitan areas include the Chicago metropolitan area, and the Metro East section, of Greater St. Louis. Other smaller metropolita ...
tort law. To address the question of whether
strict liability In criminal and civil law, strict liability is a standard of liability under which a person is legally responsible for the consequences flowing from an activity even in the absence of fault or criminal intent on the part of the defendant. ...
is appropriate in this case, Posner turns to several foundational 19th century cases, including ''
Rylands v. Fletcher ''Rylands v Fletcher'' (1868) LR 3 HL 330 is a leading decision by the House of Lords which established a new area of English tort law. It established the rule that one's non-natural use of their land, which leads to another's land being damaged ...
'' (1868) and '' Guille v. Swan'' (1822), and then consults the
Restatement (Second) of Torts The American ''Restatement of Torts, Second'', is a treatise issued by the American Law Institute. It summarizes the general principles of common law United States tort law. The volumes covering torts are part of the second ''Restatements of the ...
. Section 520 of the Restatement sets out six factors for determining when strict liability is appropriate: "Guille is a paradigmatic case for strict liability. (a) The risk (probability) of harm was great, and (b) the harm that would ensue if the risk materialized could be .. great ... The confluence of these two factors established the urgency of seeking to prevent such accidents. (c) Yet such accidents could not be prevented by the exercise of due care ... (d) The activity snot a matter of common usage ... (e) The activity sinappropriate to the place in which it took place ... nd (f) Reinforcing(d), sthe value to the community of the activity great enough to offset its unavoidable risks Posner explains the relationship between negligence and strict liability as follows:
The baseline
common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipresen ...
regime of tort liability is
negligence Negligence (Lat. ''negligentia'') is a failure to exercise appropriate and/or ethical ruled care expected to be exercised amongst specified circumstances. The area of tort law known as ''negligence'' involves harm caused by failing to act as a ...
. When it is a workable regime, because the hazards of an activity can be avoided by being careful (which is to say, nonnegligent), there is no need to switch to
strict liability In criminal and civil law, strict liability is a standard of liability under which a person is legally responsible for the consequences flowing from an activity even in the absence of fault or criminal intent on the part of the defendant. ...
. 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..., or by reducing the scale of the activity in order to minimize the number of accidents caused by it.... 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 In general, incentives are anything that persuade a person to alter their behaviour. It is emphasised that incentives matter by the basic law of economists and the laws of behaviour, which state that higher incentives amount to greater levels of ...
, 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... The greater the risk of an accident...and the costs of an accident if one occurs..., 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.
Turning from these general principles to the case, Posner states that "we have been given no reason...for believing that a negligence regime is not perfectly adequate to remedy and deter, at reasonable cost, the accidental spillage of acrylonitrile from rail cars."''Indiana Harbor Belt Railroad Co. v. American Cyanamid Co.'', 916 F.2d 1174, 1179 (7th Cir. 1990) Instead, the court says that under the facts of this case, the chemical spill was caused by the negligence of either (a) the North American Car Corporation in failing to maintain or inspect the rail car properly; (b) American Cyanamid in failing to maintain or inspect the car; or (c) the Missouri Pacific Railroad when it had custody of the rail car. Under a negligence regime, the role of the courts is to consider the evidence and reach a determination as to which party's negligence caused the spill, and the negligent party would then have to pay the cleanup costs. Under a strict liability regime, American Cyanamid would have to pay the cleanup costs, even if it did not act negligently, and the court is not convinced that there are compelling reasons to force American Cyanamid to bear the cleanup costs if it was not negligent. The court rejected a number of arguments made by Indiana Harbor Belt Railroad as to why strict liability should be applied in this case. Indiana Harbor Belt Railroad argued that the potentially calamitous nature of a chemical spill meant that strict liability should be imposed on shippers shipping hazardous chemicals. The court, however, found that "if a tank car is carefully maintained the danger of a spill of acrylonitrile is negligible. If this is right there is no compelling reason to move to a regime of strict liability." Indiana Harbor Belt Railroad also argued that a strict liability regime would encourage manufacturers not to ship hazardous materials through densely populated cities and instead choose alternate routes. The court rejected this argument on the grounds that given the US railway system's
hub and spoke A hub is the central part of a wheel that connects the axle to the wheel itself. Hub, The Hub, or hubs may refer to: Geography Pakistan * Hub Tehsil, Balochistan, an administrative division ** Hub, Balochistan, capital city of the tehsil * Hub ...
design, it was difficult for shippers to avoid shipping their goods through densely populated neighborhoods, because the hubs of this system are all located in large cities.''Indiana Harbor Belt Railroad Co. v. American Cyanamid Co.'', 916 F.2d 1174, 1180 (7th Cir. 1990) The court said that Indiana Harbor Belt Railroad had failed to demonstrate that the shipment of acrylonitrile by rail through populated areas is so hazardous an activity that even when shippers exercise due care, the law should nevertheless create incentives to relocate the activity to nonpopulated areas or to reduce the scale of the activity.''Indiana Harbor Belt Railroad Co. v. American Cyanamid Co.'', 916 F.2d 1174, 1181 (7th Cir. 1990) Indiana Harbor Belt Railroad also pointed to concerns of distributional fairness, arguing that American Cyanamid was a huge firm better able to bear the costs of an environmental cleanup, while Indiana Harbor Belt Railroad was a struggling regional railroad that nearly went bankrupt after it was ordered to pay the cleanup costs in this case. The court was unconvinced by this argument, and noted that Indiana Harbor Belt Railroad was a jointly owned subsidiary of
Conrail Conrail , formally the Consolidated Rail Corporation, was the primary Class I railroad in the Northeastern United States between 1976 and 1999. The trade name Conrail is a portmanteau based on the company's legal name. It continues to do busin ...
and the
Soo Line Railroad The Soo Line Railroad is the primary United States railroad subsidiary of the Canadian Pacific Railway , one of seven U.S. Class I railroads, controlled through the Soo Line Corporation. Although it is named for the Minneapolis, St. Paul and Sa ...
, corporations with pockets just as deep as American Cyanamid's. The court concluded that concerns about distributional fairness did not therefore require imposing strict liability on shippers. Implicit in much of Posner's reasoning is the idea that, because each of the potential defendants are interlinked in a commercial chain, liability imposed on any one defendant would simply lead to higher prices passed on to the others. This makes an exact determination of where liability lies unnecessary. The court therefore held that a shipper of a hazardous chemical by rail is not strictly liable for the consequences of a spill or other accident to the shipment en route. A shipper may, however, be held liable if a plaintiff can prove that the shipper acted negligently.


References


External links


Alan O. Sykes, "Strict Liability Versus Negligence in ''Indiana Harbor''", ''Stanford Law and Economics Olin Working Paper'' No. 332Keith N. Hylton, "Duty in Tort Law: An Economic Approach", in ''The Fordham Law Review'' (2006)
{{United States tort case law United States Court of Appeals for the Seventh Circuit cases United States tort case law 1990 in the environment 1990 in United States case law 1990 in Illinois 1990 in case law 1990 in rail transport Railway case law