Recovery of Purely Economic Damages From Third Parties for an Oil Spill

November 10, 2017

Types : Alerts

In re Settoon Towing, L.L.C., 859 F.3d 340 (5th Cir. 2017), two flotillas of barges were sailing southbound on the Mississippi River.  One flotilla was carrying crude oil; the other flotilla was carrying grain.  They collided as the crude oil flotilla was overtaking the grain flotilla.  A crude oil barge ruptured and spilled its cargo into the river.

Settoon, the owner and operator of the flotilla carrying crude oil, was designated as the “Responsible Party” pursuant to the Oil Pollution Act of 1990, 33 U.S.C. §§ 2701 et seq. (“OPA 90”).  As such, Settoon spent millions of dollars removing (i.e., cleaning up) the crude oil spill and paying other damages.  Settoon also filed a petition for limitation of liability pursuant to 46 U.S.C. §§ 30501, et seq.

Marquette, the owner and operator of the flotilla carrying grain, filed a claim against Settoon.  In turn, Settoon filed a counterclaim against Marquette seeking contribution under OPA 90, the general maritime law, or both.  The district court found that Settoon was 35% at fault for the collision and Marquette was 65% at fault for the collision.  Accordingly, Settoon sought contribution from Marquette – including contribution for purely economic damages – consistent with Marquette’s apportioned fault.

Under the general maritime law, purely economic damages are not recoverable.  See Robin Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 307-09 (1927).  However, under OPA 90, purely economic damages are recoverable from a third party if the third party was solely at fault.  See 33 U.S.C. § 2702(d)(1)(B).  The issue before the court of appeals was whether purely economic damages are recoverable from a third party when the third party is partially at fault.

Marquette argued that OPA 90 permits a responsible party to recover purely economic damages from a third party only when the third party is solely at fault.  The theory is that in those limited circumstances a responsible party is entitled by subrogation to all rights of the United States and other claimants to recover removal costs and damages – including purely economic damages – from a third party.  See 33 U.S.C. § 2702(d)(1)(B).  However, Settoon’s counterclaim was not based on subrogation; rather, it was based on contribution.

OPA 90 addresses contribution at 33 U.S.C. § 2709.  It says “[a] person may bring a civil action for contribution against any other person who is liable or potentially liable under this Act or another law.”  Marquette argued that this section of OPA 90 merely acknowledged that the general maritime law, including the prohibition of recovery of purely economic damages, still applied.  The district court and the court of appeals disagreed.

The court of appeals analyzed the statute’s plain language and compared it to the Clean Water Act, 33 U.S.C §§ 1251 et seq. (“CWA”), and the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq. (“CERCLA”).  Whereas CWA did not create a cause of action for contribution, both CERCLA and OPA 90 did create a create a cause of action for contribution – including against a third party for purely economic damages – when the third party was partially at fault.

The court of appeals noted that its interpretation of OPA 90 was consistent with legislative history.  Congress intended that OPA 90, and not the general maritime law, controlled liability with respect to oil spills.  In other words, OPA 90 nullified the Robins Dry Dock prohibition of the recovery of purely economic damages.  Therefore, the court of appeals held that a responsible party may seek contribution for purely economic damages from third parties who were partially at fault for an oil spill.


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