East River S.S. Corp. v. Transamerica, 476 U.S. 858 (1986)

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE THIRD CIRCUIT

Syllabus

A shipbuilder contracted with respondent to design, manufacture, and supervise the installation of turbines that would be the main propulsion units for four oil-transporting supertankers constructed by the shipbuilder. After each ship was completed, it was chartered to one of the petitioners. When the ships were put into service, the turbines on all four ships malfunctioned due to design and manufacturing defects. Only the products themselves were damaged. Petitioners filed a five-count admiralty complaint in Federal District Court against respondent, alleging tortious conduct based on a products liability theory and seeking damages for the cost of repairing the ships and for income lost while they were out of service. The District Court granted summary judgment for respondent. The Court of Appeals affirmed, holding that petitioners’ dissatisfaction with product quality did not state a claim cognizable in tort.

Held:

1. The fourth count should have been dismissed on the ground that the petitioner who chartered the ship referred to in that count lacked standing to bring the claim. P. 863.

2. The torts alleged in the other counts clearly fall within admiralty jurisdiction. Pp. 863-864.

3. Admiralty law, which already recognizes a general theory of liability for negligence, also incorporates principles of products liability, including strict liability. Pp. 864-866.

4. But whether stated in negligence or strict liability, no products liability claim lies in admiralty when a commercial party alleges injury only to the product itself resulting in purely economic loss. Such a claim is most naturally understood as a warranty claim. Pp. 866-876.

752 F.2d 903, affirmed.

BLACKMUN, J., delivered the opinion for a unanimous Court.