Indiana Harbor Belt Railroad Co. v. American Cyanamid Co.

Brief Fact Summary.

Cyanamid’s railroad tank car was brought to a railroad yard owned by Indiana Harbor Belt Railroad to be switched onto an eastern railroad line. The tank car leaked chemicals, causing Indiana Harbor Belt Railroad employees to evacuate nearby homes. Indiana Harbor Belt Railroad was fined $981,022.75 for contamination of soil and water and sued to recover the cost of the fine.

Synopsis of Rule of Law.

A manufacturer of a product is not engaged in an abnormally dangerous activity merely because the product becomes dangerous when it is handled or used in some way after it leaves his premises, even if the danger is foreseeable.

Facts.

Cyanamid loaded 20,000 gallons of chemicals into a railroad tank car in Louisiana. A train brought the tank car to a railroad yard owned by Indiana Harbor Belt Railroad so that the tank car could be switched onto another railroad line to take it east to New Jersey.

Several hours after the tank car arrived, Indiana Harbor Belt Railroad employees noticed fluid gushing from the bottom of the tank car. The employees were able to close the leak after about two hours, but they evacuated the nearby homes for a few hours because the chemical was highly flammable and toxic.

The Illinois Department of Environmental Protection charged Indiana Harbor Belt Railroad with $981,022.75 in fines for contamination of soil and water resulting from the spill. Indiana Harbor Belt Railroad sued American Cyanamid Co. to recover the cost of the fine.

Issue.

May the shipper of a hazardous chemical by rail be held strictly liable for the consequences of a spill or other accident to the shipment en route?

Held.

Reversed and remanded for further proceedings on the plaintiff’s claim for negligence.

No. A shipper of a hazardous chemical by rail be held strictly liable for the consequences of a spill or other accident to the shipment en route.

Discussion.

Restatement (Second) of Torts § 250 sets forth six factors to determine whether an activity is abnormally dangerous to hold the actor strictly liable:

1. The risk of harm;
2. The harm that would ensue if the risk materialized;
3. Whether the accident could be prevented by the exercise of due care;
4. Whether the activity was a matter of common usage;
5. Whether the activity was appropriate to the place in which it took place; and
6. Whether the value to the community was great enough to offset its unavoidable risks.

In Guille, a man unintentionally landed a hot-air balloon in a vegetable garden in New York City. A crowd trampled on the vegetables while attempting to rescue the man. The owner of the garden sued the balloonist and won, even though the man did not intentionally land the hot-air balloon in the vegetable garden. The Guille found strict liabilityon the part of the balloonist given the risk of serious harm to others in the densely populated New York City was high. Additionally, the activity of recreational ballooning does not offset the unavoidable risks present with the activity.

Guille was a circumstance where no amount of care could have been taken to reduce the risk of harm of accident from the balloonist’s unintentional landing on the vegetable garden. Thus, strict liability was appropriate because it incentivize such potential wrongdoers to relocate, change, or reduce the activity that could give risk to an accident.

In contrast, accidents due to a lack of care can be adequately deterred by a negligence regime. Here, Indiana Harbor Belt Railroad Co.  was not a shipper who merely placed goods on a loading dock—it actively participated in the transportation in that the leak was caused not by the inherent acidic properties of the chemical, but rather a lack of care on the part of Indiana Harbor Belt Railroad Co. If most chemical spills occur due to a lack of care, then strict liability should only cause a slight rise in liability insurance rates.

Shippers will not be incentivized to reroute transportation of such chemicals where: (1) metropolitan areas are hubs for interstate transportation; (2) rerouting could result in prohibitive costs; (3) shippers are not equipped to determine the “safest” route of a railroad; and (4) rerouting could result in longer trips, which in turn could increase the likelihood of an accident. All in all, it’s easy to see how the accident could have been prevented by greater care on the part of Indiana Harbor Belt Railroad Co., but it’s harder to see how the accident could have been prevented by changing the route or way the chemicals were transported.

The ultrahazardous inquiry goes to the transportation of the chemicals in a metropolitan area and not the dangerous nature of the chemicals themselves. It may be brutal to say, but people who live close to a railroad yard are like people who live between the runway tracks at an international airport.