Environmental law principles and applications

Nissan v. Maryland Shipbuilding

In the last several decades as industry has increased throughout the United States, there have been several court cases regarding industrial chemicals, their use, and the liability of those using potentially hazardous materials. From personal property cases to cases between industries, the court systems have struggled to determine criteria for negligence, trespassing, liability, and other aspects of potentially harmful materials in the air, water, and soil. With no specific federal criteria for such suits, and only common law to interpret in such cases, these issues can be solely up to interpretation of the law. With additional concerns about jurisdiction in cases of maritime commerce, such suits can be difficult to judge, at best.

This paper discusses the case of Nissan Motor Corp. v. Maryland Shipbuilding and Drydock Company, a case originally brought in 1982 that shows the difficulty of applying common law to corporate environmental issues. Throughout the paper, we will examine the history of the case, the background and specific requirements of the environmental issues and regulations cited in the lawsuit, and the reasons behind the use of such regulations. Additionally, this paper will discuss the final verdict of the court, the reasoning behind the judgment, and will discuss the judgment, citing the specific legal conditions in the case that justify the end judgment. Through such an analysis, we hope to show that the judges in this case were correct in their decision.

In Nissan Motor Corp. v. Maryland Shipbuilding and Drydock Company (1982), there are several issues one must first examine to fully understand the case at hand. Nissan Motor Corp. secured land from the Weyerhaeuser Lumber Company in the mid-1970s. This land was located in the Port of Baltimore, and was to be used as a docking point for vessels carrying new automobiles, and as a storage point for those vehicles. The company then distributed the vehicles to retailers for sale in various regions throughout the United States. By 1978, the land had been leased from Weyerhaeuser by the Maryland Port Authority, and sublet to Nissan. In February of 1978, Nissan opened the storage facility. Of the three lots located on the property, the main lot was immediately adjacent to a ship repair and drydock facility owned and operated by Maryland Shipbuilding and Drydock Company. This main lot, at any given time, could hold up to 6,000 vehicles as they waited for redistribution (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

The land owned by Maryland Shipbuilding was used, as mentioned, for ship repair and as a drydock facility, and had been in use by Maryland Shipbuilding for nearly fifty years. Vessels docked at Maryland Shipbuilding's piers for paint work and repair services, which included at times repairs to boilers and engines. In order to repair those boilers, the workers of the vessels shut them down, and then fired them up again upon exiting the pier. This procedure, called a "light off," could cause black smoke to emit from the vessel, and under specific wind conditions, this smoke blew onto the property of Nissan, and particulates settled on the exteriors of the vehicles stored there. Similarly, under proper conditions, paint spray from the painting activities of Maryland Shipbuilding blew onto the same lot (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

In July of 1978, Nissan claimed smoke and soot discharged from the smokestack of a vessel leaving the shipyard damaged the exterior paint of vehicles stored on the main lot. A similar occurrence was said to have happened in August if 1978. Nissan filed suit at that time, but the incident was settled outside of court (Yasuda Fire & Marine Insurance Company, Ltd. v. Maryland Shipbuilding & Drydock Company, Civil No. H-80-877, 1980).

In November of 1980, Nissan again filed suit against Maryland Shipbuilding, this time claiming damage due to paint spraying. The complaint originally listed four incidents, but as time went forward, the complaint was amended to include other paint incidents, as well as further claims of smoke damage to the vehicles. In all, the complaint, by the time the case came to trial, included twelve occurrences of smoke damage and four incidents of spray paint damage (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

The first question of the case was the jurisdiction under which the case would be heard. The original complaint asserted the claims by the plaintiff fell under admiralty jurisdiction (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

Otherwise known as maritime law, admiralty jurisdiction is a system of law that concerns commerce and navigation at sea. The United States Constitution, Article 3, section 2, gave federal courts the authority to govern over any incidents occurring within the navigable waters of the U.S. (Churchill and Lower, 1999).

The current grant of admiralty jurisdiction falls under 28 U.S.C. section 1333, and continues to grant state courts the right to share jurisdiction through the "savings to suitors" clause. In particular, tort cases require that there be a "potentially disruptive impact on maritime commerce," and there must be a "significant relationship to traditional maritime activity" in order for there to be admiralty jurisdiction. In those cases, the Admiralty Extension Act, 46 U.S.C. section 740, extends admiralty jurisdiction for damages (Orlando, 2001).

In this case, the Court ruled that the case existed under the Admiralty Jurisdiction Act, 46 U.S.C. 740. Under this extension of the Admiralty Jurisdiction, maritime jurisdiction is extended to all cases of damage or injury to persons or property caused by a vessel on navigable water (46 U.S.C. 740). The Court's decision rested on the idea that the alleged paint damage to Nissan vehicles would have occurred as a result of a floating crane barge located on navigable waters, and that any alleged smoke damage would have occurred as a result of the actions of vessels located in navigable waters or docked at Maryland Shipbuilding's piers (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

Once jurisdiction was determined, the Court then had to determine whether common law or the law of Maryland could be applied in the case. In Byrd v. Byrd (657 F. 2d 615, 4th Cir. 1981), the same Court decided that to follow state law in admiralty cases would negate the entire point of maritime law, that of a simplistic principle of uniform law. Thus, the Court determined that it would look to common law and, in particular, the Restatement Second of Torts, to determine criteria for nuisance and trespass in determining liability (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

It is important to understand the Restatement of Torts in a general sense prior to continuing the discussion of this particular case. The Restatements of the Law are treatises by the American Law Institute that take common law, and address any uncertainty of basic legal practice to ensure a clear and concise understanding of base issues. Originally published between 1923 and the end of World War II, the Restatements originally addressed Torts, Contracts, Property, Restitution, Trusts, and several other areas of common law. However, in 1950, the Institute realized a need to revise and update the common law principles within the Restatements, and thus published new volumes as "Second Restatements" (Thierer, 2003).

Once these issues were determined, the Court had to determine the environmental issues at hand. To do so, the Court first noted there were two distinct issues in this case, those of the alleged smoke damage, and the alleged paint damage. The reasoning for the distinction between two similar issues was simply that the smoke damage complaints stemmed from smoke rising from vessels operated by ship owners, rather than by Maryland Shipbuilding employees. On the other hand, the paint spraying issue was clearly done by employees of the shipyard (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

In terms of the smoke damage, the Court noted that neither party disputed the fact that smoke from the shipyard occasionally landed in Nissan's property. Instead, the issue at hand was whether or not such occurrences were the result of negligence, trespass, or nuisance, as prescribed under common law in order for a plaintiff to collect damages. In terms of negligence, common law prescribes that the plaintiff must prove the defendant was "required to conform to a certain standard of conduct...," that the defendant "failed to meet" those standards by "acting negligently or unreasonably," that the defendant's failure was the "proximate cause" of damages suffered, and that the plaintiff suffered damages (Kidner, 2004).

In Nissan Motor Corp. v. Maryland Shipbuilding and Drydock Company, the Court first had to determine whether Maryland Shipbuilding was negligent, and therefore responsible, for the damage to the vehicles of Nissan caused by smoke emissions (Nissan Motor Corp. v. Maryland Shipbuilding, 1982). First, the Court had to determine if the smoke its self was caused by negligence. According to expert testimony in the case, the smoke was a byproduct of normal functions of specific vessels. Steamships using Bunker C. fuel emitted black smoke during the "light off" procedure. These emissions were not considered hazardous materials, as they were sporadic and only harmful under very specific conditions. Only in conditions where ship owners fired up cold boilers, using Bunker C. fuel, when winds were blowing from the north, under not too dry or not too wet conditions, would possible damage occur. Under such conditions, the smoke particles could have turned to sulpheric acid, and had a corrosive effect on the vehicle paint (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

The Court found that the defendants did not fire up the boilers, and thus, were not directly negligent. Only the ship owners could have fired up the boilers when leaving the docks. The shipyard employees were clearly not directly responsible for the "light off" procedure and thus, could not be held responsible for any damage caused by such a procedure. Had Nissan chosen to sue the ship owners, the Court noted, the vessels could have been seized under admiralty process, and the ship owners could have been liable for the damage. However, since Nissan chose to pursue only Maryland Shipbuilding, and sought only to show they were negligent, Nissan was not able to collect damages based on the theory of negligence.

However, the second question of negligence referred to whether the company employees were negligent through their failure to stop the ship owners from "lighting off" improperly. Nissan urged that Maryland Shipbuilding employees had a "duty" to require vessels to "light off" with distilled fuels, only from ports further from the Nissan land, and should have enforced the use of emission control devices. The Court noted, however, that these options were not practical or economically feasible for either the defendant or the ship owners. Thus, the defendant was not acting unreasonably in their failure to enforce such restrictions (46 U.S.C., 222-224, 229). Further, experts in the case testified that the use of an EPS device, or an external plume scrubber, was impractical, and would have been costly and ineffective (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

Even more to the point, negligence requires proof of a lack of due care. Maryland Shipbuilding showed that, following the first incident of smoke damage, the company altered the "Plant Information and Regulation" sheet to ask ship owners not to "light off" if the wind was blowing from the west, and asked that they use alternate fuel sources. The ship owners, however, continued to "light off." The Court found that Maryland Shipbuilding acted reasonably during the incidents, and attempted to prevent future incidents. Thus, the company was not negligent (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

Recovery based on the concept of trespass was also found to be unsupported. According to the common law principles set forth in the Restatement, trespassing is the invasion of another person's possession of land by entry. To be exact, the Restatement says, "A claim in trespass ordinarily seeks damages for a physical intrusion onto property. Where the intrusion is permanent, or if it is serious or persistent, the suit sounds in trespass" (Restatement, 821D, comment d.). In this case, Maryland Shipbuilding did not interfere with Nissan's possession of the land. Further, according to the Restatement, no damages can be recovered from trespass that was unintentional and non-negligent (Restatement, 166). Thus, even if Maryland Shipbuilding were found to be trespassing via the soot emissions, Nissan could not collect any damages from such a charge (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

It should be noted here, however, that this finding is relative to the charges being heard using common law, rather than Maryland law. Under Maryland law, the soot emissions from the Maryland Shipbuilding vessels can be considered trespass, and as such, establishes their liability without the needed component of fault. In North Central RR Co. v. Oldenburg & Kelley, Inc., 122 Md. 236, 89 a. 601 (1914), for example, the plaintiff was awarded damages based on smoke damage alone. However, under Restatement, this does not apply.

Finally, in order to collect damages, Nissan had to show that, in lack of any above criteria, Maryland Shipbuilding was liable under the concept of nuisance. To show nuisance, however, Nissan had to show Maryland Shipbuilding invaded their interest and enjoyment of the property through either intentional or unintentional invasion, where the unintentional invasion is seen as such because of negligent or dangerous activity (Restatement, 821(a) - 822(a)). However, even under these circumstances, according to Restatement 821F, one is only liable if "significant harm" is present.

In this case, the Court determined "significant harm" was not shown. According to the Court, the rights of use of the land needed to be examined in terms of normal business operations and not in particular relation to Nissan's business. Since the port Maryland Shipbuilding used had been in operation for several years without complaint, the Court decided it was the particular aspect of Nissan's business, that of new car paint, that made the situation possible (Nissan Motor Corp. v. Maryland Shipbuilding, 1982). Therefore, it was the business of Nissan, not the smoke, which caused the harm.

Furthermore, the Court examined the "location, character, and habits" of the area, as per Restatement 828. Both properties existed in an area that was zoned as M-3, or Heavy Industrial. Within the same area, chemical and pesticide plants, other industrial plants, oil refineries, and coal burning oil refineries operated. As a result, smoke, dust, and soot in the air were common occurrences, as was black smoke from other ships coming into the port (Nissan Motor Corp. v. Maryland Shipbuilding, 1982). Therefore, Nissan implied acceptance of such conditions when they leased the land, since they knew the area was zoned industrial.

Still another factor to consider in a nuisance issue is the frequency of the invasion in comparison with the utility of the conduct of the defendant (Restatement, 821F). The Court determined that of the seven incidents found to cause any form of harm to Nissan's vehicles, only two incidents actually resulted in required repainting of the vehicles. In the other five incidents, the employees at the time observed the fallout, and immediately washed the vehicles to avoid damage. Thus, no damage occurred. Further, Nissan could have avoided the problem, the Court determined, by using a common coating called "cosmoline." Such a coating would have prevented, or at least minimized, the damage done, and was a common coating for stored vehicles (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

In terms of the conduct of the defendant, the Court determined the importance of their work outweighed the occasional harm done to Nissan's vehicles. Maryland Shipbuilding employed 1750 persons and purchased nearly $24 million per year in materials to Baltimore area business. If Maryland Shipbuilding were required to refuse certain customers, their business would likely suffer (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

As a result of the analysis above, it was clear to the Court that Maryland Shipbuilding was not liable for damages that occurred from smoke and soot emissions of vessels located at their pier. The employees of the company did not fire up the boilers that caused the smoke, were not responsible for the conditions causing the smoke, attempted to suggest to ship owners alternate "light up" procedures, conducted their business in a legal and responsible manner, and contributed greatly to the economy of the area. Thus, the company was not liable for damages resulting from smoke.

Once the issue of smoke damage was decided, the next issue was the damage alleged by the paint spraying activities of the company. In the original complaint, Nissan claimed damages resulting from six separate occurrences between 1980 and 1981. According to their records, the first occurrence of paint damage happened when employees of the company were painting the American Merchant vessel on May 22 and 23 in 1981. The second occurrence was between August 26th and 27th in the same year. All other instances of alleged paint damage were thrown out of the suit due to a lack of evidence (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

Unlike the smoke incidents, Maryland Shipbuilding did not admit to the damage in these cases. According to their defense, the paint damage may have come from other sources. The Court, however, after hearing the facts, disagreed. According to evidence, the vehicles in question were damaged by the same paint as that being used on the specific days in question at the shipyard (Nissan Motor Corp. v. Maryland Shipbuilding, 1982). The Court also found, unlike in the smoke incidents, that substantial damage was sustained. Expert testimony showed that the paint contamination in 1981 was "considerable," and Nissan produced records showing nearly 1700 vehicles were affected in a single incident, and 143 were affected in the other (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

However, as with the smoke incidents, the Court had to find, using Restatement (Second) of Tort principles, that Maryland Shipbuilding was legally responsible for the damage to the vehicles through negligence. First, the Court noted that, unlike the smoke damage incidents, the employees of the company were "acting within the scope of their assigned duties...which caused paint to be carried by the wind onto Nissan's vehicles" (Nissan Motor Corp. v. Maryland Shipbuilding, 1982). Thus, the employees were directly and legally responsible for the resulting damage.

The Court noted part of their reasoning for such a judgment resulted from the circumstances surrounding an initial complaint, filed in 1980. Following the complaint, Maryland Shipbuilding put into place regulations and prohibitions relating to the painting of vessels at Pier 5, the pier nearest the Nissan property. These regulations clearly stated that employees were not to spray ships while docked at Pier 5, nor while at the slip area, which was also near Nissan's property. Further, the regulations stated employees were to use "extreme care" while painting in other areas of the company to ensure that no spray would spread to Nissan's land (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

However, these regulations were simply not followed during the two incidents in question in the case. Even the Executive Vice President of Maryland Shipyard, John G. Roemer, admitted the regulations were not following during the painting of the American Merchant. This admission shows clearly the company knew they had a responsibility to provide due care while painting vessels, and that such responsibility was passed on to company employees. Since the personnel failed to exercise this due caution, the Court found the shipyard negligent in their actions (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

In addition, unlike the smoke incidents, the Court found Maryland Shipbuilding could easily and cost effectively enforce the painting regulations without damage to their business. Whereas the steps Nissan asked Maryland Shipyard to take to resolve the smoke issue, such as the refusal of customers, the use of emission controls, and the use of alternate fuel sources, the painting restrictions would not disrupt normal operations at the shipyard. Thus, Maryland Shipbuilding was found negligent, and damages were awarded to Nissan (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

In the case, Nissan was originally seeking substantial levels of damages for smoke and paint damage to vehicles, as well as a permanent injunction against Maryland Shipbuilding. This injunction sought to extend the provisions laid out in a temporary retraining order issued on September 18, 1981. In this order, Maryland Shipbuilding was required to notify all vessels that any discharge of ash or smoke may result in damage to Nissan property and thus, legal action. Additionally, the Order required any vessels in the shipyard to notify Nissan employees prior to "light off" procedures at least four hours prior to the procedure, and required Maryland Shipbuilding to submit a proposal to reduce the smoke discharge (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).

In addition to the above provisions, Nissan requested that Maryland Shipbuilding be ordered to require all vessels to use distillate fuels when "lighting off," be required to furnish a watch person with direct communication to vessels to ensure prompt response to smoke conditions, and that any vessel wishing to depart the shipyard quickly be required to use emission control devices. Further, Nissan requested that any ship refusing to use an ECD when using Bunker C. fuel be required to "light off" from the pier furthest from Nissan's land. Still further, they requested Maryland Shipbuilding be required to notify Coast Guard personnel prior to testing vessels that may discharge soot. On top of the requests to control smoke damage, Nissan sought to prohibit Maryland Shipbuilding from conducting painting at the Pier 5 or building slip area and during any time the wind was blowing toward Nissan's property. Further, Nissan sought to ensure Maryland Shipbuilding construct shielding materials to protect paint from spreading (Nissan Motor Corp. v. Maryland Shipbuilding, 1982).