United States Court of Appeals
For the First Circuit
____________________
Nos. 99-2369
99-2370
SOUTH PORT MARINE, LLC,
Plaintiff, Appellant,
v.
GULF OIL LIMITED PARTNERSHIP;
THE REINAUER COMPANIES, INC.,
f/k/a BOSTON TOWING AND TRANSPORTATION COMPANY INC.;
Defendants, Appellees.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. D. Brock Hornby, U.S. District Judge]
____________________
Before
Torruella, Chief Judge,
Boudin and Lynch, Circuit Judges.
_____________________
David J. Perkins, with whom Daniel G. Lilley, Patrick J. Mellor
and Perkins, Olson & Pratt, P.A. were on brief, for appellant.
William H. Welte, with whom Welte & Welte P.A. was on brief, for
appellee Gulf Oil Limited Partnership.
Brian P. Flanagan, with whom Flanagan & Hunter, P.C., Leonard W.
Langer, Marshall J. Tinkle and Tompkins, Clough, Hirshon & Langer, P.A.
were on brief, for appellee Boston Towing and Transportation Co., L.P.
____________________
December 7, 2000
____________________
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TORRUELLA, Chief Judge. This appeal, which arises out of a
February 1997 gasoline spill in Maine's Portland Harbor, requires us to
interpret both historic and contemporary maritime law in the United
States. On the one hand, appellees present a Seventh Amendment
argument that involves the state of federal admiralty jurisdiction in
the early days of the Constitution. Appellant, on the other hand,
raises questions of federal preemption and statutory interpretation in
relation to two issues of much current interest: oil spills and
punitive damages. Finally, both parties dispute the sufficiency of
evidence presented to the jury on various aspects of appellant's
alleged damages.
We conclude that the district court's disposition of these
issues must be affirmed in part and reversed in part.
I. Factual and Procedural Background
A. The Parties
Appellant South Port Marine, LLC, ("South Port") is a family-
owned marina located on a cove in Portland Harbor, Maine. The marina
is principally designed to accommodate recreational motor and sailing
vessels by allowing them to tie up to floating dock segments that are
connected with fixed docks leading to the marina's onshore facilities.
The floating dock segments are identical in function and purpose to
ordinary fixed docks, but are designed in sections with Styrofoam
flotation which allows them to rise and fall with the tides.
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In the winter of 1996-1997, South Port's owners planned to
dredge the marina and parts of the surrounding cove to allow access by
larger boats. The owners also intended to increase the number of slips
in the marina from approximately one hundred to closer to one hundred
and twenty-five.
Appellee Gulf Oil is a Massachusetts-based petroleum company.
It operates a distribution facility on Portland Harbor where, inter
alia, petroleum products such as gasoline are pumped into barges for
transportation to other ports. Appellee Boston Towing and
Transportation operates tug boats and tank barges for the purpose of
oil transportation. Gulf Oil was pumping gasoline into a barge owned
and operated by Boston Towing at the time of the incident involved in
this appeal.
B. The February 5, 1997 Spill
In the early morning hours of February 5, 1997, a Boston
Towing tank barge was tied to the Gulf Oil pier in Portland Harbor,
while a crew member transferred gasoline from a Gulf onshore storage
facility into individual tanks on the barge. The gasoline transfer
process required the crew member to monitor the filling of each tank
and to manually switch the flow of gasoline to the next empty tank when
the prior tank reached its full capacity.
Sometime after 2:00 a.m. in the morning, under severe weather
conditions, the crew member assigned to monitor the gas flow left the
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barge and boarded a nearby tug boat, leaving the gasoline transfer
completely unattended. While the crew member was absent, the gasoline
overflowed the recipient tank and subsequently overflowed the barge's
safety transom, flowing into Portland Harbor. Between 23,000 and
30,000 gallons of gasoline spilled into the water.
A large portion of the spilled gas entered the cove on which
South Port Marine is located, and by 8:00 a.m. two to three inches of
gasoline floated on the surface of the water at the marina. The
Styrofoam flotation of the dock segments began to disintegrate, causing
the docks to sink, list, and in many cases, fully submerge. As this
happened, a number of electrical posts (at least some of which were
apparently awaiting installation) fell off the docks and into the
water.
C. Alleged Effects of the Spill on South Port Marine
At trial, South Port alleged damages falling into three
general categories: extensive property damage, lost profits, and
"other economic losses" including loss of goodwill and business stress.
The spill allegedly destroyed between sixty and eighty Styrofoam floats
and severely damaged forty-five dock segments. According to South
Port, the repair and cleanup of this damage was both costly and, at a
critical time in its development, very time-consuming. South Port
further alleged that the spill set back its dredging plan an entire
year and put the construction of new slips on indefinite hold due to
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the cash flow crisis caused by the accident and the diversion of South
Port's employees from gainful work to cleanup and repair tasks. South
Port claimed the economic injury caused by the spill eventually forced
it to restructure its debt and threatened its owners' entire investment
of almost $1,000,000.
D. Procedural History
On January 14, 1998, South Port filed a complaint in federal
district court raising claims under the federal Oil Pollution Act of
1990 ("OPA") and asserting several state common law tort actions. The
complaint demanded trial by jury on all claims. Appellants argued that
South Port was not entitled to a jury trial because its claims sounded
in admiralty. The court initially reserved judgment on that issue and
proceeded to try the case before a jury.
On April 7, 1999, the first day of trial, appellees conceded
liability under the OPA in response to questioning from the court.
However, the court then ruled that South Port's state common law claims
(which included strict liability, negligence, private nuisance, and
trespass) were barred by Maine law, see Me. Rev. Stat. Ann. tit. 38, §
551(2)(D) (West 1999); see also Portland Pipeline Corp. v. Envtl.
Improvement Comm'n, 307 A.2d 1, 40 (Me. 1973), because South Port
failed to bring its state law claims under Maine's Oil Pollution
statute, which displaces state common law claims. The court also
decided that punitive damages were unavailable under the OPA.
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On April 16, 1999, the jury returned a verdict in favor of
South Port. The jury awarded South Port $181,964 in damages for injury
to property, $110,000 for lost profits, and $300,000 for injury to good
will and business stress. After the jury verdict, appellees renewed
their motion for judgment as a matter of law, moved for a new trial,
and also renewed their challenge to appellant's right to trial by jury.
The district court denied appellees' challenge to the jury
trial in an order and opinion issued July 27, 1999. The motions for
judgment as a matter of law and for a new trial, however, were granted
in part and denied in part by order and opinion issued October 14,
1999. The court held that the evidence presented to the jury was
insufficient as a matter of law to support the award of damages for
lost profits and other economic loss and reduced the jury's award by
$395,000. Ruling in the alternative in case its decision should be
overturned on appeal, the court also granted appellees' motion for a
new trial unless appellant would agree to a remittitur of $100,000.
Appellant filed this timely appeal challenging the district
court's rulings on the availability of punitive damages and sufficiency
of the evidence, and appellees have cross-appealed the district court's
decision that appellant was entitled to trial by jury. We will address
the jury issue first, the punitive damages issue second, and the
sufficiency of the evidence arguments last.
II. Law and Application
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A. Appellant's Seventh Amendment Right to Trial by Jury
In the district court, appellees moved to strike South Port's
jury demand on the basis that the OPA claim was comparable to a claim
in admiralty to which the Seventh Amendment's guarantee of trial by
jury does not apply. The district court initially reserved judgment on
the motion and impaneled a jury with the caveat that the jury's verdict
would be merely advisory if the court later determined that appellant
had no right to a jury trial. Following trial, on July 27, 1999, the
district court ruled that the Seventh Amendment did in fact guarantee
South Port a trial by jury on its OPA claim, and entered judgment
according to the jury's verdict. Appellees now challenge that
determination.
South Port's demand for a jury trial in its complaint bound
the district court to Federal Rule of Civil Procedure 39, which
required the court to try the case before a jury unless it found that
South Port was not entitled to a jury trial under the Constitution or
laws of the United States. See Fed. R. Civ. P. 39(a). Because the OPA
does not create a statutory right to trial by jury, South Port's
entitlement to such jury trial must stem, if at all, from the Seventh
Amendment to the Constitution, which states, "In Suits at common law,
where the value in controversy shall exceed twenty dollars, the right
of trial by jury shall be preserved . . . ." U.S. Const. amend. VII.
As the Supreme Court has declared,
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Although "the thrust of the Amendment was to
preserve the right to jury trial as it existed in
1791," the Seventh Amendment also applies to
actions brought to enforce statutory rights that
are analogous to common-law causes of action
ordinarily decided in English law courts in the
late 18th century, as opposed to those
customarily heard by the courts of equity or
admiralty.
Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 41-42 (1989). The issue
before us, then, is whether South Port's OPA claim is analogous to a
cause of action in admiralty in 1791, to which no right to trial by
jury would apply, or to a cause of action at law, which carries the
Seventh Amendment guarantee. We agree with the district court that in
1791, South Port would have brought its claim for damages to its marina
under the common law rather than in admiralty, and we therefore affirm
the use of a jury to hear the claim at trial.
The earliest cases from the United States courts on the scope
of admiralty jurisdiction applied a "locality" test to determine
whether a tort fell under the admiralty or common law jurisdiction.
Justice Story, riding the Circuit in 1813, stated his understanding
"that the jurisdiction of the admiralty is exclusively dependent upon
the locality of the act. The admiralty has not (I believe)
deliberately claimed to have any jurisdiction over torts, except such
as are maritime torts, that is, such as are committed on the high seas,
or on waters within the ebb and flow of the tide." Thomas v. Lane, 23
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F. Cas. 957, 960 (C.C.D. Me. 1813). More recently, the Supreme Court
summarized the locality test as follows:
The traditional test for admiralty jurisdiction
asked only whether the tort occurred on navigable
waters. If it did, admiralty jurisdiction
followed; if it did not, admiralty jurisdiction
did not exist. This ostensibly simple locality
test was complicated by the rule that the injury
had to be "wholly" sustained on navigable waters
for the tort to be within admiralty. Thus,
admiralty courts lacked jurisdiction over, say,
a claim following a ship's collision with a pier
insofar as it injured the pier, for admiralty law
treated the pier as an extension of the land.
Grubart v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 531 (1995)
(citations omitted).
As suggested by Grubart, the "location" of a tort sometimes
depended on the nature of the injured structure, i.e., whether the
structure was considered "an extension of the land." Beginning with
The Plymouth, 70 U.S. (3 Wall.) 20 (1866), which found no admiralty
jurisdiction over damage to a warehouse destroyed in a fire started on
board a ship, admiralty jurisdiction "has not been construed to extend
to accidents on piers, jetties, bridges, or even ramps and railways
running into the sea." Rodrigue v. Aetna Cas. Co., 395 U.S. 352
(1968). Using this rubric, South Port contends that the injury to its
docks would not have fallen within the admiralty jurisdiction of the
federal courts in 1791.
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Appellees, however, argue that several cases, most notably
The Blackheath, 195 U.S. 361 (1904), support the opposite conclusion.
In The Blackheath, Justice Holmes distinguished The Plymouth and
announced the Court's decision that a collision with a beacon would lie
in admiralty since it served as a navigational aid. This remained so
despite the fact that the structure is "technically land, through a
connection at the bottom of the sea," Id. at 367.
Appellees have failed to persuade us, however, that The
Blackheath or any of the other cases cited in their briefs invalidated
the rule established in The Plymouth. In fact, in Cleveland Terminal
& Valley R. Co. v. Cleveland S.S. Co., 208 U.S. 316 (1908), the Supreme
Court addressed the tension between The Plymouth and The Blackheath and
concluded that the two decisions were not incompatible. After
discussing both cases, the Court reaffirmed that admiralty jurisdiction
did not extend to injuries inflicted by a vessel upon a bridge, its
protective pilings, and an adjacent dock, stating that "the bridges,
shore docks, protection piling, piers, etc., pertained to the land.
They were structures connected with the shore and immediately concerned
commerce upon land. None of these structures were aids to navigation
in the maritime sense, but extensions of the shore and aids to commerce
on land as such." Id. at 321.
Moreover, courts specifically examining the nature of
floating docks have consistently held that they do not possess the
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characteristics associated with maritime objects. In Cope v. Vallete
Dry-Dock Co., 119 U.S. 625 (1887), for example, the Supreme Court
decided that the salvage of floating dry-docks could not properly fall
under admiralty jurisdiction because they "had no means of propulsion
. . . and were not designed for navigation." Id. at 627. Circuit
cases in this century have reached similar conclusions. See, e.g.,
Atkins v. Greenville Shipbuilding Corp., 411 F.2d 279, 282-83 (5th
Cir. 1969) (holding that as a matter of law, a floating dock was not a
"vessel" owing a maritime warranty of seaworthiness); Royal Ins. Co. of
America v. Pier 39 Ltd. Partnership, 738 F.2d 1035, 1037 (9th Cir.
1984) (ruling that policies insuring floating docks did not fall under
admiralty jurisdiction because the subject matter was not maritime);
cf. Digiovanni v. Traylor Bros., 959 F2d 1119, 1123 (1st Cir. 1992)
(stating that if a float is not in actual navigation, the test for
whether it qualifies as a vessel is whether its "purpose or primary
business is . . . navigation or commerce"). Thus, appellees' emphasis
on the floating nature of South Port's docks is insufficient and
misplaced. See id. ("Floating is not enough."). Although these
structures move with the ebb and flow of the tides, they remain moored
to a fixed location and serve no navigational function. Indeed, their
purpose is precisely the same as that of traditional fixed piers or
docks: to facilitate commerce on land, presumably conducted in and
around whatever retail and repair facilities are operated by South
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Port. In essence, South Port's floating docks are "extensions of the
land" in the sense of that phrase in eighteenth century admiralty
jurisprudence. Consequently, a tort that causes damage to them does
not occur "wholly on the navigable waters" and would have constituted
an action at law, rather than in admiralty, in the late eighteenth
century.1
We therefore agree with the district court that South Port's
OPA claim is analogous to a claim under the common law at the time of
the Seventh Amendment's ratification in 1791, and that South Port was
entitled to trial by jury.
B. Punitive Damages
Plaintiff contends that the district court erred in ruling
that punitive damages were unavailable as a matter of law. We affirm
the district court's ruling.
Plaintiff's complaint alleged six "counts": a claim under the
OPA, four state law tort claims, and a count entitled simply "Punitive
Damages." Punitive damages, however, do not constitute a separate
1 The district court correctly noted that the Admiralty Extension Act
of 1948, 46 U.S.C. § 740 (1994), which eliminates the land-water
distinction, does not affect the analysis here. While the Act might
permit the extension of admiralty jurisdiction over South Port's tort
action today, it does not divest the claim of its original common law
character and its attendant right to trial by jury. See, e.g.,
California v. Bournemouth, 307 F. Supp. 922, 925 (C.D. Cal. 1969)
("[T]he legislative history clearly indicates that the Act makes
available a concurrent remedy in admiralty for the existing common-law
action.").
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cause of action, but instead form a remedy available for some tortious
or otherwise unlawful acts. Consequently, plaintiff's claim for
punitive damages must relate to some separate cause of action which
permits recovery of punitive damages.
Despite a valiant effort, plaintiff has been unable to point
to a legal basis for its punitive damages claim. One of the four tort
claims alleged in the complaint might have been adequate; those claims,
however, were dismissed by the trial court, a decision which plaintiff
has not challenged on appeal. The remaining possibilities, therefore,
are (1) the OPA, or (2) general admiralty and maritime law.
1. OPA Does Not Provide for Punitive Damages
In 1990, in the wake of the Exxon Valdez and other oil spill
disasters, Congress established a comprehensive federal scheme for oil
pollution liability in the OPA. See 33 U.S.C. § 2702 et seq. (1990).
The OPA sets forth a comprehensive list of recoverable damages,
including: removal costs; damage to natural resources and real or
personal property; loss of subsistence use of natural resources; loss
of government revenues, lost profits and earning capacity; and costs of
increased or additional public services occasioned by the unlawful act.
See 33 U.S.C. § 2702(b). Absent from that list of recoverable damages
is any mention of punitive damages. The question before us, therefore,
is whether, by leaving punitive damages out of the OPA, Congress
intended to supplant the general admiralty and maritime law that
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existed prior to the enactment of the statute, which permitted the
award of punitive damages for reckless behavior. See, e.g., CEH,
Inc. v. F/V Seafarer, 70 F.3d 694, 699 (1st Cir. 1995) (punitive
damages long recognized in admiralty actions for willful or reckless
conduct).
2. Congress Intended the OPA To Be the Exclusive
Federal Law Governing Oil Spills
First, we note that, although the parties have referred to
this issue as one of "preemption," it does not present any of the
federalism concerns normally associated with that word, because we are
concerned only with the OPA's effect on preexisting federal law. The
question, therefore, is not complicated by any "presumption against
preemption," see, e.g., Medtronic, Inc., v. Lohr, 518 U.S. 470, 485
(1996), but is rather a straightforward inquiry into whether Congress
intended the enactment of the OPA to supplant the existing general
admiralty and maritime law, which allowed punitive damages under
certain circumstances in the area of oil pollution. We conclude that
Congress did so intend.
The best indication of Congress's intentions, as usual, is
the text of the statute itself. See Strickland v. Com'r Dept. Human
Services, 48 F.3d 12, 17 (1st Cir. 1995). Section 2702 sets forth a
list of damages recoverable under the OPA, briefly describing each
type. As we have noted already, this scheme is comprehensive. To our
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knowledge no case or commentator has suggested that the availability of
punitive damages under general admiralty and maritime law survived the
enactment of the OPA. We take this to be a strong indication that
Congress intended the OPA to be the sole federal law applicable in this
area of maritime pollution.
The text of the statute is not without its limitations,
however. Plaintiff emphasizes the language at 33 U.S.C. § 2718, which
states that the OPA shall not be construed as "preempting the authority
of any State or political subdivision thereof from imposing any
additional liability," 33 U.S.C. § 2718(a), nor to "affect the
authority of the United States of any State or political subdivision
thereof (1) to impose additional liability of additional requirements;
or (2) to impose, or to determine the amount of, any fine or penalty
(whether criminal or civil in nature) for any violation of law," id. §
2718(c). Plaintiff also points to 33 U.S.C. § 2751, which states that
"[e]xcept as otherwise provided in this chapter, this chapter does not
affect . . . admiralty and maritime law." Plaintiff argues that this
language demonstrates that Congress intended to leave open claims and
damages other than those enumerated in the OPA.
We have indeed acknowledged that Congress did not intend the
OPA to bar the imposition of additional liability by the States. See
Ballard Shipping Co. v. Beach Shellfish, 32 F.3d 623, 630-31 (1st. Cir.
1994) (using OPA to support validity of state liability statute
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permitting recovery for purely economic loss). That determination
rested on the underlying federalism concerns that counsel a skeptical
view towards federal preemption of state statutes. See id. at 630
("Where as here the state remedy is aimed at a matter of great and
legitimate state concern, a court must act with caution."). This case,
however, presents an entirely different issue, namely, whether
Congress's very specific treatment of oil pollution in the OPA, which
does not provide for punitive damages, supplanted general admiralty and
maritime law, which has traditionally provided for the general
availability of punitive damages for reckless conduct. This question
has largely been decided for us by the Supreme Court in Miles v. Apex
Marine, 498 U.S. 19 (1990), in which the Court declined to supplement
damage provisions of the Death on the High Seas Act, 46 U.S.C. § 762.
The Court refused to allow recovery for loss of society when such
damages were not provided in the statute, reasoning that "in an 'area
covered by statute, it would be no more appropriate to prescribe a
different measure of damage than to prescribe a different statute of
limitations, or a different class of beneficiaries.'" See Miles, 498
U.S. at 31 (quoting Mobil Oil Corp. v. Higginbotham, 436 U.S. 618, 625
(1978)). As we indicated in CEH, 70 F.3d 694 (1st Cir. 1995), Miles
dictates deference to congressional judgment "where, at the very least,
there is an overlap between statutory and decisional law." Id. at 701.
Such is obviously the case here.
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Although our analysis might end there, we think it necessary
to address plaintiff's contention that the OPA should be construed more
liberally because it was enacted for the purposes of benefitting the
victims of oil pollution and punishing its perpetrators. While we
agree that such intentions were Congress's principal motivation in
enacting the OPA, we think it would be naive to adopt so simpleminded
a view of congressional policymaking in light of the competing
interests addressed by the Act. For instance, the OPA imposes strict
liability for oil discharges, provides both civil and criminal
penalties for violations of the statute, and even removes the
traditional limitation of liability in cases of gross negligence or
willful conduct. Yet at the same time, the Act preserves the liability
caps in most cases and declines to impose punitive damages. We think
that the OPA embodies Congress's attempt to balance the various
concerns at issue, and trust that the resolution of these difficult
policy questions is better suited to the political mechanisms of the
legislature than to our deliberative process.
For the reasons set forth above, we agree with the district
court that punitive damages were not available to plaintiff and affirm
the court's ruling on that issue.
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C. Sufficiency of the Evidence
Finally, South Port challenges the district court's decision
granting judgment as a matter of law to defendants on sufficiency-of-
the-evidence grounds. The court held that, as a matter of law, South
Port had failed to introduce sufficient evidence to support the jury's
verdict with regard to most of the damages claimed for lost profits and
"other economic harm." We affirm this decision in part, and we reverse
in part.
1. Lost Profits
The jury awarded $110,000 of the $185,062 that South Port
requested for damages in the form of lost profits. These alleged
damages were presented in two main categories: (1) $105,000 in lost
slip revenues resulting from a delay in South Port's plans to dredge
and expand the marina by approximately twenty-five slips, and (2)
$80,062 from business interruption, including diversion of South Port's
labor force and the loss of slip fees due to the temporary closing of
the facility. The district court, however, vacated all but $15,000 of
this award on the ground that it was not supported by sufficient
evidence.
We disagree with the district court's conclusion that South
Port failed to introduce evidence sufficient to support the award for
lost slip revenues. Plaintiff presented testimony establishing the
marina's plan to dredge the cove leading to the marina, as well as
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parts of the marina itself, and to expand the marina by some twenty-
five slips. South Port further offered proof sufficient to support a
finding that the delay in this improvement to the business was caused,
at least in part, by the February 5, 1997 gasoline spill. The district
court noted that South Port introduced no evidence to support its hope
that the additional slips could be filled if constructed and that no
comparison was made with other marinas or with any indicator of the
number of boats in the Portland Harbor area seeking dockage. We
believe, however, that a jury could reasonably infer that South Port's
very willingness to make a substantial investment was grounded in some
professional certainty that a market would, in fact, exist once the
dredging was completed. Although the district court did not find
compelling the fact that the existing slips had been nearly full in
years prior to the spill, we think this evidence substantially supports
an inference that the new slips would also be in demand. Thus, we
uphold the jury's award for lost slip fees resulting from the delay in
expansion and improvement.
We also cannot agree with the district court's conclusion on
the issue of diversion of South Port's workforce. The jury apparently
compensated South Port for the losses incurred by the marina when it
was forced to allocate employees who normally serviced boats (and
billed clients) to dock repair necessitated by the spill. The district
court vacated this award for the same reason it vacated the award for
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lost slip fees--that the plaintiff had failed to establish demand for
the service work that the employees allegedly would have been doing had
they not been needed for repairs. Again, we think that the claimed
damage is considerably less speculative than it appeared to the
district court. South Port claims that, absent the spill, things would
have proceeded essentially as they always had at the marina, with a
portion of the labor force performing service work that could be billed
to clients rather than nonbillable repair work. Robert Craig, South
Port's damage expert, testified that he had spoken with the principal
operator of the marina, Kip Reynolds, and others, and that he had also
seen the diversion of labor with his own eyes. Although Craig
admitted that the time cards used by South Port's employees did not
allocate hours to specific projects or types of work, he explained how
he had arrived at his expert opinion and estimates. Appellant might
have done more to establish this element of the damages it claimed.
Nevertheless, we think that the proof presented meets the minimum
inferential threshold and that the jury award should not have been
disturbed. We therefore reverse the district court on its evaluation
of the lost slip revenue diversion of labor issues and reinstate the
jury's award of $110,000.
2. Other Economic Losses
The district court also vacated the jury's award for a
$100,000 loss in goodwill and a $150,000 for business stress. After
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reviewing the record, we agree with the district court that the
evidence is insufficient to support the jury's verdict on these claims.
South Port's goodwill loss is based upon a projected loss of
value of the business after the spill. Certainly, a bad reputation
which lingers even after South Port repairs its damages could affect
its expected earnings. This loss could be calculated by discounting
the estimated loss of future revenues to present value or,
alternatively, by assessing the decrease in value of the business to
potential buyers after the spill repairs. South Port's estimated loss,
however, was not adequately supported by either of these calculations.
Craig offered his expert opinion that South Port's goodwill
following the spill was approximately $100,000, or ten percent of the
value of the business. The court correctly determined that the jury
could accept that ten percent is typically the value of goodwill in
this type of business. However, as the district court observed, Craig
"never gave any basis for concluding that this goodwill had been
reduced to zero or to any other number." Craig did identify the
potential perception that South Port marina was located in a cove
susceptible, for geographic reasons, to spill-related pollution, and
South Port introduced evidence at least suggesting damage to its
reputation in the community (media coverage, etc.). There were no
concrete numbers, however, explaining how these factors affected all,
or even part, of the goodwill of the business
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Similarly, South Port provided no basis for its estimation
of business stress. Like goodwill loss, this claim involved a form of
the loss in value of the business: the reduction in the value of the
business due to the bank loan default and the risk that the workout
plan may not succeed. Although this is a plausible claim for
recovery, Craig offered no analysis for quantifying this potential loss
at $150,000. The district court concluded that Craig's estimate was
not supported by evidence that he conducted a more specific
investigation "regarding the market for a business like South Port
Marine's." We agree.
A reasonable calculation of loss due to business stress might
take into account general data concerning the reduced value of
businesses in default or a specific showing that this property had
declined in market value. At the very least, the calculation of
business stress resulting from South Port's workout plan required a
specific computation of its risk of failure in the same arrangement.
However, Craig derived his estimation simply as a portion of South
Port's $600,000 net value after deducting the loan. We believe this,
without a more accurate account, is an insufficient foundation to
sustain the jury's award. Accordingly, we affirm the district court's
vacatur of the awards for loss of goodwill and business stress.
Affirmed in part, reversed in part. Remanded for action
consistent with this opinion.
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