## Facts

- A November 1980 fire at the MGM Grand Hotel in Las Vegas led to the hotel’s closure and temporary unemployment for many employees.
- Employee plaintiffs filed a class action seeking lost wages and employment benefits during the shutdown.
- Union plaintiffs sought lost union dues attributable to the same period of unemployment.
- Defendants included entities involved in the hotel’s design, construction, and governmental inspection/approval.
- Plaintiffs alleged negligence and strict products liability based on defects or negligent conduct that allegedly contributed to the fire and its economic consequences.
- Plaintiffs alleged no personal injuries and no damage to property they owned; the claimed damages were purely economic.

## Issues

1. Whether plaintiffs may recover purely economic losses in negligence against third parties absent privity (or a similar special relationship) and absent personal injury or property damage.
2. Whether plaintiffs may recover purely economic losses under strict products liability absent personal injury or damage to their own property.

## Decision

- The Nevada Supreme Court affirmed dismissal for failure to state a claim.
- The court held that negligence does not permit recovery of purely economic loss absent privity/special relationship or personal injury/property damage.
- The court held that strict products liability likewise does not permit recovery for purely economic losses unaccompanied by personal injury or damage to plaintiffs’ own property.

## Legal Principles

- Purely economic loss is not recoverable in negligence absent privity (or a special relationship) or injury to person or property.
- Strict products liability is directed at physical harm to persons or property and generally does not provide a remedy for purely economic loss.
- Limiting tort recovery for economic loss avoids indeterminate liability to an indeterminate class and preserves the division between tort protection of safety interests and contract/warranty allocation of economic risk.

## Conclusion

The court refused to extend tort doctrines to allow employees and unions to recover wages, benefits, and dues lost due to a catastrophic event where plaintiffs alleged only economic harm and lacked privity or a comparable special relationship with the defendants.


Local Joint Exec. Bd. of Las Vegas, Culinary Workers Union, Loc. No. 226 v. Stern, 651 P.2d 637 (Nev. 1982)