## Facts

- A Conrail coupling operation punctured a tank car carrying ethylene oxide in the Port Newark freight yard, causing a chemical release and fire.
- The tank car was owned by Union Tank Car Co. and leased to BASF Wyandotte Co., which manufactured/shipped the chemical.
- Authorities ordered an evacuation of the surrounding area, including Newark Airport’s North Terminal, where People Express operated its principal facilities.
- People Express alleges it was barred from using the terminal for about twelve hours, causing flight cancellations, lost reservations, and continuing fixed costs.
- People Express claimed no personal injury and no physical damage to its property; its alleged damages were business interruption and lost profits.
- People Express asserted defendants knew or had reason to know ethylene oxide was highly volatile and that accident-response plans contemplated evacuation-related shutdowns.

## Issues

1. Whether negligence law permits recovery for purely economic losses unaccompanied by personal injury or property damage.
2. Whether defendants owed a duty of reasonable care to avoid economic harm to a plaintiff whose business would foreseeably be disrupted by an evacuation-causing chemical accident.
3. What limiting principle can confine liability for economic loss to avoid indeterminate or disproportionate exposure.

## Decision

- The Supreme Court of New Jersey held that a defendant may owe a duty of care to avoid causing purely economic loss to a particularly foreseeable plaintiff or identifiable class, even without physical injury or property damage.
- The court rejected a per se bar on negligent infliction of purely economic loss and treated the question as one of duty and proximate cause.
- It concluded People Express could qualify as a member of an identifiable, particularly foreseeable class given its proximity and the predictable operational shutdown from an emergency evacuation.
- The Appellate Division’s judgment was modified and affirmed, and the matter was remanded for further proceedings on liability, causation, and damages.

## Legal Principles

- Negligence liability for purely economic loss is permissible when the plaintiff is a particularly foreseeable victim, meaning an identifiable class of persons or entities whose economic expectations are especially likely to be disrupted by the defendant’s conduct.
- Foreseeability must be limited by identifiability: the class should be discrete and definable by factors such as geographic area, the type of economic activity, and the relationship to the risk-creating conduct.
- The duty is not owed to the public at large for ripple-effect economic loss; it is owed only to those whose economic harm is directly and proximately caused and was especially predictable.
- Economic damages, including lost profits, remain subject to ordinary proof requirements and must be shown with reasonable certainty.

## Conclusion

The court allowed a negligence claim for business-interruption losses to proceed despite the absence of physical injury or property damage, holding that duty can extend to a particularly foreseeable, identifiable class and thereby limit liability to direct and predictably disrupted economic interests.


People Express Airlines, Inc. v. Consolidated Rail Corp., 100 N.J. 246, 495 A.2d 107 (N.J. 1985)