People Express Airlines, Inc. v. Consolidated Rail Corp. Case Brief

Summary of People Express Airlines, Inc. v. Consolidated Rail Corp. (1985) Pg. 548, 100 N.J. 246, 495 A.2d 107 (1985)

Parties: Appellee – Plaintiff – People Express Airlines

Appellant – Defendant – Consolidated Rail Corp.

Court: Supreme Court of New Jersey, 1985

Facts: A fire broke out in a freight yard near Newark Airport. It was caused by an ethylene oxide leak caused by a puncture in a tank car during an operation that connected rail cars together, which ignited the chemical. Defendants knew of the volatility of ethylene oxide and actually had SOP’s to deal with such a case. In the action plan, it involved evacuation of the nearby area which included the Plaintiff’s business offices in case the tank car exploded. The Plaintiff’s office was closed done for 12 hours. Plaintiff is suing for economic loss.

Procedural Posture: TC – granted Defendant’s summary judgment on the grounds that economic loss alone can not be granted relief without accompanied by personal injury or property damage.

MC – granted plaintiff’s interlocutory request for leave to appeal and reversed TC’s decision.

Issue: Are there exceptions to a plaintiff’s claim for purely economic losses without suffering personal injury or property damage?


Judgment: Modified and affirmed MC’s decision and remanded for to TC for further proceedings.

Holding: The court held that there are exceptions to the rule of recovering for merely economic losses depending on several factors. (SEE RULE BELOW) However, these should only be applied on a case-by-case basis and should not be considered a blanketed rule of law.

Relevant Rule: A defendant who has breached his duty of care to avoid the risk of economic injury to particularly foreseeable plaintiffs may be held liable for actual economic losses that are proximately caused by its breach of duty.

Recovery of Purely Economic Loss (Exceptions)

1. Special Relationships – when defendant negligently misrepresents something that causes a third party to act at its detriment.

2. Private Actions for Public Nuisance – Where a plaintiff’s business is based in part upon the exercise of public right, and the negligence of the defendant impedes on the business of the plaintiff.


The class of people that would be susceptible to economic loss by a defendant’s lack or duty to exercise reasonable care must reasonably foreseeable by the defendant.

Ways the Class of People that are Reasonably Foreseeable are Identified

1. Types of persons or entities comprising the class

2. Certainty or predictability of their presence

3. Approximate numbers of those in the class

4. Type of economic expectations disrupted

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