520 U.S. 875, 117 S.Ct. 1783, 138 L.Ed.2d 76 (1997)
In the early 1970s, J. M. Martinac & Co. constructed the fishing vessel M/V Saratoga, installed a hydraulic system designed by Marco Seattle Inc., and sold the completed ship to Joseph Madruga.1 Madruga subsequently equipped the vessel with a skiff, a seine net, and spare parts for use in tuna fishing operations.2 In 1974, Madruga sold the outfitted ship to Saratoga Fishing Co., which continued to operate it for fishing purposes.3
In January 1986, the M/V Saratoga sank following an engine room fire and flood.4 Saratoga Fishing Co. filed a tort suit in admiralty against J. M. Martinac & Co. and Marco Seattle Inc. in 1987, alleging that a defect in the hydraulic system had caused the accident.5
The District Court determined that the hydraulic system was defectively designed and awarded damages to Saratoga Fishing Co., adjusted to account for Saratoga Fishing Co.'s partial fault in the incident, including compensation for the loss of the equipment that Madruga had added to the vessel after its initial purchase.6
On appeal, the Ninth Circuit concluded that the District Court should not have included damages for the added equipment in its award.7 The Supreme Court granted certiorari to address the treatment of such added equipment under applicable admiralty principles.8
Whether equipment added by an initial user to a manufactured product after the initial sale, and then included when the product is resold to a subsequent user, constitutes part of the 'product itself' or 'other property' for purposes of tort recovery in admiralty for physical damage caused by a defective product?9
In admiralty, a plaintiff cannot recover in tort for physical damage a defective product causes to the product itself but may recover for physical damage the product causes to other property. When a manufacturer places an item in the stream of commerce by selling it to an initial user, that item is the product itself. Items added to the product by the initial user are therefore other property, and the initial user's sale of the product to a subsequent user does not change these characterizations.10
Yes. The product itself consists at least of the ship as built and outfitted by its original manufacturer and sold to an initial user. Martinac built the M/V Saratoga, installed the hydraulic system, and sold the ship to Madruga. Madruga then added the skiff, seine net, and spare parts before reselling the vessel to Saratoga Fishing Co. Those additions by the initial user are other property.11
The equipment added by the initial user constitutes other property for which Saratoga Fishing Co. may recover in tort.12
Related opinions on this issue
Justice Scalia dissented from the majority opinion.15 He argued that the product should be defined as the object of the purchaser's bargain rather than fixed at the initial-user sale.16 Justice Scalia contended that the majority's rule makes liability turn on the fortuity of whether the person adding equipment uses the product before selling it.17
He suggested that a last-402A-seller rule would be preferable as it would fix the product when sold by the last person engaged in the business of selling such products.18 Justice Scalia believed this approach better aligned with the considerations in East River regarding contract-warranty protection.19 He would have affirmed the judgment of the Ninth Circuit.20