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People Express Airlines, Inc. v. Consolidated Rail Corp. | 495 A.2d 107 (1985)

When we think of negligent torts, we typically think of incidents such as motor vehicle collisions, slip-and-fall accidents, building fires, and other incidents where property is damaged or people are hurt. But is personal injury or property damage a necessary element of a negligence claim? The court considered that question in People Express Airlines versus Consolidated Rail, known as Conrail.

A Conrail tank car carrying ethylene oxide was punctured during a coupling operation at Conrail’s Port Newark freight yard, leaking the flammable chemical, which quickly caught fire.

Pursuant to a prearranged emergency response plan, Conrail personnel and municipal authorities evacuated everyone within a one-mile radius from the burning tanker to lessen the risk of damage or injury if the tanker exploded. Newark International Airport’s North Terminal, where People Express Airlines based their business operations, fell within that one-mile radius. Everyone in the terminal, including airline personnel, evacuated.

The tanker never exploded, and the fire and leak were brought under control. The airline suffered no property damage nor were any airline personnel injured. But airline employees were forced out of the terminal for twelve hours.

The airline sued Conrail for negligence, seeking compensation for business-interruption losses resulting from the evacuation, including for cancelled flights, lost reservations, and fixed operating costs incurred, despite the fact that the airlines offices were closed.

The trial court granted Conrail summary judgment, ruling that absent property damage or personal injury, the airline couldn’t recover economic losses. The Appellate Division reversed and remanded for trial. The New Jersey Supreme Court granted Conrail’s appeal.

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