In the Southern California Gas Leak Cases, the Supreme Court today limits the Southern California Gas Company’s liability for the massive four-month-long Aliso Canyon gas leak, a leak the court notes “releas[ed] enough greenhouse gases into the atmosphere to erase several years’ worth of efforts to combat climate change in California.”

Applying a common law rule it admits is the “least-worst” and, “like society itself, imperfect,” the court’s unanimous opinion by Justice Mariano-Florentino Cuéllar holds the gas company need not compensate businesses that, because of the leak, lost customers but suffered no property damage or personal injuries.  [Disclosure: Horvitz & Levy filed an amicus brief in the case.]  The opinion concludes that “claims for purely economic losses suffered from mere proximity to an industrial accident create intractable line-drawing problems for courts.”

It follows the limiting rule even while acknowledging, “The courthouse doors are open for people who experience slight physical injury — yet closed to others who suffer devastating purely economic losses.”  The court says the rule is necessary nonetheless because “the ripple effects of industrial catastrophe on this scale in an interconnected economy defy judicial creation of more finely tuned rules.”

The court leaves unaddressed the issue “whether, or to what extent, these line-drawing problems persist (or dissipate) in cyberspace,” citing a case that considered tort duties to guard against economic losses stemming from a data breach.

The court affirms a divided Second District, Division Five, Court of Appeal.  It follows what it states to be the nation’s majority rule and is critical of a 1985 New Jersey Supreme Court decision.