Transport Corp. v. IBM

Citation: Transport Corporation of America v. IBM Corp., 30 F.3d 953 (8th Cir. 1994).

Factual Background
Transportation Corp. of America (TCA) sued IBM, claiming that a disk drive failure caused data to be damaged, resulting in lost income and data. TCA asserted claims, inter alia, in negligence and strict liability.

District Court Decision
The court barred TCA’s recovery for lost data under the economic loss rule, holding that the data was not “separate property” damaged by the hardware failure. The court found that “where a defect in a component part damages the product into which that component was incorporated, economic losses to the product as a whole, [are] not losses to other property under the economic loss rule.” The court held that the data was in effect a component of the entire computer system, and thus not separate property for tort law.