How to best characterize the doctrine deriving from Palsgraf?

Question

Palsgraf v. Long Island Railroad Co., 248 N.Y. 339, 162 N.E. 99 (1928) is old, but it has shaped tort law in a very influential way: it did pretty much draw a line in the sand for where you can not recover from injury. Or as the Court of Appeals put it: one can only recover for "a natural and probable consequence of assisting a man to board a train".¹

So, it is a landmark case, setting limits in tort law for where an injury is recoverable or not. The line here seems to be at first forseeability, which is heavily connected to the reasonable person test (aka: "man on the bus"), as in, would a reasonable person foresee these consequences, but then again, Palsgraf seems to be a slight bit different and more encompassing: Palsgraf has been cited in cases as diverse as a wrongful death case brought against the state and probation board for releasing a prisoner (George MARTINEZ et al., Appellants, v. STATE OF CALIFORNIA et al. 444 U.S. 277, 100 S.Ct. 553 (1980)) to interstate commerce trifles (State of WYOMING, Plaintiff v. State of OKLAHOMA. 502 U.S. 437, 112 S.Ct. 789 (1992)). The latter claims that Palsgraf stands for both foreseeability but also Proximate Cause, muddying the water what Palsgraf actually seems to stand for. Yet again other cases insist that Palsgraf stands for limiting the duty of someone (CONSOLIDATED RAIL CORPORATION, Petitioner v. James E. GOTTSHALL. CONSOLIDATED RAIL CORPORATION, Petitioner v. Alan CARLISLE. 512 U.S. 532, 114 S.Ct. 2396, 129 L.Ed.2d 427)...

So, figuring out what the actual doctrine stemming from Palsgraf is seems to be complicated. What is clear, is that it is somewhere in the nimbus of limiting the liability of one party based on the knowledge and expectations of that party and acting as some sort of line against both unexpected acts and happenings of others... Or is that starting to shift into the area of Force Majeure?

So, summarizing: What doctrine does Palsgraf actually stand for in modern tort law, and is it even still applicable today?

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^{1 - Manz, William H. (Spring 2003). "Palsgraf: Cardozo's Urban Legend?". Dickinson Law Journal. 107: 785–844, here: pp. 830–831.}

Answer 1

No case stands for a single doctrine. Every case forms and draws from the material that is the common law. Each case embeds a multitude of principles, some longstanding, some developing, some rephrased. There is no ground truth "actual doctrine." As you have observed, people draw a variety of principles from the case.

However, Palsgraf is typically used in first year tort classes in North American law schools to introduce the concept of foreseeability as a limitation to recovery in negligence.

You say:

What is clear, is that it is somewhere in the nimbus of limiting the liability of one party based on the knowledge and expectations of that party

No. The limiting principle is what the fictional reasonable person should expect in the circumstances. Chief Judge Cardozo refers to what would be apparent to an "eye of ordinary vigilance."

The case also reiterates the principles that for negligence, there must be a duty, a breach, and causation of foreseeable damage.

The phrase "there is no negligence in the air" reflects the principle that near-harms don't count, and nor do harms that were initiated by someone without a duty to the other or are too far removed to be foreseeable.