Cause in fact and Proximate Cause are two very different things.
Fixed that for you.
However, when looking at the proximate cause, it is clear that LIRR should not be responsible. To check proximate cause follow these steps:
1. Ask - what was the negligence? In Palsgraff, the negligence was the LIRR employee pushing the passenger and causing him to drop the box.
2. Ask - what was the risk created from that negligence? In Palsgraff, the risk from pushing the passenger was that the passenger himself could have been hurt if the push was really hard or that the employee's push could cause damage to the contents of the box that the passenger was holding.
3. Ask - was the injury that occurred a result of the risk that was created from that negligence? In Palsgraff, the harm was not within the scope of the risk (see above). Thus, it was not foreseeable. Pushing someone on to a train with a package in their hand does not create a risk that a bystander will be hurt by an explosion. LIRR only would have been liable for damage to the passenger who was pushed on the train and possibly for the contents of the package that was dropped.
This analysis will work to check proximate cause every time. If the answer to any of the questions is no, there is no proximate cause and no liability.
Exactly. Of course, this only checks the "foreseeability" approach to legal (proximate) causation. The OP's prof may want him to also analyze the case according to the "direct" approach (the Polemis case). If so, this won't work.
People have mentioned duty in some other responses. Proximate cause is a separate element of negligence from duty. Be careful not to mix up the elements on an exam question. You will lose points if you crosswire and talk about duty if it is really a proximate cause issue and vice versa.
Yea. To the OP - Duty asks about the foreseeable plaintiff. Legal Cause asks about the foreseeable type of harm.