WILLIS v. INDIANA HARBOR STEAMSHIP CO. No. A09-2223.
790 N.W.2d 177 (2010)
Daniel L. WILLIS, Respondent, v. INDIANA HARBOR STEAMSHIP CO., L.L.C., a foreign limited liability company, et al., Appellants, and Indiana Harbor Steamship Co., L.L.C., et al., defendants and third party plaintiffs, Appellants, v. Duluth, Missabe and Iron Range Railway Company, third party defendant, Respondent.
Court of Appeals of Minnesota.
October 19, 2010.
Diane P. Gerth, Alfonse J. Cocchiarella, Ricke & Sweeney, P.A., St. Paul, MN, for respondent Duluth, Missabe and Iron Range Railway Company.
Considered and decided by MINGE, Presiding Judge; JOHNSON, Judge; and COLLINS, Judge.
Appellants Indiana Harbor Steamship Co., Central Marine Logistics, Inc., ArcelorMittal USA, Inc., and ArcelorMittal Minorca Mine, Inc. appeal from judgment following a jury verdict in favor of respondent Daniel J. Willis on his negligence claims brought under the Jones Act, 46 U.S.C. § 30104 (2006). Appellants challenge (1) a negative-inference jury instruction based on spoliation; (2) the determination that the liability and apportionment of damages were governed by Minnesota law rather than federal maritime law; (3) the amount of damages awarded for past lost wages; (4) the amount of damages awarded for future losses; (5) the determination that appellants were governed by a provision in a contract between the dock owner and the entity contracting for transportation, rather than by the federal maritime warranty of workmanlike performance; (6) the denial of a request to determine collateral sources under Minn. Stat. § 548.251 (2008); and (7) the application of an incorrect rate for postjudgment interest. Because we conclude that appellants' challenges to the damages awards are without merit but that the negative-inference instruction was reversible error, we affirm in part, reverse in part, and remand.
On August 27, 2004, while working as a crewman of the vessel Joseph L. Block, Willis was injured on a dock in the Duluth harbor owned by respondent Duluth, Missabe & Iron Range Railway Company (DM&IR). Willis was handling one of the Block's mooring lines used to secure the vessel when he slipped on the dock and fell. Willis testified that at the place where he fell the dock was covered by a slime of water and limestone, and that his knee hit both the dock and taconite pellets that were obscured by the milky limestone mixture. Willis eventually was diagnosed with deep vein thrombosis stemming from the injury to his knee.
Willis sued his employers, Indiana Steamship and Central Marine, under the Jones Act, claiming entitlement to maintenance and cure as well as additional compensation for his injuries under a negligence theory. Indiana Steamship impleaded DM&IR under the theory that DM&IR, as the dock owner, was liable due to the dangerous condition of the dock. Willis later amended the complaint to add DM&IR as a direct defendant, as well as to assert claims against the Block's charterer, ArcelorMittal USA, Inc., and the owner of the taconite manufacturing facility for which the cargo of
At trial, evidence was presented that the Block arrived at the dock at approximately 2 p.m. on August 27, 2004. Another vessel, the Callaway, had occupied the dock prior to the arrival of the Block and departed shortly after it finished unloading its cargo at 12:45 p.m. Because the Callaway's cargo did not include taconite pellets, there was testimony that any such pellets on the dock where Willis fell must have been there since before the Callaway docked that morning at approximately 2 a.m. The rulebook governing dock policies and procedures at the time required that docks be cleaned prior to vessel arrival and, in the event that they could not be cleaned, that the vessel be notified of their condition. According to a dock foreman, there had not been time between the Callaway's departure and the Block's arrival to properly clean the dock. Although the dock foreman confirmed DM&IR's policy to inform the vessel's captain if the dock was not cleaned, the foreman could not recall any instance in his 36 years' experience when a vessel was told to delay docking because of a spill on the dock or when a vessel has refused to dock because of a spill.
The foreman also testified that no accident was reported on the day Willis slipped and fell on the dock. According to the foreman, had the accident been reported, DM&IR would have investigated the incident, taking statements and documenting the condition of the dock at the time of the accident. The accident occurred on a Friday and, although Central Marine Logistics was informed of the accident on that afternoon, DM&IR was not notified of the incident until the following Monday. In light of this late notice, the district court gave a negative-inference jury instruction as a sanction based on its interpretation of the doctrine of spoliation.
The jury returned a verdict in favor of Willis in the total sum of $1,818,898, finding that Willis was entitled to compensation for $281,468 in past lost wages, $50,000 for past pain and suffering, $962,430 for future lost wages, $500,000 for future medical costs, and $251,000 for future pain and suffering. The jury apportioned 85% of the causal fault for the accident to the vessel defendants, 7.5% to DM&IR, and 7.5% to Willis. The district court ordered judgment accordingly. Appellants sought posttrial relief, which the district court denied in all respects, and this appeal followed.
I. Was the negative-inference jury instruction as a sanction for spoliation prejudicial error?
II. Did the district court err in determining that Minnesota premises-liability law applied to appellants?
III. Did the district court abuse its discretion in denying remittitur on the damages award for past lost wages?
IV. Did the district court abuse its discretion in denying appellants a new trial on future damages?
V. Did the district court err in applying the contractual contribution clause?
VI. Did the district court err in denying appellants' motion for determination of collateral sources?
Appellants first argue that the negative-inference jury instruction based on spoliation was unwarranted under Minnesota law and unfairly prejudiced appellants on both liability and apportionment of that liability, and therefore that the district court abused its discretion in failing to grant appellants a new trial. A party may seek a new trial when there are errors of law at trial or when a party is deprived of a fair trial due to irregularities in the proceedings. Minn. R. Civ. P. 59.01(a), (f). Because the district court has the discretion to grant a new trial, appellate courts will not disturb the decision "absent a clear abuse of that discretion." Halla Nursery, Inc. v. Baumann-Furrie & Co.,
The term "spoliation" generally refers to the destruction of relevant evidence by a party. Foust v. McFarland,
Although Black's Law Dictionary 1531 (9th ed.2009) defines spoliation as "[t]he intentional destruction, mutilation, alteration, or concealment of evidence," Minnesota courts have held that spoliation does not have to be intentional to constitute obstruction of justice deserving of a sanction. Wajda, 652 N.W.2d at 862. Regardless of intent, disposal of evidence may be subject to a spoliation sanction when a party knows or should know that the evidence should be preserved for pending or future litigation. Patton, 538 N.W.2d at 118. As a spoliation sanction Minnesota "permits `an unfavorable inference to be drawn from failure to produce evidence in the possession and under the control of a party to litigation.'" Federated Mut. Ins. Co. v. Litchfield Precision Components, Inc.,
Appellants argue that, because they lacked control over the dock and its condition, they cannot be subject to a spoliation sanction for changes to the condition of the dock after the accident. There is nothing in the record that indicates that appellants had any control of the dock or when the dock was cleaned. The only party who had control over the dock or would have cleaned the dock, and thus destroyed the spill evidence, was DM&IR. The district court, however, concluded that a spoliation-based negative-inference instruction was appropriate despite the fact that appellants never had control over the dock or the condition related to the spill. In its posttrial order, the district court justified "the instruction on spoliation of evidence," stating "[t]he fact of [Willis's] fall, and the condition of the dock at the place and time, were within the exclusive knowledge, and therefore the exclusive control and possession, of the vessel Defendants" and because there was evidence that the vessel defendants failed to notify DM&IR of the
Although we generally respect a district court's broad discretion regarding jury instructions and the determination of an appropriate sanction for spoliation, we review separately whether a spoliation sanction was authorized. Wajda, 652 N.W.2d at 860. Without citation to precedential caselaw, DM&IR argues that sanctions should be imposed regardless of control when a party knowingly allows evidence to dissipate. But our relevant caselaw involves only evidence that was under the control of the party sanctioned. See, e.g., Patton, 538 N.W.2d at 118 (addressing loss of plaintiff's allegedly defective motor home and loss of parts retained by the plaintiffs' expert); Wajda, 652 N.W.2d at 864 (addressing destruction of tapes under the exclusive control of an adverse party); Hoffman v. Ford Motor Co.,
The determination that the sanction was not authorized does not end our inquiry. We must next determine if the negative-inference instruction substantially prejudiced appellants. Error in a jury instruction is likely to be considered fundamental, and therefore not harmless, if the error destroys the substantial correctness of the entire jury charge, results in a miscarriage of justice, or substantially prejudices a party. Lindstrom v. Yellow Taxi Co. of Minneapolis, 298 Minn. 224, 229,
The instruction read:
Willis argues that this instruction is harmless because the instruction allows the jury to determine if evidence was allowed to be altered and who allowed it to be altered. But the only party to proffer testimony and argue destruction of evidence was DM&IR. DM&IR elicited testimony that appellant Central Marine Logistics knew
Much was made at trial about the condition of the dock, especially on the issue of the presence of taconite pellets. If there were taconite pellets present, appellants would have a much stronger argument that DM&IR failed in its duty to properly clean the dock. The negative-inference instruction invited the jury to draw an inference against the vessel defendants regarding the condition of the dock. While we agree that either party is free to argue about the significance of the appellants' failure to promptly notify DM&IR of Willis's slip and fall, the district court's decision to grant a sanction in the form of a negative-inference instruction places the court's authority behind the negative inference. Because we cannot conclude that the negative-inference instruction did not prejudice appellants' substantial right to a fair trial, and because we have concluded above that the instruction was not authorized, we reverse the jury's apportionment of liability and remand for a new trial on liability and the apportionment of the causal fault.
Appellants next argue that the district court erred in determining that the liability and apportionment were governed by Minnesota premises-liability law rather than federal maritime law. Willis argues that appellants are prohibited from raising this argument on appeal because it was not raised in appellants' posttrial motions. The district court gave the jury an instruction on Minnesota premises-liability law, over appellants' objection, concluding that Minnesota premises-liability law applied to Willis's claims against the vessel defendants as well as those against DM&IR. This specific premises-liability jury instruction was not challenged in appellants' posttrial motions.
The Minnesota Supreme Court has recognized the longstanding rule "that matters such as trial procedure, evidentiary rulings and jury instructions are subject to appellate review only if there has been a motion for a new trial in which such matters have been assigned as error." Sauter v. Wasemiller,
State courts generally are bound to apply federal maritime law in cases brought under the Jones Act. See Chelentis v. Luckenbach S.S. Co.,
When injury is caused by a vessel, admiralty law applies regardless of where the injury occurred. See 46 U.S.C. § 30101 (2006) ("The admiralty and maritime jurisdiction of the United States extends to and includes cases of injury or damage, to person or property, caused by a vessel on navigable waters, even though the injury or damage is done or consummated on land."). The Jones Act states:
46 U.S.C. § 30104. Because this case is brought under the Jones Act, and because the Jones Act specifically states that the laws of the United States apply to Jones Act claims, the federal maritime standard of premises liability applies since it is substantive, not procedural, law. See also Garrett v. Moore-McCormack Co.,
Appellants argue that the jury's award of damages for past wage loss was not supported by the evidence. A district court may grant a new trial because of excessive damages that appear to have been given under the influence of passion or prejudice or are not justified by the evidence. Minn. R. Civ. P. 59.01(e), (g). A district court possesses "the broadest possible discretion in determining whether a new trial should be granted for excessive damages." Bisbee v. Ruppert, 306 Minn. 39, 48-49,
The district court denied appellants' motion for remittitur, noting that the vessel defendants "admit that the award for past wage loss was in the range that [Willis's financial expert] testified to" and concluding that the weight of the testimony was an issue for the jury and that the award was not contrary to the evidence. Willis's financial expert, Dr. Sherman, testified that Willis lost wages in the amount of $267,022. This amount was based on Dr.
The jury awarded $281,468 in past lost wages. Although this award is not precisely the amount recommended by Dr. Sherman, we agree with the district court that it is within the range supported by Dr. Sherman's testimony. Because the jury verdict on past wages is not significantly outside of the recommended past wages amount, we cannot conclude that the district court abused its broad discretion in denying remittitur or a new trial on past lost wages.
The fourth issue is whether the district court abused its discretion in failing to grant appellants a new trial on future damages. In a civil action the plaintiff has the burden of proving, by a preponderance of the evidence and to a reasonable certainty, the amount of future damages. Pietrzak v. Eggen,
Appellants argue that, though Dr. Sherman testified to lost earnings capacity in the range found by the jury, the award was born of speculation. Appellants' speculation argument appears to be based on evidence, presented to the jury, that Willis's employment history contains significant periods of unemployment. The jury was given this information to consider, but there was nothing to indicate that Willis would not have continued his employment as a seaman. Dr. Sherman testified that the range for lost future earnings was between $1,437,404 and $1,629,251. The jury awarded $962,430 in lost future earnings, an amount below the range testified to by Dr. Sherman. Accordingly, we conclude that the district court did not abuse its discretion in denying appellants' motion for a new trial based on the future-earnings award.
Appellants argue that the award of future medical expenses also was speculative. They contend that the award of $500,000 in future medical expenses must have been based on future nursing-home care, the need for which is too speculative to justify the award. Instead, appellants argue, the amount testified to by their expert, $293,265.02, more accurately predicts Willis's future medical costs, including costs of blood-thinning and other medications, compression stockings, pain relief, Doppler studies, and periodic physician visits. In contrast, Dr. Sherman testified
Dr. Sherman's testimony was based on the necessary medical expenses testified to by Linda Graham, a registered nurse and life-care planner. Graham testified that she made her determinations of expected future medical needs based on an examination of Willis's medical records, a report from his treating physician, the depositions of the other medical experts, and an interview with Willis. Graham testified to many of the medical needs testified to by DM&IR's expert, but also focused on Willis's home-care needs. According to Graham, Willis's girlfriend was providing home care four hours per day, and Willis would need a home health aide's help were his girlfriend not available. Graham also testified about possible intermittent nursing-home placement due to complications, but that "the hope is that he won't need that." Assuming that all care was done at home, Graham testified that the "lower end of the range [of lifetime cost] is $1,252,891." This amount did not include nursing-home care.
Because the award of future medical expenses was supported by the testimony of Dr. Sherman and Graham, because the award was well below the range testified to by both Dr. Sherman and Graham, and because the weighing of conflicting evidence is an issue for the jury, Reinhardt v. Colton,
The fifth issue is whether the district court erred in applying the written contribution clause in the transportation contract. Section 13 of the transportation contract between DM&IR and ArcelorMittal Minorca Mine states that the Minorca Mine accepts responsibility for "negligence of [c]ompany, its agents or employees acting pursuant to this contract." The contract further states "[s]hould [r]ailroad and/or [c]ompany suffer any harm through the joint negligence of company and railroad acting pursuant to this [c]ontract, such expenses will be apportioned between the parties in proportion to their negligence." The district court concluded that the vessel defendants were agents and that the joint-negligence contract language thus applied to all vessel defendants.
a. Operation of the maritime warranty of workmanlike performance
Appellants argue that, even if the contribution clause applies, the warranty of workmanlike performance also applies. In Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp., the Supreme Court ruled that stevedores, or dockworkers, and other contractors give shipowners an implicit warranty that their services will be performed in a "workmanlike" manner.
Recent caselaw, however, indicates a trend away from Ryan indemnity. In the Ninth Circuit case Knight v. Alaska Trawl Fisheries, Inc., the court adopted the rationale of other circuits that have abandoned Ryan indemnity in favor of comparative fault in seamen personal-injury cases.
b. Evidence of agency status
Appellants argue that the district court erred in finding that appellants were all agents for the purpose of the contract. Because the Jones Act incorporates the standards of the Federal Employers' Liability Act (FELA), the agency principles outlined in Sinkler v. Missouri Pac. R.R. Co.,
In its posttrial order, iterating that it did not err in finding that the four vessel defendants were agents, the district court explained:
c. Finding of a "unitary enterprise"
Appellants also argue that the district court erred in concluding that the vessel defendants were engaged in a "unitary enterprise." The district court concluded that the "closeness and entanglement of the various companies can lead to no other conclusion than that the [four] are engaged in furthering the operational activities of each other." DM&IR argues that the testimony of Daniel Cornillie supports the district court's conclusion that the vessel defendants were a unitary enterprise. Cornillie was employed by ArcelorMittal at Indiana Harbor as the manager of marine and raw materials, and logistics. His testimony supports the conclusion that (1) the relationship between ArcelorMittal USA and the owner of the Block, Indiana Harbor, is exclusive; (2) ArcelorMittal USA has extensive control over the movements and management of the ship; and (3) ArcelorMittal USA pays many of the bills related to the operation of the vessel. This evidence supports the district court's conclusion that Indiana Harbor, ArcelorMittal USA, and Central Marine Logistics were a unitary enterprise.
A closer question is whether Indiana Harbor, ArcelorMittal USA, and Central Marine Logistics were a unitary enterprise with the ArcelorMittal Minorca Mine. DM&IR argues that, because the three shipping parties were working with the ArcelorMittal Minorca Mine with the "overarching" purpose of transporting limestone, they were all engaged in a unitary enterprise. The record contains testimony supporting the district court's conclusion that ArcelorMittal Minorca Mining was part of a unitary enterprise with ArcelorMittal USA as subunits of ArcelorMittal Mining in Europe. Based on this testimony, the district court did not abuse its discretion in determining that the four appellants were a unitary enterprise, and the district court did not err in applying the contribution clause.
d. Minorca Mine as a vessel defendant
Appellants argue that ArcelorMittal Minorca Mine was entitled to JMOL on all of Willis's claims because it was not a "vessel defendant." Appellate courts review de novo a district court's denial of a Rule 50 motion for JMOL. Bahr v. Boise Cascade Corp.,
The district court determined that the ArcelorMittal Minorca Mine was a vessel defendant based on the "unitary enterprise" theory. Appellants argue that ArcelorMittal Minorca Mine is only liable under the contract it signed with DM&IR and that, because appellants argue that the district court erred in finding the vessel defendants a "unitary enterprise," there should be no liability under the agency principles in the contract. DM&IR argues that this determination of liability was appropriate based on the interrelatedness of the vessel defendants and the fact that each served as a "link in the chain of production." Because we conclude that there was record support for the "unitary enterprise" finding by the district court, and that such a finding supports a conclusion that the liability provision in the contract involving agents would apply, we conclude that the district court did not err in denying JMOL on this issue.
The sixth issue is whether the district court erred in denying appellants' motion for a determination of collateral sources. Appellants sought a collateral-source offset under Minn.Stat. § 548.251, subd. 1 (2008). "When an individual or entity other than a tortfeasor compensates a tort plaintiff for his or her injuries, the plaintiff has received a `collateral-source benefit.'" Swanson v. Brewster,
Willis first argues that appellants are not entitled to a collateral-source offset because appellants' payments were a direct, and not collateral, source of payments. See Do v. Am. Family Mut. Ins. Co.,
The district court concluded that, because all of appellants' prior payments to Willis, totaling $200,339.37, were properly characterized as maintenance and because Willis "received no award for past medical expense, there is nothing to offset." Appellants argue that the district court's characterization of the $200,339.37 as maintenance was error because the required maintenance rate, as established in the union contract, was $8.00 per day or $56.00 per week. Appellants argue that they therefore paid supplemental-wage compensation of $187,123.37 above the maintenance rate required by the collective bargaining agreement and that the award of past wages should be reduced by that amount.
"Maintenance and cure" refers to the duty the owner of a vessel has under admiralty law to compensate a seaman for food and lodging, and to pay for necessary medical expenses if the seaman becomes ill or is injured in the service of the vessel. Calmar S.S. Corp. v. Taylor,
In Stanislawski, the Eighth Circuit addressed a similar issue regarding double compensation for lost wages. There, the plaintiff received checks from the defendant prior to trial that totaled $13,840. Id. The defendant argued that the checks represented "payments of $55 per day: $20 for maintenance and $35 in voluntary supplemental wage compensation." Id. Although the plaintiff argued that the entire $55 was for maintenance, the district court found that $35 was for supplemental wages and, based on an affidavit supporting the district court's finding, the Eighth Circuit affirmed the district court's conclusion and reduced by $8,680 the original past-wage award on the ground that it constituted double payment. Id.
Willis argues the district court's decision to disregard the $8.00 per day amount and find that the pretrial payments were entirely maintenance is a finding of fact and should be reviewed for clear error. The Ninth Circuit, in a divided opinion, held that the collectively bargained rate of $8.00 a day is binding on the seaman notwithstanding the district court's finding that the rate is inadequate to obtain food and lodging. Gardiner v. Sea-Land Serv., Inc.,
Because the circuits are split and there is no Supreme Court case resolving this issue, this court is not bound by any circuit court's rationale. We note that the district court, in finding the payments were in the form of maintenance, relied on the fact that the payments were not designated as supplemental wages distinct from maintenance. This failure to distinguish maintenance from supplemental wages, in conjunction with statements from a corporate representative that the payments were wages in the form of maintenance, supports the district court's determination that these payments were in the form of maintenance and not supplemental income. In light of the purpose of maintenance and the fact that the payments were treated as maintenance prior to trial, we conclude that the district court's finding that appellants' pretrial payments were maintenance was not clear error.
Finally, appellants argue that the district court erred in applying the wrong statute governing postjudgment interest on the damages award. Because we reverse and remand for a new trial on liability and the apportionment of the causal fault based on the erroneous spoliation sanction, we need not reach the issue of the appropriate postjudgment interest.
We affirm the district court's decisions to (1) deny JMOL, a new trial, or remittitur on the issue of damages; (2) deny appellants' preference to apply the indemnity provision of the maritime warranty of workmanlike performance over the apportionment-of-negligence provision in the transportation contract; (3) deny appellants' motion for JMOL on the claims against ArcelorMittal Minorca Mine; and (4) deny appellant's motion for a collateral-source offset. But because we conclude that the district court prejudicially erred in granting a spoliation sanction for the destruction of evidence that was never in appellants' control, we reverse and remand for a new trial on liability and the apportionment of the causal fault. In the new trial, we direct the district court to properly instruct the jury on the federal maritime premises-liability law regarding the liability of the vessel defendants.
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