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Certain Underwriters at Lloyd's v. Southern Pride Trucking, Inc.

United States District Court, D. Nebraska

June 28, 2018

CERTAIN UNDERWRITERS AT LLOYD'S AND THOSE COMPANIES SEVERALLY SUBSCRIBING TO BOEING POLICY No. MARCW150053 AND RELATED POLICIES GOVERNING THE CARGO, Plaintiffs,
v.
SOUTHERN PRIDE TRUCKING, INC., et al., Defendants.

          MEMORANDUM AND ORDER

          John M. Gerrard United States District Judge.

         This matter is before the Court on Bauer Built's and Road Star's joint Motion to Reconsider (filing 232) asking the Court to revise several aspects of its Memorandum and Order of January 30, 2018 (filing 217). Southern Pride and Thunder Rolls have also filed a separate but related motion for summary judgment (filing 241) asking the Court to dismiss Bauer Built's and Road Star's contribution claims. And there are several outstanding motions mostly relating to discovery and case progression. Filing 256; filing 258; filing 261; filing 264; filing 269; filing 286; filing 311; filing 315; filing 319; filing 325.

         As set forth below, the Court will grant Bauer Built's and Road Star's motion to reconsider in part, and deny it in part. The Court will grant Southern Pride's and Thunder Rolls' motion for summary judgment. And the Court will clear out the remaining discovery and progression motions so that the parties can assess the effect of the Court's ruling on the motion to reconsider and motion for summary judgment.

         I. MOTION TO RECONSIDER

         Defendants Bauer Built and Road Star move for reconsideration of this Court's Memorandum and Order of January 30, 2018 (filing 217).[1] Specifically, they ask the Court to alter its conclusions with respect to two issues: (1) apportionment of liability, and (2) proximate cause. Their arguments with respect to proximate cause are without merit, and will not be revisited here- the Court abides by its previous decision. Their arguments with respect to liability, however, raise broader issues of law and policy not previously addressed by the parties.[2] And those issues warrant reconsideration.[3]

         All the parties have, at various points in this litigation, made inconsistent arguments. Compare, e.g., filing 131 at 16, withfiling 234 at 10. As a general matter, the positions taken by the parties up to this point, embedded in thousands of pages of briefing, often seem to be based on advocacy of the moment, as opposed to a genuine attempt to grapple with the complex issues presented by this case-and therefore to help the Court grapple with those issues as well. In other words, instead of describing the forest, the parties have been pelting the Court with trees. And the barrage of filings has created its own problems, because the pleadings and motions never seem to sit still long enough to present a stationary target, for the Court or the parties-to the point that one of the pending motions (which will be dealt with below) actually asks the Court to rule on whether certain claims have been pled. Filing 319.

         The Court's previous memorandum and order (filing 217) solved some of those problems, but exacerbated others. It did, however-if nothing else-have the salutary effect of narrowing the parties' vision, such that the last round of briefing on the pending motions was a bit more focused.[4] So, the Court is now in a position, for perhaps the first time in this litigation, to concretely assess the scope of the remaining parties' liability-which it will now address.[5]

         Broadly, the Court reaches two conclusions with respect to the apportionment of liability and the applicability of Nebraska's contributory negligence statutes. First, the Court finds that because Certain Underwriters' Carmack Amendment claims have been dismissed, and the remaining claims sound in negligence, Nebraska's contributory negligence statutes are applicable. And second, the Court concludes that it erred in the first instance in concluding that those statutes were inapplicable, regardless of whether Carmack Amendment claims were pending. Here's why.

         1. Effect of Dismissing Carmack Amendment Claims Certain

         Underwriters originally sued four defendants for their alleged role in causing or contributing to a roadside accident. Filing 115. Two of the defendants-Southern Pride and Thunder Rolls-were sued under the Carmack Amendment. See filing 115 at 7. The other two defendants-Bauer Built and Road Star-were sued in negligence. Filing 115 at 9-11. Certain Underwriters has since settled (and dismissed) its claims against Southern Pride and Thunder Rolls, leaving only its remaining claims in negligence against Bauer Built and Road Star. Filing 203; filing 206. Thus, the question before the Court is: What effect, if any, did the settlement and dismissal have on the apportionment of liability?

         As a threshold matter, there are two bodies of substantive law that govern the apportionment of liability in Nebraska civil tort actions: common law, and Nebraska's comparative negligence statutes. The comparative negligence statutes apply only where contributory negligence may be a defense to the underlying claim. Neb. Rev. Stat. § 25-21, 185.07. State common law applies in every other instance. Dykes v. Scotts Bluff Cty. Agr. Soc., Inc., 617 N.W.2d 817, 823 (Neb. 2000). But before addressing which body of law governs this case, it is worth discussing how they are similar, and different, as that relates to the underlying dispute.

         Nebraska's comparative negligence statutes abrogate the common law in some respects, but do not supplant it entirely. Indeed, the statutes retain common law joint and several liability for economic damages. Neb. Rev. Stat. § 25-21, 185.10; Tadros v. City of Omaha, 735 N.W.2d 377, 382 (Neb. 2007). So, as a general matter, joint and several liability applies under the statutes and common law where-as here-two or more causes produce a single indivisible injury. Kudlacek v. Fiat S.p.A., 509 N.W.2d 603, 612 (Neb. 1994).

         The analysis changes, however, when a claimant settles with one or more of the jointly and severally liable defendants. At common law, the "traditional rule" for apportioning liability amongst the remaining, non-settling defendants is applied. Under the common-law traditional rule, "[when] the plaintiff settles with one of the jointly and severally liable tort-feasors, then the plaintiff's recovery against the remaining tort-feasors is reduced by the actual settlement amount." Tadros, 735 N.W.2d at 380. So, non-settling tort-feasors remain jointly and severally liable for the total damages assessed, less the actual dollar amount of the settling parties' agreement.

         Nebraska's statutory scheme abrogates the traditional rule. Under the statute, when the plaintiff settles with one of the jointly and severally liable defendants, the plaintiff's recovery against the remaining tort-feasors is reduced by the settling tort-feasor's proportionate share of liability. Id. at 383. Thus, by settling with a joint tort-feasor, the claimant "forfeits . . . joint and several liability," and the trier of fact must instead apportion a percentage of liability to each defendant. Id. at 382. The court then reduces the total percentage apportioned to the settling defendants from the overall damage award. Id. And because any right to contribution arises only when a joint tort-feasor discharges more than his or her proportionate share of the judgment, that apportionment has the practical effect of extinguishing contribution claims by the remaining defendants against a settling defendant. Id.

         Not surprisingly, the parties disagree as to which law governs this dispute. Bauer Built and Road Star argue that the statutes apply, and that Certain Underwriters-as a result of its settlements-"[cannot] recover[] from Bauer Built and Road Star more than their proportionate share of individual liability . . . as determined by the trier of fact." Filing 233 at 4. Certain Underwriters, however, argues that common law applies, and that Bauer Built and Road Star are jointly and severally liable for any and all damages awarded by the jury (less Certain Underwriters' settlement with Southern Pride and Thunder Rolls).

         The Nebraska Supreme Court has suggested that, when a negligence defendant is sued alongside a strict liability defendant, courts do not apply the statutory scheme. See Shipler v. General Motors Corp., 710 N.W.2d 807, 825 (Neb. 2006). After all, in order to trigger the statutory scheme, contributory negligence must be, pursuant to law, a potential defense to the underlying claim. § 25-21, 185.07. And contributory negligence is not a defense to an action based upon strict liability. Shipler, 710 N.W.2d at 831-32. So, in Shipler, the Nebraska Supreme Court affirmed applying common law principles where the plaintiff sought recovery in both negligence and strict liability.[6] Id. at 824-32.

         But here, unlike Shipler, Certain Underwriters has voluntarily dismissed its claims against the only two defendants who were arguably sued in strict liability. See filing 203; filing 206. In other words, there are no strict liability claims that, pursuant to Shipler, might preclude application of Nebraska's statutory scheme. Id. Shipler does not expressly address whether an action is one "to which contributory negligence may be, pursuant to law, a defense" within the meaning of § 25-21, 185.07 when strict liability claims are settled-and therefore dismissed-before trial. And as Road Star and Bauer Built correctly point out, the applicability of Nebraska's statutory scheme may vary during litigation depending on the then-pending claims. See generally, filing 233 at 8-9; cf. Tadros, 735 N.W.2d at 380.

         So, at least at this stage of the litigation, under an ordinary reading of § 25-21, 185.07, the statutory scheme governs. And that is true because the remaining claims sound in negligence-to which contributory negligence may be a defense pursuant to law.[7] See, e.g., Jensen v. Archbishop Bergan Mercy Hosp., 459 N.W.2d 178, 184 (Neb. 1990). The next question, then, is whether liability should be apportioned pursuant to § 25-21, 185.11.[8] That's not a foregone conclusion: the Nebraska Supreme Court said in Tadros that § 25-21, 185.11 provides for a pro rata reduction of the plaintiff's recovery because "the language of § 25-21, 185.11(1) is similar to the language of Neb. Rev. Stat. § 25-21, 185.10, relating to the allocation of noneconomic damages amongst multiple defendants, 'in direct proportion to that defendant's percentage of negligence.'" 735 N.W.2d at 381. And the Court said in Shipler that § 25-21, 185.10 "allows the jury to compare the negligent conduct of codefendants" but "does not provide that one defendant's negligence may be compared to another in a cause of action for strict liability in tort." 710 N.W.2d at 830-31.

         But the Court nonetheless concludes that § 25-21, 185.11(1) should be applied. First, the Court sees little basis in the statutory scheme to conclude that § 25-21, 185.11 does not apply in any instance in which § 25-21, 185.07 is satisfied, even if it was satisfied as a consequence of dismissing other claims. Second, as a general matter, there is no conceptual reason why comparative fault principles cannot be used to apportion liability between tortfeasors even when liability for one rests on strict liability and liability for the other on negligence. See Frazer v. A.F. Munsterman, Inc., 527 N.E.2d 1248, 1257 (Ill. 1988) (collecting cases). And finally, as will be explained in more detail below, the Carmack Amendment does contemplate comparing the parties' negligence, even if it shifts and raises the burden of proof with respect to such issues. Accordingly, Certain Underwriters' claims against Bauer Built and Road Star are to "be reduced by the amount of [Southern Pride's and Thunder Rolls]'s share of the obligation as determined by the trier of fact." § 25-21, 185.11.

         And that result makes sense. After all, as the Nebraska Supreme Court articulated in Tadros, the law ought to encourage rather than discourage settlement. 735 N.W.2d at 940. And under the common law rule, there is little, if any, incentive to settle. Id. Indeed, common law fails to provide finality of liability for the settling tort-feasor because its remaining defendants maintain the right to contribution. Id. But, under the statutory scheme, finality and fairness are achieved: the non-settling parties will not be prejudiced by a settlement amount over which they had no control, the settling parties can be sure that their share of liability is limited to the bargained-for settlement amount, and the plaintiff may benefit in the event that its settlement with settling parties exceeds their proportionate shares of liability. Id.

         In arguing to the contrary, Certain Underwriters relies on Downey v. W. Cmty. Coll. Area, in which the Nebraska Supreme Court held that § 25-21, 185.11 did not apply where the injured plaintiff received workers' compensation benefits from his employer, then sued a third-party tort-feasor for negligence. 808 N.W.2d 839, 845, 851-52 (Neb. 2012). According to Certain Underwriters, Downey supports the proposition that "that parties that do not face liability for negligence are not within the statute and their fault, if any, will be recoverable jointly and severally from the other tortfeasors[.]" Filing 234 at 10 (emphasis omitted). But Downey is clearly distinguishable-or, more to the point, a workers' compensation claim is clearly distinguishable from a Carmack claim.

         In Downey, the Nebraska Supreme Court held that the employer was not a "released person" to whom fault could be allocated under § 25-21, 185.11, because the employer had never been a "person liable" in tort for the injury. 808 N.W.2d at 851. But that's because under the Nebraska Workers' Compensation Act, "employers are immune from lawsuits by their employees" and "an employer covered by workers' compensation has no liability in tort[.]" Id. at 852. As will be discussed in more detail below, however, a Carmack claim "does indeed sound significantly in tort." Fulton v. Chicago, Rock Island & P. R. Co., 481 F.2d 326, 333 (8th Cir. 1973).[9] Certain Underwriters' argument to the contrary, see filing 234 at 11, is squarely foreclosed by Eighth Circuit precedent. And Downey also rests on the premise that an employer whose concurring negligence contributed to an employee's injury does not have a common liability with the third party tort-feasor-a premise wholly at odds with the joint and several liability that Certain Underwriters has repeatedly insisted upon in this proceeding. Compare Downey, 808 N.W.2d at 851, 853, with filing 201, passim, and filing 234 at 10.

         In sum, the Court concludes that, following Certain Underwriters' settlement with Southern Pride and Thunder Rolls, the plain language of the statute and underlying policy considerations support application of Nebraska's statutory scheme. Nothing in § 25-21, 185.11 precludes apportioning fault to a (formerly) strict liability defendant when, at the time that liability is determined, the statutory scheme is applicable by its terms. The Court concludes that, were the Nebraska Supreme Court confronted with the question, that court would conclude that the statutory scheme applies to "civil actions to which contributory negligence may be, pursuant to law, a defense" when contributory negligence could be a defense at the time the case is submitted to the finder of fact. Cf. Tadros, 735 N.W.2d at 380. Accordingly, § 25-21, 185.11 will govern this dispute at trial.

         2. Applicability of Contributory Negligence Statutes

         But even absent the dismissal of the Carmack Amendment claims, the Court has reconsidered its holding regarding the applicability of Nebraska's contributory negligence statutes in this case. In the Court's Memorandum and Order of January 30, 2018 (filing 217), the Court found that Nebraska's comparative negligence statutes would not apply here, because they do not apply in an action based in part on strict liability. Filing 217 at 19 (citing Shipler, 710 N.W.2d at 826). Upon further consideration of this complex issue, the Court now concludes otherwise.

         Understanding why starts with Shipler. In Shipler, the plaintiff had been injured in an automobile accident and sued two defendants: the driver of the vehicle in which the plaintiff had been a passenger, and the manufacturer of the vehicle. Id. at 818. She alleged, as relevant, that the driver had been negligent and that the vehicle was defective. Id. Under Nebraska law,

[i]n a cause of action based on negligence, the question involves the manufacturer's conduct, that is, whether the manufacturer's conduct was reasonable in view of the foreseeable risk of injury, whereas in a cause of action based on strict liability in tort, the question involves the quality of the manufactured product, that is, whether the product was unreasonably dangerous.

Id. at 830 (citing Rahmig v. Mosley Machinery Co., 412 N.W.2d 56 (Neb. 1987)). And, the Court explained,

[s]trict liability is an abandonment of the fault concept in product liability cases. No. longer are damages to be borne by one who is culpable; rather they are borne by one who markets the defective product. The question of whether the manufacturer or seller is negligent is meaningless under such a concept; liability is imposed irrespective of his negligence or freedom from it. Even though the manufacturer or seller is able to prove beyond all doubt that the defect was not the result of his negligence, it would avail him nothing.

Id. at 829 (citing Smith v. Smith, 278 N.W.2d 155 (S.D. 1979)). So, the Shipler court concluded that Nebraska's comparative negligence statutes did not apply to a strict liability claim-e.g., a product liability claim-because contributory negligence was excluded as a defense under the statutes. See Id. at 830.

         But there are meaningful differences between a Nebraska product liability claim and a claim under the Carmack Amendment. The Carmack Amendment has been characterized as imposing "something close to strict liability upon originating and delivering carriers." Mitsui Sumitomo Ins. Co. v. Evergreen Marine Corp., 621 F.3d 215, 217 (2d Cir. 2010); see Essex Ins. Co. v. Barrett Moving & Storage, Inc., 885 F.3d 1292, 1300 (11th Cir. 2018); PNH Corp. v. Hullquist Corp., 843 F.2d 586, 589 (1st Cir. 1988). And that's true to the extent that a Carmack plaintiff need not prove negligence as part of its prima facie case. But that doesn't mean negligence isn't at issue.

Indeed, the nature of the carrier's duty under the Carmack Amendment sounds in negligence. The carrier's duty in the carriage of cargo is due care, it cannot exculpate itself from loss or responsibility due to negligence, [and] the carrier bears a heavy burden of proof akin to res ipsa loquitur because it has peculiarly within its knowledge the facts which may relieve it of liability, but it is liable under the statute only for damage "caused by" it and therefore can escape liability by proving the damage was due to an excepted cause and that it was free from negligence. Thus, despite the divergent language in the various cases, it is clear ...

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