United States District Court, N.D. Illinois, Eastern Division
May 17, 2005.
FIRST NATIONAL BANK OF DANVILLE, as Administrator of the Estate of ALLEN J. PIERCE, and MARY PIERCE, Individually and as Administrator of the Estate of ALLEN M. PIERCE, Plaintiffs,
SYSTEM TRANSPORT, INC., a Washington Corporation; GENIE INDUSTRIES, INC., a Washington Corporation; and MARKET TRANSPORT, LTD. d/b/a MARKET LOGISTICS, an Oregon Corporation, Defendants.
The opinion of the court was delivered by: HARRY LEINENWEBER, District Judge
MEMORANDUM OPINION AND ORDER
Before the Court are the Partial Motions for Summary Judgment
of Defendants System Transport, Inc. (hereinafter, "System"),
Genie Industries, Inc. (hereinafter, "Genie"), and Market
Transport, Ltd. (hereinafter, "Market").
This diversity action arises from a tragic auto accident that
occurred on September 1, 2001. On that day, System's driver
Gregory Maine, was transporting two Z-60 lifts manufactured by
Genie on a flatbed tractor-trailer. Maine loaded the lifts at the
Genie facility in Moses Lake, Washington and was traveling
southbound toward North Carolina on I-65. The Pierce family which included husband, wife and infant son, was also traveling in
their family car on I-65 when they sustained a flat tire outside
Hobart, Indiana. Mr. Pierce pulled over to the shoulder and began
fixing the tire with Mrs. Pierce's assistance. Their son Allen
remained in the car.
While Mr. Pierce was fixing the flat tire, Maine lost control
of the System trailer after driving through a construction zone
lane shift and hitting a dip in the highway. The trailer fell to
its right and the two Genie Z-60 lifts broke loose of their
securement chains and straps. One lift hit the Pierce family car,
which burst into flames and killed the couple's son, who was
trapped inside the car. Mary Pierce watched the crash and the
subsequent death of her son while standing outside the car.
Another lift collided with Mr. Pierce and severed his leg, which
he lost as a result of the accident.
The Third Amended Complaint seeks compensatory and punitive
damages based on theories of negligence, wrongful death, strict
liability, and negligent infliction of emotional distress as a
result of the collision.
II. LEGAL STANDARD
Summary judgment is appropriate when "the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). A
genuine issue of triable fact exists only if "the evidence is
such that a reasonable jury could return a verdict for the
nonmoving party." Pugh v. City of Attica, 259 F.3d 619, 624
(7th Cir. 2001) (quoting Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986)).
A. System's Partial Motion for Summary Judgment
System leased the flatbed tractor-trailer involved in the
accident and employed the driver, Gregory Maine. Its partial
summary judgment motion involves Plaintiffs' punitive damages
claim against System. The Court already has concluded that
Indiana law applies to this case. (See 4/23/02 Minute Order).
System claims that Indiana law does not support punitive damages
under the facts here.
Under Indiana law, punitive damages will not stand if the facts
demonstrate negligence only (i.e., merely failing to act as a
reasonable person does not constitute the type of conduct
punishable by punitive damages). See, e.g., Austin v. Disney
Tire Co., Inc., 815 F. Supp. 287 (S.D. Ind. 1993). The purpose
of punitive damages is to identify and deter conduct that is
driven by a mental state of obduracy. Id. at 288. For conduct
to be punishable by punitive damages, one must look to the
actor's subjective state of mind and determine that the actor
recognized the danger that would probably result in injury, and consciously
and intentionally disregarded it. Id. at 288-89; see also
Purnick v. C.R. England, Inc., 269 F.3d 851, 852 (7th Cir. 2001)
(stating that the "punitive damages standard in Indiana . . .
presents a high hurdle"). "Punitive damages may be awarded upon a
showing of defendants' will and wanton misconduct, even absent
malice, ill will, or intent to injury." Wanke v. Lynn's Trans.
Co., 836 F. Supp. 587, 599-600 (N.D. Ind. 1993) (citing
Picadilly, Inc. v. Colvin, 519 N.E.2d 1217, 1221 (Ind. 1988)).
Negligent conduct, on the other hand, is judged by a reasonable
person objective standard. Punitive damages must be proved by
clear and convincing evidence and the analysis is fact-driven.
Ind. Code § 34-51-3-2; Wanke, 836 F. Supp. at 599-600.
System argues that the evidence shows that Maine did not act in
an obdurate or iniquitous manner and was instead conscientious
about the safety of the load, thus precluding punitive damages.
System points out several factors to indicate Maine's safe and
cautious driving: he drove 1900 miles without incident before the
accident; he sped up beyond the 45 mile-per-hour limit in a
construction zone only in an attempt to stabilize his load; he
conducted a pre-trip inspection of the trailer and the load; he
stopped and investigated the trailer when he initially felt the
load lean to the right in Moses Lake, Washington; upon arriving
at the System Spokane, Washington facility he asked a System
mechanic to inspect the trailer; an Indiana Motor Carrier Enforcement
Inspector found that the trailer load was in compliance with DOT
regulations; and he tightened the chains and replaced the strap
securing the Genie lift in Lake Station, Indiana on August 31
one day before the accident. (Sys. Br. at 9-10).
System also points to the fact that Maine initially requested
that the lifts be loaded facing each other, but his request was
denied. Also, both of Plaintiffs' experts, Nathan Ware and
Kenneth Baker, opined that more likely than not, the accident
would not have occurred if Genie had specified and loaded the
lifts facing each other (basket-to-basket), and would not have
occurred if loaded on a stepdeck trailer. System notes that
Plaintiffs' experts state that Maine's speed above 45 m.p.h. only
contributed to the accident, which was defined by the
above-stated conditions. (Id. at 11; Pl. App. Exhs. 12 & 14).
In addition, System points out that there is no evidence to show
that Maine was impaired in his driving for example, he was not
intoxicated, he was not on drugs, and he had rested for twenty
hours in Indiana shortly before the accident. These facts, System
contends, indicate that any fault on System's part only could be
attributed to mistaken judgment or human error, which actions do
not contemplate a punitive award.
Plaintiffs argue that System failed to paint a complete picture
of the relevant facts. Plaintiffs indicate that beyond the above stated facts, Maine never hauled a Z-60 lift before and
that System did not provide Maine with specific directions for
Genie lift securement or Genie load tie-down instructions prior
to the accident. Plaintiffs emphasize the fact that from the
moment Maine left the Genie facility in Moses Lake, Washington,
he felt that the load was insecure. Even after Maine and a System
mechanic checked the load, he still felt that it was leaning
"bad" and was "scary." (Pl. Res. at 3). While still in the
Spokane area, Plaintiff alerted his dispatcher of the problem via
a text message, who instructed him with urgency to return to
System's Spokane yard due to the instability, but he did not and
System did not further press the order. Throughout the trip,
Maine indicated that he felt "uncomfortable" with the load,
experiencing "instability" in left turns, but that he did not
notify anyone. Maine's dispatcher Robert DeBolt testified that he
may have resolved the situation by phone, but could not recall
and there is no other record to indicate any conversation.
The facts do not independently substantiate a punitive damage
award. However, the analysis examines the totality of the
circumstances. Wanke, 836 F. Supp. 604. By itself, the fact
that Maine never transported a Z-60 lift before the accident is
not enough. At the time of the accident, Maine was an experienced
truck driver and in good standing. Further, Maine had a System
safety manual, but it is disputed as to whether Maine also had a copy of recommended Genie tie-down securement instructions at the
time of the accident. (System admits in response to Plaintiffs
interrogatories that Genie communicated instructions to System
regarding the Z-60 lifts and other products (Market App., Exh.
9)). Maine's actual securement method of the lifts, using three
binders, three chains, and one strap is undisputed. Genie's
tie-down instructions recommended further securement for safe
transport. Even if Maine had no knowledge of Genie's specific
instructions, outstanding issues remain as to whether the
securement loop holes located throughout the lifts were obvious
to Maine and whether their use in securement was a necessity for
safe transport. Further, Maine's dispatcher at System, Robert
DeBolt, stated in his deposition that if he had noticed the lifts
only were secured with three chains, he would have resecured the
lifts with at least five chains on each lift.
With respect to Maine and System's load stability concerns,
even given the facts in the light most favorable to Plaintiffs,
there is no evidence to infer that System followed-up to resolve
the potentially dangerous situation. Also, although Maine
continually checked the securement chains throughout the trip, he
never ceased to feel uncomfortable with his leaning load and
never wholly rectified the problem. After the initial text
message to System, Maine did not mention the leaning load to his
supervisors again. Although it remains a fact issue, Maine's speed in the
construction zone, somewhere between 45 and 60 m.p.h., as well as
the "dip" in the construction zone and the lane shift, probably
contributed to the accident. The speed limit was 45 m.p.h.
Speeding alone, however, does not give rise to punitive damages.
See Wanke, 836 F. Supp. at 604. System points to Maine's own
statements regarding speeding through the construction zone that
indicate he was consciously attempting to restabilize the lifts
and avoid an accident by pushing on the throttle, which made the
load feel more comfortable. (System 56.1 ¶ 41) (Pl. 56.1 Resp. ¶
41). Plaintiffs contend, however, that slowing down, especially
through turns, is intuitive to avoid tipping when transporting a
load that has a high center of gravity. (Pl. Res. Br. at 5; see
Beckley deposition). Also, Maine stated that throughout the trip
the load felt unstable, but that it was more comfortable when
slowing down through left turns.
Maine's subjective mental state is at issue. The jury may
determine that Maine and System's actions account only for gross
misjudgment or human error. However, their actions also indicate
a dangerous pattern of warning signs that were apparent and
acknowledged by Maine and System, but that were insufficiently
attended to or disregarded in order to proceed with the scheduled
delivery. Because issues of intent and securement remain, the
jury must make those factual determinations at trial. Based on
the evidence, a reasonable jury could find that System and Maine
acted with the requisite state of mind to justify a punitive
award by clear and convincing evidence. Accordingly, System's
motion for partial summary judgment is denied, and the punitive
damage claim against System survives for trial.
B. Genie Industries' Partial Motion for Summary Judgment
Genie filed a motion for partial summary judgment on three
issues. First, that strict liability is not applicable under
Indiana's product liability statute. Second, that there is no
basis for Allen Pierce's emotional distress damages claim. Third,
that there is not enough evidence to support a punitive damages
claim against Genie. Genie's motion for partial summary judgment
1. Strict Liability Claim
For Plaintiffs to have proper standing to assert their strict
liability claim, they must fall within Indiana's statutory
guidelines. Indiana's Product Liability Act (the "Act") states
that strict liability applies to injured bystander plaintiffs as
"consumers" or "users" when they "reasonably . . . expected to be
in the vicinity of the product during its reasonably expected
use." Ind. Code 34-6-2-29. The critical question in determining
whether Plaintiffs fall into the category of persons protected by
the Act is the "foreseeability" of the product's expected use and
the "forseeability" of the bystander consumer. Gen. Elec. v.
Drake, 535 N.E.2d 156, 160 (Ind.Ct.App. 1989) (explaining an earlier
version of the Act, but with the same bystander language).
Determining the class of persons able to recover under the Act is
a legal question and is restricted by these two qualifications.
Stegemoller v. Acands, Inc., 767 N.E.2d 974, 975 (Ind. 2002).
Genie argues that the Z-60 lifts were not involved in their
"reasonable expected use," and that Plaintiffs were not the
intended bystanders under the Act. Genie also argues that Indiana
law does not recognize a cause of action for products still
within the initial chain of distribution, as the Z-60 lifts were
in the middle of transport between Genie's site in Washington and
the purchaser in North Carolina. See Thiele v. Faygo Beverage,
Inc., 489 N.E.2d 562 (Ind.Ct.App. 1986).
Plaintiffs counter that because there was a sale of the lifts,
they were in the stream of commerce during transport and the Act
applies. Plaintiffs also contend that transportation is a
reasonable expected use of the lifts and that there are no facts
that show otherwise. If transporting the lifts falls within their
reasonable expected use, then injury to Plaintiffs who were along
the route of transport makes them foreseeable bystanders.
The Z-60 lifts generally are used in the construction industry
to raise workers up to a specific elevated height. Transportation
of the lifts is not a reasonable expected use to trigger
bystander liability under the Act. The lifts were in transport to
the consumer so that they could be moved to a location where they
actually would be used for either their intended purpose or a
reasonably expected purpose. Every product must be transported at
some point in time, and to include the Z-60's transport in their
"reasonably expected use" would broaden the scope of the Act's
coverage too far. Therefore, the Act does not reach this
situation. Further, because the first qualification is not met,
the bystander foreseeability analysis need not be addressed.
Plaintiffs' cases supporting strict liability do not reach the
present situation. Stegemoller dealt with the bystander
qualification under the Act at 767 N.E.2d at 976. The Indiana
Supreme Court specifically "took into account the nature of
asbestos products" and the Act's asbestos language in applying it
to the claims. The court found that it was foreseeable that an
industrial worker's spouse would also have contact with the
disease causing asbestos that accumulated on her spouse's work
clothes resulting from clean-up activities. Id. Similarly,
Butler v. City of Peru, 733 N.E.2d 912, 919 (Ind. 2000), held
that a school was the ultimate user of electricity and therefore
a maintenance employee of a "consuming entity," who was injured
while trying to restore power to an electrical outlet, falls
under the Act. Although the Indiana "supreme court expanded the
application of the Act to activities beyond the exact intended
purpose of the product [to include] those activities related to
furthering the use of the product," installation, maintenance, and repair all fit into
a particular category of activities that "render? a product
operational . . . for its intended purpose." Vaughn v. Daniels
Co., Inc., 777 N.E.2d 1110, 1127 (Ind.Ct.App. 2002). The Court
finds that transport of the Z-60s does not fit into the same
category of related activities. Plaintiffs also do not give any
explanation of how transport of the Z-60s fits into the category
of specific activities defined by the Indiana courts that render
the product operational for its intended purpose.
Due to the disposition of the above issue, the Court need not
address Defendant's arguments about the chain of distribution and
Thiele's point-of-sale analysis. Accordingly, Genie's Summary
Judgment Motion on Plaintiffs' Strict Liability Claim is granted.
2. Allen Pierce's Emotional Damages
Defendant argues that Allen Pierce (Sr.), does not have an
emotional distress damages claim based on his wife Mary Pierce's
injuries because she did not sustain severe physical injury. See
Groves v. Taylor, 729 N.E.2d 569, 572-73 (Ind. 2000). Plaintiffs
concede this claim in a footnote attached to their response
brief, but only as to any emotional damages suffered by Allen
Pierce as a result of Mary Pierce's injuries. Accordingly, the
claim is dismissed. 3. Punitive damages against Genie
Genie argues that "the material facts do not give rise to an
inference by which a jury could find that Genie acted with
conscious indifference or reckless disregard for the safety of
others." (Genie Br. at 6). Genie states that the following facts
support its punitive damages argument. It is undisputed that
there are no federal regulations or industry customs requiring
that Genie learn "the center of gravity and rollover threshold
for the tractor-trailer combination." (Genie Br. at 6).
Plaintiffs' trucking expert, Donald Asa, admitted that he was not
aware of any product shippers (such as Genie), logistics
companies, or motor carriers who perform tilt table tests to
evaluate load stability prior to transport. (Genie 56.1, Exh. T).
Genie argues that even if such testing was done, there is no
objective criteria in the industry to evaluate the information.
Genie also argues that Plaintiffs' trucking expert Asa's
testimony defeats its claim for punitive damages. First, there is
no evidence that using "a flatbed trailer was unreasonably
dangerous," to which Plaintiffs' own trucking expert, Asa,
agrees. (Genie Br. at 8; 56.1, Exh. T). Genie reiterates this
argument with regard to the loading method of the lifts,
counterweight-to-counterweight vs. basket-to-basket. Genie
states that Plaintiffs' expert Asa conceded that two Z-60s lifts
loaded counterweight-to-counterweight on a flatbed safely could be transported as long as the load is
properly secured. (Id.).
Genie had been shipping Z-60s on flatbeds since their
introduction in 1993. Robert Debolt, System's fleet manager at
the time of the accident, testified that it is common to see
flatbed trailers used to transport industrial equipment. (Genie
56.1, Exh. O). There is no evidence that Genie's motive in using
flatbeds to transport Z-60s was to save money. Genie adds that it
also relied on the experience and advice of their logistics
provider (Market) and approved carrier (System) with respect to
transportation of their product. (Genie Br. at 8). Genie argues
that there is absolutely no evidence that they knew their
shipping method was unreasonably dangerous. Prior to the present
accident, there were no rollover accidents involving Genie Z-60
lifts. Since the lifts' introduction, Genie has transported over
2000 lifts using flatbed trailers throughout the country, and on
several of those occasions loading the lifts
counterweight-to-counterweight. Finally, Genie argues that it had
no control over System and Maine's critical actions, which it
alleges caused the accident.
Plaintiffs' argue, however, that a 1998 rollover of a single
Genie S-80 lift was a prior similar occurrence, which eventually
resulted in the change from flatbed to stepdeck trailer
transport. Genie explains that the earlier accident is
inapplicable because it involved a truck transporting a different
single Genie aerial lift model. The driver descended a 6.5 degree incline hill and
overheated his brakes, causing the speeding flatbed trailer to
leave the roadway and crash. This does not raise an inference of
awareness of a dangerous condition with respect to the Z-60
transport for purposes of punitive damages.
Plaintiffs assert that Genie safety engineer Richard Curtin
testified that the lifts posed a risk of injury or death when
strapped to a flatbed trailer if they were to rollover in
transit. (Pl. Res. at 5; Pl. 56.1 ¶ 44). Genie engineer Erik
Elzinga testified that the engineering department had the
capability to determine certain stability characteristics of
their lifts when loaded for transport. (Pl. 56.1 ¶ 131). The
engineers never were approached about the type of trailer or load
configuration that should be used in transporting Z-60s. (Pl.
Res. Br. at 5-7). Plaintiffs contend that instead, Genie simply
chose to use the less expensive flatbed option and switch the
loading method of the lifts due to the concern over chipping the
Plaintiffs' experts Ware and Baker tested the accident load at
the University of Michigan Transportation Institute. After the
tilt-table stability testing, the experts testified that the
rollover threshold calculation was at an "unsafe" level when
transporting at speeds above 45 m.p.h. (Pl. Res. 56.1 ¶ 143; Pl.
App. 12 & 14). The experts opined that the accident would not
have occurred if there was a stepdeck trailer, and that is more
likely than not that the accident would not have occurred if there was a
basket-to-basket configuration. Genie responds that they did not
need to consult their engineering department because they
reasonably relied on their carrier and logistics experts for
those decisions. (Genie Res. to Pl. 56.1 ¶¶ 13-18 (see Meyer and
Plaintiffs also contend that the absence of specific
regulations does not prohibit a finding of punitive damages in
this case. See Ford Motor Co. v. Ammerman, 705 N.E.2d 539,
555-56 (Ind.App. 1999). Plaintiffs argue that Z-60s are
distinguishable from standard industrial equipment. They assert
that the particular features of aerial lifts give them a higher
center of gravity, which can affect the load stability during
transport and make them unique loads. Also, Plaintiffs argue that
Genie knew of the potentially dangerous nature of transporting
the Z-60s because they created specific transportation
instructions, yet they failed to communicate that information to
either Market or System. (Pl. Res. at 6) (System admits in
response to Plaintiffs interrogatories, however, that Genie
communicated instructions to System regarding the Z-60 lifts and
other Genie products (Market App., Exh. 9)).
Further, Plaintiffs submit testimony from Market's Donald
Farthing that discusses a call from Maine to Meyer during
transport of the accident load. Genie disputes Farthing's
testimony and states that Genie had no knowledge about any
problems with the load at issue after the driver left the Genie facility. (Genie 56.1 ¶
46, 49-53). This inadmissible double hearsay evidence will not be
considered by the Court for purposes of this summary judgment
Plaintiffs do not point to direct evidence, either disputed or
undisputed, to show that Genie knew the loading method or use of
flatbed trailers was unreasonably dangerous and likely to cause
injury. The Court must "look to whether [Plaintiffs] present
circumstantial evidence that [Genie] consciously decided to
engage in a course of conduct notwithstanding awareness that it
would probably expose others to impending danger." Wanke,
836 F. Supp. at 601. The Court takes note of the argument that the
S-80 lift accident is a different situation and therefore is
inadmissible. Even though the accident did involve another Genie
aerial lift, it is some evidence of notice with respect to
trailer type. Nachtsheim v. Beech Aircraft Corp.,
847 F.2d 1261, 1269 n. 9 (citing Jackson v. Firestone Tire & Rubber Co.,
788 F.2d 1070, 1083 (5th Cir. 1986)). At trial, Defendants are
free to argue the accident's many differences and point out that
this S-80 accident is the only one that Plaintiffs point to in
the eight-year span that Genie was transporting Z-60s on flatbeds
(from 1993 to the 2001 accident).
The Court cannot ignore testimony from Plaintiffs' own expert,
Donald Asa, that transporting the lifts on a flatbed trailer and
loading the lifts counterweight-to-counterweight were not unsafe methods of transport. (Genie 56.1, Exh. T). Even so, the Court
notes the existence of somewhat conflicting opinion testimony
from Plaintiffs' other experts, Ware and Baker, regarding the
accident load's "unsafe" rollover threshold level at speeds above
45 m.p.h. However, there has been no evidence presented that
other industrial manufacturers, logistics companies, or carriers
do any load stability testing (or are required to do testing)
before transport. There also is no evidence that Genie received
complaints concerning the load stability, either internally (as
Ford did in Ammerman) or externally from the drivers (as with
the S-80s), before the tragic Pierce accident. These facts do not
shield Genie from a finding of liability under a negligence
standard, but they cut against punitive damages.
Richard Curtin's statement, even when construed in the light
most favorable to Plaintiffs, is merely evidence that a large
industrial transport is potentially dangerous and appropriate
care should be taken. See Juarez v. Menard, Inc., 366 F.3d 479,
482 (7th Cir. 2004) ("It is not enough that the tortfeasor engage
in conduct that she knows will probably result in injury. After
all, most business owners understand that their operations pose
some level of risk of injury to consumers."). Genie also attacks
Plaintiffs attempts to distinguish the Z-60s from other
industrial equipment Bruce Leonard from Market stated that the
aerial lifts were not considered a "unique shipment load" from
other industrial equipment and DeBolt testified that industrial equipment is
commonly transported on flatbed trailers. The Z-60s were shipped
on flatbeds since their inception. There is no evidence to
indicate that at anytime between 1993 and 2001 Genie knew
internally or was informed from an outside source that using a
flatbed was a dangerous form of shipment for these lifts, but
still continued to ship in that manner. See Samuel v. Home Run,
Inc., 784 F. Supp. 548, 551-52 (S.D. Ind. 1992) ("Merely
creating a dangerous situation does not support a further
inference that the conduct was wanton or morally blameworthy").
Plaintiffs bear the burden of proof at trial, and because the
available evidence is all circumstantial, proving punitive
damages by a clear and convincing standard is difficult. See
Orkin Exterminating Co., Inc. v. Traina, 486 N.E.2d 1019, 1023
(Ind. 1986) (finding the evidence to support punitive damages
"woefully lacking"). For purposes of finding the requisite state
of mind to justify punitive damages, Plaintiffs point to no
evidence that Genie knew its methods in transporting the Z-60s
would cause injury. See Juarez, 366 F.3d at 483 (finding that
several accidents only were circumstantial evidence and not
enough to justify "quasicriminal conduct that Indiana courts
require before awarding punitive damages"). Additionally,
although Genie did not consult its engineers regarding the Z-60
transport, Plaintiffs do not present any evidence to indicate the
Genie was consciously avoiding testing required of it by regulations or other
standards, common or even existent in industry practice, or
apparent need because of safety concerns over safe transport of
the Z-60. Cf. Ammerman, 705 N.E.2d 539, 555-57 (Ind.App. 1999)
(finding punitive damages where defendant Ford had conducted
several conclusive tests regarding instability of the product,
knew of the defect, was under investigation by regulators, but
continued production as the status quo despite internal protest).
Further, Plaintiffs' argument concerning the quality of Genie's
communication of its recommended securement instructions to
System fails to raise a sufficient favorable inference for
purposes of punitive damages because federal regulations make
securement the carrier's primary responsibility (see
49 C.F.R. §§ 390-393), System received some type of recommended instruction
from Genie, and proper securement is necessary for safe transport
of all products.
Even affording all inferences in the light most favorable to
Plaintiffs, there is no evidence that Genie "knew of, but
consciously disregarded the likely injurious consequences of
their course of conduct." Purnick, 269 F.3d 851, 853-54 (citing
Wanke, 836 F. Supp. at 600) (affirming the district court's
grant of summary judgment because of insufficient evidence on
punitive damages). The Court concludes that no reasonable jury
could impose punitive damages under Indiana's clear and
convincing standard. Accordingly, Genie's Motion is granted on
this ground. C. Market's Motion for Summary Judgment
Market's summary judgment motion rests on three theories to
fully absolve it of liability and contests the punitive damages
claim. First, Market's role as an independent contractor ("IC")
between Genie and System absolve it from any liability involving
the accident. Second, System and Maine are solely responsible for
the safe transport of the load pursuant to the federal
regulations. Third, Maine's intervening negligent actions
preclude any liability directed at Market. The Court finds that
Market is not off-the-hook with respect to its own potential
negligence, but that the punitive damages claim against Market is
unwarranted and hereby dismissed.
1. Market's Independent Contractor Role
Market argues that it is a transportation broker and logistics
company and that its role as an IC at the time of the accident
was to offer administrative support, logistical experience, and
to assist in arranging for transportation of Genie products by
tendering Genie loads to qualified motor carriers. (Market Br. at
2). Market states that in its role, it made only commercial
arrangements for the shipper, as specified in the Logistics
Management Agreement (the "LM Agreement") between Genie and
Market, which absolves it from any liability relating to the
accident. (Market 56.1, Exh. 6). Market contends that Genie had
been using System as a contract carrier since 1998. In 2001 Tim
Meyer, Genie's Traffic Manager, used System to transport the two Z-60
lifts involved in the accident. Genie employees loaded the
subject lifts onto the trailer and a System driver, Maine,
accepted the load. Market asserts that it has nothing to do with
any negligence or other issues of improper securement or loading
of the lifts. Market does not point to Indiana law, but cites to
three cases to support its theory that it cannot be liable
because of its contractual IC status. The cases discuss the IC
broker-carrier relationship and when the relationship could
potentially transform into one of principal-agent resulting in
vicarious liability, which would make the broker liable for the
driver's negligent actions. Schramm v. Foster, No. Civ.
JFM-02-3442, 2004 WL 1882629 (D. Md. Aug. 24, 2004); Toledo v.
Van Waters & Rogers, Inc., 92 F. Supp. 2d 44 (D.R.I. 2000);
Tartaglione v. Shaw's Express, Inc., 790 F. Supp. 438 (D.S.D.
Plaintiffs argue that all of Market's cases are distinguishable
because Plaintiffs' claims are for independent acts of Market's
own negligence, which contributed to the accident. Plaintiffs
contend Tim Meyer testified that when he was a Market employee in
1998 or 1999, in performing his contractual duties to Genie, he
requested that the Z-60 lifts be transported by flatbed trailers
and loaded counterweight-to-counterweight, rather than
basket-to-basket. Plaintiffs' experts Ware and Baker also opine
that the counterweight loading method of the subject lifts and
the use of a flatbed may be primary causes of the accident. (Pl.
Resp. at 4). "Market's participation in tendering Z-60's to its
contract carriers [using such loading method] was
negligent. . . ." (Id. at 4). Plaintiffs also point to
testimony by Genie employees, Meyer and Matushak, that Genie
expected Market, as a logistics transportation expert, to make
those decisions. (Genie Resp. Pl. 56.1 ¶¶ 13-18; Genie 56.1, Exh.
K). Similar to Genie, Market never conducted stability or safety
tests concerning the transportation method.
The Court has reviewed the LM Agreement between Market and
Genie and finds that although in the LM Agreement Market is
designated as an IC, that status does not shield Market from its
own potential acts of negligence. However, the plain language of
the LM Agreement specifically precludes Market from any vicarious
liability claims involving Genie or System regardless of its
designation as a "shipper's agent," and includes other liability
limiting provisions that are not directly on point. The same is
true of the contract between System and Market. The Court also
concludes that the facts asserted regarding the interaction
between Genie and Market in Plaintiffs' additional 56.1 statement
are not sufficient to give rise to a principal-agent relationship
based on conduct. (See Pl. 56.1 ¶¶ 20-35); see Schramm,
341 F. Supp. 2d at 543-45. Therefore, Market is not vicariously
liable for Genie's or System's independent actions. Beyond any vicarious liability claims, Market's argument
essentially focuses on the issue of duty and whether Market
actually had a duty to Plaintiffs in order for Plaintiffs to move
forward on their negligence claims. Under Indiana law, the court
considers three things in determining whether a duty exists: "(1)
the relationship between the parties; (2) the reasonable
foreseeability of harm to the person injured; and (3) public
policy concerns." Williams v. R.H. Marlin, Inc.,
656 N.E.2d 1145, 1155 (Ind.Ct.App. 1995). The central question at issue
here is the "relationship of the parties" inquiry, which can
arise through contract or conduct.
To interpret a written contract, the court must "ascertain the
intent of the parties at the time the contract was executed as
disclosed by the language used to express their rights and
duties." Merril v. Knauf Fiber Glass, 771 N.E.2d 1258, 1268
(Ind.Ct.App. 2002). Contract interpretation is ordinarily a
question of law. Ind. Broadcasting Corp. v. Star Stations of
Ind., 388 N.E.2d 568, 571-72 (Ind.Ct.App. 1979). However, if
the court finds that the relevant provisions in the contract are
ambiguous or uncertain, determining the extrinsic evidence then
becomes a question of fact for the jury. Id.
The LM Agreement states that Market is in the business of
"providing integrated logistics management services, including
arranging for and furnishing transportation. . . ." (Market 56.1 App., Exh. 6). The contract does not explicitly include Market's
alleged negligent actions, nor does it explicitly exclude those
actions. The "Scope of Services" section of the LM Agreement uses
general terms to describe "transportation services" such as
"coordinating transportation" and "other services requested by
customer." (Id.) In the "transportation coordination" section,
the contract references particular types of coordination tasks,
but specifically states that "coordination may include, but is
not limited to . . ." (Id.) None of the other provisions in the
contract make the scope of services more definitive.
There is a degree of uncertainty in the contract over the
particular scope of services that Market will agree to perform
for Genie. To determine if advising Genie on the carrier trailer
type and loading method were logistics services included within
the scope of the contract, "the responsibility [is placed] on the
trier of fact to ascertain the extrinsic facts necessary to
interpret the contract." Kordick v. Merchants Nat'l Bank & Trust
Co. of Indianapolis, 496 N.E.2d 119, 125 (Ind.Ct.App. 1986).
The jury first must resolve whether these types of services were
contemplated within the scope of Genie and Market's LM agreement
and then determine whether Genie requested these services of
A duty of care may also arise through conduct. When a party
voluntarily assumes a duty, that party "creates a special relationship between the parties and a corresponding duty to act
in the manner of a reasonably prudent person." Delta Tau Delta
v. Johnson, 712 N.E.2d 968, 975 (Ind. 1999). The existence and
extent of such a duty are ordinarily questions of fact for the
trier of fact. Id. The jury must determine whether Market's
conduct involved in transporting Genie's Z-60s lifts and
tendering such loads to System establishes a duty of care where
potentially it could be liable to a "reasonably foreseeable
victim [who was] injured by a reasonably foreseeable harm."
Williams, 656 N.E.2d at 1155.
The issue of Market's own negligence through an assumed duty by
contract or conduct, remains a fact determination for the jury.
The jury also must resolve which Defendants actually engaged in
the allegedly negligent conduct to allocate responsibility for
the accident. However, Market cannot be held vicariously liable
for any of Genie or System's negligent actions. Accordingly,
Market's Summary Judgment Motion on this ground is denied.
2. Federal Regulation Violations and Market's Liability
Market also argues that System's failure to properly secure the
Z-60 lifts violated the applicable federal regulations as to
carriers and thus precludes any liability on Market's part.
Market points to sections of the Federal Motor Carrier Safety
Regulations that require the driver to properly distribute and
secure a load on his trailer before driving, and also inspect the securement
devices during transport. 49 C.F.R. §§ 390-393.
In support of its argument, Market cites to a recent district
of Minnesota case. Smith v. N. Dewatering, Inc., No. Civ.
01-1948, 2004 WL 326696, at *2-3 (D. Minn. Feb. 19, 2004). In
Smith, the plaintiff truck driver was injured while unloading
pipes from his trailer. The defendant brought a third-party
action against the shipper of the pipes for improperly loading
them on the trailer by not adding securement stakes between the
pipes. The court granted summary judgment in favor of the
shipper, who was released from liability. Market contends that
because Maine accepted the load, the federal regulations shift
the liability burden to the carrier. See id.
Plaintiffs argue that Smith's facts are distinguishable. The
Smith court also recognized the possibility of a co-existing
common-law duty if the loading had a latent defect or the loader
provided the carrier with assurances that it was properly loaded.
See id. (citing United States v. Savage Truck Line, Inc.,
209 F.2d 442 (4th Cir. 1953)). In Smith, the driver transported the
shipper's pipes many times over the course of several years and
was familiar with the accident load. Also, the driver never
expressed any concerns with the shipper over the pipes'
Here, Plaintiffs contend, when Maine picked up the Z-60s, Genie
loaded the trailer and would not alter their loading practice even upon Maine's request. System did not orchestrate the loading
method and there is conflicting evidence over who designated the
Z-60 lifts loading configuration Market or Genie. Further,
there is a dispute over whether the loading configuration was
reasonably safe or actually unsafe. Thus, the potential of a
latent defect still exists that could give rise to liability.
See United States v. Diebold, Inc., 369 U.S. 654, 82 S. Ct. 993
(1962) (stating that inferences drawn from underlying facts
should be made in favor of the party opposing summary judgment).
Neither party points to any Seventh Circuit appellate nor
district court case law on this issue, but after examining
applicable federal regulations, the Court will follow the general
carrier-shipper rule set out in United States v. Savage Truck
Line, Inc., 209 F.2d 442, 445 (4th Cir. 1953). The primary duty
for safe loading rests with the carrier. Id.; see also
40 C.F.R. § 392.9. When the shipper assumes responsibility for
loading, the shipper becomes liable for latent defects in
improper loading, or for assuring the carrier that a certain
loading method is safe and standard after which the carrier then
relies on such assurances. See Savage, 209 F.2d at 445.
"Although a carrier may be liable to the general public for
damages caused by failure to comply with the Commissions's rules,
its duty with regard to a shipper, who has assumed the
responsibility for the load is to exercise reasonable care to see
that the load is properly secured." Franklin Stainless Corp. v. Marlo Transp. Corp., 748 F.2d 865, 868-69 (4th Cir.
1984) (citing Am. Foreign Ins. Ass'n v. Seatrain Lines, Inc.,
689 F.2d 295, 299-300 (1st Cir. 1982)) (jury finding that
"improper loading and consequent shift of the cargo was a
proximate cause of the accident"). In a case similar to this one,
the court held that whether a carrier acted reasonably in
accepting the shipper's mistaken assurances that the height of
cargo loaded by the shipper was not excessive presented a
question of fact for the jury, precluding the shipper's summary
judgment motion. Ebasco Serv., Inc. v. Pacific Intermountain
Express Co., 398 F. Supp. 565 (S.D.N.Y. 1975).
The undisputed facts are as follows. Although Maine had
extensive experience in the trucking industry, he had no
experience with the particular Z-60 lifts before the accident
transport. It is also undisputed that at the Genie facility,
Genie employees assumed the responsibility of loading the lifts.
During loading, Maine inquired into the counterweight method, but
Genie did not alter their load configuration, which was the
standard manner that they had been loading Z-60s for some time.
See Franklin, 748 F.2d at 868-70 (holding even though lack of
strapping was apparent to driver, defect not obvious when carrier
had never transported that type of cargo and relied on shipper's
assurances that cargo was secure). Material issues of fact remain, which bear on the ultimate
issue of allocation of liability between the defendants. These
include, the overall load safety and actual existence of a defect
in the configuration, and the loading responsibility between
Genie and Market. The disputed facts alone preclude summary
judgment. The facts also are sufficient to raise the inference
that Maine's lack of knowledge about a defect in loading the
lifts and his reasonable reliance on Genie's assurances preclude
System as the carrier from bearing responsibility for the loading
method. The Court notes that these carrier-shipper cases deal
with contribution claims and are third-party actions. See, e.g.,
Smith, 2004 WL 326696, at *2-3; Alitalia v. Arrow Trucking
Co., 977 F. Supp. 973, 984 (D. Ariz. 1997); Franklin,
748 F.2d at 868-70. Plaintiffs underlying claims of negligence involving
all three defendants still await resolution. (As an example,
beyond the specific loading method, Plaintiffs claim the use of
flatbed over stepdeck trailers was a cause of the accident, and
issues remain as to the propriety of such choice and which
defendant bears that responsibility.) Accordingly, Market's
motion on this ground is denied.
3. Maine's Intervening Actions
Market argues that Maine's superseding acts were the proximate
cause of the accident. Market contends that System's intervening
negligent conduct precludes any finding of liability on Market's part. However, outstanding factual issues remain over the
proximate cause of the accident and the extent of each
defendant's contributory negligent actions. Under Indiana law,
the doctrine of intervening cause provides that only when "a
negligent act or omission is followed by a subsequent negligent
act or omission so remote in time that it breaks the chain of
causation, the original wrongdoer is relieved of liability."
Control Techniques, Inc. v. Johnson, 762 N.E.2d 104, 107 (Ind.
2002). The issue is whether Plaintiffs' injuries are "a natural
and probable consequence, which in the light of the
circumstances, should have been foreseen or anticipated." Bader
v. Johnson, 732 N.E.2d 1212, 1218 (Ind. 2000).
Market also asserts that Maine's alleged negligent actions
failure to properly secure the load, continuing unstable
transport, and speeding were unforeseeable, which Plaintiffs
dispute. See Vernon v. Kroger Co., 712 N.E.2d 976 (Ind. 1999).
"Whether the resulting harm is `foreseeable' such that liability
may be imposed on the original wrongdoer is a question of fact
for a jury." Control Techniques, 762 N.E.2d at 107.
Accordingly, factual questions remain on the critical causation
issue of foreseeability of Plaintiffs' injuries, which
encompasses Maine's actions and the Court denies Market's summary
judgment motion on this ground.
4. Punitive Damages Against Market
A punitive damages claim involves a fact intensive inquiry into
the actor's wanton conduct that must be proved by clear and convincing evidence. See supra Section III.A. Several issues of
fact remain, including determining whether Market had a duty to
Plaintiffs and Market's actual conduct. However, Market's and
Genie's potential negligent conduct and responsibility somewhat
overlap for purposes of punitive damages. Further, Market is a
bit more removed than either the carrier System or the
manufacturer Genie as it is a third-party logistics intermediary.
Therefore, the Court dismisses the punitive damages claim against
For the reasons stated above, the Court rules as follows:
1. System's Partial Motion for Summary Judgment is denied.
2. Genie's Motion is granted with respect to strict liability,
Allen Pierce's emotional distress claim, and the punitive damages
3. Market's Motion is granted with respect to the punitive
damages claim, and denied on all other grounds.
IT IS SO ORDERED.
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