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Exxonmobil Oil Corp. v. Amex Construction Co.

November 12, 2009

EXXONMOBIL OIL CORPORATION, PLAINTIFF,
v.
AMEX CONSTRUCTION CO., INC., DEFENDANT/THIRD PARTY PLAINTIFF
v.
ISCO INDUSTRIES, LLC., AND AMBITECH ENGINEERING CORP., THIRD PARTY DEFENDANTS



The opinion of the court was delivered by: Virginia M. Kendall, United States District Judge

Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiff ExxonMobil Oil Corporation ("ExxonMobil") brought suit against Defendant Amex Construction Co., Inc. ("Amex") alleging breach of warranty and negligence after a High Density Polyethylene ("HDPE") pipe installed by Amex burst at an ExxonMobil refinery. Amex later filed a third-party complaint seeking contribution against ISCO Industries, LLC ("ISCO"), the supplier of the defective pipe, and Ambitech Engineering Corporation ("Ambitech"), the pipe designer. Ambitech and ISCO have now each filed motions to exclude certain testimony by Dr. Nicholas Biery, an expert retained by Amex. For the reasons stated below, Ambitech's motion is granted in part and denied in part. ISCO's motion is also granted in part and denied in part.

STATEMENT OF FACTS

On or about May 26, 2003, Exxon entered into a Continuing Services Agreement ("CSA") with Amex. Sec. Amend. Cmplt. at ¶ 5. The CSA operated as a master contract covering all work, service, and materials provided to Exxon. Id. at ¶ 6. Pursuant to the CSA, on March 5, 2004, Amex submitted a proposal to Exxon for the installation of a High Density Polyethylene ("HDPE") pipe to be used for water cooling at Exxon's Joliet Refinery. Id. at ¶ 7. On September 30, 2004, Exxon accepted Amex's proposal and placed a service order for the installation of the HDPE pipe and related services. Id. at ¶ 9. Amex began work on the installation of the HDPE pipe in November of 2004. Id. at ¶ 10. On or about June 2, 2005, Amex completed the installation and Exxon accepted the work and put the pipe into service. Id. at ¶ 11.

On July 30, 2005, approximately eight weeks after the final installation, a weld holding a thirty-six inch section of the HDPE pipe failed, causing the pipe to decouple. Id. at ¶ 12. Because of the failure of the HDPE pipe, the refinery's cooling system lost its water circulation, resulting in an emergency shutdown of various crude production and refining units, a shutdown of the gas turbine generator, and a slowdown of crude production and refining in other units of the refinery. Id. at ¶ 13. The pipe failure also caused other property to be destroyed. Id. at ¶ 14. Approximately $900,000 in crude and hydrocarbons were burned during the emergency shutdown process and subsequent start-up process. Id. Various heat exchangers, pump seals, and other mechanical devices were also damaged. Id. at ¶ 15.

Exxon states that the HDPE pipe failed because Amex failed to use reasonable care in its installation and its selection of materials. Id. at ¶ 27. Amex seeks contribution from ISCO for any finding of negligence against Amex. Third Party Cmplt. at ¶ 29-30. Specifically, Amex alleges that ISCO is guilty of one or more negligent acts, including failing to warn ExxonMobil and Amex of any defective conditions that existed in the HDPE pipe, supplying inadequate pipe and fusion machines, and improperly training field personnel. Id. at ¶ 20. Amex also seeks contribution from Ambitech, asserting that Ambitech negligently failed to correct or adequately test for defective conditions in the HDPE pipe and improperly designed the pipe. Id. at ¶ 27. Amex retained Biery, a technical consultant at SEA, Ltd., to provide expert testimony regarding the pipe burst. On May 14, 2009, Biery issued a report rendering a professional opinion as to the adequacy of the design and construction of the pipe. Ambitech and ISCO both moved to strike certain portions of Biery's testimony on July 16, 2009.

STANDARD

The admissibility of scientific expert testimony is governed by Federal Rule of Evidence 702 ("Rule 702") and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). See Ervin v. Johnson & Johnson, Inc., 492 F.3d 901, 904 (7th Cir. 2007). Rule 702 states: "If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise." Fed.R.Evid. 702. The Seventh Circuit has developed a three-step admissibility analysis for expert testimony under Rule 702 and Daubert. See Ervin, 492 F.3d at 904. First, "the witness must be qualified 'as an expert by knowledge, skill, experience, training, or education.'" Id. (quoting Fed.R.Evid. 702). Second, "the expert's reasoning or methodology underlying the testimony must be scientifically reliable." Id. (citing Daubert, 509 U.S. at 592-93). Courts are, however, granted "broad latitude when [they] decide[] how to determine reliability." Kumho Tire Co. v. Carmichael, 526 U.S 137, 142 (1999). Finally, the expert's testimony must be relevant, or "assist the trier of fact to understand the evidence or to determine a fact in issue." Ervin, 492 F.3d at 904.

DISCUSSION

I. Ambitech's Motion to Bar Expert Testimony

Ambitech moves to bar any testimony related to the following four conclusions made in Biery's report: 1) "Ambitech's piping design used an incorrect wall thickness"; 2) "The use of thinner-walled HDPE pipe than required by ASME B31.3 contributed to the failure by reducing the margin of safety"; 3) "A pipe joint with the wall thickness required by ASME B31.3 . . . would most likely have had a longer life"; and 4) "ExxonMobil reviewed the design basis and did not check that the wall thickness calculation . . . was correct." (R. 165-C, at p. 1).

A. Qualifications

Ambitech does not challenge Biery's expert qualifications, and this Court finds that an engineer who received his Ph.D. in Materials Science and Engineering, performed graduate research measuring small strains in titanium alluminides, and currently serves as a technical consultant investigating material failures at ...


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