Kowalewski v. BNSF Ry. Co.

Scott Kowalewski, Respondent, v. BNSF Railway Company, Appellant.

A18-0559

A18-1214

A18-1406

STATE OF MINNESOTA IN COURT OF APPEALS

April 22, 2019

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2018).

Affirmed in part, reversed in part, and remanded

Worke, Judge

Hennepin County District Court

File No. 27-CV-17-145

Eric J. Magnuson, Robins Kaplan LLP, Minneapolis, Minnesota;

Paula M. Jossart, Jossart Law Office, LLC, Burnsville, Minnesota; and

David M. Bolt, Joseph M. Sayler, Bolt Hoffer Boyd Law Firm, Anoka, Minnesota (for respondent)

Sam Hanson, Tara Reese Duginske, Briggs and Morgan, P.A., Minneapolis, Minnesota;

Daniel A. Haws, HKM, P.A., St. Paul, Minnesota; and

Patrick Sweeney, Sweeney Law Firm, PA., White Bear Lake, Minnesota (for appellant)

Considered and decided by Worke, Presiding Judge; Cleary, Chief Judge; and Slieter, Judge.

UNPUBLISHED OPINION

WORKE, Judge

Appellant-railroad challenges the district court's imposition of discovery sanctions and other adverse decisions that the district court made in the course of a Federal Employers' Liability Act (FELA) action brought by a former employee. We affirm in part, reverse in part, and remand.

FACTS

Respondent Scott Kowalewski was working for appellant BNSF Railway Company in Fridley at the Northtown railyard on January 19, 2014, when workers were exposed to a strong smell, and at least two workers experienced physical symptoms. Kowalewski was taken to the hospital. Kowalewski was diagnosed with reactive airways disease syndrome, vocal cord dysfunction, posttraumatic stress disorder, and Parkinsonism. Kowalewski believed that he was exposed to toxic gas emitted from one or more of 11 hydrocarbon tank cars carrying "casing head gasoline." The tank cars were not identified as the likely source of the leak on the date of the incident and they were routinely added to trains that left the yard within a few days thereafter.

Kowalewski sued BNSF in December 2016. Kowalewski's counsel gave notice that an expert would inspect the railyard and tank cars on July 11, 2017. BNSF objected on the 30th day and indicated that date would not work, but agreed that the inspection could take place on July 19. BNSF's counsel explained that BNSF did not own the tank cars, but was working with the owners to get them back to Minnesota for inspection. The district courtspecifically asked whether the cars would be available on July 19, and BNSF's counsel indicated that railroad staff "believe[d] so."

BNSF failed to produce the tank cars for inspection on July 19. On August 11, the district court indicated that BNSF's counsel had given the impression that BNSF was able to get the cars for Kowalewski to inspect. The district court acknowledged that BNSF had not made any promises, but said it was trying to get the cars.

At a second hearing concerning discovery on September 11, 2017, BNSF's counsel indicated that it had been trying to get the cars, but the owners were not cooperating. The district court, expressing frustration, stated that BNSF's previous explanations of the process it was following to obtain the cars, including representations it was working on it "every day," was inconsistent with BNSF's assertion. The district court explicitly ordered that "all 11 hydrocarbon cars be produced for inspection in the Northtown yard" during the week of September 24-29, 2017. In a September 18, 2017 order, the district court found that BNSF "has the ability to comply with the [c]ourt's order because [it] has control over the 11 cars." The district court also found that "BNSF has the practical ability to produce the cars for inspection at the Northtown railyard if and when it so desires."

In late 2017 and early 2018, the parties filed several motions. Kowalewski moved for sanctions, alleging discovery violations, spoliation, and misconduct. BNSF moved to exclude certain expert testimony. On February 5, 2018, the district court (1) granted Kowalewski's motion for sanctions, struck BNSF's defenses on liability and causation, and entered judgment for Kowalewski on those issues, plus costs and attorney fees; (2) limited the upcoming trial to damages only; (3) denied BNSF's motion to exclude experttestimony; and (4) scheduled a hearing on contempt and monetary sanctions against BNSF and its counsel.

In its February 5 order, the district court condemned BNSF's discovery conduct. The district court stated that "BNSF misled Kowalewski by representing that he was exposed to sulfur dioxide," "failed to produce any information or documentation related to the seven related release incidents," and "attempted to obscure the true source of the chemical release by focusing on cars other than the 11 hydrocarbon cars." The district court found that, as a result, Kowalewski was deprived of an accurate diagnosis and appropriate treatment.

The district court also found that BNSF spoliated evidence by failing to inspect and preserve evidence at the scene and by destroying or intentionally failing to secure field and yard audio-video evidence, and documents associated with the 11 hydrocarbon cars. Finally, the district court found "Kowalewski also presented evidence that BNSF suppressed the identity of a critical witness . . . . BNSF had initially identified a different employee as the hump tower operator on the date of exposure, and disclosed [the actual tower operator] only after reaching a confidential settlement with him," and "[f]ollowing its in camera review of [the BNSF claims manual], the [c]ourt learned that BNSF had produced a version of this document that was revised after the incident." The district court found that these actions prejudiced Kowalewski on the issues of liability and causation. The district court concluded:

The [c]ourt finds that BNSF has engaged in a pattern of misconduct throughout this case characterized by late production of documents and witnesses, production ofinaccurate or inconsistent documents, and by the outright failure to produce relevant evidence. The [c]ourt finds that BNSF's behavior constitutes a deliberate effort to frustrate Kowalewski's ability to bring his claim, and that this behavior constitutes misconduct. Kowalewski and his experts have been prejudiced by this behavior, as it has significantly inhibited their ability to establish issues of liability and causation in a trial before a jury.

Following a February 2018 trial on the issue of damages, a jury found in favor of Kowalewski in the amount of $15,343,753. BNSF moved for a new trial. The district court denied the motion without comment.

On June 27, 2018, the district court issued an order for financial sanctions in the amount of $1,153,507.50 in attorney fees, $89,649.25 in costs and expenses, and $4,600,000 in post-judgment interest lost by Kowalewski "as a result of the three-year delay caused by [BNSF]'s misconduct." On July 27, 2018, the district court issued an order for offsets. This appeal followed.

DECISION

Sanctions

A district court may issue orders compelling discovery and imposing sanctions for failure to properly answer discovery. Minn. R. Civ. P. 37.01 (b), (d), .02. "The district court's discovery-related orders will not be disturbed absent an abuse of discretion." Frontier Ins. Co. v. Frontline Processing Corp., 788 N.W.2d 917, 922 (Minn. App. 2010), review denied (Minn. Dec. 14, 2010). "A district court abuses its discretion if its decision is against the facts in the record or if its ruling is based on an erroneous view of the law."State ex rel. Swan Lake Area Wildlife Ass'n v. Nicollet Cty. Bd. of Comm'rs, 799 N.W.2d 619, 625 (Minn. App. 2011) (quotation omitted).

BNSF disputes the district court's finding that it had control over the 11 hydrocarbon cars, stating that the district court admittedly misinterpreted statements made by BNSF's counsel. BNSF argues that Minnesota has not extended the reach of sanctions to a party who fails to produce evidence over which it does not have control. We disagree with BNSF's characterization of the district court's reasoning and the circumstances that formed the basis for this finding.

The record shows that, while the district court may have initially misunderstood BNSF's counsel's statements, it had a clear understanding of them at the time of the September 18 order. After finding that BNSF had the ability to comply with the court's order because it had "control over the 11 cars," the district court explicitly stated that "[t]his finding is based on multiple representations" by BNSF's counsel, "including the representation that BNSF would do its best to have all 11 cars available for inspection on August [sic] 19, 2017 at the Northtown railyard." The district court went on to find that "BNSF has employed every opportunity to delay inspection of the cars," and recounted several of BNSF's delay tactics.

BNSF's discovery misconduct was pervasive in this case. Failure to produce the 11 cars after three orders to compel is merely one example of this misconduct. Further, the district court's sanctions for spoliation are designed to rectify BNSF's failure to preserve and inspect the 11 cars on the date of the incident, not just BNSF's failure to produce the cars several years later. While the district court may have been frustrated at BNSF's failureto produce the cars after implying that it had the ability to do so, that does not mean that the sanctions order, which covers a wide range of discovery misconduct, constitutes an abuse of discretion.

Right to jury trial

Sanctions for failing to comply with a discovery order may include dismissal of all or part of a claim. Minn. R. Civ. P. 37.02(b)(3); see also Minn. R. Civ. P. 16.06 ("If a party or party's attorney fails to obey a scheduling or pretrial order, . . . the court, upon motion or upon its own initiative, may make such orders with regard thereto as are just, including any of the orders provided in Rule 37.02(b)(2), (3), (4)."). When a party has willfully...