Clark v. Union Pacific Railroad Company

Filing 167

OPINION AND ORDER that Union Pacific and Gunderson must pay equal parts of the $1,150,000 settlement to Plaintiff. Signed by Judge Susan Webber Wright on 6/8/12. (kpr)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
WESTERN DIVISION
M. RANDY RICE, TRUSTEE FOR
JODY L. CLARK,
Plaintiff,
vs.

UNION PACIFIC RAILROAD COMPANY,
Defendant/Third-Party
Plaintiff,
vs.

GUNDERSON RAIL SERVICES, LLC,
D/B/A GREENBRIER RAIL SERVICES
PINE BLUFF D/B/A GUNDERSON
WHEEL SERVICES AND D/B/A
GUNDERSON, INC.
Third-Party Defendant.

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No. 4:12-cv-00108-SWW

OPINION AND ORDER
Plaintiff M. Randy Rice, Trustee for Jody L. Clark, brings this action under the Federal
Employers’ Liability Act (FELA), 45 U.S.C. § 51 et seq., the Federal Railroad Safety Act
(FRSA), 49 U.S.C. § 20101 et seq., and the Federal Safety Appliance Act (FSAA), 49 U.S.C. §
20301 et seq., for personal injuries Clark sustained in an accident while working as a
switchman/brakeman for defendant Union Pacific Railroad Company (Union Pacific).1 Union

1

After this action was filed, Clark filed for bankruptcy and moved to substitute Rice as the
Plaintiff in this matter. The Court granted Clark’s motion but did not allow Clark to remain as a Plaintiff
as he does not have standing to pursue this claim. See Vreugdenhil v. Hoekstra, 773 F.2d 213, 215 (8th
Cir. 1985) (“a debtor may not prosecute on his own a cause of action belonging to the estate unless that
cause of action has been abandoned by the trustee.”); In re Griffin, 330 B.R. 737, 740 (W.D. Ark. 2005)
(“the only party who can pursue a claim on behalf of the bankruptcy estate is the trustee, thus the debtor
lacks standing”).

Pacific, in turn, has filed a third-party complaint for indemnity against Gunderson Rail Services,
LLC, d/b/a Greenbrier Rail Services Pine Bluff d/b/a Gunderson Wheel Services and d/b/a
Gunderson, Inc. (Gunderson), alleging that Clark’s accident was the result of failure and
negligence of Gunderson and that Gunderson is liable for Clark’s loss under indemnity
provisions in a Track Lease Agreement pursuant to which Gunderson leases track from Union
Pacific.
By Opinion and Order entered May 15, 2012 [doc.#94], the Court denied as moot Union
Pacific’s motion for summary judgment on Count II of Plaintiff’s complaint under the FSAA as
Plaintiff withdrew Count II of his complaint, denied as premature Union Pacific’s motion for
summary judgment on its claim for indemnity against Gunderson under the Track Lease
Agreement, granted in part and denied in part Plaintiff’s motion for partial summary judgment,
and denied the parties’ six motions to exclude expert testimony.
Following the Court’s ruling on the motions, the parties settled Plaintiff’s claims for
$1,150,000, with Union Pacific and Gunderson each agreeing to pay Plaintiff $575,000.2
Because Union Pacific is responsible for Plaintiff’s loss incurred as a result of violations of its
non-delegable duty to furnish a safe workplace under FELA, see, e.g., Burlington Northern R.
Co. v. Farmers Union Oil Co. of Rolla, 207 F.3d 526, 532 (8th Cir. 2000) (noting that the primary

2

The parties reached a settlement the weekend prior to trial and exchanged several emails
confirming that settlement. However, a dispute soon arose concerning the terms of the settlement
agreement and Plaintiff filed a motion to enforce settlement. Plaintiff and Union Pacific claimed a
settlement had been reached, while Gunderson denied a settlement had been reached, at least on the terms
as Union Pacific claimed them to be. The Court held a telephone conference on May 29, 2012, to resolve
the parties’ dispute and also addressed the issue during a pretrial conference on May 30, 2012. By Order
and Judgment entered May 31, 2012 [doc.#’s 157, 158], the Court granted Plaintiff’s motion to enforce
settlement, finding that Plaintiff, Union Pacific, and Gunderson entered into a binding settlement
agreement that resolved Plaintiff’s claims.

-2-

purpose of an indemnity agreement such as is at issue here is to indemnify a railroad when its
lessee's act or omission causes the railroad to violate its non-delegable duty to furnish a safe
workplace under FELA), Gunderson, by agreeing to pay Plaintiff $575,000 of the settlement, or
one-half of Union Pacific’s liability, indemnified Union Pacific for that same amount.
Accordingly, the only question remaining is whether Gunderson will be required to indemnifiy
Union Pacific for the full amount of its liability or whether Gunderson can limit Union Pacific’s
recovery of indemnity to one-half of its liability by proving that Union Pacific was negligent and
that its negligence contributed to Clark’s accident.3 The Court held a bench trial on Union
Pacific’s indemnity claim beginning on May 30, 2012 and concluding on June 1, 2012. This
Opinion and Order constitutes the Court’s findings of fact and conclusions of law pursuant to
Fed.R.Civ.P. 52.4
I.
At the time of his accident, Clark was a switchman working for Union Pacific. Clark was
part of a three man crew, which also included a foreman, Edward Lybrand, and an engineer,
Tommy Morrison. They were the only Union Pacific employees whose job was to switch cars at
the Gunderson facility in Pine Bluff, Arkansas. Union Pacific owned the tracks at the
Gunderson facility and allowed Gunderson to use the tracks under a Track Lease Agreement.

3

Contrary to Union Pacific’s argument, there was never an agreement for Union Pacific to pay
one-half of Plaintiff’s settlement and then allow Union Pacific to seek indemnity from Gunderson for its
part of the remaining $575,000 due Plaintiff and litigate whether that amount of indemnity would be onehalf or all of the remaining $575,000. Rather, there was one loss ($1,150,000) and the question before the
Court is whether Union Pacific and Gunderson will pay equal parts of the loss or whether Gunderson will
be solely responsible for the loss. Union Pacific may not, in other words, seek 50% of the 50% that
Gunderson is obligated to pay Plaintiff.
4

This Opinion and Order was prepared without benefit of a certified transcript.

-3-

The Track Lease Agreement was drafted by Union Pacific and entered into by Union
Pacific and Gunderson on June 20, 2000. The Track Lease Agreement refers to Gunderson as
“the Industry” and Union Pacific as “the Railroad.” Article 3 of the Track Lease Agreement
governs maintenance of the leased track and provides in pertinent part as follows:
Article 3.

MAINTENANCE OF TRACK STRUCTURE, RIGHT OF WAY AND
TRACK APPURTENANCES.

A.

The Industry, at its sole expense, shall maintain the track structure
consisting of the rail, ties, ballast and other Track material including any
paving or planking work that may be needed.
* * *

C.

The Industry at its sole expense, shall remove snow, ice, sand and
other substances as needed to permit safe operation over the
Track....

D.

Maintenance work performed by the Industry shall conform to the
Railroad’s standards....
* * *

Exhibit B to the Track Lease Agreement sets forth certain terms regarding the parties’
responsibility for safety and liability. Section 2 of Exhibit B to the Track Lease Agreement
addresses “SAFETY.” Section 2(c) governs walkways and provides that the “Industry, at its
expense, shall provide and maintain a clear and safe pathway for Railroad employees along both
sides of the Track. …” Section 2(d) provides that the “Industry shall have a non-delegable duty
and responsibility to train and oversee its employees and agents as to proper and safe working
practices while performing any work in connection with this Agreement, or any work associated
with the Railroad serving the Industry over the Track.” Section 2(e), regarding intraplant
switching, states that the “Industry shall not perform, permit or cause intraplant switching
-4-

without the prior written consent of the Railroad” and defines “intraplant switching” as “the
movement of rail cars on the track by the Industry by any method and includes the Industry’s
capacity to move rail cars whether before, during or after any such movement.” Finally, section
2(f) requires the Industry to comply with “Standards,” defined as “all applicable ordinances,
regulations, statutes, rules, decisions and orders including, but not limited to, safety, zoning, air
and water quality, noise, hazardous substances and hazardous wastes” which are “issued by any
federal, state or local governmental body or agency (hereinafter “Authority”).” Section 2(f)
further provides:
If the Industry is not in full compliance with any Standards issued by any
authorized Authority, the Railroad, after notifying the Industry of its
noncompliance and the Industry’s failure within twenty days of such notice to
correct such noncompliance, may elect to take whatever action is necessary to
bring the Track and any Railroad property into compliance with such Standards;
PROVIDED, HOWEVER, that if Industry’s failure to comply with Standards
interferes with, obstructs or endangers Railroad mainline or yard operations in
any way, Railroad may initiate compliance action immediately; and PROVIDED,
FURTHER, nothing in this Agreement shall prevent Railroad from taking action
to mitigate damages caused by Industry’s noncompliance with Standards. The
Industry shall reimburse the Railroad for all costs (including, but not limited to,
consulting, engineering, clean-up, disposal, legal costs and attorneys’ fees, fines
and penalties) incurred by the Railroad in complying with, abating a violation of,
or defending any claim of violation of such Standards. A waiver by the Railroad
of the breach by the Industry of any covenant or condition of this Agreement shall
not impair the right of the Railroad to avail itself of any remedy for any
subsequent breach thereof.
Section 3 of Exhibit B to the Track Lease Agreement addresses “LIABILITY” and
provides in pertinent part as follows:
Section 3.

LIABILITY.

(b) Except as otherwise specifically provided in this Agreement, all Loss
related to the construction, operation, maintenance, use, presence or removal of
the Track shall be allocated as follows:

-5-

(1) The Railroad shall pay the Loss when the Loss arises
from or grows out of the acts or omissions of the Railroad whether
or not a Third Person contributes to cause the Loss.
(2) The Industry shall pay the Loss when the Loss arises
from or grows out of the acts or omissions of the Industry. The
Industry shall also pay Loss when the Loss arises from or grows
out of:
* * *
(ii) the Industry’s failure to construct or
adequately maintain pathways or walkways as
required by Section 2(c);
(iii) the Industry’s failure to comply with
Standards, as required by Section 2(f);
(iv) intraplant switching as defined by
section 2(e); ...
* * *
The Industry shall be liable under [(ii)
through (iv)] regardless of whether the Railroad had
notice of, consented to, or permitted the aforesaid
impairments, failures, Standards, wastes or
substances, and whether or not the Railroad or a
Third Person contributed to cause the Loss.
(3) Except as otherwise more specifically provided in this
Agreement, Railroad and Industry shall pay equal parts of the Loss
that arises out of the joint or concurring negligence of the Railroad
and the Industry, whether or not the acts or omissions of a Third
Person contribute to cause the Loss....5
* * *

5

Union Pacific and Gunderson both agree that if the loss arises out of the joint or concurring
negligence of Union Pacific and Gunderson, liability will be 50% each, even if one party is more at fault
than the other.

-6-

On Monday, August 30, 2010, Clark and the other members of his crew were picking up
three wheel cars from the Gunderson facility to bring back to the Union Pacific facility. When
Clark asked Morrison to “stretch,” or move the train forward to make certain that the cars were
coupled together, Clark realized that the last car on the track, AOK6445, was not coupled to the
others. Clark walked to the rear of Track 570 and he noticed that the drawbar on the last car was
slued, or moved over to one side. Standing water and mud were around the track and in-between
the rails of Track 570; no ballast or railroad ties were visible. Clark slipped in the mud in
between the rails of Track 570 while attempting to manually align the drawbar, as he had been
trained to do, and seriously injured his back.
Clark and the two other members of his crew all testified that they switch cars at the
Gunderson facility on Mondays, Wednesdays, and Fridays, and that they had left three cars,
including AOK6445, coupled together on the Friday before the Monday accident. Union Pacific
apparently has no switch activity records to confirm that the three cars were left coupled together
the Friday before the accident. There is, however, ample evidence that Gunderson frequently
moves cars with forklifts in order to load and unload the cars at its facility and that Union Pacific
was aware that Gunderson did this. But there is little evidence that Gunderson had any need to
move cars that were in the position of AOK6445 on Track 570, as cars in that location were not
in the pathways of forklifts at the facility. Usually Gunderson workers are not at the site on
weekends.
Adjusting drawbars is something Clark anticipated doing every day as part of his job and
he acknowledged that he knows about a tool called a “Knuckle Buddy” to assist in leveraging
slued drawbars to effect a coupling of the cars, although he testified that he would not have used

-7-

such a tool in this instance as he always first tries to move a drawbar manually, which he said
can be done easily on some cars. What caused Clark to slip was not the movement of the car but
the muddy conditions that existed between the rails at Track 570. Clark acknowledged that in
his training he was taught that he can refuse to work in dangerous conditions.
Under the terms of the Track Lease Agreement, Gunderson is required to maintain the
track at its facility in accordance with Union Pacific standards. Gunderson never asked for
written standards from Union Pacific and Union Pacific never gave Gunderson written standards
for track maintenance. However, as was the case before the Track Lease Agreement, Gunderson
would hire contractors to make repairs to the tracks when Union Pacific pointed out that such
were required. At one time before the accident, Union Pacific even stopped switching at
Gunderson because some of the wheels and axles that Gunderson refurbishes were in positions
that impaired clearance along the tracks.
Even though the lease requires it to do so, Gunderson did not train its employees with
respect to track maintenance or Union Pacific standards but, as already stated, would rely on
Union Pacific to notify it of problems. Gunderson’s manager, Cliff Koonce, did not understand
Gunderson’s obligations under the Track Lease Agreement and had never seen the Track Lease
Agreement before Clark’s accident.
Union Pacific employees, including Clark and Lybrand, complained to the Union Pacific
Safety Committee about the muddy conditions on Gunderson’s tracks around June 2010, prior to
the accident. Union Pacific, however, did not notify Gunderson to do anything to correct the
muddy conditions at Track 570.

-8-

The Federal Railroad Administration (FRA) has promulgated track safety standards for
the maintenance and construction of a track. These standards, codified at 49 C.F.R. Pt. 213,
require adequate ballast and slope for drainage along the track. “Excepted track,” such as the
Union Pacific track leading up to the switch at the Gunderson yard, must be inspected once a
month for proper track gage and loose rails. There was testimony from a Union Pacific inspector
that he inspects Gunderson track once a year and excepted track once a month. Another Union
Pacific employee, James Smith, testified that when he is with FRA inspectors, they stop
inspecting when they get to the Gunderson property.
II.
A.
Union Pacific is entitled to indemnification from Gunderson if it establishes that “an act
or omission” of Gunderson caused the accident. Burlington Northern, Inc. v. Bellaire Corp., 921
F.2d 760, 763 (8th Cir. 1990) (citing Burlington Northern, Inc. v. Hughes Brothers, Inc., 671 F.2d
279, 284 (8th Cir.1982); Missouri Pacific R.R. Co. v. International Paper Co., 618 F.2d 492, 496
(8th Cir.1980)). “[A]n ‘industry's obligation to indemnify a railroad under an industrial track
agreement is a contractual duty and not a duty arising under the common law of tort.’” Id.
(quoting Hughes Brothers, 671 F.2d at 284). These contracts are made in contemplation of the
railroad's liability under FELA, which subjects the railroad to liability for failure to furnish a safe
workplace. Id. (citing Hughes Brothers, 671 F.2d at 283–284). In cases dealing with similar
indemnity agreements, the Eighth Circuit has held that the primary inquiry is two-fold. Id.
“First, the fact finder must determine ‘if an act or omission of the industry caused the injury.’”
Id. (quoting Hughes Brothers, 671 F.2d at 284). “‘The phrase ‘act or omission’ includes any act

-9-

or omission which constitutes a violation of the railroad's duty to provide a safe workplace, and
thus, subjects it to liability under [FELA].’” Id. “Second, if the industry's act or omission caused
the injury, then the fact finder must determine whether the railroad is entitled to full or partial
indemnity.” Id. “The railroad may only recover one-half of its liability if ‘the industry can
prove that the railroad was negligent and its negligence contributed to the injury.’” Id. (quoting
Hughes Brothers, 671 F.2d at 284–285). See also Illinois Cent. Gulf R.R. Co. v. Crown
Zellerbach Corp., 859 F.2d 386, 390–391 (5th Cir.1988) (“railroad must be found negligent under
common law standards before its recovery from the indemnitor will be limited by the agreement
to one-half of the underlying liability”) (cited with approval in Bellaire, 921 F.2d at 763)).6
B.
1.
The Court finds that Clark suffered an injury compensable under FELA that stemmed
from muddy conditions at Track 570 and that Union Pacific has established, in accordance with
the terms of the Track Lease Agreement, that acts or omissions by Gunderson caused the
accident in which Clark was injured. Under the terms of the Track Lease Agreement, Gunderson
is required to maintain the track at its facility in accordance with Union Pacific standards. Even
though the Court is unable to find with certainty what those standards might be, Gunderson
never asked for any written standards from Union Pacific. Gunderson has not trained its
employees with respect to track maintenance or any other Union Pacific standards but has relied
on Union Pacific to notify it of problems. Gunderson’s manager did not understand Gunderson’s

6

Because Gunderson takes the position that it did not settle this action with Union Pacific and
Plaintiff, see n.2, supra, the Court will consider the issues of Union Pacific’s and Gunderson’s liability as
if there had been no settlement.

-10-

obligations under the Track Lease Agreement and had never seen the Track Lease Agreement
before Clark’s accident. It is clear that Gunderson’s acts or omissions caused Clark’s accident
and that this was an accident that violated Union Pacific’s non-delegable duty under FELA to
provide its employees with a safe place to work. Gunderson is therefore required to indemnify
Union Pacific for the loss.
2.
Before proceeding to the determination of whether Union Pacific was also negligent and
whether its negligence contributed to Clark’s accident, the Court addresses Union Pacific’s
argument that Gunderson is strictly liable under Section 3(b)(2)(ii),(iii), and (iv) of Exhibit B to
the Track Lease Agreement. As previously noted this section provides that Gunderson shall pay
Loss when the Loss arises from or grows out of Gunderson’s (ii) failure to construct or
adequately maintain pathways or walkways as required by Section 2(c), (iii) failure to comply
with Standards, as required by Section 2(f), or (iv) intraplant switching as defined by section
2(e). This section further provides that Gunderson shall be liable under (ii) through (iv)
“regardless of whether [Union Pacific] had notice of, consented to, or permitted the aforesaid
impairments, failures, Standards, wastes or substances, and whether or not [Union Pacific] or a
Third Person contributed to cause the Loss.”
a.
Union Pacific argues that Gunderson did not maintain the walkways in accordance with
FRA regulations setting forth track safety standards applicable to Track 570 and that it was this
breach of its statutory duty that caused Clark’s accident, making it strictly liable under Section
3(b)(2)(ii). The Court disagrees. Aside from the fact that Clark’s accident was not a walkway

-11-

accident, the FRA regulations do not even apply to Track 570, a fact acknowledged by Union
Pacific’s designated expert and corporate representative, James Smith. “Although the FRA has
broad jurisdiction over anything that can be construed as a railroad (with the exception of selfcontained urban rapid transit systems), it has chosen, for practical purposes, to regulate
‘something less than the total universe of railroads.’” Sapp v. CSX Transp., Inc., — Fed.Appx.
—, 2012 WL 1345733, at *5 (6th Cir. Apr. 19, 2012) (quoting 49 C.F.R. Pt. 209, App. A)). In
this respect, the FRA regulations prescribe “minimum safety requirements for railroad track that
is part of the general railroad system of transportation.” 49 C.F.R. § 213.1. They expressly do
not apply to railroad track “[l]ocated inside an installation which is not part of the general
railroad system of transportation.” 49 C.F.R. § 213.3(b)(1).
For example, all of FRA's regulations exclude from their reach railroads whose
entire operations are confined to an industrial installation (i.e., “plant railroads”),
such as those in steel mills that do not go beyond the plant's boundaries.... Other
regulations exclude not only plant railroads but all other railroads that are not
operated as a part of, or over the lines of, the general railroad system of transportation....
By “general railroad system of transportation,” FRA refers to the network of
standard gage track over which goods may be transported throughout the nation
and passengers may travel between cities and within metropolitan and suburban
areas. Much of this network is interconnected, so that a rail vehicle can travel
across the nation without leaving the system. However, mere physical connection
to the system does not bring trackage within it. For example, trackage within an
industrial installation that is connected to the network only by a switch for the
receipt of shipments over the system is not a part of the system.
49 C.F.R. Pt. 209, App. A (citations omitted). It defies logic that the FRA would classify as
excepted track the Union Pacific Track 570 entering into the switch area right before the track
gets to the Gunderson facility and then, when the track enters the Gunderson property where the
cars travel 5 miles an hour (if that), all of a sudden the FRA regulations are in place. As
previously noted, Smith testified that when he is with FRA inspectors, they stop inspecting when
-12-

they get to the Gunderson property, clearly because the inspectors treat it as something not
subject to FRA regulations. The Court finds that Track 570 is railroad track “[l]ocated inside an
installation which is not part of the general railroad system of transportation,” 49 C.F.R. §
213.3(b)(1), and that the FRA regulations at 49 C.F.R. Pt. 213 do not apply to Gunderson.7
b.
The Court additionally rejects Union Pacific’s argument that Gunderson is strictly liable
for failing to comply with “Standards” under Section 3(b)(2)(iii), which is defined as “all
applicable ordinances, regulations, statutes, rules, decisions and orders including, but not limited
to, safety, zoning, air and water quality, noise, hazardous substances and hazardous wastes”
which are “issued by any federal, state or local governmental body or agency....” Union Pacific
argues that the muddy conditions at Track 570 violated standards of the Occupational Safety &
Health Administration (OSHA) or the Arkansas Department of Labor. The Court, however, is
not aware that any regulatory agency or other government body has claimed that Gunderson
violated any of its standards with respect to Clark’s accident, and the Court finds Union Pacific
has not established by a preponderance of the evidence that Gunderson violated standards of
OSHA or the Arkansas Department of Labor.
c.
Finally, the Court rejects Union Pacific’s argument that Gunderson is strictly liable for
intraplant switching under Section 3(b)(2)(iv), which is defined as “the movement of rail cars on

7

Union Pacific suggests that Appendix A of Part 209 can override the specific regulations but a
Track Safety Standards Guidance Manual relied upon by Union Pacific in its motion for summary
judgment against Gunderson [doc.#54] states that “[because it is a policy statement, Appendix A of Part
209 cannot override the text of [the track safety standards], which clearly excludes plant railroads from
the reach of the track regulations.” The Court agrees that the specific text of the regulations are
controlling.

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the track by the Industry by any method and includes the Industry’s capacity to move rail cars
whether before, during or after any such movement.” As previously noted, Clark and the two
other members of his crew all testified that they had left three cars, including AOK6445, coupled
together on the Friday before the Monday accident and Union Pacific has not proved that
Gunderson was responsible for the cars being uncoupled. But even if Gunderson were
responsible for the cars being uncoupled, the fact that Clark had to adjust the drawbars is not in
and of itself dangerous. Adjusting drawbars is something Clark anticipated doing every day as
part of his job. What caused Clark to slip was not the movement of the car, or intraplant
switching, but the muddy conditions that existed between the rails at Track 570.
3.
Having determined that acts or omissions of Gunderson caused Clark’s accident and that
Gunderson is not strictly liable under the Track Lease Agreement, the Court must now determine
whether Union Pacific is entitled to full or partial indemnification. The Court finds that Union
Pacific may only recover one-half of its liability as Gunderson has proven that Union Pacific was
also negligent and that its negligence contributed to Clark’s accident.8
Although he knew he could refuse to work in dangerous conditions, Clark failed to use
ordinary care for his own safety by attempting to maneuver to couple the cars in the mud
between the rails at Track 570. As an agent or employee of Union Pacific, Clark’s acts or
omissions are imputed to Union Pacific. Okvat v. Penn Cent. Transp. Co., 438 F.Supp. 658
(W.D.N.Y. 1977); Swan v. New Orleans Terminal Co., 745 So.2d 52 (La.App. 4 Cir. 1999). In
addition, Union Pacific employees told Union Pacific’s safety committee about the muddy
8

Common law components of negligence in the context of FELA include duty, breach,
foreseeabilty, and causation. Adams v. CSX Transp., Inc., 899 F.2d 536, 539 (6th Cir. 1990).

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conditions at the Gunderson facility, but nothing was done to remedy the situation. Section 2(f)
of Exhibit B to the Track Lease Agreement provides that “[i]f the Industry is not in full
compliance with any Standards issued by any authorized Authority, the Railroad, after notifying
the Industry of its noncompliance and the Industry’s failure within twenty days of such notice to
correct such noncompliance, may elect to take whatever action is necessary to bring the Track
and any Railroad property into compliance with such Standards....” Union Pacific clearly knew
of the condition of the tracks, and knew or should have known that Gunderson’s manager knew
very little or nothing about track maintenance, railroad standards, ballast, slopes, or grades.
Union Pacific’s knowledge of the dangerous conditions at Track 570 is of sufficient character
and quality to show that it acted negligently, Crown Zellerbach, 859 F.2d at 391, and Gunderson
has established acquiescence on the part of Union Pacific, which is established by “the long
continued awareness of a dangerous situation by the indemnitee without either taking any
corrective measure or calling upon the indemnitor to do so.” Hughes Brothers, 671 F.2d at 286
(quoting Pennsylvania R.R. Co. v. Erie Ave. Warehouse Co., 302 F.2d 843, 848 (3rd Cir. 1962)).
Union Pacific, however, argues that in Nabholz Construction Corp. v. Graham, 319 Ark.
396, 403-404, 892 S.W.2d 456, 460-461 (1995), the Arkansas Supreme Court “explicitly”
declined to adopt the doctrine of acquiescence and that this doctrine is thus inapplicable to the
Track Lease Agreement and the contractual duties therein. Union Pacific misrepresents the
holding of Nabholz. While the Arkansas Supreme Court in Nabholz did note that it had never
adopted the doctrine of acquiescence and that the concept had “no relevance to the circumstances
of the present case,” the Court distinguished the case before it from cases dealing with railroad
sidetrack agreements and FELA. 319 Ark. at 403-404, 892 S.W.2d at 460-461. In this respect,

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the Arkansas Supreme Court specifically noted that the Eighth Circuit’s importation of the tort
concept of acquiescence into a set of contractual duties was in the context of specific federal law
(FELA) and particular factual circumstances (railroad spur-track accidents) and that “[t]he
present situation is simply not comparable.” Id. Nabholz, then, a non-FELA case, essentially
excepted FELA cases from its disallowance of the doctrine of acquiescence in ordinary contract
cases. Union Pacific’s reliance on Nabholz as precluding the application of acquiescence in this
FELA action is simply misplaced.9
The Court recognizes that the Eighth Circuit has distinguished those leases containing a
clause specifying that the railroad’s knowledge of a dangerous condition did not waive its right
to indemnification from its lessee for damages arising out of a violation of the lease. Rouse v.
Chicago, Rock Island and Pacific R.R. Co., 474 F.2d 1180, 1183 n.1 (8th Cir. 1973) (citing
Anthony v. Louisiana & Arkansas Ry. Co., 316 F.2d 858 (8th Cir. 1963)). But even if Gunderson
were strictly liable under Section 3(b)(2)(ii),(iii), or (iv) of Exhibit B to the Track Lease
Agreement, Gunderson also was negligent as set forth under section II.B.1. of this Opinion and
Order and that negligence was independent of any violations of Section 3(b)(2)(ii),(iii), or (iv).
Likewise, the negligence of Union Pacific that contributed to Clark’s accident–namely, the
imputation of Clark’s acts or omissions to Union Pacific as well as Union Pacific’s knowledge of
dangerous conditions at Track 570 and its failure to remedy the situation or require Gunderson to
do so–was also independent of any violations of Section 3(b)(2)(ii),(iii), or (iv). Accordingly,
the Court would in any case find that Union Pacific may only recover one-half of its liability as

9

The Arkansas Supreme Court obviously recognized that FELA cases adjudicated in state courts
are governed by federal substantive law. St. Louis Southwestern Ry. Co. v. Dickerson, 470 U.S. 409, 411
(1985).

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Gunderson has proven that Union Pacific was also negligent, independent of any violations of
Section 3(b)(2)(ii),(iii), or (iv) of Exhibit B to the Track Lease Agreement, and that its
negligence contributed to Clark’s accident.
III.
In sum, acts or omissions of Gunderson caused Clark’s accident, Gunderson is not
strictly liable under the Track Lease Agreement, and the negligence of Union Pacific contributed
to Clark’s accident. As Gunderson has already agreed and been ordered to pay $575,000 of the
settlement in indemnification–one-half of the loss–Union Pacific is not entitled to further
indemnification from Gunderson. Accordingly, Union Pacific and Gunderson must pay equal
parts of the $1,150,000 settlement to Plaintiff.

IT IS SO ORDERED this 8th day of June 2012.

/s/Susan Webber Wright
UNITED STATES DISTRICT JUDGE

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