Clark v. Union Pacific Railroad Company
Filing
181
ORDER granting Union Pacific's motion for attorneys' fees in the amount of $160,208.49; denying 169 Gunderson's Motion for Attorney Fees; denying 170 Gunderson's Motion for Costs; denying 175 Gunderson's Motion for Attorney Fees; denying as moot Union Pacific's Rule 58 180 Motion to Extend Time to file notice of appeal. Signed by Judge Susan Webber Wright on 7/6/12. (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
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
Pacific, in turn, has filed a third-party complaint for indemnity against Gunderson Rail Services,
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.
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.
Before the Court are the following motions: (1) Union Pacific’s motion for attorneys’
fees pursuant to the Track Lease Agreement [doc.#166]; (2) Union Pacific’s motion for
attorneys’ fees pursuant to Ark. Code Ann. § 16-22-308 [doc.#169]; (3) Gunderson’s Rule 68
motion for costs [doc.#170]; (4) Gunderson’s motion for attorneys’ fees pursuant to Ark. Code
Ann. § 16-22-308 [doc.#175]; and (5) Union Pacific’s Rule 58 motion to extend time to file
notice of appeal [doc.#180]. Gunderson has responded in opposition to both of Union Pacific’s
motions for attorneys’ fees and Union Pacific has filed a reply to both of Gunderson’s responses.
Union Pacific has also responded in opposition to Gunderson’s motions for costs and for
attorneys’ fees. According to Union Pacific, Gunderson objects to Union Pacific’s motion to
extend time to file a notice of appeal. For the reasons that follow, the Court grants Union
Pacific’s motion for attorneys’ fees pursuant to the Track Lease Agreement, denies Union
Pacific’s motion for attorneys’ fees pursuant to Ark. Code Ann. § 16-22-308, denies
Gunderson’s Rule 68 motion for costs, denies Gunderson’s motion for attorneys’ fees pursuant
to Ark. Code Ann. § 16-22-308, and denies as moot Union Pacific’s Rule 58 motion to extend
time to file notice of appeal.
I. Background
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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 and an engineer. Union Pacific owned
the tracks at the Gunderson facility and allowed Gunderson to use the tracks under a Track Lease
Agreement.
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 the engineer 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 the track–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.
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 Court found, over Gunderson’s
objection, that the parties settled Plaintiff’s claims the weekend before trial for $1,150,000, with
Union Pacific and Gunderson each agreeing to pay Plaintiff $575,000. Because Union Pacific is
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responsible for Plaintiff’s loss incurred as a result of violations of 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 issue remaining for trial was 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. The Court held a bench
trial on Union Pacific’s indemnity claim beginning on May 30, 2012 and concluding on June 1,
2012.
On June 8, 2012, the Court entered an Opinion and Order setting forth its findings of fact
and conclusions of law pursuant to Fed.R.Civ.P. 52(a) [doc.#167]. In its Opinion and Order, the
Court found that acts or omissions of Gunderson caused Clark’s accident, that Gunderson is not
strictly liable under the Track Lease Agreement, and that the negligence of Union Pacific
contributed to Clark’s accident. The Court determined that 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 and that Union Pacific and
Gunderson must therefore pay equal parts of the $1,150,000 settlement to Plaintiff.
II. Discussion
1. Union Pacific’s Motions for Attorneys’ Fees
Union Pacific has filed two motions for attorneys’s fees, one for “loss” under the Track
Lease Agreement and one as a prevailing party under Ark. Code Ann. § 16-22-308. The Court
will address these motions in turn.
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A. Motion for Attorneys’ Fees for “Loss” under Track Lease Agreement
As previously noted, the Court found in its findings of fact and conclusions of law 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. Consistent
with this finding, Union Pacific requests that the Final Judgment require that Gunderson pay
50% of the following in addition to the $575,000 already enforced in the Order Enforcing
Settlement: attorneys’ fees in the amount of $257,973, costs in the amount of $46,843.98, and
expert fees in the amount of $15,600 for an amount totaling $320,416.98, of which Gunderson
should be required to pay half ($160,208.49). Union Pacific argues that these fees and costs
constitute “loss” incurred by it under the Track Lease Agreement.
Exhibit B to the Track Lease Agreement sets forth certain terms regarding the parties’
responsibility for losses. Section 3 of Exhibit B relates to liability and provides as follows:
Section 3.
LIABILITY.
(a) For purposes of this section, the following definitions shall apply:
* * *
(5) “Loss” means loss of or damage to the property
of any Third Person or Party and/or injury to or
death of any Third Person or Party. “Loss” shall
also include, without limitation, the following
associated expenses incurred by a Party: costs,
expenses, the cost of defending litigation, attorneys’
fees, expert witness fees, court costs, the amounts
paid in settlement, the amount of the judgment, and
any pre-judgment and post-judgment interest and
expenses. . . .
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(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:
* * *
(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....2
* * *
The Court finds that Union Pacific is entitled to 50% of its total fees and costs as it is a
“loss” under the Track Lease Agreement. Gunderson argues that its agreement to pay half of
Union Pacific’s liability to Plaintiff precludes Union Pacific from seeking its fees and costs, but
the Court finds that the settlement with Plaintiff did not include a settlement with Union Pacific
concerning its fees and costs. The Court finds that all fees and expenses submitted by Union
Pacific, including those associated with enforcement of the indemnity provision, constitute a
“loss” as defined in the Track Lease Agreement. Given the joint or concurring negligence of
Union Pacific, half of the total amount of fees and costs–$160,208.49–are therefore recoverable.
B. Motion for Attorneys’ Fees as a Prevailing Party under Ark. Code Ann. § 16-22-308
Union Pacific argues that it was the prevailing party in the bench trial on its claim for
indemnity, with the Court holding that Union Pacific was entitled to 50% indemnity pursuant to
the Track Lease Agreement, and that it is thus entitled to 100% of its reasonable attorneys’ fees
2
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.
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associated with prevailing on this indemnity agreement under Ark. Code Ann. § 16-22-308. The
Court disagrees.
Ark. Code Ann. § 16-22-308 provides that “[i]n any civil action to recover on an open
account, statement of account, account stated, promissory note, bill, negotiable instrument, or
contract relating to the purchase or sale of goods, wares, or merchandise, or for labor or services,
or breach of contract, unless otherwise provided by law or the contract which is the subject
matter of the action, the prevailing party may be allowed a reasonable attorney's fee to be
assessed by the court and collected as costs.” See also Perry v. Baptist Health, 368 Ark. 114,
117, 243 S.W.3d 310, 313 (2006) (a successful defendant in a contract action may be considered
a prevailing party for the purposes of the statute–Ark. Code Ann. § 16-22-308–allowing award
of attorney’s fees to prevailing party).2
Union Pacific states that it recognizes that it is difficult to determine what was indemnity
and what was the underlying FELA claim, and that to be fair and reasonable, it requests 100% of
the attorneys’ fees incurred after May 29, 2012, the day the Court enforced the settlement
agreement and the parties determined that they would be trying only the indemnity claim,
through June 5, 2012. Union Pacific thus requests that it be awarded 100% of its reasonable
attorneys in the amount of $17,205.20.
The Court finds that Union Pacific was not a prevailing party for purposes of Ark. Code
Ann. § 16-22-308. Rather, Union Pacific and Gunderson entered into a settlement agreement
with Plaintiff, with each agreeing to pay half of Union Pacific’s liability, leaving for trial only
2
A litigant is a prevailing party under Ark. Code Ann. § 16-22-308 “in terms of the entire case, and not in
terms of particular issues or actions therein.” Id. The prevailing party is determined by who comes out “on top” at
the end of the case. Id. (citation omitted).
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the issue of 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. That issue was tried to the Court and the Court found that the negligence of
Union Pacific contributed to Clark’s accident and that because 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. Union Pacific,
then, was not a prevailing party in the indemnity action tried to the Court. Moreover, the
indemnity action tried to the Court was not an action pursuant to which Ark. Code Ann. § 16-22308 would even apply but, rather, a trial to determine application of the indemnity provision.
2. Gunderson’s Motion for Costs Pursuant to Fed.R.Civ.P. 68
On May 15, 2012, Gunderson delivered an Offer of Judgment to counsel for Union
Pacific that provided as follows:
OFFER OF JUDGMENT
Pursuant to Federal Rule of Civil Procedure 68, Third-Party Defendant
Greenbrier Rail Services, LLC, d/b/a Gunderson Rail Services (“Gunderson”)
offers to allow judgment to be entered against Gunderson and in favor of ThirdParty Plaintiff Union Pacific Railroad Company (“Union Pacific”), on Union
Pacific’s claim for contractual indemnity, requiring Gunderson to pay fifty one
percent of the “loss” as that term is defined in the Track Lease Agreement, arising
from Jody Clark’s FELA claim against Union Pacific in this matter. Gunderson
also offers to pay Union Pacific’s costs as required under Rule 68.
This Offer of Judgment shall not be filed with the Court unless (a)
accepted or (b) in a proceeding to determine costs. To accept this Offer of
Judgment, Third-Party Plaintiff must serve written notice of acceptance thereof
within fourteen days of the date this offer is made.
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Gunderson notes that Union Pacific did not accept the Offer of Judgment and that on
June 8, 2012, after a trial of the indemnity issue, the Court ruled that Union Pacific and
Gunderson must pay equal parts of the $1,150,000 settlement to Plaintiff. Gunderson states that
because this judgment is less favorable to Union Pacific than the unaccepted offer, Union Pacific
must pay the costs Gunderson incurred after the offer was made pursuant to Rule 68(d), which
provides that “[i]f the judgment that the offeree finally obtains is not more favorable than the
unaccepted offer, the offeree must pay the costs incurred after the offer was made.”
In response to Gunderson’s motion for costs pursuant to Rule 68, Union Pacific argues,
inter alia, that the offer of judgment provisions of Rule 68 do not apply to situations where an
offer of judgment was followed by a settlement rather than a trial and that the “[t]he majority of
courts have come to the same conclusion.”3 The Court rejects Union Pacific’s argument that
Rule 68 does not apply to settlements. While “some courts have insisted that Rule 68 has no
bearing unless plaintiff’s judgment is obtained after trial ... [t]his approach is flawed, and the fact
that the case ends by settlement should not preclude application of Rule 68.” 12 Charles Alan
Wright, Arthur R. Miller, Mary Kay Kane, & Richard L. Marcus, Federal Practice and
Procedure § 3006 (2d ed. 2012). In this respect,
[i]n terms of customary legal expectations, a judgment entered pursuant to a
settlement has been “obtained” by plaintiff if it is favorable to the plaintiff, as the
Supreme Court seems to have recognized in another context. Many a lawyer will
3
Union Pacific cites Hutchison v. Wells, 719 F.Supp. 1435 (S.D. Ind. 1989), E.E.O.C. v.
Hamilton Standard Div., 637 F.Supp. 1155, 1158 (D.Conn. 1986), and Good timez, Inc. v. Phoenix Fire
& Marine Ins. Co., 754 F.Supp. 459 (D.V.I. 1991), all of which held that Rule 68 does not apply to
settlements. See also Vitullo v. Velocity Powerboats, Inc., No. 97 C 8745, 2001 WL 1117307, at *2
(N.D.Ill. Sept. 21, 2001) (“In this court’s view, although the literal text of Rule 68 does not require that
the final judgment obtained by the plaintiff be pursuant to a trial, it appears that Rule 68 was intended to
address only such a scenario.”).
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crow about favorable settlements obtained for clients, making this situation quite
different from cases in which defendant prevails.
Moreover, applying the rule in this situation comports with its purposes.
Unlike cases in which defendant prevails, cases that are settled do not create risks
of frivolous Rule 68 offers. To the contrary, applying the rule would encourage
defendants to make Rule 68 offers that are reasonable in the sense that they are
more favorable than settlements subsequently accepted by plaintiffs. It is true that
Rule 68 is in part intended to encourage settlement before trial, so that its
objectives might be said to be satisfied in any case that is settled before trial. But
the rule is also designed to expedite the prompt settlement of cases and avoid the
burden and cost of continued litigation. Although some courts see a risk that
applying Rule 68 to settled cases would deter settlement after rejection of such an
offer, it seems more likely that nullifying Rule 68 if the case ultimately settles
would undercut the rule because most cases do settle short of trial. In order to
encourage defendants to make realistic offers of judgment, and to make plaintiffs
“think very hard” about such offers, it is necessary that the rule apply where a
settlement is later confected on less favorable terms, as other courts have
recognized. The parties may, of course, make explicit provision for allocation of
costs in their settlement agreement, in which case neither Rule 68 nor Rule 54(d)
would apply.
Id. (footnotes omitted). The Court agrees with this reasoning and accordingly finds that the offer
of judgment provisions of Rule 68 apply to situations where an offer of judgment was followed
by a settlement. See Lang v. Gates, 36 F.3d 73, 76 (9th Cir. 1994) (holding that Rule 68 applies
to settlements); Boorstein v. City of N.Y., 107 F.R.D. 31, 33 (S.D.N.Y. 1985) (same); Mannick v.
Kaiser Foundation Health Plan, Inc., No. C 03-5905 PJH, 2007 WL 2892647, at *9 (N.D. Cal.
Sept. 28, 2007) (same). See also Edward F. Sherman and Christopher M. Fairman, Interplay
Between Mediation and Offer of Judgment Rule Sanctions, 26 Ohio St. J. on Disp. Resol. 327,
346-347 (2011) (“To encourage defendants to make realistic offers of judgment, and to make
plaintiffs seriously contemplate such offers, Federal Rule 68 should apply where a settlement is
later made on less favorable terms than those in a rejected Federal Rule 68 offer.”).
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The Court does agree, however, with Union Pacific that Gunderson’s Offer of Judgment
does not contain specified terms and is therefore unenforceable. “To decide whether there has
been a valid offer and acceptance for purposes of Rule 68, courts apply the principles of contract
law.” Radecki v. Amoco Oil Co., 858 F.2d 397, 400 (8th Cir. 1988). An offer of judgment made
pursuant to Rule 68 must specify a definite sum or other relief for which judgment may be
entered and must be unconditional. Simmons v. United Mortg. and Loan Inv., LLC, 634 F.3d
754, 764 (4th Cir. 2011). This is because the Plaintiff must know unequivocally what is being
offered in order to be responsible for refusing such an offer. Id. See also Radecki, 858 F.2d at
403-403 (“especially when considering a Rule 68 offer, the offeree needs to have a clear
understanding of the terms of the offer in order to make an informed decision whether to accept
it.”).
At the time Gunderson delivered its Offer of Judgment to counsel for Union Pacific, it
was unknown what Plaintiff’s “loss” was. Rather, the Offer of Judgment was for a percentage of
an unknown amount and, as such, failed to specify a definite sum or other relief for which
judgment could be entered. Cf. Affordable Communities of Missouri v. Jefferson Arks Bldg.,
LLC, No. 4:08cv617 CDP, 2009 WL 90125, at *3 (E.D.Mo. Jan. 14, 2009) (noting that neither
the Defendant's offer of judgment nor the Plaintiff's complaint mentioned a specific dollar
amount that the Plaintiff is seeking and that it would be impossible for the Court to enter a
judgment on the basis of this document; therefore, it is not in the proper format and it is
rejected). Because Gunderson’s Offer of Judgment did not contain specified terms necessary for
the application of Rule 68, it is unenforceable. Accordingly, the Court denies Gunderson’s
motion for costs pursuant to Rule 68.
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3. Gunderson’s Motion for Attorneys’ Fees as a Prevailing Party under Ark. Code
Ann. § 16-22-308
Gunderson argues that it was the prevailing party in Union Pacific’s indemnity trial and
that it is thus entitled to attorneys’ fees pursuant to Ark. Code Ann. § 16-22-308. As the Court
noted in denying Union Pacific’s motion for fees and expenses pursuant to Ark. Code Ann. § 1622-308, the indemnity action tried to the Court was not an action pursuant to which Ark. Code
Ann. § 16-22-308 would apply but, rather, a trial to determine application of the indemnity
provision.4 Accordingly, the Court denies Gunderson’s motion for attorneys’ fees under Ark.
Code Ann. § 16-22-308.
4. Union Pacific’s Rule 58 Motion to Extend Time to File Notice of Appeal
In its Rule 58 motion to extend time to file notice of appeal, Union Pacific states that
because the issues of the fees and costs are intertwined with the merits and the effect of the June
8, 2012 Judgment, the parties cannot properly analyze whether to appeal, or what portions to
appeal, of the June 8, 2012 Judgment until the motions are resolved. The Court, however, has
today resolved the issues of the fees and costs and so the parties can now properly analyze
whether to appeal, or what portions to appeal, of the June 8, 2012 Judgment. Accordingly, the
Court denies as moot Union Pacific’s Rule 58 motion to extend time to file notice of appeal
[doc.#180].
III. Conclusion
4
In response to Union Pacific’s motion for attorneys’ fees pursuant to Ark. Code Ann. § 16-22308, Gunderson argues that § 16-22-308 is not applicable to this situation. As noted by Union Pacific,
“[i]f § 16-22-308 does not apply to Union Pacific, then it also does not apply to Gunderson. It either
applies to the claim, or it does not.”
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For the foregoing reasons, the Court grants Union Pacific’s motion for attorneys’ fees
pursuant to the Track Lease Agreement in the amount of $160,208.49 [doc.#166], denies Union
Pacific’s motion for attorneys’ fees pursuant to Ark. Code Ann. § 16-22-308 [doc.#169], denies
Gunderson’s Rule 68 motion for costs [doc.#170], denies Gunderson’s motion for attorneys’ fees
pursuant to Ark. Code Ann. § 16-22-308 [doc.#175], and denies as moot Union Pacific’s Rule 58
motion to extend time to file notice of appeal [doc.#180].
IT IS SO ORDERED this 6th day of July 2012.
/s/Susan Webber Wright
UNITED STATES DISTRICT JUDGE
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