Phathong et al v. Tesco Corporation (US)
Filing
197
ORDER. 181 Defendant's Rule 50(b) Motion for New Trial or, in the alternative, Motion for a New Trial is Denied. By Judge William J. Martinez on 10/10/12. (alvsl)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 10-cv-00780-WJM-MJW
VON J. PHATHONG, and
JENNIFER D. PHATHONG,
Plaintiffs,
v.
TESCO CORPORATION (US),
Defendant.
ORDER DENYING DEFENDANT’S RULE 50(b) MOTION
OR, IN THE ALTERNATIVE, MOTION FOR A NEW TRIAL
On April 6, 2010, Plaintiffs Von J. Phathong and Jennifer D. Phathong brought
this action against Defendant Tesco Corporation (US) based on injuries Mr. Phathong
sustained on December 13, 2005 while working on Defendant’s drill rig in Rifle,
Colorado. (ECF No. 1; see also ECF No. 44.) Jurisdiction is based on diversity of
citizenship under 28 U.S.C. § 1332. (Id. at 1.)
On June 12, 2012, after a seven-day jury trial, the jury returned a verdict against
Defendant Tesco Corporation (US), and in favor of Plaintiff Von Phathong on his
negligence claim and Plaintiff Jennifer Phathong on her loss of consortium claim. (ECF
No. 175, 175-10.) The jury awarded Mr. Phathong $2,556,000 in compensatory
damages and $1,500,000 in punitive damages, awarded Ms. Phathong $75,000 in
compensatory damages, and attributed to Defendant 90 percent of the negligence that
caused Mr. Phathong’s injuries. (ECF No. 175-10.)1 After the Court reduced the
compensatory damage awards based on the jury’s allocation of fault (ECF No. 177),
judgment was entered on June 19, 2012 in favor of Mr. Phathong and against
Defendant in the amount of $4,283,648.96 in compensatory damages, punitive
damages, and pre-judgment interest; and in favor of Ms. Phathong and against
Defendant in the amount of $81,679.84 in compensatory damages and pre-judgment
interest (ECF No. 178).
Currently pending before the Court is Defendant’s Rule 50(b) Motion or, in the
Alternative, a Motion for a New Trial (“Motion”). (ECF No. 181.) Plaintiffs have filed a
Response to the Motion (ECF No. 186), and Defendant has filed a Reply (ECF No.
190). The Motion is now ripe for adjudication. For the following reasons, Defendant’s
Motion is DENIED.
I. LEGAL STANDARDS
Judgment as a matter of law is appropriate where “a party has been fully heard
on an issue during a jury trial and the court finds that a reasonable jury would not have
a legally sufficient evidentiary basis to find for the party on that issue.” Fed. R. Civ. P.
50(a)(1). Stated another way, “[a] directed verdict is justified only where the proof is all
one way or so overwhelmingly preponderant in favor of the movant so as to permit no
other rational conclusion.” Hinds v. Gen. Motors Corp., 988 F.2d 1039, 1045 (10th Cir.
1993). In reviewing a Rule 50 motion, the Court must draw all reasonable inferences in
favor of the nonmoving party. Wagner v. Live Nation Motor Sports, Inc., 586 F.3d 1237,
1
The jury attributed ten percent of the fault to non-party EnCana Oil & Gas (USA). (Id.)
2
1244 (10th Cir. 2009).
Where a party properly moves for judgment as a matter of law prior to the case
being submitted to the jury, that party may renew the motion after the jury returns its
verdict. See Fed. R. Civ. P. 50(b); Atchley v. Nordam Group, Inc., 180 F.3d 1143,
1147-48 (10th Cir. 1999). “The renewed motion under Rule 50(b) cannot assert
grounds for relief not asserted in the original motion [under Rule 50(a)].” Marshall v.
Columbia Lea Reg’l Hosp., 474 F.3d 733, 739-40 (10th Cir. 2007). The Court applies
the same legal standard to a renewed motion under Rule 50(b) as is applied to a Rule
50(a) motion for judgment as a matter of law. See Hysten v. Burlington N. Santa Fe Ry.
Co., 530 F.3d 1260, 1269-70 (10th Cir. 2008). In resolving a Rule 50(b) motion, the
Court “will not weigh evidence, judge witness credibility, or challenge the factual
conclusions of the jury.” Deters v. Equifax Credit Info. Servs., Inc., 202 F.3d 1262, 1268
(10th Cir. 2000).
With the filing of a Rule 50(b) motion, the moving party “may include an
alternative or joint request for a new trial under Rule 59.” Fed. R. Civ. P. 50(b). Federal
Rule of Civil Procedure 59 allows a court to grant a new trial after a jury trial “for any
reason for which a new trial has heretofore been granted in an action at law in federal
court.” Fed. R. Civ. P. 59(a)(1)(A). Where, as here, a party’s motion for a new trial is
based on a court’s alleged error during trial, the motion should only be granted if the
“the error was prejudicial and affects the party's substantial rights,” i.e., if “the claimed
error substantially and adversely affected the party's rights.” Henning v. Union Pacific
R. Co., 530 F.3d 1206, 1217 (10th Cir. 2008) (citations and internal quotations omitted).
“In diversity cases, federal law governs whether [judgment as a matter of law] or
3
a new trial is appropriate, but the substantive law of the forum state governs analysis of
the underlying claim[s].” Valley View Angus Ranch, Inc. v. Duke Energy Field Servs.,
LP, 410 F. App’x 89, 94-95 (10th Cir. 2010).
II. ANALYSIS
As further background, on June 8, 2012, at the close of Plaintiffs’ evidence at
trial, Defendant moved for judgment as a matter of law under Federal Rule of Civil
Procedure 50(a) on several bases, and the Court reserved ruling on the Motion. Then,
at the close of all the evidence at trial (on the same day), Defendant renewed its Rule
50 Motion, and Plaintiffs also moved for judgment as a matter of law under Rule 50 as
to certain issues. The Court denied Defendant’s Rule 50 Motion, and granted in part
and denied in part Plaintiffs’ Rule 50 Motion.
Now, post-trial, Defendant has filed a renewed motion for judgment as a matter
of law under Rule 50(b) or for a new trial under Rule 59. The Court addresses each of
Defendant’s arguments presented in its Motion in turn.
A.
Rule 50(b) Motion for Judgment as a Matter of Law
1.
Actual Employer
Defendant first argues that the Court should enter judgment as a matter of law in
favor of Defendant because Defendant is immune from suit as Mr. Phathong’s actual
employer under the applicable workers’ compensation laws. (ECF No. 181, at 5-6.)2 As
2
“The statutory scheme created by the [Colorado] Workers’ Compensation Act . . .
grants an injured employee compensation from his or her employer without regard to
negligence, and it grants the employer immunity from common law negligence liability.”
Humphrey v. Whole Foods Market Rocky Mountain/Sw. L.P., 250 P.3d 706, 708 (Colo. App.
2010). In this Court’s Order denying Defendant’s Motion for Summary Judgment, the Court
agreed with Defendant that the workers’ compensation laws of Colorado, not Texas, apply in
4
Plaintiffs emphasize, Defendant has raised this argument repeatedly throughout this
litigation, including in both of its Rule 50 motions at trial.
At the time of the accident at issue – December 13, 2005 at approximately 3:30
a.m. – it is undisputed that Defendant was Mr. Phathong’s employer and was
responsible for the safety of its workers on the drill rig. However, it is also undisputed
that later that day, Defendant sold its drilling operations to a company called Turnkey
E&P, and made the sale retroactive to 12:01 a.m. on December 13, 2005 –
approximately three-and-a-half hours prior to the accident. Based on the retroactive
nature of the sale, the Court has repeatedly held that Turnkey, and not Defendant, was
Mr. Phathong’s legal employer at the time of the accident for immunity purposes, which
is reflected by the fact that Turnkey ultimately paid Mr. Phathong’s workers’
compensation benefits.3 However, faced with this very unique factual setting, the Court
has consistently drawn a distinction between (1) the entity that was Mr. Phathong’s legal
employer for workers’ compensation purposes – Turnkey – a fact changed by the
retroactive sale; and (2) the entity that was actually responsible for safety on the drill rig
this case. (ECF No. 103, at 4-5.)
3
Notably, Defendant’s Motion for Summary Judgment listed the following as one of its
Statements of Material Facts: “At the time of injury on December 13, 2005, Plaintiff Von J.
Phathong was an employee of Turnkey E&P.” (ECF No. 76, at 6 ¶ 33.) It appears that
Defendant is now trying to change its position to argue that Mr. Phathong was an employee of
Defendant.
Also, Defendant has repeatedly argued that Plaintiffs’ counsel admitted at an oral
argument that Defendant was Mr. Phathong’s employer. The Court disagrees. The retroactive
nature of the sale from Defendant to Turnkey created complexities in this case where there
otherwise would be few. The Court finds that counsel on both sides did an admirable job of
attempting to sort out the ramifications of the retroactive sale for the Court. The argument by
Plaintiffs’ counsel that is cited by Defendant is one such example of this.
5
at the time of the accident – Defendant – a fact that cannot be undone by the legal
maneuvering of the retroactive sale. Defendant has provided no new evidence or case
law that would warrant this Court to suddenly change course on this issue at this late
date. The Court’s prior rulings on this issue were in its Order denying Defendant’s
Motion for Summary Judgment, located at ECF No. 103, and in its oral ruling denying
Defendant’s Rule 50 Motions on the record during the proceedings before the Court on
June 11, 2012 (on the sixth day of the jury trial).
For the same reasons previously stated in these prior rulings, and stated in this
Order, Defendant’s Rule 50(b) Motion as to this issue is denied.
2.
Statutory Employer
At every point of this litigation at which Defendant has argued that it was Mr.
Phathong’s actual employer, and thus immune from suit under the workers’
compensation laws, Defendant has also argued that it is immune from suit as Mr.
Phathong’s “statutory employer” under the workers’ compensation laws.4 The present
4
The Colorado Workers’ Compensation Act
grants an injured employee compensation from the employer without regard to
negligence and, in return, the responsible employer is granted immunity from
common-law negligence liability. To be afforded this immunity, an employer
must be a “statutory employer” as contemplated by the [Act]. Although a given
company might not be a claimant’s employer as understood in the ordinary
nomenclature of the common law, it nevertheless might be a statutory employer
for workers’ compensation coverage and immunity purposes. . . . [The Act]
makes general contractors ultimately responsible for injuries to employees of
subcontractors. Its purpose is to prevent employers from avoiding responsibility
under the [Act] by contracting out their regular work to uninsured independent
contractors. . . . [W]e hold that the test for whether an alleged employer is a
“statutory employer” under [the Act] is whether the work contracted out is part of
the employer’s “regular business” as defined by its total business operation. In
applying this test, courts should consider the elements of routineness, regularity,
and the importance of the contracted service to the regular business of the
6
Rule 50(b) Motion is no different, with Defendant and its counsel again raising an
identical argument to that previously raised. (ECF No. 181, at 6-8.) The Court
addressed this issue, also, both in its Order denying Defendant’s Motion for Summary
Judgment (ECF No. 103), and in its oral ruling denying Defendant’s Rule 50 Motions on
the record during the proceedings before the Court on June 11, 2012 (on the sixth day
of the jury trial).
Defendant’s basis for arguing that it was a “statutory employer” of Mr. Phathong
is that it subcontracted out its drilling operations to Turnkey, and thus remained as a
type of general contractor on the project, remaining in the employment chain between
EnCana and Turnkey. This argument emphasizes the ways in which Defendant
remained obligated under its original contracts with EnCana. However, Defendant’s
argument is belied by its own statements of material facts presented in its Motion for
Summary Judgment. (ECF No. 76, at 6-7 ¶¶ 34, 37, 39, 41.) The fact that Defendant
had continuing obligations to EnCana under their original contracts does not mean the
relationship between Defendant and Turnkey was one of a general contractor and
subcontractor, respectively. Instead, as the Court ruled on Defendant’s Rule 50 Motion
at trial,
[T]he only reasonable interpretation of the evidence in this case is that
Defendant is not a “statutory employer” under the [Colorado Workers’
Compensation] Act. . . . The only reasonable interpretation of the
evidence in this case is that Defendant sold its drilling operations to
Turnkey on December 13, 2005. The relationship between Defendant and
employer.
Finlay v. Storage Tech. Corp., 764 P.2d 62, 63-64, 67 (Colo. 1988); see also Colo. Rev.
Stat. § 8-41-401.
7
Turnkey pursuant to that sale was not one of a general contractor and
subcontractor as envisioned by the Colorado Supreme Court in Finlay.
This was a sale of drilling operations, such that EnCana remained the
general contractor, and Turnkey took over the subcontractor duties of
running the drilling operations. In these circumstances, Defendant is not a
“statutory employer” entitled to immunity under the Colorado Workers'
Compensation Act.
The Court denies Defendant’s Rule 50(b) Motion on this same basis.
3.
Immunity as a Statutory Employer Due to Landowner Status
Defendant also argues that it is immune from suit as a statutory employer
because it was a landowner under Colorado Revised Statute § 8-41-402, which
provides, inter alia,
Every person, company, or corporation owning any real property or
improvements thereon and contracting out any work done on and to said
property to any contractor, subcontractor, or person who hires or uses
employees in the doing of such work shall be deemed to be an employer
under the terms of articles 40 to 47 of this title.
Colo. Rev. Stat. § 8-41-402(1). For the reasons set forth above (regarding the proper
interpretation of Defendant’s sale of its drilling operations to Turnkey) and set forth
below (regarding how Defendant cannot be fairly described as a landowner of the land
at issue), this argument fails.
For the aforementioned reasons, Defendant’s Rule 50(b) Motion for judgment as
a matter of law is denied.
B.
Rule 59 Motion for a New Trial
1.
Premises Liability
At trial on its Rule 50 Motion, Defendant argued that this case was governed by
the Colorado Premises Liability Statute, Colorado Revised Statute § 13-21-115, and
8
therefore Plaintiffs could not maintain their simple negligence claim. The Court
denied the Motion at trial with a thorough analysis. Now, in arguing for a new trial under
Rule 59, Defendant makes the same arguments for why it should have been deemed a
landowner under the Premises Liability Statute. With no new argument presented, the
Court need not engage in any new analysis here, other than to simply repeat the Court’s
oral ruling at trial denying Defendant’s Rule 50 Motion on this issue:
In Plaintiffs’ Rule 50 Motion, they move for judgment as a matter of law as
to the issue of whether the Premises Liability Act, Colorado Revised
Statute section 13-21-115, applies in this action. As background,
Plaintiffs’ operative Complaint pled two alternative theories of recovery (in
addition to the third claim for loss of consortium). Plaintiffs’ first claim was
a simple negligence claim, and their second claim was under the Premises
Liability Act. The Court has already held, at ECF No. 162, that it was not
improper to have pleaded alternative theories of recovery, even if
inconsistent, and therefore that Plaintiffs are not bound by the allegations
in the Complaint under the second cause of action that the Premises
Liability Act applies.
The parties’ trial briefs, and arguments on Plaintiffs’ Rule 50
Motion, indicate their agreement of the following. If the Premises Liability
Act does apply here, then Plaintiffs cannot pursue a simple negligence
claim against Defendant, but instead must pursue their claim under the
Premises Liability Act. However, if the Premises Liability Act does not
apply here, then obviously Plaintiffs cannot pursue a claim under that Act,
but may pursue a general negligence cause of action. See also Vigil v.
Franklin, 103 P.3d 322 (Colo. 2004).
The Court’s decision on this issue centers on Colorado Revised
Statute § 13-21-115(2), which provides that the Premises Liability Act
applies to injury occurring “by reason of the condition of [the real] property,
or activities conducted or circumstances existing on such property . . . .”
As the Colorado Supreme Court stated in Pierson v. Black Canyon
Aggregates, Inc., 48 P.3d 1215 (Colo. 2002), if the injury was caused by
“activities conducted or circumstances existing on such property,” those
activities or circumstances causing the injury must be “directly related to
the real property itself in order to be within the rubric of the statute.” Id. at
1221.
Several decisions from federal district court judges in this Circuit
have explained this requirement in more detail, holding that for the
Premises Liability Act to apply, the “activities or circumstances” causing
the injury must be activities or circumstances that are inherently related to
9
the land. Thus, in Giebink v. Fischer, 709 F. Supp. 1012 (D. Colo. 1989),
the Court held that the Premises Liability Act did not apply to a claim
against a ski resort based on a ski instructor’s alleged negligent failure to
properly supervise a child in a ski school class. The Court held that the
activity in question – negligent supervision – was not inherently related to
the land. Id. at 1017. In so holding, the court noted that to apply the
Premises Liability Act to any activities occurring on land, as opposed to
only those activities inherently related to the land, “would shield all types
of negligent activities from the negligence standard, such as in a case
where a doctor negligently treats a patient at his privately owned clinic.”
Id. at 1017 n.5.
As another example, the case of Geringer v. Wildhorn Ranch, Inc.,
706 F. Supp. 1442 (D. Colo. 1998), involved the death of guests of a
resort in a paddle-boating accident on a lake at the resort. The plaintiff
brought a Premises Liability Act claim based on the resort’s alleged
negligence in the maintenance and condition of the paddleboat at issue.
The court held that the Premises Liability Act did not apply in the case of a
landowner’s negligent supply of a chattel to a guest. Id. at 1446. In so
holding, the court stated that the Premises Liability Act “does not establish
a feudal realm of absolute protection from liability for simple negligence
based only on a defendant's status as landowner.”
Just last year, one of my colleagues again restated the rule that the
Colorado Premises Liability Act's applicability to “activities conducted or
circumstances existing on [the] property” only applies to “activities and
circumstances that are inherently related to the land.” Larrieu v. Best Buy
Stores, L.P., No. 10-cv-01883, 2011 WL 3157011, at *3 (D. Colo. July 27,
2011).
In this case, the evidence at trial indicated that Mr. Phathong was
injured on Defendant’s drill rig when the wrong size crossover sub was
used to switch out a heavy weight drill collar. Because this caused the
drill collar to not be threaded properly, when operation of the drill began,
Mr. Phathong's body became trapped between the derrick leg and drill
collar. Plaintiffs’ claims are based, inter alia, on Defendant’s employees’
alleged actions at the time of the accident in using the wrong size
crossover sub, and in Defendant’s failure to provide its employees with
sufficient safety training prior to the accident. Activities such as using the
wrong equipment on a drill rig and failing to properly train employees are
not activities that are “directly related to the real property itself” or that are
“inherently related to the land.” Therefore, the Colorado Premises Liability
Act does not apply, and Plaintiffs are entitled to judgment as a matter of
law on this issue. Thus, Plaintiffs' two remaining claims in this action are
for simple negligence, and for loss of consortium.
For these same reasons, Defendant’s Rule 59 Motion as to this issue is denied.
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2.
Statute of Limitations
Defendant also moves for a new trial on the ground that the Court allegedly gave
legally flawed statute-of-limitations instructions to the jury. (ECF No. 181, at 11-12.)
The Court issued three detailed instructions to the jury regarding statute-of-limitations
issues, one regarding the statute of limitations and claim accrual, one defining equitable
tolling, and one listing the required elements for equitable tolling to apply. The verdict
form submitted to the jury asked the jury to resolve the statute-of-limitations issues first,
and to proceed to evaluating liability only if the jury found that Plaintiffs’ claims were not
time-barred.
As further background, the Court previously denied Defendant’s Motion for
Summary Judgment on the statute-of-limitations issue. (ECF No. 103, at 8-11.)
Defendant also moved under Rule 50 at trial on this issue, which the Court denied in its
oral ruling taking place on the record during the proceedings before the Court on June
11, 2012 (on the sixth day of the jury trial). In short, both at summary judgment stage
and at the Rule 50 stage, the Court held that there were sufficiently reasonable disputes
between the parties regarding when Plaintiffs’ claims accrued, and regarding whether
equitable tolling applies, such that it was appropriate for the jury to decide whether
Plaintiffs’ claims were time-barred.
Defendant has repeatedly argued throughout this litigation that Plaintiffs’ claims
accrued on December 13, 2005, the date of the injury, which is usually the case in
straight-forward personal injury cases. Plaintiffs, however, have argued that at the time
of the accident, and for years after the accident, Plaintiffs believed that Defendant was
Mr. Phathong’s legal employer at the time of the accident, and thus could not be sued
11
for his injuries. In the meantime, Plaintiffs brought suit in state court against EnCana,
the general contractor on the project and the entity that the jury in this case found to be
ten percent at fault for Plaintiffs’ injuries. Plaintiffs contend that it was not until discovery
was undertaken in the EnCana state court action in the spring of 2009 that they learned
of the retroactive nature of the sale between Defendant and Turnkey.5
Thus, Plaintiffs contend that it was not until spring 2009 that they learned that
they had viable causes of action against Defendant, given that Turnkey (not Defendant)
was Mr. Phathong’s legal employer at the time of the accident for workers’
compensation purposes (which is reflected by the fact that Turnkey paid Mr. Phathong’s
workers’ compensation benefits). Because of this, Plaintiffs argued that their claims
accrued no earlier than the spring of 2009. The Court has repeatedly held that these
two differing views on the accrual date were appropriately left for the jury to decide.6
The Court also found that Plaintiffs’ equitable tolling argument was properly submitted
for the jury to decide. The jury’s verdict form indicates its conclusion that Plaintiffs’
5
Defendant has repeatedly and unpersuasively argued that a letter sent to Plaintiffs in
2006 reasonably put Plaintiffs on notice that Turnkey became Mr. Phathong’s employer.
However, the letter in no way mentioned the retroactive nature of the sale, and so did not put
Plaintiffs on notice that an entity other than Defendant might have been Mr. Phathong’s legal
employer at the time of the accident.
6
Under Colorado law, a claim for bodily injury does not accrue “until the plaintiff knows,
or should know, in the exercise of reasonable diligence, all material facts to show the elements
of that cause of action.” Miller v. Armstrong World Indus., Inc., 817 P.2d 111, 113 (Colo. 1991).
The time when a plaintiff should have discovered, by reasonable diligence, that a cause of
action accrued is typically a question of fact that must be resolved by the trier of fact. See
Morris v. Geer, 720 P.2d 994, 997 (Colo. 1986).
In this Court’s Order denying Defendant’s Motion for Summary Judgment, in the text and
a long footnote, the Court addressed the unique issue presented here, namely, when a claim
accrues when a plaintiff does not learn until a later time that he/she has a cause of action
against a particular defendant. (See ECF No. 103, at 10-11 & n.3.)
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claims were not time-barred.
Defendant’s current challenge first argues that the Court’s jury instruction
regarding claim accrual improperly instructed the jury to determine whether the claim
accrued before or after April 6, 2008, the date exactly two years prior to the date on
which Plaintiffs filed this action. Defendant argues that the Court instead should have
instructed the jury that the claim accrued on the date of the accident. The Court (again)
disagrees. The Court has repeatedly found that it was for the jury to decide whether
Plaintiffs’ claims accrued on December 13, 2005, or at some later date. Given this, the
Court’s instruction focusing the jury’s attention to the date exactly two years prior to the
accident was proper: if the claims accrued before that date, they would be time-barred,
if they accrued on or after that date, they would not be time-barred.
Defendant also challenges the particular jury instruction which read, “regarding
the accrual of Plaintiffs’ claims for purposes of the running of the statute of limitations,
the question is when Plaintiffs knew, or in the exercise of reasonable diligence should
have known, of the retroactive nature of the sale of Defendant Tesco’s drilling
operations to Turnkey.” As to this instruction, the Court acted within its discretion to
tailor the instruction to the particular facts of this case. See United States v. Heredia,
483 F.3d 913, 920 (9th Cir. 2007) (“A district judge, in the exercise of his discretion, may
say more to tailor the instruction to the particular facts of the case.”). The retroactive
nature of the sale of Defendant’s drilling operations to Turnkey created several unique
and challenging legal issues in this action. It was the Court’s opinion that these unique
and challenging issues could only be simplified for the jury with certain case-specific
instructions. See United States v. Brandon, 17 F.3d 409, 453 (1st Cir. 1994) (“[O]n
13
particular facts, it might so mislead a jury to give a general instruction, rather than one
tailored to a specific defendant or rather than no instruction at all, as to be an abuse of
discretion, but we emphasize that judgments of this kind are primarily entrusted in the
trial judge who inevitably has a superior feel for the dynamics of the trial and the likely
reaction of the jury.”).
For the aforementioned reasons, the Court is confident it did not err in the
statute-of-limitations instructions provided to the jury. Accordingly, Defendant is not
entitled to a new trial on this basis.
3.
Punitive Damages
Defendant also moves for a new trial under Rule 59 based on several arguments
related to punitive damages. (ECF No. 181, at 12-14.) Because of how Defendant has
attempted to spin and indeed twist the record in this action as it relates to the issue of
punitive damages, the Court believes it important to recount that record in detail.
Plaintiffs’ original Complaint in this action, filed on April 6, 2010, did not include a
claim for punitive damages, although the Prayer for Relief did indicate that Plaintiffs
would ultimately seek to amend their Complaint to add a punitive damages claim. (ECF
No. 1, at 8.) On October 29, 2010, Plaintiffs filed a Motion for Leave to Amend
Complaint seeking to add a claim for punitive damages, pointing out that Colorado law
prohibits a party from making a claim for punitive damages until after initial Rule 26
disclosures have been exchanged and the party making the claim establishes prima
facie proof of a triable issue as to punitive damages. (ECF No. 38.) Defendant
opposed the motion to amend (ECF No. 40), but U.S. Magistrate Judge Michael J.
Watanabe granted the motion (ECF No. 43), and Plaintiffs’ operative First Amended
14
Complaint, which included a claim for punitive damages, was filed on December 10,
2010 (ECF No. 44). Defendant did not file an appeal of Magistrate Judge Watanabe’s
Order allowing amendment to this Court.
On December 27, 2010, Defendant then filed a Motion to Dismiss the First
Amended Complaint. (ECF No. 46.) In the Motion to Dismiss, Defendant argued that
Plaintiffs’ claims were time-barred, and that Defendant was immune from suit as a
statutory employer. (Id.) Defendant’s Motion to Dismiss only makes one statement
regarding why the punitive damage claim should be dismissed, to wit, “Since Plaintiffs’
claims are time-barred and Tesco should be granted statutory employer immunity,
Plaintiffs’ assertions that they are entitled to exemplary damages are futile.” (Id. at 2 ¶
5.) On May 20, 2011, Defendant then filed a Motion for Summary Judgment, again
arguing that it was immune from suit as a statutory employer, and that Plaintiffs’ claims
were time-barred. (ECF No. 76.) Defendant’s Motion for Summary Judgment did not
even mention Plaintiffs’ claim for punitive damages, and thus obviously did not move for
summary judgment on the punitive damages claim, e.g., by arguing that a lack of
evidence supported the claim. (See id.)
On November 30, 2011, the Court denied Defendant’s Motion for Summary
Judgment, holding that Defendant had not carried its burden of showing that it was a
“statutory employer,” and holding that there was sufficient evidence on both sides such
that the jury would decide whether Plaintiffs’ claims were time-barred. (ECF No. 103.)
Because the statutory employer issue and statute of limitations issue were the same
two issues argued in Defendant’s Motion to Dismiss, the Court denied Defendant’s
Motion to Dismiss as moot given the Court’s ruling on Defendant’s Motion for Summary
15
Judgment. (Id.) As Plaintiffs point out, at oral argument on these two Motions, counsel
for Defendant conceded that a ruling on Defendant's Motion for Summary Judgment
would moot Defendant's Motion to Dismiss. (ECF No. 99.) And indeed, that decision
was proper, including as to punitive damages. To repeat, Defendant only argued in the
Motion to Dismiss that the punitive damages claim should be dismissed because
Defendant was immune from suit as a statutory employer and because Plaintiffs’ claims
were time-barred. By rejecting those two arguments, Defendant’s statement that the
punitive damages claim should be dismissed necessarily failed.
The Amended Pretrial Order clearly states that Plaintiffs are bringing a claim for
punitive damages in this action. (ECF No. 123, at 3.) A footnote in the Amended
Pretrial Order states, “The Defendant Tesco objects to the claim for punitive damages
for the reasons express in its motion to dismiss said claim and the Court having not
ruled on that issue.” (Id.)
At the Final Trial Preparation Conference before the Court, Defendant failed to
raise any argument regarding punitive damages. Also, as trial approached, both parties
submitted their proposed jury instructions to Court. Plaintiffs submitted two proposed
instructions regarding punitive damages, one contained within what were purportedly
stipulated instructions. Defendant objected to both, indicating its awareness that the
punitive damages claims were at issue. (ECF No. 115, at 5.)7
At trial, Defendant did not move under Rule 50 for judgment as a matter of law on
Plaintiffs’ punitive damages claim either at the close of Plaintiffs’ evidence or at the
7
Defendant’s Objections to the proposed instructions repeated the same meritless
argument that the Court never ruled on its Motion to Dismiss the punitive damages claim. (Id.)
16
close of Defendant’s evidence, both of which occurred on June 8, 2012. On June 12,
2012, the Court issued its oral ruling on the Rule 50 Motions. The Court then
proceeded with the jury instruction charging conference, at which Defendant’s counsel
represented that he was not aware the punitive damage claims were still at issue, and
tardily and cursorily argued that Rule 50 was warranted on the punitive damages claim.
The Court denied that Rule 50 Motion.
Having thoroughly recited the procedural history regarding Plaintiffs’ punitive
damages claim, the Court turns to Defendant’s arguments regarding punitive damages
raised in its currently pending Rule 59 Motion. First, Defendant argues that
[t]he Court did not decide the issues addressed in regard to the
Defendant’s Motion to Dismiss Plaintiffs’ First Amended Complaint for
punitive damages until June 11, 2012, thereby preventing Defendant from
both conducting discovery as to the factual basis for any such claim and
presenting evidence and a full argument on the issues raised in the
Amended Complaint and preventing Defendant from adequately preparing
for closing arguments. . . . Given the eleventh hour of the punitive
damages claim, Tesco was prejudiced in defending the [sic] against the
claim . . . .
(ECF No. 181, at 12, 14.) This argument is frivolous, indeed ludicrous, and the Court
will not countenance Defendant blaming the Court for its counsel’s own failings. First,
the early procedural history of this case made it perfectly clear to Defendant that
Plaintiffs were pursuing a claim for punitive damages in this action, and at no point was
that claim dismissed by the Court. Defendant made a tactical decision not to conduct
discovery on the punitive damages claim. It also chose not to present argument to the
jury regarding this claim. Therefore, Defendant blaming the Court for what did or did not
transpire in this case with regard to Plaintiffs’ punitive damages claim is flatly rejected.
Moreover, prior to the jury instruction charging conference, the only time during
17
this litigation when Defendant sought dismissal of Plaintiffs’ punitive damages claim was
in the one sentence in the Motion to Dismiss, when it did so based on its statutory
employer and statute-of-limitations arguments. As has been explained, the Court
properly denied that Motion, and Defendant’s suggestion that the Court never ruled on
the issue is patently frivolous. Throughout this litigation, Defendant failed to actively
pursue dismissal of the punitive damages claim. For example, Defendant could have
objected to the Magistrate Judge’s decision to allow Plaintiffs to amend their complaint
to add a punitive damages claim, but failed to do so. Defendant also could have moved
for summary judgment on the punitive damages claim, arguing that Plaintiffs had failed
to come forward with sufficient evidence supporting an award of punitive damages, but
failed to do so. Defendant also could have moved under Rule 50 for dismissal of the
claim at the close of Plaintiffs’ evidence and at the close of its own evidence, but failed
to do so.
Second, Defendant argues that Plaintiffs failed to present sufficient evidence at
trial supporting the punitive damages claim, an argument presented for the first time at
the jury instruction charging conference and presented now for only the second time in
this litigation. (ECF No. 181, at 13-14.) Colorado Revised Statute § 13-21-102(1)(a)
provides,
In all civil actions in which damages are assessed by a jury for a wrong
done to the person or to personal or real property, and the injury
complained of is attended by circumstances of fraud, malice, or willful and
wanton conduct, the jury, in addition to the actual damages sustained by
such party, may award him reasonable exemplary damages.
“Willful and wanton conduct” is defined in the statute as “conduct purposefully
committed which the actor must have realized as dangerous, done heedlessly and
18
recklessly, without regard to consequences, or of the rights and safety of others,
particularly the plaintiff.” Colo. Rev. Stat. § 13-21-102(1)(b). The Colorado Supreme
Court has interpreted this statute such that “the statutory requirements of section 13-21102 are met” where “the defendant is conscious of his conduct and the existing
conditions and knew or should have known that injury would result.” Coors v. Sec. Life
of Denver Ins. Co., 112 P.3d 59, 66 (Colo. 2005); see also Stamp v. Vail Corp., 172
P.3d 437, 449 (Colo. 2007) (“Conduct is willful and wanton if it is a dangerous course of
action that is consciously chosen with knowledge of facts, which to a reasonable mind
creates a strong probability that injury to others will result.”) (citation and internal
quotations omitted). “Exemplary damages against the party against whom the claim is
asserted shall only be awarded in a civil action when the party asserting the claim
proves beyond a reasonable doubt the commission of a wrong under the circumstances
set forth in section 13-21-102.” Colo. Rev. Stat. § 13-25-127(2); see also Coors, 112
P.3d at 65. At trial, the Court gave a thorough instruction to the jury on punitive
damages that accurately reflected this applicable law.8
8
The instruction read,
If you find in favor of Plaintiff Von Phathong on his negligence claim, then
you shall consider whether he should recover punitive damages against
Defendant Tesco. If you find beyond a reasonable doubt that Defendant Tesco
acted in a willful and wanton manner, in causing Plaintiff Von Phathong's
damages you shall determine the amount of punitive damages, if any, that
Plaintiff Von Phathong should recover.
Punitive damages, if awarded, are to punish the defendant and to serve
as an example to others.
“Reasonable doubt” means a doubt based upon reason and common
sense which arises from a fair and thoughtful consideration of all the evidence, or
the lack of evidence, in the case. It is not a vague, speculative, or imaginary
doubt, but one that would cause reasonable persons to hesitate to act in matters
of importance to themselves.
19
Plaintiffs presented sufficient evidence at trial as to the wrongfulness of
Defendant’s conduct, such that the punitive damages claim was properly submitted to
the jury for consideration. One or more witnesses at trial – including Plaintiffs’ expert
witness as to drilling operations and Defendant’s own drill rig supervisor and other
employees – testified to one or more the following: (1) working on a drill rig is
dangerous, warranting sufficient safety precautions; (2) Defendant had inadequate
safety training for its workers; (3) of all the different drill rigs certain witnesses had
worked on, Defendant’s drill rig was the worst in terms of workplace safety; (4) the work
environment on Defendant’s drill rig was one of threats and intimidation by supervisors,
such that workers such as Mr. Phathong knew they could be fired if they ever disobeyed
orders; (5) workers were always pushed to hurry their work in this dangerous work
environment; (6) on the evening of the accident, the depths at which drilling was being
done was unsafe, given the small size of the drill rig; (7) the decision was made by Mr.
Phathong’s superiors that night to change from a 6 ½-inch drill collar to an 8-inch drill
collar so that they would be able to drill faster; (8) a correctly sized crossover sub was
necessary to safely change the drill collars, but the correctly sized crossover sub was
not on the drill rig that night; (9) despite not having the correctly sized crossover sub,
the decision was made by Defendant’s superiors to nevertheless change drill collars;
(10) the snatch block, which would have made changing the drill collar safer, could not
“Willful and wanton conduct” means an act or omission purposefully
committed by a person who must have realized that the conduct was dangerous,
and which conduct was done heedlessly and recklessly, either without regard to
the consequences, or without regard to the rights and safety of others,
particularly the plaintiff.
20
be used because all of its pieces were not on the drill rig; (11) a superior gave an order
for someone to grab a set of tongs to help change the drill collar, and Mr. Phathong
volunteered and grab the tongs; (12) using the wrong crossover sub meant that the drill
collar would not be threaded properly; (13) because the wrong crossover sub was used,
when operations began the drill started up and spun unusually fast, pinning Mr.
Phathong up against the derrick leg and causing his injuries; (14) the next night
supervisors on the drill rig decided to stick with the 6 ½-inch drill collar and were able to
complete the work; and (15) Defendant’s incident report regarding the accident stated
that the accident occurred because the “threads fouled,” suggesting that something was
wrong with the threads themselves, not that the wrong crossover sub was used, which
necessarily meant that it wouldn’t be threaded properly. All of this evidence considered
together, along with other evidence and supporting evidence presented at trial, could
lead a reasonable jury to find beyond a reasonable doubt that Defendant was
“conscious of [its] conduct and the existing conditions and knew or should have known
that injury would result,” Coors, 112 P.3d at 66, and that Defendant took “a dangerous
course of action that [was] consciously chosen with knowledge of facts, which to a
reasonable mind creates a strong probability that injury to others will result,” Stamp, 172
P.3d at 449.
Because Defendant failed to effectively pursue the dismissal of Plaintiffs’ punitive
damage claim throughout this litigation, and because sufficient evidence supporting
Plaintiffs’ punitive damage claim was presented at trial, Defendant’s Rule 59 Motion as
it relates to Plaintiffs’ punitive damages claim is denied.
21
4.
Assumption of Risk and Comparative Negligence
In one small paragraph in its Motion (ECF No. 181, at 14), and with two full
pages in its Reply brief (ECF No. 181, at 8-9), Defendant argues that the Court erred by
failing to instruct the jury regarding Mr. Phathong’s own assumption of risk and
comparative negligence in voluntarily grabbing the tongs prior to the accident. As to
comparative negligence, the Court stands by its previous bases for granting Plaintiffs’
Rule 50 Motion on this issue, in which Plaintiffs argued that no reasonable fact-finder
could find Plaintiff comparatively negligent in causing his injuries. In that oral ruling, the
Court stated,
Plaintiffs also moved for judgment as a matter of law on the issue of
whether Plaintiff Von Phathong himself can be considered comparatively
negligent in causing the accident. At the Rule 50 hearing, Plaintiffs
emphasized that Mr. Phathong was simply following a superior’s order
when he jumped in to grab the tongs. They also argued that, given the
culture of intimidation on the rig, Mr. Phathong could have been
terminated if he disobeyed the order. In response, Defendant’s primary
argument seemed to be that Mr. Phathong was at fault for taking what he
knew to be a sometimes dangerous job. Defendant also argued that the
order given was only made generally to the workers in the area, and it was
Mr. Phathong who voluntarily jumped in to grab the tongs. Defendant
further argued that Mr. Phathong was on notice of the dangerous situation
at the time, because of another dangerous incident that had occurred just
minutes before.
The Court holds that Plaintiffs are entitled to judgment as a matter
of law on this issue. Based on the evidence presented at trial, no
reasonable jury could conclude that Plaintiff was comparatively negligent
in causing the accident. First, Defendant’s argument blaming Plaintiff for
accepting employment on the drill rig is ludicrous. His acceptance of
employment months before was not negligent, nor was it a cause of the
accident. In the Court’s view equating acceptance of employment in a
risky industry with legal negligence is a dangerous proposition. The
adverse implications for workers employed in risky or dangerous
industries were the Court to adopt Defendant’s reasoning on this issue
would be extraordinary, and the Court emphatically rejects Defendant’s
contention on this point.
Defendant's other arguments are also unavailing because a direct
22
order was given to the workers in the area to grab the tongs, and it was
understood that workers on that rig faced harsh penalties for refusing to
obey orders. Finding Mr. Phathong comparatively negligent would have
the perverse result of punishing him for being the one to step up and
volunteer to grab the tongs. This also the Court will not do.
There was no evidence at trial that Mr. Phathong had any
involvement in the decision to make the change to an 8-inch drill collar.
There was no evidence at trial that Mr. Phathong had any responsibility for
ensuring that the proper equipment was on the drill rig. There was no
evidence at trial that Mr. Phathong trained any of the workers on the drill
rig. There was no evidence at trial that Mr. Phathong did something he
wasn’t supposed to do. There was no evidence at trial that Mr. Phathong
did his job improperly in any way. Simply put, there is no evidence for
which a reasonable jury could find that negligence on the part of Mr.
Phathong in any way caused the accident and his injuries.
(Court’s oral ruling on the parties’ Rule 50 Motions, on day six of the jury trial on June
12, 2012.)
As to Plaintiffs’ assumption of risk argument, the Court rejects the argument for
similar reasons. Defendant proposed the following jury instruction regarding
assumption of risk: “Negligence may also mean assumption of risk. A person assumes
the risk of injury or damage if the person voluntarily or unreasonably exposes himself or
herself to such injury or damage with knowledge or appreciation of the danger and risk
involved.” (ECF No. 113, at 6.) That is an accurate statement of law. See, e.g., Colo.
Jury Instructions, Civil 9:6 (4th ed. 2012). However, the Court rejected the proposed
instruction, because the evidence at trial could not lead a reasonable jury to conclude
that Mr. Phathong voluntarily or unreasonably exposed himself to the conditions (the
changing of the drill collar with the wrong sized crossover sub) that led to his injuries.
As previously stated, given the culture of threats and intimidation on the rig and the fact
that a superior ordered someone to grab the tongs, among other evidence, a
reasonable jury could not conclude that Mr. Phathong voluntarily or unreasonably
23
grabbed the tongs.
5.
Designation of Turnkey as a Non-Party at Fault
Defendant also challenges the Court’s decision to strike Defendant’s designation
of Turnkey as a non-party at fault.9 The Court stands by its previously stated bases for
striking Defendant’s designation of Turnkey as a non-party at fault, located at ECF No.
162, at pages 3-6. See, e.g., ECF No. 162, at 5 & n.3 (“Turnkey had absolutely no
actual, ‘on the ground’ involvement in the operations on the drill rig that resulted in the
December 13, 2005 accident. . . . While the retroactive sale changed who Mr.
Phathong’s legal employer was at the time of the accident, such a retroactive sale
cannot change the facts regarding who, if anyone, caused the accident by a negligent
act or negligent failure to act. Of course, if Turnkey, through its purchase of
Defendant’s drilling operations, agreed to assume any and all liability of Defendant
incurred following the retroactive sale date and time, Defendant would likely to entitled
to recover from Turnkey for any liability Defendant incurs in this action. However, the
issue of contractual assumption of liability for negligence is entirely different and distinct
[from] the issue of who, if anyone, was actually negligent or at fault for the accident that
occurred.”). For the reasons previously stated in this Order and in the Court’s Order
resolving issues raised in the trial briefs (ECF No. 162), the fact that Turnkey was Mr.
Phathong’s legal employer for purposes of workers’ compensation, that does not mean
Turnkey could be negligent or otherwise at fault for what occurred on the drill rig at 3:30
a.m. on December 13, 2005.
9
On the verdict form submitted to the jury, the jury was only asked to apportion fault
between Defendant and the general contractor on the project, EnCana.
24
For all of the aforementioned reasons, Defendant has not met its burden of
showing entitlement to a new trial in this action under Rule 59.
III. CONCLUSION
In accordance with the foregoing, the Court hereby ORDERS that Defendant’s
Rule 50(b) Motion or, in the Alternative, a Motion for a New Trial (ECF No. 181) is
DENIED.
Dated this 10th day of October, 2012.
BY THE COURT:
_________________________
William J. Martínez
United States District Judge
25
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