McKerchie v. Wisconsin Central, Ltd.

Filing 20

OPINION ; signed by Judge Robert Holmes Bell (Judge Robert Holmes Bell, kcb)

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
NORTHERN DIVISION
ERIC McKERCHIE,
Plaintiff,
File No. 2:13-cv-329
v.
HON. ROBERT HOLMES BELL
WISCONSIN CENTRAL LTD.,
Defendant.
/
OPINION
This is a diversity case involving personal injuries sustained by an employee of an
independent contractor. Plaintiff alleges one count for relief in his complaint, citing Restatement
(Second) of Torts § 428, seeking to hold Defendant strictly liable for his injuries. Defendant filed
a motion to dismiss and for summary judgment (Dkt. No. 5). Plaintiff filed a motion for leave to
amend his complaint (Dkt. No. 8). The parties have filed corresponding responses and replies. On
October 25, 2013, this case was transferred from the United States District Court for the Eastern
District of Michigan to this Court.
The parties’ motions present the following issues. First, whether Michigan or Wisconsin state
substantive law should apply when the alleged injury took place in Wisconsin but neither party is
a citizen of that state. Second, whether a federal court sitting in diversity should adopt a theory of
tort liability that has not been accepted or rejected by a state’s highest court. Third, whether justice
requires allowing amendment of a complaint to include a claim for which a defendant asserts no
admissible evidence exists. Finally, whether loading unbanded railroad ties onto a truck is an
inherently dangerous activity. For the reasons that follow, the Court will grant in part and deny in
part each party’s motion.

I.

Background

The underlying facts, sparse as they are, are not disputed by the parties. Plaintiff, a Michigan
resident (Compl., Dkt. No. 1 ¶ 2), was hired by non-party A.J.’s Railroad Contractors (“AJRC”) to
transport railroad ties. (Id. ¶ 6). Defendant, an Illinois entity, employed AJRC as its contractor. (Id.
¶ 5). Plaintiff was working on Defendant’s yard located in Green Bay, Wisconsin. (Proposed Am.
Compl., Dkt. No. 8-1 ¶ 8). The ties Plaintiff was loading were not banded together, and during
loading fell upon Plaintiff and injured him in an unspecified manner. (Compl., Dkt. No. 1 ¶ 7).
II.
A.

Analysis

Arguments presented
Plaintiff’s sole count for relief in his complaint is Defendant’s alleged violation of

Restatement (Second) of Torts § 4281 which states:
An individual or a corporation carrying on an activity which can be lawfully carried
on only under a franchise granted by public authority and which involves an
unreasonable risk of harm to others, is subject to liability for physical harm caused
to such others by the negligence of a contractor employed to do work in carrying on
the activity.
Defendant argues that the complaint should be dismissed because Michigan has not recognized § 428
as a theory of tort liability. (Def.’s Mot., Dkt. No. 5 at 2). Alternatively, Defendant argues that the
activity involved, loading railroad ties, is (1) not one that requires a public franchise; and (2) does
not pose an unreasonable risk of harm. (Id.) Defendant also argues it is entitled to summary judgment
based on:
the general rule in Michigan (that an employer of a general contractor is not liable in
negligence to third parties or employees of the independent contractor) governs
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Plaintiff's pleadings mistakenly refer to the Restatement (First) of Torts, which does not
define the cause of action he seeks to assert.
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where WCL did not retain supervisory control, either by contract or practice, and
where the subject activity is, by definition, not “inherently dangerous.”
(Id. at 8).
Plaintiff responds by noting that Michigan courts would adopt § 428, based on the adoption
of other Restatement sections by Michigan courts and a nearly two-and-a-half page string citation
of cases from other jurisdictions adopting § 428. (Pl.’s Resp., Dkt. No. 9 at 2–5). Plaintiff argues that
loading railroad ties requires a public franchise because the Restatement uses railroad work as
examples of applications of § 428. (Id. at 2). Plaintiff also argues that “handling of railroad ties in
this instance being part of the maintenance of ways, is an operational activity of railroading work.”
(Id. at 7). Plaintiff further argues that because there are “‘risks inherent in railroad work’” (id.)
(quoting Sinkler v. Mo. Pac. R.R. Co., 356 U.S. 326, 330 (1958)), that any work related to a railroad
presents “an unreasonable risk of harm to others.” (Pl.’s Resp., Dkt. No. 9 at 8).
Plaintiff has also moved for leave to file an amended complaint. (Pl.’s Mot., Dkt. No. 8).
Nowhere in his filings has Plaintiff identified why he should be granted leave to amend his
complaint. He merely asserts that the amendments are proposed to cure “alleged allegational
deficiencies in the Complaint [sic].” (Id. at 1). Plaintiff, however, adds two new counts for relief:
Negligent Direction/Supervision/Control and Inherently Dangerous Work Activity. (Id. at 2-3).
Defendant challenges such amendments as futile. (Def.’s Resp., Dkt. No. 13 at 4–6). Given the
overlapping nature of the arguments presented, these motions can be decided together.
B.

Rule 12(b)(6) Motion Standards
In reviewing a Rule 12(b)(6) motion to dismiss, the Court must “‘construe the complaint in

the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable

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inferences in favor of the plaintiff,’” but “‘need not accept as true legal conclusions or unwarranted
factual inferences.’” Hunter v. Sec’y of U.S. Army, 565 F.3d 986, 992 (6th Cir. 2009) (quoting Jones
v. City of Cincinnati, 521 F.3d 555, 559 (6th Cir. 2008)). Under the federal notice pleading
standards, a complaint must contain “a short and plain statement of the claim showing how the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The purpose of this statement is to “give the
defendant fair notice of what the claim is and the grounds upon which it rests.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007).
The complaint need not contain detailed factual allegations, but it must include more than
labels, conclusions, and formulaic recitations of the elements of a cause of action. Id. “Threadbare
recitals of the elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). To survive
a motion to dismiss under Rule 12(b)(6), a complaint must allege facts that “state a claim to relief
that is plausible on its face,” and that, if accepted as true, are sufficient to “raise a right to relief
above the speculative level.” Twombly, 550 U.S. at 555.
“The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than
a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. 678. “A claim is plausible
on its face if the ‘plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.’” Ctr. for Bio-Ethical Reform, Inc.
v. Napolitano, 648 F.3d 365, 369 (6th Cir. 2011), cert. denied, 132 S. Ct. 1583 (2012) (quoting
Iqbal, 556 U.S. at 677). Where a complaint pleads facts that are merely consistent with a defendant’s
liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.’”
Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557).
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Further, under Rule 10(c), the court can consider the exhibits attached to the complaint
without converting defendants’ Rule 12(b)(6) motion into a motion for summary judgment. Fed. R.
Civ. P. 10(c); see Koubriti v. Convertino, 593 F.3d 459, 462 n.1 (6th Cir. 2010) (“Documents
attached to the pleadings become part of the pleadings and may be considered on a motion to
dismiss.”).
C.

Legal Issues
For purposes of the present motions, Defendant does not argue that Plaintiff’s pleadings are

factually insufficient, but rather that Plaintiff has failed to state a legally cognizable theory of
liability. The basic underlying facts are therefore undisputed. Plaintiff was an employee of AJRC
loading railroad ties in Defendant’s Green Bay, Wisconsin, railroad yard. AJRC was a contractor
hired by Defendant. While loading the ties, some of them fell and injured Plaintiff. The underlying
issues turn on whether, as a matter of law, Defendant can be held liable for injuries sustained by an
employee of its subcontractor.
1.

Applicable Law
Although not addressed by the parties in any of their pleadings or briefs, because this is a

diversity case presenting state-law claims, and because the events giving rise to the case took place
outside of Michigan, as a threshold matter the Court must determine what law to apply. It is wellsettled that a federal court sitting in diversity must apply the conflict of laws principles of the forum
state to determine which state’s substantive law to apply. Klaxon Co. v. Stentor Elec. Mfg. Co., 313
U.S. 487, 496–97 (1941). Michigan courts apply Michigan law unless a “rational reason” exists to
apply the law of another state. Sutherland v. Kennington Truck Serv., Ltd., 562 N.W.2d 466, 471
(Mich. 1997). To determine if a rational reason exists, a court must undertake a two-step analysis:
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(1) does another state have an interest in having its law applied, and if so; (2) do Michigan’s interests
mandate that Michigan law apply in spite of the foreign state’s interest. Id. (citing Olmstead v.
Anderson, 400 N.W.2d 292, 304 (Mich. 1987)). If no other state has an interest, the presumption that
Michigan law applies cannot be overcome. Sutherland, 562 N.W.2d at 471.
According to the Michigan Supreme Court, “The injury state always has an interest in
conduct within its borders, whether or not its citizens are involved.” Olmstead, 400 N.W.2d at 304.2
Here, it is undisputed that the injury took place in Green Bay, Wisconsin, and thus, that state has an
interest in having its law applied to this case. Therefore, the Court must determine if Michigan’s
interest in this litigation outweighs Wisconsin’s. Here, while Michigan certainly has an interest in
vindicating the rights of its citizens, Wisconsin has a greater interest in regulating the conduct of
entities, such as Defendant, who do business within its borders. The Court holds, therefore, that
Wisconsin law applies to this case.
Even if Michigan law were to apply to this case, “when there is no conflict regarding the law
between different states, no need exists to make a choice of law decision.” Saab Auto. AB v. Gen.
Motors Co., 12-cv-13432, 2013 WL 3013677, at *4 (June 18, 2013 E.D. Mich.) (citing In re
Aircrash Disaster Near Monroe, Mich. on Jan. 9, 1997, 20 F.Supp.2d 1110, 1111 (E.D.Mich.1998);
In re Rezulin Prods. Liab. Litig., 390 F.Supp.2d 319, 330 (S.D.N.Y.2005)). As explained below, the
disposition of the present motions would be the same no matter which state’s law is applied to the
case.

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Olmstead distinguishes between a state’s interest in regulating conduct and its interest in
limiting damages. If the only issue is damages and the litigants are not citizens of the state where the
injury took place, that state will have no interest in the litigation. Olmstead, 400 N.W.2d at 304.
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2.

Restatement (Second) of Torts § 428
Plaintiff's complaint and Count I of his proposed amended complaint seek relief under

Restatement (Second) of Torts § 428. This section of the Restatement has neither been accepted, nor
even considered, by Wisconsin courts. As Defendant notes in its briefing, while the Michigan Court
of Appeals considered § 428 in Candelaria v. BC General Contractors, Inc., 653 N.W.2d 630 (Mich.
Ct. App. 2002), it did not adopt the theory of liability because the case could be decided on other
grounds.
A federal court sitting in diversity in this situation must make the best prediction of what the
Wisconsin Supreme Court would do if confronted with this question. Combs v. Int’l Ins. Co., 354
F.3d 568, 577 (6th Cir. 2004). In a case like this where the question of state law would “greatly
expand[] liability” the Court “should chose the narrower and more reasonable path.” Id. (quoting
Todd v. Societe Bic, S.A., 21 F.3d 1402, 1412 (7th Cir. 1994)). Indeed, “federal courts sitting in a
diversity case are in ‘a particularly poor position ... to endorse [a] fundamental policy innovation’”
Combs, 354 F.3d at 577–78 (quoting Dayton v. Peck, Stow & Wilcox Co., 739 F.3d 690, 694 (1st Cir.
1984)). Where no authoritative voice from the state has spoke to the issue there is “no basis for even
considering the pros and cons of innovative theories.” Combs, 354 F.3d at 578 (quoting Dayton, 739
F.3d at 694). The reluctance to speak to issues of trends in state law applies “with special force to
a plaintiff in a diversity case, like this one, who has chosen to litigate his state law claim in federal
court.” Combs, 354 F.3d at 577 (citing Torres v. Goodyear Tire & Rubber, Inc., 867 F.2d 1234, 1238
(9th Cir. 1989)).
Given this strong admonition of the Sixth Circuit, supported by the sound reasoning of its
Sister Circuits, this Court sees no wisdom in speculating whether Michigan or Wisconsin’s Supreme
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Court would adopt § 428 as a new theory of liability in either state. Therefore, Plaintiff has failed
to state a claim upon which relief can be granted, and any amendment to add factual detail to a claim
predicated on § 428 liability will be futile. Because the Court will dismiss Plaintiff’s complaint for
failure to state a claim, Defendant’s alternative motion for summary judgment will be denied as
moot.
D.

Motion to Amend
Although Plaintiff’s complaint fails to state a claim upon which relief can be granted, his

proposed amended complaint adds two additional grounds that the Court must consider. Leave to
amend a complaint may be had as a matter of course within 21 days of filing the complaint, or 21
days after service of a responsive pleading is served, if one is required, or 21 days of service of
motions under Rule 12(b), (e), or (f). Fed. R. Civ. P. 15(a)(1). After this period expires, leave to
amend the complaint may be granted by the Court; the Court should grant such leave freely “when
justice so requires.” Fed. R. Civ. P. 15(a)(2). The decision of whether to grant leave to amend the
complaint is within this Court’s sound discretion. Leary v. Daeschner, 349 F.3d 888, 904 (6th Cir.
2003).
The Court may deny such leave, however, where there exists “undue delay, bad faith or
dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment,
futility of the amendment, etc.” Benzon v. Morgan Stanley Distrib., Inc., 420 F.3d 589, 613 (6th Cir.
2005) (internal quotations and citations omitted). The Sixth Circuit has held that an amendment is
futile “where [the] proposed amendment would not survive a motion to dismiss.” Thiokol Corp. v.
Dep’t of Treasury, State of Mich., Revenue Div., 987 F.2d 376, 383 (6th Cir. 1993).
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1.

Negligent Supervision
First, Plaintiff adds a count for negligent supervision. Plaintiff alleges: (1) that Defendant had

a duty to supervise the activities on the work site (Proposed Am. Compl., Dkt. No. 8-1 ¶12), (2) that
the activity leading to the injury took place in a common work area (id. at ¶13), and (3) that
Defendant failed to properly supervise the activity by allowing railroad ties to be loaded that were
“unbanded and unchocked which constitutes a breach of [Defendant]’s obligation to exercise
reasonable care . . . in [its] supervision control an[d]/or direction of the subject activity.” (Id. at ¶14).
Defendant argues that Plaintiff has not properly alleged that it retained control of the subject activity
because the declaration attached to the amended complaint does not contain admissible evidence.
(Def.’s Resp., Dkt. No. 13 at 5). Defendant therefore argues the proposed amendment is futile.
Defendant does not argue that the proposed amendment exhibits undue delay, bad faith or dilatory
motive, or undue prejudice.
When deciding if a proposed amendment is futile, the proper inquiry is whether the
amendment would survive a motion to dismiss. Therefore, the Court does not look to whether
Plaintiff has presented admissible evidence to support his claim, but rather, taking the allegations
as true, whether Plaintiff has stated a plausible claim for relief. See Twombly, 550 U.S. at 555.
Under Wisconsin law, a principal employer of an independent contractor is generally not
liable to the independent contractor’s employees for injuries the employees sustain on the job.
Wagner v. Cont’l Cas. Co., 421 N.W.2d 835, 838 (Wis. 1988) One exception to this general rule is
when the injuries are “caused by the principal employer’s affirmative act of negligence.” Wagner,
421 N.W.2d at 838 (citing Barth v. Downey Co., 239 N.W.2d 92 (Wis. 1976). While the recital of
facts are slight, Plaintiff has alleged that his injury was caused by Defendant’s failure to properly
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secure the railroad ties he was loading, and thus this count of his complaint would survive a motion
to dismiss. Although Defendant has provided affidavits of its employees stating that Defendant did
not supervise, nor have a duty to supervise, Plaintiff’s work, such evidence is more properly
presented in a motion for summary judgment, and not in opposition to a motion for leave to amend
a complaint.
Even if Michigan law applied, the result would be the same. Michigan imputes liability to
a general contractor for injuries sustained by an employee of an independent contractor when:
(1) that the defendant contractor failed to take reasonable steps within its supervisory
and coordinating authority (2) to guard against readily observable and avoidable
dangers (3) that created a high degree of risk to a significant number of workmen (4)
in a common work area.
Ormsby v. Capital Welding, Inc., 684 N.W.2d 320, 327–28 (Mich. 2004) (citing Funk v. Gen. Motors
Corp., 220 N.W.2d 641 (Mich. 1974)). Again, while skirting dangerously close to “[t]hreadbare
recitals of the elements of a cause of action,” Iqbal, 556 U.S. at 678, Plaintiff has alleged facts
which, taken as true, plausibly “raise a right to relief above the speculative level.” Twombly, 550
U.S. at 555.
Therefore, because his proposed amendment would survive a motion to dismiss, the
amendment is not futile, and leave to amend will be granted.
2.

Inherently Dangerous Work Activity
Plaintiff incorporates his other allegations by reference and alleges that
loading of railroad ties onto a flatbed truck is an activity recognizable at the time of
contracting the work as creating a peculiar risk of physical harm that, unless special
precautions and/or great care are taken, such as banding or chocking, is an inherently
dangerous work activity.

(Proposed Am. Compl, Dkt. No. 8-1 at ¶16.) Defendant argues that the amendment is futile because
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Michigan caselaw “vitiate[s] [P]laintiff’s claim that the subject activity was inherently dangerous.”
(Def.’s Resp., Dkt. No. 13 at 6.) Despite the application of Wisconsin law to this case, Defendant
is correct that Plaintiff’s proposed amendment is futile.
As stated above, Wisconsin generally does not allow recovery against a general contractor
by an injured employee of an independent contractor. Another exception to this general rule is when
the activity being performed by the employee is “abnormally dangerous.” Estate of Thompson v.
Jump River Elec. Co-op., 593 N.W.2d 901, 904 (Wis. Ct. App. 1999). An activity is abnormally
dangerous when “‘the risk of harm remains unreasonably high no matter how carefully [the activity]
is undertaken’” Id. (quoting Wagner, 421 N.W.2d at 840). However, “an activity which is inherently
dangerous because of the absence of special precautions is not abnormally dangerous because one
can take steps to minimize the risk of injury.” Thompson, 593 N.W.2d at 904 (citing Wagner, 421
N.W.2d at 840). Plaintiff’s own pleading acknowledges that the risk to him could have been
minimized by the use of special precautions. (See Prop. Am. Compl., Dkt. No. 8-1 ¶16). Therefore,
the subject activity at issue here was not abnormally dangerous as a matter of law. For this reason,
Plaintiff’s proposed amendment could not survive a motion to dismiss, and the amendment is futile.
The result is the same under Michigan law. The Michigan Supreme Court has rejected
Plaintiff’s theory of liability. See DeShambo v. Nielson, 684 N.W.2d 332, 335 (Mich. 2004) (holding
that general contractors will only be liable to third parties injured by inherently dangerous activities
undertaken by an independent contractor, but not to employees of the independent contractor). Thus,
even if Michigan law applied to this case, Plaintiff’s amendment would be futile, because the
proposed count would not survive a motion to dismiss.

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III.
For the foregoing reasons, Defendant’s motion to dismiss will be granted, but its motion for
summary judgment will be denied as moot. Plaintiff’s motion for leave to amend is granted with
respect to Count II of his proposed amended complaint, but denied as futile with respect to Counts
I and III of the proposed amended complaint.
The Court will issue an Order consistent with this Opinion.

Dated: January 10, 2014

/s/ Robert Holmes Bell
ROBERT HOLMES BELL
UNITED STATES DISTRICT JUDGE

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