Allison et al v. Smoot Enterprises, Inc et al

Filing 124

OPINION AND ORDER: The Court GRANTS Plaintiffs Partial Motion for Summary Judgment 50 and DENIES Horizon-Defendants Motion to Bifurcate Punitive Damages 58 . (See 9-page opinion and order for more information.) Signed on 4/12/19 by Magistrate Judge Patricia Sullivan. (dsg)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PENDLETON DIVISION

MATTHEW ALLISON, individual;
and TIM NAY as the personal
representative for the ESTATE OF
SARA E. ALLISON,

Case No. 2:17-cv-01598-SU
OPINION
AND ORDER

Plaintiffs,
v.
SMOOT ENTERPRISES INC., dba
Smoot Brothers Transportation; JAMES
DECOU; PETER BARNES; HORIZON
TRANSPORT, INC.; and JONATHAN
HOGABOOM,
Defendants.
_________________________________________
SULLIVAN, United States Magistrate Judge:
There are two motions before me: Plaintiffs’ Motion for Partial Summary
Judgement and

defendant Horizon Transport’s and Mr. Hogaboom’s (“Horizon-

Defendants”) Motion to Bifurcate Punitive Damages. Mr. Decou, Mr. Barnes, and

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Smoot Enterprises (“Smoot-Defendants”) have not filed any responsive pleadings
with respect to these motions.
For the following reasons, the Court GRANTS Plaintiffs’ Partial Motion for
Summary Judgment (Docket No. 50) and DENIES Horizon-Defendants’ Motion to
Bifurcate Punitive Damages (Docket No. 58). Thus, the Court does not need oral
argument from the parties.
I.

Partial Motion for Summary Judgement
Plaintiffs have filed a Motion for Partial Summary Judgment (Docket No. 50)

on the issue of whether Horizon is vicariously liable for the negligence of Hogaboom,
its employee. Horizon-Defendants stipulate that Horizon will be vicariously liable for
any compensatory damage award against Hogaboom but dispute whether vicarious
liability extends to punitive damages. Since Horizon-Defendants concede vicarious
liability for the purposes of establishing compensatory damages, the only remaining
issue on summary judgement is whether vicarious liability should extend to punitive
damages.
Summary judgment is appropriate if “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(a). The moving party has the burden of establishing the absence of a genuine
issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving
party shows the absence of a genuine issue of material fact, the nonmoving party
must go beyond the pleadings and identify facts which show a genuine issue for
trial. Id. at 324. “Summary judgment is inappropriate if reasonable jurors, drawing

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all inferences in favor of the nonmoving party, could return a verdict in the
nonmoving party’s favor.” Diaz v. Eagle Produce Ltd P’ship, 521 F.3d 1201, 1207 (9th
Cir. 2008).
Horizon-Defendants argue that, in Oregon, the mere existence of an agency
relationship is not sufficient to establish principal liability with respect to punitive
damages—they are only appropriate if the principal authorized or ratified the
tortious acts of the agent. Plaintiffs disagree and point to two cases in support of the
proposition that vicarious liability can exist for punitive damages as long as the
employee was acting within the scope of their employment—even without proving
ratification or authorization.
Plaintiffs’ first case is Stroud v. Denny’s Restaurant, Inc. 532 P.2d 790 (Or.
1975). Plaintiffs cite that case for the proposition that an employer is vicariously
liable for punitive damages arising from the wrongful actions of its employee if the
employee acts within the scope of his employment. 532 P.2d. at 793. Defendants
seemingly concede that Stroud’s holding indicates that ratification or authorization
are not prerequisites for vicarious liability. But they argue that Stroud conflicts with
the clear language of the applicable statutes, is distinguishable in a way that supports
Horizon, and is inconsistent with previous and subsequent case law.
I agree with Plaintiffs. In Johannesen v. Salem Hospital, the Oregon Supreme
Court revisited Stroud’s holding. 336 Or. 211, 219 (2003). In that case, the defendant
argued it could not be vicariously liable for punitive damages based on the conduct of
another without evidence of fault on its part. Id. The court noted that it had

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“considered and rejected that theory” in Stroud and “perceive[d] no reason to revisit
[Stroud] in this case.” Id. It is irrelevant whether Stroud conflicts with previous case
law. The Oregon Supreme Court is free to depart from prior precedent and the fact
that Stroud was again considered in Johannesen and left intact is probative. While
Horizon-Defendants state that Stroud is inconsistent with case law that came after
it, they cite no cases subsequent to Johannesen, a 2003 case, which evidences a
departure from Stroud’s rule.
Horizon-Defendants also argue that Stroud’s holding is inconsistent with the
language of the relevant punitive damages statutes: ORS 31.725 and 31.730.
Specifically, they argue that under subsection (1) of ORS 31.730, punitive damages
are not recoverable unless the plaintiff establishes that the party against whom they
are sought has acted with the requisite degree of culpability. But that statute says
nothing of vicarious liability for punitive damages, and thus provides no support for
the rule that Horizon-Defendants want this court to embrace, i.e., that vicarious
liability for punitive damages requires evidence of authorization or ratification on the
principal’s part.
The Court is therefore left to apply the rule in Stroud to the present case.
Namely, that if an agent commits a tort within the scope of his employment that
renders a corporation liable for compensatory damages, and if the agent’s act renders
him liable for punitive damages, then the corporation is likewise liable for punitive
damages. Stroud, 532 P.2d at 793. Horizon-Defendants concede that they would be
vicariously liable for any compensatory damages, and under Stroud, this makes them

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potentially vicariously liable for any punitive damages. There is no evidence that the
Oregon Supreme Court has departed from the rule in Stroud so this Court is left with
no choice but to apply it faithfully. Plaintiffs’ motion is therefore granted.
II.

Motion to Bifurcate
Horizon-Defendants have filed a Motion to Bifurcate Punitive Damages

(Docket No. 58).
The decision on whether to bifurcate a trial is subject to the discretion of the
district court. See Hangarter v. Provident Life & Accident Ins. Co., 373 F.3d 998, 1021
(9th Cir. 2004). The Federal Rules of Civil Procedure allow district courts to order a
separate trial of one or more separate issues, claims, crossclaims, counterclaims, or
third-party claims for convenience, to avoid prejudice, or to expedite and economize
the trial. Fed. R. Civ. P. 42(b). The moving party has the burden to prove that
bifurcation is appropriate. Benson Tower Condo. Owners Ass’n v. Victaulic Co., 150
F. Supp. 3d 1184, 1208 (D. Or. 2015) (citing Clark v. I.R.S., 772 F. Supp. 2d 1265,
1269 (D. Haw. 2009)). The court has broad, discretionary authority to bifurcate
claims or issues. Hirst v. Gertzen, 676 F.2d 1252, 1261 (9th Cir. 1982).
The Horizon defendants make two arguments in favor of bifurcation: (A)
bifurcation will avoid undue prejudice and (B) it will promote judicial economy.
Neither argument is persuasive.
A.

Undue Prejudice

Horizon-Defendants argue that bifurcation will avoid the risk that evidence
submitted in support of punitive damages will influence the jury’s liability decision,

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and thereby unfairly prejudice Horizon-Defendants. But compensatory damages and
punitive damages issues are routinely tried together in the Ninth Circuit. Hangarter
v. Provident Life and Acc. Ins. Co., 373 F.3d 998, 1021 (9th Cir. 2004) (“[S]ince the
evidence usually overlaps substantially, the normal procedure is to try compensatory
and punitive damage claims together with appropriate [jury] instructions.”) (internal
quotation marks and citation omitted). “Absent some experience demonstrating the
worth of bifurcation, ‘separation of issues for trial is not to be routinely ordered.’”
Hamm v. Am. Home Prods. Corp., 888 F. Supp. 1037, 1039 (E.D. Cal. 1995), citing,
Advisory Committee Notes to the 1966 Amendment to Fed. R. Civ. P. 42(b)).
Here, the risks that Horizon-Defendants are concerned with are not unique to
this trial—they are general concerns with trying the issues of general liability and
punitive damages together. For example, Horizon-Defendants argue that a single
trial will enable Plaintiffs to introduce evidence that may be irrelevant for proving
liability and an entitlement to compensatory damages, but relevant to establishing
punitive damages.

Specifically, Horizon points to the fact that evidence of a

defendants’ “ability to pay” is generally inadmissible to prove liability but can be
admissible for the determination of punitive damages.
But Horizon-Defendants’ concern is at best a general criticism of combining
the issues of liability and punitive damages together—an insufficient reason for this
Court to bifurcate—and further ignores the prejudicial effects of bifurcation on other
parties.

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As explained above, juries are generally capable of separating out the issues of
liability that gives rise to compensatory damages and conduct that warrants punitive
damages. In Hamm, for example, the district court considered bifurcating the issue
of a defendant’s wealth from the rest of the trial. It considered an argument similar
to the one put forward by Horizon-Defendants; namely, that defendants will be
prejudiced if information about their finances is intermingled with evidence on the
issue of liability. The district court explained that its experience “does not support
such a dark view of juror competence [and] any concerns about potential prejudice [is
addressable] with appropriate limiting instructions.” I find the same to be true here.
The issue of punitive damages is routinely tried with issues of general liability in the
Ninth Circuit. Horizon-Defendants don’t provide a unique reason that the jury in
this case will be unable to separate the two issues, or why mitigating instructions are
not a sufficient safeguard in this case, as they would be in most others.
Finally, moving to bifurcate on the eve of trial is particularly prejudicial to the
court and other parties. Horizon-Defendants’ reasons for bifurcating the trial were
as present months ago as they are now. Any serious bifurcation request should likely
have been brought long ago and Horizon-Defendants’ concerns regarding undue
prejudice are unpersuasive. Thus, the theoretical risk of prejudice to them does not
warrant bifurcating the trial.
B.

Judicial Economy

Horizon-Defendants further argue that bifurcation will allow the jury to decide
the dispositive issue of liability and thereby avoid the unnecessary hearing of

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punitive damages evidence. Specifically, Horizon-Defendants argue that if the jury
finds for Horizon and Hogaboom on the underlying cause of action, it will save judicial
resources by making evidence presented in support of punitive damages unnecessary.
While Horizon is correct that Rule 42(b) allows this Court to order bifurcation
based solely on the factors of convenience and judicial economy, see Jinro Am., Inc. v.
Secure Invs., Inc., 266 F.3d 993, 998 (9th Cir. 2001), this case does not provide
sufficient efficiency benefits, if any at all, to justify a second trial.
Here, there is substantial overlap between the evidence for proving general
liability and an entitlement to punitive damages.

For example, the evidence

supporting Plaintiffs’ negligence claims concerns the four commercial drivers’ actions
on the same stretch of Oregon road. This evidence is also the basis for Plaintiffs’
punitive damages claims, from which a jury could infer the requisite recklessness and
conscious indifference to the safety of Plaintiffs.

In this case, bifurcating will

substantially lengthen the trial and will require separate opening statements, closing
arguments, and deliberations, and likely involve many of the same witnesses.
Additionally, bifurcation is made less worthwhile by the fact that Smoot-Defendants
have already stipulated to Mr. DeCou’s negligence and their vicarious liability. Thus,
the core issue with respect to Horizon-Defendants is whether their conduct rises to a
level of general liability and whether it further warrants punitive damages—but in
either case, the same conduct is at issue. An unspecified chance that the jury will
find Horizon liability-free is not a sufficient benefit to warrant an independent trial.

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In this case, then, bifurcation seems unlikely to yield substantial judicial economy
benefits, if any. This motion is therefore denied.
CONCLUSION
For these reasons, the Court GRANTS Plaintiffs’ Partial Motion for Summary
Judgment (Docket No. 50) and DENIES Horizon-Defendants’ Motion to Bifurcate
Punitive Damages (Docket No. 58).
IT IS SO ORDERED.
DATED this 12th day of April, 2019.
/s/ Patricia Sullivan
PATRICIA SULLIVAN
United States Magistrate Judge

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