By Kathleen Bianco, J.D.
Personal injury to employee takes railroad’s suit out of reach of economic loss doctrine.
A railroad company could pursue claims against the manufacturer of an allegedly defective locomotive seat to recover an amount it had paid as compensation to a railroad employee who was injured when the seat failed, a federal district court in Nebraska determined, finding that sufficient evidence had been presented to establish that the economic loss doctrine did not bar the claims and that the railroad and the manufacturer shared a common liability (BNSF Railway Co. v. Seats, Inc., January 18, 2019, Kopf, R.).
A railroad engineer was injured when the backrest of his locomotive seat broke. He sued his railroad employer under the Federal Employers Liability Act (FELA), claiming that the seat did not comply with federal standards under the Locomotive Inspection Act (LIA). The LIA requires that locomotives, their parts, and appurtenances be "in proper condition and safe to operate without unnecessary danger of personal injury." The LIA confers on railroads a "duty to provide safe equipment," and, as such, facilitates employee recovery. The railroad settled the FELA claim with the engineer and then sued the manufacturer of the locomotive seat to recover the costs of settlement.
The manufacturer moved to dismiss, arguing that the railroad’s claims were preempted by the LIA, among other arguments. In a previous decision, the district court granted the motion to dismiss based on preemption by the LIA without considering the other asserted arguments. On appeal by the railroad, the motion to dismiss was reversed and remanded for further consideration of all arguments put forth for dismissal. Pending before the court in the current case was the manufacturer’s renewed motion to dismiss, which contended that the products liability claims were barred by the economic loss doctrine and that the railroad’s indemnity, contribution, and equitable subrogation claims were not sustainable because the railroad and the manufacturer did not share a common liability.
Products liability claims. The manufacturer’s contention that the railroad’s products liability claims were barred by the economic loss doctrine was unavailing. The economic loss doctrine precludes products liability claims where a defective product causes harm only to itself, unaccompanied by either personal injury or damage to other property. The manufacturer’s assertion that the economic loss doctrine applied because the railroad had not suffered any personal injury or damage to other property caused by the defective seat was rejected by the court because the damages that the railroad sought to recover were the result of personal injuries to an employee. Because the defective seat did not just cause harm to itself, the products liability claims asserted by the railroad were outside the scope of the economic loss doctrine, according to the court. Consequently, the manufacturer’s motion to dismiss the claims was denied.
Indemnity, contribution, or equitable subrogation. As to the indemnity and contribution claims, the manufacturer argued that dismissal was warranted because the railroad and the manufacturer did not share a common liability. The court again rejected this assertion, finding that state law recognizes that a FELA defendant may bring indemnification and contribution actions against third parties. At this stage of the proceeding, the court concluded that the railroad had presented sufficient evidence to state a plausible claim for both equitable indemnity and contribution. Which theory of recovery will ultimately prevail depends upon whether the employee’s injuries are determined to be the full responsibility of the manufacturer or shared between the railroad and the manufacturer. Thus, the manufacturer’s motion for dismissal of the railroad’s claim on this issue was denied.
Finally, as to the equitable subrogation claim, while the court acknowledged that the manufacturer could not be liable to the employee under FELA, there was a common harm for which it might be liable under different grounds or theories of recovery. As such, dismissal of the equitable subrogation claim was not warranted.
The case is No. 4:16C3121.
Attorneys: Andrew D. Weeks (Sattler, Bogen Law Firm) for BNSF Railway Co. Anthony P. Steinike (Quarles, Brady Law Firm) for Seats, Inc.
Companies: BNSF Railway Co.; Seats, Inc.
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