TORTS, RAILROAD & PUNITIVE DAMAGES / Montana Supreme Court breathes life into 32-year-old precedent on punitive damages against a railroad: “Evidence collateral to all other issues in the case nevertheless may be admissible to prove punitive damages”

Runkle v. Burlington Northern, 2013 WL 6740153 (Supreme Court of Montana, 1980). Free copy available here.

Why raise this old case here? The Montana Supreme Court last week issued an opinion in a tort case in which it relied on Runkle v. Burlington Northern for two key propositions of what sort of evidence ought to be admitted on the question of punitive damages against a company or other party who has harmed persons or property (a “tortfeasor”). McEwen v. MCR, LLC, 2012 WL 6740153 (Supreme Court of Montana, December 31, 2012). Free copy available here.

Although last week’s McEwen v. MCR, LLC itself was about a negligence action for contaminating a rancher’s water supply, it relied on Runkle v. Burlington Northern for the proposition that, “evidence collateral to all other issues in the case nevertheless may be admissible to prove punitive damages”:

“In Runkle v. Burlington N., 188 Mont. 286, 613 P.2d 982 (1980), a freight train collided with a vehicle in Troy, Montana, and killed its driver. The decedent’s wife sought punitive damages on the basis that the railroad company had acted wantonly in placing profits ahead of safety considerations. The city council had considered lowering the speed limit on that stretch of railroad from 40 miles per hour to 25 miles per hour. The trial court excluded as irrelevant proposed testimony from a city council member that the railroad had pressured him to vote to maintain the 40 miles per hour speed limit. This Court reversed on the grounds that the excluded evidence potentially could have demonstrated the railroad’s wantonness in support of plaintiff’s claim for punitive damages. Runkle, 188 Mont. at 301, 613 P.2d at 991.”

Who is affected? Companies whose executives or other agents acting on their behalf express themselves with arrogance in some way where such companies’ operations have caused death, injury or harm to property that might incite the emotions of a trial court jury. Victims of such events who have been addressed in this manner by an executive or other agent of company whose operations cause them death, injury or harm to property.

Be careful about your client organization’s executives or other agents expressing themselves on matters of safety in a manner that might sound arrogant or heavy-handed to a jury. 

When I was working as an executive my boss, the company’s president, expressed surprise and amusement about his time in jury duty – remarking about what he viewed as the naiveté and silliness of those with him in the jury room. I cautioned him that – however he viewed them – it would be people like those fellow jurors who would decide 7-, 8- and 9-figure verdicts should lawsuits be brought against the firm for which we both were then working.

Here’s what the court observed about words by a railroad executive that may have been construed as evidencing “wantonness” or “oppressiveness” preceding the circumstances of a fatal accident then being litigated:

 

“Dennis Welch was called. He had been a town councilman at Troy the year before this accident, and as a councilman made a motion at one of the council’s meetings to have the Burlington Northern reduce the speed of its trains to 25 miles per hour through town. Welch was also an employee of the Burlington Northern. The plaintiff offered to prove that while Welch was at work following that council meeting he was called on the telephone by an official of the Burlington Northern who stated, according to Welch:

“… I am not sure of his exact words. I do recall he told me `yes, I see here by your records or by the file that you worked with the railroad since June 4th, 1966 and you have worked for the railroad long enough to know better than to suggest reducing the speed of trains because of the fact that he went on to explain that I believe economic stability of it is costly and so forth.’”

After the conversation with this official, Welch resigned from the town council because, “90% of the reason” was he felt a conflict of interest.

“The District Court excluded this evidence. Plaintiffs had raised the issue of wantonness or oppressiveness as the basis for establishing punitive damages. Clearly, if the railroad in fact had utilized its position as employer to exert a form of duress upon its employee, acting in an official capacity, such evidence might have a bearing in the mind of the jury to demonstrate wantonness or oppressiveness sufficient to establish a basis for punitive damages. Section 27-1-221, MCA. This testimony was admissible on the question of the railroad’s negligence and on the issue of punitive damages.”

Don’t be dismissive of complaints and protests from the public about what they view as dangerous conditions created by one’s client organization:  

In this case the Montana Supreme Court ruled that it was reversible error for the trial court to exclude from evidence testimony and documents tending to show that citizens and officials of the town where the subject grade crossing was located had expressed concern about its safety.

“A further issue with respect to the admission of evidence revolves around the refusal by the District Court of minutes of the town council of Troy and of letters between the town council and various railroad officials concerning the hazards of the crossing.

“Appellants contend that these letters were evidence of the amount and kind of notice that the railroad had respecting the hazardous conditions of the crossing, the need for flashing signals, flagmen, or other safety devices, and were further important in connection with claimed punitive damages to show that the railroad wantonly placed its economic advantage ahead of safety considerations at the crossing.

“The railroad, on the other hand, contends that the testimonial evidence otherwise admitted fully showed the jury that the citizens of the town of Troy were concerned about the hazardous condition, that the town council had passed a resolution relating to a speed limit to be imposed on the trains passing through Troy and that appellants’ contention that the railroad stopped the imposition of a town speed limit on trains by threatening to take the town to court is an unfair contention.

“The District Court had granted a motion in limine to exclude the minutes of the town council as well as the letters because the town had not adopted an ordinance, as distinguished from a resolution, that would have the force and effect of law in imposing a speed limit on trains.

“The record shows that as early as October 1974, the town council had received citizen requests relating to slowing the speed of the train through the town of Troy and the need for other safety devices. Correspondence ensued with the railroad about these matters. The town council passed a resolution, as distinguished from an ordinance, to impose a 25 mile per hour speed limit on the trains. In response, railroad officials met with the town council and offered objections to the speed limits, including the railroad’s need to be competitive. The appellant contends that the speed limit was never enforced, nor an ordinance adopted, because of the threat of the railroad to take the matter to court if necessary.

“The documentary evidence was relevant to these issues. As such, “[a]ll relevant evidence is admissible …” Rule 402, Mont.R.Evid. The minutes of the town council which set forth its “regularly conducted and regularly recorded activities”, Rule 803(8), Mont.R.Evid., are admissible as public records and are excepted from the hearsay rule. Letters between the town council and the railroad, and intercorporate memoranda between railroad officials on the subject matter of the crossing were likewise admissible and relevant to show notice of the claimed hazardous conditions, and the intent of the railroad with respect to the same. Of course, letters from the town council or town officials to persons other than railroad personnel (for example, to senators or other elected public officials) would not be admissible unless the railroad personnel participated in the correspondence. The intercorporate memoranda are relevant as possible admissions by a party opponent within the meaning of Rule 801(d)(2), Mont.R.Evid., and the letters are within the business records exception to the hearsay rule, Rule 803(6), Mont.R.Evid.

“The fact that an ordinance was not passed, which would have a binding effect on the railroad, does not prevent the admission of documentary evidence which would establish the resolution of the town council, and how that brought to the notice of the railroad officials the claimed hazardous conditions. These documents go to the issue of ordinary care to be exercised by the railroad and may indeed go to the issue of punitive damages, as an indication of wantonness or oppressiveness.

“Whether the railroad had notice of the hazardous condition to the extent that in the exercise of ordinary care it should have moved to reduce or eliminate the hazards, and whether it acted wantonly or oppressively in not so moving, were fact issues which existed independently of the minutes and the council letters. Accordingly, we are not called upon to apply the best evidence rule (See 29 Am.Jur.2d Evidence § 449, at 510.) Nonetheless, the documentary evidence here was superior to the testimonial evidence, particularly of those witnesses who would admit only that there was “some concern” or “some discussion” as to the hazardous conditions being brought to the railroad’s attention, and the need for a slowdown of the train or additional warning devices.”