103 Investors I, L.P. v. Square D Co., 05-3385.

Citation470 F.3d 985
Decision Date12 December 2006
Docket NumberNo. 05-3385.,05-3385.
Parties103 INVESTORS I, L.P., Plaintiff-Appellant, v. SQUARE D COMPANY, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)

Submitted on the briefs:* David R. Buchanan, Dennis J. Cassidy, Brown & James, P.C., Kansas City, MO, for Plaintiff-Appellant.

Thomas N. Sterchi, James S. Kreamer, Baker, Sterchi, Cowden & Rice, L.L.C., Overland Park, KS, for Defendant-Appellee.

Before TYMKOVICH, ANDERSON, and BALDOCK, Circuit Judges.

TYMKOVICH, Circuit Judge.

Plaintiff 103 Investors I, L.P. appeals from the district court's decision entering judgment in favor of defendant Square D Company on plaintiff's products liability claims. Plaintiff argues that the district court: (1) abused its discretion by granting defendant's spoliation motion; (2) erred in granting defendant's motion for judgment as a matter of law on the failure to warn claim; (3) abused its discretion by excluding the expert testimony of Carl Martin; (4) erred by granting summary judgment in favor of defendant on the manufacturing defect claim; and (5) abused its discretion by sustaining defendant's objection to the playing of the videotaped deposition of Ron Rush. We have jurisdiction under 28 U.S.C. § 1291 and we affirm.

I. Background

In March 2001, a fire caused damage to an office building that plaintiff owned. Plantiff investigated the fire and ultimately attributed the cause of the fire to a busway malfunction. A busway is a system of four insulated aluminum bars in aluminum casing that run from the basement to the top floor and distribute electricity to the floors. Defendant manufactured the busway and another company installed it in 1978. Plaintiff brought an action asserting strict liability and negligence based on manufacturing defects and failure to warn.

Plaintiff advanced alternate theories for recovery. Plaintiff argued that the presence of contaminants in the busway indicated that there was a manufacturing defect. Alternatively, plaintiff argued that if the contaminants had infiltrated the busway through water intrusion after it left defendant's control, then defendant had failed to place a warning label on the product instructing owners to keep the high-voltage busway free of water and other contaminants.

After discovery, defendant filed for summary judgment. The district court granted the motion based on its rejection of plaintiff's expert reports as untimely. Plaintiff appealed and this court reversed the district court's decision because the timeliness of plaintiff's report had been unfairly affected by extensions that had been granted to defendant without a corresponding extension for plaintiff. See 103 Investors I, L.P. v. Square D Co., 372 F.3d 1213, 1216-17 (10th Cir.2004).

On remand, defendant again filed a motion for summary judgment and for exclusion of one of plaintiff's experts, Carl Martin, under Rule 702 of the Federal Rules of Evidence and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). After the district court held a Daubert hearing, it granted defendant's motion to exclude Mr. Martin's testimony and granted defendant's motion for summary judgment on the manufacturing defect and negligence claims. The district court denied defendant's motion for summary judgment on the failure to warn claim.

Prior to trial on the failure to warn claim, defendant filed a motion for sanctions for spoliation of evidence because plaintiff had failed to preserve all but a small section of the busway. The case proceeded to trial on the sole issue of whether the warning label defendant placed on its busways was placed on the busway in question when it left defendant's control in 1978. Plaintiff elicited testimony from Gregory Goens, the building maintenance supervisor, who testified that he had not seen a warning on the busway. His testimony was controverted by Ron Rush, defendant's senior staff engineer, who testified that in the manufacturing of the busways, defendant placed a warning label on specific components of the busway assembly and on the installation instructions.

At the close of evidence, defendant moved for judgment as a matter of law on the basis that there was no evidence the busway lacked a warning label when it left defendant's control. At that point, the district court granted defendant's motion for sanctions for spoliation of evidence and struck Mr. Goens' testimony. The district court then granted the motion for judgment as a matter of law, concluding that even with Mr. Goens' testimony there remained an absence of evidence on whether a warning label was missing from the busway at the time it left defendant's control in 1978. This appeal followed.

II. Discussion
A. Spoliation Sanction

Plaintiff first argues that the district court erred in granting defendant's motion for spoliation and striking the testimony of Mr. Goens. In the motion, defendant asserted that plaintiff's investigators had access to the busway after the fire and were able to inspect and evaluate it. Then without notice to the defendant, plaintiff threw away fifty to sixty feet of the busway and saved only four feet. The portion of the busway that was saved was not a piece that would have contained a warning. Defendant argued that plaintiff had a duty to preserve the busway and that defendant was prejudiced by plaintiff's actions because there was no way for defendant to defend against the claim that the busway lacked a warning. The district court agreed and struck Mr. Goens' testimony as a sanction for the spoliation.

Plaintiff asserts that the district court should not have granted defendant's motion without a showing that plaintiff was acting in bad faith when it destroyed the majority of the busway after the fire, relying on Aramburu v. Boeing Co., 112 F.3d 1398 (10th Cir.1997). In Aramburu, however, we did not reach the question of what kinds of sanctions could be used for spoliation generally. Instead, we focused solely on the use of an adverse inference jury instruction as a spoliation sanction. We noted that "the general rule is that bad faith destruction of a document relevant to proof of an issue at trial gives rise to an inference that production of the document would have been unfavorable to the party responsible for its destruction." Id. at 1407.

In its ruling on the spoliation motion, the district court cited to Aramburu as guiding precedent and explained that an adverse-inference jury instruction would not be appropriate because defendant had not shown that plaintiff acted in bad faith. To support its decision to impose a different type of spoliation sanction without a showing of bad faith, the district court cited to an unpublished decision from this court, Jordan F. Miller Corp. v. Mid-Continent Aircraft Service, Inc., No. 97-5089, 1998 WL 68879 (10th Cir. Feb.20 1998). In that case, we noted that "[c]ourts have not generally imposed a similar requirement of bad faith when considering other sanctions for the spoliation of evidence." Id. at *4 (citing Allstate Ins. Co. v. Sunbeam Corp., 53 F.3d 804, 806-07 (7th Cir.1995); Dillon v. Nissan Motor Co., 986 F.2d 263, 267-69 (8th Cir.1993); Unigard Sec. Ins. Co. v. Lakewood Eng'g & Mfg. Corp., 982 F.2d 363, 368-69 (9th Cir.1992)). We then upheld the dismissal of Mr. Miller's damages claim as a spoliation sanction without a showing of bad faith on the part of Mr. Miller. Id. at *7.

Defendant was not required to show that plaintiff acted in bad faith in destroying the evidence in order to prevail on its request for spoliation sanctions. The district court found that plaintiff had a duty to preserve the evidence because it knew or should have known that litigation was imminent, and defendant was prejudiced by the destruction of the evidence because there was no substitute for a direct visual examination of the busway. The district court also imposed the least severe sanction that would be appropriate to balance out the prejudice to the defendant. We conclude that the district court did not abuse its discretion in granting defendant's motion for sanctions and striking Mr. Goens' testimony.

B. Judgment as a Matter of Law on the Failure to Warn Claim

Plaintiff next argues that the district court erred when it sustained defendant's motion for judgment as a matter of law on the failure to warn claim. It contends there was sufficient evidence from which a reasonable juror could have concluded that all the elements of a prima facie case for strict liability were met. In order to establish a prima facie case for negligence or strict liability in a Kansas products liability case, plaintiff must produce evidence that shows: "(1) the injury resulted from a condition of the product; (2) the condition was an unreasonably dangerous one; and (3) the condition existed at the time it left defendant's control." Messer v. Amway Corp., 210 F.Supp.2d 1217, 1227 (D.Kan.2002) (citing Jenkins v. Amchem Prods. Inc., 256 Kan. 602, 886 P.2d 869, 886 (Kan.1994)). Plaintiff asserted at trial that defendant had failed to include a warning label on the busway regarding the risks of water infiltration into the busway. Defendant offered testimony that it did place such a warning label on the busway when it was manufactured.

In ruling in favor of the defendant on its motion for judgment as a matter of law, the district court concluded that there was "a complete absence of proof on the issue of whether the warnings were missing from the bus duct system at the time it left the control of the Square D Company." Aplt.App. at 18. The court noted that it would reach the same conclusion even if the testimony of Mr. Goens was considered by the jury.

Plaintiff did not own the building when the busway was installed and it failed to elicit testimony from anyone who was present when the busway left the control of defendant and was installed in the building. Although Mr. Goens testified that h...

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