Asea, Inc. v. Southern Pac. Transp. Co.

Citation669 F.2d 1242
Decision Date08 March 1982
Docket NumberNo. 80-5341,80-5341
PartiesASEA, INC., Plaintiff-Appellee, v. SOUTHERN PACIFIC TRANSPORTATION COMPANY, a corporation, and Harbor Belt Line, a partnership, Defendants-Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Lila L. Cox, Los Angeles, Cal., for defendants-appellants.

Francis J. MacLaughlin, Lillick, McHose & Charles, Los Angeles, Cal., for plaintiff-appellee.

Appeal from the United States District Court for the Central District of California.

Before WRIGHT and WALLACE, Circuit Judges, and EAST, * District Judge.

WALLACE, Circuit Judge:

Southern Pacific Transportation Co. and Harbor Belt Line (the railroads) appeal from a judgment entered in favor of Asea, Inc. (Asea) and from the denial of their motion for a new trial. The railroads' principal contention in this appeal is that the district court erred in ordering admitted certain matters the railroads failed to admit or deny in response to requests for admissions served by Asea. We affirm in part and vacate and remand in part.

I

Asea, a New York corporation, is the sole United States distributor of electrical transformers manufactured in Sweden by Asea A/B, a Swedish corporation. 1 Asea sold a transformer to the Los Angeles Department of Water & Power. The transformer was transported by merchant vessel from Sweden to the Los Angeles harbor. Pursuant to their contract with Asea, the railroads then took custody of the transformer and shipped it to North Hollywood, California. Upon its arrival, the transformer was inspected by representatives of the railroads and Asea. It was found that the transformer had shifted on the railroad car during transit despite being shored and braced. An electrical check revealed the transformer had shorted. Asea had installed an "impact recorder" on the transformer to measure any impact that might occur during rail carriage. Inspection of the impact recorder tape indicated that, while the transformer was in the custody of the railroads, it had suffered an impact measured at 1.8 on the recorder scale, equivalent to an impact at a speed in excess of 5 miles per hour. Internal inspection of the transformer revealed that it had sustained substantial damage during transit.

On July 10, 1978, Asea filed an action for damages in the district court, invoking its diversity jurisdiction pursuant to 28 U.S.C. § 1332(a), relying on theories of negligence, breach of implied warranty, and violation of California Civil Code § 2194 (inland carrier's liability for loss). The parties engaged in extensive discovery for over one year. On January 22, 1979, Asea served a series of requests for admissions pursuant to Fed.R.Civ.P. 36(a). 2 Those of primary importance in this appeal related essentially to the condition of the transformer at the time the railroads took custody of it, the impact revealed on the impact recorder tape, the location of the transformer at the time the impact occurred, the short discovered in the transformer after its arrival and the reasonable cost of repairing the transformer and returning it to the Los Angeles Department of Water & Power. The district court allowed additional time to reply. To eighteen of these requests, the railroads responded on May 24, 1979:

Answering party cannot admit or deny. Said party has made reasonable inquiry. Information known or readily obtainable to this date is not complete. Investigation continues.

Each of the requests for admissions was accompanied by an interrogatory which asked that if the railroads' response was anything other than an unqualified admission, they should state the facts, documents and witnesses upon which the response was based. The railroads answered these interrogatories by insisting they were "(n)ot applicable."

Discovery continued following a pretrial conference held in June, 1979. As a result of further depositions of certain railroad employees, Asea became convinced that the railroads had known the actual cause of the impact on the transformer for many months, and therefore could have admitted or denied the requests for admissions. On December 3, 1979, five weeks prior to trial, Asea moved to have the requests ordered admitted. At the hearing on the motion, the railroads claimed that their responses were proper by authority of Rule 36(a) because they did not have any firsthand information. The district court inquired whether the railroads had "subsequently come into more information that (would) enable (them) to supply more appropriate answers?" Counsel for the railroads responded, "We may possibly, Your Honor," but insisted that "the answers still stand." The railroads claimed the information relevant to the requests for admissions was "wholly within the hands of (Asea)." The court replied:

(T)hat's what I hear all the time .... (T)his case has been here so many times, and you are a constant complainer about the inadequacy of the other side. Now it appears that you're standing behind that same shield yourself saying that you just don't have the information to provide.

The district court took the matter under submission and subsequently granted Asea's motion to order the matters admitted. The railroads' later motion to have these admissions withdrawn was denied.

II

The railroads contend their responses to the requests for admissions satisfied the requirements of Fed.R.Civ.P. 36(a). In the alternative, they argue that the sanction for failure of a party to make reasonable inquiry prior to answering a request for admission lies in an award of the expenses incurred in proving the fact at trial, pursuant to Fed.R.Civ.P. 37(c), and not in deeming the matter admitted. We have considered this issue carefully because it apparently is a question of first impression. We conclude, however, that a district court may, under proper circumstances and in its discretion, order admitted matters which an answering party has failed to admit or deny, where the information known or readily obtainable after reasonable inquiry was sufficient to enable the answering party to admit or deny.

The purpose of Rule 36(a) is to expedite trial by establishing certain material facts as true and thus narrowing the range of issues for trial. Keen v. Detroit Diesel Allison, 569 F.2d 547, 554 (10th Cir. 1978); Webb v. Westinghouse Electric Corp., 81 F.R.D. 431, 436 (E.D.Pa.1978). The Rule was amended in 1970 to adopt the majority view that a party may not refuse to admit or deny a request for admission based upon a lack of personal knowledge if the information relevant to the request is reasonably available to him. 8 C. Wright & A. Miller, Federal Practice and Procedure § 2261, at 731 (1970). As the Advisory Committee's Note explains, the Rule is "in keeping with a basic principle of the discovery rules that a reasonable burden may be imposed on the parties when its discharge will facilitate preparation for trial and ease the trial process." Advisory Committee's Note to Rule 36(a), 48 F.R.D. 531, 533 (1970). The appropriate penalty for a party's failure to discharge that burden, however, is unclear.

Rule 36(a) provides that a matter may be deemed admitted if the answer "does not comply with the requirements of this rule." It is undisputed that failure to answer or object to a proper request for admission is itself an admission: the Rule itself so states. It is also clear that an evasive denial, one that does not "specifically deny the matter," or a response that does not set forth "in detail" the reasons why the answering party cannot truthfully admit or deny the matter, may be deemed an admission. See, e. g., Havenfield Corp. v. H & R Block, Inc., 67 F.R.D. 93, 96-97 (W.D.Mo.1973). Since such a response does not comply with the literal requirements of Rule 36(a), the district court may, in its discretion, deem the matter admitted. The railroads, however, argue that an answer complies with the requirements of Rule 36(a) if it states that the party has insufficient information to admit or deny the matter and that the party has made reasonable inquiry into all readily obtainable information.

The language of Rule 36(a) would indeed permit such a construction. The Rule provides that a party may not give lack of information as a reason for failure to admit or deny "unless he states that he has made reasonable inquiry and that the information known or readily obtainable by him is insufficient to enable him to admit or deny" (emphasis added). The railroads cite in support of this construction Adley Express Co. v. Highway Truck Drivers & Helpers, Local No. 107, 349 F.Supp. 436 (E.D.Pa.1972), where the district court observed that "it would appear that a mere statement in the answer that the answering party has made reasonable inquiry and that the information solicited was insufficient to enable him to admit or deny the requested matter will suffice." Id. at 451-52 (footnote omitted). Their position is further supported by the Advisory Committee's Note, which states:

The revised rule requires only that the answering party make reasonable inquiry and secure such knowledge and information as are readily obtainable by him. In most instances, the investigation will be necessary either to his own case or to preparation for rebuttal. Even when it is not, the information may be close enough at hand to be "readily obtainable." Rule 36 requires only that the party state that he has taken these steps. The sanction for failure of a party to inform himself before he answers lies in the award of costs after trial, as provided in Rule 37(c).

48 F.R.D. at 533 (emphasis added).

We have not been cited to, nor has our review uncovered, any case holding that a response which includes the statement required by Rule 36(a) may nonetheless be deemed an admission. Even when a party's answer does not include such a statement, and thus fails to comply with the literal requirements...

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