Intercargo Ins. Co. v. Burlington N. Santa Fe R.R.

• Decision Date: 28 September 2001
• Docket Number: No. CV FMC 99-2372.,CV FMC 99-2372.
• Court: U.S. District Court — Central District of California
• Parties: INTERCARGO INSURANCE COMPANY, Plaintiff, v. BURLINGTON NORTHERN SANTA FE RAILROAD, et al., Defendants.

185 F.Supp.2d 1103

INTERCARGO INSURANCE COMPANY, Plaintiff, v. BURLINGTON NORTHERN SANTA FE RAILROAD, et al., Defendants.

No. CV FMC 99-2372.

United States District Court, C.D. California.

September 28, 2001.

COPYRIGHT MATERIAL OMITTED

Stephen L. Bucklin, Michael S. McDaniel, Countyman & McDaniel, Los Angeles, CA, for plaintiff.

Leslie G. McMurray, Leslie G. McMurray Law Offices, Valley Village, CA, Bruce M. Cohen, Cohen & Lord, Marina Del Rey, CA, Thomas K. Rourke, Thomas K. Rourke Law Offices, Los Angeles, CA, Tonya L. Sullivan, Houston, TX, Michael M. Bergfeld, Paul J. Gutierrez, Cummins & White, Newport Beach, CA, Michael W. Lodwick, Haight Brown & Bonesteel, Santa Ana, CA, Stephen C. Bass, Berk Williams & Sorensen, San Francisco, CA, for defendants.

ORDER DENYING DEFENDANTS' MOTIONS TO STRIKE PLAINTIFF'S EXPERT WITNESS DESIGNATION; ORDER DENYING DEFENDANTS' MOTIONS TO DESIGNATE REBUTTAL EXPERT WITNESSES; ORDER COMPELLING PLAINTIFF TO MAKE ADDITIONAL DISCLOSURES PURSUANT TO FED. R. CIV. P. 26(A)(2)(B); ORDER GRANTING IN PART AND DENYING IN PART CROSS MOTIONS FOR SUMMARY JUDGMENT

COOPER, District Judge.

This matter is before the Court on defendants' motions regarding plaintiff's expert witness designations, as well as the parties' cross motions for summary judgment. The Court deems these motions appropriate for decision without oral argument. See Fed.R.Civ.P. 78; Local Rule 7.11. Accordingly, the hearing set for October 1, 2001, is removed from the Court's calendar.

For the reasons stated below, defendants' motion to strike plaintiff's expert witness designation and defendants' alternative motion to designate rebuttal experts are HEREBY DENIED. For the reasons and in the manner set forth below, the parties' motions for summary judgment are HEREBY GRANTED IN PART AND DENIED IN PART.

I. Introduction

The present action arises out of the theft of a shipment of television sets and video cameras ("the shipment"). The shipment was carried via rail by defendant Burlington Northern Santa Fe Railroad ("BNSF")¹ to a rail yard ("Hobart Yard" or "the yard") owned by BNSF, and operated by defendant ITS. Defendant Esco Transportation is the trucking company that was to pick up the shipment from the yard. The theft was accomplished by a driver who was either an Esco employee, or a driver who impersonated an Esco employee. The owner of the shipment, Panasonic, filed a claim with its insurance company, plaintiff Intercargo Insurance Company ("Intercargo" or "plaintiff"), which paid Panasonic over $231,000. Panasonic assigned to Intercargo its rights to recover from defendants. Plaintiff has asserted state-law claims based on damage to cargo, negligence, breach of contract, and breach of bailment. BNSF and ITS have both asserted cross claims, and BNSF has asserted third-party claims. These cross claims and third-party claims are based on indemnity, apportionment of fault, breach of contract, and negligence.

At its essence, the issue before the Court is which, if any, defendant or defendants may be liable to plaintiff as a result of the stolen shipment. First, however, the Court will resolve the parties' disputed issue regarding the designation of expert witnesses.

II. Expert Witnesses

Expert witness designations are governed by Fed.R.Civ.P. 26(a)(B)(2). Expert witness designations must be accompanied by written reports prepared and signed by the expert. Id. The report must contain 1) the expert's opinions and basis for those opinions, 2) the data and information considered by the expert in arriving at these opinions, 3) the exhibits used to support opinions, and 4) a description of the qualifications of the expert, a list of publications of the expert, the compensation to be paid to the expert, and a list of prior testimony.

Plaintiff designated two experts about 15 months ago. The two reports are not signed by the experts, and are identical in their substantive opinions. This similarity supports defendants contention that the reports were prepared by plaintiff's attorneys rather than the experts themselves. The exhibits supporting the experts' opinions were not attached to the reports, and one expert did not attach a list of qualifications, publications, testimony, or compensation to be paid. This expert did provide a curriculum vitae a few days after the report was disclosed.

It is evident to the Court that the reports are not in compliance with Rule 26(a)(2)(B) in many ways. As a result, defendants argue that the experts' reports should be stricken. Alternatively, Defendants would move to designate rebuttal expert witnesses.

Plaintiff argues that defendants simply missed the expert witness designation date—a date that was extended more than once. Having missed their deadline, defendants now seek to use the deficiencies in plaintiff's experts' reports an excuse to designate their own experts well after the time in which to do so has expired. The Court agrees.

Defendants' remedy for an inadequate expert report is to seek an order compelling adequate discovery. Exclusion of expert report or testimony is appropriate only when the failure to provide an adequate expert report is in violation of an order compelling discovery. See Rutter Group, Cal. Prac. Guide, Fed. Civ. P. Before Trial, §§ 11:209.5-9, 11:918-919 (2001).

Defendants did not seek to compel a more adequate disclosure within a reasonable time of service of the expert reports. Accordingly, defendants may not now seek to exclude plaintiff's experts. Additionally, the Court is persuaded by plaintiffs' argument that defendants now attempt to exploit plaintiff's failure to comply with Fed.R.Civ.P. 26(a)(2)(B) in order to designate rebuttal experts that should have been designated long ago. Therefore, the Court HEREBY DENIES the motions to strike expert witness designation, and HEREBY DENIES the alternative motions to designate rebuttal experts as well. Plaintiff is HEREBY ORDERED to, within ten days of the entry of this order, take all action and make all supplemental disclosures necessary to ensure its experts' reports are in full compliance with Fed.R.Civ.P. 26(a)(2)(B).

III. Summary Judgment Standard

Summary judgment is proper only where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Whether a fact is material is determined by looking to the governing substantive law; if the fact may affect the outcome, it is material. Id. at 248, 106 S.Ct. 2505.

If the moving party meets its initial burden, the "adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). "[M]ere disagreement or the bald assertion that a genuine issue of material fact exists does not preclude the use of summary judgment." Harper v. Wallingford, 877 F.2d 728, 731 (9th Cir.1989).

The Court construes all evidence and reasonable inferences drawn therefrom in favor of the non-moving party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505; Brookside Assocs. v. Rifkin, 49 F.3d 490, 492-93 (9th Cir.1995).

IV. Uncontroverted Facts

Third-party defendant Hub Group ("Hub") arranged for shipment of the goods from its origin to its destination in Cypress, California. The shipment's journey involved a number of different carriers. Hub hired a trucking company to take the shipment to a rail yard in Chicago, where it was then transported by rail (by defendant BNSF) to the Hobart Yard. From there, the shipment was to be picked up by defendant Esco and trucked to Cypress, California.²

BNSF contracted to carry the shipment and incorporated its own intermodal rules and policies. The rules and policies enable the shipper to select from a variety of types of shipment arrangements. These arrangements had varying degrees of protection against risk of loss or damage of cargo; not surprisingly, cost of shipment varied according to the protection against risk or loss or damage. Hub had notice of the option to ship with full Carmack Amendment liability protection, as evidenced by a blanket contract entered into by Hub and BNSF, but did not elect to ship with this level of protection; instead, the shipment at issue was shipped under code "25," which is a "ramp to ramp" shipment.³ The shipment left Chicago in a sealed container in good condition, and it was placed on the ramp in Hobart Yard in unchanged condition.

BNSF owns Hobart Yard, but contracts with defendant In-Terminal Services ("ITS") to operate the yard. The yard is approximately 200 acres in size, and approximately 700,000 shipments are loaded and unloaded there each year. ITS's duties in operating the yard include providing checkpoint services—services designed to ensure that only those authorized to do so leave the yard, through its many gates, with shipments that are received in the yard.

ITS is required by its contract with BNSF to conduct background checks on its employees, to not hire any individuals that have been convicted of theft offenses, and to indemnify BNSF in the event that theft results from an ITS failure to adhere to proper checkpoint procedures.

In March 1997, when the shipment was stolen, James Hensley was an outgate inspector with ITS. Mr. Hensley has a long record of incarceration; he estimates he has several hundred criminal convictions.⁴ Although Hensley indicated on his...