Kirk v. Schaeffler Grp. USA, Inc., 16-3417

Citation887 F.3d 376
Decision Date05 April 2018
Docket NumberNo. 16-3417,16-3417
Parties Jodelle L. KIRK, Plaintiff-Appellee v. SCHAEFFLER GROUP USA, INC.; FAG Bearings, LLC, Defendants-Appellants
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

Counsel who presented argument on behalf of the appellant was Richard Salgado, of Dallas, TX. The following attorney(s) appeared on the appellant brief; Adam Pierson, of Dallas, TX, Gregory Thomas Wolf, of Kansas City, MO, Wade P.K. Carr, of Kansas City, MO, and Gary M. Roberts, of Sacramento, CA.

Counsel who presented argument on behalf of the appellee was Kenneth Blair McClain, of Independence, MO. The following attorney(s) appeared on the appellee brief; Jonathan M Soper, of Independence, MO.

Before LOKEN, ARNOLD, and SHEPHERD, Circuit Judges.

LOKEN, Circuit Judge.

From 1973 to 1982, FAG Bearings Corporation released thousands of gallons of trichloroethylene (TCE), a volatile organic compound now classified as a hazardous substance, at its manufacturing facility in Joplin, Missouri. In 1991, the Missouri Department of Health and the Environmental Protection Agency (EPA) detected TCE contamination in residential wells in the Villages of Silver Creek and Saginaw, communities south of the FAG Bearings plant. Subsequent litigation established that FAG Bearings was solely responsible for the TCE contamination in Silver Creek and Saginaw. FAG Bearings began cooperating with EPA and Missouri Department of Health remediation, efforts that continued after Schaeffler Group USA acquired the facility in 2005.

Janice and Stan Kirk moved to Silver Creek in 1987. Their daughter, plaintiff Jodelle Kirk (Kirk), was born the following year and spent her entire childhood in Silver Creek. In 2002, Kirk was diagnosed with autoimmune hepatitis

(AIH), a liver disease that occurs when a person's immune system produces antibodies that attack liver proteins, creating inflammation that can lead to fibrosis and cirrhosis

. Kirk remains on medication to manage her AIH and faces serious medical issues in the years ahead. In 2013, Kirk brought this diversity action against FAG Bearings, LLC1 and Schaeffler Group USA (collectively, "Schaeffler"), seeking compensatory and punitive damages. Kirk alleged that Schaeffler's negligent release of TCE and failure to warn the community of TCE contamination caused her to develop AIH.

After discovery, the district court denied Schaeffler's motion for summary judgment. As relevant here, the court concluded that Kirk presented sufficient evidence of causation for a jury to find defendants liable, and that Schaeffler Group USA is judicially estopped to deny it can be held responsible as successor for FAG Bearings' tortious conduct. After a lengthy trial, the district court instructed the jury to return a verdict for Kirk if it found that defendants' negligent "handling, use, or disposal of [TCE] at the Joplin plant, or [failure] to properly warn Plaintiff of the TCE contamination," had directly caused or contributed to Kirk's injury. The jury awarded Kirk $7,600,000 in compensatory damages and, after submission of additional testimony and evidence addressing whether "Defendants' conduct showed complete indifference to or conscious disregard for the safety of others," $13,000,000 in punitive damages. The district court denied Schaeffler's motions for judgment as a matter of law and a new trial. This appeal followed.

On appeal, Schaeffler argues (i) the district court erred in concluding that judicial estoppel bars Schaeffler Group USA from denying that it is liable for FAG Bearings' pre-acquisition torts; (ii) the court abused its discretion by admitting Kirk's experts' opinions regarding whether TCE exposure caused Kirk's AIH, and evidence of regulatory standards governing safe levels of TCE in drinking water; and (iii) the court erred in denying judgment as a matter of law on the causation issue and on Kirk's failure to warn claim. We reverse the district court's judicial estoppel ruling and conclude that (i) Schaeffler Group USA was entitled to summary judgment on the successor liability issue, and therefore (ii) the jury's general verdict requires a new trial on Kirk's punitive damages claim against FAG Bearings, LLC.

I. The Judicial Estoppel Issue.

A. Kirk's complaint alleged that Schaeffler Group USA "owns the brand FAG and ... took on, purchased or otherwise assumed all assets, properties and liabilities of FAG Bearings LLC, and/or FAG Bearings Corporation." Schaeffler's motion for summary judgment alleged that, after the 2005 conversion, FAG Bearings became Schaeffler Group USA's wholly owned subsidiary; that under Missouri law a parent corporation is not responsible for its subsidiary's actions unless it is the subsidiary's alter ego or plaintiff pierces the corporate veil; that Kirk has the burden to prove Schaeffler Group USA is responsible for FAG Bearings' actions; and that Kirk had no evidence to show that the corporate veil should be pierced or that the Schaeffler parent had any role in FAG Bearings' alleged pre-acquisition tortious acts.

In response, Kirk argued that Schaeffler Group USA should be judicially estopped to deny successor liability because "it has taken the position in other litigation that its ... purchase of FAG Bearings amounted to a merger of the two companies and that it is responsible for the ... actions of FAG Bearings." Kirk cited a complaint Schaeffler Group USA filed against the United States before the United States Court of International Trade (CIT) in November 2006, and a February 2008 memorandum it filed in the District of Connecticut in unrelated litigation.

The district court denied Schaeffler Group USA's motion for summary judgment, invoking judicial estoppel based on the allegation in its complaint to the CIT that FAG Bearings Corporation "by change of name and/or merger" was "absorbed into Schaeffler."2 In applying judicial estoppel, the district court considered the three non-exhaustive factors identified by the U.S. Supreme Court in New Hampshire v. Maine, 532 U.S. 742, 750-51, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001), and followed by this court in Stallings v. Hussmann Corp., 447 F.3d 1041, 1047 (8th Cir. 2006) :

First, a party's later position must be clearly inconsistent with its earlier position. Second, courts regularly inquire whether the party has succeeded in persuading a court to accept that party's earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled. Absent success in a prior proceeding, a party's later inconsistent position introduces no risk of inconsistent court determinations.... A third consideration is whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party.

The district court ruled that Schaeffler Group USA's position before the CIT was "clearly inconsistent" with its position in this case because "it is black letter law that a parent corporation lacks standing to sue for injuries suffered by a subsidiary." The court noted that the CIT stated in an opinion rejecting Schaeffler Group USA's claim on the merits that the court "accepts [Schaeffler Group USA's] undisputed representation that it is the legal successor to ... FAG Bearings Corp." Schaeffler Grp. USA, Inc. v. United States, 808 F.Supp.2d 1358, 1360 n.3 (Ct. Int'l Trade 2012). The district court ruled that judicial estoppel is appropriate because "Schaeffler would derive an unfair advantage if not estopped, because it would avoid any liability that it would otherwise have to [Kirk]."

The parties on appeal, like the district court, argue the judicial estoppel issue based on the above-quoted standards from New Hampshire and Stallings, cases that were governed by federal law. However, in this diversity case, we apply the Missouri law of judicial estoppel. See Monterey Dev. Corp. v. Lawyer's Title Ins. Corp., 4 F.3d 605, 608-09 (8th Cir. 1993).3 This raises the question whether the principles of judicial estoppel differ under Missouri and federal law, in which case the district court should have looked, as we must, to Missouri law. Judge Shepherd in dissent argues that the Supreme Court of Missouri has rejected the New Hampshire factors in favor of a "more general" standard: "[j]udicial estoppel will lie to prevent litigants from taking a position, under oath, in one judicial proceeding, thereby obtaining benefits from that position in that instance and later, in a second proceeding, taking a contrary position in order to obtain benefits ... at that time." State Bd. of Accountancy v. Integrated Fin. Sols., L.L.C., 256 S.W.3d 48, 54 (Mo. banc 2008).

We conclude the answer under Missouri law is not so simple. One month before the decision in State Board, the Supreme Court of Missouri ruled:

The doctrine of judicial estoppel provides that "[w]here a party assumes a certain position in a legal proceeding, and succeeds in maintaining that position, he may not thereafter, simply because his interests have changed, assume a contrary position, especially if it be to the prejudice of the party who has acquiesced in the position formerly taken by him." Zedner v. United States, 547 U.S. 489[, 504, 126 S.Ct. 1976, 164 L.Ed.2d 749] (2006), quoting Davis v. Wakelee, 156 U.S. 680, 689 [15 S.Ct. 555, 39 L.Ed. 578] (1895).

Taylor v. State, 254 S.W.3d 856, 858 (Mo. banc 2008). The passage in Zedner quoted in Taylor was itself a quotation from New Hampshire, and after that passage, the U.S. Supreme Court in Zedner quoted the three New Hampshire factors. Though the Supreme Court of Missouri did not cite Taylor in its State Board opinion, it denied rehearing in Taylor the same day it issued its opinion in State Board. This is clear indication the Supreme Court of Missouri has not rejected consideration of the New Hampshire factors the parties and the district court looked to...

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