Orjias v. Stevenson, LOUISIANA-PACIFIC

• Decision Date: 01 August 1994
• Docket Number: No. 93-1144,LOUISIANA-PACIFIC,93-1144
• Citation: 31 F.3d 995
• Parties: Margaret ORJIAS; Arthur O. Orjias; John M. Orjias; Arthur G. Orjias; Sandra L. Orjias; Stephen H. Pridy, individually and a next best friend of his minor children; Michael S. Pridy; Katherine M. Pridy; Jamie L. Pridy; Janmarie R. Pridy; Ethel I. Hines; Wendell P. Hines, Plaintiffs-Appellees, v. Martha STEVENSON, Plaintiff, v.CORPORATION, a Delaware corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 995

31 F.3d 995

30 Fed.R.Serv.3d 146

Margaret ORJIAS; Arthur O. Orjias; John M. Orjias; Arthur

G. Orjias; Sandra L. Orjias; Stephen H. Pridy,

individually and a next best friend of his minor children;

Michael S. Pridy; Katherine M. Pridy; Jamie L. Pridy;

Janmarie R. Pridy; Ethel I. Hines; Wendell P. Hines, Plaintiffs-Appellees, v. Martha STEVENSON, Plaintiff, v. LOUISIANA-PACIFIC CORPORATION, a Delaware corporation,

Defendant-Appellant.

No. 93-1144.

United States Court of Appeals Tenth Circuit.

Aug. 1, 1994.

Keith R. Clifford (Allen D. Reuter of Clifford & Reuter, Madison, Wisconsin, and Stanley L. Garnett and Andrew W. Loewi of Brownstein, Hyatt, Farber & Strickland, P.C., Denver, CO, with him on the briefs) of Clifford & Reuter, Madison, WI, for appellant.

Kevin S. Hannon (Wesley A. Light, Crested Butte, Colorado, Stephen H. Cook, Boulder, CO, and Joshua B. Epel, Denver, CO, with him on the brief), Denver, CO, for appellee.

Before KELLY and BARRETT, Circuit Judges, and O'CONNOR, ^* District Judge.

BARRETT, Senior Circuit Judge.

Appellant/defendant, Louisiana-Pacific Corporation (L-P), appeals from the district court's judgment following a jury trial on the issues of negligence per se and common law nuisance. The appellees/plaintiffs were awarded actual and punitive damages.

Factual Background

In September, 1984, following the invitation of state and local officials, L-P located and began operating a waferboard plant near Olathe, Colorado. Waferboard is a building product which is manufactured by pressing wood chips and gluing resin together. The process of manufacturing waferboard produces air emissions of particulates and waste chemicals from at least four sources.

First, wet bark and sawdust are burned in a furnace, called a Konus Thermal Oil Heater, to generate most of the heat required by the plant. The stack emissions from the heater include carbon monoxide, particulates of ash and soot, resinous materials, formaldehyde, and volatile organic compounds (VOCs) which condense into a dust-like particulate as the emission contacts cooler outside air.

Second, wood, which has been chipped into wafers, is dried in a wafer drier. The drying process produces stack emissions which are similar to those from the Konus heater.

Third, the dried wafers are compressed with glue-like resins at high temperature to make the final waferboard product. Initially, L-P used a formaldehyde-based resin and later switched to a resin called "MDI." The heat and pressure from the press process releases natural resins from the wood and results in a stack emission containing steam and VOCs from the natural and added resins.

Fourth, piles of waste wood ash which are dumped on the ground can be blown into the air during windy conditions and are sources of particulate emissions.

Each source of emissions is regulated by the State of Colorado for health and safety reasons, with emission limits and conditions set in the regulatory permits. The permits set, inter alia, a visible emission or "opacity" limitation not to exceed 20%, Aplt.App., Vol. 2 at 199, and specific pollutant limitations measured in pounds per hour. Id., Vol. 6 at 1029.

Various pollution control devices or methods were implemented by L-P which, ideally, would enable L-P to meet the emissions limitations in the permits. For example, emissions from the Konus heater were blown through a cyclone and then through a fabric "bag house" to remove solid material and particulates. Emissions from the wafer dryer were passed through a series of cyclones and a bag house. Since 1985, emissions from the wafer dryer had also passed through an Electrified Filter Bed device (EFB) to remove additional particulates. To decrease opacity from VOCs from the wafer dryer, heat going into the dryer was kept below a certain temperature. Blowing ash emissions were controlled by rain or by spraying water over the ash piles to form a crust.

Under normal operating conditions, state officials expected that all of the pollution control devices would work to keep L-P in compliance with the permits. It was expected that, occasionally, events would occur which were unforeseen and outside of L-P's control to prevent. Any valid "upset" conditions allowed L-P's emissions to exceed the permit limits for the short period of time that was required to repair the faulty equipment or process and was not a violation of the state regulations. If no upset condition was reported, any emission in excess of the permit limit was a violation of the state regulations.

The twelve plaintiffs are members of four families who had lived near the L-P plant when it began its operation. Margaret and Arthur O. Orjias, owned 55 acres east of the L-P plant on the other side of a highway. They built a house and improved the land to accommodate four mobile homes, two of which were rental units. Their teenaged son, John, lived with them. Their son and daughter-in-law, Arthur G. and Sandy Orjias, lived in a mobile home on the property. Ethel and Wendell Hines moved their mobile home onto the Orjias property, paying rent and making improvements to the land. The Pridy family resided on and farmed the land directly west of the L-P plant.

Within three years of the L-P plant opening, the plaintiffs had brought this suit and vacated their homes because of the noise, light, and irritating emissions which coated their homes and possessions with layers of grit and caused them physical illness, annoyance, inconvenience, and discomfort. During the approximately twelve-day jury trial, extensive documentary evidence and expert and lay witness testimony was presented to the jury. The jury awarded appellees $396,100 in actual damages and $1,872,000 in punitive damages. Though each plaintiff received differing amounts of actual damages, ranging from $10,000 for each of the three Pridy children to $98,320 for Arthur O. Orjias, each plaintiff received $156,000 in punitive damages. The district court denied L-P's post trial motions for a new trial, judgment notwithstanding the verdict, and remittitur.

On appeal, L-P states the issues as (1) whether the trial court erred by admitting evidence of alleged environmental violations at a different L-P plant in another state; (2) whether the trial court erred in excluding testimony that plaintiffs' key witness, Scott Butler, was terminated from his employment with L-P for precisely the improper conduct he claimed was encouraged by L-P; (3) whether the trial court erred by not declaring a mistrial when a Colorado air pollution enforcement official falsely testified that "it had not cost L-P any money to violate the air quality standards" and by prohibiting L-P from conducting any cross examination on this issue; (4) whether the trial court erred in not assigning collateral estoppel effect to United States v. Louisiana-Pacific Corp., 682 F.Supp. 1141 (D.Colo.1988), and in otherwise not permitting L-P to reference that decision; and (5) whether the trial court erred in submitting the issue of punitive damages to the jury or alternatively in refusing to remit the punitive damages award in accordance with Colorado law.

I.

L-P contends that because documentation of six air quality violations at an L-P waferboard plant in Wisconsin was improperly admitted under Fed.R.Evid. 404(b), L-P was tried for these prior bad acts and not for its own conduct in Olathe.

Decisions on evidentiary matters lie within the sound discretion of the district court and will not be disturbed absent a clear showing of abuse of discretion. United States v. Morgan, 936 F.2d 1561, 1571 (10th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 1190, 117 L.Ed.2d 431 (1992).

Rule 404(b) provides, in part:

Other crimes, wrongs, or acts. Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show action in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident ....

Fed.R.Evid. 404(b) applies to civil, as well as criminal cases. Huddleston v. United States, 485 U.S. 681, 685, 108 S.Ct. 1496, 1499, 99 L.Ed.2d 771 (1988). In Huddleston, a unanimous United States Supreme Court, recognizing a trend toward the improper exclusion of Rule 404(b) evidence, examined the legislative history of Rule 404(b) and concluded that "Congress was not nearly so concerned with the potential prejudicial effect of Rule 404(b) evidence as it was with ensuring that restrictions would not be placed on the admission of such evidence." Id. at 688-89, 108 S.Ct. at 1500-01.

Huddleston, decided that protection against unfair prejudice can be afforded by four requirements to the admission of Rule 404(b) evidence: (1) the evidence must be offered for a proper purpose; (2) the evidence must meet the relevancy requirement of Rule 402, as enforced through Rule 104(b); (3) the trial court must assess whether the probative value of the evidence is substantially outweighed by its potential for unfair prejudice under Rule 403; and (4) the trial court shall, upon request, instruct the jury that the similar acts evidence is to be considered only for the proper purpose for which it was admitted. Id. at 691-92, 108 S.Ct. at 1502; United States v. Record, 873 F.2d 1363, 1374 (10th Cir.1989); Turley v. State Farm Mut. Auto. Ins. Co., 944 F.2d 669, 675 (10th Cir.1991).

We understand L-P's argument to be that the first two Huddleston requirements are not met here. L-P argues that because it is uncontroverted that L-P had knowledge of its emissions and because there is no evidence that L-P concealed or misrepresented the contents of its emissions, the Wisconsin letters were irrelevant and were not offered for a proper purpose.

Assuming that L-P is correct that the contents of the emissions were undisputed, still the Wisconsin letters were relevant to the issue of whether L-P was...