Reboy v. Cozzi Iron & Metal, Inc., 92-4156

• Decision Date: 23 November 1993
• Docket Number: No. 92-4156,92-4156
• Citation: 9 F.3d 1303
• Parties: James REBOY and Michelle Reboy, Plaintiffs-Appellees, v. COZZI IRON & METAL, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1303

9 F.3d 1303

27 Fed.R.Serv.3d 637

James REBOY and Michelle Reboy, Plaintiffs-Appellees, v. COZZI IRON & METAL, INC., Defendant-Appellant.

No. 92-4156.

United States Court of Appeals Seventh Circuit.

Argued Sept. 21, 1993.

Decided Nov. 23, 1993.

Barry D. Rooth, Theodoros, Theodoros & Rooth, Merrillville, IN, David Cerven (argued), Burke, Murphy, Costanza & Cuppy, East Chicago, IN, for plaintiffs-appellees.

Janella L. Barbrow, Elizabeth A. Knight (argued), Knight, Hoppe, Fanning & Knight, Des Plaines, IL, for defendant-appellant.

Before FLAUM and ROVNER, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

ESCHBACH, Senior Circuit Judge.

Defendant Cozzi Iron & Metal, Inc. ("Cozzi") appeals from final judgment entered after a jury verdict in favor of the plaintiffs, James and Michelle Reboy. Cozzi argues that the district court erred by (1) ruling that James Reboy was not Cozzi's employee; (2) denying Cozzi's motions for judgment as a matter of law on several issues; and (3) denying Cozzi's motion for a set-off. While affirming on all other grounds, we believe that the district court improperly removed the question of James Reboy's employment status from the province of the jury. We therefore reverse the judgment in favor of the Reboys and remand for a jury trial on that issue only.

I.

James Reboy ("Reboy") sued Cozzi because of injuries he sustained on November 5, 1990 during a rail car switching maneuver at Northern Indiana Dock ("NID"), a scrap metal processing yard in East Chicago, Indiana. NID is owned by American Scrap Processing, Inc. ("ASP"), a wholly-owned subsidiary of Cozzi. After working at NID for approximately one month, Reboy was promoted to switchman and began training for the position the day of his accident. After a morning of training with two yard employees, Reboy attempted to switch a rail car from one line to another by himself. During the switching maneuver, Reboy's left leg was caught between a moving rail car and a stationary rail car on another track. His leg later had to be amputated above the knee. Reboy sued Cozzi for negligent training and supervision.

Reboy asserted that Cozzi failed to fulfill its assumed duty to oversee the training and supervision of workers at the NID facility, and thereby caused his injury. Reboy's wife, Michelle, brought a derivative action against Cozzi for loss of consortium. The Reboys, who are Indiana citizens, brought suit against Cozzi, an Illinois corporation, under diversity jurisdiction. 28 U.S.C. Sec. 1332.

Cozzi contends that the exclusivity provision of the Indiana Worker's Compensation Act bars the Reboys' suit. This provision prevents an employee from bringing a negligence action against his employer for injuries sustained on the job. Instead, the employee must bring his claims before the Industrial Disputes Board under the Worker's Compensation Act. ¹ Cozzi claims that it employed Reboy or that both it and ASP employed Reboy. Conversely, Reboy insists that ASP was his employer, not Cozzi and thus his negligence action is not barred by this provision of the Worker's Compensation Act.

At the close of plaintiffs' evidence, Cozzi moved for judgment as a matter of law pursuant to Rule 50 of the Federal Rules of Civil Procedure ("Federal Rules") on the issue of who was Reboy's employer ("the employment issue"). The judge heard Cozzi's arguments and then allowed Cozzi to present its evidence in the case. At the close of all evidence, Cozzi renewed its motion for judgment as a matter of law on the employment and liability issues. In turn, the Reboys moved for judgment as a matter of law on the issue of whether Cozzi assumed a duty to supervise and train Reboy. After denying both parties' motions for judgment as a matter of law, the district court ruled from the bench that Reboy was the employee of ASP and not Cozzi and submitted the negligence issues to the jury. The jury awarded damages of $490,000 to James Reboy and $10,000 to Michelle Reboy, after a 30% reduction in both awards for James Reboy's comparative fault. Cozzi filed a post-trial motion for judgment as a matter of law or alternatively, a new trial on the liability issues and a motion for a set-off of plaintiffs' award. The district court denied these motions and Cozzi filed a timely notice of appeal. We have jurisdiction pursuant to 28 U.S.C. Sec. 1291.

II.

A. Waiver of a jury trial on the employment issue

Cozzi contends that the district court erred in ruling that ASP was Reboy's employer. However, we believe that the district court erred by deciding the issue at all instead of allowing the jury to decide it. Before the trial began, Cozzi moved for summary judgment on the employment issue. The district court denied Cozzi's motion on the ground that there were genuine issues of material fact that could only be resolved at trial. After hearing all of the evidence at trial, the judge applied Indiana law and ruled that Reboy was the employee of ASP. He then let the case go to the jury on the remaining issues. Implicit in the judicial ruling was a determination that Reboy was not the employee of Cozzi.

The parties dispute the nature of the judge's ruling. The judge characterized it as a Federal Rule 12(b)(6) ruling on whether the Reboys stated a claim upon which relief could be granted. Cozzi insists that the district court actually entered judgment as a matter of law in favor of the Reboys. The Reboys argue that the district court made a factual determination under Rule 39(b) of the Federal Rules because Cozzi waived its right to a jury trial on the employment issue. ²

The record does not indicate that the bench ruling was a judgment as a matter of law. The judge believed that he had to rule on Reboy's employment status before he could allow the case to go to the jury on the other issues. The judge relied on Rule 12(b)(6) and our precedent, Beach v. Owens-Corning Fiberglas Corp., 728 F.2d 407 (7th Cir.), cert. denied, 469 U.S. 825, 105 S.Ct 104, 83 L.Ed.2d 48 (1984), in making his ruling. The district court's application of Rule 12(b)(6) and Beach to this case is erroneous and thus we can affirm the employer ruling only if Cozzi in fact waived its right to a jury trial of the employment issue.

Notwithstanding Cozzi's timely demand for a jury trial of all issues, the Reboys contend that during the course of the trial Cozzi agreed to have the employment issue decided by the judge, waiving its right to a jury trial on the issue. Rule 38(d) of the Federal Rules provides that once a party demands a jury trial, no triable issues may be resolved by the district court without the consent of all parties. Rule 39(a)(1) of the Federal Rules states that the parties' consent must be in writing and filed with the court or stipulated to in open court and entered into the record. The Reboys concede and the record confirms that neither Cozzi nor they formalized their "agreement" to have the district court try the employment issue. ³ Moreover, Cozzi vehemently denies that it ever entered into such an agreement.

In the alternative, the Reboys urge this Court to find that Cozzi waived its demand for a jury trial of the employment issue through its conduct at trial. The Reboys insist that Cozzi's conduct at trial demonstrates that Cozzi acquiesced in having the district court act as trier of fact on the employment issue, and consequently waived its right to have a jury decide this issue. The Reboys stress that this Circuit has not required strict compliance with Federal Rules 38 and 39 to effect a waiver of a jury demand. See National Family Ins. Co. v. Exchange Nat'l Bank, 474 F.2d 237, 241 (7th Cir.), cert. denied, 414 U.S. 825, 94 S.Ct. 129, 38 L.Ed.2d 59 (1973); Lovelace v. Dall, 820 F.2d 223, 227 (7th Cir.1987). The Reboys are correct. Instead, this Circuit, along with several others, has held that a party's conduct at trial may effectively waive its right to a jury trial. For example, we have held that a party's failure to object to a non-jury, fact-finding proceeding may waive the party's valid jury demand as to any claims decided in that proceeding where it was clear the court intended to make factual determinations. Lovelace, 820 F.2d at 227.

There is evidence in the record which could suggest that Cozzi acquiesced to having the district judge decide the employment issue. The record reveals instances where the district judge states that he must decide the employment issue or weigh the evidence, to which Cozzi either agrees or does not object. However, most of these instances occur directly before or during discussions concerning Cozzi's trial motions for judgment as a matter of law on the employment issue. In this context, it is entirely appropriate for the trial judge to weigh the evidence.

A party's conduct must clearly and explicitly signal such a waiver for this Court to give it effect. The right to a jury trial is important and this Court will not find a waiver without clear, unequivocal evidence that the party intended to waive its right. While this is undoubtedly a close case, we nevertheless hold that Cozzi did not waive its right to a jury trial on the employment issue either by express agreement or by its conduct and thus the district court erred by removing the issue from the province of the jury. Reboy's employment status under Indiana law was a mixed question of law and fact triable by a jury. ⁴ Because the jury should have made this determination, we reverse and remand to the district court for a jury trial on the employment issue only. ⁵

Two additional issues warrant attention. On appeal, Cozzi asserts that it is entitled to judgment as a matter of law on the issue of James Reboy's employment status. Judgment as a matter of law is appropriate only if there is no legally sufficient evidentiary basis for a reasonable jury to find for the opposing party on a particular issue. Fed.R.Civ.P. 50(a)(1). We cannot say that the evidence put forth at trial so...