Schadel v. Iowa Interstate R.R., Ltd.

• Decision Date: 25 August 2004
• Docket Number: No. 02-2379.,02-2379.
• Citation: Schadel v. Iowa Interstate R.R., Ltd., 381 F.3d 671 (7th Cir. 2004)
• Parties: Douglas SCHADEL and Inez Schadel, Plaintiffs-Appellees, v. IOWA INTERSTATE RAILROAD, LTD., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

381 F.3d 671

Douglas SCHADEL and Inez Schadel, Plaintiffs-Appellees, v.IOWA INTERSTATE RAILROAD, LTD., Defendant-Appellant.

No. 02-2379.

United States Court of Appeals, Seventh Circuit.

Argued September 24, 2003.

Decided August 25, 2004.

Appeal from the United States District Court for the Northern District of Illinois, Nan R. Nolan, J Steven P. Garmisa (argued), Hoey & Farina, Chicago, IL, for Plaintiffs-Appellees.

James C. Larew(argued), Iowa City, IA, for Defendant-Appellant.

William A. Brasher, St. Louis, MO, for Amicus Curiae.

Before BAUER, EASTERBROOK, and DIANE P. WOOD, Circuit Judges.

DIANE P. WOOD, Circuit Judge.

Complex questions relating to such issues as claim reduction, the availability of contribution and indemnity in a case governed by the Federal Employers' Liability Act (FELA), and the rules of joint and several liability confront us in this case.Specifically, we must decide whether a non-settling railroad should be held liable for all damages suffered by its employee, reduced by an amount attributable to the employee's comparative negligence and a settlement with a third party, or alternatively, if the railroad should be responsible only for its proportionate share of damages, taking into account the comparative fault of the employee and that of a settling third-party defendant.The district court allowed the jury to find the total damages suffered by the plaintiff, without regard to the settlement; it then reduced those damages by 50%, the amount representing the plaintiff's negligence; and finally, using an Illinois standard, it applied a set-off against the balance owed by the railroad.While our reasons are not identical to those offered by the district court, we conclude that the result was correct, and we therefore affirm the judgment.

I

Douglas Schadel was employed as a conductor by the Iowa Interstate Railroad (IAIS).He was working on the morning of December 31, 1997, as part of a two-person crew assigned to relieve an eastbound IAIS crew who were expected to come through the Joliet, Illinois, area that morning.In keeping with normal IAIS practice, rather than accomplish the crew exchange at a railroad yard, Schadel's crew was to meet the train at an at-grade railroad crossing west of Joliet.The one they chose was at Bush Road.

Engineer Eddie Brown was the other crew member.With Brown at the wheel and Schadel in the passenger seat, the two drove in an IAIS vehicle to the Bush Road crossing just before 9:00 a.m. that morning.Brown parked the vehicle approximately 50 feet south of the crossing gates, on the west shoulder of the road.Brown immediately got out of the car as the train came to a stop.Schadel initially went with him, but then Schadel returned to the car to retrieve some paperwork.By this time, the crossing gates, which were equipped with bells and flashing lights, had caused the approaching traffic to come to a halt.Suddenly, however, a vehicle driven by Brenda Kowalewicz flew toward the gates from the north, skidded past the stopped vehicles, crashed through the wooden gates, and shot on to strike Schadel, who was then standing behind the car.The impact of the collision propelled Schadel into a nearby ditch.He was taken to a local emergency room, and later he underwent surgery and rehabilitative work on his knees.The accident left him unable to work as a conductor.

Schadel sued IAIS under the FELA and he sued Kowalewicz under Illinois state law.For the latter claim only, his wife joined him and claimed loss of consortium.IAIS filed cross-claims against Kowalewicz for contribution and indemnification.Prior to the trial, Schadel settled with Kowalewicz and her insurance carrier for the full amount covered by her policy, $100,000, in return for dismissing his claims against her.Invoking the Illinois Joint Tortfeasor Contribution Act ("Contribution Act"), 740 ILCS 100/0.01 et seq. Schadel and Kowalewicz asked the district court to approve this settlement.As required by the Contribution Act, the court convened a "good faith" hearing to assess the validity and reasonableness of the settlement.(This case was proceeding before the magistrate judge by consent of the parties.See28 U.S.C. § 636(c).)IAIS objected to the use of the Illinois procedure at that juncture, arguing that issues concerning the settlement should be governed by federal common law, not by the Illinois statute.The district court disagreed, approved the settlement, and, in accordance with the Contribution Act, dismissed Kowalewicz from the case with prejudice.That order of dismissal also extinguished IAIS's claims against her for contribution and indemnity.

At the jury trial on Schadel's FELA claims against IAIS, the district court precluded IAIS from introducing any evidence or argument about the Kowalewicz settlement.The jury did hear expert testimony, however, about Kowalewicz's driving at the time of the accident.In its instructions and special verdict form, the court allowed the jury to assign fault only to Schadel or IAIS; it was not permitted to consider Kowalewicz's role.The jury found Schadel's overall damages to be $450,000.It found that he was 50% contributorily negligent, which reduced his recoverable damages to $225,000.The court then reduced that number to $125,000, to account for the settlement, and then added another $5,000 by agreement of the parties to account for Mrs. Schadel's loss of consortium claim, for a final total of $130,000 due from IAIS.

IAIS filed post-trial motions requesting a new trial on the ground that the district court applied the wrong methodologies to the allocation of damages.Instead of using a pro tanto approach (that is, accounting for the settlement with a dollar-for-dollar reduction in the damages IAIS owed), IAIS argued that the court should have used a proportionate share approach.Under the latter rule, the jury would have allocated responsibility among all three parties and imposed damages on IAIS only to the extent of its share of the liability.The district court denied the motions and entered the $130,000 judgment against IAIS.

II

The district court had federal question jurisdiction over Schadel's claim against IAIS, because it arose under the FELA, see28 U.S.C. § 1331,45 U.S.C. §§ 51-60; it had supplemental jurisdiction over Schadel's claim against Kowalewicz and IAIS's contribution and indemnification claims against her, see28 U.S.C. § 1367(a).The more difficult question is what law governs the allocation of responsibilities among these parties: federal law (including federal common law), or state law (Illinois law in this case).Moreover, even if federal common law governs, the further question is whether courts are to develop that law independently, or if this is one of those areas in which federal common law borrows the state law rule.SeeUnited States v. Kimbell Foods, Inc.,440 U.S. 715, 718, 99 S.Ct. 1448, 59 L.Ed.2d 711(1979).If state law applies directly, or if federal common law adopts state law here, then we would come full circle back to the question whether the district court correctly applied the Illinois rule.

The reason this case is in federal court at all is because it is one brought by a railroad employee against the railroad, and thus it falls within the scope of the FELA.We begin, therefore, with an examination of that statute.The FELA makes railroad common carriers "liable in damages to any person suffering injury while he is employed by such carrier ... for such injury or death resulting in whole or in part from the negligence" of the railroad or its employees.45 U.S.C. § 51.In Norfolk & Western Ry. Co. v. Ayers,538 U.S. 135, 123 S.Ct. 1210, 155 L.Ed.2d 261(2003), the Supreme Court noted the long-standing rule that "joint and several liability is the traditional [FELA] rule."Id. at 163, 123 S.Ct. 1210.Relying on the language in the statute making the railroad employer liable if the injury results "in whole or in part" from its negligence, the Court held that a jury is not permitted to make a deduction from a damages award for the contribution of other defendants to the employee's injuries:

Nothing in the statutory text [of the FELA] instructs that the amount of damages payable by a liable employer bears reduction when the negligence of a third party also contributed in part to the injury-in-suit.

Id. at 160, 123 S.Ct. 1210.This is so notwithstanding the fact, recognized by the Court in Ayers, that the FELA specifies a rule of comparative negligence.That rule is found in § 53, which says that "the fact that the employee may have been guilty of contributory negligence shall not bar a recovery, but the damages shall be diminished by the jury in proportion to the amount of negligence attributable to such employee."45 U.S.C. § 53.

Put in its simplest terms, we must decide between two alternatives.Under the one used by the district court, the sequence of decisions is as follows: (1) ascertain the full amount of damages suffered by the plaintiff; (2) ascertain the plaintiff's comparative fault with respect to the non-settling defendant(s); (3) compute net damages due to the plaintiff after reducing the total for that fault; (4) apply a pro tanto reduction to the net sum, representing the amount paid by the settling defendant(s); and (5) assess the balance against the non-settling railroad.Applying that rule, we have $450,000 in total damages, less 50% comparative fault, for a net recoverable amount of $225,000, less $100,000 from the Kowalewicz settlement, giving a final amount due of $125,000 (plus the uncontested $5,000, which is unimportant to the issue before us and which we disregard from now on).

The approach IAIS urges requires the following steps: (1) ascertain the full amount of damages suffered by the plaintiff; (2) ascertain the comparative fault of all parties involved, both settling and non-settling; (3) compute net damages due from the non-settling defendant...