Soo Line Railroad Company d/b/a Canadian Pacific, Third-Party Plaintiff

v.

Knoedler Manufacturers, Inc., Knoedler Manufacturers Canada, LTD., Atwood Mobile Products, LLC, and Atwood Mobile Products, Inc., Third-Party Defendants.

 

This contribution and indemnity action arose out of three separate incidents in which three Canadian Pacific (“CP”) employees suffered career-ending injuries as a result of the in-service collapse of their locomotive seats.  The locomotive seats were manufactured by Knoedler Manufacturers, Inc. and Knoedler Manufacturers Canada, LTD. (collectively “Knoedler”) and equipped with a defective recliner mechanism from a defunct component supplier, Atwood Mobile Products, Inc.  Atwood Mobile Products, LLC, purchased that entity’s assets in a sale pursuant to §363 of the Bankruptcy Code after the manufacture of the seats at issue.

Following the injuries, the three employees filed lawsuits against CP under the Locomotive Inspection Act (“LIA”) and the Federal Employers’ Liability Act (“FELA”).  Each employee alleged that his locomotive seat, suddenly and without warning, collapsed backward at the point of recline, causing serious injury.  CP admitted violation of the LIA in those cases and settled for a total of approximately $2.5 million dollars. 

The LIA, of course, mandates that a locomotive and its “parts and appurtenances” must be in “proper condition and safe to operate without unnecessary danger of personal injury.”  Relevant to this case, it specifically requires that locomotive cab seats “be securely mounted and braced.”

Accordingly, CP brought third-party contribution and indemnity actions against Knoedler and both Atwood entities in Minnesota state court for their failures to design and manufacture a locomotive seat and recliner that complied with LIA requirements.  

Ultimately, the court found that the bankruptcy sale shielded Atwood Mobile Products, LLC, from liability and it entered a default judgment against Atwood Mobile Products, Inc.

After nearly 30 depositions that spanned the United States and Canada, Knoedler moved for summary judgment.  Knoedler claimed that CP’s third-party claims were preempted by the LIA, and further claimed that its US-based corporation did not design, manufacture, or sell the seats at issue.  The court denied Knoedler’s motion in its entirety.  Because CP properly based its state claims on the LIA’s standard of care, the court correctly ruled that the LIA did not preempt its claims against Knoedler.  The court also agreed with CP that it raised an issue of fact concerning the role that Knoedler’s US-based arm played in the design, manufacture, and sale of the seats at issue.  Nevertheless, Knoedler refused to take part in meaningful pre-trial settlement efforts.

Prepared to try its case, CP brought its claims against Knoedler before the Honorable Nancy E. Brasel and a jury from the Circuit Court of Hennepin County, Minnesota, on March 13-21, 2017.

In a hard fought trial, Knoedler presented evidence that indicated CP had been aware of the defective seat recliner mechanisms for several years before the seat failures at issue, but did not replace all the affected seats.  Knoedler and its experts further blamed CP and its employees for the seat failures, arguing that CP’s employees misused and abused the seats and that CP failed to properly test, maintain, and replace the seats, even after learning of the defective components in the years prior to the injuries.  However, CP effectively crossed Knoedler’s experts, eliciting that the Knoedler seats were not suitable for the locomotive environment in the first place. 

CP’s experts held up under cross, and explained that Knoedler did not perform any design or engineering analysis on its seats before selling them to CP as “Railroad Seats” for use in locomotives operated by CP, as required by product design engineering principals.   Neither did

Knoedler perform any design or engineering analysis on the recliner mechanism before installing it on seats sold for use in locomotives operated by CP. Lastly, in one of the final pieces of evidence presented to the jury, Knoedler’s president admitted that the seats at issue were not designed for locomotive use and were not securely mounted and braced. 

On March 21, 2017, the jury awarded CP approximately $1.25 million dollars, plus costs, in contribution from Knoedler for the FELA/LIA employee injury suits settled by CP.  Knoedler did not appeal the judgment.  The award was nearly $500,000 more than Knoedler’s final settlement offer.  CP’s post-judgment motions for costs, prejudgment interest, and attorneys’ fees from the underlying injury cases remain pending. 

CP’s victory was the first jury verdict to award damages to a third-party plaintiff railroad against a third-party defendant manufacturer for contribution for railroad employee injuries in the wake of Delaware & Hudson v. Knoedler Manufacturing, Inc., 781 F. 3d 656 (3rd Cir. 2015).  In that opinion, the Third Circuit held that the LIA did not preempt a railroad’s third-party product liability-type claims against a manufacturer because the claims were premised on standards of care prescribed by the LIA itself, and not any state law standards.

Anyone with questions about these cases or the LIA should contact Dan Mohan, 312.422.0786, mohan@daleymohan.com, or Matthew Hammer, 312.422.5874, mhammer@daleymohan.com.