Jentz v. Conagra Foods, Inc., No. 13-1542 (7th Cir. 2014)

Annotate this Case
Justia Opinion Summary

A Chester, Illinois grain bin exploded, injuring three workers. A jury awarded almost $180 million in compensatory and punitive damages against ConAgra, which owned the facility, part of a flour mill, and West Side, which ConAgra had hired about a month before the explosion to address problems in the bin. The injured workers were working on the bin’s problems. On appeal, West Side did not contest liability to the workers but claimed that it did not have to reimburse ConAgra for the cost of repairing the facility. Both maintained that damages were excessive. The Seventh Circuit reversed the judgment against ConAgra and the award of punitive damages against West Side, but affirmed awards of compensatory damages against West Side and remanded for consideration of indemnification and contribution. West Side was an independent contractor in a commercial relation with ConAgra and normal rules of contract and tort law apply. Having hired an expert in hot bins, ConAgra was entitled to assume that West Side would ask for whatever information it needed. Admission of evidence that referred to insurance was harmless; the verdicts so far exceeded $3 million that the jury’s belief that West Side carried that much insurance cannot have played a material role.

Download PDF
In the United States Court of Appeals For the Seventh Circuit ____________________   Nos.  13-­ 1505,  13-­ 1542,  13-­ 1543  &  13-­ 1544   JOHN  W.  JENTZ,  et  al.,   Plaintiffs-­ Appellees,   v.   CONAGRA  FOODS,  INC.,  and  WEST  SIDE  SALVAGE,  INC.,   Defendants-­ Appellants.   ____________________   Appeals  from  the  United  States  District  Court   for  the  Southern  District  of  Illinois.   Nos.  10-­ cv-­ 0474-­ MJR-­ PMF  et  al.    Michael  J.  Reagan,  Judge.   ____________________   ARGUED  OCTOBER  2,  2013    DECIDED  SEPTEMBER  9,  2014   ____________________   Before  EASTERBROOK,  MANION,  and  ROVNER,  Circuit  Judg-­ es.   EASTERBROOK,   Circuit   Judge.   A   grain   bin   in   Chester,   Illi-­ nois,  exploded  on  April  27,  2010,  injuring  three  workers.  Af-­ ter   a   17-­ day   trial,   a   jury   awarded   almost   $180   million   in   compensatory   and   punitive   damages   against   ConAgra   Foods   and   West   Side   Salvage.   ConAgra,   which   owned   the   facility,   part   of   a   flour   mill,   contends   that   liability   rests   on   2   Nos.  13-­ 1505  et  al.   West   Side,   which   it   had   hired   to   address   problems   in   bin   C15.   For   its   part,   West   Side   does   not   contest   liability   to   the   workers   but   contends   that   it   does   not   have   to   reimburse   ConAgra  for  the  cost  of  repairing  the  facility.  Both  ConAgra   and  West  Side  maintain  that  the  damages  are  excessive.  The   injured   workers   contend   that   both   ConAgra   and   West   Side   must  pay  the  full  verdict.   Seventeen  days  of  trial  mean  that  the  record  is  hefty,  but   a   recap   is   enough   to   set   up   the   parties   contentions.   Explo-­ sions  are  a  constant  risk  in  grain  storage,  which  produces  not   only  a  lot  of  combustible  dust  and  carbon  monoxide  (which   can  oxidize  explosively  to  carbon  dioxide)  but  also,  through   the  decay  of  a  bin s  contents,  heat  that  can  set  off  a  blast.  In   March  2010  ConAgra  discovered  a  burning  smell  in  bin  C15,   containing   wheat   pellets.   ConAgra   got   in   touch   with   West   Side,   which   touts   expertise   in   handling   hot   bins.   ConAgra s   negotiations   with   West   Side   and   its   competitors   (ConAgra   wanted   a   lower   price)   delayed   the   start   of   work;   West   Side s   own   busy   schedule   added   to   the   delay.   Work   finally  began  on  April  20,  2010,  and  West  Side  hired  A&J  Bin   Cleaning  to  do  some  of  the  tasks.  Two  of  the  injured  work-­ ers,  John  Jentz  and  Robert  Schmidt,  were  employees  of  A&J;   the  third,  Justin  Becker,  was  employed  by  West  Side  itself.   ConAgra  wanted  to  salvage  as  much  of  the  grain  as  pos-­ sible,  but  as  pellets  were  removed  from  the  top  more  oxygen   reached   wheat   composting   at   the   bin s   bottom.   West   Side   decided  to  remove  some  grain  via  side  tunnels.  On  April  27   West   Side   detected   smoke   coming   from   the   bin.   Its   crew   sprayed  water  on  the  pellets  and  used  an  air  lance  to  try  to   discover   the   smoke s   source;   the   effort   failed.   Mel   Flitsch,   West   Side s   foreman,   told   ConAgra   to   call   the   fire   depart-­ Nos.  13-­ 1505  et  al.   3   ment.  Waiting  for  firefighters  to  arrive,  Flitsch  sent  Jentz  and   Becker   into   a   tunnel,   instructing   them   to   remove   tools   that   might  impair  firefighters  access.  While  they  were  there,  the   explosion   occurred.   They   were   severely   injured   but   sur-­ vived.  Schmidt,  who  was  in  an  elevator  nearby,  also  was  in-­ jured,   but   less   seriously.   In   a   series   of   opinions,   the   district   judge  rejected  all  proposals  for  judgment  as  a  matter  of  law   or  a  new  trial.  See  2013  U.S.  Dist.  LEXIS  17231  (S.D.  Ill.  Feb.  8,   2013)   (addressing   West   Side s   motions   related   to   tort   liabil-­ ity);   2013   U.S.   Dist.   LEXIS   17232   (S.D.   Ill.   Feb.   8,   2013)   (ad-­ dressing   ConAgra s   motions   related   to   tort   liability);   2013   U.S.  Dist.  LEXIS  17237  (S.D.  Ill.  Feb.  8,  2013)  (addressing  West   Side s   motions   related   to   contract   liability);   2012   U.S.   Dist.   LEXIS   109344   (S.D.   Ill.   Aug.   6,   2012)   (addressing   ConAgra s   motion   related   to   contribution);   2012   U.S.   Dist.   LEXIS   93137   (S.D.  Ill.  July  6,  2012)  (resolving  a  dispute  about  the  measure   of  damages  for  breach  of  contract).   Normally   employees   of   an   independent   contractor   (which   describes   all   of   the   plaintiffs   except   Amber   Becker,   whose  claim  depends  on  her  role  as  Justin  Becker s  spouse)   cannot   obtain   damages   from   the   owner   of   the   premises   at   which  the  contractor  was  working.  See  Restatement  (Third)  of   Torts  §§  55 57.  Plaintiffs  contend  that  ConAgra  nevertheless   is  liable  for  failing  to  provide  West  Side  with  a  safe  place  to   work.  ConAgra  responds  that  of  course  bin  C15  was  unsafe that s  why  West  Side  had  been  hired!  ConAgra  relies  on  the   principle   that   someone   who   engages   an   independent   con-­ tractor  to  redress  an  unsafe  condition  is  not  liable  when  the   feared  event  occurs.  Illinois  (whose  law  governs  in  this  suit   under   the   diversity   jurisdiction)   has   adopted   this   principle,   observing   in   Community   College   District   508   v.   Coopers   &   Lybrand,  208  Ill.  2d  259,  271  (2003),  that   in  a  case  involving   4   Nos.  13-­ 1505  et  al.   negligent  rendition  of  a  service  [by  an  independent  contrac-­ tor],   ¦  a  factfinder  does  not  consider  any  plaintiff s  conduct   that  created  the  condition  the  service  was  employed  to  rem-­ edy.   (Quotation   from   Restatement   (Third)   of   Torts:   Appor-­ tionment  of  Liability  §7  comment  m.)  And  that,  ConAgra  con-­ tends,  is  that:  It  hired  West  Side  to  deal  with  a  hot  bin,  and   all  liability  therefore  is  on  its  account.  West  Side  could  have   negotiated  for  an  indemnity  or  insurance  for  its  benefit  (and   that   of   its   workers   and   subcontractors)   but   did   not   do   so;   West  Side  and  plaintiffs  rely  only  on  the  law  of  torts.   Although  plaintiffs  and  West  Side  weakly  contend  that  it   did   not   know   that   C15   was   a   hot   bin,   the   evidence   over-­ whelmingly  establishes  that  it  did indeed,  it  knew  that  this   is  why  it  had  been  hired and  no  reasonable  jury  could  have   concluded   otherwise.   (The   jury   was   not   asked   to   return   a   special  verdict  on  that  question,  which  it  did  not  need  to  re-­ solve  under  the  instructions  it  received.)  West  Side  may  have   failed  to  alert  A&J  adequately,  but  that s  not  a  reason  to  im-­ pose   liability   on   ConAgra.   Plaintiffs   say   that   ConAgra   should   have   hired   West   Side   sooner   (without   shopping   for   lower   bids)   and   that   this   might   have   reduced   the   risk;   they   also  observe  that  ConAgra  did  not  volunteer  all  temperature   readings   it   had   taken   in   bin   C15   before   the   mid-­ April   en-­ gagement.   But   no   one   contends   that   ConAgra   failed   to   an-­ swer  accurately  all  questions  West  Side  posed.  Having  hired   a  self-­ proclaimed  expert  in  hot  bins,  ConAgra  was  entitled  to   assume  that  West  Side  would  ask  for  whatever  information   it  needed.  (Flitsch  had  dealt  with  more  than  50  hot  bins  dur-­ ing   his   career   at   West   Side;   he   knew   the   territory.)   People   who  hire  lawyers  rely  on  them  to  ask  for  information  mate-­ rial  to  the  situation,  and  no  court  would  hold  a  client  liable   to   his   lawyer   for   failing   to   reveal   spontaneously   something   Nos.  13-­ 1505  et  al.   5   that  the  lawyer  never  asked  about;  similarly  people  who  hire   specialists   in   controlling   the   risks   of   grain   storage   are   enti-­ tled   to   rely   on   them   to   know   what   matters   and   ask   for   the   material  information.   Plaintiffs   and   West   Side   equate   the   doctrine   adopted   in   Coopers  &  Lybrand  to  the   firefighters  rule  and  contend  that   it   must   be   limited   to   firefighters.   That s   wrong   for   two   rea-­ sons.  First,  the  firefighters  rule  is  a  distinct  doctrine  dealing   with   services   not   charged   for.   Under   it   firefighters   cannot   recover   from   homeowners   for   creating   the   conditions   that   led  to  the  fire  (which  may  claim  firefighters  lives);  converse-­ ly,  homeowners  cannot  recover  from  firefighters  who  fail  to   bring   the   blaze   under   control   quickly   or   without   damaging   the   home.   West   Side   was   not   a   volunteer,   nor   were   its   ser-­ vices   paid   for   by   taxpayers;   it   was   a   standard   independent   contractor  in  a  commercial  relation  with  ConAgra,  and  nor-­ mal  rules  of  contract  and  tort  law  apply.   Second,  Coopers  &  Lybrand  itself  shows  that  its  rule  is  not   limited  to  firefighters;  the  Supreme  Court  of  Illinois  dealt  in   that   suit   with   a   client s   malpractice   claim   against   its   ac-­ countants.   The   accountants   argued   that   the   client   was   com-­ paratively  negligent  because  it  created  (financial)  conditions   that  made  it  easier  for  accountants  to  err.  The  conclusion  that   an  accountant s  malpractice  is  not  mitigated  by  the  fact  that   the   client   created   risky   financial   or   bookkeeping   conditions   applies  equally  to  a  claim  by  a  grain-­ removal  specialist  (and   its  employees)  against  the  owner  of  the  grain-­ storage  facility.   Coopers  &  Lybrand  is  far  from  the  only  Illinois  case  on  point.   For  example,  Keating  v.  68th  &  Paxton  L.L.C.,  401  Ill.  App.  3d   456,  470 72  (2010),  holds  that  a  property  owner  could  not  be   liable   to   a   contractor   for   injuries   the   contractor   and   its   em-­ 6   Nos.  13-­ 1505  et  al.   ployees   suffered   while   working   on   a   dangerous   porch   that   the   contractor   had   been   hired   to   repair.   Other   states   follow   the  same  approach.   The  district  court  should  have  granted  ConAgra s  motion   under   Fed.   R.   Civ.   P.   50   for   judgment   as   a   matter   of   law.   Plaintiffs   observe   that   ConAgra   did   not   feature   this   de-­ fense  at  trial,  but  that  is  not  dispositive.  It  is  enough  to  pre-­ sent   a   defense;   harping   on   it   is   not   required.   The   district   court  thought  that  it  had  been  preserved  and  addressed  it  on   the  merits.  2013  U.S.  Dist.  LEXIS  17232  at  *9 10,  *21 25.  It  was   right  to  do  so,  though  it  reached  the  wrong  resolution,  which   we   now   reverse.   (The   district   judge   may   have   confused   the   contractors   rule   with   the   open-­ and-­ obvious-­ hazard   doc-­ trine,  denying  ConAgra s  motion  in  substantial  part  because   of   exceptions   to   that   doctrine.   They   are   different,   however,   and  we  do  not  discuss  that  doctrine  or  its  exceptions.)   West  Side,  by  contrast,  is  liable  for  the  errors  of  its  super-­ visor   Flitsch,   and   it   does   not   ask   us   to   set   aside   the   jury s   verdict  in  the  employees  favor.   Our   conclusion   that   ConAgra   is   not   liable   makes   it   un-­ necessary  to  address  disputes  about  its  relative  share  of  lia-­ bility  compared  with  West  Side.  But  there  remains  a  contract   claim  between  the  parties.  ConAgra  signed  and  tendered  to   West   Side   a   contract   containing   a   promise   by   West   Side   to   indemnify   ConAgra   for   any   damage   caused   by   West   Side s   negligence.  The  jury  concluded  that  West  Side  is  liable  under   this  promise;  the  judge  agreed;  but  West  Side  argues  other-­ wise,   observing   that   it   did   not   return   a   signed   copy   of   the   contract  to  ConAgra.  It  agreed  to  undertake  the  job,  and  set   to   work,   but   did   not   sign   on   the   dotted   line.   The   district   judge   thought   this   irrelevant,   because   performance   usually   Nos.  13-­ 1505  et  al.   7   is  as  good  as  a  signature  as  a  way  to  accept  a  proposed  writ-­ ten   contract.   We   agree   with   that   conclusion   as   well   as   the   district  judge s  resolution  of  all  disputes  about  the  amount  of   damages  the  jury  awarded  on  this  subject.  The  district  judge   covered  these  issues  ably;  more  words  are  unnecessary.   We   turn   to   damages   in   tort.   The   jury   awarded   Jentz   $41,585,000  in  compensatory  damages  plus  $34,333,333.33  in   punitive  damages.  It  allocated  all  but  $1  million  of  the  puni-­ tive  damages  to  ConAgra;  it  allocated  54%  of  the  compensa-­ tory  damages  to  ConAgra,  45%  to  West  Side,  and  1%  to  Jentz   himself.     The   jury   awarded   Justin   Becker   $35,390,000   in   compensatory   damages   (allocated   5%   to   Becker,   51%   to   ConAgra,  and  44%  to  West  Side)  and  his  wife  Amber  Becker   $250,000   in   compensatory   damages   in   her   own   right   (all   al-­ located   to   ConAgra).   The   award   against   West   Side   appears   to   be   incompatible   with   the   workers   compensation   statute,   since  West  Side  was  Becker s  employer,  but  the  district  court   did   not   order   West   Side   to   pay   Becker;   instead   it   used   the   allocation   to   determine   indemnification   under   the   contract   between   ConAgra   and   West   Side.   2012   U.S.   Dist.   LEXIS   109344   at   *15 22.   The   jury   added   $33,333,333.33   in   punitive   damages,   all   against   ConAgra.   The   jury   awarded   Schmidt   $2,915,000   in   compensatory   damages   (65%   to   ConAgra   and   the  rest  to  West  Side)  and  $33,333,333.34  in  punitive  damag-­ es,  all  against  ConAgra.   Given   our   holding   that   ConAgra   is   not   liable,   the   only   punitive  award  that  requires  consideration  is  the  $1  million   that  the  jury  ordered  West  Side  to  pay  Jentz.  Illinois  does  not   authorize   punitive   damages   for   ordinary   negligence;   they   depend   on   willful   and   wanton   conduct,   see   Kelsay   v.   Motorola,   Inc.,   74   Ill.   2d   172,   186   (1978),   which   if   not   inten-­ 8   Nos.  13-­ 1505  et  al.   tional   wrongdoing   entails   at   least   a   gross   deviation   from   the   standard   of   care .   Shirk   v.   Kelsey,   246   Ill.   App.   3d   1054,   1065   (1993).   No   one   contends   that   Flitsch   sent   the   workers   into   the   tunnel   wanting   harm   to   come   their   way;   they   were   his  co-­ workers  if  not  his  friends.  And  it  is  also  hard  to  see  a   gross  deviation  from  the  standard  of  care.  If  the  tools  were   in   the   way,   someone   had   to   move   them;   why   should   that   task   (and   the   associated   risk)   be   assigned   to   the   firefighters   rather  than  to  the  people  who  knew  the  tools  best  and  could   reach  them  sooner?   Of  course,  if  an  explosion  was  likely  to  precede  the  arri-­ val  of  the  firefighters,  or  if  the  firefighters  on  arrival  would   have   concluded   that   no   one   should   enter   the   tunnel,   allow-­ ing  the  fire  or  explosion  to  happen  unimpeded,  then  sending   the  workers  to  remove  the  tools  posed  a  needless  risk.  This   must  have  been  what  the  jury  concluded.  That  makes  it  im-­ portant   to   know   how   likely   and   how   imminent   an   explosion   was,  under  the  conditions  Flitsch  knew  about.   We   looked   through   the   briefs   for   clues   but   found   none.   At  oral  argument  we  asked  counsel  what  the  record  showed   (perhaps   through   expert   testimony)   about   the   probability   that   a   smoking   bin   will   explode,   or   break   into   open   fire,   within   any   given   time.   We   also   received   post-­ argument   supplementary  filings  on  this  topic.  The  answer  turns  out  to   be:  Nothing.  Without  data,  or  at  least  a  qualitative  risk  esti-­ mate  (and  the  record  contains  neither),  the  jury  lacked  sup-­ port   for   a   conclusion   that   Flitsch s   conduct   exposed   the   workers  to  a  risk  so  great  that  his  order  marked  a   gross  de-­ viation  from  the  standard  of  care.   True,   Flitsch   asked   ConAgra   to   call   the   fire   department,   which  evinced  consciousness  of  risk,  but  his  order  to  retrieve   Nos.  13-­ 1505  et  al.   9   the   tools   evinced   a   belief   that   the   short-­ run   risk   was   small   (and   Flitsch   so   testified).   For   all   this   record   shows,   Flitsch   may  have  been  right.  The  probability  of  an  explosion  before   the   workers   could   reach   safety   may   have   been   only   1   in   10,000.   It   could   have   been   more,   or   it   could   have   been   less.   We  just  don t  know.   Even  a  small  risk  will  come  to  pass  if  events  are  repeated   often   enough,   but   Illinois   has   not   announced   a   rule   under   which   punitive   damages   are   proper   whenever   small   or   re-­ mote  risks  occur  and  cause  injury.  The  verdict  appears  to  be   a  consequence  of  hindsight  bias the  human  tendency  to  be-­ lieve   that   whatever   happened   was   bound   to   happen,   and   that  everyone  must  have  known  it.  If  Flitsch  believed  that  an   explosion   was   imminent,   then   he   is   a   monster;   but   of   that   there  is  no  evidence.  Hindsight  bias  is  not  enough  to  support   a  verdict.  The  award  of  punitive  damages  against  West  Side   must  be  set  aside.   West  Side  does  not  contest  the  amounts  of  compensatory   damages.  (It  made  such  an  argument  in  the  district  court  but   has   not   repeated   it   on   appeal.)   Instead   it   contends   that   it   is   entitled  to  a  new  trial  on  damages  because  the  district  court   permitted  the  jury  to  infer  that  it  carried  liability  insurance,   which  it  says  violated  Fed.  R.  Evid.  411.   Plaintiffs  argued,  among  other  things,  that  ConAgra  is  li-­ able   for   its   delay   in   hiring   West   Side.   Part   of   the   trial   was   devoted   to   ConAgra s   negotiations   and   internal   delibera-­ tions   before   West   Side s   engagement.   The   district   court   ad-­ mitted  in  evidence  an  email  from  one  ConAgra  executive  to   another   stating   that   a   particular   bidder   could   not   be   used   because  it  did  not  carry  at  least  $3  million  in  liability  insur-­ ance.  West  Side  says  that  this  email  allowed  the  jury  to  infer   10   Nos.  13-­ 1505  et  al.   that   it   did   have   that   much   insurance though   the   record   does  not  contain  direct  evidence,  one  way  or  the  other,  about   whether   West   Side   was   insured   and,   if   so,   for   how   much.   West   Side   maintains   that   any   possibility   of   an   inference   about  insurance  is  enough  to  violate  Rule  411.   That  is  not  what  the  rule  says.  It  provides:   Evidence  that   a   person   was   or   was   not   insured   against   liability   is   not   ad-­ missible   to   prove   whether   the   person   acted   negligently   or   otherwise   wrongfully.   The   email   was   not   introduced   to   prove  that  West  Side  acted  negligently.  It  was  introduced  as   part   of   an   effort   (unsuccessful,   we   have   held)   to   prove   that   ConAgra   is   liable.   The   jury s   ability   to   infer   that   West   Side   carried   insurance something   that   plaintiffs   counsel   never   argued should   have   been   addressed,   if   at   all,   under   Rule   403  rather  than  Rule  411.  Yet  West  Side  does  not  argue  that   the   district   judge   abused   his   discretion   in   not   excluding   or   redacting  the  email  under  Rule  403  to  eliminate  a  risk  of  un-­ justified  prejudice;  indeed,  West  Side  does  not  mention  Rule   403   in   this   court.   What s   more,   any   error   on   the   district   court s  part  was  harmless.  The  verdicts  so  far  exceed  $3  mil-­ lion   that   the   jury s   belief   that   West   Side   carried   that   much   insurance  cannot  have  played  a  material  role.   The   judgment   against   ConAgra   is   reversed.   The   con-­ tract  judgment  in  favor  of  ConAgra  and  against  West  Side  is   affirmed.  The  award  of  punitive  damages  against  West  Side   is   reversed,   and   the   awards   of   compensatory   damages   against   West   Side   are   affirmed.   We   remand   to   the   district   court  for  the  limited  purpose  of  determining  how  these  deci-­ sions  affect  indemnification  or  contribution.  ConAgra  recov-­ ers  its  costs;  plaintiffs  and  West  Side  bear  their  own  costs.