In Re: Paulsboro Derailment Ca v. , 704 F. App'x 78 ( 2017 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
Nos. 15-4039, 16-1654,16-1655
____________
IN RE: PAULSBORO DERAILMENT CASES
ALICE BREEMAN, S.B.-R., A.B.-R. AND H.B.-R.,
Appellants in 15-4039
BRYAN EVERINGHAM,
Appellant in 16-1654
RYAN RAGONE,
Appellant in 16-1655
____________
On Appeal from the United States District Court
for the District of New Jersey
(D. N.J. Nos. 1-12-cv-07468, 1-13-cv-00784, 1-13-cv-03350,
1-13-cv-07410)
District Judge: Honorable Robert B. Kugler
____________
Argued
December 6, 2016
Before: FISHER*, KRAUSE and MELLOY**, Circuit Judges.
(Filed: August 28, 2017)
*
Honorable D. Michael Fisher, United States Circuit Judge for the Third Circuit,
assumed senior status on February 1, 2017.
**
Honorable Michael J. Melloy, Senior Circuit Judge, United States Court of
Appeals for the Eighth Circuit, sitting by designation.
____________
OPINION***
____________
Mark R. Cuker [Argued]
Michael J. Quirk
Williams Cuker Berezofsky LLC
1515 Market Street, Suite 1300
Philadelphia, PA 19102
David M. Cedar
Cedar Law Firm, LLC
1908 Marlton Pike East
Cherry Hill, NJ 08003
Attorneys for Breeman Appellants
Kevin McCann
Matthew Weng [Argued]
Chance & McCann
201 W Commerce St
Bridgeton, NJ 08302
Attorneys for Appellants Everingham, Ragone, and Johnson
Chad M. Clamage
Mayer Brown LLP
71 South Wacker Drive
Chicago, IL 60606
Evan M. Tager
Mayer Brown LLP
1999 K Street, Northwest
Washington, DC 20006-1101
Attorneys for Appellee CSX Transportation, Inc.
Ralph G. Wellington
***
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
Nancy Winkelman (argued)
Schnader Harrison Segal & Lewis LLP
1600 Market Street, Suite 3600
Philadelphia, PA 19103
Ronald K. Wray, II (argued)
Gallivan, White & Boyd P.A.
55 Beattie Place, Suite 1200
Greenville, SC 29601
Attorneys for Appellee Consolidated Rail Corp., Norfolk Southern Railway Co.,
and CSX Transportation, Inc.
MELLOY, Circuit Judge.
On November 30, 2012, several train cars derailed while crossing Mantua Creek
on a swing bridge near Paulsboro, New Jersey. One of the cars released over 20,000
gallons of vinyl chloride, creating an airborne chemical cloud. Plaintiff-appellants Alice
Breeman and her children drove through the cloud repeatedly on the day of the spill. The
other plaintiff-appellants are first responders who arrived on the scene shortly after the
spill.
In several separate suits, the plaintiffs sued numerous parties, including
Consolidated Rail Corporation (“Conrail”), the owner of the bridge. The plaintiffs sought
compensation for alleged physical injuries, ongoing medical monitoring, emotional
distress due to fears of increased cancer risk, and punitive damages. The district court
consolidated cases for pretrial matters, ruled on several motions in limine regarding
expert witnesses, granted summary judgment against the first responders, and granted
partial summary judgment against the Breemans. In doing so, the district court noted that
3
the amount in controversy for the Breemans appeared insufficient to reach the $75,000
threshold for diversity jurisdiction. The district court ordered briefing on the issue and
later concluded punitive damages were unavailable. The district court accordingly
dismissed the Breemans’ complaint, concluding the Breemans’ alleged compensatory
damages fell short of the jurisdictional threshold.
We need not discuss most of the issues addressed by the district court. Rather, as
to the Breemans and two of the first responders, we conclude the allegations of injury fail
to satisfy the $75,000 amount-in-controversy threshold for establishing federal diversity
jurisdiction. Accordingly, we will dismiss their appeals without prejudice. We reach our
conclusion without reference to the district court’s underlying evidentiary and summary
judgment rulings and rely, instead, on the plaintiffs’ own allegations of injury as initially
pleaded and as later clarified by the plaintiffs themselves. The third first responder,
Marlo Johnson, did not timely file his appeal, and thus, we granted the motion to dismiss
his appeal for lack of appellate jurisdiction.
I.
The swing bridge at the center of this case could be positioned “open” to permit
boat traffic along the creek or “closed” to permit train traffic across the creek. From
March through November, the default position for the bridge was open; from December
through February, the default position was closed. When not closed and locked for the
winter, the bridge could be moved as needed to permit rail traffic.
4
In the past, Conrail had employed a person to control the bridge and visually
ensure the rails were locked for crossing. In 2003, however, Conrail changed to a
computerized locking and signal system to indicate to approaching trains whether the
bridge was properly aligned and locked for crossing. When functioning properly, the
locking system used four slide locks, two on each side of the bridge. A proximity
detector would sense when the locks were fully extended and generate a green signal.
When the slide locks were one-half inch or more away from the detectors, the signal
system would generate a red signal and audibly announce, “Paulsboro moveable bridge
failed to operate.”
In general, if a train approached the bridge and did not receive a green signal, the
train would stop and an engineer or conductor would visually inspect the bridge to
determine if the rails were in place and locked. If these persons were unable to obtain a
green signal, they would call a dispatch control center to report their observations and
obtain permission to cross. This procedure was set forth in a Conrail operating rule,
providing that no trains were to cross a moveable bridge through a red signal unless a
“qualified” employee ensured the bridge was fully locked and safe to cross. Northeast
Operating Rules Advisory Committee Rule 241(d).
In the year prior to the derailment, thousands of trains passed over the bridge, and
there were approximately two dozen reports of signal problems. Half of these reports
came after Hurricane Sandy struck in October 2012. In response to each report, Conrail
5
employees conducted investigations and either addressed the problem or were unable to
determine the cause of the problem.
On at least one occasion, Conrail hired a consultant, Hans Heidenreich, to inspect
and diagnose the signal error at the bridge. Heidenreich was the designer of the
programmable logic controller at the heart of the bridge’s locking and signal system. He
inspected the system on November 13 and 20, 2012. He was unable to diagnose the
problem, but he was aware that the bridge was scheduled to be locked into the default,
closed position on December 1. As such, he recommended to Conrail’s Supervisor of
Structures that Conrail seek permission to lock the bridge early for the winter to permit
further inspection of electrical wiring. The Supervisor of Structures elected not to lock
the bridge early. Heidenreich indicated his recommendation to close the bridge was
related to functionality not safety. The Supervisor indicated he did not believe the
recommended closure was a safety recommendation and believed continued use of the
bridge would allow diagnosis of the intermittent signal failure.
Then, on November 30, a train approached the bridge. The bridge was in the
closed position, but the signal system generated a “red” signal. Train engineer Mark
Mather and conductor Wilbert den Ouden stopped the train. The conductor inspected the
bridge and reported the rails were lined and locked. The engineer called a Conrail
dispatch center to report the situation, explaining that the conductor had walked the rails
and confirmed the rails were “locked and lined.” The dispatch center gave permission for
6
the train to proceed across the bridge. When crossing the bridge, seven cars derailed, one
of which ruptured and spilled 20,000 gallons of vinyl chloride into the creek, creating a
vapor cloud.
The plaintiffs were near the bridge on the day of the derailment. New Jersey State
Police Trooper Bryan Everingham worked near the bridge on the day of the derailment.
He does not allege he experienced any adverse health effects on the day of the
derailment. Rather, he alleges he developed headaches and sleeplessness in December
2012 or January 2013, and does not allege he sought medical treatment for these issues.
Officer Ryan Ragone helped evacuate residents from their homes immediately
following the derailment. He alleges he developed severe watery eyes and nasal
discharge at that time and later that day developed a cough that lasted through one night.
He described these symptoms as having subsided and does not allege he sought medical
treatment for these symptoms. He does not allege ongoing symptoms related to vinyl
chloride exposure.
On the day of the derailment, Alice Breeman left her home with her three children
to take them to a school and a day-care center. On her way, she drove through the cloud
of vinyl chloride and its degradation products only to discover the school was closed.
She drove back through the cloud to reach a different day-care provider nearer to the site
of the derailment only to find that location also closed. Finally, she drove two blocks to a
relative’s home and walked her children into the home. She then attempted to drive to
7
work but began to feel lightheaded and dizzy. She turned around, retrieved her children,
and drove them to her mother’s home in another town.
Breeman reports that she started coughing, wheezing, and having nosebleeds. The
following day, she went to an emergency room where she was diagnosed with vinyl
chloride exposure, epistaxis, and reactive disease with bronchospasms. Two days after
that, she went to a different emergency room complaining of dizziness, a tight chest, and
shallow breathing. She was treated with a Ventolin nebulizer. Nine days after that, she
visited her family doctor complaining of wheezing, nausea, and a headache. Her family
doctor had seen many patients with similar symptoms and had consulted with a
toxicologist for Conrail. The toxicologist told the doctor Paulsboro residents were not
exposed to vinyl chloride at a concentration above 10 parts per million (ppm). Allegedly
influenced by this information, Breeman’s doctor diagnosed Breeman’s continuing
symptoms as due to “viral bronchitis or sinusitis” rather than vinyl chloride exposure.
Breeman asserts she was exposed to a substantially greater concentration of vinyl
chloride and the toxicologist provided inaccurate information to her doctor. Breeman
alleges that she continues to cough, wheeze, and suffer shortness of breath. Breeman has
been a smoker for 16 years, smoking half a pack per day. In addition, prior to the
derailment, she suffered from hypertension, diabetes, acid reflux disease, and numerous
upper respiratory tract infections.
8
Breeman’s youngest child, who was one-year old at the time of the derailment,
was also examined during Breeman’s first visit to the emergency room, where the
examining doctor said the child was fine. Breeman took this child to the emergency
room again during her own visit to the emergency room two days after the accident. Like
Breeman, this child received breathing treatments during this second visit. Breeman
alleges this child developed “an aggressive cough that persisted for weeks.” (Breeman
Appellants’ Br. 8) Breeman also alleges this child now contracts respiratory illness more
frequently and such illnesses last longer than before the derailment. The child’s
pediatrician has prescribed a nebulizer for use if the child is sick, but the child is not
otherwise under regular treatment for asthma or under the care of a pulmonologist.
Breeman sought no medical treatment for her two older children.
It is undisputed that long-term, continued exposure to vinyl chloride, such as that
experienced in an occupational setting, may increase the risk of cancer. It also is
undisputed that a single, acute exposure to sufficiently high levels of vinyl chloride may
cause irritation, dizziness, or headaches with more severe adverse effects at even higher
levels. Breeman asserts that a sufficiently high level of acute exposure may cause death.
The parties dispute vigorously whether a single, acute exposure to vinyl chloride
increases the risk of cancer.
Through expert witnesses and in briefing on motions for summary judgment, the
parties contested the concentrations of vinyl chloride exposure following the derailment,
9
whether a jury could find a one-time acute exposure to vinyl chloride capable of
increasing a person’s risk of cancer, whether the train’s conductor was a “qualified”
employee for purposes of inspecting the rail locks, and whether Conrail’s training and
operating procedures were adequate. The district court held that training issues were
preempted by federal law and excluded the plaintiffs’ medical-causation, railroad-
operations, and railroad-engineering expert witnesses. The district court then granted
summary judgment against the first-responders and against most of the Breemans’
claims.
In addition, the district court questioned the amount in controversy as to the
Breemans. Breeman argued (1) she and her children suffered physical injuries; (2) they
suffered harm in the form of a need for future medical monitoring; and (3) punitive
damages should be available thus multiplying the amount in controversy. Although
Breeman alleged in her complaint that she and her children suffered emotional harm due
to a fear of heightened cancer risks, she did not attempt to place a dollar amount on this
harm in her arguments.
The district court concluded punitive damages were not available. Citing New
Jersey law, the district court determined that punitive damages required malice or a
willful disregard of a known risk of a high probability that harm would occur. The court
then noted that no allegations tended to show any Conrail employees actually believed
the bridge was unsafe and that, instead, Conrail had repeatedly acted to inspect the bridge
10
and its locking and signal system to understand and diagnose the problem. The district
court also determined Alice Breeman’s claims for physical injury and medical monitoring
were, to a legal certainty, incapable of reaching the jurisdictional threshold. In so
finding, the district court quoted Breeman’s attorney who indicated Breeman sought no
specific testing or monitoring; rather, she sought only general lifestyle counseling
regarding healthy practices that might minimize the risk of cancer. The district court
reached the same conclusion regarding the Breeman children, noting that the older two
children actually did not allege any physical harm that had required a visit to a hospital or
doctor.
After the district court dismissed the Breemans’ complaint for lack of federal
jurisdiction, they filed a similar suit in state court. The state court suit was pending as of
the date of oral arguments in this appeal.
The Breemans and the first responders appeal. Regarding the jurisdictional
amount in controversy, the Breemans argue the district court impermissibly looked at the
record as it existed at the time of dismissal rather than when they commenced the action.
In addition, they argue the facts in existence at commencement of the action do not show
to a legal certainty that punitive damages are unavailable.
II.
11
We review de novo the legal determination of whether subject matter jurisdiction
exists. Shaffer v. GTE North, Inc., 284 F.3d 500, 502 (3d Cir. 2002). In addition, as a
court of limited jurisdiction, we at all times possess the responsibility to ensure we hold
jurisdiction over matters that come before us. See id. (“Although neither party had posed
the question [of] subject matter jurisdiction . . . , nor had the district court focused on that
issue, we raised the matter sua sponte—as every court is obligated to do when subject
matter jurisdiction is in question.”). The appellants all allege diversity jurisdiction
pursuant to 28 U.S.C. § 1332(a).
“[T]he diversity statute vests in the federal district courts original jurisdiction of
‘all civil actions where the matter in controversy exceeds the sum or value of $75,000, . .
. and is between . . . citizens of different States . . . .’” In re Lipitor Antitrust Litig., 855
F.3d 126, 150 (3d Cir. 2017) (quoting 28 U.S.C. § 1332(a)(3)). A plaintiff asserting
diversity jurisdiction bears the burden of demonstrating that the amount in controversy
exceeds $75,000. Auto-Owners Ins. Co. v. Stevens & Ricci Inc., 835 F.3d 388, 395 (3d
Cir. 2016). The burden is not heavy, as “the sum claimed by the plaintiff controls if the
claim is apparently made in good faith.” St. Paul Mercury Indem. Co. v. Red Cab Co.,
303 U.S. 283, 288 (1938) (footnote omitted). As such, “[i]t must appear to a legal
certainty that the claim is really for less than the jurisdictional amount to justify
dismissal.” Id. at 289 (emphasis added).
12
We assess the amount in controversy as of “the time that the complaint was filed,”
Auto-Owners, 835 F.3d at 395 (citation omitted), such that the subsequent dismissal or
defeat of a plaintiff’s claims does not retroactively divest the court of jurisdiction, see id.
at 395–96 (“Subsequent events cannot reduce the amount in controversy so as to deprive
the district court of jurisdiction, nor can later events increase the amount in controversy
and give rise to jurisdiction that did not properly exist at the time of the complaint’s
filing.”). If during the course of pretrial proceedings, however, facts come to light
making it apparent that the threshold amount of damages simply was never available as a
matter of law, that discovery may be deemed a “revelation” of facts as they existed at the
time of filing. Huber v. Taylor, 532 F.3d 237, 244 (3d Cir. 2008) (discussing and
applying St. Paul Mercury Indem., 303 U.S. at 290). Such a revelation may serve as the
basis for finding that the amount in controversy is—and always was—insufficient. Id.(“Dismissal is warranted . . . only when a subsequent revelation clearly establishes that
the plaintiff’s claims never could have amounted to the sum necessary to support
diversity jurisdiction.”); see also id. (“The Supreme Court has endorsed the practice of
dismissing a case on the basis of post-filing revelations regarding the invalidity of claims
at the time of filing[.]” (citing St. Paul Mercury Indem., 303 U.S. at 290)).
In attempting to separate facts in existence at the time of filing and later
revelations about those facts (all of which we properly may consider) from subsequent
events (information we may not consider), few clear dividing lines exist. At a minimum,
13
however, a plaintiff’s subsequently revealed and detailed descriptions of her own alleged
injuries as they existed at the time of filing are revelations of past facts rather than
subsequent developments. In contrast, a plaintiff’s ultimate failure to succeed on a claim
or a district court’s exclusion of a plaintiff’s expert witnesses are subsequent
developments not affecting the jurisdictional analysis. See id. at 246–47.1
For example, in Huber, a district court dismissed a civil action on jurisdictional
grounds, finding a diversity complaint patently deficient as to the amount in controversy.
532 F.3d at 243. This court reversed, noting that the district court erroneously looked at
the case as it “currently exist[ed]” rather than at the time of filing. Id. at 246–47. There,
the district court noted “that Plaintiffs had failed to present evidence of actual damages,
that Plaintiffs’ breach of fiduciary duty claims were the only claims that remained viable,
and that relief was limited to disgorgement of fees, compensatory damages that were
likely to be de minimis, and punitive damages.” Id. at 246. This court characterized
those plaintiffs’ failures as subsequent events not material to the jurisdictional analysis.
Id. Further, the potential for punitive damages made it legally uncertain whether the
amount in controversy could be met. Id. at 246–47. Because it could not be said with
1
The district court in the present case noted that one related case raising similar
claims went to trial and resulted in a compensatory award for the plaintiff in the amount
of $500. To the extent the district court relied upon this award as evidence to assess the
likely value of the current plaintiffs’ claims, such reliance was in error. Setting aside any
differences between plaintiffs and their alleged personal injuries, the damages assessed
by a jury in a different case long after the complaints were filed in the present cases
constitutes a subsequent event not material to the jurisdictional issue in the present cases.
14
legal certainty that damages would be below $75,000, dismissal for lack of jurisdiction
was improper. Id. at 247.
Against this backdrop, we note that, at the pleading stage, a plaintiff need not set
forth with great specificity all the details of her injuries. Thomas v. Indep. Twp., 463 F.3d
285, 295 (3d Cir. 2006) (“As the Supreme Court has advised, the Federal Rules do not
require a claimant to set out in detail the facts upon which he bases his claim. Rather, the
complaint must only give the defendant fair notice of what the plaintiff’s claim is and the
grounds upon which it rests.” (citations and internal quotation marks omitted)). The
notice pleading standard, however, does not relieve the plaintiff of the burden of
establishing jurisdiction. As such, a plaintiff’s later “fleshing out” of her claims through
clarification of her allegations will, necessarily, inform the court as to the potential
amount in controversy. Minor injuries meriting possible compensation legally certain to
be below the jurisdictional threshold cannot serve as a basis for diversity jurisdiction
merely because a plaintiff elects at the pleading stage to omit details that might reveal the
true and limited scope of those injuries. Therefore, when a plaintiff clarifies her
allegations of injury throughout the pretrial process, the court should ensure such
revelations do not show that the jurisdictional amount had always been unavailable.
Here, Alice Breeman alleged four essentially identical counts (one for herself and
one “as parent and natural guardian” for each of her three children). In each of these
counts, she alleged physical injury, loss and impairment of earning power, ongoing
15
medical monitoring, and psychological and emotional injury related to a fear of increased
cancer risk. She also alleged a count for punitive damages and a count for nuisance.2 In
her demand for relief, she specifically sought “upon each of the foregoing Counts
compensatory damages for a sum in excess of One Hundred Fifty Thousand Dollars
($150,000) and punitive damages for a sum not less than Ten Million dollars
($10,000,000.00).”
In subsequent briefing and arguments, however, she clarified the nature and full
extent of her and her children’s alleged injuries. She sought no medical care at all for her
two older children. As to her youngest child, she alleged that the child developed “an
aggressive cough” that persisted. (Breeman Appellants’ Br. 8) She sought medical care
for herself and her youngest child at two emergency room visits one day and three days
after her exposure. She sought care for herself at a visit to her regular doctor nine days
later. She reported nausea, coughing, headaches, dizziness, and difficulty sleeping. She
alleges that she and her youngest child have received conservative treatment, and she
alleges minor symptoms that persist. When pressed by the district court, Breeman did not
attempt to meaningfully quantify or describe her alleged injuries apart from her physical
injuries. She appeared to waive any argument as to the value of her claims for emotional
distress related to an increased fear of cancer because she did not ascribe a value, nor
2
The nuisance count alleged interference with enjoyment of property but did not
identify the property at issue. Further, in presenting arguments as to subject matter
jurisdiction, Breeman does not reference the nuisance claim.
16
explain in any detail, her claim of emotional distress. Further, she revealed that her
request for ongoing medical monitoring was limited to general lifestyle coaching in the
nature of diet and exercise recommendations to minimize cancer risks. In fact, in her
briefing to our Court, she described her requested monitoring, as set out in detail by her
own expert witness, as “preventive measures to promote health by educating Breeman on
her exposure and how she can reduce modifiable risk factors to compensate for her
increased cancer risk.” (Reply Brief at 16) In this regard, counsel for Breeman conceded
that she alleged no specific medical testing or early detection methods likely to identify
the type of cancer she alleged might arise.
Even assuming for the sake of our analysis that Breeman did not waive arguments
concerning possible compensation for emotional damages due to fear of cancer, her
claims in this regard cannot push her potential recovery over the amount-in-controversy
threshold. Such claims under New Jersey law are compensable in two circumstances.
First, an emotional-distress claim may be viable where a plaintiff demonstrates a physical
injury as a result of chemical exposure and also demonstrates the reasonableness of an
attendant fear of an increased cancer risk. Theer v. Philip Carey Co., 611 A.2d 148, 153
(N.J. Super. Ct. App. Div. 1992), rev’d on other grounds, 628 A.2d. 724 (N.J. 1993);
Ironbound Health Rights Advisory Comm’n v. Diamond Shamrock Chems. Co., 578 A.2d
1248, 1250 (N.J. Super. Ct. App. Div. 1990) (“A person who sustains physical injury
because of exposure to toxic chemicals may recover damages for emotional distress
17
based on a reasonable concern that he or she has an enhanced risk of future disease.”).
Second, in the absence of a physical injury, an emotional distress claim may be viable
“where the resultant emotional distress is severe, substantial and tantamount to physical
injury.” Theer, 611 A.2d at 153. Here, as revealed through Breeman’s own expert
witness who relied on Breeman’s allegations regarding the concentration of chemical
exposure, Breeman alleges an increased likelihood of contracting cancer in the range of 1
in 10,000. She did not allege emotional distress of a severe nature as anticipated in
Theer.
Based on these more detailed representations about the general injuries the
Breemans alleged in the complaint, we conclude to a legal certainty that possible
compensatory damages, in the absence of punitive damages, cannot reach the
jurisdictional threshold. We do not mean to characterize the alleged injuries as de
minimis. In assessing the amount in controversy, however, including the reasonableness
of a fear of an increased cancer risk and the compensable scale of that risk, we must
apply a common sense filter to the plaintiffs’ own allegations of harm. An award that
would amount to an impermissibly excessive verdict cannot be the measuring stick in a
jurisdictional analysis. See Nelson v. Keefer, 451 F.2d 289, 295 (3d Cir. 1971) (stating,
in the context of an amount-in-controversy analysis, “This court has succinctly and
frequently stated that the question of excessiveness of a verdict is primarily a matter to be
18
addressed to the sound discretion of the trial court.” (quoting Russell v. Monongahela Ry.
Co., 262 F.2d 349, 352 (3d Cir. 1958))).
Similarly, first-responder plaintiffs Ragone and Everingham alleged minor
symptoms describing physical injuries compensable, if at all, at some amount far below
the $75,000 jurisdictional threshold. Although it is difficult to see how the first-
responder plaintiffs can justify an award of damages above this amount, we take their
demands for relief and arguments in the most favorable and generous possible light.
Doing so, we interpret their demands as seeking compensation for ongoing medical
monitoring and emotional distress for cancer fears. Like the Breemans, these plaintiffs
indicate in no fashion how such demands in the present case might push possible
compensatory damages over the jurisdictional threshold.
The plaintiffs’ claims, however, are not limited to compensatory damages; they
also seek punitive damages. “If appropriately made . . . claims for punitive damages
‘will generally satisfy the amount in controversy requirement because it cannot be stated
to a legal certainty that the value of the plaintiff’s claim is below the statutory
minimum.’” Huber, 532 F.3d at 244 (quoting Golden ex rel. Golden v. Golden, 382 F.3d
348, 355 (3d Cir. 2004) (emphasis omitted)). This follows from the fact that, although
punitive damages greater than single-digit multiples of actual damages are rare, higher
multiples may be justified if actual damages are small and the offending conduct is
particularly egregious. See, e.g., Willow Inn, Inc. v. Pub. Serv. Mut. Ins. Co., 399 F.3d
19224, 234 (3d Cir. 2005) (“While few awards exceeding a single-digit ratio between
punitive and compensatory damages, to a significant degree, will satisfy due process,
greater ratios may comport with due process where a particularly egregious act has
resulted in only a small amount of economic damages.” (internal quotation marks and
citations omitted)). As such, because a court generally cannot assess with the requisite
legal certainty what punitive damages a jury might award, a good-faith and colorable
claim for punitive damages tends to open the door for diversity jurisdiction even where
alleged compensatory damages, standing alone, cannot reach the jurisdictional threshold.
See Huber, 532 F.3d at 244, 246.
A claim for punitive damages, however, is not a mere abstraction. A generalized
allegation of a naked legal conclusion that someone acted “willfully” or “maliciously”
cannot convert what otherwise is a state-court negligence suit into a federal diversity
action for punitive damages. Rather, a pleading as to punitive damages must be viewed
against the backdrop of the governing law regarding the availability of punitive damages.
In this case, New Jersey law applies. Through express statutory language, New Jersey
provides that even gross negligence will not suffice to make punitive damages available.3
3
New Jersey Stat. Ann. § 2A:15-5.12 provides:
Punitive damages may be awarded to the plaintiff only if the plaintiff
proves, by clear and convincing evidence, that the harm suffered was the
result of the defendant's acts or omissions, and such acts or omissions were
actuated by actual malice or accompanied by a wanton and willful disregard
of persons who foreseeably might be harmed by those acts or omissions.
20
Conduct must occur with malice or “with knowledge of a high degree of probability of
harm and reckless indifference to the consequences.” Smith v. Whitaker, 734 A.2d 243,
254 (N.J. 1999).
Breeman alleged many failures by Conrail or its employees that, if true, would
appear to constitute negligence or even gross negligence. Her allegations, however, did
not show intentional, malicious conduct, nor did her allegations set forth acts or
omissions undertaken “with knowledge of a high degree of probability of harm.” Id. She
alleged Conrail received many reports of problems with the bridge’s signal system in
2012 with an uptick in reports after Hurricane Sandy. She also alleged that prior to
relying on the signal system, Conrail employed a human to move the bridge and ensure
locked rails. She acknowledged, however, that Conrail personnel inspected the rails and
locks as a human backstop to the automatic signal system. She also acknowledged the
conductor, in fact, inspected the locks on the day of the derailment prior to the train’s
attempted crossing of Mantua Creek, as had been done by many other trains that crossed
the bridge following signal failures and human inspections.
This burden of proof may not be satisfied by proof of any degree of
negligence including gross negligence.
The first-responder plaintiffs asked for punitive damages in their complaints as to
claims alleging “gross negligence.” Everingham also asked for punitive damages as to a
claim alleging “strict liability.” Punitive damages are unavailable as to these plaintiffs
for the reasons discussed infra in reference to Breeman’s arguments. Punitive damages
also are unavailable due to the statutory restriction on such damages for claims asserting
gross negligence.
21
Against this backdrop, she alleges the following as wrongful acts: permitting an
inadequately trained person to make the decision to proceed over the bridge despite the
red signal; failing to comply with operating rules; failure to properly inspect, maintain,
and repair the signal system; failure to take necessary precautions despite engaging in an
ultra-hazardous activity; and failure to warn people in the area of the risks at the bridge.
These allegations simply do not satisfy New Jersey’s rigorous test to open the door
for punitive damages. In general, Breeman alleges Conrail knew there was a problem
with the locking and signal system and did not do enough—did not take sufficient
action—to resolve the problem or take the bridge out of service. Breeman’s allegations,
therefore, are in the nature of claims for negligence or gross negligence. To the extent
she identifies facts and risks of which personnel at Conrail knew or should have known,
she does not identify a willful flaunting of those risks. Rather, she alleges inadequate
steps to remedy or guard against those risks.
Punitive damages are unavailable in a situation like this, where a defendant knows
of a potentially hazardous situation and unsuccessfully takes steps to remedy the
situation. In Allendorf v. Kaiserman Enterprises, an elevator doors’ safety features were
malfunctioning, and the defendant had acted in an effort to inspect and remedy the
malfunction before an accident occurred. 630 A.2d 402, 404 (N.J. Super. Ct. App. Div.
1993). The morning of the accident in that case, a technician inspected the elevator but
did not find or fix the problem. Id. The court held that punitive damages were
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unavailable. Id. at 409. The court observed that “[the defendant] did not simply ignore
the problems with the elevator but instead called [the technicians] to service it.” Id.Ultimately, the court concluded that “this evidence would not support a finding that [the
defendant] intended someone to be injured in its elevator or that it was aware there was a
high probability of injury.” Id. Like the defendant in Allendorf, Conrail acted to address
a risk. Continued use of the bridge with in-person inspection rather than reliance upon
the signal system cannot demonstrate the requisite scienter for punitive damages.
Similarly, to the extent Breeman focuses upon the conductor’s training, skills, and
qualifications, or the engineer or dispatcher’s failure to inquire as to the conductor’s
qualifications, her claims, again, amount to claims of negligence.
Because we conclude punitive damages are unavailable and compensatory
damages do not pass the jurisdictional threshold, federal diversity jurisdiction is lacking
as to the Breemans, Everingham, and Ragone. We will accordingly dismiss these
appellants’ cases without prejudice.
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