Union Pacific Corp. v. Clean Harbors, Inc. ( 2019 )

IN THE SUPREME COURT OF THE STATE OF DELAWARE
UNION PACIFIC CORP., §
§
Defendant Below, § No. 35, 2018
Appellant/Cross-Appellee, §
§ Court Below—Superior Court
v. § of the State of Delaware
§
CLEAN HARBORS, INC., §
§
Plaintiff Below, §
Appellee/Cross-Appellant. §
Submitted: October 24, 2018
Decided: January 7, 2019
Before STRINE, Chief Justice; VALIHURA, VAUGHN, SEITZ, and
TRAYNOR, Justices, constituting the Court en Banc.
ORDER
This 7th day of January, 2019, after careful consideration of the parties’ briefs,
the record on appeal, and the argument of counsel, it appears to the Court that:
(1) Clean Harbors sued Union Pacific to enforce an indemnification
provision in a stock purchase agreement under which Union Pacific agreed to hold
Clean Harbors harmless for environmental liabilities related to a hazardous-waste
facility in Wichita, Kansas. At the core of the dispute was the reasonableness of
Clean Harbors’ cleanup of environmental contamination at the facility.
(2) After a three-week jury trial, the Superior Court entered judgment
against Union Pacific and in Clean Harbors’ favor in the amount of $5,681,351.53
plus costs and interest. The amount of the judgment was based on the jury’s
finding—as recorded on a verdict form prepared by the trial judge—that the total
reasonable cost of the environmental cleanup performed by Clean Harbors was
$9,180,445.76. The reduced judgment amount was based on the Superior Court’s
calculation, the propriety of which was not contested.1
(3) After trial, Clean Harbors moved for an award of fees and costs, which
the Superior Court denied.
(4) Union Pacific appealed on numerous grounds, including that the
indemnification provision did not cover the cleanup costs. But the principal thrust
of Union Pacific’s objections to the proceedings below relate to the Superior Court’s
evidentiary rulings and jury instructions as exemplified by the aforementioned jury
verdict form, which Union Pacific says was confusing and prejudicial.
(5) Clean Harbors cross-appealed the Superior Court’s denial of its
motions for fees and costs.
(6) We find no error in the Superior Court’s determination on summary
judgment that Clean Harbors’ cleanup of the Wichita facility was a covered third-
party claim,2 but we do take this opportunity to address Union Pacific’s claim that
1
To reach the final judgment figure, the jury’s verdict was reduced by $2,000,000 (indemnification
deductible), multiplied by 80% (indemnification ratio), and reduced again by $64,005.08 (prior
payment by Union Pacific). The Superior Court also awarded $272,184.08 in prejudgment interest.
2
Clean Harbors, Inc. v. Union Pac. Corp., 2017 WL 1175664 (Del. Super. Mar. 28, 2017).
2
the wording of the verdict form led the jury to return a figure incommensurate with
Clean Harbors’ contract damages.
(7) The verdict form asked the jury:
(1) whether Union Pacific breached the SPA;3
(2) whether Clean Harbors breached the SPA;
(3) what “the total reasonable cost of the environmental clean-
up” was; and
(4) what amount would “fairly and reasonably compensate
Union Pacific for Clean Harbors’ breach of contract.”
As mentioned, the Superior Court entered judgment in the favor of Clean Harbors
with a damages figure based on the jury’s response to Question 3.
(8) For its part, Union Pacific’s proposed verdict form asked the jury,
should it find that Union Pacific breached the contract, “[w]hat sum of money, if
any, if paid now in cash, would fairly and reasonably compensate Clean Harbors for
its damages, if any, that resulted from such breach of contract?”4 In turn, Clean
Harbors’ proposed form would have required the jury to identify “the total dollar
amount of expenses incurred addressing environmental liabilities covered by the
indemnification provision of the SPA,”5 and to perform the mathematical calculation
described above in footnote 1. The Superior Court rejected both proposals in favor
3
The jury verdict form also instructed the jurors to call the bailiff if they answered no to this first
question.
4
App. to Op. Br. A512.
5
Id. at A672.
3
of its purportedly simplified version “to make the jury’s task as clear as possible.”6
Union Pacific believes, however, that the court’s version—and especially Question
3—was “confusing and prejudicial.”7
(9) Particularly, Union Pacific contends that, though it might have been
obligated to indemnify Clean Harbors for the reasonable cost of a reasonable
cleanup of any environmental harm that it caused, the jury instructions—and, more
specifically, the Superior Court’s verdict form—asked for and the jury awarded the
cost of the actual cleanup. Union Pacific argues that the cleanup Clean Harbors
actually conducted was unreasonably complex, costly, and intended to deal with
environmental harms not caused by Union Pacific.
(10) This Court reviews de novo challenges to jury instructions,8 which
include verdict forms.9 Jury instructions must be “reasonably informative and not
misleading, judged by common practices and standards of verbal communication.”10
Instructions, however, need not be flawless, and a deficiency constitutes reversible
error “only if it undermined the ability of the jury to intelligently perform its duty in
returning a verdict.”11
6
Clean Harbors v. Union Pac. Corp., 2017 WL 5606953, at *3 (Del. Super. Nov. 15, 2017).
7
Op. Br. 22.
8
Sammons v. Doctors for Emergency Servs., P.A., 913 A.2d 519, 540 (Del. 2006).
9
See Sheehan v. Oblates of St. Francis de Sales, 15 A.3d 1247, 1255 (Del. 2011).
10
Probst v. Delaware, 547 A.29 114, 119 (Del. 1988) (internal quotations omitted).
11
Id.
4
(11) Although a different verdict form may have more clearly indicated to
the jury that they should return the total reasonable cost of a reasonable
environmental clean-up, we do not think the verdict form as written was so deficient
that reversible error resulted. This is especially so when the verdict form is
considered with the jury instructions as a whole and the presentations of counsel
throughout the trial including their opening statements and closing arguments.
Particularly, the jury was instructed that “Clean Harbors had a contractual duty to
mitigate the amount of money that Union Pacific had to pay” 12 and was repeatedly
reminded by counsel—including by Clean Harbors’ counsel—that Clean Harbors
had to conduct a reasonable cleanup and that any cleanup subject to indemnification
had to be performed before December 31, 2014.13
(12) In sum, we are satisfied that the verdict form did not mislead the jury
or “undermine[] . . . [its] ability to intelligently perform its duty in returnin[g] a
verdict.”14
(13) Union Pacific also appeals the Superior Court’s exclusion of certain
expert testimony and the denial of its motion for a new trial. These issues are
12
App. to Op. Br. A502.
13
See e.g., App. to Answering Br. B682, B691.
14
Newnam v. Swetland, 338 A.2d 560, 562 (Del. 1975) (internal quotations omitted.)
5
committed to the sound discretion of the trial judge,15 who resolved many such
spirited disputes among the parties during this case. Union Pacific makes colorable
arguments that these issues could have been resolved differently. But the trial court
has broad discretion to resolve issues of these kinds, and we cannot conclude that its
rulings exceeded those relaxed boundaries, much less that any ruling generated the
significant prejudice required to justify a new trial.16
(14) Union Pacific also challenges the jury’s verdict. We will uphold a
jury’s verdict “unless it is against the great weight of evidence.”17 Here, the Superior
Court properly found that the jury’s verdict is not against the great weight of
evidence because Clean Harbors submitted documentary evidence and witness
testimony, including expert testimony, that adequately supported the jury’s
judgment in its favor.18
15
See Cox v. Turner, 663 A.2d 486, 1995 WL 379237, at *2 (Del. June 22, 1995) (TABLE) (“Any
ruling concerning the admissibility of evidence implicates the sound discretion of the trial court
and will be reversed only when a clear abuse of that discretion is demonstrated.”); Emershaw-
Andrieux v. Biddle, 2015 WL 1208374, at *2 (Del. Mar. 16, 2015).
16
See Green v. Alfred A.I. DuPont Inst. of Nemours Found., 759 A.2d 1060, 1063 (Del. 2000)
(“The parties agree that this Court reviews for abuse of discretion both a trial court’s evidentiary
rulings and its denial of a motion for a new trial . . . . If the court finds error or abuse of discretion
in the rulings, it must then determine whether the mistakes constituted ‘significant prejudice so as
to have denied the appellant a fair trial.’”) (quoting Eustice v. Rupert, 460 A.2d 507, 510 (Del.
1983)).
17
Storey v. Camper, 401 A.2d 458, 465 (Del. 1979) (quoting Cities Service Oil Co. v. Launey,
403 F.2d 537, 540 (5th Cir. 1968)).
18
Clean Harbors, Inc. v. Union Pac. Corp., 2017 WL 5606953, at *2 (Del. Super. Nov. 15, 2017).
6
(15) Finally, as to Clean Harbors’ cross-appeal challenging the denial of fees
and costs, we affirm. The Superior Court correctly held that the indemnification
provision in the stock purchase agreement does not entitle Clean Harbor to costs and
fees,19 and that the indemnification provision was importantly distinct from and
more limited than the kind at issue in Pike Creek Chiropractic Center, P.A. v.
Robinson20 and Delle Donne & Associates, LLP v. Millar Elevator Service Co.21
NOW, THEREFORE, IT IS ORDERED that the judgment of the Superior
Court is AFFIRMED.
BY THE COURT:
/s/ Gary F. Traynor
Justice
19
See id. at *5–9.
20
637 A.2d 418 (Del. 1994).
21
840 A.2d 1244 (Del. 2004).
7