Terry Boyd v. BNSF Railway Company ( 2014 )

STATE OF MINNESOTA
IN COURT OF APPEALS
A14-0277
Terry Boyd,
Respondent,
vs.
BNSF Railway Company,
Appellant.
Filed December 29, 2014
Affirmed
Hooten , Judge
Concurring in part, dissenting in part, Rodenberg, Judge
Hennepin County District Court
File No. 27-CV-12-6144
Paula M. Jossart, Christopher J. Moreland, Bremseth Law Firm, P.C., Minnetonka,
Minnesota (for respondent)
Timothy K. Masterson, R. John Wells, Karl E. Robinson, Sweeney & Masterson, P.A.,
St. Paul, Minnesota (for appellant)
Considered and decided by Rodenberg, Presiding Judge; Hooten, Judge; and Kirk,
Judge.
SYLLABUS
An award of double post-offer costs to plaintiff under Minn. R. Civ. P.
68.03(b)(2), when defendant rejects plaintiff’s settlement offer and plaintiff subsequently
obtains a verdict more favorable than the settlement offer, is permissible in a Federal
Employers’ Liability Act lawsuit brought in a Minnesota state court.
OPINION
HOOTEN, Judge
In this appeal from a judgment in a Federal Employers’ Liability Act (FELA)
action, appellant BNSF Railway Company challenges the district court’s award of costs
and disbursements to respondent Terry Boyd, arguing that: (1) Minn. R. Civ. P.
68.03(b)(2), which permits enhanced costs based on the rejection of a settlement demand,
is preempted by FELA; and (2) the district court abused its discretion by awarding certain
expert costs. Because the Minnesota rule is not preempted by FELA and the district court
acted within its discretion when awarding expert costs, we affirm.
FACTS
In February 2012, Boyd filed a five-count complaint against BNSF, alleging
violations of FELA, 45 U.S.C. §§ 51–60 (2012); the Federal Safety Appliance Act
(FSAA), 49 U.S.C. §§ 20301–06 (2012); and the Locomotive Inspection Act (LIA), 49
U.S.C. §§ 20701–03 (2012), stemming largely from a March 6, 2011 incident in which
Boyd slipped on a ladder and was injured in the course of his employment with BNSF.1
On January 15, 2013, Boyd made BNSF a settlement offer of $275,000 pursuant to
Minn. R. Civ. P. 68.01. This offer was not accepted by BNSF, and the case proceeded to
a trial of Boyd’s FELA and LIA claims on May 28, 2013.2 The jury returned a verdict
for Boyd on both FELA claims, finding that BNSF failed to provide Boyd with a
reasonably safe workplace and that BNSF’s negligence caused injury to Boyd in violation
1
Boyd also brought a negligence claim relating to a 2009 incident in which he injured his
lower back. Boyd ultimately did not pursue this claim at trial.
2
Before trial, the district court granted BNSF summary judgment on the FSAA claim.
2
of FELA. The jury found no violation of LIA. The jury awarded Boyd damages in the
amount of $610,954.61. The district court granted BNSF’s motion for offsets and
reduced the award, entering judgment in favor of Boyd for $411,954.98.
After Boyd filed an affidavit of taxation of costs pursuant to Minn. R. Civ. P.
54.04(b), the court administrator taxed $152,537.16 in costs and disbursements against
BNSF, which included $62,584.48 under rule 68.03. These costs and disbursements
included expert fees in the amount of $37,985.74 for Alan Blackwell and $20,558.66 for
Dr. Robert Andres.
BNSF challenged the award with the district court, arguing that the doubling of
costs under rule 68.03 is preempted by FELA. The district court held that FELA does not
preempt rule 68.03. The district court reasoned that because rule 68.03 “is not meant to
make a party whole” and “is not an element of damages initially sought by [Boyd],” its
application is unlike that of the prejudgment-interest rule at issue in Monessen Sw. Ry. v.
Morgan, 486 U.S. 330, 108 S. Ct. 1837 (1988). The district court also distinguished
enhanced costs under rule 68.03 from punitive damages available under Minn. Stat.
§ 549.20, subd. 1(a) (2012). Therefore, the district court held that rule 68.03 could be
applied in this action. BNSF also challenged the expert fees taxed by the court
administrator. The district court upheld the fees for Blackwell and reduced the fees for
Dr. Andres to $10,352.88. With that fee reduction and other cost changes, the district
court ultimately taxed BNSF $133,751.12 for costs and disbursements. BNSF challenges
this award.
3
ISSUES
I. Does FELA preempt the doubling of post-offer costs and disbursements
pursuant to Minn. R. Civ. P. 68.03?
II. Did the district court abuse its discretion by awarding costs and disbursements
for the expert fees charged by Blackwell and Dr. Andres?
ANALYSIS
I.
BNSF disputes the district court’s award of double costs under Minn. R. Civ. P.
68.03(b)(2), arguing that the doubling of costs is preempted by FELA. “Whether federal
law preempts state law is an issue of statutory interpretation, which we review de novo.”
Meyer v. Nwokedi, 777 N.W.2d 218, 222 (Minn. 2010).
A. Minnesota Rule of Civil Procedure 68.03
Minnesota Rule of Civil Procedure 68.03(b)(2) allows a plaintiff, who serves an
offer of settlement on the defendant and wins a judgment greater than that offer, to
recover (1) the rule 54.04 costs to which it would otherwise be entitled, and (2) an
additional amount equal to its rule 54.04 costs incurred after the date of the offer. 3 Rule
68.03 balances this potential reward for plaintiffs with a similar incentive for defendants.
If a plaintiff rejects a defendant’s offer of settlement and the verdict is in favor of the
3
Minn. R. Civ. P. 68.03(b)(2) provides, in relevant part:
If the offeror is a plaintiff, and the relief awarded is less
favorable to the defendant-offeree than the offer, the
defendant-offeree must pay, in addition to the costs and
disbursements to which the plaintiff-offeror is entitled under
Rule 54.04, an amount equal to the plaintiff-offeror’s costs
and disbursements incurred after service of the offer.
4
plaintiff but less favorable than defendant’s offer, the defendant is awarded its post-offer
costs and does not have to pay plaintiff’s costs. Minn. R. Civ. P. 68.03(b)(1). Thus,
under this scenario, the defendant effectively receives “double” post-offer costs; the
defendant recovers its post-offer costs and is relieved of having to pay the post-offer costs
a plaintiff would otherwise be entitled to under rule 54.04. See Minn. R. Civ. P. 68 2008
advisory comm. cmt. (“[U]nder the revised rule, a plaintiff who rejects a Rule 68 offer
suffers dual adverse consequences: loss of the right to recover his costs and required
payment of the defendant’s costs.” (emphasis added)).
B. FELA
FELA provides that “[e]very common carrier by railroad . . . shall be 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. 45
U.S.C. § 51. In creating this right of recovery for railroad workers, Congress “crafted a
federal remedy that shifted part of the human overhead of doing business from employees
to their employers.” Consol. Rail Corp. v. Gottshall, 512 U.S. 532, 542, 114 S. Ct. 2396,
2404 (1994) (quotations omitted). Congress has given state courts concurrent jurisdiction
with federal courts over adjudication of FELA claims, 45 U.S.C. § 56, and has prohibited
railroad defendants in state courts from removing FELA lawsuits to United States district
courts. 28 U.S.C. § 1445(a) (2012). FELA does not expressly address the decision to
award costs and disbursements to the prevailing party or the shifting of those costs and
disbursements between the parties.
5
C. Preemption
The Supremacy Clause of the United States Constitution provides that “[t]his
Constitution, and the Laws of the United States . . . shall be the supreme Law of the
Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution
or Laws of any State to the Contrary notwithstanding.” U.S. Const. art. VI, cl. 2. The
Supremacy Clause “invalidates state laws that interfere with, or are contrary to, federal
law.” Hillsborough Cnty., Fla. v. Automated Med. Labs., Inc., 471 U.S. 707, 712, 105 S.
Ct. 2371, 2375 (1985) (quotation omitted).
Determining whether federal law preempts a state law under the Supremacy
Clause “starts with the basic assumption that Congress did not intend to displace state
law.” Bldg. & Constr. Trades Council v. Assoc. Builders & Contractors of Mass./R.I.,
Inc., 507 U.S. 218, 224, 113 S. Ct 1190, 1194 (1993) (quotation omitted). This “normal
presumption against pre-emption” is “buttressed” when courts act in accordance with a
“neutral state Rule regarding the administration of state courts.” Johnson v. Fankell, 520
U.S. 911, 918, 117 S. Ct. 1800, 1805 (1997); see also Howlett v. Rose, 496 U.S. 356, 372,
110 S. Ct. 2430, 2441 (1990) (“States may apply their own neutral procedural rules to
federal claims, unless those rules are pre-empted by federal law.”). BNSF thus bears a
“heavy burden of persuasion” in arguing that the Minnesota rule is preempted by federal
law. Johnson, 520 U.S. at 918, 117 S. Ct. at 1805. As our supreme court has warned,
“[p]reemption of state law by federal statute or regulation is not favored in the absence of
pervasive reasons—either that the nature of the regulated subject matter permits no other
conclusion, or that the Congress has unmistakably so ordained.” Pikop v. Burlington N.
6
R.R., 390 N.W.2d 743, 747 (Minn. 1986) (quotations omitted); see also Gretsch v.
Vantium Capital, Inc., 846 N.W.2d 424, 433 (Minn. 2014) (“We have . . . recognized that
preemption is generally disfavored.”).
Applying United States Supreme Court precedent, our supreme court has
recognized three ways in which federal law may preempt state law: (1) explicit
preemption, in the “rare” case where Congress explicitly states that the federal law is
meant to preempt “any state action in the field”; (2) implied field preemption, where
Congressional intent to preempt state law is inferred either from “the extent of the federal
involvement [in the field] or the scope of the federal interest”; and (3) conflict-in-fact
preemption, where the federal law makes it impossible to comply with both state and
federal law, or “the state law is an obstacle to the accomplishment of the purposes of the
federal scheme.” Pikop, 390 N.W.2d at 748.
BNSF does not contend that this case falls under the rubric of explicit preemption.
There is no language in FELA explicitly at odds with rule 68.03, and we conclude that
this is not the “rare” case in which Congress has “expressly preclude[d] all state law in a
given regulatory field.” Id.
Congressional intent to impliedly preempt state law by occupying a legislative
field can be inferred “where the scheme of federal regulation is sufficiently
comprehensive to make reasonable the inference that Congress left no room for
supplementary state regulation.” In re Estate of Barg, 752 N.W.2d 52, 63 (Minn. 2008).
The Supreme Court has held that FELA occupies the field of personal-injury lawsuits
against railroads by railroad workers. See, e.g., N.Y. Cent. & Hudson River R.R. v.
7
Tonsellito, 244 U.S. 360, 361, 37 S. Ct. 620, 621 (1917) (“[FELA] is comprehensive and
also exclusive in respect of a railroad’s liability for injuries suffered by its employees
while engaging in interstate commerce.” (quotation omitted)). While FELA occupies the
field of railroad employee recovery in personal-injury suits against their employers, id.,
“FELA cases adjudicated in state courts are subject to state procedural rules.” St. Louis
Sw. Ry. v. Dickerson, 470 U.S. 409, 411, 105 S. Ct. 1347, 1348 (1985). Thus, whether
rule 68.03 is impliedly preempted by FELA will depend on whether the rule invades
substantive rights under FELA.
Under FELA precedent, conflict-in-fact preemption is similarly premised on
whether the state rule interferes with the federal right. Because FELA is silent as to cost-
shifting, compliance with both FELA and rule 68.03 is not impossible. Cf. Pikop, 390
N.W.2d at 748. The question instead is whether rule 68.03 “stands as an obstacle to the
accomplishment and execution of the full purposes and objectives of Congress”
underlying FELA. See Felder v. Casey, 487 U.S. 131, 138, 108 S. Ct. 2302, 2307 (1988)
(quotation omitted). When adjudicating federal rights, state courts “may establish the
rules of procedure governing litigation in their own courts,” but “where state courts
entertain a federally created cause of action, the ‘federal right cannot be defeated by the
forms of local practice.’” Id. at 138, 108 S. Ct. at 2306 (quoting Brown v. W. R.R., 338
U.S. 294, 296, 70 S. Ct. 105, 106 (1949)).
Contrary to the arguments of the parties, preemption does not hinge upon whether
rule 68.03 is characterized as “substantive” or “procedural.” Simply looking at rule 68.03
in a vacuum and choosing whether its operation looks more like “substance” or
8
“procedure” would do nothing to aid our preemption analysis. Cf. St. Louis Sw. Ry., 470
U.S. at 411, 105 S. Ct. at 1348 (“[T]he Court’s decisions in this area ‘point up the
impossibility of laying down a precise rule to distinguish substance from procedure.’”
(quoting Brown, 338 U.S. at 296, 70 S. Ct. at 106) (quotation marks omitted)).
Instead, we look at whether the neutral state rule, be it inherently substantive or
procedural, encroaches upon the substance of the federal cause of action created by
Congress. See Dice v. Akron, Canton & Youngstown R.R., 342 U.S. 354, 363, 72 S. Ct.
312, 315 (1952). The Supreme Court has used a two-pronged test when examining the
application of a state rule to a federal cause of action to determine whether the state rule
is inconsistent with the federal right created by Congress and therefore preempted. The
first prong is whether the state rule “burdens the exercise of the federal right” found in
the federal cause of action, and whether such burden, if any, “is inconsistent in both
design and effect” with the goals of the federal statute. Felder, 487 U.S. at 141, 108 S.
Ct. at 2308. The second prong is whether the application of the state rule is “outcome-
determinative,” such that it would “frequently and predictably produce different
outcomes” depending on whether the federal claim is brought in state or federal court.
Id. at 138, 153, 108 S. Ct. at 2307, 2314; see also Johnson, 520 U.S. at 920–21, 117 S.
Ct. 1805–06. We therefore examine how rule 68.03 functions in a FELA action under
both of these prongs.
1. Burdening the Federal Right
BNSF argues that rule 68.03 is preempted by FELA because the double-cost
provision increases both the employee-plaintiff’s recovery and the railroad-defendant’s
9
liability as compared to litigation in federal court. Relying heavily on Monessen, BNSF
contends that the double-cost mechanism burdens the exercise of the federal right under
FELA because it allows a FELA plaintiff to recover additional amounts constituting “a
significant portion of a[] FELA plaintiff’s total recovery,” which are “too substantial a
part of a defendant’s potential liability under the FELA” to be deemed procedural. See
486 U.S. at 335, 336, 108 S. Ct. at 1842, 43.
BNSF’s reliance upon Monessen is misplaced. The state rule at issue in Monessen
allowed Pennsylvania state courts to add ten percent prejudgment interest to a
compensatory damage award for a FELA claim. Id. at 333, 108 S. Ct. at 1841. Drawing
from Dice, the Supreme Court held that because prejudgment interest “is normally
designed to make the plaintiff whole” and would constitute a “significant portion of a
FELA plaintiff’s total recovery,” the interest was thus “too substantial a part of a
defendant’s potential liability under the FELA for this Court to accept a State’s
classification of such a provision . . . as a mere ‘local rule of procedure.’” Id. at 335–36,
108 S. Ct. at 1842–43 (citing Dice, 342 U.S. at 363, 72 S. Ct. at 315). The Court
reasoned that in the past seven decades, federal and state courts had held “with virtual
unanimity” that “prejudgment interest is not available under FELA.” Id. at 338–39, 108
S. Ct. at 1844 (citations omitted). The Court therefore concluded that because
prejudgment interest affected the measure of compensatory damages in FELA actions,
and FELA did not provide for recovery of prejudgment interest, the Pennsylvania rule
was preempted by FELA. Id. at 342, 108 S. Ct. at 1846.
10
The reasoning underlying Monessen was that prejudgment interest is a part of
damages, which are “inseparably connected with the right of action” under FELA. Id. at
335, 108 S. Ct. at 1842. This holding is consistent with our case law distinguishing
prejudgment interest, which is considered to be part of compensatory damages, from
costs and disbursements, which do not compensate for injury. See Lienhard v. State, 431
N.W.2d 861, 864–65 (Minn. 1988) (distinguishing prejudgment interest, which is
“directly proportional to the magnitude of damages sustained by the claimant,” from
costs and disbursements, which “are not part of the claim for compensation of personal
injury”); see also State ex rel. Burnquist v. Miller Home Dev., 243 Minn. 1, 7, 65 N.W.2d
900, 904 (1954) (holding that “costs and disbursements” are a “procedural element”
separate from the concept of “just compensation” under the Minnesota Constitution).
Unlike prejudgment interest, an award of costs and disbursements under rule 68.03
does not add to the compensatory damages tied to the underlying FELA claim. Instead,
rule 68.03 provides a cost-shifting mechanism that only takes effect after a party makes a
settlement offer, the other party rejects that offer, and the offeror then receives a more
favorable verdict than the offer. Minn. R. Civ. P. 68.03(b)(2). The cost-shifting
mechanism is not connected to the amount of compensation due to the plaintiff under
FELA, but rather is dependent upon the litigation conduct of the parties in making
reasonable settlement demands and predicting jury verdicts.4 BNSF acknowledges in its
4
Other state rules that shift costs between parties have been applied in state-court
litigation of federal claims. See Eversole v. Consol. Rail. Corp., 551 N.E.2d 846, 855
(Ind. Ct. App. 1990) (“The taxing of costs is not a right inextricably tied to Eversole’s
rights under FELA.”); Duello v. Bd. of Regents, 583 N.W.2d 863, 869-70 (Wis. Ct. App.
11
brief that “[a]n award of enhanced costs under Rule 68.03(b)(2) is not compensatory—it
does not make the plaintiff whole.” If double costs under rule 68.03 are not “designed to
make the plaintiff whole,” are not “a part of the actual damages sought to be recovered,”
and do not increase the amount of compensation a plaintiff may ultimately be owed under
FELA, Monessen, 486 U.S. at 335, 108 S. Ct. at 1842, then the reasoning of Monessen
does not apply to bar the application of rule 68.03 in a FELA action in Minnesota state
courts.
Furthermore, we reject BNSF’s argument that rule 68.03 is unconstitutional under
the Supremacy Clause merely because it imposes an additional litigation cost upon a
party in a FELA case. If monetary liability shifted between parties for litigation conduct
constitutes a “windfall” forbidden by FELA, it would follow that any award of attorney
fees and costs as sanctions for litigation misconduct by a party trying a FELA claim in
state court would be forbidden under Monessen. This would include misrepresentation
sanctions under Minn. R. Civ. P. 11.03 and sanctions under Minn. R. Civ. P. 37.02 for a
party’s failure to cooperate with discovery. Under BNSF’s position, this court would be
prevented from imposing appellate sanctions under Minn. R. Civ. App. P. 138, which is a
rule we have previously utilized against a defendant in a FELA action for appealing
1998) (applying Wisconsin statute-shifting costs based on rejected settlement offers to
Fair Labor Standards Act claim). And state postjudgment interest rules, which, similar to
litigation costs, are not tied to the underlying claim but rather to conduct of the parties
after litigation, are routinely applied in FELA actions in state courts. See Louisville &
Nashville R.R. v. Stewart, 241 U.S. 261, 263, 36 S. Ct. 586, 588 (1916) (allowing state
appeals court to add ten percent postjudgment interest to judgment); Lockley v. CSX
Transp. Inc., 66 A.3d 322, 327–28 (Pa. Super. Ct. 2013); Jacobs v. Dakota, Minn. & E.
R.R., 806 N.W.2d 209, 216 (S.D. 2011); Weber v. Chi. & Nw. Transp. Co., 530 N.W.2d
25, 30–32 (Wis. Ct. App. 1995).
12
merely to delay enforcement of a district court judgment. Melin v. Burlington Northern
R.R. Co., 401 N.W.2d 418, 420 (Minn. App. 1987). Such a result is incompatible with
the “great latitude” our supreme court has to “establish the structure and jurisdiction of
[its] own courts.” Howlett, 496 U.S. at 372, 110 S. Ct. at 2441.
BNSF also argues that the award of double costs to injured employees under rule
68.03 is just another form of punitive damages, which are not allowed under FELA. See
Kozar v. Chesapeake & Ohio Ry., 449 F.2d 1238, 1243 (6th Cir. 1971). But, as was
recognized in S.A. Healy Co. v. Milwaukee Metro. Sewerage Dist., the doubling of costs
is “a sanction . . . for turning down reasonable settlement demands,” which is “entirely
separate from the judgment” and more like “an award of attorney’s fees . . . as a sanction
for filing a frivolous suit.” 60 F.3d 305, 308 (7th Cir. 1995). Punitive damages, on the
other hand, are designed “to punish the perpetrator, to deter repeat behavior and to deter
others from engaging in similar behavior” that caused the plaintiff’s injury. Jensen v.
Walsh, 623 N.W.2d 247, 251 (Minn. 2001). These damages represent a portion of “the
indemnity recoverable by a person who has sustained an injury,” and are therefore barred
in FELA actions because they are not a part of permissible compensatory damages under
FELA. Kozar, 449 F.2d at 1240. Rule 68.03 is easily distinguished from punitive
damages because the genesis of the double-cost award is a rejected settlement offer,
which necessarily takes place after any alleged misconduct. Cost shifting under the rule
is not intended to punish a defendant for its pre-trial conduct in connection with a
plaintiff’s injury, but instead to encourage good-faith settlement offers between parties.
13
The rule sanctions litigants for litigation conduct and has no connection to a defendant’s
injury-causing conduct.
Finally, rule 68.03 does not “conflict[] in both its purpose and effects” with the
objectives of FELA. See Felder, 487 U.S. at 138, 108 S. Ct. at 2307. Rule 68.03 was
recently revised to “encourage[e] the settlement of litigation” by “remov[ing] surprises”
in settlement negotiations and to “provid[e] incentives for both claimants and parties
opposing claims.” Minn. R. Civ. P. 68 2008 advisory comm. cmt. The rule’s
restructuring created parity between parties by allowing a plaintiff to recover double
costs, as the award of single costs under the previous version of the rule merely
duplicated taxable costs available to a plaintiff under rule 54 and provided no settlement
incentive for defendants. See id. A rule explicitly re-designed to encourage defendants
to settle with plaintiffs is entirely consistent with the purpose of FELA:
[FELA] was designed to put on the railroad industry some of
the cost for the legs, eyes, arms, and lives which it consumed
in its operations. Not all these costs were imposed, for the
Act did not make the employer an insurer. . . . The purpose
of the Act was to . . . relieve men who by the exigencies and
necessities of life are bound to labor from the risks and
hazards that could be avoided or lessened by the exercise of
proper care on the part of the employer in providing safe and
proper machinery and equipment with which the employee
does his work.
Wilkerson v. McCarthy, 336 U.S. 53, 68, 69 S. Ct. 413, 420–21 (1949) (Douglas, J.,
concurring) (quotation omitted). As the Felder Court noted, “[s]tates may make the
litigation of federal rights as congenial as they see fit—not as a quid pro quo for
compliance with other, uncongenial rules, but because such congeniality does not stand
14
as an obstacle to the accomplishment of Congress’ goals.” Felder, 487 U.S. at 151, 108
S. Ct. at 2313. Minnesota’s decision to encourage settlement makes litigation of FELA
cases more congenial and is fully consistent with the goals of FELA.
These considerations, coupled with the presumption against preemption, lead us to
conclude that rule 68.03 does not impermissibly burden the federal right created by
FELA.
2. Outcome-Determinative
The second prong of our preemption analysis requires us to determine whether
rule 68.03’s “enforcement in [FELA] actions will frequently and predictably produce
different outcomes” in FELA litigation “based solely on whether the claim is asserted in
state or federal court.” See Felder, 487 U.S. at 138, 108 S. Ct. at 2307.
BNSF argues that this case would have proceeded differently if it had been
brought in federal court and utilized the federal analogue to rule 68.03, which operates
solely in favor of defendants. Under Fed. R. Civ. P. 68, if a defendant-offeror wins a
judgment in federal court, it does not recover federal rule 68 costs. Delta Air Lines, Inc.
v. August, 450 U.S. 346, 351–52, 101 S. Ct. 1146, 1149–50 (1981). But, if a plaintiff
wins a judgment less favorable than the defendant’s offer, the federal rule has the same
“doubling” effect as Minn. R. Civ. P. 68.03(b)(1): plaintiff cannot recover its post-offer
costs and must pay the post-offer costs of defendant. See Herrington v. Cnty. of Sonoma,
12 F.3d 901, 906–07 (9th Cir. 1993). The federal rule does not provide any
corresponding incentive for plaintiffs to make offers to defendants. See Delta Air Lines,
450 U.S. at 350, 101 S. Ct. at 1149 (“The Rule has no application to offers made by the
15
plaintiff.”). BNSF correctly notes that Boyd, as plaintiff, could not have recovered
double costs if he had brought suit in federal court.
The question then becomes whether the unavailability of double costs for plaintiffs
in federal court is a sufficient difference in outcome to warrant preemption. Both Felder
and Johnson analyzed the difference in outcomes between state and federal courts, in the
context of § 1983 actions, because different outcomes would show that application of the
state rule was “inconsistent with [the] federal interest in intrastate uniformity” underlying
§ 1983. Felder, 487 U.S. at 153, 108 S. Ct. at 2314; see also Johnson, 520 U.S. at 920,
117 S. Ct. at 1806. Because FELA, like § 1983, requires “uniform application
throughout the country” in order to “effectuate its purposes,” Dice, 342 U.S. at 361, 72 S.
Ct. at 314, we must determine whether the outcome of a FELA claim in a Minnesota state
court under rule 68.03 is sufficiently different from the outcome of a FELA claim in
federal court that rule 68.03 is inconsistent with the federal interest in uniformly applying
FELA.
In Johnson, the Supreme Court explained that the difference in “outcome”
requiring preemption of a state rule referred to a difference in “the ultimate disposition of
the case” between federal and state courts. 520 U.S. at 921, 117 S. Ct. at 1806 (emphasis
added). Consistent with this principle, the Supreme Court has held state rules to be
preempted when such rules significantly affected state-court adjudication of the
underlying rights of the federal statute, typically by defeating a plaintiff’s cause of action
when such defeat would not have occurred in federal court. See, e.g., Haywood v.
Drown, 556 U.S. 729, 740–42, 129 S. Ct. 2108, 2117–18 (2009) (holding state statute
16
that prevented § 1983 suits seeking damages relief against correctional officers to be
preempted); Felder, 487 U.S. at 152–53, 108 S. Ct. at 2314 (holding that the state notice-
of-claim statute allowed state courts to decline consideration of § 1983 claims and
therefore “predictably alter[ed] the outcome of § 1983 claims”); Dice, 342 U.S. at 362, 72
S. Ct. at 314–15 (concluding that state law regarding fraud defense that was “so harsh” as
to “defeat a railroad employee’s claim” could not be applied in FELA case); Brown, 338
U.S. at 295–96, 70 S. Ct. at 106–107 (holding that state pleading rule under which
plaintiff’s claim was dismissed “denied a right of trial granted him by Congress” and
could not be used to defeat the federal right under FELA); Garrett v. Moore-McCormack
Co., 317 U.S. 239, 249, 63 S. Ct. 246, 253 (1942) (holding that state burden-of-proof rule
was not a “mere incident of form of procedure” and denied admiralty plaintiff “the
benefit of the full scope of [federally created] rights”).
Johnson provides an example of a state rule that did not produce a different
“ultimate disposition of the case” than would otherwise occur in federal court. See 520
U.S. at 921, 117 S. Ct. at 1806. The challenged state rule prevented state-government
defendants from obtaining interlocutory appellate review of the district court’s denial of
their qualified-immunity defense in a § 1983 proceeding in state court. Id. at 913–14,
117 S. Ct. at 1802. The defendants argued that because federal courts allowed
interlocutory appeal of such a denial, preemption was needed to avoid different outcomes
based on the choice of forum. See id. at 918, 117 S. Ct. at 1804. But, this appellate
procedural rule did not prevent the state appellate court from hearing the defendants’
appeal on the merits; rather, it merely meant that their claim would be reviewed after
17
final judgment, not before trial as it would be in the federal system. Id. at 921, 117 S. Ct.
at 1806. The Court therefore held that “postponement of the appeal until after final
judgment will not affect the ultimate outcome of the case,” and the rule was therefore not
preempted by the federal cause of action. Id.
Here, the taxation of double costs likewise does not affect the “ultimate
disposition” of the FELA suit. See id. “Disposition” is “a final settlement or
determination” of a case. Black’s Law Dictionary 572 (10th ed. 2014). Even with rule
68.03 in place, Minnesota state courts ultimately dispose of FELA actions the same way a
federal district court would. Rule 68.03 does not change how the merits of a FELA claim
are adjudicated or modify any accompanying damages. The only difference between the
two forums is the potential distribution of litigation costs between parties if rule 68.03
comes into effect. And that difference is no sure thing; neither plaintiffs nor defendants
are entitled to double costs under rule 68.03 as a matter of course. Each party controls
whether to make a settlement offer. After that, the recovery of double costs is contingent
on two things: (1) the rejection of an offer; and (2) a jury verdict more favorable than the
offer. While the notice-of-claim statute in Felder “frequently and predictably produce[d]
different outcomes” in state court, 487 U.S. at 138, 108 S. Ct. at 2307, rule 68.03 is not
similarly frequent or predictable simply by virtue of the fact that it was triggered by the
parties’ litigation conduct in this case. Because rule 68.03 does not affect the “ultimate
disposition” of state-court FELA claims, much less do so “frequently” or predictably,” it
is not outcome-determinative under Supreme Court precedent.
18
BNSF also appears to argue that rule 68.03 is outcome-determinative, and
therefore substantive, by citing the Seventh Circuit’s decision in S.A. Healy. But, S.A.
Healy can be distinguished from the present case. It is an Erie decision dealing with
choice-of-law in a federal diversity case, an entirely different matter than the preemption
question presented to us here.
The Erie doctrine is used by federal courts considering state-law claims under
their diversity jurisdiction, for which the federal courts are directed to “apply state
substantive law and federal procedural law.” Gasperini v. Ctr. for Humanities, Inc., 518
U.S. 415, 427, 116 S. Ct. 2211, 2219 (1996). But, as in the preemption context, “[t]he
line between procedural and substantive law is hazy.” Erie R.R. v. Tompkins, 304 U.S.
64, 91, 58 S. Ct. 817, 828 (1938) (Reed, J., concurring in part). Federal courts only
“wade into Erie’s murky waters” in deciding whether a state law should be applied if “the
federal rule is inapplicable or invalid.” Shady Grove Orthopedic Assocs., P.A. v. Allstate
Ins. Co., 559 U.S. 393, 398, 130 S. Ct. 1431, 1437 (2010). If those murky waters must be
entered because there is no federal rule of procedure on point, federal courts utilize the
Erie choice-of-law analysis, which examines whether failure to apply the state law in
federal court would “significantly affect the result of . . . litigation.” Gasperini, 518 U.S.
at 427, 116 S. Ct. at 2219 (quotation omitted). As expounded by the Supreme Court, this
Erie outcome analysis includes consideration of the “twin aims of the Erie rule:
discouragement of forum-shopping and avoidance of inequitable administration of the
laws.” Id. at 428, 116 S. Ct. at 2220 (quotation omitted). If application of the state law
would abate forum shopping and would not be “likely to impair the integrity of federal
19
procedure,” the state law can be used in the federal diversity action. S.A. Healy, 60 F.3d
at 310–11.
The Erie choice-of-law analysis is inapplicable to the preemption issue we face in
the present case for a number of reasons. The issue before the court in S.A. Healy was
whether to apply a Wisconsin cost-shifting statute similar to rule 68.03 in a federal
diversity action involving state-law claims. Id. at 307–08. Unlike the court in S.A.
Healy, we must apply the presumption against preemption. Johnson, 520 U.S. at 918,
117 S. Ct. at 1805. The holding in S.A. Healy did not depend on preemption concepts
because the Seventh Circuit found “no direct conflict between the Wisconsin rule . . . and
any rule of federal procedure” when the Wisconsin rule was applied to plaintiffs, as Fed.
R. Civ. P. 68 only operates in favor of defendants. 60 F.3d at 310, 312. And, when the
S.A. Healy court proceeded to consider choice-of-law principles under Erie, it compared
the operation of two rules: the Wisconsin cost-shifting rule and Fed. R. Civ. P. 68. Id.
Neither of those rules is at issue here, as BNSF is arguing that Minn. R. Civ. P. 68.03 is
preempted by FELA. We are not analyzing whether Fed. R. Civ. P. 68 conflicts with the
Minnesota rule because, like the federal interlocutory appeal right in Johnson, federal
rule 68 “is a federal procedural right that simply does not apply in a nonfederal forum.”
See 520 U.S. at 921, 117 S. Ct. at 1806.
Finally, the holding in S.A. Healy was based upon application of an Erie forum-
shopping test that has never been used in preemption analysis. The Seventh Circuit held
that the Wisconsin rule favored plaintiffs and was therefore “so likely to dictate outcomes
that it [would] cause a lot of forum shopping . . . unless it [was] made applicable to
20
diversity cases.” S.A. Healy, 60 F.3d at 310–11. But, we are not aware of any Supreme
Court opinion that applied an Erie-type analysis of forum shopping in determining
whether federal substantive laws preempt neutral state procedural rules in state-court
litigation. We therefore decline to overstep the bounds of our authority as an error-
correcting court by assessing the forum-shopping implications of rule 68.03. See Lake
George Park, L.L.C. v. IBM Mid-America Emps. Fed. Credit Union, 576 N.W.2d 463,
466 (Minn. App. 1998), review denied (Minn. June 17, 1998). And, even if we were
allowed to consider the issue, the parties in this case did not present any arguments or
evidence, either here or at the district court, regarding the potential forum-shopping effect
rule 68.03 might have when compared to federal litigation that utilizes Fed. R. Civ. P. 68.
We cannot consider an issue without argument to that effect from the parties. See Thiele
v. Stich, 425 N.W.2d 580, 582 (Minn. 1988); Melina v. Chaplin, 327 N.W.2d 19, 20
(Minn. 1982) (“This issue was not argued in the briefs and accordingly must be deemed
waived.”).
In sum, BNSF bears a “heavy burden of persuasion” in arguing that FELA
preempts rule 68.03, Johnson, 520 U.S. at 918, 117 S. Ct. at 1805, and has failed to
satisfy that burden and overcome the presumption against preemption. Applying rule
68.03 to FELA claims in Minnesota state court does not burden the federal right created
by FELA, or affect the “ultimate disposition” of FELA claims as compared to federal
litigation. To hold that FELA preempts rule 68.03 would be squarely at odds with
“respect” for “principles that are fundamental to a system of federalism,” which is “at its
apex when we confront a claim that federal law requires a State to undertake something
21
as fundamental as restructuring the operation of its courts.” See id. at 922, 117 S. Ct. at
1807 (quotation omitted). We hold that Minn. R. Civ. P. 68.03 can be applied to FELA
claims adjudicated in state court.
II.
BNSF challenges the district court’s grant of costs for expert-witness fees. “The
trial court does not have discretion to deny costs and disbursements to the prevailing
party,” but does use its discretion to determine what costs are reasonable. Quade & Sons
Refrigeration, Inc. v. Minn. Mining & Mfg. Co., 510 N.W.2d 256, 260 (Minn. App.
1994), review denied (Minn. Mar. 15, 1994). The district court can “allow such fees or
compensation [for expert witnesses] as may be just and reasonable.” Minn. Stat.
§ 357.25 (2012). “[A] discretionary award of expert witness fees will be disturbed only
in cases where abuse of discretion is apparent.” Carpenter v. Mattison, 300 Minn. 273,
280, 219 N.W.2d 625, 631 (1974). BNSF argues that the district court abused its
discretion in its award of expert witness fees for the work of Boyd’s experts Blackwell
and Dr. Andres because it failed to provide sufficient reasoning supporting its fee award.
BNSF argues that Blackwell’s fee should have been reduced because most of
Blackwell’s preliminary report related to the common-law negligence claim that Boyd
did not pursue at trial. But, far from “not articulat[ing] any reasoned basis for awarding”
the fees associated with Blackwell, the district court found that Blackwell’s time spent
reviewing materials, testifying, and conducting a site inspection were worthy of allowing
Boyd to recover all fees associated with Blackwell. The district court apparently found
that the work conducted in association with Boyd’s common-law negligence claim was
22
slight in comparison to everything else Blackwell did for the claims on which Boyd
succeeded. This finding was within the district court’s discretion.
BNSF also challenges the district court’s grant of witness fees for Dr. Andres on
the basis that the district court “did not make an adequate record to explain how or why”
fees were granted. Noting that Dr. Andres testified relative to three separate issues, the
district court specifically found that because there were some limitations on some of Dr.
Andres’s testimony regarding footwear, his fees should be reduced by one-third. But, the
district court granted two-thirds of the claimed fees relative to Dr. Andres’s other
opinions on ergonomics and the Mertens bar. While BNSF may be unhappy with the
district court’s explanation, the district court detailed its reasons for reducing costs
associated with Dr. Andres’s expert testimony. The district court decided that reducing
Dr. Andres’s fees by one-third was sufficient to account for the excluded testimony. This
decision was within the district court’s discretion and does not constitute an “apparent”
abuse of discretion. See id.
BNSF also challenges the district court’s grant of fees for Blackwell and Dr.
Andres because the opinions to which they testified were not timely disclosed. BNSF
argues that ordering payment of these fees would not be “just [or] reasonable” within the
meaning of Minn. Stat. § 357.25 because it “would improperly encourage parties to
violate the rules and trial court orders requiring timely expert disclosures.” But BNSF
fails to cite any authority providing that district court judges abuse their discretion and
misapply section 357.25 in awarding expert costs when those experts’ opinions were not
23
timely disclosed. The grant of fees for expert testimony is within the district court’s
discretion, and the district court did not abuse that discretion.
DECISION
Because rule 68.03 is not preempted by FELA, the district court did not err in
awarding Boyd double costs under the rule. Furthermore, the district court did not abuse
its discretion when awarding expert-witness fees to Boyd.
Affirmed.
24
RODENBERG, Judge (concurring in part, dissenting in part)
I concur with part II of the majority opinion, but I respectfully dissent from part I.
In my view, awarding respondent $62,584.48 more than his actual costs and
disbursements under Minn. R. Civ. P. 68.03(b)(2) is plainly substantive within the
meaning of well-established federal caselaw. The windfall award of amounts never
actually disbursed or paid by a prevailing FELA plaintiff has not been authorized by
Congress and conflicts with the principles of uniformity sought to be advanced by FELA.
The judgment against appellant should be reduced by $62,584.48.
The majority accurately observes in part I.C.1. that rule 68.03(b)(2) designedly
provides for an award to a prevailing plaintiff of amounts over and above the plaintiff’s
actual costs and disbursements, as a mechanism for inducing a defendant to settle. See
Minn. R. Civ. P. 68.04, 2008 cmt. (“Rule 68 is extensively revamped . . . to make it more
effective in its purpose of encouraging the settlement of litigation.” (emphasis added)).
The district court’s award of the $62,584.48 in question would doubtless be proper were
this not a FELA case. But in this FELA case, the wisdom of Minnesota’s provision is not
the issue. Instead, the issue on appeal is the straightforward one accurately identified by
the district court: “[W]hether the enhancement of costs under Rule 68 is a procedural rule
or substantive law” under controlling caselaw. See St. Louis Sw. Ry. v. Dickerson, 470
U.S. 409, 411, 105 S. Ct. 1347, 1348 (1985) (stating that state procedural rules and
federal substantive rules apply in FELA cases).
“State courts are required to apply federal substantive law in adjudicating FELA
claims,” Monessen Sw. Ry. v. Morgan, 486 U.S. 330, 335, 108 S. Ct. 1837, 1842 (1988),
C/D-1
and state rules must yield to FELA when “enforcement of [state or local rules] stand[s] as
an obstacle to the accomplishment and execution of the full purposes and objectives of
Congress” in creating FELA, see Felder v. Casey, 487 U.S. 131, 138, 108 S. Ct. 2302,
2306-07 (1988) (quotation omitted).
A FELA action can be brought in any federal district or state court. 45 U.S.C.
§ 56 (2012). Because of this forum-selection right, the United State Supreme Court has
consistently required that federal substantive law, broadly defined, must apply to FELA
claims. “[O]nly if federal law controls can the federal Act be given that uniform
application throughout the country essential to effectuate its purposes.” Dice v. Akron,
Canton & Youngstown Ry., 342 U.S. 359, 361, 72 S. Ct. 312, 314 (1952); see also New
York Central & Hudson R.R. Co. v. Tonsellito, 244 U.S. 360, 362, 37 S. Ct. 620, 621
(1917) (holding that FELA is “comprehensive and also exclusive in respect of a
railroad’s liability for injuries suffered by its employees while engaging in interstate
commence” (quotation omitted)). So important is the requirement of uniformity that, in
Dice, the United States Supreme Court held that, in FELA cases, the State of Ohio must
provide a right to a trial by jury of all issues in its court of common pleas, a court of
equity in which there previously existed no right of trial by jury. 342 U.S. at 363, 72 S.
Ct. at 315.
In Monessen, all nine Justices of the United States Supreme Court joined in part
II.A. of the opinion, holding that prejudgment interest under rule 238 of the Pennsylvania
Rules of Civil Procedure is substantive and not procedural. 486 U.S. at 334-36, 108 S.
Ct. at 1842-43. “[C]haracterizing Rule 238 as nothing more than a procedural device to
C/D-2
relieve court congestion” was insufficient justification to consider the state rule as
procedural. Id. at 336, 108 S. Ct. at 1843. Observing that “federal and state courts have
held with virtual unanimity over more than seven decades that prejudgment interest is not
available under FELA,” id. at 338, 108 S. Ct. at 1844, and that in order for the remedy of
prejudgment interest to be available to a prevailing FELA plaintiff, “Congress must
expressly so provide,” id. at 339, 108 S. Ct. at 1845, the Supreme Court determined that
the Pennsylvania “procedural” provision is preempted by FELA. The Supreme Court
held that the award of $26,712.50 in prejudgment interest was “too substantial a part of
[the] defendant’s potential liability under the FELA” to be properly characterized as
procedural. Id. at 336, 108 S. Ct. at 1843.
That prejudgment interest is computed based on the size of the damage award and
the enhanced judgment allowed under rule 68.03(b)(2) is computed based on the
prevailing plaintiff’s costs and disbursements is all the more reason that Minnesota’s rule
must yield to FELA preemption. In effect, and as applied here, rule 68.03(b)(2) is purely
punitive against a party who opted to try the case rather than settle it. The award under
rule 68.03(b)(2) bears no relationship whatever to the damages authorized by Congress to
be recovered under FELA. See Am. R.R. of Porto Rico v. Didricksen, 227 U.S. 145, 149-
150, 33 S. Ct. 224, 225 (1913) (holding that damages in a FELA action are limited
“strictly to the financial loss thus sustained,” overturning a jury award for the loss of
“society and companionship”); see also Local 20, Teamsters, Chauffeurs & Helpers
Union v. Morton, 377 U.S. 252, 260-61, 84 S. Ct. 1253, 1259 (1964) (holding that
C/D-3
punitive damages could not be granted because punitive damages are a matter of
substantive law and “substantive state law . . . must yield to federal limitations”).
Interpreting Monessen as preempting the award of $62,584.48 to respondent in
this case also comports with common sense and the black-letter definitions of substance
and procedure. Black’s Law Dictionary defines “substantive law” as “[t]he part of the
law that creates, defines and regulates the rights, duties and powers of parties.” 1567 (9th
ed. 2009). “Procedure” is defined as “[t]he judicial rule or manner for carrying on a civil
lawsuit.” Id. at 1323. Procedure is how a thing is done. Substantive law is the thing that
is done. Rule 68.03(b)(2) operates to award a judgment for amounts that Congress has
not authorized under FELA. This is not a case of “how.” It is a case of “what.” And the
thing that rule 68.03(b)(2) authorizes is inconsistent with FELA.
The majority mischaracterizes rule 68.03(b)(2) as a cost-shifting provision.5 It is
no such thing. Rule 68.03(b)(2) provides that a “defendant-offeree must pay, in addition
to the costs and disbursements to which the plaintiff-offeror is entitled under Rule 54.04,
5
The majority cites Eversole v. Consol. Rail Corp., 551 N.E.2d 846, 855 (Ind. Ct. App.
1990) in support of its approach distinguishing litigation conduct from compensatory
damages and suggesting that state law inconsistent with FELA may be applied to
litigation conduct. But Eversole involves the shifting of out-of-pocket costs actually
incurred. And taxation of actual costs is undoubtedly procedural. Eversole says nothing
about the issue before us here, the taxation of additional phantom costs, and it utterly fails
to support the majority’s assertion that state law inconsistent with FELA may be applied
in a FELA case to discourage disfavored litigation conduct. That was the issue in
Monessen, and the United States Supreme Court resolved the issue. Eversole applies the
Monessen directive that whether a state law provision may be applied in a FELA case
depends entirely upon whether the state-law provision at issue is one of substance or
procedure, a directive that the majority refuses to apply here. Likewise, Duello v. Bd. of
Regents, 583 N.W.2d 863 (Wis. Ct. App. 1998), a Fair Labor Standards Act case
involving the denial of attorney fees to a prevailing plaintiff, has no application here.
C/D-4
an amount equal to the plaintiff-offeror’s costs and disbursements incurred after service
of the offer.” (Emphasis added.) Therefore, under the plain language of the rule, the
$62,584.48 at issue here is not an award of costs and/or disbursements. It is an award of
an additional amount equal to the costs and disbursements after a designated point in
time—an additional amount never paid or disbursed by respondent. The rule creates and
defines a right of recovery for a prevailing plaintiff and is substantive under Monessen.
Monessen held that Pennsylvania’s prejudgment interest rule, in awarding
$26,712.50 as prejudgment interest, was “too substantial a part of a defendant’s potential
liability under the FELA” to be accepted as procedural. 486 U.S. at 336, 108 S. Ct. at
1843. The majority opinion allows almost two-and-one-half times that amount, an
amount the majority characterizes as “costs and disbursements” but an amount that was
never actually paid or expended by appellant, to be awarded by way of a judgment that
everyone agrees could not be obtained under federal law. Under Monessen, this is “too
substantial a part of a defendant’s potential liability under the FELA.” Id. If such an
amount is to be awarded, “Congress must expressly so provide.” See id. at 339, 108 S.
Ct. at 1844. And Congress has not done so.
The majority seems to doubt the “potential forum-shopping effects” of the
application of Minnesota’s rule 68.03(b)(2). But the majority acknowledges, as it must,
that FELA requires “uniform application throughout the country” to “effectuate its
purposes,” Dice, 342 U.S. at 361, 72 S. Ct. at 314, and that if a rule “will frequently and
predictably produce different outcomes . . . based solely upon whether the claim is
asserted in state or federal court,” application of the state rule is prohibited, Felder, 487
C/D-5
U.S. at 138, 108 S. Ct. at 2307.6 Since FELA plaintiffs are authorized by the federal
statute to sue in any state or federal court, 45 U.S.C. § 56, and because Minnesota’s
courts today become the only place where a prevailing FELA plaintiff can tax phantom
costs and disbursements never paid or incurred, it cannot be doubted that forum-shopping
will result.7
Part I of the majority opinion irreconcilably conflicts with governing federal
caselaw, and I must therefore dissent from that part of the majority’s opinion.
6
The majority correctly notes that “forum shopping” is not specifically briefed as a
separate issue on appeal. But the central importance of uniformity in FELA cases arises
from the forum-selection right of plaintiffs. And the outcome of the case should not
depend upon the forum selected. See S.A. Healy Co. v. Milwaukee Metro. Sewerage
Dist., 60 F.3d 305 (7th Cir. 1995) (discussing the significance of forum-shopping
considerations in the context of determining whether a law is substantive or procedural).
7
And, of course, uniformity has nothing to do with whether the substantive rule under
examination benefits a plaintiff or a defendant. Whether Minnesota’s rule is “fairer” than
the federal rule is of no consequence here. Uniformity requires that the same substantive
law apply to prevailing plaintiffs regardless of the court in which suit is brought. FELA
requires uniformity of outcome—not, as the majority seems to think, the outcome that
most favors a plaintiff or the outcome that we might think is better or fairer. That
Minnesota’s rule advances the interests of prevailing plaintiffs and produces a result that
cannot be replicated under federal law is all the more indication that rule 68.03(b)(2) may
not be applied to a FELA case consistent with the requirement of uniformity.
C/D-6