O&G Indus., Inc. v. Nat'l R.R. Passenger Corp.

06-4719-cv
O&G Indus., Inc. v. Nat’l R.R. Passenger Corp.
1 UNITED STATES COURT OF APPEALS
2
3 FOR THE SECOND CIRCUIT
4
5 August Term, 2007
6
7 (Argued: October 23, 2007 Decided: August 8, 2008)
8
9 Docket No. 06-4719-cv
10
11 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
12 O&G INDUSTRIES, INC.,
13
14 Third-Party-Defendant Appellant,
15
16 HARTFORD FIRE INSURANCE CO. AND DAVID E. ROBERTS, ADMINISTRATOR FOR
17 THE ESTATE OF GREGORY J. ROBERTS,
18
19 Plaintiffs,
20
21 PETER QUINTILIANI AND LAUREL QUINTILIANI,
22
23 Consolidated Plaintiffs,
24
25 v.
26
27 NATIONAL RAILROAD PASSENGER CORPORATION,
28
29 Defendant-Third-Party-Plaintiff Appellee,
30
31 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
32 B e f o r e: FEINBERG, WINTER, and STRAUB, Circuit Judges.
33 Appeal from a judgment of the United States District Court for
34 the District of Connecticut (Dorsey, J.) entered in a third-party
35 action for indemnity, following an accident in which a train owned
36 and operated by defendant-third-party-plaintiff appellee Amtrak
37 caused the death of one employee of third-party-defendant appellant
38 O&G Industries, Inc. and injured another. In the first instance, the
39 district court (1) granted summary judgment to Amtrak on the ground
40 that the indemnity agreement between Amtrak and O&G was not invalid
41 under Connecticut General Statute § 52-572k(a), because the latter
42 is preempted by 49 U.S.C. § 28103(b), which allows rail passenger
43 carriers to enter into indemnification agreements concerning claims
44 brought against them; and (2) held that O&G was required, as a
45 matter of law, to indemnify Amtrak for the liabilities and costs
1
46 Amtrak incurred in the tort actions arising out of the accident,
47 despite a jury verdict that O&G was relieved of this obligation
48 because Amtrak’s failure to adequately protect O&G workers amounted
49 to a material breach of the contract between them. We now affirm the
50 rulings of the district court. We also find that any error the
51 district court committed by precluding appellant from
52 cross-examining an employee of the appellee in the first phase of
53 the trial (concerning the tort actions against Amtrak) and
54 subsequently restricting appellant’s direct examination of the same
55 employee in the second phase of the trial (concerning the indemnity
56 claim against O&G) was harmless. Finally, we dismiss for want of
57 appellate jurisdiction O&G’s challenges to the award of attorneys’
58 fees and costs. Dismissal does not affect our jurisdiction to review
59 the merits of the other issues on appeal. Affirmed in part and
60 dismissed in part.
61
62 KIMBERLY A. KNOX (Michael S. Taylor and Brendon P. Levesque, on
63 the brief), Horton Shields & Knox, P.C., Hartford, Connecticut,
64 and Jeffrey A. Blueweiss (on the brief), Bai, Pollock,
65 Blueweiss & Mulcahey, Shelton, Connecticut, for Third-Party-
66 Defendant Appellant.
67
68
69 WILLIAM G. BALLAINE (Dawn Pinkston, of counsel, on the brief),
70 Landman Corsi Ballaine & Ford, P.C., New York, New York, for
71 Defendant-Third-Party-Plaintiff Appellee.
72
73
74 FEINBERG, Circuit Judge:
75
76 This case is procedurally complicated. The present appeal
77 arises out of a third-party complaint brought by National Railroad
78 Passenger Corporation (hereafter “Amtrak” or “appellee”) against O&G
79 Industries, Inc. (hereafter “O&G” or “appellant”) in the United
80 States District Court for the District of Connecticut (Dorsey, J.).
81 In its complaint, Amtrak sought indemnification from O&G for any
82 liabilities and costs, including attorneys’ fees, that Amtrak would
2
83 incur in two consolidated tort actions against it for wrongful death
84 and personal injury damages resulting from a train accident. 1
85 The proceedings in the district court included two rulings that
86 O&G now appeals to this Court. First, before trial of the third-
87 party indemnity action began, the district judge granted partial
88 summary judgment to Amtrak on the basis of an explicit indemnity
89 provision in a right-of-access contract between Amtrak and O&G. The
90 court upheld the validity of the indemnity provision, ruling that 49
91 U.S.C. § 28103(b) (hereafter “§ 28103(b)”) -- which allows rail
92 passenger carriers to enter into liability-shifting agreements --
93 preempted Connecticut General Statute § 52-572k(a) (frequently
94 referred to hereafter as the “Connecticut statute”). That statute
95 prohibits, on public policy grounds, indemnity agreements entered
96 into in connection with construction contracts, if they purport to
97 shield the indemnitee from liability for its own negligence. O&G
98 invoked the Connecticut statute to defeat Amtrak’s indemnity claim.
99 See Roberts v. Nat’l R.R. Passenger Corp. v. O&G Indus., Nos. 3:04-
100 cv-1318, 3:04-cv-1622 & 3:04-cv-2195, 2006 WL 648212 (D. Conn. Mar.
101 9, 2006).
1
The two actions were Roberts v. Nat'l R.R. Passenger Corp., No.
3:04-cv-1318 (D. Conn. filed Aug. 9, 2004), and Quintiliani v. Nat'l R.R.
Passenger Corp., No. 3:04-cv-2195 (D. Conn. filed Dec. 29, 2004). A third
action was brought against Amtrak by the Hartford Fire Insurance Company,
as subrogee of O&G, for damage to O&G property caused by the train
accident. See Hartford Fire Ins. Co. v. Nat’l R.R. Passenger Corp., No.
3:04-cv-1622 (D. Conn. filed Sept. 28, 2004). This action was settled and
is not part of the present appeal.
3
102 Second, the judge granted Amtrak's post-trial motion for
103 judgment as a matter of law, setting aside a jury verdict that O&G
104 was relieved of its obligation to indemnify Amtrak because of
105 Amtrak’s material breach of the contract with O&G. Judge Dorsey held
106 that Amtrak’s contractual default did not affect the validity of the
107 indemnity agreement, which explicitly covered accidents attributable
108 to Amtrak’s negligence. See Roberts v. Nat’l R.R. Passenger Corp. v.
109 O&G Indus., Nos. 3:04-cv-1318, 3:04-cv-1622 & 3:04-cv-2195, 2006 WL
110 2621733 (D. Conn. Sept. 12, 2006).
111 O&G argues on appeal that the district court erred in (1)
112 granting partial summary judgment to Amtrak; (2) entering judgment
113 for Amtrak as a matter of law; (3) curtailing O&G’s cross- and
114 direct examination of an Amtrak employee during the trial; and (4)
115 awarding Amtrak attorneys’ fees and defense costs without any
116 evidence as to their amount and reasonableness.
117 On the first and second of these issues, we affirm the district
118 court. On the third, we find the limitations of O&G’s
119 cross-examination rights by the district court, even if erroneous,
120 were not substantially prejudicial to appellant. On the fourth
121 issue, we conclude that we lack appellate jurisdiction over the
122 district court’s non-final award of attorneys’ fees and costs.
123
124 I. BACKGROUND
4
125 The accident that led to this litigation occurred in June 2004,
126 while Gregory Roberts and Peter Quintiliani, carpenters employed by
127 O&G, were installing wood planks on the underside of a highway
128 bridge suspended over Amtrak's tracks in East Haven, Connecticut. An
129 Amtrak diesel locomotive entered their worksite without warning and
130 collided with the man-lift in which they were stationed. Amtrak’s
131 on-site safety personnel were unable to prevent the accident,
132 because they were unaware of the train’s scheduled passage through
133 O&G’s work area, due to poor coordination with the office of
134 Amtrak’s chief dispatcher in Boston. Furthermore, Amtrak’s
135 employees, having already de-energized the tracks at the East Haven
136 worksite so that no electric-powered train could pass, erroneously
137 believed that the tracks had been placed out of service. Thus, they
138 had not made a specific request to “foul” the tracks, i.e., render
139 them completely inoperable until O&G’s crew had completed its work.
140 At the time of the accident, therefore, none of O&G’s or Amtrak’s
141 employees on duty at the site expected any train movement through
142 the work zone. 2 The collision killed Roberts instantly; Quintiliani
143 was injured while jumping out of the lift.
2
A more detailed description of the train accident can be found in
the district court’s March 2006 ruling on the parties’ motions for
summary judgment. See Roberts v. Nat’l R.R. Passenger Corp. v. O&G
Indus., Nos. 3:04-cv-1318, 3:04-cv-1622 & 3:04-cv-2195, 2006 WL 648212(D. Conn. Mar. 9, 2006), 2006 WL 648212, at *1-3. We think it unnecessary
to recount here all the factual circumstances surrounding the accident,
because the crux of the dispute before us is Amtrak’s indemnity claim
against O&G -- not responsibility for the accident, which Amtrak admitted
at trial.
5
144 David Roberts (hereafter “Roberts”), the brother of the
145 deceased O&G employee and administrator of his estate, filed in
146 August 2004 a wrongful death action against Amtrak, seeking
147 compensatory and punitive damages. The suit by Roberts was
148 consolidated with Quintiliani’s personal injury action. After
149 answering the two actions, Amtrak filed its third-party complaint
150 against O&G.
151 The indemnity claim was based on a clause in the “Temporary
152 Permit to Enter Upon Property” (hereafter “Permit”), a contract
153 concluded between O&G and Amtrak in October 2003. Under the Permit,
154 Amtrak allowed O&G access to Amtrak’s property in East Haven, in
155 order to perform construction work in relation to O&G’s contract
156 with the Connecticut State Department of Transportation regarding
157 the re-building of a stretch of Interstate 95 between New Haven and
158 Branford, Connecticut; consideration was $1. O&G, on its part,
159 undertook to “use all necessary care and precaution to avoid
160 accidents, delay or interference with [Amtrak's] trains or property”
161 and abide by Amtrak's safety regulations. Pursuant to the Permit,
162 Amtrak would provide, at its discretion and at O&G’s expense, “flag
163 service and/or other protection” necessary to maintain the “safety
164 and continuity of railroad traffic,” over which Amtrak retained
165 exclusive control. However, the provision of “protective services”
166 would “not relieve [O&G] from [its] complete responsibility for the
6
167 adequacy and safety of [its] operations.” A key feature of the
168 Permit is the following provision:
169 The Permittee [O&G] shall defend, indemnify and hold harmless
170 Railroad [Amtrak], its officers, directors, employees, agents,
171 servants, successors, assigns and subsidiaries, irrespective of
172 their negligence or fault, from and against any and all losses
173 and liabilities, . . . claims, causes of action, suits, costs
174 and expenses incidental thereto (including cost of defense and
175 attorney's fees), which any or all of them may hereafter incur,
176 be responsible for, or pay as a result of injury, [or] death, .
177 . . to any person . . . arising out of or . . . resulting from
178 activities of or work performed by [O&G], its officers,
179 employees, agents, servants, contractors, subcontractors, or
180 any other person acting for or by permission of [O&G]. The
181 foregoing obligation shall not extend to situations where the
182 negligence or fault of Amtrak, its officers, directors, [or]
183 employees . . . is the sole causal negligence or fault, except
184 that it shall so extend to injury [or] death . . . to employees
185 of [O&G], its agents, servants, contractors, subcontractors, or
186 any other person acting for or by permission of [O&G]. The
187 foregoing obligation shall not be limited by the existence of
188 any insurance policy or by any limitation on the amount or type
189 of damages, compensation, or benefits payable by or for [O&G]
190 or any contractor or subcontractor, and shall survive the
191 termination of this permit for any reason.
192
193 (Emphasis added.) In the district court, O&G argued that the above
194 provision was invalid under Connecticut General Statute § 52-
195 572k(a), which declares void as against public policy agreements to
196 indemnify a party against its own negligence, if such agreements
197 were made “in connection with or collateral to” construction
198 contracts.
199 Before trial began on Amtrak’s indemnity claim, Amtrak sought
200 summary judgment and orders directing O&G to defend Amtrak in the
201 two tort actions and reimburse Amtrak’s reasonable attorneys' fees
202 in defending against those claims. In March 2006, Judge Dorsey
7
203 granted Amtrak partial summary judgment, concluding that § 28103(b),
204 which allows Amtrak to enter into indemnification agreements as to
205 claims against it, preempted the Connecticut statute and allowed
206 Amtrak to pursue its indemnity claim at trial.
207 The jury trial of the consolidated actions by plaintiffs
208 Roberts and Quintiliani against Amtrak began in March 2006. The
209 first phase (“Phase I”) was limited to the issue of damages to be
210 awarded to plaintiffs. Amtrak conceded negligence (but not
211 recklessness). In April 2006, the jury awarded plaintiffs $1.425
212 million each in compensatory damages, but rejected the punitive
213 damages claims, finding that Amtrak's conduct was not willful or
214 reckless. 3 At the end of the second phase of the trial (“Phase II”)
215 concerning Amtrak’s third-party complaint against O&G, the jury
216 found that O&G was excused from its obligation to indemnify Amtrak,
217 because Amtrak's failure to provide O&G’s crew adequate on-site
218 protection amounted to a material breach of the Permit, rendering it
219 void in its entirety.
220 After this second verdict, Amtrak moved for judgment as a
221 matter of law, under Federal Rule of Civil Procedure 50(b), arguing
222 that there were no triable issues of fact as to the applicability of
223 the indemnity clause in the Permit and, hence, O&G was required to
3
The Roberts estate appealed from the judgment of the district court
entered against Amtrak after the verdict. That appeal was heard by this
panel the same day as the appeal now before us. In November 2007, we
summarily affirmed the judgment of the district court. See Roberts v.
Nat’l R.R. Passenger Corp., No. 06-3036-cv, 2007 WL 3230736 (2d Cir. Nov.
1, 2007) (summary order).
8
224 indemnify Amtrak for litigation costs and damages awarded in the
225 underlying actions by Quintiliani and Roberts. In the alternative,
226 Amtrak sought a new trial, under Rule 59(a), on whether a material
227 contractual default nullified the entire Permit.
228 In September 2006, the judge granted Amtrak's Rule 50(b)
229 motion, concluding that Amtrak’s right to indemnity explicitly
230 accrues, under the Permit, where Amtrak is found liable for injury
231 to or death of an O&G employee solely caused by Amtrak’s own
232 negligence or fault. See Roberts, 2006 WL 2621733, at *5-6. Allowing
233 O&G to evade its indemnity obligations because of Amtrak’s
234 negligence, the court reasoned, would “render the indemnification
235 provision meaningless.” Id. at *6.
236 In December 2006, the court entered judgment in favor of Amtrak
237 in its indemnity action against O&G. This timely appeal by O&G
238 followed.
239
240 II. DISCUSSION
241 The parties to this appeal raise several issues. First, we must
242 decide whether the Connecticut statute, which nullifies indemnity
243 agreements insulating a contracting party from its own negligence, 4
4
Connecticut General Statute § 52-572k states:
(a) Any covenant, promise, agreement or
understanding entered into in connection with or
collateral to a contract or agreement relative to the
construction, alteration, repair or maintenance of any
building, structure or appurtenances thereto including
moving, demolition and excavating connected therewith,
that purports to indemnify or hold harmless the
9
244 applies, on its face, to the Permit; if it does, we must next
245 examine whether § 28103(b), which permits Amtrak to enter into
246 indemnification agreements, 5 preempts the Connecticut statute.
247 Second, in considering the district court's grant of Amtrak's motion
248 for judgment as a matter of law, we must assess whether Amtrak’s
249 conceded failure to effectively protect O&G’s crew constituted a
250 material breach of the Permit, discharging O&G from its indemnity
251 obligation. Third, we review the district court's decision to
252 preclude O&G from cross-examining an Amtrak employee during Phase I
253 of the trial, and the judge’s subsequent decision to restrict O&G's
254 direct examination of the same employee during Phase II. Finally, we
255 consider whether we have jurisdiction over the district court's non-
256 quantified award to Amtrak of reasonable costs and attorneys' fees
257 incurred in the defense of the Roberts and Quintiliani actions.
258
259 A. Preemption
260 Our review of a grant of summary judgment under Rule 56 is
261 plenary. “[S]ummary judgment is appropriate where there exists no
promisee against liability for damage arising out of
bodily injury to persons or damage to property caused
by or resulting from the negligence of such promisee,
such promisee's agents or employees, is against public
policy and void, provided this section shall not affect
the validity of any insurance contract, workers'
compensation agreement or other agreement issued by a
licensed insurer.
5
49 U.S.C. § 28103(b) provides:
A provider of rail passenger transportation may
enter into contracts that allocate financial
responsibility for claims.
10
262 genuine issue of material fact and, based on the undisputed facts,
263 the moving party is entitled to judgment as a matter of law.”
264 D'Amico v. City of New York, 132 F.3d 145, 149 (2d Cir. 1998). We
265 view the facts in the light most favorable to the nonmoving party
266 and resolve all factual ambiguities in its favor. Cioffi v. Averill
267 Park Cent. Sch. Dist. Bd. of Educ., 444 F.3d 158, 162 (2d Cir.
268 2006).
269
270 1) Applicability of the Connecticut Statute
271 In its appeal, O&G relies heavily on the Connecticut statute.
272 In response, Amtrak claims for the first time that the Connecticut
273 statute does not apply to the Permit because it allegedly bars
274 indemnity agreements only if inserted in construction contracts.
275 Amtrak argues that the Permit was not such a contract. In the
276 district court, however, Amtrak did not contest the applicability of
277 the Connecticut statute, although it had ample opportunity to do so.
278 Under the circumstances, Amtrak has waived that argument and cannot
279 raise it on appeal. See Greene v. United States, 13 F.3d 577, 586
280 (2d Cir. 1994) (citing Singleton v. Wulff, 428 U.S. 106, 120
281 (1976)). 6 Therefore, we proceed with the preemption question on the
6
Our refusal to consider Amtrak’s waived argument on the
applicability of the Connecticut statute is of little importance to the
final disposition of the case. As set forth below, we agree with the
district court’s finding that the Connecticut statute is preempted by
federal law and thus does not invalidate the indemnity clause in the
Permit.
11
282 assumption that the Connecticut statute applies, unless it is
283 preempted.
284
285 2) Preemption by § 28103(b)
286 Section 28103 of Title 49 of the United States Code was enacted
287 as part of the Amtrak Reform and Accountability Act of 1997
288 (hereafter the “Reform Act”). Subsection (b) of § 28103 provides
289 that “[a] provider of rail passenger transportation may enter into
290 contracts that allocate financial responsibility for claims.” Amtrak
291 argues that this subsection was intended to allow it to enter into
292 enforceable indemnity agreements not voidable under state law. In
293 Amtrak’s view, § 28103(b) is at odds with and preempts the
294 Connecticut statute.
295 O&G counters that § 28103(b) applies only to indemnity
296 agreements (1) regarding claims brought by passengers and (2)
297 concluded between passenger rail carriers like Amtrak and freight
298 railroads. Because Gregory Roberts and Quintiliani were not Amtrak
299 passengers, and the indemnity agreement was between Amtrak and O&G,
300 a construction company rather than a freight railroad company, O&G
301 maintains that § 28103(b) is not applicable and does not supersede
302 the Connecticut statute. In support of its arguments, O&G points to
303 subsection (a) of § 28103, which governs the issue of punitive
304 damages to be awarded in relation to passenger claims for personal
12
305 injury, wrongful death or property damage, 7 and to the legislative
306 history of § 28103(b).
307 Federal preemption of state law is a doctrine grounded in the
308 Supremacy Clause of the Constitution. See U.S. Const. Art. VI, cl. 2
309 ("[T]he Laws of the United States . . . made in Pursuance [of the
310 Constitution] shall be the supreme Law of the Land . . . any Thing
311 in the Constitution or Laws of any State to the Contrary
312 notwithstanding."). The doctrine requires us first to ascertain
313 congressional intent, which is “‘the ultimate touchstone’ of pre-
314 emption analysis.” See Cipollone v. Liggett Group, Inc., 505 U.S.
315 504, 516 (1992) (quoting Malone v. White Motor Corp., 435 U.S. 497,
316 504 (1978)). Intent to preempt state law may be found “(1) where
317 Congress expressly states its intent to preempt; (2) where
318 Congress's scheme of federal regulation is sufficiently
7
That subsection provides:
(a) Limitations.
--(1) Notwithstanding any other statutory or common law
or public policy, or the nature of the conduct giving rise to
damages or liability, in a claim for personal injury to a
passenger, death of a passenger, or damage to property of a
passenger arising from or in connection with the provision of
rail passenger transportation, . . . punitive damages, to the
extent permitted by applicable State law, may be awarded in
connection with any such claim only if the plaintiff
establishes by clear and convincing evidence that the harm
that is the subject of the action was the result of conduct
carried out by the defendant with a conscious, flagrant
indifference to the rights or safety of others. If, in any
case wherein death was caused, the law of the place where the
act or omission complained of occurred provides, or has been
construed to provide, for damages only punitive in nature,
this paragraph shall not apply.
(2) The aggregate allowable awards to all rail
passengers, against all defendants, for all claims, including
claims for punitive damages, arising from a single accident
or incident, shall not exceed $200,000,000.
13
319 comprehensive to give rise to a reasonable inference that it leaves
320 no room for the state to act; and (3) where state law actually
321 conflicts with federal law.” Marsh v. Rosenbloom, 499 F.3d 165, 177
322 (2d Cir. 2007) (citing Cal. Fed. Sav. & Loan Ass’n v. Guerra, 479
323 U.S. 272, 280 (1987)).
324 As the district court correctly concluded, § 28103(b) does not
325 expressly preempt state law, nor is it “so pervasive as to make
326 reasonable the inference that Congress left no room for the states
327 to supplement it.” Roberts, 2006 WL 648212, at *10. Preemption can
328 thus be found here only if the Connecticut statute conflicts with §
329 28103(b), i.e., if compliance with both statutes is impossible, or
330 if the Connecticut statute “‘stands as an obstacle to the
331 accomplishment and execution of the full purposes and objective of
332 Congress.’” United States v. Locke, 529 U.S. 89, 109 (2000) (quoting
333 California v. ARC Am. Corp., 490 U.S. 93, 100-101 (1989)).
334 O&G first contends that no irreconcilable conflict exists
335 between the federal and the Connecticut statutes, because Congress
336 intended § 28103(b) to apply only to passenger claims. The argument
337 is unavailing. The subsection contains no such limitation on its
338 face and indeed makes plain that Amtrak may enter into contracts
339 allocating financial responsibility (i.e., indemnity agreements) for
340 any claims brought against it.
341 Furthermore, if Congress intended § 28103(b) to apply only to
342 passenger claims, it would have included such qualifying language in
14
343 the definition of the term “claims.” Congress did not do so. The
344 definition in subsection (e) of § 28103 is sufficiently broad to
345 encompass any claims asserted against Amtrak -- not only those by
346 passengers. 8 Subsection (e) defines the persons or entities against
347 whom a claim may be pursued, but does not limit the class of
348 claimants. Because the language is unambiguous on this point, we
349 cannot “supply that which is omitted by the legislature.” Spielman
350 v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 332 F.3d 116, 127
351 (2d Cir. 2003).
352 The title of § 28103 –- “Limitations on rail passenger
353 transportation liability” –- is of little aid to O&G’s proposition
354 that the statute covers only passenger claims. “[A] title . . .
355 cannot limit the plain meaning of unambiguous text.” Collazos v.
356 United States, 368 F.3d 190, 196 (2d Cir. 2004)(omission in
357 original) (internal quotation marks omitted).
358 We conclude that § 28103(b), read in the context of the whole
359 section, see Food & Drug Admin. v. Brown & Williamson Tobacco Corp.,
360 529 U.S. 120, 133 (2000), authorizes Amtrak’s entry into
361 indemnification agreements for any claim filed against it, including
8
49 U.S.C. § 28103(e) states:
Definition.-- For purposes of this section --
(1) the term "claim" means a claim made--
(A) against Amtrak, any high-speed railroad authority
or operator, any commuter authority or operator, any rail
carrier, or any State; or
(B) against an officer, employee, affiliate engaged in
railroad operations, or agent, of Amtrak, any high-speed
railroad authority or operator, any commuter authority or
operator, any rail carrier, or any State.
15
362 tort claims by contractor employees. This permissive mandate can
363 hardly be reconciled with the prohibition of the Connecticut
364 statute.
365 O&G also argues that the scope of § 28103(b) only extends to
366 indemnity agreements between Amtrak and the freight railroad
367 companies that own most of the rail lines on which Amtrak operates
368 and are reluctant to shoulder liabilities stemming from the use of
369 their tracks by passenger trains. This claim is equally unpersuasive
370 because of the unambiguous text of § 28103(b) for the reasons set
371 forth above, and we rest our conclusion that § 28103(b) preempts the
372 Connecticut statute on that ground.
373 Nonetheless, O&G’s argument that congressional intent, as
374 evidenced by the legislative history of § 28103(b), counsels a
375 different result is meritless. Because Amtrak is a passenger rail
376 provider mostly operating on track systems owned by freight
377 railroads, the protection afforded by § 28103(b) will most likely
378 apply to indemnity agreements with freight railroads. As a result,
379 many of the congressional sponsors of the Reform Act frequently
380 referred in their discussions to the liability allocation agreements
381 between Amtrak and host freight railroads. That said, we find no
382 evidence of congressional intent that § 28103(b) apply only in that
383 particular set of circumstances. Rather, the goal of the Reform Act
384 was to shield all of Amtrak's indemnity arrangements from legal
385 attacks on their validity. See Symposium: The State of the Law in
16
386 the Railroad Indus., 26 Transp. L.J. 319, 336-37 (1999) (“Congress .
387 . . encouraged all providers of rail passenger transportation to
388 enter into contracts that allocate financial responsibility for
389 claims. Resolving an issue that had plagued freight railroads that
390 host Amtrak trains, Congress also affirmed the enforceability of
391 contracts that include indemnification obligations.”).
392 The legislative history of § 28103(b) is illuminating.
393 Congressional debates reveal legislative concern about Amtrak’s
394 financial problems and intention to support Amtrak’s contractual
395 arrangements designed to reduce its liability exposure. The Reform
396 Act was meant, among other things, to ensure the enforceability of
397 indemnity agreements Amtrak concludes with any other party. The
398 Senate Committee Report is categorical in that regard:
399 [T]his bill clarifies that indemnification agreements
400 related to the provision of rail passenger service entered
401 into by Amtrak and other parties would be enforceable. The
402 Committee has been requested by Amtrak to include this
403 provision in order to aid Amtrak in achieving operating
404 self-sufficiency. . . . As long as there is the
405 possibility that state laws governing indemnification
406 contracts may make these contracts unenforceable, Amtrak
407 and a freight railroad may find themselves litigating with
408 each other. Amtrak believes that such litigation
409 inevitably would not only adversely impact business
410 relationships between Amtrak and the host freight
411 railroads, but it would also lead to significantly higher
412 outlays in settlements and judgments to plaintiffs.
413
414 S. Rep. No. 105-85, at 5 (1997) (emphasis added). Congress
415 unmistakably intended “[t]he language in section 28103(b) . . . to
416 confirm that such contractual agreements [i.e. indemnification
17
417 agreements] are consistent with Federal law and public policy.” 143
418 Cong. Rec. S11937-03 (statement of Sen. Lott). O&G’s interpretation
419 of the statute’s legislative history would be inconsistent with the
420 stated objective of § 28103(b) to solidify the enforceability of
421 Amtrak’s liability-shifting arrangements.
422 When the Reform Act was passed, Amtrak was in the middle of “a
423 financial crisis, with growing and substantial debt obligations
424 severely limiting its ability to cover operating costs and
425 jeopardizing its long-term viability.” Amtrak Reform and
426 Accountability Act of 1997, §2(2), Pub. L. No. 105-134, December 2,
427 1997, 111 Stat. 2570, at *2571; see also 143 Cong. Rec. S11929-03
428 (statement of Sen. McCain) (“Amtrak is on the verge of bankruptcy.
429 Fundamental reforms are needed immediately if there is to be any
430 possibility of addressing Amtrak's financial crisis and turning it
431 into a viable operation.”). The Reform Act clearly reflects
432 Congress’s distress over Amtrak’s financial burdens: in 49 U.S.C. §
433 28103(a), Congress limited the award of punitive damages, in actions
434 “arising from . . . the provision of rail passenger transportation,”
435 to cases where the defendant was proven to have “a conscious,
436 flagrant indifference to the rights or safety of others.” 49 U.S.C.
437 § 28103(a)(1). In a similar vein, Congress placed a $200 million cap
438 on Amtrak’s aggregate liability from any single accident. Id. §
439 28103(a)(2).
18
440 Against this legislative background, contentions that Congress
441 intended to allow state law or public policy to interfere with
442 Congress’s attempt to rescue Amtrak are simply not persuasive. We
443 believe that we must enforce and recognize the validity of the
444 indemnity provision in the Permit. Applying the Connecticut statute
445 would violate the plain language and spirit of § 28103(b), which
446 therefore preempts the Connecticut statute.
447
448 B. Material Breach of the Permit
449 At the conclusion of Phase II of the trial, the jury found
450 that, under the indemnity provision in the Permit, O&G was required
451 to reimburse Amtrak for costs incurred and damages awarded in the
452 Roberts and Quintiliani actions, but that Amtrak’s material breach
453 of the Permit relieved O&G of all its contractual duties, including
454 the obligation to indemnify Amtrak. However, the district judge
455 overturned the jury verdict, ruling that as a matter of law O&G’s
456 contractual obligation to indemnify Amtrak was valid regardless of
457 Amtrak’s negligence. See Roberts, 2006 WL 2621733, at *5-7. O&G now
458 challenges this ruling, arguing that the jury properly found that
459 Amtrak's violation of its duty to protect O&G's workers from passing
460 trains resulted in termination of the entire Permit and O&G’s
461 indemnity obligation thereunder. We review de novo the district
462 court's grant of a post-verdict judgment to Amtrak as a matter of
463 law, considering the evidence in the light most favorable to O&G,
19
464 the nonmoving party. Zellner v. Summerlin, 494 F.3d 344, 371 (2d
465 Cir. 2007).
466 “[A] material breach is a failure to do something that is so
467 fundamental to a contract that the failure to perform that
468 obligation defeats the essential purpose of the contract or makes it
469 impossible for the other party to perform under the contract.” 23
470 Williston on Contracts § 63:3 (4th ed. 2007) (footnotes and internal
471 quotation marks omitted). Under Connecticut law, an uncured,
472 material failure of performance by one contracting party discharges
473 the other party from any further performance under the contract,
474 which is rendered unenforceable in toto. See Bernstein v. Nemeyer,
475 570 A.2d 164, 168 (Conn. 1990).
476 It is uncontroverted that O&G complied with its obligations
477 under the Permit to perform its work on Amtrak’s property so as to
478 observe Amtrak's safety regulations and not “interfere with
479 [Amtrak’s] operations.” By contrast, Amtrak’s failure to provide
480 adequate protection to O&G’s workers, O&G claims, negated the
481 Permit’s purpose and amounted to a material breach. The district
482 court rejected this claim because of the unambiguous language of the
483 indemnity agreement, which the court held squarely applicable to the
484 undisputed facts of the case. See Roberts, 2006 WL 2621733, at *6
485 (“The argument lacks merit, however, because the factual situation
486 on which O&G relies for being excused from its obligation is exactly
487 the factual situation which gives rise to that obligation.”).
20
488 We agree with the district judge’s holding. Not only is the
489 indemnity clause not qualified by or conditioned on Amtrak's
490 obligation to operate its trains safely through the worksite, but it
491 explicitly provides Amtrak with a right to indemnity even where “the
492 negligence or fault of Amtrak [or] its . . . employees” is the sole
493 cause of “injury, death, disease, or occupational disease to
494 employees of” O&G. 9 O&G cannot circumvent its indemnity obligation by
495 invoking Amtrak’s negligence, which the parties envisaged and
496 clearly determined would not exonerate O&G from its contractual
497 duties. As Judge Dorsey emphasized, if O&G is allowed to evade its
498 obligation to hold Amtrak harmless, “Amtrak’s protection against
499 ultimate responsibility for any unsafe train operation, as provided
500 in the Permit, would be nullified.” Id. at *6. Since the indemnity
501 provision expressly contemplates the factual situation that arose
502 here (i.e., Amtrak’s negligence was the sole cause of injury and
503 death to O&G’s employees), Amtrak’s failure to safely operate its
504 trains through O&G’s work zone could not have thwarted the Permit’s
505 essential purpose.
506 A reading of the Permit as a whole suggests, in fact, that at
507 the core of the agreement was the parties’ preoccupation with the
508 “safety and continuity of railroad traffic,” rather than the safety
509 of O&G’s personnel. The emphatic references to O&G’s undertaking to
510 take all measures necessary to avoid undue interference with train
9
The indemnity provision is quoted in full in section I of the
opinion, see supra at p.__. Its applicability in this case has not been
called into question by the parties.
21
511 operations and its “complete responsibility for the adequacy and
512 safety of” its activities suggest that the Permit was drafted with a
513 principal focus on Amtrak’s interests. Even Amtrak’s promise to
514 furnish protection was aimed at ensuring the safety and continuity
515 of railroad traffic and would come into play only if, in the opinion
516 of Amtrak’s officers, “conditions warrant” it, and under the
517 condition that O&G would bear all the costs. It is a fair inference
518 that the essential purpose of the Permit was not to guarantee the
519 safety of O&G’s employees, but rather to authorize O&G’s temporary
520 access to Amtrak’s property while reassuring Amtrak that O&G’s
521 presence on its property would neither disrupt train operations nor
522 damage Amtrak’s trains and facilities. Amtrak’s negligent failure to
523 provide adequate protection to O&G’s workers did not vitiate this
524 purpose.
525 O&G does not claim that every negligent act by Amtrak would
526 constitute a material breach of the Permit. According to O&G, there
527 could be situations involving negligent acts by Amtrak
528 representatives that, nevertheless, would be covered by the
529 indemnity provision without necessarily amounting to a breach of a
530 fundamental contractual term. For example, O&G claims, “an Amtrak
531 employee could accidentally strike someone with a tool or a piece of
532 equipment, or could dig a hole into which an individual might fall.”
533 See Br. of Appellant at 36.
22
534 The breadth of the indemnity provision refutes the distinction
535 O&G seeks to introduce. The provision does carve out of its reach
536 some situations where Amtrak’s negligence is the sole cause of the
537 indemnifiable loss, but O&G’s obligation to indemnify Amtrak
538 explicitly extends to instances of “injury, death, disease, or
539 occupational disease to employees of [O&G]” exclusively caused by
540 Amtrak's negligence or fault. If Amtrak’s obligation to protect
541 O&G’s employees were a centerpiece of the Permit, and default of
542 this obligation were intended to invalidate the Permit in its
543 entirety, the parties could have made this clear by, for example,
544 including a termination clause in the Permit. Absent any stipulation
545 or indication to that effect, we cannot “unmake” the bargain the
546 parties struck, “whether provident or improvident.” Tallmadge Bros.,
547 Inc. v. Iroquois Gas Transmission Sys., L.P., 746 A.2d 1277, 1292
548 (Conn. 2000) (internal quotation marks omitted). “Where the language
549 of the contract is clear and unambiguous, the contract is to be
550 given effect according to its terms.” Pesino v. Atl. Bank of New
551 York, 709 A.2d 540, 545 (Conn. 1998) (internal quotation marks
552 omitted). Under the circumstances of this case, a finding of
553 material breach of the Permit would be incompatible with its plain
554 language.
555 “Simply stated, . . . the evidence [here] is such that, without
556 . . . considering the weight of the evidence, there can be but one
557 conclusion as to the verdict that reasonable men could have
23
558 reached.” Simblest v. Maynard, 427 F.2d 1, 4 (2d Cir. 1970).
559 Accordingly, we affirm the district court's grant of judgment to
560 Amtrak as a matter of law and hold that, regardless of Amtrak’s
561 negligence in causing the accident, O&G bears the valid obligation
562 to indemnify Amtrak for the damages awarded to Quintiliani and
563 Roberts.
564
565 C. Cross-Examination of Amtrak's Employee by O&G
566 The district court permitted O&G to participate in Phase I of
567 the trial, in which plaintiffs Roberts and Quintiliani sued
568 defendant Amtrak. The judge’s rationale was that evidence presented
569 in relation to plaintiffs’ claims against Amtrak might well bear on
570 Amtrak’s indemnity claim against O&G. Nevertheless, the judge did
571 not permit O&G's counsel to cross-examine Amtrak's New England
572 Division Superintendent Fred Fournier. O&G’s stated reason for
573 cross-examining Fournier was to elicit testimony tending to prove
574 that O&G was not at fault for the accident, which was entirely
575 attributable to Amtrak's reckless conduct. O&G argues that a showing
576 of Amtrak’s recklessness would enable O&G to avoid its indemnity
577 obligations on public policy grounds. Judge Dorsey’s reasoning for
578 denying O&G’s request to cross-examine Fournier was that issues
579 pertaining to O&G's role in the accident would be addressed in Phase
580 II. O&G was told that it would have ample opportunity to present its
581 recklessness defense at that time. However, when O&G attempted to
24
582 question Fournier in Phase II of the trial about whether Amtrak
583 followed proper internal procedures to avert safety risks to O&G’s
584 on-site employees, the court sustained Amtrak’s objection to this
585 line of questioning. The judge noted that the jury had already
586 resolved the issue of Amtrak’s fault in Phase I of the trial.
587 O&G now claims that by precluding its cross-examination of
588 Fournier in Phase I and limiting its questioning of the same witness
589 in Phase II of the trial, the district judge prevented O&G from
590 fully litigating the question of Amtrak's recklessness -- on which
591 one of O&G’s defense was premised -- and thus deprived it of its
592 cross-examination rights. The error, according to O&G, warrants a
593 new trial.
594 As a preliminary matter, we reject Amtrak's contention that
595 this claim has not been preserved for appellate review. O&G
596 repeatedly objected to the court's limitations on its examination of
597 Fournier, articulating the concern that, if the jury found no
598 recklessness by Amtrak in Phase I, that issue would be barred from
599 jury consideration in Phase II.
600 We turn to the merits of O&G’s claim. “Whether an evidentiary
601 error implicates a substantial right depends on ‘the likelihood that
602 the error affected the outcome of the case.’” See Tesser v. Bd. of
603 Educ., 370 F.3d 314, 319 (2d Cir. 2004) (per curiam) (quoting Malek
604 v. Fed. Ins. Co., 994 F.2d 49, 55 (2d Cir. 1993)); see also Fed. R.
605 Civ. P. 61 (“Unless justice requires otherwise, no error . . . by
25
606 the court . . . is ground for granting a new trial, . . . or
607 otherwise disturbing a judgment or order. At every stage of the
608 proceeding, the court must disregard all errors and defects that do
609 not affect any party’s substantial rights.”)
610 We believe that the court’s alleged error did not have a
611 substantial impact on the outcome of the case. O&G's interests were
612 adequately protected by Roberts and Quintiliani, the plaintiffs in
613 Phase I. These parties were seeking punitive damages from Amtrak and
614 thus had an equal, if not greater, incentive than O&G to show that
615 Amtrak's conduct was reckless. The question of Amtrak’s recklessness
616 was adequately litigated by Roberts and Quintiliani and there is no
617 indication that the jury would have found recklessness, had O&G been
618 allowed to cross-examine Fournier. The limitation of O&G’s
619 cross-examination rights, even if erroneous, did not cause any
620 prejudice to O&G, because “it is [not] likely that in some material
621 respect the factfinder's judgment was swayed by the error.” Tesser,
622 370 F.3d at 319 (internal quotation marks omitted). See also United
623 States v. Thomas, 274 F.3d 655, 668 (2d Cir. 2001) (en banc) (“An
624 error affects a defendant's substantial rights if it is prejudicial
625 and it affected the outcome of the district court proceedings”)
626 (internal quotation marks omitted).
627 Furthermore, even supposing the district judge had not
628 restricted O&G’s examination of Fournier in Phase I, and that O&G
629 had convinced the jury that Amtrak’s conduct was reckless, it is
26
630 doubtful that the outcome of the case would have been more favorable
631 to O&G. The indemnity provision in the Permit unequivocally requires
632 O&G to reimburse Amtrak for all the losses Amtrak may sustain as a
633 result of death or injury to O&G’s employees, even when Amtrak’s own
634 negligence or fault is the sole cause of the incident. The
635 unmistakable wording of the clause would thus not allow O&G to
636 nullify its obligation to indemnify Amtrak, even if the jury had
637 entered a punitive damages award against Amtrak on recklessness
638 grounds.
639 O&G argues to us that, had it been allowed to fully participate
640 in Phase I of the trial, and had the jury found Amtrak’s conduct
641 reckless, O&G would have been relieved of its duty to hold Amtrak
642 harmless, by raising a public policy defense against enforcement of
643 the indemnity agreement. We disagree. We have already held in this
644 opinion (see Part II.A, supra) that the Connecticut statute
645 embodying the public policy of Connecticut against indemnification
646 for liabilities due solely to the negligence of the indemnitee 10 is
647 preempted by § 28103(b). Subsection § 28103(b) also superseded the
648 opinion that would have been most helpful to O&G in its public
649 policy defense against indemnification for reckless conduct. See
650 Nat’l R.R. Passenger Corp. v. Consol. Rail Corp. (“ConRail”), 698 F.
651 Supp. 951 (D.D.C. 1988) (invalidating an agreement to indemnify for
652 losses caused by the indemnitee’s gross negligence, as contrary to
653 District of Columbia public policy), vacated on other grounds, 892
10
See supra note 3.
27
654 F.2d 1066 (D.C. Cir. 1990). As Judge Dorsey correctly noted in
655 granting summary judgment to Amtrak, it was precisely the doubts
656 cast by the ConRail decision over the validity of indemnity
657 agreements by railroad parties that prompted Congress to enact §
658 28103(b). See Roberts, 2006 WL 648212, at *11. The broad,
659 unqualified language in § 28103(b) leaves no doubt as to the
660 specific intent of Congress to sanction indemnity arrangements
661 between Amtrak “and other parties” with respect to any claims
662 against Amtrak. See S. Rep. No. 105-85, at 5 (1997). A finding of
663 recklessness in Phase I, therefore, would have resulted in a higher
664 jury verdict against Amtrak in the underlying actions against it in
665 Phase I of the trial. This would most probably have permitted Amtrak
666 to obtain greater recovery from O&G under the Permit; public policy
667 considerations would not have precluded enforcement of the express
668 direction of the indemnity provision.
669 In view of the above, we hold that, assuming arguendo that the
670 district judge erred in preventing O&G from cross-examining Fournier
671 in Phase I and from fully pursuing its recklessness defense in Phase
672 II, the error was not prejudicial to O&G in the context of the trial
673 as a whole and does not justify a new trial.
674
675 D. Attorneys' Fees
676 In granting Amtrak's Rule 50(b) motion for judgment as a
677 matter of law, the district judge held that, under the indemnity
28
678 agreement, Amtrak was entitled to reimbursement of its attorneys’
679 fees, as well as the costs it incurred in Phase I of the trial, in
680 defense of the actions brought by Roberts and Quintiliani. The
681 judge, however, did not set the amount of attorneys’ fees and
682 litigation costs for which O&G was required to indemnify Amtrak. O&G
683 now argues that the district court abused its discretion in awarding
684 attorneys’ fees and costs where there was no evidence as to the
685 amount or reasonableness of these expenses. Amtrak responds that the
686 amount of fees due would be ascertained by the district judge only
687 after liability for such fees was determined.
688 Pursuant to 28 U.S.C. § 1291, we review only final decisions of
689 the district court that “leave[] nothing for the court to do but
690 execute the judgment.” Catlin v. United States, 324 U.S. 229, 233
691 (1945). A non-quantified award of attorneys’ fees and costs is not
692 appealable until the amount of the fees has been set by the district
693 court. “We have held that where attorneys’ fees are a contractually
694 stipulated element of damages, a judgment is not final until the
695 fees have been determined.” F.H. Krear & Co. v. Nineteen Named
696 Trustees, 776 F.2d 1563, 1564 (2d Cir. 1985) (per curiam); see also
697 Honeywell Int'l, Inc. v. Purolator Prods. Co., 468 F.3d 162, 164 (2d
698 Cir. 2006). This circuit, moreover, has “rejected the doctrine of
699 pendent appellate jurisdiction as a basis to review an undetermined
700 award of attorneys’ fees, even when the question of liability for
701 the fees had been consolidated with other decisions that were
29
702 final.” Krumme v. WestPoint Stevens Inc., 143 F.3d 71, 87 (2d Cir.
703 1998) (citing Cooper v. Salomon Bros., 1 F.3d 82, 85 (2d Cir.
704 1993)). We therefore dismiss for lack of appellate jurisdiction the
705 portion of O&G’s appeal challenging the district court’s grant of
706 attorneys’ fees and costs incurred in Phase I of the trial.
707 This defect does not impair the finality of the district
708 court’s ruling on Amtrak’s motion for judgment as a matter of law,
709 nor does it divest us of jurisdiction to review the merits of the
710 other issues on appeal. In reaching this conclusion, we apply the
711 “bright-line rule” enunciated by the Supreme Court in Budinich v.
712 Becton Dickinson & Co., 486 U.S. 196 (1988), “that a decision on the
713 merits is a ‘final decision’ for purposes of [28 U.S.C.] § 1291
714 whether or not there remains for adjudication a request for
715 attorney's fees.” Id. at 202-03. 11
716
717 III. CONCLUSION
11
Some of our pre-Budinich precedent might be read to support the
proposition that the non-finality of an award of attorneys’ fees sought
as an element of contractual damages renders non-appealable the entire
judgment in which such award is incorporated. See, e.g., Union Tank Car
Co. v. Isbrandtsen, 416 F.2d 96 (2d Cir. 1969) (per curiam). However, we
heed the Supreme Court’s admonition in Budinich that “no interest
pertinent to § 1291 is served by according different treatment to
attorney's fees deemed part of the merits recovery,” and abide by the now
“uniform rule that an unresolved issue of attorney’s fees . . . does not
prevent judgment on the merits from being final.” Budinich, 486 U.S. at
202. Application of this sensible rule also promotes the interests of
judicial economy, especially in this case where resolution of the
“question remaining to be decided . . . will not alter . . . or revise”
the court’s final rulings on the merits of the other issues on appeal.
Id. at 199. Treating the district court’s grant of Amtrak’s Rule 50(b)
motion as non-final and remanding the entire case to the district court
would only cause further delays in the disposition of this long-pending
case.
30
718 We have considered all of appellant O&G’s arguments and find
719 them to be without merit. For the reasons discussed above, we affirm
720 the district court on all issues except for the ruling on attorneys'
721 fees, over which we lack appellate jurisdiction. AFFIRMED IN PART
722 AND DISMISSED IN PART.
31