Opinion
Case No. 8:99CV352
February 28, 2002
MEMORANDUM AND ORDER
This matter is before the court on the Motion for Summary Judgment of Cross-Claim Plaintiff and Cross-Claim Defendant Argus Gesellschaft MBH ("Argus") (Filing No. 188) and Argus's Motion to Strike the Affidavit of Isaac Avitan (Filing No. 200). Argus seeks summary judgment against Plaintiff Omaha Public Power District ("OPPD") on all claims, and Argus seeks summary judgment against Defendant and Cross-Claim Plaintiff Siemens Aktiengesellschaft ("Siemens AG") on its cross-claim against Argus. The Court has reviewed the evidence submitted by Argus in support of its motion for summary judgment (Filing No. 189), and the evidence submitted by Siemens AG in opposition to Argus's motion (Filing 197), which includes the Affidavit of Isaac Avitan that Argus seeks to strike.
To the extent Argus's motion for summary judgment is asserted against Plaintiff OPPD, it is denied as moot. On October 30, 2001, OPPD filed a Motion to Voluntarily Dismiss Argus, (Filing No. 183), and on November 28, 2001, the Court granted OPPD's motion for a voluntary dismissal of Argus and dismissed Argus without prejudice (Filing No. 194). That decision left OPPD's claims against Siemens AG, and Argus's and Siemens AG's cross-claims against each other. Accordingly, the Court will consider Argus's motion for summary judgment as it relates to Siemens AG's cross-claims against it.
A court may exercise its discretion to grant a plaintiff's motion for voluntary dismissal of a defendant, but if the defendant asserted a counterclaim against the plaintiff before the plaintiff's motion for dismissal was filed, then the action shall not be dismissed against the defendant's objection unless the defendant's counterclaim can remain pending for independent adjudication, that is, jurisdiction over subject matter and parties remain. Fed.R.Civ.P. 41(a)(2). This same standard applies to cross-claims. Fed.R.Civ.P. 41(c). Although the Cross-Claimant's contribution and indemnity claims probably could remain for independent adjudication in this case, dismissing the cross-claims with leave to refile would not serve the interests of judicial economy because OPPD's claims against Siemens AG, which are related to Siemens AG's cross-claim against Argus, remain and trial is scheduled to begin soon.
Argus and Siemens AG have fully briefed their positions on the summary judgment motion and submitted evidence (Filing Nos. 189 and 197, respectively) in support of those positions. Whether the Court will consider the Affidavit of Isaac Avitan, offered by Siemens AG in opposition to the summary judgment motion, is material to the disposition of the motion, and, therefore, the Court initially considers Argus's Motion to Strike the Affidavit of Isaac Avitan.
A very brief outline of undisputed facts may be helpful. On September 14, 1995, there was a fire at an OPPD power plant located in Sarpy County, Nebraska, referred to as Unit # 3, that resulted in costly property damage to OPPD. The plant housed a V84.2 model 105 megawatt gas combustion turbine generator that was designed by Siemens AG. The combustion turbine was constructed, in part, using an Emergency Stop Valve ("ESV") that was designed and manufactured by Siemens AG and two Argus ball valves, which were designed by Siemens AG and manufactured by Argus. See Index of Evidence of Argus in Support of Motion for Summary Judgment, Volume 1, at Tab 1, OPPD Sarpy County Unit # 3 Anti-Ice Pipe Investigation ("Fire Investigation Report").
As a result of an investigation performed after the fire, it was determined that an accumulation of fuel oil leaked into an anti-icing line, ignited, and caused the fire. In order for the fuel oil to have reached the anti-icing line, the fuel oil had to flow through the ESV and the Argus ball valves. The ESV failed for reasons that are in dispute. When the ESV failed, the Argus ball valves were subjected to pressures that exceeded the design parameters, causing the Argus ball valves to open and allowing the fuel oil into the anti-icing line. Id.
An understanding of the procedural background of this case is also relevant. The Complaint was filed on August 26, 1999 (Filing No. 1). On May 15, 2001, Siemens AG's expert disclosures were timely made and included the initial report of Isaac Avitan (Filing No. 96). Isaac Avitan has a Ph.D. in electrical engineering. On June 4, 2001, Siemens AG filed an Amended Answer and Cross-Claim against Argus. Dr. Avitan's report was supplemented on August 17, 2001, and served on August 29, 2001 (Filing No. 161). Dr. Avitan's deposition was properly noticed and taken on September 25, 2001 (Filing Nos. 156 and 178). Argus filed its motion for summary judgment on November 2, 2001 (Filing No. 188). No additional amendments to Avitan's opinions were presented until the Affidavit of Isaac Avitan, dated December 1, 2001, was filed in opposition to Argus's motion for summary judgment on December 3, 2001 (Filing No. 197). Argus's Motion to Strike Dr. Avitan's Affidavit was filed on December 14, 2001 (Filing No. 200). This case has received a special setting scheduling trial to begin on February 25, 2002 (Filing No. 203).
Motion to Strike Affidavit of Isaac Avitan
The basis for Argus's Motion to Strike is that Dr. Avitan's Affidavit "embodies an expert opinion critical of the Argus ball valve that was not disclosed by Siemens AG . . . pursuant to Federal Rule of Civil Procedure 26(a)(2)," (Filing No. 200). If the Court finds a violation of Rule 26(a)(2), then Argus contends that Rule 37 requires that the Affidavit be stricken unless Siemens AG can show that its delay in disclosure was either justified or harmless.
Rule 26 requires the proponent of expert testimony to serve opposing parties with a detailed expert report, in writing, that is "prepared and signed by the witness." Fed.R.Civ.P. 26(a)(2). The report must contain the following specified sections: (1) a complete statement of all opinions to be expressed; (2) the basis and the reasons for the opinions expressed; (3) the data or other information considered by the expert in forming the opinions; (4) any exhibits to be used as a summary of or support for the opinions; (5) the qualifications of the witness, including a list of all publications authored by the witness within the preceding ten years; (6) the compensation to be paid for the study and testimony; and (7) a listing of any other cases in which the witness has testified as an expert at trial or by deposition within the preceding four years. Fed.R.Civ.P. 26(a)(2)(B).
"Since failure to disclose in a timely manner is equivalent to failure to disclose," Siemens AG must produce its evidence in accordance with Rule 26(a)(2)(B) in a timely manner or risk sanctions under Rule 16 and 37. Trost v. Trek Bicycle Corp., 162 F.3d 1004, 1008 (8th Cir. 1998) citing Sylla-Sawdon v. Uniroyal Goodrich Tire Co., 47 F.3d 277, 284 (8th Cir. 1995). See also Bonin v. Chadron Comm. Hosp., 163 F.R.D. 565 (D.Neb. 1995).
Based on an examination of Dr. Avitan's initial report, amended report, and deposition testimony, the Court agrees that the opinions challenged in the Motion to Strike were disclosed for the first time in the Avitan Affidavit. One of the opinions provided in the Affidavit relates to the cause of the fire:
The failure of the Ball Valve Assemblies [manufactured by Argus] to perform, as required by the design requirements set by Siemens AG, most likely contributed to the cause of the fire, as such failure most likely increased the amount of fuel oil, which otherwise would not have accumulated in the anti-icing line, if the Ball Valve Assemblies had performed as required by Siemens AG, and most likely increased the speed at which such oil accumulated in the anti-icing line.
Index of Evidence in Opposition to Argus's Motion for Summary Judgment at Tab 2, paragraph 2 (Filing No. 197). This opinion, or one substantially similar to it, does not appear anywhere else in the record before the Court.
Dr. Avitan's initial report and his amended report mention the Argus ball valves, but do not criticize their functioning and do not find them to be a cause of the fire. Dr. Avitan's strongest opinion relating to Argus is in his Amended Report stating that Siemens Power Corporation contributed to the cause of the fire because it incorporated the Argus ball valve into the design of its combustion turbine. See Index of Evidence of Argus in Support of Motion for Summary Judgment, Volume 2, Tab 16(1), Avitan's Amended Report at 17 (Filing No. 189). The initial and amended reports do not attack the Argus ball valve itself, but rather only its use in the combustion turbine. In the final section of Dr. Avitan's reports, he assigns fault to many parties, but he does not assign fault to Argus. Id. at 16-17.
The only other opinions of Dr. Avitan that were disclosed prior to his Affidavit were provided in his deposition. In response to a question posed by plaintiff's counsel, Dr. Avitan states:
Q: Do you have any opinions in this case as to the Argus ball valve?
A: Well, I was not afforded the opportunity to test it or value it in February when we came to inspect it so I really would rather reserve that to such a point in time when I could test it.Id., Tab 20, Avitan Deposition, at 103:20-104:1. He added that he had visually inspected the Argus ball valve and had not found any defects, and that he did not consider it a redundant valve to Siemens AG's own ESV because the valves were designed to withstand different back pressures. Id. at 49; 104.
There is no question that the expert opinions contained in the Avitan Affidavit had not previously been disclosed, and that they were disclosed after all applicable court deadlines. Dr. Avitan's expert opinions were disclosed initially on May 15, 2001. If Siemens AG had wanted Avitan to supplement his opinions after it filed its cross-claim against Argus, those supplemental opinions could have, and should have, appeared in the Amended Report prepared in August, or by the time the deposition was provided at the end of September. At the latest, the opinions critical of Argus should have been provided before the deadline for the completion of discovery on October 15, 2001 (Filing No. 151).
Even when Siemens AG requested additional time to conduct expert discovery, the request was made to obtain additional deposition testimony from OPPD's proposed experts and not to supplement its own disclosures. See Motion of Siemens AG for Extension of Deadlines in Scheduling Order (Filing No. 184).
Having determined that the opinions contained in the December 1, 2001, Affidavit were not previously disclosed, the next issue is whether Siemens AG's delay in disclosing them was justified or is harmless.
A party that . . . fails to disclose information required by Rule 26(a) . . . shall not be permitted to use [the nondisclosed information] as evidence at a trial, at a hearing, or on a motion" "unless such failure is harmless" or there was "substantial justification" for the failure. Fed.R.Civ.P. 37(c)(1). Rule 16 gives the district court the authority to set management deadlines and to impose sanctions for their violation. Fed.R.Civ.P. 16(b), (c)(5)-(7), (f). The rules thus permit a court to exclude untimely evidence unless the failure to disclose was either harmless or substantially justified.Trost v. Trek Bicycle Corp., 162 F.3d at 1008.
One court has stated that, "As a rule of thumb, if the failure to comply with the required disclosure involves a material aspect of the expert's testimony, and if the opposing party can show prejudice in connection with the lack of disclosure, then the opinion of the expert should be excluded, in whole or in part, at trial." Sullivan v. Glock, Inc., 175 F.R.D. 497, 503 (D.Md. 1997).
The Eighth Circuit has acted in accordance with this "rule of thumb" in at least two instances. In Sylla-Sawdon v. Uniroyal Goodrich Tire Co., 47 F.3d 277, 281-82 (8th Cir. 1995), the plaintiff's proposed expert, a race car driver who was also a mechanical engineer, submitted only a brief affidavit in response to the court's scheduling order for disclosure of expert witness opinions. The district court refused to qualify the witness as an expert and refused to allow him to testify as to the cause of the tire failure that was at issue. On appeal, the Eighth Circuit Court affirmed the trial court, finding that the plaintiff had failed to comply with the trial court's scheduling order and with Rule 26(a)(2). The Court discussed the 1993 revisions to Rule 26 and 37:
The commentary to the amended Rule echoes the district court's stated rationale for requiring expert reports: the elimination of unfair surprise to the opposing party and the conservation of resources:
". . . Revised Rule 37(c)(1) provides an incentive for full disclosure; namely, that a party will not ordinarily be permitted to use on direct examination any expert testimony not so disclosed."Id. at 284, quoting Fed.R.Civ.P. 26(a)(2)(B) Advisory Committee's Note.
In another case, the Eighth Circuit Court affirmed the trial court's exclusion of plaintiff's expert opinion evidence and the entry of summary judgment in favor of the defendant, finding that the plaintiff, for the first time in opposing defendant's summary judgment motion, had disclosed expert witness opinions implicating the defendant's design as a proximate cause of the accident. Trost v. Trek Bicycle Corp., 162 F.3d at 1008. The affidavit in Trost was submitted after the deadline for disclosure of expert witness opinions and after the close of discovery. The Eighth Circuit Court determined that plaintiff's excuse for the delay in disclosing — that the expert had to perform additional tests — failed to demonstrate substantial justification because it was plaintiff's own procrastination that had caused the delay in completing the tests. Neither was the delay harmless. The Court found that the defendant had "prepared its summary judgment motion at least partially premised on the lack of expert opinion to support" plaintiff's claims. Id. at 1008-09.
Siemens AG has shown no justification for its failure to comply with the disclosure requirements as they relate to the Avitan Affidavit. Siemens AG has not presented any explanation for the late disclosure of the Affidavit, and the lateness of this disclosure stands in stark contrast to the full and timely disclosures made by Siemens AG regarding the opinions of Dr. Avitan that are contained in the initial report and amended report. See Index of Evidence of Argus in Support of Motion for Summary Judgment, Volume 2, Tab 16(1), Avitan's Original and Amended Reports (Filing No. 189). Rather, it appears that the opinions relating to Argus were disclosed after all applicable deadlines because Siemens AG was unable to oppose Argus's summary judgment motion with evidence previously discovered in the proceeding. If the Avitan Affidavit was proffered for some legitimate reason, not simply to create a genuine issue of material fact, then it seems that the disclosure of those opinions could have been made before the close of discovery.
The surprise and prejudice to Argus cannot be credibly disputed. Dr. Avitan's opinions relating to Argus's fault were disclosed just a few weeks before the final pretrial conference and less than three months before trial of this two-year-old case. Like the defendant in Trost, it can fairly be presumed that Argus moved for summary judgment at least, in part, because there was no expert witness testimony implicating Argus and its ball valves as a proximate cause of the fire. Allowing the Affidavit to stand would warrant reopening discovery for Argus to explore the opinions and, if necessary, counter them, which would result in a delay of the trial.
Having determined that Siemens AG had no justification for such a late disclosure, and having determined that Argus was prejudiced by the late disclosure, Rule 37 requires that the Court exclude the opinions of Dr. Avitan that are contained in the Affidavit. This sanction is fair and does not unduly burden Siemens AG since all of Dr. Avitan's opinions from his Amended Report remain for use in its defense. Accordingly, Argus's motion to strike the Affidavit is granted.
Argus's Motion for Summary Judgment against Siemens AG
Argus seeks summary judgment claiming that there is no evidence of liability on its part, and that it is entitled to summary judgment as a matter of law. Pursuant to Federal Rule of Civil Procedure 56, summary judgment is appropriate when, viewing the facts and inferences in the light most favorable to the nonmoving party, "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Harder v. ACandS, 179 F.3d 609, 611 (8th Cir. 1999).
The proponent of a motion for summary judgment "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The party opposing the summary judgment motion must "set forth specific facts showing that there is a genuine issue for trial." NELR 56.1(b) and Fed.R.Civ.P. 56(e). See also Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 474 U.S. 574, 586 (1986) (quoting Fed.R.Civ.P. 56(e)) (emphasis omitted); Prudential Ins. Co. v. Hinkel, 121 F.3d 364, 366 (8th Cir. 1997) (quoting Fed.R.Civ.P. 56(e), cert. denied, 522 U.S. 1048 (1998)).
The only claim remaining against Argus is Siemens AG's cross-claim that alleges a right to indemnification and contribution. There are no facts to establish that Siemens AG is entitled to be indemnified by Argus. The parties cite no express agreement to indemnify, and neither party relies on facts in the record from which a right to indemnification might be implied. Siemens AG makes no argument in its brief to support its indemnification claim. Accordingly, summary judgment in favor of Argus on the indemnification claim is granted.
The contribution claim requires more analysis. To succeed in a contribution claim, the plaintiff must establish that it and the defendant share a common liability to the same party. Rawson v. City of Omaha, 212 Neb. 159, 322 N.W.2d 381(1982); Lackman v. Rousselle, 7 Neb. App. 698, 712, 585 N.W.2d 469, 480 (Neb.App. 1998). Argus argues that there is no evidence to demonstrate that it proximately caused, in whole or in part, the fire at Unit # 3.
Argus relies primarily upon the Fire Investigation Report dated as approved on January 8, 1996, and the opinions of its own expert witnesses to demonstrate that the Argus ball valves functioned as intended and that they did not cause the fire. See Index of Evidence of Argus in Support of Motion for Summary Judgment, Volume 1, Exhibit 1, Fire Investigation Report at Section 3.5.4 and appendix J; Exhibit 4, Affidavit of Bernd Fechner at paragraphs 22 to 26; Exhibit 5, Affidavit of Vinod Sharma at paragraphs 8 to 12; and Exhibit 6, Affidavit of A.D. Patton at paragraph 5 and exhibit B thereto. Very generally stated, the expert witnesses find that the Argus ball valve performed consistent with its design specifications; there was no manufacturing defect or failure; and there is no factual basis for liability on the part of Argus as a result of the fire. Id. All of Argus's expert witnesses relied, in part, on the Fire Investigation Report. Id. at Exhibits 4, 5, and 6. Edward Maenle, who was primarily responsible for preparing the Fire Investigation Report, concluded that the Argus ball valves performed as designed. Id. at Exhibit 2, Deposition of Edward Maenle, at 122-130.
Argus also relies upon the deposition testimony Klaus Peters. Mr. Peters is the former manager of Siemens AG's Department of Technical Automation, which was then charged with the design and construction of the combustion turbine and its valves. Mr. Peters is also the witness produced by Siemens AG in response to OPPD's Rule 30(b)(6) Notice of Taking Deposition, and he is one of the persons who was produced as being responsive to Argus's Rule 30(b)(6) Notice. Id. Exhibit 18, Klaus Peters Deposition, at 7-13 and 16-17. Mr. Peters expressly stated that he does not dispute the findings in the fire investigation report that the Argus ball valves functioned as designed. Id. at 306. He explained that Siemens AG designed the combustion turbine system so that fuel oil would first encounter the ESV, and if fuel oil seeped through the ESV, then the Argus ball valves would function to protect the system by relieving "small amounts of pressure under normal operating conditions." Id. at 312-13. Based on these submissions, Argus has clearly satisfied its initial responsibility of coming forward with affidavits and other evidence that it believes demonstrate the absence of a genuine issue of material fact.
Siemens AG's main argument in opposition to the motion is that there is a genuine issue as to whether the Argus ball valves performed to design specifications. Siemens AG contends that the Argus ball valves, as manufactured, relieved pressure at 8.2 bar (120psig), but that the design specifications for the Argus ball valves required them to relieve pressure at 12 bar (174 psig). Siemens AG argues that "[i]f the Argus Ball Valves would have resisted fuel oil pressure up to not less than 12 bar instead of 8 bar, then the fuel oil may never have passed through the Argus Ball Valves into the anti-icing line where it ultimately ignited and, if so, the fire would not have occurred." Siemens AG's argument continues, "At the very least, the amount of fuel oil which passed through the Ball Valves would have been less during a certain period of time and the amount of time it took for the fuel oil to accumulate in the anti-icing line would have been greater." Amended Brief in Opposition to Motion for Summary Judgment of Argus at 8-9. This argument is vague and speculative. There is no evidence showing that the difference between 8 bar and 12 bar was material under the circumstances that gave rise to the fire. There is no evidence relating to the amount of time it took for the oil to accumulate or whether, during that time, someone could have discovered the dangerous condition. There simply are no facts to support Siemens AG's argument.
"Bar" is a unit of pressure measurement used in Europe that is roughly equivalent to 14.5 pounds per square inch gravity ("psig").
Siemens AG also attacks the reliability of much of the evidence Argus offered in support of its motion for summary judgment against OPPD. Because Argus did not need to rely on that evidence — primarily the testimony of OPPD employees and consultants — in support of its motion against Siemens AG, this Court need not consider Siemens AG's opposition to it.
While there may be disagreement as to whether the Argus ball valves were manufactured as designed given evidence contained on a document relating to the plans and specifications, this disagreement lacks the requisite genuineness given Mr. Peters's admission that the Argus ball valves did not malfunction. Siemens AG's corporate representative and a designer of the combustion turbine system used in Unit # 3, Mr. Peters, stated:
The Argus ball valve, both in the feed line and in the return line, worked correctly. . . . No complaint can be made about the function of the ball valve. And in my opinion, nothing can be said in a negative manner about the ball valve in any way whatsoever in this case.See Index to Evidence offered by Argus, Exhibit 18, Peters Deposition at 288.
Finally, even if there is a genuine issue relating to whether the Argus ball valves were manufactured to withstand pressure at 8 bar instead of 12 bar, that issue does not relate to a material fact. The parties agree that fuel oil accumulated in the anti-icing line, which ignited and caused the fire. For fuel oil to have accumulated in the anti-icing line, fuel oil had to travel through the ESV and through the Argus ball valves. What pressure made the fuel oil travel through both valves is a material fact. Following the fire, testing was performed that established that the ESV did not leak at 41 bar (600 psig). However, when the pressure was increased to 62 bar (900 psig), a heavy deluge of fuel oil was noted. Id. at Exhibit 1, Fire Investigation Report at section 3.5.3; and Exhibit 2, Edward Maenle Deposition at 61-63. The ESV was designed to withstand operating pressures at 79 bar (1150 psig). Id. Thus, the least amount of pressure that could actually have been present to cause the leak was something greater than 41 bar (600 psig) — a pressure far greater than the pressure for which the Argus ball valve was either manufactured or designed to relieve.
The amount of pressure present at the time of the leak that caused the fire, based on the testing, could have been as low as just over 41 bar, which was more than three times the 12 bar pressure that Siemens AG contends was the design requirement of the Argus ball valves. Id. The Court finds that this fact renders the distinction between 8 bar and 12 bar irrelevant, and the factual dispute relating to the design specification for the Argus ball valve immaterial. Siemens AG has failed to proffer any evidence to demonstrate that there is a genuine issue as to any material fact relating to Argus's liability in this matter. Therefore, Argus is entitled to summary judgment as a matter of law, and its motion must be granted. Argus's cross-claim against Siemens AG also shall be dismissed because Argus's prayer for relief asks for its dismissal from this case.
IT IS THEREFORE ORDERED:
1. Argus's Motion to Strike the Affidavit of Isaac Avitan (Filing No. 200) is granted;
2. Argus's Motion for Summary Judgment (Filing No. 188) is denied, in part, as to Plaintiff Omaha Public Power District, as moot;
3. Argus's Motion for Summary Judgment (Filing No. 188) is granted, in part, as to Siemens AG's Cross-Claim against Argus; and
4. Argus's Cross-Claim against Siemens AG is dismissed without prejudice.