Indiana Court Decisions — Sept. 13-26, 2018

7th Circuit Court of Appeals

Sept. 13

Civil Tort — Failure to Warn/“Popcorn Lung”

Gregory Aregood, Jr. v. Givaudan Flavors Corporation


The 7th Circuit Court of Appeals reinstated a claim filed by nearly 30 workers who argue a microwave popcorn plant failed to warn them of exposure during the manufacturing process to a butter flavor ingredient that has been linked to a disease known as “popcorn lung.”

The workers allege that exposure caused them to suffer from respiratory injuries related to the flavoring ingredient diacetyl while working at the ConAgra Snack Foods Group plant in Rensselaer. In Sept. 2017, Senior Judge Sarah Evans Barker granted summary judgment to the plant’s longtime supplier, Givaudan Flavors Corp., finding that the plaintiffs provided no expert testimony on the costs and benefits of a diacetyl-free butter flavor.

In Gregory Aregood, Jr. v. Givaudan Flavors Corporation, 17-3390, Givaudan faced several claims under Indiana product liability law for strict liability, failure to warn, negligence, and design defect. On appeal, the 7th Circuit Court found summary judgment for Givaudan to be proper on all counts, with the exception that the supplier failed to warn that its products contained a dangerous substance.

When inhaled, diacetyl can cause bronchiolitis obliterans or “popcorn lung” — the inflammation and obstruction of the smallest airways of the lungs. Symptoms include a dry cough, shortness of breath, wheezing, fatigue, and can lead to worse personal injuries.

“In the mid-1980s, Givaudan learned from its trade association that inhaling diacetyl was ‘harmful’ and ‘capable of producing system toxicity,’” Judge Michael Brennan wrote for the panel. “In the 1990s, three employees at Givaudan’s plant in Cincinnati were diagnosed with bronchiolitis obliterans, and one died.”

On appeal, the employees focused on Givaudan’s manufacturing and supply of butter flavorings, its accompanying material safety data sheets, and the lack of warnings that the flavorings contained diacetyl. In order to show that the butter flavorings were defective under the Indiana Product Liability Act and to prevail on their failure to warn claim, the 7th Circuit noted the plaintiffs needed show Givaudan had a duty to adequately warn about a latent dangerous characteristic. The 7th Circuit found that the supplier failed to warn in that regard.

The 7th Circuit also found that a jury could reasonably conclude that Givaudan knew of diacetyl’s dangers after several cases of bronchiolitis obliterans in the 1990s, as well as the need to protect its own employees and the users of its products.

“Viewing the evidence in the employees’ favor, and drawing justifiable inferences for them, a reasonable jury could conclude that Givaudan failed to discharge its duty to warn the plaintiff employees on the dangers of diacetyl,” the court concluded. “Thus, summary judgment should not have been granted to Givaudan on plaintiffs’ failure to warn claim.”

Indiana Supreme Court

Sept. 13

Civil Tort — Liability/Police Sexual Assault

Jennifer Cox v. Evansville Police Department and The City of Evansville; Babi Beyer v. The City of Fort Wayne


The Indiana Supreme Court affirmed two cities were entitled to summary judgment on the common-carrier theory, but not on the issue of liability under respondeat superior’s scope-of-employment rule in a consolidated civil lawsuit involving two women who were sexually assaulted by on-duty police in Evansville and Fort Wayne.

In 2009, Jennifer Cox was sexually assaulted by then-Evansville police officer Martin Montgomery. He had responded to a domestic disturbance call involving Cox, who he took back to her apartment, followed her inside, and coerced her into sex. Cox sued, and he later was convicted of criminal deviate conduct and sentenced to 12 years in prison.

Then up north, Babi Beyer was assaulted and raped by then-officer Mark Rogers. After she was arrested for sitting behind the wheel of a car parked on a road while intoxicated, she was taken to a hospital where a blood draw revealed an alcohol level more than three times the legal limit. She was discharged, however, to Rogers’ custody, and he took her to a grassy area and raped her on a bench while armed and in uniform. Rogers pleaded guilty to charges of rape, sexual misconduct and official misconduct.

The suits were combined before the Indiana Court of Appeals because they shared a common issue of law — whether the “common carrier” liability exception applied to police departments and municipalities in both cases. Last September, the COA found the exception did apply to the cities and officers, however, the high court sided with the trial court’s decision that it did not in Jennifer Cox v. Evansville Police Department and The City of Evansville; Babi Beyer v. The City of Fort Wayne, 18S-CT-447.

On appeal, Fort Wayne contended that the sexual assault was outside its police officer’s scope of employment as a matter of law. And both cities maintained that the common-carrier exception did not apply. The high court did not excuse Fort Wayne from liability as a matter of law, but did find the common carrier-exception did not apply.

First, the high court found that under Indiana’s scope-of-employment rule, an employer is liable for employees’ tortious acts that arise naturally or predictably from the employment context.

It also determined that when a police officer misuses employer-conferred power and authority to commit sexual assault, the city is liable for the assault if it arose naturally or predictably from the officer’s employment activities.

“The reasons underlying scope-of-employment liability support this conclusion,” Chief Justice Loretta Rush wrote. “First, the city benefits from the lawful exercise of police power, so when tortious abuse of that power naturally or predictably flows from employment activities, the city equitably bears the cost of the victim’s loss.”

The high court also found that Rogers exploited his unique institutional prerogatives of his police employment.

“Because a question of fact remains about whether Officer Rogers’s sexual assault occurred within the scope of his employment, we affirm the denial of summary judgment to Fort Wayne on the issue of liability under the doctrine of respondeat superior,” Rush wrote.

In its second point, the high court declined to extend Indiana’s common-carrier exception outside relationships formed by a “contract of passage.”

“Though the responding officers exercised control over Cox and Beyer, the women’s relationships with the cities were not contractual as required to invoke the common carrier exception,” the panel wrote. “Neither Cox nor Beyer entered a ‘contract of passage’ with Evansville or Fort Wayne: there was no invitation, no acceptance of an invitation, no fare or other consideration, and no agreed-on period of accommodation.”

The court concluded in noting that with “great power comes with great responsibility.”

“Cities are endowed with the coercive power of the state, and they confer that power on their police officers. Those officers, in turn, wield it to carry out employment duties — duties that may include physically controlling and forcibly touching others without consent.”

“For this reason, when an officer carrying out employment duties physically controls someone and then abuses employer-conferred power to sexually assault that person, the city does not, under respondeat superior, escape liability as a matter of law for the sexual assault,” Rush concluded.

Juvenile — Delinquency Hearing/Right to Be Present

R.R. v. State of Indiana


The Indiana Supreme Court split over whether a juvenile waived his right to be present when he skipped his hearing, but the justices came together in calling for a legislative remedy. Justices in a 3-2 decision reversed the teen’s juvenile delinquency adjudication.

A fact-finding hearing was convened for R.R., who was charged with violating the terms of his probation and committing auto theft and false informing. However, he did not appear, and his mother told the Lawrence Circuit Court she did not know where he was.

Despite the objections of R.R.’s counsel, the court continued the proceedings, finding R.R. violated his probation and adjudicating him a delinquent for auto theft and false informing.

About two months later, R.R. was detained by police and the court made him a ward of the Indiana Department of Correction. He appealed, arguing he had a constitutional right to appear at his fact-finding hearing and the court violated that right by holding the hearing in his absence.

A split Court of Appeals affirmed, finding that adopting R.R.’s interpretation would allow juveniles to “hijack trial court dockets and avoid responsibility for their delinquent behavior by knowingly and voluntarily (and repeatedly) refusing to appear at factfinding hearings.”

But the Indiana Supreme Court reversed the trial court’s delinquency determination and remanded for further proceedings. Justice Steven David wrote a dissent in R.R. v. State of Indiana, 18S-JV-230, which Chief Justice Loretta Rush and Mark Massa joined in part.

Writing for the majority, Justice Geoffrey Slaughter asserted that Indiana’s juvenile waiver-of-rights statute, Indiana Code 31-6-7-3, does not allow for either his counsel, parent or himself to waive his right to be present at a fact-finding hearing.

Slaughter also downplayed the Court of Appeals’ finding that the juvenile-waiver statute could lead to unintended consequences. He also contended that applying a judicial fix would intrude too much into legislative territory.

“But even were we to conclude that no reasonable legislator could have intended that a no-show teenager would avoid waiver by resorting to such litigation gamesmanship, the judicial fix would not be modest,” Slaughter wrote. “It would require courts to rewrite the statute by adding a substantive ‘fourth’ waiver option the legislature did not enact.”

In his dissent, David argued holding the hearing in R.R.’s absence was a “just outcome.” The juvenile had presumably run away, a pick-up order for him had been issued, he was nearly 18 and had great familiarity with the justice system, so, David contended, R.R. had waived his right to be present at his hearing.

However, he did note the Indiana General Assembly should act.

“I urge our legislature to consider amending the statute to give trial court judges some discretion in situations where the juvenile is absent,” David wrote. “That is, the statute should allow for knowing, intelligent and voluntary waiver by a juvenile who is aware of upcoming proceedings but chooses to be absent with no adequate explanation.”

Sept. 25

Infraction – Indiana Blocked Railroad Crossing Statute

State of Indiana v. Norfolk Southern Railway Company


A unanimous Indiana Supreme Court sent a message to all Hoosier motorists stuck at a railroad crossing waiting for the train to pass – relax, you’re going to be there awhile.

All five justices found that Indiana’s statute preventing trains from blocking a railroad crossing for more than 10 minutes was pre-empted by the federal Interstate Commerce Commission Termination Act. The court concluded the federal law runs over any state attempts to “mange or govern rail transportation.” This includes Indiana’s blocked-crossing statute, because it substantially interferes with railroad operations.

“While Congress largely deregulated the railroad industry, it did not invite states to step in and fill the void,” Chief Justice Loretta Rush wrote for the court.

Norfolk Southern challenged Indiana’s blocked-crossing statute, Indiana Code section 8-6-7.5-1, after it got hit with 23 citations between December 2014 and December 2015 for blocking crossings near its Allen County trainyard. Each violation is a Class C infraction and carries a minimum $200 fine.

Allen Superior Court ruled for the railroad, finding that complying with the state statute would be an onerous process for Norfolk Southern. However, the Indiana Court of Appeals reversed on the basis that the ICCTA did not specifically say blocked-crossing statutes were squashed by the federal law.

The Indiana Supreme Court accepted transfer and heard oral arguments in May.

In a 16-page opinion sprinkled with locomotive references, the Indiana Supreme Court tore apart the ICCTA. It looked closely at the language that says ICCTA remedies regarding the regulation of railroads “are exclusive and preempt” state remedies.

The court determined Indiana’s statute dictates key operational choices.

“Railroads cannot run trains too slowly or make them too long, lest they take more than 10 minutes to clear a crossing,” Rush wrote. “… Railroads also cannot schedule trains or operate trainyards in a way that forces them to stop trains for more than ten minutes at a crossing to repair problems, perform safety checks, or wait for tracks to clear.”

For Norfolk Southern in particular, the justices noted the railroad company’s switching operations take more than 10 minutes to safely complete. Norfolk Southern would have to run faster or shorter trains or it would have to cut the trains into segments, but the reassembly and mandatory brake tests would take more than 10 minutes.

“All this means that Norfolk Southern — just to try to comply with the blocked-crossing statues — would have to change several key railroad-operation choices,” Rush wrote. “… The statute’s duty to clear crossings within ten minutes means that if there is any way for the railroad to comply — no matter how onerous — then it must do so.”

Pointing to Friberg v. Kansas City S. Ry., 267 F.3d 439, 443 (5th Cir. 2001), the Indiana justices concluded the state’s statute as to when trains can use the tracks and stop on them violates the ICCTA because it is attempting to manage or govern rail transportation in a direct way.

The ruling in State of Indiana v. Norfolk Southern Railway Company, 18S-IF-193, will impact motorists across the state. As Rush noted, not only does Indiana have more than 4,000 miles of track, but it also has 5,693 railroad-highway grade crossings — one for every 17 roadway miles, which is the highest concentration in the country.

“Indiana — The Crossroads of America — is a railroad capital,” Rush wrote.

However, the Supreme Court did hint at an alternative solution for frustrated motorists. It noted the Surface Transportation Board’s Rail Customer and Public Assistance Program handles complaints and, in 2017, addressed 32 issues related to blocked railroad crossings.

Sept. 26

Agency Action — Utility Rates/Modified Order, Cost Overruns

NIPSCO Industrial Group v. Northern Indiana Public Service Company


Revisiting a decision that limited how utilities can pass the bill for future costs to ratepayers, the Indiana Supreme Court tweaked its earlier opinion to insert language in a modified decision that now will allow utilities to recover project cost overruns in utility rate increases.

Justices in June ruled against Northern Indiana Public Service Co. and in favor of a group of its heaviest commercial users, NIPSCO Industrial Group. The decision reversed regulatory approval of a portion of a rate increase meant to pay for undefined replacement of a percentage of NIPSCO gas pipes throughout its system.

The court generally held in June that under that the 2013 TDSIC Statute, utilities may obtain rate increases for specific, defined projects, but not for broad categories of projects such as unspecified maintenance of infrastructure.

After a rehearing, the court reissued Justice Geoffrey Slaughter’s unanimous opinion in NIPSCO Industrial Group v. Northern Indiana Public Service Company, 18S-EX-334, with a small but significant difference. The new opinion is substantially identical to the June order, with the notable exception of the addition of the clause in bold in this paragraph:

“After the Commission has approved the foundational seven-year plan under Section 10, the utility may file petitions every few months under Section 9 to obtain ‘automatic’ rate adjustments for approved costs and expenditures as it completes these improvements and puts them into service. I.C. §§ 8-1-39-9(a), (c), (e). These periodic Section 9 petitions allow the utility to recoup eighty percent of approved cost estimates. Id. § 8-1-39-9(a). The remaining twenty percent — along with any cost overruns that are specifically justified by the utility and specifically approved by the Commission — is recoverable during the general ratemaking case required.”

Slaughter wrote for the court that the decision in the NIPSCO case would be far-reaching, as likely the modification will be for utilities and their ratepayers.

“The stakes are much larger than just the roughly $20 million at issue between NIPSCO and the Industrial Group. The Commission, we are told, has approved billions of dollars of utility-infrastructure investments through the TDSIC process. Given the favorable regulatory treatment, utilities are likely to funnel increasing amounts of infrastructure investments through this reimbursement mechanism. How we resolve these competing visions of the TDSIC Statute will likely have enormous financial consequences for utilities and their customers,” both opinions say.

Indiana Court of Appeals

Sept. 17

Civil Plenary — Default Judgment/Jurisdiction

Timothy C. Troxel v. Dale Ward, successor in interest to original Plaintiff, Plan Administrators, Inc.


Timothy Troxel had a complaint filed against him and his company, WK Payroll, Inc., in Wisconsin in 2014. The plaintiff, Plan Administrators, claimed WK Payroll had breached a $653,000 promissory note by failing to make agreed payments.

However, Troxel had already moved to the Sunshine State almost a year earlier. The process server left the summons and complaint at an old address for Troxel in Francesville, Indiana, but told Plan Administrators the property was vacant, and neighbors believed Troxel had moved.

Still, the Wisconsin state court found the plaintiffs had satisfied Indiana Trial Rule 4.1(A)(3) by leaving a copy of the summons and complaint at Troxel’s former address. It then entered a default judgment against WK Payroll and Troxel for $490,010.13 plus costs.

More than a year later, Plan Administrators filed in LaPorte Circuit Court a Notice of Filing of Foreign Judgment and a Complaint to Enforce Foreign Judgment against Troxel. Plan Administrators told the court Troxel was living in LaPorte County even though a summons and complaint mailed to him at a La Crosse address came back marked “return to sender” and “unable to forward.”

Nearly a year after that, Plan Administrators assigned its right, title and interest in the Wisconsin judgment to Dale Ward. The LaPorte Circuit Court granted Ward’s motion for an order authorizing the sale of 8,578 shares of Adaptasoft stock, valued at $300,000, and owned by Troxel.

On appeal, Troxel argued the LaPorte Circuit Court’s order authorizing the sale of the stock is void under Trial Rule 60(B)(6) because he was not properly served.

The Court of Appeals overturned the sale for a “more fundamental reason” than proper notification in Timothy C. Troxel v. Dale Ward, successor in interest to original Plaintiff, Plan Administrators, Inc., 18A-PL-597. The appellate panel found the LaPorte Circuit Court’s order authorizing the sale of the stock was void because a “judgment which is void in the state where it is entered is also void in Indiana.”

Although Troxel did not argue the Wisconsin judgment is void, he did challenge the Wisconsin judgment in his brief. In addition, Ward recognized Troxel was challenging the Wisconsin judgment.

However, Ward claims that personal jurisdiction should be presumed in this case because there is nothing to suggest that jurisdiction was not proper in the Wisconsin lawsuit. The Court of Appeals was not convinced, pointing to the problems serving Troxel.

“Because Troxel was not properly served with notice of the Wisconsin lawsuit, the Wisconsin court did not have personal jurisdiction over Troxel when it entered default judgment against him and therefore that judgment is void,” Chief Judge Nancy Vaidik wrote for the court. “Accordingly, any Indiana orders based on the void Wisconsin judgment are also void.”

The Court of Appeals reversed the LaPorte Circuit Court’s denial of Troxel’s Trial Rule 60(B) motion and remanded with instructions for the court to vacate its order authorizing the sale of Troxel’s stock.•

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