December 16 2008
DA 07-0686
IN THE SUPREME COURT OF THE STATE OF MONTANA
2008 MT 424
JASON SINCLAIR,
Plaintiff and Appellant,
v.
BURLINGTON NORTHERN AND SANTA FE
RAILWAY COMPANY, a Delaware Corporation,
and SCOTT JACOBSEN,
Defendants and Appellees.
APPEAL FROM: District Court of the Eighth Judicial District,
In and For the County of Cascade, Cause No. ADV 2004-242
Honorable Julie Macek, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Erik B. Thueson, Thueson Law Office, Helena, Montana
James T. Towe, Towe Law Offices, Missoula, Montana
For Appellees:
Jeff Hedger, James E. Roberts, Hedger Friend & Roberts, P.L.L.C.,
Billings, Montana
Submitted on Briefs: September 23, 2008
Decided: December 16, 2008
Filed:
__________________________________________
Clerk
Justice Patricia O. Cotter delivered the Opinion of the Court.
¶1 Jason Sinclair (Sinclair) appeals the dismissal of his claims against Burlington
Northern and Santa Fe Railway Company (BNSF) in the Eighth Judicial District,
Cascade County. We affirm in part, reverse in part and remand for further proceedings
consistent with this Opinion.
FACTUAL AND PROCEDURAL BACKGROUND
¶2 Sinclair was an employee of BNSF from 1994 to 2001. In December 2001,
Sinclair reported to BNSF that he had sustained injuries during his employment. He
attributed his injuries to a Freightliner FL-80 truck in which he rode regularly in order to
perform his job. BNSF denied liability for the injuries. Sinclair consequently filed a
claim under the Federal Employer’s Liability Act (FELA), 45 U.S.C. § 51, on January 7,
2002, in the Eighth Judicial District Court. Sinclair sought damages for cumulative
trauma due to riding in the FL-80 work truck and damages due to a separate slip and fall
injury. Discovery proceeded and the case went to trial on March 10, 2003.
¶3 On the third day of trial, the parties settled. At that time, Sinclair signed a Release
and Settlement Agreement with BNSF. The release stated that Sinclair would “release
and forever discharge” BNSF and any of its predecessor, successor, or affiliated
companies “from all claims and liabilities of every kind of nature, INCLUDING
CLAIMS FOR INJURIES, ILLNESSES OR DAMAGES, IF ANY, WHICH ARE
UNKNOWN TO ME AT THE PRESENT TIME . . . .” The release then listed two
specific work-related accidents which occurred while Sinclair was working as a truck
driver for BNSF. The release also contained clauses “C” and “D,” releasing:
2
C. Any and all claims, suits, demands, actions, damages, costs
and expenses of any type, past present or future, known or unknown, which
have been made or which could have been made, which I, Jason O.
Sinclair, [have] by reason of any physical, psychological, mental or
emotional claims, stress, cumulative trauma and repetitive motion injuries,
bilateral carpal tunnel syndrome, labor claims, claims under the American
with Disabilities Act, including claims for negligent mismanagement or
claims that could potentially be made pursuant to MCA 39-2-703 or any
similar state or federal law, civil rights claims, federal or state employment
statutes, or any other claims relating to any employment practices, claims
handling practices, occupational hearing loss, hearing impairment, tinnitus,
hearing disorders of any type, including any increased risk of further
hearing disorder, and any respiratory, immunological, neurological,
organic, or organ condition, injury, illness or disease caused or aggravated
by exposure to stress, occupational exposures to fumes, chemicals, smoke,
dust, gases, heavy metals, or any other substances or situation while
employed by [BNSF] including any claim for present or future
reinstatement which I hereby expressly waive and release.
D. It is agreed and understood that the claims which were or
could have been made or brought by Jason O. Sinclair, including, but
limited to, injuries to the spine, brain and any other cumulative injuries for
claims for other injuries or illnesses referenced in the medical records or
described by Jason O. Sinclair in his lawsuit are herein released.
¶4 During discovery in his suit against BNSF, Sinclair had requested information and
documents concerning problems with the FL-80 truck. Sinclair claims that BNSF did not
produce any information indicating any major problems with the FL-80 truck, and that
BNSF’s claims adjustor Scott Jacobson (Jacobson) verified BNSF’s discovery responses.
Sinclair’s trial counsel made additional discovery requests in this regard, but Sinclair
claims nothing further was produced. As it turns out, a co-worker of Sinclair named
Mike Dolan (Dolan) had filed a similar suit against BNSF, alleging that he had been
injured from riding in an FL-80 truck. Dolan also made discovery requests with BNSF
concerning the FL-80 truck. After deposing Jacobsen, Dolan learned of additional
3
information, not heretofore disclosed neither to himself nor Sinclair, concerning the
FL-80 truck in connection with a lawsuit in Missouri against BNSF. Dolan then
contacted attorneys involved in the Missouri litigation and obtained information
concerning the FL-80 truck. Sinclair claims that the information obtained by Dolan
shows that BNSF had safety complaints and back injury reports about the FL-80 truck
dating back as far as 1999. Sinclair also claims that further discovery by Dolan revealed
that BNSF had knowledge that the FL-80 truck was responsible for back injuries to its
employees.
¶5 Because he did not learn of the foregoing information until after his suit against
BNSF had settled, Sinclair filed a new complaint against BNSF on March 9, 2004. In it,
he contended that before and during his trial, BNSF had represented to him and the jury
that the FL-80 was a safe truck when, in fact, it knew otherwise. Sinclair contended that
BNSF knew about problems with the FL-80 truck and failed to produce this information
to him in response to his discovery requests.
¶6 Sinclair’s new complaint initially contained five counts. Count I asserted a new
cause of action for negligence against BNSF, alleging that Sinclair had been overexposed
to poisonous or hazardous fumes, vapors, dust, and particles while he performed his
duties as a welder for BNSF. Sinclair alleged that BNSF had failed to provide him with
appropriate respiratory protection when he performed some welding for BNSF in 2001,
and that during this time he was exposed to toxic manganese fumes. Sinclair alleged in
this new count that he suffered subtle neurotoxic damages over the course of his career,
but was unaware of this damage until 2003 when he was advised that several symptoms
4
he had been suffering (including tremors in his hands, balance difficulties, and weakness
in his legs) had been caused by overexposure to toxic fumes at his workplace. Sinclair
further alleged that BNSF had knowledge of Sinclair’s potential susceptibility to injury
from chemical exposures dating back to at least 1996.1
¶7 Count II stated a bad faith claim in which Sinclair alleged BNSF violated its duty
to act promptly, fairly, and in good faith to settle his claim. In particular, Sinclair alleged
that BNSF withheld information it had concerning the FL-80 truck during discovery in
the initial suit which, if revealed, would have shown that liability was clear, causation
was clearly established, and that BNSF’s defenses were not meritorious. Sinclair claimed
that the withholding of this information during his previous lawsuit affected his ability to
present his case to the District Court and the jury, and ultimately led to his acceptance of
a settlement for less than a reasonable and fair amount.
¶8 Count III stated a fraud claim. In this count, Sinclair alleged that BNSF’s failure
to provide information requested by him concerning its knowledge of the FL-80 truck
constituted fraud under Montana law. Sinclair alleged that BNSF knew that the withheld
information concerning the FL-80 truck had a direct bearing on the validity of its
defenses, as well as liability and causation. In spite of this, Sinclair claims that BNSF
took positions on the safety of the FL-80 truck which were contrary to its internal
1
In Count I, Sinclair also alleged that BNSF negligently assigned him to numerous tasks in the
course of his welding duties which resulted in repetitive use trauma to his arms and upper
extremities, and that BNSF was responsible for damages from these injuries on account of its
negligence. However, on appeal he has exclusively focused on the manganese poisoning
allegations, and made virtually no mention of these repetitive trauma claims. Accordingly, we
will confine our review solely to the manganese poisoning claims.
5
documents, and caused him to settle for a lesser amount than he would have if he had
known this information. Sinclair alleged that BNSF perpetrated a fraud both upon him
and the court, and that BNSF breached its duties under both Montana common and
statutory law in concealing this information from him in order to gain an unfair
advantage. Count IV stated a punitive damages claim, stemming from BNSF’s alleged
attempts to conceal information pertaining to the liability and causation issues involved in
Sinclair’s lawsuit.
¶9 Count V, entitled “release issues,” related to the release which Sinclair signed
when he settled his previous suit. Sinclair alleged the release was overly broad,
unconscionable, not supported by adequate consideration, and based on concealment,
deceit, fraud, and mutual mistake of fact. Accordingly, Sinclair asserted the release could
not be asserted as a defense to any of his present claims against BNSF. Sinclair asserted
that he was unaware of any system-wide problems with the FL-80 truck and that if BNSF
and Jacobsen were similarly unaware of such information, then the release was based
upon a mutual mistake of fact. Finally, he specifically alleged that the injury claims
asserted in his new complaint were not at issue in his previous trial, had not been
diagnosed, and thus were not part of the earlier settlement and accompanying release.
¶10 BNSF subsequently moved the District Court to dismiss Counts II, III, and IV of
Sinclair’s complaint. On November 16, 2004, Sinclair amended his complaint, adding an
alternative claim under FELA (alternative FELA claim). This claim reads in pertinent
part as follows:
6
BNSF negligently assigned Mr. Sinclair to unsafe work practices,
tools and equipment over the course of his career, including but not limited
to, the FL-80 truck described above. The BNSF knew that this and
identical trucks were dangerous and causing back injuries to its workforce,
yet concealed this information from Mr. Sinclair and other workers. Mr.
Sinclair was further negligently required to perform other heavy, awkward,
and repetitive work activities over the course of his career.
BNSF’s negligence based on the information currently available
included failure to provide a safe workplace, tools and equipment, failure to
train or warn Mr. Sinclair, failure to provide adequate assistance for doing
the work, and the general failure to act reasonably under the circumstances.
BNSF’s negligence under the FELA caused, in whole or in part,
injuries to Sinclair’s spine and related general damages that are recoverable
under the FELA.
Sinclair maintains that he added this claim to his complaint after BNSF filed its motion to
dismiss his state law claims, so that if those claims were dismissed, he would be entitled
to rescind his back injury settlement on the grounds of fraud and re-litigate his FELA
case.
¶11 The District Court granted BNSF’s motion to dismiss on February 10, 2006. The
District Court concluded that Count II, the bad faith claim, was unripe while the
underlying validity of the FELA release remained at issue, and dismissed that claim
without prejudice. The District Court dismissed Sinclair’s state law fraud claims on the
theory that those claims were preempted by federal law under FELA; thus, Sinclair could
not simultaneously affirm the validity of his release and independently pursue state law
claims related to fraud. Then, because it dismissed both the fraud and bad faith claims,
the District Court dismissed the corresponding punitive damages claims as well.
7
¶12 After granting BNSF’s motion, the District Court issued an order regarding further
discovery on issues related to the remaining counts in Sinclair’s complaint. Subsequent
to discovery, both parties moved for summary judgment on Sinclair’s remaining FELA
claims. The District Court held a hearing on June 5, 2007, and granted summary
judgment to BNSF from the bench on the remaining counts in Sinclair’s complaint. The
rationale for the District Court’s decision is set forth in the transcript of the June 5
hearing.
¶13 The District Court explained that the United States Supreme Court decision of
Dice v. Akron, Canton & Youngstown R. R. Co., 342 U.S. 359, 72 S. Ct. 312 (1952), set
forth the grounds under which a release could be set aside for fraud in the inducement
and that Sinclair had failed to meet this standard because he had not set forth any
allegations claiming that he was deceived by BNSF as to the contents of the release itself.
Similarly, the District Court found that Sinclair had failed to properly allege a mutual
mistake of fact, or that the release was not supported by adequate consideration. The
District Court concluded that there were no genuine issues of material fact which would
allow it to invalidate the release under the standards set forth in Dice.
¶14 Additionally, the District Court considered whether the scope of the release
violated § 5 of FELA, which reads in pertinent part as follows:
Any contract, rule, regulation or device whatsoever, the purpose or intent of
which shall be to enable the common carrier to exempt itself from any
liability created by this Chapter, shall to that extent be void . . . .
8
45 U.S.C. § 55.2
¶15 With respect to the scope of the release, the District Court concluded as a matter of
law that the release did not violate § 5 of FELA, covered Sinclair’s manganese poisoning
injuries as alleged in Count I, and therefore prevented Sinclair from litigating those
claims any further. The District Court found that when he signed the release, Sinclair
knew that he was having symptoms which could be related to manganese poisoning and
that he was also receiving treatment for symptoms for exposures to fumes and chemicals
which occurred while he was performing welding work for BNSF prior to the signing of
the release in April 2003. The District Court also noted that Sinclair had counsel when
he signed the release, and that Sinclair indicated that he understood the release and what
he was signing. Furthermore, the District Court interpreted the release language to
preclude any chemical claims, as well a work-related accident involving his ankle which
occurred while employed as a truck driver, and any and all claims, known or unknown,
that could be made.
¶16 After the District Court granted summary judgment to BNSF on the remaining
counts of Sinclair’s complaint, Sinclair sought to undertake further discovery on Count II,
the bad faith claims. Sinclair argued that these claims had previously been stayed
pending the resolution of the underlying claims, and that since those underlying claims
had been dismissed, he could now pursue his bad faith claims. The District Court agreed
and subsequently issued a scheduling order.
2
The role that § 5 of FELA plays in the context of settlement releases is discussed below at
¶¶ 48-52.
9
¶17 BNSF initially acquiesced in these further proceedings, but on August 16, 2007,
BNSF moved the District Court to “reaffirm” its previous dismissal of Sinclair’s bad faith
claims. It asserted that the District Court had previously dismissed, not stayed, Sinclair’s
bad faith claims and urged the District Court to reaffirm its earlier dismissal. On October
26, 2007, Sinclair filed a motion to amend his bad faith and punitive damages claims. On
November 1, 2007, the District Court held a hearing on BNSF’s motion for reaffirmance
of the previous dismissal of the bad faith claim, and on November 2, 2007, the District
Court granted BNSF’s motion. In its written order, the District Court acknowledged that
it had previously dismissed these claims without prejudice, and that it erred in stating at
the June 5 hearing that it had stayed them. The District Court then reaffirmed this
dismissal as well the dismissal of all the other counts. The District Court further directed
that if Sinclair should file a new complaint containing the bad faith claim under a new
cause number, the clerk of court would not assess a new filing fee to Sinclair.
¶18 On November 19, 2007, Sinclair filed a new complaint alleging bad faith against
BNSF under a new cause number in the Eighth Judicial District Court. On December 20,
2007, BNSF removed this state court action to the federal district court in the District of
Montana, Great Falls Division, pursuant to 28 U.S.C. §§ 1332, 1441, and 1446. As of the
time of this appeal, Sinclair’s action in federal district court is still pending.
¶19 Sinclair now timely appeals the District Court’s dismissal of his claims against
BNSF. He presents several issues on appeal. First, he challenges the dismissal of his
state law claims against BNSF. Second, he challenges the dismissal of his alternative
FELA claim. Third, he alleges that the District Court abused its discretion in denying his
10
October 26, 2007 motion to amend his bad faith claim. Finally, he maintains that the
District Court erred in dismissing Count I of his complaint with respect to the allegations
of manganese poisoning.
¶20 As an initial matter, and as noted above, Sinclair’s bad faith claims have been
removed to federal court. Once those claims were removed, the District Court was
divested of jurisdiction over them. “A basic removal principle is that once the provisions
of Section 1446(d), Title 28, U.S. Code have been met, the state court is divested of
jurisdiction to proceed further until there has been a remand by the federal court.”
Borkowski v. Abood, 884 N.E.2d 7, 10 (Ohio 2008) (citing Yarnevic v. Brink’s, Inc., 102
F.3d 753, 754 (4th Cir. 1996); Maseda v. Honda Motor Co., Ltd, 861 F.2d 1248, 1254
(11th Cir. 1988)). This being so, a state appellate court may not issue further rulings on
the lower court’s decisions. See Lewis v. C.J. Langenfelder & Son, Jr., Inc., 587 S.E.2d
697, 700-01 (Va. 2003). Moreover, once a case has been removed to federal court “[t]he
question of the removability of a suit from a state court to a Federal court is a matter
exclusively and necessarily for cognizance by the Federal court.” State ex. rel. Coleman
v. Dist. Ct. of Fifth Jud. Dist. In and For Beaverhead Co., 120 Mont. 372, 376, 186 P.2d
91, 93 (1947).
¶21 While we realize that Sinclair is appealing from the District Court’s decision to
dismiss his original bad faith complaint—thus forcing him to file a new complaint which
was then removed by BNSF to federal court—we are nonetheless now faced with the fact
that the federal court has exercised jurisdiction over the bad faith claim. Any decision we
were to make regarding the District Court’s disposition of this claim would not strip the
11
federal court of jurisdiction over the present action, which was properly removed.
Therefore, until and unless Sinclair’s bad faith claims are returned to the state District
Court, we decline under the foregoing authorities to further address them in this appeal.
¶22 Thus, we state the remaining issues on appeal as follows:
¶23 Issue One: Did the District Court err in dismissing Sinclair’s state law claims for
fraud and related claims for punitive damages?
¶24 Issue Two: Did the District Court err in granting summary judgment to BNSF on
Sinclair’s remaining FELA claims?
STANDARD OF REVIEW
¶25 We review a district court’s ruling on a motion to dismiss under the standards set
forth in M. R. Civ. P. 12(b)(6). A complaint should not be dismissed for failure to state a
claim unless it appears beyond doubt that the plaintiff can prove no set of facts which
would entitle him to relief. Reidelbach v. Burlington Northern and Santa Fe Ry. Co.,
2002 MT 289, ¶ 14, 312 Mont. 498, ¶ 14, 60 P.3d 418, ¶ 14. When considering a motion
to dismiss under M. R. Civ. P. 12(b)(6), all well-pleaded allegations and facts in the
complaint are admitted and taken as true, and the complaint is construed in a light most
favorable to the plaintiff. Reidelbach, ¶ 14. A district court’s determination that a
complaint has failed to state a claim for which relief can be granted is a conclusion of law
which we review for correctness. Reidelbach, ¶ 14.
¶26 We review de novo a district court’s decision to grant summary judgment using
the criteria set forth in M. R. Civ. P. 56. Stockman Bank of Mont. v. Mon-Kota Inc., 2008
MT 74, ¶ 11, 342 Mont. 115, ¶ 11, 180 P.3d 1125, ¶ 11. The party moving for summary
12
judgment must demonstrate the absence of genuine issues of material fact, and
entitlement to judgment as a matter of law. Stockman, ¶ 11. Where a district court
determines that there are no genuine issues of material fact and that the moving party is
entitled to judgment as a matter of law, we review the district court’s conclusions of law
for correctness. Lohmeier v. State, 2008 MT 307, ¶ 12, 346 Mont. 23, ¶ 12, 192 P.3d
1137, ¶ 12.
DISCUSSION
¶27 Issue One: Did the District Court err in dismissing Sinclair’s state law claims for
fraud and related claims for punitive damages?
¶28 The District Court dismissed Sinclair’s fraud claims on the theory that federal law
governed those claims by virtue of FELA, and that federal law did not permit him to
simultaneously affirm the validity of his release and independently pursue state law
claims related to fraud. Under Dice and Counts v. Burlington Northern R.R. Co., 896
F.2d 424 (9th Cir. 1990), the District Court concluded that Sinclair was limited to any
remedies available to him under FELA, which permits a cause of action to set aside a
release on the basis of fraud in the inducement. Thus, the District Court concluded
Sinclair could state a cause of action to challenge the release on the basis of fraud under
federal law standards, but could not bring a fraud-related claim under state law, and
granted BSNF’s motion to dismiss this claim.
¶29 Sinclair maintains the District Court erred in dismissing his state law claims for
fraud, asserting that the District Court misunderstood the nature of his claims. Sinclair
argues that he was not attempting to rescind his release, a claim which would have been
13
indeed covered by federal law under FELA. Instead, he was affirming the validity of the
settlement and then bringing a separate cause of action under state law for fraud, seeking
damages caused by BNSF’s fraud and deceit in concealing evidence related to the FL-80
truck and misrepresenting that evidence to the jury. Such damages included the tens of
thousands of dollars wasted on his trial, as well as punitive damages for BNSF’s alleged
fraudulent practices as permitted under state law. Sinclair argues that federal law under
FELA does not preempt this type of state law claim and that Riedelbach controls the
preemption issue and supports his position.
¶30 In Riedelbach, we discussed the history and congressional intent behind passage of
FELA. See Riedelbach, ¶¶ 18-19. We stated that “[c]ourts since 1908 have broadly
interpreted the FELA in an effort to honor the Congressional intent of the Act, which was
to protect railroad workers and to provide assured compensation for those workers
injured by the negligence of their railroad employer. The question we must answer in the
case at bar is just how broadly the FELA is to be interpreted, and whether and when it
will preempt state tort claims.” Reidelbach, ¶ 20. In that case, we concluded FELA did
not prevent an injured railroad worker from bringing state law claims for bad faith claims
handling practices because they were not federally preempted by FELA, and because the
litigation of those claims would not “conflict with or stand as an obstacle to the
accomplishment and execution of FELA.” Riedelbach, ¶ 54. In like manner, the issue
before us in the instant case turns squarely upon whether Sinclair’s state law claims are
preempted by federal law under FELA.
14
¶31 In Counts, the Ninth Circuit addressed a claim very similar to the one before us
now. In that case, BNSF employee Silas Counts (Counts) injured his back and left leg
while at work. Counts, 896 F.2d at 425. BNSF conceded its responsibility for the injury
and began making small payments to Counts, but later threatened to stop those payments
if Counts hired an attorney to investigate his claim. A BNSF claims representative told
Counts to attend a FELA trial involving another BNSF employee, which resulted in a
verdict for BNSF. After this, BNSF told Counts that he too would lose if he chose to go
to trial with his claims. BNSF also told Counts that he was not seriously injured (even
though BNSF’s own reports showed otherwise), and told him that BNSF’s claims office
in his area was closing soon and that after it closed BNSF would make Counts no more
offers and no more advances if he did not immediately accept its offer.
¶32 Counts accepted the offer but then later brought a diversity action against BNSF
seeking state law fraud damages in inducing him to sign the release. The federal district
court rejected Counts’ claim, concluding it was “preempted by federal law because a
cause of action under FELA existed for fraud in the inducement of a release.” Counts,
896 F.2d at 425. Counts appealed to the Ninth Circuit, which affirmed. Counts, 896 F.2d
at 426. As stated by the Ninth Circuit,
Notwithstanding a document signed by an employee which purports
to release his employer for FELA injury claims, the employee may bring a
FELA suit for damages by challenging the validity of the release for fraud.
See Dice v. Akron, Canton & Youngstown R.R. Co., 342 U.S. 359, 72 S.Ct.
312, 96 L.Ed. 398 (1952). A challenge to the validity of a FELA release
for fraud raises a federal question to be determined under federal rather
than state law. Id. at 361, 72 S.Ct. at 314. To permit independent state-law
actions for fraud in inducing FELA releases would lead to results that
would vary from state to state. That we cannot allow. “[O]nly if federal
15
law controls can the federal Act be given that uniform application
throughout the country essential to effectuate its purposes.” Id.
Counts, 896 F.2d at 425 (footnote omitted, alterations in original).
¶33 Because Counts had a cause of action to set aside the release for fraud under
FELA, the court held that he could not bring an independent state law claim for fraud.
“Counts has a cause of action under FELA available to him. Thus, Counts may not bring
an independent state law claim for fraud in the inducement of a release.” Counts, 896
F.2d at 426 (citing Lancaster v. Norfolk & Western Ry. Co., 773 F.2d 807, 812 (7th Cir.
1985)). Here, Sinclair seeks to bring an independent cause of action for fraud under state
law while simultaneously affirming the validity of the FELA release. However, he has
failed to cite any FELA cases in which such an action has been permitted, and the
holding in Counts clearly precludes such an a claim.
¶34 Furthermore, we agree with the District Court that Reidelbach does not support
Sinclair’s argument. As the District Court recognized here, the claimant in Riedelbach
had not entered into a release with BNSF at the time he brought his bad faith claims
handling practices. The lack of a release in that case was a key factor in our conclusion
that his state law claims were not federally preempted. BNSF had argued that Riedelbach
was without any remedy because FELA controlled all the negotiation and settlement
procedures but did not itself provide a remedy for a suit claiming that such procedures
were conducted in bad faith. Reidelbach, ¶ 43. Thus, the claimant was without any legal
recourse under federal law and his claims fell into the category of damnum absque injuria
16
(i.e., a loss which does not give rise to an action for damages). We responded to this
argument as follows,
Certainly we recognize that damnum absque injuria claims exist, but
Reidelbach’s grievances do not fall into this category. Dice and its
offspring, including Counts . . . are distinguishable from the case at bar in
one important detail—Reidelbach did not enter into a release agreement
with BNSF. This is a critical distinction because an executed release
actually defines and potentially compromises the amount of damages an
injured employee receives for his or her physical injury; it establishes
negligent liability and assigns a monetary value to the work-related injury.
It does exactly what a FELA court proceeding would do if the proceeding
was held. It is for this reason that a release is linked inextricably to the
FELA claim. We do not have that link in the case at bar.
Reidelbach, ¶ 44.
¶35 Here, by contrast, Sinclair executed a FELA release. The release in this case is
“inextricably linked” to Sinclair’s claims and, under FELA, Sinclair may challenge the
validity of that release and have it set aside if there was fraud in the inducement as
defined under federal law. Thus, as in Counts, Sinclair has an available FELA claim
which he may pursue. However, while Sinclair may challenge the validity of the release
under federal law, FELA does not permit Sinclair to affirm that release, and then
separately sue for state law damages, and Sinclair has failed to provide any authority
showing that he may do so. Accordingly, we hold that the District Court did not err in
dismissing Sinclair’s state law fraud claims on the grounds that they were preempted by
FELA. Similarly, we hold that Sinclair’s related punitive damages claims were properly
dismissed as well.
¶36 Issue Two: Did the District Court err in granting summary judgment to BNSF on
Sinclair’s remaining FELA claims?
17
¶37 At the June 5 hearing, the District Court granted summary judgment to BNSF on
Sinclair’s FELA claims, holding that the release itself was valid and that its scope did not
violate § 5 of FELA, and thus prevented Sinclair from litigating further FELA claims.
Under FELA, a release may be valid in the sense that it was not fraudulently induced;
however, its scope may be limited by virtue of operation of § 5 of FELA. This statutory
provision reads in pertinent part as follows:
Any contract, rule, regulation or device whatsoever, the purpose or intent of
which shall be to enable the common carrier to exempt itself from any
liability created by this Chapter, shall to that extent be void . . . .
45 U.S.C. § 55.
¶38 Federal courts, including the United States Supreme Court, have liberally
construed § 5 of FELA in favor of the rights of railroad employees. See Wicker v.
Consolidated Rail Corp., 142 F.3d 690, 701 (3rd Cir. 1998). Because of the unique role
§ 5 plays in the context of FELA releases, we deem it necessary to consider both the
overall validity of the release, and, second, whether its scope precludes Sinclair from
pursuing the manganese poisoning claims set forth in Count I of his complaint.
A. The Validity of the Release With Respect to the Alternative FELA Claim and
Count V
¶39 The District Court concluded that the FELA release executed by Sinclair barred
his alternative FELA claims as well as his additional claims stated in Count V. Sinclair
argues that the District Court erred in granting summary judgment to BNSF and
concluding that the release barred his alternative FELA claim. He argues that he added
this claim after BNSF filed its initial motion to dismiss. In the event his state law claims
18
were dismissed, he had argued that he should be allowed to pursue this alternative FELA
claim and seek a remedy for BNSF’s fraudulent conduct.
¶40 Sinclair’s alternative claim under FELA alleged that BNSF had assigned him to
work in unsafe working conditions with unsafe equipment, including but not limited to
the FL-80 truck. See ¶ 10. Sinclair further alleged that BNSF’s overall negligence
caused his spinal and related general damages. Clearly, the allegations of Sinclair’s
alternative claim are precisely in the nature of the claims released (see ¶ 3); yet, Sinclair
does not seek in either his alternative FELA claim or Count V to set aside this release.
For the reasons noted above, we conclude he cannot both affirm the release and seek
damages anew for injuries stemming from the same conduct already released. We
therefore affirm the District Court on this issue.
B. Scope of the Release and Sinclair’s Manganese Poisoning Claims
¶41 In addition to determining that the release barred his alternative FELA claims, the
District Court concluded that there were no genuine issues of material fact that the scope
of the release covered Sinclair’s manganese poisoning claims, and that it did not conflict
with § 5 of FELA. According to the District Court, Sinclair knew of his symptoms at the
time he signed the release, understood they were work-related, and also understood that
the release covered those claims. Thus, the District Court granted BNSF summary
judgment as a matter of law, concluding that the release precluded Sinclair from pursuing
the manganese poisoning claims in Count I of his complaint.
¶42 Sinclair argues that the District Court erred. He maintains that the District Court’s
ruling runs afoul of § 5 of FELA. See ¶ 37. Sinclair argues that language in the release
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(see ¶ 3) releasing all “unknown” claims, including an undiagnosed injury due to toxic
fume exposures, violates § 5 of FELA, and that any release with respect to his manganese
poisoning claims should be declared void. In support of his argument, Sinclair cites
several cases including Babbit v. Norfolk & Western Ry. Co., 104 F.3d 89 (6th Cir. 1997)
and Wicker, in which courts have invalidated a release based on its conflict with § 5 of
FELA. Citing to Bevacqua v. Union Pacific R.R. Co., 1998 MT 120, ¶ 49, 289 Mont. 36,
¶ 49, 960 P.2d 273, ¶ 49, Sinclair asserts that the release should be liberally construed in
his favor and allow his manganese poisoning claims to go forward.
¶43 Sinclair specifically argues that Babbit and Wicker cast doubt on the validity of
boilerplate releases such as the one used in this case. First, quoting Babbit, Sinclair
argues that “[t]o be valid, a release must reflect a bargained-for settlement of a known
claim for a specific injury, as contrasted with an attempt to extinguish potential future
claims the employee might have arising from injuries known or unknown by him.”
Babbit, 104 F.3d at 93. Here, Sinclair argues that he never bargained for the release of
the specific claims of manganese poisoning. Second, citing to Wicker, Sinclair argues
that the fact that he was represented by counsel is irrelevant to the question of whether
the release was valid. Finally, citing to both Babbit and Wicker, Sinclair maintains that
the fact that he had some symptoms which might have been associated with his toxic
exposure prior to executing the release does not mean that a general release would be
valid with respect to those claims.
¶44 Additionally, Sinclair maintains that three experienced members of BNSF’s claims
department, including Jacobson, admitted under oath that they could not settle claims for
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undiagnosed injuries. Sinclair maintains that throughout the negotiation of the release, it
was understood that this principle governed the settlement discussions. Sinclair argues
that this evidence should have been sufficient to trigger a conclusion that there was a
genuine issue of material fact precluding summary judgment. Accordingly, Sinclair
seeks the reversal of the District Court’s grant of summary judgment and the
reinstatement of his manganese poisoning claims.
¶45 BNSF responds that the terms of the release are not ambiguous, and that the
general release should apply to Sinclair’s manganese claims. BNSF asserts that
Sinclair’s own testimony establishes his awareness of the accrual of his manganese
poisoning claims prior to signing the release. BNSF points to portions of his deposition
testimony where he acknowledged that smoke from the welding fumes made him sick as
early as 2001, and that he had symptoms such as mood swings, irritability, headaches,
nosebleeds, and respiratory problems and shaking at that time. Further, BNSF points out
that Sinclair had reason to suspect that these symptoms were due to the welding fumes
based on some personal research he conducted. BNSF maintains that this knowledge
triggered the accrual of his FELA cause of action, and that under federal law Sinclair had
an affirmative duty to investigate his claims once he experienced and became aware of
these symptoms.
¶46 BNSF further maintains that the District Court applied the correct legal standard in
concluding that the scope of the release as it pertained to Sinclair’s manganese poisoning
claims did not run afoul of § 5 of FELA. In this regard, BNSF argues that its position in
supported by Wicker as well as Brophy v. Cincinnati, New Orleans, & Texas Pacific Ry.
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Co., 855 F. Supp. 213 (S.D. Ohio 1994), and Manis v. CSX Transp., Inc., 806 F. Supp.
177 (N.D. Ohio 1992). Particularly, BNSF argues that under Brophy a release will be
invalid under § 5, only if the employee is unaware of the injury at the time of the signing
of the release and the employee’s unawareness is reasonable. See Brophy, 855 F. Supp.
at 217. Similarly, BNSF maintains that under Manis a release will be valid with respect
to injuries which had already occurred and of which the employee was aware when he
signed the release. See Manis, 806 F. Supp. at 179. Because Sinclair was aware of his
symptoms prior to executing the release, and knew they were related to his welding work,
he released this “known risk” when he signed the release, and it does not violate § 5 of
FELA to enforce the release with respect to his manganese poisoning claims.
¶47 The District Court granted summary judgment to BNSF finding that there were no
genuine issues of material fact as to the scope of the release in this case. Under de novo
review, our task is to determine if this conclusion was correct as a matter of law.
Stockman, ¶ 11; Lohmeier, ¶ 12. Although the District Court did not issue a written
order, the transcript reveals that its decision was based on three major findings: (1) that
Sinclair knew at the time he signed the release that he was experiencing symptoms
related to welding that could be attributable to fumes and chemicals from his workplace;
(2) that Sinclair was represented by counsel at the time and reviewed the release with
him; and (3) that the release clearly set forth a release of the chemical claim, and
indicated—in addition to the ankle accident and injury related to the FL-80 truck—a
release of “any and all claims that could be made including exposure to chemical fumes.”
The District Court apparently concluded that a FELA release will cover those injuries of
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which a reasonable person would be aware at the time he entered into the release, and
which he or she would attribute to work. The District Court placed weight upon all three
factors noted above in concluding that the release entitled BNSF to summary judgment as
a matter of law on Sinclair’s manganese poisoning claims.
¶48 Our inquiry is two-fold: Did the District court err in concluding that the
“boilerplate” release signed by Sinclair did not violate § 5 of FELA, and did the District
Court err in concluding that there were no genuine issues of fact precluding summary
judgment? To answer these questions, we turn to Wicker.
¶49 In Wicker, a case relied upon by both BNSF and Sinclair, the Third Circuit set
forth a standard under which the validity of a FELA release should be evaluated in light
of § 5 of that Act. In that case, five plaintiffs (collectively employees), were employees
of Conrail who had suffered work-related injuries. All the employees had executed
releases which appeared to settle all claims for past and future injuries. Wicker, 142 F.3d
at 692-94. Each employee developed additional chemical-related symptoms after signing
their releases which they believed were attributable to work-related conditions. The
employees each claimed that their additional symptoms were not covered by their
previous releases. For some of the employees, the new symptoms developed after the
releases were signed, while others were aware of some of the symptoms before signing
the releases but did not attribute them to work conditions.
¶50 The fundamental question for the Third Circuit in Wicker concerned the scope of
§ 5’s application and whether it precluded the enforcement of the releases against the
newly-filed claims. The court began its analysis by conducting a brief yet thorough
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review of the United State Supreme Court’s jurisprudence in this area. See Wicker, 142
F.3d at 696-97. The court concluded that releases were not per se unreasonably invalid
under FELA, and “that parties may settle ‘[w]here controversies exist as to whether there
is liability, and if so for how much.’ ” Wicker, 142 F.3d at 697 (quoting Callen v.
Pennsylvania R.R. Co., 332 U.S. 625, 631, 68 S. Ct. 296, 298-99 (1948)). At the same
time, the Third Circuit noted that in Boyd v. Grand Trunk W.R. Co., 338 U.S. 263, 70
S. Ct. 26 (1949), the United State Supreme Court cautioned that in light of § 5’s
language, it was necessary to distinguish appropriate compromises from “ ‘a device
which obstructs the right of the [FELA] plaintiff to secure the maximum recovery if he
should elect judicial trial of his cause.’ ” Wicker, 142 F.3d at 697 (quoting Boyd, 338
U.S. at 266, 70 S. Ct. at 27-28). For this reason, the Wicker court noted that general,
boilerplate releases were often viewed with suspicion and concluded that the proper reach
and application of § 5 in this context remained “unclear,” possibly because “the Court’s
decisions rejecting general releases as bars to subsequent claims have been fact-driven,
and consequently do not provide a generally applicable rule of law.” Wicker, 142 F.3d at
698.
¶51 From here, the court went on to examine some seminal cases in this area in order
to determine the proper principles under which to evaluate the validity and scope of a
FELA release in light of § 5. The court recognized that lower courts addressing the issue
were split between those that ban the use of general releases in light of § 5, and those that
allow them. See Wicker, 142 F.3d at 699 (collecting cases). The Wicker court took
particular note of the Sixth Circuit’s decision in Babbit. Babbit set forth a bright line rule
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to the effect that releases are valid only if they are part of a bargained-for settlement of a
specific injury, as opposed to “ ‘an attempt to extinguish potential future claims the
employee might have arising from the injuries known or unknown by him.’ ” Wicker,
142 F.3d at 699 (quoting Babbit, 104 F.3d at 93). In light of the United States Supreme
Court’s expression in Callen that settlements apparently have some role to play under
FELA, the Wicker court rejected the Babbit standard as overbroad, in part out of a
concern that such a rigid, bright-line rule, would severely hamstring the ability of
employers and employees to engage in the settlement process. As stated by the court,
The question still remains whether a rule allowing parties to release
claims related to known risks rather than known injuries reflects FELA’s
remedial goals. We believe it does. We hold that a release does not
violate § 5 provided it is executed for valid consideration as part of a
settlement, and the scope of the release is limited to those risks which are
known to the parties at the time the release is signed. Claims relating to
unknown risks do not constitute “controversies,” and may not be waived
under § 5 of FELA. See Callen, 332 U.S. at 631, 68 S.Ct. at 298-99. For
this reason, a release that spells out the quantity, location and duration of
potential risks to which the employee has been exposed—for example
toxic exposure—allowing the employee to make a reasoned decision
whether to release the employer from liability for future injuries of
specifically known risks does not violate § 5 of FELA.
Wicker, 142 F.3d at 701.
¶52 The court went on to explain that a release which “chronicles the scope and
duration of known risks . . . would supply strong evidence in support of the release
defense,” but also cautioned that boilerplate releases should be viewed with caution, and
that trial courts should recognize that the validity of a release is a “fact-intensive
process.” Wicker, 142 F.3d at 701.
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Instead, we conclude that a release may be strong, but not
conclusive, evidence of the parties’ intent. Where a specific known risk or
malady is not mentioned in the release, it would seem difficult for the
employer to show it was known to the employee and that he or she
intended to release liability for it. Furthermore, where a release merely
details a laundry list of diseases or hazards, the employee may attack that
release as boiler plate, not reflecting his or her intent. We recognize that
this is a different (and more difficult) standard for railroad employers than
is typical in non-FELA situations, but given the Supreme Court’s pro-
employee construction of the FELA, see Kernan v. American Dredging
Co., 355 U.S. 426, 432, 78 S.Ct. 394, 398, 2 L.Ed.2d 382 (1958) (“it is
clear that the general congressional intent was to provide liberal recovery
for injured workers”); Boyd, 338 U.S. at 265, 70 S.Ct. at 27 (“Congress
wanted Section 5 to have the full effect that its comprehensive
phraseology implies.”) (internal quotation omitted), we adopt it.
Wicker, 142 F.3d at 701.
¶53 The Wicker approach to the scope and validity of FELA releases in light of § 5 of
FELA has been adopted approvingly by several courts. See Jaqua v. Canadian Nat. R.R.,
Inc., 734 N.W.2d 228, 229 (Mich. App. 2007) (adopting the Wicker approach because
“[t]he rationale in Wicker allows the employer and the employee the freedom to negotiate
and settle claims, but protects the employee from releasing the employer for unknown
liability that was not considered and resolved in an informed manner.”); Ill. Cent. R.R.
Co. v. McDaniel, 951 So.2d 523, 531-32 (Miss. 2006); Oliverio v. Consolidated Rail
Corp., 822 N.Y.S.2d 699, 702 (N.Y. Sup. 2006); Sea-Land Serv., Inc. v. Sellan, 231 F.3d
848, 852 (11th Cir. 2000). We join these courts in adopting the standard set forth in
Wicker to determine the validity and scope of a FELA release in light of § 5 of that act.
¶54 Applying Wicker in the instant case, we conclude that the District Court erred in
granting summary judgment to BNSF on Sinclair’s manganese poisoning claims. While
Sinclair might have arguably known of the risk of injury from toxic exposure to
26
manganese, it is another thing to say that there is no genuine issue of material fact as to
whether he and BNSF intended to release this claim when they entered into the release.
Under Wicker, the language of the release in this case is not sufficient to show an absence
of a genuine issue of material fact because it makes only a general mention of chemical
exposure, and does not spell out the “quantity, location and duration” of the manganese
exposure. Wicker, 142 F.3d at 701. For that matter, the release does not even
specifically mention exposure to manganese poisoning at all. Additionally, it contains
precisely the type of boilerplate terms—that is, a release of “claims for injuries, illnesses
or damages . . . which are unknown to me at the present time” (see ¶ 3)—which are
suspect given the language of § 5 and FELA’s remedial purposes, and its “pro-employee”
construction by the United States Supreme Court. See Wicker, 142 F.3d at 701. Thus,
the language of the release should be viewed with caution, in spite of the fact that Sinclair
himself may have suspected he had been poisoned by manganese exposure. Moreover,
Sinclair and his attorney both stated that they did not believe that the release covered
anything other than the back and ankle injuries, and there appears to be some evidence
from BNSF’s own representatives that they themselves did not believe the manganese
poisoning claims were covered by the release in this case.
¶55 Because there are genuine issues of material fact as to the parties’ intent in
entering into the release and whether it covered Sinclair’s manganese poisoning claims,
we reverse the District Court’s grant of summary judgment on Sinclair’s manganese
poisoning claims. The intent of the parties to the release in this regard should be
determined by a trier of fact.
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CONCLUSION
¶56 We affirm the District Court’s dismissal of Sinclair’s claims, save for those claims
in Count I relating to manganese poisoning. While expressing no view on the merits of
these claims, we hold that the intent of the parties as to whether the release was intended
to cover these claims should be decided by a trier of fact, and therefore remand this issue
for further proceedings consistent with this Opinion.
/S/ PATRICIA COTTER
We concur:
/S/ JAMES C. NELSON
/S/ JIM RICE
/S/ W. WILLIAM LEAPHART
/S/ BRIAN MORRIS
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