January 17, 2019, Trial News | The American Association For Justice

January 17, 2019, Trial News

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District court stresses jurors’ importance to civil justice system when denying defendants summary judgment

Mandy Brown

picture of a jury

A federal judge has denied defense motions for summary judgment in a case involving a farm worker whose arm was crushed by a harvesting machine. The court found that material issues of fact remained and repeatedly declined to remove these questions from the jury, saying that to do so would be “. . . an unabashed retreat from the vision of the Founders.”
 

A federal judge sitting by designation in federal court in North Dakota has denied defense motions for summary judgment in a case involving a farm worker whose arm was crushed by a harvesting machine. The court found that material issues of fact remained and repeatedly declined to remove these questions from the jury, saying that to do so would be “nothing but elitism, pure and simple . . . [and] an unabashed retreated from the vision of the Founders.” (Marchan v. John Miller Farms, Inc., 2018 WL 6518660 (D.N.D. Dec. 11, 2018)).

In 2015, Valeria Cruz Marchan was harvesting potatoes on John Miller Farms in Minto, North Dakota, when her jacket got caught in a conveyor machine, crushing her arm, which later had to be amputated. Marchan sued the farm, Mayo Manufacturing (the machine’s manufacturer), and North Valley Equipment (who sold the machine to the farm) in federal court. She alleged breach of warranty, failure to warn, failure to train, and negligence.

The case went before Judge William Young, sitting by designation from the District Court of Massachusetts. Various other corporate entities were later added as defendants, including KRG Capital Partners LLC, the owner and operator of both North Valley Equipment and Mayo Manufacturing. The defendants filed five separate summary judgment motions, all of which the court denied in October 2018.

In its full opinion, released December 2018, the court analyzed whether the jury or the judge should determine whether the plaintiff can “pierce the [manufacturer’s] corporate veil” to reach KRG Capital Partners. As the court described, this issue carries great significance because the manufacturer is now defunct, and the plaintiff likely cannot recover damages from any of the parties except KRG Capital Partners.

Although the Supreme Court of North Dakota has ruled that judges should decide the veil-piercing issue (Watts v. Magic 2 x 52 Mgmt., Inc., 816 N.W.2d 770 (N.D. 2012)), the court found it was not bound by this decision, which analyzed the state constitution, not the U.S. Constitution’s Seventh Amendment rights at issue here.

To determine whether the issue should go before a jury, the court applied the analysis outlined by the U.S. Supreme Court in Granfinanciera, S.A. v. Nordberg (492 U.S. 33 1989)). The court first determined that historical sources supported the position that piercing the corporate veil involved questions of common law, not only equity. Next, the court ruled that the remedy sought “does not sound solely in equity” because it involved requests for damages rather than injunctive relief. The court quoted extensively from the Second Circuit’s opinion in Passalacqua Builders v. Resnick Developers (933 F.2d 131 (2d Cir. 1991)), which found that although “the action for piercing the corporate veil appears to have its roots in both law and equity . . . the nature of the relief sought here supports the conclusion that plaintiff’s cause of action is legal in nature, [and] it is entirely proper for the district court to submit the corporate disregard issue to the jury.”

The court then went on to reject justifications sometimes offered for why judges should decide complex questions such as veil piercing. While acknowledging that using judges might be more efficient than juries, the court noted that delays in this case resulted from a “lack of judicial resources” not jurors or jury selection. The court also rejected the idea that judges would reach more consistent decisions, writing that “the great strength of our common law system is reasoned inconsistency” based on “varying decisions [that] draw from the body of other such decisions with the idea that the law will grow and adapt based on such reasoning.”

Finally, the judge emphatically rejected the idea that “judges are better equipped . . . to weigh legal concepts,” writing that this is “simply not true” and that “[i]n the fact-finding line, anything a judge can do a jury can do better.” The judge cited his 40 years of experience as a trial judge and gave examples of recent issues he had presented to juries, including whether the design of a microscopic, 3-D printing interface layer constituted infringement and whether a settlement between pharmaceutical companies had an anticompetitive effect. “It takes a special kind of arrogance simply to conclude that American jurors cannot handle the veil-piercing issues presented here,” he wrote.

Nashville attorney Mark Chalos applauded the decision and the judge’s emphasis on the importance of juries. “The right to a civil jury trial is so fundamental that our founders included it in the Bill of Rights, and jury trials enable hard-working Americans to hold dishonest corporations accountable for the harm they cause.”