Seventh Circuit Finds No Liability For Facility Owner That Hired Expert In Hazardous Activity; Reverses Punitive Damages Awarded Based On Jury’s “Hindsight Bias”

Grain storage facilities must contend with the constant risk of explosions, caused by certain byproducts such as combustible dust and carbon monoxide (which can oxidize explosively to carbon dioxide) or may be set off by heat caused from decay of storage bin contents.  In March 2010, a grain facility owner hired an expert to handle a specific “hot bin” that the facility was concerned about.  After the expert’s employees began working on the bin, an explosion occurred injuring three workers.  After an extensive trial, the jury awarded $180 million in compensatory and punitive damages against both the facility owner and the hot-bin expert contractor.  Both companies appealed.

Writing for a panel of the Seventh Circuit Court of Appeals, Judge Easterbrook reversed the judgment against the facility owner and reversed the punitive damages award (but left intact compensatory damages) against the hot-bin expert.

First, the court recognized that Illinois law has adopted the tort principle that “someone who engages an independent contractor to redress an unsafe condition is not liable when the feared event occurs … [and] in a case involving negligent rendition of a service by an independent contractor … a factfinder does not consider any plaintiff’s conduct that created the condition the service was employed to remedy.”  Noting that “people who hire specialists in controlling the risks of grain storage are entitled to rely on them,” the court held that the facility owner was entitled to judgment as a matter of law and was not subject to liability.

Second, the court turned to the issue of punitive damages against the expert independent contractor.  Where the record contained no fact or expert testimony or other evidence indicating the probability that the smoking hot-bin would explode, the court found that the jury had nothing to rely on to support their conclusion that the lead worker for the independent contractor exposed other workers to a “risk so great that his order marked a ‘gross deviation’ from the standard of care.”  Noting that it appeared the verdict was simply the result of “hindsight bias – the human tendency to believe that whatever happened was bound to happen, and that everyone must have known it,” the court held the lack of evidence that would allow a jury to assess the degree of risk required the punitive damages award to be set aside.