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Nature of Suit Code: 365
Nature of Suit: Personal Injury - Product Liability
Cause of Action: 

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United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 05-1739

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Steven A. Menz; Jennifer Menz, *

*

Appellants, *

*

v. * Appeal from the United States

* District Court for the

New Holland North America, Inc.; * Eastern District of Missouri.

Ford Motor Company; Bangert *

Tractor Sales, Inc.; Westendorf *

Manufacturing Co., Inc., *

*

Appellees. *

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Submitted: January 9, 2006

Filed: March 16, 2006

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Before BYE, HEANEY, and COLLOTON, Circuit Judges.

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BYE, Circuit Judge.

Steven Menz and his wife, Jennifer Menz, sued New Holland North America

and others for their injuries arising out of a tractor roll-over accident. The district

court denied their motion to remand the case to state court and then dismissed the

action as a sanction for spoliation of evidence. The Menzes appeal both orders. We

affirm in part, reverse in part, and remand for further proceedings.

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I

On October 3, 2002, Steven Menz was moving dirt with his Ford 6600 tractor

at the bottom of a levy next to his farm near Jackson, Missouri. The tractor was

equipped with a front-end loader manufactured by Westendorf Manufacturing. The

loader was approximately three-quarter's full of dirt when the tractor's front tire

skidded into a hole and the tractor rolled over. Menz's left arm remained pinned

between the ground and the tractor seat most of the day. Menz suffered several

injuries, including the amputation of his left arm.

After the accident, Menz repaired the tractor by replacing the back fenders, seat,

steering wheel, muffler and hood. Approximately two months after the accident,

Menz bought a different tractor equipped with a foot-activated throttle. Intending to

buy a different loader he could operate after his amputation, Menz sold the

Westendorf loader. In the summer and fall of 2003, Menz completed the farm work

he had been performing at the time of the accident, changing the slope of the levy.

In November 2003, the Menzes filed suit in St. Louis Circuit Court against New

Holland North America, Ford Motor Company, Bangert Tractor Sales, and

Westendorf Manufacturing. The Menzes sued Bangert, a Missouri company they used

to service and repair the tractor, for negligent failure to warn of the dangers associated

with tractor tipovers and for failing to offer to retrofit the tractor with a roll over

protection system (ROPS).

In December 2003, Ford and New Holland removed the case to federal court

alleging Bangert, the one non-diverse defendant, was fraudulently joined and should

be disregarded for purposes of establishing diversity jurisdiction. The district court

denied a motion to remand brought by the Menzes, concluding they had failed to state

cognizable claims against Bangert.

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In January 2005, Ford filed a motion for sanctions seeking to have the case

dismissed because the Menzes spoliated evidence by making the post-accident repairs

to the tractor, selling the Westendorf loader, and completing the levy work which

allegedly altered the scene of the accident. Without determining whether the Menzes

acted in bad faith, the district court granted the motion concluding the spoliation

prejudiced the defendants and rendered a full defense impossible.

The Menzes filed a timely appeal. On appeal they contend the district court

erred in concluding Bangert was fraudulently joined for the purpose of destroying

diversity jurisdiction. They also contend the district court abused its discretion in

dismissing the case as a sanction for spoliation of evidence.

II

A. Fraudulent Joinder

We review the district court's denial of the remand motion de novo. Watson v.

Philip Morris Cos., Inc., 420 F.3d 852, 855 (8th Cir. 2005); see also Mayes v.

Rapoport, 198 F.3d 457, 460 (4th Cir. 1999) ("We review de novo questions of

subject matter jurisdiction, including those relating to the propriety of removal and

'fraudulent joinder.'").

The "common thread" underlying the question whether a defendant has been

fraudulently joined to defeat diversity jurisdiction "is reason. Thus, a proper review

should give paramount consideration to the reasonableness of the basis underlying the

state claim." Filla v. Norfolk S. Ry., 336 F.3d 806, 810 (8th Cir. 2003). "[J]oinder

is fraudulent when there exists no reasonable basis in fact and law supporting a claim

against the resident defendants." Id. (quoting Wiles v. Capitol Indem. Corp., 280 F.3d

868, 871 (8th Cir. 2002)).

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Bangert's involvement in this case stems from its occasional repair and service

of the tractor involved in the accident. As a result of that involvement, the Menzes

claim Bangert had a duty to warn of the dangers associated with rollovers and a duty

to offer to retrofit the tractor with a ROPS. We address the reasonableness of each of

these claims in turn.

1. Duty to Warn of Rollovers

With respect to the duty-to-warn claim, Missouri law provides "suppliers" of

products can be liable for failing to warn of a product's allegedly dangerous

characteristics. E.g., Hill v. Gen. Motors, 637 S.W.2d 382, 384 (Mo. Ct. App. 1982)

(noting Missouri's adoption of Section 388 of the Restatement (Second) of Torts).

Relying upon comment c to Section 388 of the Restatement (Second) of Torts, the

Menzes argue Bangert was a "supplier" of the tractor in question. Comment c

provides a "supplier" includes "one who undertakes the repair of a chattel and who

delivers it back with knowledge that it is defective because of the work which he is

employed to do upon it." Restatement (Second) of Torts § 388 cmt. c (1965).

By its own terms, comment c only applies to a negligent repairer who knows

a product is defective because of the specific repair work he is asked to perform. In

this case, there is no evidence Bangert was ever asked to repair or inspect the tractor's

stability. Instead, the Menzes seek to extend a repairer's duty to include a duty to

warn of general dangers in the product unrelated to the specific repair work

performed. The Menzes contend there is no fraudulent joinder so long as they allege

a "colorable" claim, that is, "if the state law might impose liability on the resident

defendant under the facts alleged[.]" Filla, 336 F.3d at 810. Although there are no

Missouri cases on point, the Menzes contend Missouri courts may expand the duty of

a repairer to include the duty to warn of general dangers associated with a product

unrelated to the specific repair work performed.

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The non-Missouri cases the Menzes cite in support of their contention all

involve a repairer's failure to warn of a defect related to the specific repair work

performed. See Delbrel v. Doenges Bros. Ford, Inc., 913 P.2d 1318, 1320 (Okla.

1996) (involving an allegation negligent repairs caused a vehicle to die in the

roadway); Mozie v. Sears Roebuck & Co., 623 A.2d 607, 612 (D.C. 1993) (involving

an injury allegedly caused by brake failure against a repairer who inspected the

brakes); Schichtl v. Slack, 737 S.W.2d 628, 629 (Ark. 1987) (involving the failure to

warn of the danger of fire associated with overheating in a newly-installed engine and

transmission); Hunt v. Ford Motor Co., 341 So.2d 614, 619 (La. Ct. App. 1977)

(involving injuries caused by a defective steering mechanism where the "difficulties

with the steering were repeatedly called to the [repairer's] attention."). We found no

jurisdiction which has expanded a repairer's duty to include the duty to warn of

general dangers associated with a product unrelated to the specific repair work

performed. As a consequence, we conclude it is unreasonable to believe Missouri

would impose such a duty upon a repair service provider

2. Duty to Offer to Retrofit the Tractor with a ROPS

Next, the Menzes contend Bangert had a duty to offer to retrofit the Ford tractor

with a ROPS. We disagree. Under Missouri law, even a manufacturer has no duty to

offer to retrofit a tractor with a ROPS when such was not required at the time of

manufacture. Morrison v. Kubota Tractor Corp., 891 S.W.2d 422, 429-30 (Mo. Ct.

App. 1994). As a consequence, it is unreasonable to contend Missouri courts would

impose such a duty upon a mere repair service provider.

Because neither claim the Menzes brought against Bangert was colorable under

Missouri law, the district court did not err in denying the motion to remand this case

to state court.

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B. Spoliation of Evidence

We review the district court's imposition of sanctions for an abuse of discretion.

Stevenson v. Union Pac. R.R. Co., 354 F.3d 739, 745 (8th Cir. 2004). "A district

court would necessarily abuse its discretion if it based its ruling on an erroneous view

of the law or on a clearly erroneous assessment of the evidence." Plaintiffs' Baycol

Steering Comm. v. Bayer Corp., 419 F.3d 794, 802 (8th Cir. 2005) (quoting Cooter

& Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990)).

The Menzes contend the district court abused its discretion in dismissing the

case because 1) there was no determination Steve Menz acted in bad faith in causing

or allowing the destruction of evidence; 2) Steve Menz lacked knowledge of the

evidence's possible significance to any potential or pending litigation and therefore

had no duty to preserve the evidence; 3) the sanction of dismissal deprived the Menzes

of a property right without due process of law; 4) the Menzes gained no evidentiary

advantage and therefore a lesser sanction, if any, should have been imposed; and 5)

the defendants were not prejudiced since their need for testing to prepare a defense

could have been met through the use of exemplar products.

We first address the Menzes' contention, supported with cites to both federal

and Missouri law, the district court abused its discretion by dismissing the case as a

sanction for spoliation of evidence without first determining whether Steve Menz

acted in bad faith. We need not decide whether federal or state law governs in this

diversity action because the result is the same under both – to warrant dismissal as a

sanction for spoliation of evidence "there must be a finding of intentional destruction

indicating a desire to suppress the truth." Stevenson, 354 F.3d at 746; see also Morris

v. Union Pac. R.R., 373 F.3d 896, 901 (8th Cir. 2004) (noting under Stevenson "a

finding of intent is required to impose the sanction of an adverse inference

instruction."); Brown v. Hamid, 856 S.W.2d 51, 56-57 (Mo. 1993) ("The evidentiary

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spoliation doctrine applies when there is intentional destruction of evidence,

indicating fraud and a desire to suppress the truth.").

The appellees contend Stevenson and Morris are distinguishable because they

dealt with the sanction of an adverse inference instruction against a defendant rather

than the sanction of dismissal against a plaintiff. We disagree. Although Stevenson

and Morris involved defendants who spoliated evidence, the reasoning in those cases

applies equally to plaintiffs; a finding of bad faith is necessary before giving an

adverse inference instruction at trial against a plaintiff for the destruction of evidence.

It would therefore be unreasonable to excuse a finding of bad faith when imposing a

more severe sanction, the outright dismissal of a plaintiff's case.

The appellees argue dismissal is nevertheless appropriate in this case because

of the extent to which they have been prejudiced by the destruction of the evidence.

They point out the very product at issue, the tractor, was substantially altered, as was

the scene of the accident. We decline to adopt an "extreme prejudice" exception in

this case. We note, after all, the Menzes bear the burden of proof if their case gets to

trial. Thus, in a case such as this, where the Menzes are pursuing a products liability

action without the product, the prejudice they have suffered due to the loss of the

product may equal or exceed that suffered by the appellees.

Moreover, with respect to the accident scene, we note it changed substantially

the very day of the accident. Emergency staff and fire fighters had to lift the tractor

off Menz with air bags and eventually a wrecker, and moved dirt while going back

and forth over the accident scene. In Stevenson we noted the "limited use" that

destroyed track records would have served when they did "not show the exact

condition of the track at the time of the accident." Stevenson, 354 F.3d at 749. Here,

the levy work Menz completed in the summer and fall of 2003 has less relevance

unless the levy was still in the exact condition it was at the time of the accident. Thus,

if on remand the district court determines Steve Menz acted in bad faith, it must also

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1

Since we are reversing on this issue, it is unnecessary to address the Menzes'

other arguments.

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determine the extent to which Menz's levy work actually prejudiced the appellees, i.e.,

altered a material condition of the levy as it existed at the time of the accident, before

a sanction for spoliation would be warranted.

The district court abused its discretion when it dismissed this action without

first determining whether Steve Menz acted in bad faith.1

III

 We affirm the district court's order denying the motion to remand, but reverse

the district court's sanction order and remand for further proceedings consistent with

this opinion.

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