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St. Jude Medical Center Inc. v. Allstate Energy Inc.

United States District Court, D. Arizona

June 29, 2018

St. Jude Medical Center Incorporated, Plaintiff,
v.
Allstate Energy Incorporated, Defendant.

          ORDER

          Honorable Roslyn O. Silver Senior United States District Judge.

         Defendant Allstate Energy Inc. worked on an electrical panel at a manufacturing facility owned by Plaintiff St. Jude Medical Center Inc. A little over one week after that work was completed, there was a fire in the electrical panel. St. Jude hired a third-party to clean up the area and, contrary to St. Jude's instructions, that third-party removed material from the electrical panel. St. Jude later filed the present case against Allstate, alleging Allstate could have prevented the fire. Allstate now seeks summary judgment claiming the third-party's actions mean St. Jude lacks sufficient evidence to support its claims or, alternatively, the third-party's actions constituted spoliation of evidence such that St. Jude should not be permitted to pursue its claims.

         BACKGROUND

         The relevant facts are undisputed. On December 30, 2014, Allstate installed a new circuit-breaker subpanel at St. Jude's manufacturing facility. That subpanel provided power to vacuum pumps. In doing so, Allstate drilled a hole into a main electrical panel and ran wiring between the main panel and the new subpanel. (Doc. 77 at 2). After Allstate completed that connection, “the vacuum pumps went on line and St. Jude operated them on a 24/7 basis.” (Doc. 77 at 2).

         On January 8, 2015-just over one week after Allstate completed its work-a fire broke out in the main panel. The Scottsdale Fire Department used fire extinguishers and water to extinguish the fire. After doing so, the Fire Department took photographs of the main panel. Those photographs show severe damage to the main panel but “many of the damaged interior parts of the [main] panel were still in place.” (Doc. 77 at 2). St. Jude hired American Technologies, Inc. (“ATI”) to clean up the fire-damaged area.

         On January 9, 2015, a number of St. Jude employees met with ATI employees regarding the cleanup. During that meeting, St. Jude's employees “specifically informed ATI . . . of the need to preserve the [main panel] where the fire had started.” (Doc. 77 at 23). St. Jude and ATI agreed the main panel would be marked with caution tape and ATI would not touch the main panel during the cleanup. Someone marked the main panel with caution tape by using the tape to place an “X” over the front of the main panel. During the cleanup, however, an ATI employee removed material from inside the main panel. Some, but not all, of the removed material was placed in a bag or box and kept onsite. It is undisputed that some of the main panel's contents were removed and never found. (Doc. 77 at 7).

         St. Jude hired an expert, William R. Haack, to determine the cause of the fire. Haack visited the site on January 12, 2015, after ATI had removed the contents of the main panel. (Doc. 77-2 at 82). Haack was able to examine the site, review photographs taken by the Fire Department, and examine the contents of the main panel that had not been removed. Based on his review of the available evidence, Haack concluded there was only one possible cause of the fire: “a high-resistance connection between the vertical busses and one or more circuit breakers” in the main panel. (Doc. 70-2 at 17). St. Jude has not provided an explanation of this statement in layman's terms. But it is undisputed Allstate did not cause the fire in an obvious way, such as through Allstate leaving debris in the main panel or leaving a loose connection. Instead, Haack concluded it was inaction by Allstate that rendered it responsible for the fire.

         According to Haack, the fire was caused by Allstate's failure “to conduct or recommend testing of the [main] panel in accordance with accepted industry practice standards.” If Allstate had performed those tests, it “would have identified the high-resistance connection in the [main] panel.” (Doc. 77 at 11). And if Allstate had identified that connection, it could have advised St. Jude to take remedial measures that would have prevented the fire. (Doc. 77 at 11).

         During his deposition, Haack was asked about the testing he believed Allstate should have performed. Haack described two types of testing Allstate should have performed: infrared and connectivity testing. Haack stated infrared testing could have been conducted while the main panel was in use but he admitted such testing might not have indicated a troublesome connection. (Doc. 77 at 11). Connectivity testing, on the other hand, would have required the panel be “de-energized” for two days but would have located the connection. (Doc. 77 at 12, 15). Thus, according to Haack, Allstate was guaranteed to locate the problem only if St. Jude had agreed to shut down the main panel for two days, which would have required a portion of the facility be out of operation for those two days.[1]

         Haack addressed the impact of ATI's actions in a declaration submitted in response to Allstate's summary judgment motion. In that declaration, Haack states “[i]deally, the post-fire . . . debris should have been systematically collected by forensic engineers.” But “due to the intensity of the fire, firefighting activities and the significant post-fire ‘overhaul', it [was his] professional opinion that the removal of the post-fire . . . debris did not materially alter the ability to determine the area of origin and cause of the fire in this case.” (Doc. 77-2 at 82). In other words, Haack does not believe ATI's actions had a material impact on determining the cause of the fire or the fact that Allstate would have prevented the fire through proper testing.

         Allstate retained its own expert to address the cause of the fire. That expert, George Hogge, believes “[t]he removal and loss of the most important components of [the main panel]” mean “the exact cause of this failure cannot be determined.” (Doc. 77-2 at 107). Despite that opinion, Hogge believes “[t]he most likely cause” of the fire was “resistance heating in the bus to circuit breaker adaptor connections” as a result of a manufacturing defect in the main panel or “thermal damage” to the main panel from an unrelated incident. (Doc. 77-2 at 107). Hogge believes ATI's removal of the main panel components made it impossible to identify with sufficient specificity where the fire originated. Therefore, it is impossible, in Hogge's view, “to determine whether any testing before the fire would have revealed a high-resistance connection or other flaw in the components of the panel or their connections.” In other words, “if you don't know what specifically caused the fire, you cannot reasonably know whether testing would have revealed that case.” (Doc. 70-9 at 3).

         ANALYSIS

         St. Jude asserted two claims when it filed this suit: breach of contract and negligence. According to the complaint, the breach of contract claim is based on Allstate's failure “to perform the work expected in a workmanship [sic] like manner, acceptable within the industry standard.” (Doc. 1 at 3). The negligence claim is based on a breach of Allstate's “duty to perform the installation . . . within the standard of care for work in its industry.” (Doc. 1 at 4). Allstate now seeks summary judgment on both claims but its arguments do not differentiate between them. St. Jude's response also fails to differentiate between the claims. Thus, the parties appear to assume the claims are functionally identical. The Court will assume the same.

         Allstate seeks summary judgment on both claims “based on . . . the lack of evidence to support St. Jude's . . . claims and as a sanction for the spoliation.” (Doc. 69 at 1). On the first argument, Allstate contends ATI's spoliation of the main panel means St. Jude is unable to present “a prima facie case that testing would have revealed the flaw that later caused the fire.” That is, the spoliation allegedly “made it impossible to determine whether any testing before the fire would have revealed” the problem that led to the fire. On the second argument, Allstate concedes St. Jude did not act ...


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