Summary
The Nebraska Supreme Court affirmed a jury verdict awarding Jacobs Engineering Group Inc. $108.9 million in contractual indemnification from ConAgra Foods, Inc. for settlements arising from a fatal plant explosion. The court addressed standing, the enforceability and interpretation of the indemnity agreement, ConAgra’s negligence and control over the contractor, workers’ compensation immunity, settlement reasonableness, causation, damages, and jury instructions. The court concluded that the evidence supported the verdict and that the district court did not err in denying ConAgra’s posttrial motions.
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Practice areas
Questions Presented
- Whether Jacobs had standing and was the real party in interest to pursue express contractual indemnification despite possible payments by its insurers.
- Whether ConAgra's workers' compensation immunity barred contractual indemnification for settlements paid to ConAgra employees.
- Whether Jacobs presented sufficient evidence that its losses were caused by the negligence of ConAgra or others under ConAgra's control.
- Whether the jury instructions adequately addressed causation and whether defense counsel's conduct in an underlying trial was an efficient intervening cause.
- Whether the jury's award, including the Brockington settlement, was excessive and required remittitur.
Holdings
- Jacobs, as a party to the indemnity contract that alleged and established injury from ConAgra's refusal to indemnify, had standing and was the real party in interest. ConAgra's specific admissions that Jacobs incurred losses and damages constituted judicial admissions sufficient to establish injury in fact, and the evidence supported the trial court's factual standing determination.
- The Nebraska Workers' Compensation Act did not bar ConAgra's contractual obligation to indemnify Jacobs for claims and losses incurred by ConAgra employees. An employer may expressly agree to indemnify a third party for payments made to the employer's employees, and no affirmative waiver of workers' compensation immunity was required under this agreement.
- Jacobs presented sufficient evidence for the jury to find that ConAgra's negligence and the negligence of persons under ConAgra's control proximately caused Jacobs' indemnifiable claims, losses, and damages. The evidence did not establish as a matter of law that ESA's employee's conduct was an efficient intervening cause or that ESA was outside ConAgra's contractual control.
- The $108.9 million verdict did not require remittitur because the award was supported by evidence, bore a reasonable relationship to the damages proved, and was not contrary to all reason.
Key quotations
“A party to a contract is generally a real party in interest with standing to raise the claim of breach of contract.” (58)
“ConAgra’s unequivocal admission that Jacobs has sustained some injury in fact establishes that Jacobs has standing to pursue its express indemnification claim.” (59)
“Thus, the district court correctly interpreted the parties’ contract to obligate ConAgra to indemnify claims and losses incurred by ConAgra employees caused by ConAgra’s negligence.” (68)
“The same analysis applies here. The agreement between ConAgra and Jacobs includes indemnification obligations for claims and losses incurred by ConAgra employees and does not express any exclusions in favor of ConAgra or Jacobs based on workers’ compensation immunity.” (70)
Factual background
ConAgra hired Jacobs to provide engineering services and later retained Energy Systems Analysts to install and commission a gas-fired water heater at ConAgra's Garner, North Carolina, plant. During commissioning, ConAgra personnel failed to complete required gas-line purging and safety procedures, allowed gas to accumulate in an enclosed room with potential ignition sources, and failed to stop the work or evacuate the plant. The resulting explosion killed three ConAgra employees and injured more than 60 others. Jacobs defended and settled related lawsuits for $108.9 million after ConAgra refused to indemnify Jacobs under the parties' reciprocal indemnification agreement.
Procedural history
After ConAgra refused Jacobs' requests for contractual indemnification, Jacobs filed suit in January 2014. Following a 19-day jury trial, the jury found ConAgra and Energy Systems Analysts negligent, found ConAgra controlled ESA, found Jacobs was not negligent, and awarded Jacobs the full amount of its objectively reasonable settlements. The district court denied ConAgra's directed-verdict, judgment-notwithstanding-the-verdict, remittitur, new-trial, and alter-or-amend motions. ConAgra appealed, and the Nebraska Supreme Court sustained bypass review.