Railroad Liability for Corporate Counsel: What Manufacturers Should Know

April 19, 2022

By Paul Petruska and Andrew Voss

The summons seems strange. Your company has been sued along with a railroad, and it includes a claim under the Federal Employers Liability Act (FELA).[1] Your company is a manufacturer, with two relatively small service tracks. You have no railroad employees and no locomotives, and the petition only contains a FELA claim against the railroad.

If you believe you are safe, you are wrong. The above fact pattern is just one example of how a non-railroad entity can be dragged into the strange world of FELA litigation. Under the FELA, a railroad employee can seek recovery for an on-the-job injury in civil court with no limitation on damages.

It would be an extremely rare case where a Class I railroad would service a manufacturer’s tracks without a contract. The contract will almost uniformly include an indemnification provision and an obligation to purchase a railroad protective policy.

The contract at issue may be 10 years old, 30 years old, or even 60 years old. The contract may have been signed by a completely different railroad that is a fourth-line predecessor to the current railroad servicing the track. In 99 percent of these cases, the contract will apply, and the railroad will tender its defense to the manufacturer. If the manufacturer refuses to accept the defense, the railroad will file a counterclaim for contractual indemnification.

Now the manufacturer has to consider the impact of potential FELA liability. Railroad employees make a very good living. It would not be uncommon for an engineer or conductor to make over $100,000 a year. It also would not be uncommon for an engineer or conductor to claim they would work until they reach age 70. With 10 or more years of potential lost earnings, the plaintiff’s attorney may easily suggest economic damages exceeding $1 million.

To make matters worse, the FELA causation standard is much lower than a standard common law negligence claim. Under Rogers v. Mo. Pac. R. Co., 352 U.S. 500 (1957), causation is established if the railroad’s negligence “played any part, even the slightest, in producing the injury or death for which damages are sought.”[2] There is no assumption of risk defense, if the employer’s negligence played any role in the injury. 45 U.S.C S 54. Furthermore, in some cases where a railroad safety statute is allegedly violated, there is no contributory negligence defense.

All of the above, and more, leads to large verdicts against railroads such as the $12 million award for a slip-and-fall injury on a terrazzo floor in Hayes v. U.P., St. Louis City, Cause No. 012-9799, and a $3 million award for a 1.3 cm laceration to the scalp in Haskin v. U.P., St. Louis City, Cause No. 022-10401. A manufacturer under a contractual duty to indemnify a railroad needs an attorney who understands the FELA and the liability thereunder.

What about the railroad protective policy? Can the manufacturer rely on the insurance for protection? The answer is no because a railroad protective policy only covers the railroad. If the manufacturer did anything negligent to cause the on-the-job injury, then it has no coverage for its own negligence under the railroad protective policy. The contractual obligation to indemnify the railroad and purchase a railroad protective policy protects the railroad and only the railroad.

If you are corporate counsel for a manufacturing client and you have railroad-related issues, please do not hesitate to contact us.

[1] 45 U.S.C. S 51 et. seq.

[2] Norfolk Southern Rw Co. Sorrell, 549 U.S. 158 (2007) indicates that the current court may change this standard in the future.

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