Spoliation risk shows ill wisdom of state awarding contract to defendant in lawsuit over same project

The eastbound span of the Washington Bridge remains functional.
Jef Nickerson via Flickr CC BY-SA 2.0

The state of Rhode Island has found itself in an awkward spot trying to prevent the spoliation of evidence in civil litigation.

In my recent screed against, inter alia, corruption in contracting, I mentioned that Rhode Island had awarded the nearly $50 million contract for a major bridge demolition to a company that also is among the 13 defendants Rhode Island has sued for failing to diagnose the defective bridge in the first place.

I suggested, and maintain, that the state's simultaneously friendly and adversarial relationship with Aetna Bridge Co. is symptomatic of problematically cozy ties between government and contractors. These relationships cost taxpayers in Rhode Island and elsewhere tens of millions of dollars in overpriced projects, I believe, effecting a form of what I call "lawful corruption."

In a schadenfreude-inducing twist in the case, demolition of the I-195 Washington Bridge in Providence was halted this week for fear that evidence in the state's civil suit would be lost. "[R.I. Attorney General (AG) Peter] Neronha told WPRO radio he had spent two days working to safeguard bridge evidence from the wrecking ball and jackhammer," The Providence Journal reported Tuesday (subscription).

Spoliation of evidence occurs in a civil action or potential civil action when (1) an actor has a legal or contractual duty to preserve evidence relative to the civil action; (2) the spoliation defendant negligently or intentionally fails to preserve evidence in accordance with the duty; (3) absence of the evidence significantly impairs the complaining party's ability to prove the civil action; and (4) the complaining party accordingly suffers damages for inability to prove the civil action (1 Tortz 335 (2024 ed.)). Though a wrongful act, most states, including Rhode Island to date, regard spoliation as a doctrine of evidence, subject to procedural remediation within the four corners of a case, rather than a separate liability theory in tort law.

The instant case puts Aetna Bridge Co. and its partners in the bizarre position of being contractually bound to destroy parts of the Washington Bridge and to dispose of the debris in accordance with state law, while also being vulnerable to state accusations of spoliation if contract performance results in the destruction of evidence. The contradiction is yet more reason that the contract award was improper.

I'm doubtful that the state on its own even realized the problem. It was Wednesday last week that the Journal asked the AG's office whether parts of the bridge would remain available as evidence in the litigation. An AG spokesman had no "comment on ongoing litigation" on Thursday, and demolition stopped abruptly this week on Tuesday, after what Neronha described as "two days" of efforts.

To contradict consistent record of impotence, DOT opens needed inquiry into airline miles programs

Washington, D.C.—The U.S. Transportation Department (DOT) last week opened an investigation of airline frequent-flier programs, and it's about time.

The old adage about wheels of justice turning slowly usually well describes the antitrust activities of the Justice Department (DOJ) and Federal Trade Commission (FTC). Only in recent years has the government begun to awaken to the rampant price-fixing in our economy that consumers have been accustomed to for decades. Runaway inflation shed light on how little choice Americans have in grocery stores, probably prompting FTC qualms over the Kroger-Albertson merger. Sky-high rents and a housing shortage similarly have prompted DOJ attention to rent-fixing.

Now it seems the emphasis is on the wheels part of the old adage, as DOT takes a belated interest in the airlines. Absurdly high prices, especially in domestic travel, probably stirred the agency giant. The Biden Administration and Buttigieg DOT have largely failed to deliver on infrastructure promises. So it's pleasing to see a glimmer of concern for consumer welfare vis-à-vis ever more profitable providers.

A window view sometimes makes flying a tiny bit less miserable.
RJ Peltz-Steele CC BY-NC-SA 4.0

Misery in the Air

As to domestic air travel, I remember President Obama saying the economy's great, but workers might have to move for jobs. Meanwhile we're encouraged to have multi-generational households to care for our elderly, and the great economy compels college grads to move back in with their parents. Is the whole family supposed to move to the same place at the same time? Air travel is a necessity for families in the vast geography of our national labor market, yet we continue to allow our oversized airlines, themselves products of mergers that should not have been allowed, to operate as if they're concierges of bespoke services.

Bespoke is ever less the consumer experience, even as prices soar. Six of my last six domestic flights, all on American Airlines, were hours late. I would be due a huge compensation check were I in the EU. From American Airlines? Nothing. To the contrary, I had to foot the bill out of pocket for transfers and overnights in pricey cities such as Chicago and D.C., else sleep in the airport. The Buttigieg DOT and Congress keep making noise about passenger compensation. But noise, to appease the electorate, is all it's amounted to. Don't even get me started on sticky trays, filthy seats, and cramped spaces on packed planes.

We All Fall Down

As to infrastructure promises, if you're thinking, "well, the Republican Congress": Save it. I don't want to hear it. The whole thing about Joe was his ability to reach across the aisle. And I didn't vote for either one of them, so if ever you tire of see-sawing between obstructionist opponents as an excuse for getting nothing done, stop voting for the only thing you're offered and come talk to me about how we dismantle the two-party system. Consumer choice indeed.

Yes, there was the infrastructure bill. Biden deserves credit for that, and I appreciate it. But even the Biden Administration knew that that would not even bring us level with our maintenance needs, much less make systemic investments.

Use of the infrastructure money, such as it is, raises serious doubts about the government's fiscal responsibility. My home state of Rhode Island is using federal infrastructure money to rebuild rotted wooden bike-path bridges that I use, so I'm selfishly pleased. But it wasn't the purpose of the bill to restore recreational paths for which the states should have planned anyway. Rhode Island failed to fund replacement for the decades when the bridges' inevitable expiry was well known; consequently, the bridges have been subject to dangerous detours for years since the failure. And the bridges are hardly vital infrastructure; the few people who actually commute on them are stymied by uncleared snow in the winter and an abrupt end to dedicated lanes at the ends.

I have doubts too about even the more clearly legitimate uses of the money. DOT and Amtrak plan to build out vital northeastern rail service westward in Massachusetts, a welcome initiative. But the trains will not be any better than the embarrassingly slow service we have in our rail system now; driving will still be preferable for speed and reliability. I remember "Amtrak Joe" saying something about high-speed trains, you know, like in the developed world. The best the administration seems to have managed is to ask Japan for help with high-speed rail. I guess we don't have the technology.

Round and Round

Topping it all off, there's the corruption that the government seems unable to get a handle on. Or as we call it in America, contracting. Rhode Island got caught with its pants down last year when the key Washington Bridge alongside the I-95 corridor in Providence was found to be fatally defective and was suddenly closed. A "junior engineer" spied the rusty deficiency, media reported, or as I like to say, a "former junior engineer" who didn't get the memo. Because the odds are nil that inspection contractors, who enjoy a revolving door with state government offices, somehow failed to notice the problem for years.

The bridge has to be torn down and replaced, and costs are spiraling. When the state bid the demolition project, intense media and public scrutiny compelled a realistic cost estimate of $31 million. But contractors don't emerge from their pools of money for realistic. The state ultimately awarded the work for close to $50 million. But wait, there's more. The company that was awarded the demolition contract is also a defendant in the state lawsuit over the defective bridge. You can't make this stuff up.

The overall estimate, no doubt too low, for the Washington Bridge replacement is about a half billion dollars, and we should pause a moment on that number. It can be difficult to assess the legitimacy of these big numbers, as the average consumer has little frame of reference to differentiate a million from a billion. For some reason I play the lottery only when the jackpot hits a half billion, as if I would not be content with a tenth as much.

The Massachusetts Bay Transit Authority (MBTA) recently estimated that it would take $24 billion to make the Boston T work the way it's supposed to. That's not to improve the system; that's just to bring it up to serviceable: timely trains, functional stations. The T is infamously unreliable and plagued by maintenance issues. Yes, it is an old system, but that doesn't fully explain the problems. An extension of the green line opened in 2022, for example, and saw such problems with defective tracks that trains had to be slowed to less than walking speed.

Chair: Wait, I see a hand. Rhode Island, you have an idea?

Rhode Island: Yes, Mr. Chair. We propose that the MBTA hire the contractor that built the green-line extension also to remove and replace it.

Chair: Thank you, Rhode Island.

Rhode Island (to camera): Baltimore, 🤙 <<call me>>.

In contrast, the city of Brisbane, Australia, is rebuilding its metro system, including a new fleet of electric vehicles and excavation of a new tunnel, for a price tag of only $1.4 billion. That's Australian dollars; it's about US$930 million. Brisbane's metro is a smaller system than Boston's, yet I can't help but think that the T couldn't mop up the urine in the system for a billion dollars.

I might not know millions from billions, but I know that 1 for new is a better buy than 24 for old. It's hard not to conclude that something is amiss in accountability for infrastructure spending. If only there were, I don't know, experts, or something, who don't work for contractors. Maybe they could work in the government, for the public.

Miles To Go

Well the good thing about antitrust enforcement is that it requires lawyers, but no new construction. Maybe the Buttigieg DOT has found its knack.

The ways in which airlines have innovated consumer exploitation in frequent-flier programs are sufficiently many to constitute a course in business school. Well, bad-business school. Violations of antitrust law are so painfully obvious that it's hard to believe we have antitrust enforcement at all.

The legal status of frequent-flier miles has evolved since the programs were conceived circa 1979. They started as little different from tenth-sandwich-free punch-card programs. It was the funny kicker on the news when they were first contested as property in legal contexts such as divorce. That's not an unprecedented evolution, by the way. Divorce has a way of showing us what's valuable to people. Dogs and cats are transitioning from mere chattel to intangible value in tort law by way of divorce court.

Notwithstanding limited legal exceptions, courts tended nonetheless to regard the airline mile as a purely contractual creature. Airlines urged that construction and delighted in it. The miles are thus controlled by terms of service, to which consumers bind themselves usually with neither meaningful choice nor actual knowledge. Per the law of boilerplate in the information age, the airlines reserve the right to change the terms more or less unilaterally. That's why the airlines can and do devalue miles routinely and add new redemption restrictions, such as blackout dates and transfer limits.

Corporations' concerted efforts to construct self-serving legal doctrine has not stopped miles from becoming "a virtual currency." The government has long tolerated this dichotomy of law and reality. And things might have continued swimmingly for the airlines had they not succumbed to greed, the Achilles heel of the American corporate ethos. Once the airlines understood that miles and money were interchangeable, they started making them, literally, interchangeable. Today a consumer can earn miles per dollar on credit cards, transfer cash-back rewards to mileage programs, and simply buy miles.

Devastatingly to the airlines' antitrust position, they doubled down on co-branded credit cards. Those agreements are a specific target of the DOT investigation. I have an American Airlines card and a United card; I've had Southwest and Delta cards in the past and probably will again. My cards get me earlier boarding and other perks. Most importantly, they (thankfully excepting Southwest) "save me" baggage-check fees. The annual fee on each card is $99; it costs $80 to check a bag roundtrip.

I put "save me" in quote marks because, remember, there didn't use to be baggage fees. Co-branded credit cards date to the 1980s, but they really took off, no pun intended, in the 20-aughts. Baggage fees were introduced in 2008. Coincidence much? Consumers have been coerced into having the credit cards; it would be economically irrational not to. Of course, paying the airfare with the card earns more miles. The cycle continues.

Ganesh Sitaraman aptly reported in The Atlantic last year, as the headlines put it, "Airlines are just banks now: They make more money from mileage programs than from flying planes—and it shows." 

But airlines are not regulated as banks.

And that's why federal scrutiny is long overdue.

Scribd has the DOT Template Letter on the Airline Rewards Inquiry, issued to the four largest carriers, American, Delta, United, and Southwest. HT @ TPG.

Consultant panning contractor was not 'improper' interference with lucrative reno deal, court holds

Rawpixel CC0 1.0

An architect whom homeowners hired to review their bills in multimillion-dollar renovation did not tortiously interfere with the reno contract when he advised them to terminate and hire another contractor, the Massachusetts Appeals Court held yesterday.

The devil in the details here is the element "improper" in the tort of interference. The same element, or the same concept, lives at the heart of many a business tort, and it's a difficult line to find. Indeed, the Appeals Court wrote that "improper" "has proved difficult to capture in a universal standard."

Interference with contract in Massachusetts law requires a contract or prospective business relation, knowing inducement to break the contract, interference by "improper motive or means," and harm to the plaintiff as a proximate result. Here, the architect told the homeowners they were being overbilled and urged them to terminate the renovation contract and hire a contractor the architect recommended. They did, and the terminated contractor sued the architect for interference with contract.

The fact pattern is common for generating interference claims, as the very job of the defendant is, in a sense, interference, that is, to run interference between consulting client and its contractor. Only "improper" was in dispute, and the plaintiff-contractor could not show evidence that measured up.

The plaintiff disputed the veracity and quality of the defendant's consultation and advice. But worst case, the court reasoned, the plaintiff might persuade a jury to find negligence or gross negligence. That can't be the basis of an interference claim, because then the interference tort would make actionable every negligent infliction of economic loss. 

The negligence tort usually requires a physical infliction of loss or harm. Business torts are exceptional in this regard, but they are predicated on a strong duty relationship, such as contract or fiduciary obligation. The plaintiff-architect and defendant-contractor here were not in privity of contract.

The court looked to an earlier case in which the Massachusetts Supreme Judicial Court had allowed interference predicated on deceit or intentional misrepresentation. That can suffice to support interference. But there was no evidence here of deceit. So the court pondered what improper means short of that standard.

The court leaned heavily on the Second Restatement of Torts, which suggested, besides deceit, threats, defamation, or other conduct "innately wrongful, [and] predatory in character." Inversely, the Second Restatement advises that no interference liability can arise from "truthful information" or "honest advice within the scope of a request for advice."

The latter standard fit, the court opined. And the Restatement comments elaborated, "[N]o more than good faith is required," regardless of competence. "The rule as to honest advice applies to protect the public and private interests in freedom of communication and friendly intercourse," affording latitude especially to "the lawyer, the doctor, the clergyman, the banker, the investment, marriage or other counselor, and the efficiency expert."

The court affirmed the superior court award of summary judgment to the defendant.

There's unfortunately one point of confusion reiterated in the court's opinion. The court correctly pointed to a line of Massachusetts cases approving of "actual malice" as supporting interference claims in the context of employment, when a disgruntled terminated worker claims interference against a supervisor or corporate officer for interfering with the worker's employment contract. In this context, the courts defined "actual malice" as "spiteful, malignant purpose unrelated to a legitimate corporate interest."

Common law malice

That's not what "actual malice" means, at least in the civil context. "Actual malice" generally is a stand-in for reckless indifference and is distinguishable from "common law malice," which represents spite, ill will, or hatred. It's been observed many times that "actual malice" is unfortunately named, and it would be better had there been a different term from the start. Common law malice can be evidence of actual malice, but certainly is not required. The difference can be confusing to jurors.

The Massachusetts precedents on interference in the employment context seem to have misused the term "actual malice" to refer to common law malice. OK, I guess, as long as we all know that malevolence is the one that can evidences tortious interference.

I have some doubts, by the way, about the correctness of the Massachusetts cases that apply the interference tort in fact patterns involving a fellow worker as defendant. A basic rule of interference is that one cannot be said to have interfered tortiously with a contract to which one is a party. If the defendant was clearly acting within the scope of employment, that is, as an agent of the employer, then I don't see that a tortious interference claim can arise, and there's no need to analyze impropriety. But then, I guess, the threshold requirement overlaps with the "unrelated to a corporate legitimate interest" piece of the impropriety test.

The case is Cutting Edge Homes, Inc. v. Mayer, No. 23-P-388 (Mass. App. Ct. Feb. 27, 2024) (temp. slip op. posted). Justice John C. Englander wrote the opinion of a unanimous panel that also comprised Justices Ditkoff and Walsh.

Injured contractor finds no award in ruling spanning worker comp, premises liability, conflict of law

Roof collapsed by snow (illustrative; not this case).
Richard Allaway via Flickr CC BY 2.0

A worker hired to remedy a dangerous property condition could not rely on the known danger to recover against the landowner, the Massachusetts Appeals Court held in mid-September.

On that distinctive fact pattern, the court's thorough opinion gave textbook treatment to issues in worker compensation, conflict of law, and premises liability.

The defendant Massachusetts landowner hired a Rhode Island home improvement company to raze a garage collapsed by snow. Hired in turn by the company, the plaintiff found the garage in its dilapidated state and expressed reservations about safety. As the plaintiff inspected the structure, it further collapsed and pinned him, inflicting bilateral fractures to both legs.

The plaintiff ultimately recovered $19,000 from R.I. worker comp. For further recovery, he sued the company, the company principal, and the landowner. The Appeals Court affirmed dismissal for all defendants.

Worker compensation scope: Worker comp covers employees, not independent contractors. R.I. worker comp initially rejected plaintiff's claim on the grounds that he was an independent contractor rather than an employee. Later evidence indicated that the plaintiff might have signed a document acknowledging status as an independent contractor. Nevertheless, the plaintiff sued over the question. The worker comp system settled for $19,000.

The exclusion of independent contractors from worker comp renders a significant gap in the American social safety net. Highly regulated industries might require that independent contractors self-insure. But a legion of workers, especially in the gig economy, works in a gray area with no contingency for catastrophic loss. The situation is worsened by industry's increased reliance on, and sometimes exploitation of, independent contractors, facilitated in part by the post-pandemic upswing in remote work.

America's runaway healthcare costs and lack of universal medical insurance compound the independent contractor's woes when injury does occur. I imagine that $19,000 did not come close to covering the plaintiff's bills for such serious injury. Plaintiff's attorney fees must be accounted for as well. The plaintiff here might have acknowledged contractor status and aimed for a better settlement against an insurer, if available, for the company or homeowner. That would have been a gamble. The top takeaway for contractors or their attorneys is that self-insurance is a necessary cost of doing business.

Worker compensation bar: One who recovers in worker comp surrenders tort claims against the employer and its agents. The fundamental premise of worker comp is that it supersedes, so bars, tort claims. The plaintiff tried to augment the worker comp recovery by suing the company principal and the landowner. The plaintiff also sued the company itself upon a theory that did not pan out on the facts, that misrepresentation of the condition of the property vitiated the worker comp bar.

The plaintiff's claim necessarily failed against the company principal. The worker comp bar naturally extends to the agents of the employer, besides the company. Employers usually—though not necessarily; caution by an employee entering into the contract of employment always is advisable—indemnify their employees for negligence in the scope of employment. Plaintiffs outside the workplace usually are more interested in pursuing employers than employees, because the employer has more money and an insurer. If a plaintiff could pursue an employer's agents, the worker comp bar would be undermined.

The worker comp bar also undoes the largely historical common law "fellow servant" rule, which released an employer from responsibility for an injury inflicted on one employee by another, but thereby cleared the way for an employee to sue a co-worker. Relieving workers of the harsh consequences of that rule in the age of industry was in fact a key reason the worker comp system came about in America.

Why America has a worker comp system, why it remains narrow in scope, and how it's been diminished by reforms in recent decades are all fascinating stories in their own rights. New Zealand's unusually broad accident compensation system, which substantially supersedes tort litigation over accidents, grew out of worker comp reform in the 1970s. Suffice to say here and now, in its core scope of application, worker comp is a "grand bargain" in which employers fund the system proactively in exchange for workers' surrender of tort claims. That's good for workers in theory, but raises, again, the problem that worker compensation schedules have not kept up with the skyrocketing costs of living and healthcare.

Conflict of laws: the worker comp bar is practically universal vis-à-vis employers and their agents. The plaintiff tried as well to circumnavigate the worker comp bar upon the theory that worker compensation was paid by the company's R.I. worker comp insurer, and that the R.I. worker comp bar does not necessarily preclude tort claims in Massachusetts.

The plaintiff was right that Massachusetts law applied to the case.  Upon conflict-of-law analysis to ascertain the state with predominant interest in the matter, the court agreed that an injury in Massachusetts arising from the condition of a premises in Massachusetts drew Massachusetts substantive law to the problem.

Nevertheless, the court recognized the applicability of the R.I. worker comp bar. The Restatement (Second) of Conflict of Laws opines that a worker comp bar should apply to action in any state. And both Rhode Island and Massachusetts observe both the worker comp bar and its application to companies and their agents. Thus, Massachusetts public policy bore no hostility to importation of the R.I. rule, even to prelude tort claims under Massachusetts substantive law.

Premises liability: A landowner cannot be liable to an invitee for a known dangerous condition when the invitee was invited for the very purpose of abating the dangerous condition.  The worker comp bar does not preclude claims against third parties to the employment relationship. The third party is not part of the grand bargain. Indeed, under state law, typically, an employee or a worker comp system in subrogation may allege a third party's responsibility for loss. An employee successful in litigation might owe reimbursement to the worker comp system. Correspondingly, a worker comp system might owe excess recovery to the employee. Here, then, the worker comp bar did not preclude the plaintiff's suit against the landowner in negligence.

The defendant landowner asserted that the dangerous state of the collapsed garage was "open and obvious," thus invoking a historical common law doctrine.  The fuzzy doctrine has been said to mean many things in many scenarios. In the instant case, the defendant invoked the doctrine to say that the obvious risks of the dilapidated garage should relieve the landowner of the usual responsibility owed to a commercial invitee.

Massachusetts no longer recognizes the common law framework that applies different liability rules depending whether a plaintiff's purpose is commercial (invitee) or social (licensee). The contemporary approach is to charge the jury to consider "reasonableness under the circumstances." There might not be a stark practical difference between the old and new approaches, because the common law framework was grounded in the proposition that as a matter of ordinary practice, "reasonable" people conduct themselves differently relative to invitees and social guests, respectively.

Similarly, the contemporary approach is to reject "open and obvious" as any kind of magical incantation. Rather, the openness and obviousness of the risk also is part of what a court and jury can be expected to consider in the reasonableness analysis. Here, the court ruled accordingly that "open and obvious" is not a rule per se.

However, "open and obvious" remains important as a matter of fact. And on these facts, the openness and obviousness of the risk of the collapsed garage proved dispositive—not because of a blanket rule favoring defendants, but because of the specific reason the plaintiff was invited to the property: to abate the very same risk. The court reasoned:

The [cited] authorities encompass the commonsense recognition that a landowner who has a hazardous condition on his or her property may need to invite onto the property another person or persons to remedy that condition. The law, of course, wishes to encourage behavior that remedies hazardous conditions.... And the person engaged to remedy such a hazardous condition differs markedly from an ordinary invitee. For one thing, there usually will be little question that such a person is aware of the danger, and thus there should be no need for warning. Furthermore, such a person will have held him- or herself out as capable of remedying the condition. Under those circumstances, it is reasonable for the law to reallocate the risk of harm from the property owner to the person who has sought to take on, and to alleviate, the hazard.

The case is Ward v. Schnurr, No. 22-P-372 (Mass. App. Ct. Sept. 13, 2023). Justice John Englander wrote the unanimous opinion of a panel that also comprised Justices Henry and Desmond.