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September 28, 2001


The opinion of the court was delivered by: Francis, United States Magistrate Judge.

                MEMORANDUM AND ORDER

In July 1994, there was an outbreak of Legionnaires' Disease, a form of pneumonia, among passengers who had disembarked from the cruise ship Horizon after a voyage to Bermuda. An investigation by the United States Centers for Disease Control and Prevention revealed the presence of Legionella bacteria in the filters of the ship's whirlpool spa. Many of the victims (collectively, the "Passenger Plaintiffs") brought suit against Celebrity Cruises Inc. and Fantasia Cruising Inc. (collectively, "Celebrity"), the owners and operators of the Horizon. They also sued Essef Corporation, Pac-Fab, Inc., and Structural Europe, N.V. (collectively, the "Essef Defendants"), affiliated companies that had designed, manufactured, and distributed the filters. In addition, Celebrity filed a complaint and cross-claims against the Essef Defendants seeking indemnification and contribution and also seeking damages for products liability, breach of warranty, fraud, and negligent misrepresentation.

The cases were consolidated for discovery, and the parties consented to refer each action to me for all purposes including trial pursuant to 28 U.S.C. § 636(c). The parties also stipulated that the Silivanch action would be tried as a bellwether case and would result in a determination of the liability of Celebrity and the Essef Defendants to the Passenger Plaintiffs, an allocation of responsibility among the defendants, a determination of the Essef Defendants' liability on Celebrity's claims, and an assessment of any punitive damages. The parties also agreed that the jury in the bellwether case would award compensatory damages to the Silivanch plaintiffs, but that separate compensatory damage trials would be held with respect to the remaining plaintiffs and with respect to Celebrity's claims against the Essef Defendants.

After receiving evidence over a period of six weeks in the Silivanch case, the jury rendered its verdict. It found Celebrity liable to the Passenger Plaintiffs for negligence and the Essef Defendants liable to these plaintiffs for negligence and strict products liability, as well as breach of express and implied warranties. Further, the jury held the Essef Defendants liable to Celebrity for fraud, negligence, strict products liability, breach of express and implied warranties, and negligent misrepresentation. The jury allocated thirty percent of the responsibility for the Passenger Plaintiffs' injuries to Celebrity and seventy percent to the Essef Defendants. It also held the Essef Defendants liable both to the Passenger Plaintiffs and to Celebrity for punitive damages.

The defendants now move pursuant to Rules 50(b) and 59(a) of the Federal Rules of Civil Procedure for judgment as a matter of law or for a new trial. The Essef Defendants seek judgment or a new trial with respect to all claims of strict liability and negligence, and in particular with respect to proof of causation.*fn1 They also move for judgment as a matter of law striking the awards for punitive damages and loss of society, and they seek a new trial on compensatory damages as well as judgment as to certain elements of that award. In addition, these defendants request a new trial based on purported errors in the admission of evidence, the jury instructions, and the conduct of the proceedings. They also renew their motion for judgment as a matter of law or seek a new trial with respect to Celebrity's claims of fraud. Finally, Essef Corporation and Pac-Fab, Inc. seek judgment or a new trial, arguing that there is no evidence of direct liability as to them and no basis for finding them vicariously liable for the acts of Structural Europe, N.V.*fn2

Celebrity, in turn, has filed posttrial motions on two narrower points. It seeks judgment as a matter of law striking the award for loss of society and it challenges the award of prejudgment interest.

With respect to all of the defendants' applications, the relevant facts will be discussed in the context of each legal argument.


A. Legal Standards

Judgment as a matter of law may be granted under Rule 50 only if "(1) there is such a complete absence of evidence supporting the verdict that the jury's findings could only have been the result of sheer surmise and conjecture, or (2) there is such an overwhelming amount of evidence in favor of the movant that reasonable and fair minded [persons] could not arrive at a verdict against [it]." Galdieri-Ambrosini v. National Realty & Development Corp., 136 F.3d 276, 289 (2d Cir. 1998) (citations omitted) (alterations in original). The court must view the evidence in the light most favorable to the party opposing the motion and must defer to all of the jury's credibility determinations and reasonable inferences. Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000); Raniola v. Bratton, 243 F.3d 610, 616 (2d Cir. 2001); Caruolo v. John Crane, Inc., 226 F.3d 46, 51 (2d Cir. 2000); Galdieri-Ambrosini, 136 F.3d at 289. On a Rule 50 motion, the court "may not weigh the credibility of witnesses or otherwise consider the weight of the evidence." Caruolo, 226 F.3d at 51 (citing Galdieri-Ambrosini, 136 F.3d at 289). Indeed, "although the court should review the record as a whole, it must disregard all evidence favorable to the moving party that the jury is not required to believe." Reeves, 530 U.S. at 151, 120 S.Ct. 2097 (citation omitted).

The standard for granting a new trial under Rule 59 is less stringent. "[U]nlike a motion for judgment as a matter of law, a trial judge considering a motion for a new trial is free to weigh the evidence himself and need not view it in the light most favorable to the verdict winner." United States v. Landau, 155 F.3d 93, 104 (2d Cir. 1998) (internal quotations and citation omitted). Accordingly, "`a motion for a new trial may be granted even if there is substantial evidence to support the jury's verdict.'" Caruolo, 226 F.3d at 54 (quoting Landau, 155 F.3d at 104). A new trial is warranted if the court "is convinced that the jury has reached a seriously erroneous result or that the verdict is a miscarriage of justice." Caruolo, 226 F.3d at 54 (internal quotations and citation omitted).

Each of the defendants' motions may now be judged against these standards.

B. Negligence

I previously determined that this litigation falls within the admiralty jurisdiction of the court. In re Horizon Cruises Litigation, 101 F. Supp.2d 204, 207-09 (S.D.N.Y. 2000). "With admiralty jurisdiction comes the application of substantive admiralty law." East River Steamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 864, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986). And, in admiralty law, common law principles of negligence apply. See Smith v. Mitlof, 130 F. Supp.2d 578, 582 (S.D.N.Y. 2001); Jurgens v. Poling Transportation Corp., 113 F. Supp.2d 388, 396-97 (E.D.N.Y. 2000); Diesel Tanker Ira S. Bushey, Inc. v. Tug Bruce A. McAllister, No. 92 Civ. 5559, 1994 WL 320328, at *6 (S.D.N.Y. June 29, 1994); see also East River Steamship, 476 U.S. at 863-66, 106 S.Ct. 2295 (incorporating principles of product liability into maritime law).

The elements of negligence are: (1) a duty owed by the defendant to the plaintiff; (2) breach of that duty; (3) proximate causation of the plaintiffs injuries; and (4) damages. See Stagl v. Delta Air Lines, Inc., 117 F.3d 76, 79 (2d Cir. 1997); see also Alfaro v. Wal-Mart Stores, Inc. 210 F.3d 111, 114 (2d Cir. 2000) (conflating the elements of causation and damages). This formula is routinely applied in maritime cases. See Petitt v. Celebrity Cruises, Inc., 153 F. Supp.2d 240, 252-53 (S.D.N.Y. 2001); Jurgens, 113 F. Supp.2d at 397; In re Queen of Hearts Cruises, Inc., Nos. 96 Civ. 6712, 98 Civ. 0111, 1999 WL 195298, at *6 (S.D.N.Y. April 7, 1999). The evidence at trial amply supported the jury's finding of negligence against the Essef Defendants.

1. Facts Relevant to Negligence

The Essef Defendants designed and manufactured the model TR-140 high rate sand filter used aboard the Horizon. The main body of the filter is a hollow cylinder. Water from the whirlpool spa is introduced into the filter by a diffuser that operates like a shower head and disperses the water when the filter is operating in filtration mode. The water then seeps through the filter medium, consisting of silica sand, which captures particulate matter such as hair, dirt, and oils. Below the sand is a gravel bed that contains a hub from which laterals radiate like the spokes of a wheel. While the filter is in filtration mode, the water passes through holes in the laterals and returns to the whirlpool spa. (Tr.1344-46).*fn3

Periodically, the filter must be backwashed to remove particulate matter that has built up during the filtration phase. Essentially, the flow is reversed. Clean water is forced through the laterals and up through the sand, dislodging the dirt and debris that has accumulated. It is forced out of the filter and is ultimately released overboard. (Tr. 1346-47).

There is substantial evidence in the record that the TR-140 filter did not backwash properly. Because the laterals did not extend all the way to the walls of the cylinder, the filter was subject to "coring," also known as "channeling." This means that during backwash the water flowed up primarily through the center of the sand, leaving the outer edges of the medium uncleansed. (Tr. 1355-58). Moreover, testing demonstrated that the sand did not completely fluidize during backwashing. In order for the filter medium to be properly cleaned, it is necessary for the entire sand bed to be lifted so that the water can circulate around each silica grain. (Tr. 1346-47). The TR-140 did not accomplish this.

Because of the small size of Legionella bacteria, it is highly unlikely that individual microbes would be trapped by a sand filter, since they would pass through the interstices between the grains of silica. However, according to the evidence in this case, organic matter in the form of biofilms developed in the filters. These biofilms provided a medium for Legionella bacteria to proliferate and also protected them from halogens such as chlorine and bromine which are added to the spa water as disinfectants. (Tr. 1173-75, 1684-85, 1704-06, 1755, 2306). As the water containing the bacteria was released into the whirlpool, it became aerosolized and was inhaled by bathers, causing Legionnaires' Disease among those most susceptible. (Tr. 1164-65; Pl. Exh. 36 at 5, 7).

2. Existence of a Duty

The Essef Defendants maintain that they owed no duty to the plaintiffs both because the filter was not designed to interdict Legionella or other bacteria and because no one could have foreseen that a sand filter would be a source of Legionnaires' Disease. Neither argument is persuasive.

First, a manufacturer owes a duty to consumers broader than merely the duty to produce products that will achieve their intended purpose; it is obligated to market only those products that are reasonably safe when used for the intended purpose. See Cacciola v. Selco Balers, Inc., 127 F. Supp.2d 175, 185 (E.D.N.Y. 2001); Hamilton v. Accu-Tek, 62 F. Supp.2d 802, 822 (E.D.N.Y. 1999); Liriano v. Hobart Corp., 92 N.Y.2d 232, 237, 677 N.Y.S.2d 764, 766, 700 N.E.2d 303 (1998). Thus, for example, an automobile manufacturer may be liable for producing a car with a gas tank which, although it adequately supplies the engine with fuel, is susceptible to explosion in the event of a rear-end collision. More to the point, the manufacturer of a device that creates conditions conducive to the proliferation of bacteria may be liable to persons who become ill as a result, even if the device otherwise performs as required. For example, the maker of functionally effective tampons has a duty to design them to minimize the incidence of toxic shock syndrome, see, e.g., Graham v. Playtex Products, Inc., 993 F. Supp. 127, 128-29, 134 (W.D.N.Y. 1998), and the manufacturer of an intra-uterine device must minimize the danger of pelvic inflammatory disease regardless of how well the product works as a contraceptive. See, e.g., Worsham v. A.H. Robins Co., 734 F.2d 676, 681-82 (11th Cir. 1984). In this case, the Essef Defendants had a duty not to distribute a filter that facilitated the growth of harmful bacteria.

Second, the Essef Defendants construe the foreseeability requirement too narrowly. A manufacturer may be liable for marketing a product that causes injuries that were generally foreseeable; a plaintiff need not demonstrate that the defendant should have foreseen the precise type of injury that actually occurred. The Restatement (Second) of Torts states:

(1) If the actor's conduct is a substantial factor in bringing about harm to another, the fact that the actor neither foresaw nor should have foreseen the extent of the harm or the manner in which it occurred does not prevent him from being liable.
(2) the actor's conduct may be held not to be a legal cause of harm to another where after the event and looking back from the harm to the actor's negligent conduct, it appears to the court highly extraordinary that it should have brought about the harm.

Restatement (Second) of Torts § 435. Thus, if a defendant's conduct could predictably contribute to the transmission of disease, that defendant is liable even if the particular disease contracted by a plaintiff is rare. For example, because it is well-known that mishandling of blood supplies may result in the infection of persons who receive transfusions, blood services may be liable to a victim who contracted Acquired Immune Deficiency Syndrome ("AIDS"), even if the defendant's conduct occurred before AIDS was identified. See Wadleigh v. Rhone-Poulenc Rorer, Inc., 157 F.R.D. 410, 420 (N.D.Ill. 1994); Doe v. United States, 737 F. Supp. 155, 162 (R.I. 1990); Gaffney v. United States, No. 88-1457-Z, 1990 WL 57625, at *7 (Mass. April 26, 1990).

In this case, the jury heard evidence that by the 1980's the spa industry, including officials of the Essef Defendants, had become aware that certain illnesses, including Legionnaires' Disease, were associated with the operation of whirlpool spa systems. (Tr. 1664-67, 1669-71, 1680-81, 1757; Deposition of Stanley H. Frederick dated May 17, 1999 ("Frederick May 17, 1999 Dep."), at 129, 161-66, attached as Exh. 2 to Declaration of Robert A. Jacobs dated Feb. 16, 2001 ("Jacobs Decl."); Deposition of Stanley H. Frederick dated May 18, 1999 ("Frederick May 18, 1999 Dep."), at 278-80, 382-83, attached as Exh. 3 to Jacobs Decl.; Deposition of Ronald Robol dated May 20, 1999 ("Robol May 20, 1999 Dep."), at 1116-17, attached as Exh. 5 to Jacobs Decl.; Exhs. C-116, C-324, attached as Exhs. 7 and 8, respectively, to Jacobs Decl.).*fn4 Significantly, it was known that the build-up of organic materials reduced the effectiveness of chemical disinfectants. (Tr. 1683-84, 1704-06). Accordingly, in 1984, the National Sanitation Foundation ("NSF") modified its standards for sand filters to require them to demonstrate that backwashing would thoroughly remove organics. (Tr. 1703-06). Thus, there is evidence that the connection between the operation of sand filters and the transmission of disease was sufficiently well-known to satisfy the foreseeability requirement.

3. Breach of the Duty

The TR-140 filter had been designed for use in swimming pools. (Tr. 342-44). Nevertheless, the Essef Defendants marketed it for use in spas as well, and included a sticker that falsely stated that the National Sanitation Foundation had approved it for such purposes. (Frederick May 17, 1999 Dep. at 170-71; Pl. Exh. 54 ¶¶ 33, 34). Prior to doing so, they never conducted tests to determine whether it was suited for use in spas. (Tr. 239, 403; Frederick May 17, 1999 Dep. at 191; Pl. Exh. 54 ¶¶ 11-14). Indeed, the TR-140 failed the NSF's sand bed flatness test (Tr. 615-16), a result that indicated that the filter might have problems with coring or channeling. (Tr. 341, 641). One of Essef Corporation's own employees, Steven Suchanek, had warned the president of that company that the TR-140 was defectively designed and that its inability to backwash properly was preventing disinfectants from circulating throughout the filter medium. (Tr. 1344, 1355-62, 1373-79). Similarly, Stanley Frederick, Pac-Fab's former vice president for engineering, testified that the TR-140 was not well suited for spas because it could not be completely cleansed of accumulated organic materials. (Frederick May 17, 1999 Dep. at 88-89, 184-85; Exh. C-152). Indeed, Pac-Fab's chief engineer stated that he would not recommend using the filter in spas. (Robol May 20, 1999 Dep. at 1133-34). Nevertheless, the TR-140 continued to be marketed for just such purposes.

4. Proximate Cause

There is no dispute that John Silivanch, along with other passengers, acquired Legionnaires' Disease from the whirlpool spa aboard the Horizon. The Essef Defendants do, however, contest two aspects of causation. First, they argue that the most severe of Mr. Silivanch's injuries are not attributable to the disease. This issue will be considered below in connection with the analysis of compensatory damages. Second, these defendants contend that there was insufficient proof that the TR-140 filters contributed to the presence of Legionella bacteria in the spa. That argument is not persuasive.

In the investigation of the outbreak aboard the Horizon, the Centers for Disease Control and Prevention (the "CDC") recovered Legionella bacteria from the sand filters of the spa system. (Pl. Exh. 37 at 6, 11). These bacteria were indistinguishable from organisms found in the respiratory system of one of the victims of the outbreak. (Pl. Exh. 37 at 6). Furthermore, the CDC found that "[v]isual examination of the filter material showed extremely heavy organic loading. This loading remained in the filter despite reports that a routine (daily) filter backwash cycle was implemented." (Pl. Exh. 37 at 11). These objective observations provided the basis for the inferences drawn by the plaintiffs' expert witnesses. Linden Witherell, an expert in public health engineering and epidemiology, testified that the failure of the TR-140 filter to backwash properly had allowed the accumulation of organic matter in the filters, which in turn trapped Legionella bacteria and provided an environment for them to proliferate. (Tr. 1690-93, 1705-09, 1753-56, 1783-85, 2274-76, 2306-08, 2317-20). Similarly, Dr. Joseph Plouffe, an epidemiologist, also identified the filters as the point of amplification for Legionella within the spa system on the Horizon. (Tr. 1174-75, 1177, 1196, 1203-04). The jury thus had sufficient evidence from which it could find causation. None of the Essef Defendants' efforts to undermine that evidence warrant either judgment as a matter of law or a new trial.

a. Halogenation

The Essef Defendants maintain that the outbreak was attributable not to the filters but to the failure of the crew to utilize chemical disinfectants properly. The Essef Defendants' expert, Dr. William Rowley, testified that with adequate halogenation, no Legionella should have been able to survive and infect the passengers. (Tr. 2196). The plaintiffs' experts, however, had testified as to the mechanisms by which the build-up of organic material in the filters would protect the bacteria and render the halogens less effective. The jury was entitled to credit this evidence.

To the extent that the Essef Defendants now argue that Celebrity's negligence was a superceding cause that relieves them of liability, this contention, too, must be rejected. The party seeking to establish a superceding cause has the burden of demonstrating that the act in question was the sole proximate cause of the injuries incurred. See Exxon Co. v. Sofec, Inc., 54 F.3d 570, 574-75 (9th Cir. 1995), aff'd, 517 U.S. 830, 116 S.Ct. 1813, 135 L.Ed.2d 113 (1996). And, whether a party has met that burden is generally an issue for the jury. See Parsons v. Honeywell, Inc., 929 F.2d 901, 905 (2d Cir. 1991). Here, it was rational for the jury to determine that Celebrity's negligence was a concurrent, not superceding, cause of the outbreak. See Hirsch v. Polymark Corp., 889 F. Supp. 714, 715-16 (S.D.N.Y. 1995) (employee's removal of safety guard concurrent cause of plaintiffs injury along with defective design of machine). The jury could reasonably have concluded that the accumulation of organics in a negligently designed TR-140 filter was the principal cause of the outbreak and, at the same time, determine that Celebrity was also negligent for failing to take precautions against filter failure such as periodically superchlorinating the spa system.*fn5

With respect to the issue of Celebrity's negligence, the Essef Defendants also complain that their expert, Dr. Rowley, was precluded from testifying that the spa was operated with one pump at a time rather than two. (Tr. 2104-08). This witness did, however, offer his opinion that operation in this manner was "unbelievable." (Tr. 2104). He was prevented only from offering calculations of flow based on a single pump because these calculations had not been disclosed during expert discovery prior to trial. (Tr. 2107). This preclusion order was appropriate under Rule 37(c)(1) of the Federal Rules of Civil Procedure since this failure to disclose would have prejudiced the plaintiffs and Celebrity by preventing them from effectively challenging at trial the somewhat arcane analysis. See Lamarca v. United States, 31 F. Supp.2d 110, 122 (E.D.N.Y. 1999). Moreover, Dr. Rowley's failure to include these calculations in his expert report cannot be excused on the basis that the factual predicate for them was only revealed at trial: the fact that the spa was operated with a single pump was disclosed in a deposition in 1997 (Deposition of Ioannis Ladakis dated March 3, 1997, at 89, attached as Exh. 19 to Jacobs Decl.), as well as in the spa system operations manual produced in pretrial discovery. (Pl. Exh. 19 attached as Exh. 20 to Jacob Decl.).

b. Post Hoc, Ergo Propter Hoc

The Essef Defendants next argue that the mere fact that the passengers became ill after the spa water had passed through the TR-140 filters does not prove that the filters caused the disease. This proposition is unassailable. "[A] temporal relationship by itself provides no evidence of causation." In re Breast Implant Litigation, 11 F. Supp.2d 1217, 1238 (Colo. 1998) (citation omitted). But such a temporal relationship can corroborate other proof of a causal nexus, see Zuchowicz v. United States, 140 F.3d 381, 385 (2d Cir. 1998), and, as discussed above, there is much evidence here beyond the mere fact that the spa water passed through the filters at a point in time before the passengers were infected.

c. The Zenith

Next, the Essef Defendants reason that any inference of causation is negated by the fact that there was never an outbreak of Legionnaires' Disease on the Zenith, a sister ship to the Horizon that was also operated by Celebrity and which had an identical spa system including TR-140 filters. There is no merit to this rationale. In the real world causation is rarely so uncomplicated that seemingly similar conditions will always lead to the same outcome. While it could certainly be argued to the jury that the experience of the Zenith indicated that the filters were not at fault for the outbreak on the Horizon, the jury was not obligated to credit that argument.

d. Post-Sale Alterations

The Essef Defendants also contend that the TR-140 filters were substantially altered after sale in that the laterals were deformed, apparently by heat, and thus rendered less effective. "[I]f a consumer alters a product in a way that creates a defect, the consumer's conduct rather than the manufacturer's is the proximate cause of any ensuing accident." Hood v. Ryobi America Corp., 181 F.3d 608, 612 (4th Cir. 1999) (citation omitted). Put another way,

[t]he injuries suffered by [the plaintiff] must be the proximate result of a defect which existed in the product at the time it was sold, and if the product has been materially altered or modified by a third party after the sale, those injuries cannot be traced to be the proximate result of [the defendant's] original design.

Lamb v. Sears, Roebuck & Co., 1 F.3d 1184, 1188 (11th Cir. 1993) (citations omitted). See also Valentin v. C.G. Bretting Manufacturing Co., 278 A.D.2d 230, 231, 717 N.Y.S.2d 281, 282 (2d Dep't 2000) (issue of fact regarding material modification precludes summary judgment); Rios v. Rockwell ...

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