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MEMORANDUM

This matter arises out of a wrongful death action against Defendants Burlington Northern

Santa Fe Corporation, The Burlington Northern and Santa Fe Railway Company, and BNSF

Railway Company (collectively “BNSF”) for its involvement in the September 26, 2003 Ferry

Street Crossing accident which resulted in the death of four young adults.1 After a six-week trial,

a jury awarded Plaintiffs damages in the amount of $24,000,000.00. After finding BNSF 90% at

fault, judgment in the amount of $21,600,000.00 was entered against BNSF. Entry of Judgment

was stayed to allow the parties to file their post-trial motions.

The motion presently before the Court originally was scheduled to be heard in November,

2008, but was cancelled when a mediated settlement appeared imminent. Unfortunately,

settlement negotiations failed and counsel stipulated that post-trial costs and sanctions motions

would be heard in April, 2009. Almost from the inception of this case, Plaintiffs have alleged

that BNSF has engaged in the systematic abuse of the civil ligation process, including, inter alia,

the loss, destruction, and/or alteration of critical evidence, misrepresentations to this Court and

Plaintiffs, and the general obstruction of Plaintiffs‟ ability to prosecute their case. Plaintiffs now

request that this Court impose sanctions against BNSF for their pervasive misconduct in these

proceedings.

I. BNSF’S MISCONDUCT

Allegations of BNSF‟s misconduct in this case are both plentiful and well-documented.

Plaintiffs contend that BNSF engaged in a systematic exploitation of the civil-justice system of a

pervasiveness seldom seen outside of John Grisham novels. Although BNSF admits that

“evidence was certainly bungled,” it attempts to casually explain away each instance of

1 Before trial, Plaintiff Frazier entered into a Pierrenger agreement with the other Plaintiffs and the case was

consolidated for the remaining proceedings.

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misconduct2 as the product of inadvertence, coincidence, and/or honest mistake. During the

April 21, 2009 sanctions hearing, BNSF‟s recently substituted counsel3 even ventured to offer an

entirely new theory that had never even been alluded to during discovery or at trial in yet another

veiled attempt to explain away BNSF‟s misconduct.

BNSF contends further that its misconduct opened the door for Plaintiffs, resulting in a

multimillion dollar verdict in Plaintiffs‟ favor and that BNSF was the only party harmed by its

own misconduct. Essentially, BNSF has thrown its hands in the air and rhetorically asked: why

do bad things happen to good companies? Looking past these polarizing perspectives, this Court

finds that BNSF did, indeed, engage in so many instances of misconduct that, when viewed in

their totality, there can be no question for this Court that considerable sanctions are in order.

BNSF tried, in earnest, throughout its submissions and at oral argument to confine Plaintiffs‟

sanctions allegations to spoliation. Spoliation is defined as the destruction of evidence or the

failure to preserve property for another's use as evidence, and may constitute an obstruction of

justice. See Federated Mut. Ins. v. Litchfield Precision Components, Inc., 456 N.W.2d 434, 436

(Minn.1990). Under that definition, it is obvious to this Court that BNSF‟s misconduct went

well beyond spoliation and encompassed other abuses as well.

This Court does not find, however, that BNSF‟s actions constitute “one of the largest

miscarriages of justice perpetrated in American history,” as Plaintiffs would have this Court

believe. Rather, this Court has examined BNSF‟s misconduct within the purview of sanctions-

2 Misconduct is defined as “[a] dereliction of duty; unlawful or improper behavior.” Black's Law Dictionary (8th ed.

2004)

3 BNSF‟s new counsel, who had absolutely no involvement in the six-week jury trial that ended in the

$24,000,000.00 verdict, argued that Mr. Hildebrant, BNSF‟s corporate designee for the entire trial and one of

BNSF‟s primary witnesses, was, in essence, a rogue employee whose actions, which included, inter alia, lying under

oath, losing, destroying, and/or tampering with critical evidence in this case, were outside the scope of his

employment. This rogue employee theory, which this Court soundly rejected at the hearing, on the record, is

discussed at greater length in the bad faith section of this Memorandum.

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related statutes, rules, and case law, along with the inherent authority of the court to impose

sanctions and will tailor her findings accordingly.

1. Spoliation and Discovery Abuses

Plaintiffs contend that BNSF destroyed, altered, misplaced, and/or mishandled evidence

at nearly every phase of these proceedings. BNSF admits that it “bungled” evidence, engaged in

“sloppy evidentiary maintenance and preservation,” and that “there has been clear and

convincing showing of negligence.” (April 21, 2008 Tr., BNSF Attorney Thornton at 25) In the

same breath, however, BNSF also attempts to explain away its mishandling of evidence by

claiming that it legitimately destroyed and/or misplaced evidence. As previously noted, BNSF

has now taken the position, at this ridiculously late stage in the proceedings, that nearly all of this

alleged misconduct can be attributed to one rogue employee, Craig Hildebrant. This Court finds

that BNSF committed substantial evidentiary and discovery abuses which, when considered

together, warrant significant court-imposed sanctions.

a. HXP and HCA Downloads

As a large railway company, BNSF maintains HXP and HCA event recorders at its

crossings. These event recorders monitor the speed of an approaching train and ensure that there

is adequate warning time at the crossing grade. The recorders also monitor the performance of

the gates and lights at the crossings. Both parties appear to agree that authentic and tamper-free

data from these recorders would provide definitive proof that the gates were either working

properly or malfunctioning at the time of the accident. Unfortunately, in this case, the data from

these event recorders were not tamper free and can no longer be authenticated.

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Evidentiary abuses with the handling of data from the event recorders occurred within

minutes of the accident and continued through trial.4 On the night of the accident, BNSF

employee Craig Hildebrant violated BNSF policy by downloading the recorder data to his laptop

without a reliable witness present in the “bungalow” which housed the HXP and HCA event

recorders at the time of the data transfer. Mr. Hildebrant, according to other BNSF employees,

made a write-protected disk of the recordings and printed two paper copies as well. The paper

copies, however, were only partial downloads of the recorder data.

Ultimately, without Plaintiffs‟ knowledge, the word processing documents were uploaded

onto Mr. Hildebrant‟s H drive. Mr. Hildebrant also admitted that he altered the format of the

data and changed its headings and titles shortly before the Plaintiffs‟ July 17, 2005 inspection.

Other than its own hollow assurances, BNSF has offered no credible evidence to corroborate Mr.

Hildebrant‟s testimony that he only adjusted the mnemonics on the HCA event recorder.

Mr. Hildebrant testified that he provided the write-protected disk and the paper copies to

Signal Supervisor Richard Kaiser on September 29, 2003. This write-protected disk is

particularly important because its contents and download time could easily be authenticated. Mr.

Kaiser testified that he provided the disk and the paper copies to either Lynn Ross or Robert

Hemmings in BNSF‟s claims department. Both Ms. Ross and Mr. Hemmings denied, under

oath, that they ever saw or received a copy of the disk and/or the paper downloads. Despite the

severity of the accident, imminent litigation, and the critical importance of the recorder data, no

chain of custody or any other documentation forms were ever kept for the disk or paper copies of

the downloaded data. What remains undisputed is the fact that the disk was misplaced, hidden,

4 For purposes of the instant sanctions motion, the allegations regarding the post-trial misconduct of BNSF and/or its

trial counsel are not now before this Court.

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or destroyed within a week of the accident.5 Mr. Hildebrant‟s laptop, which contained the

original download, also was destroyed.

Mr. Hildebrant returned to the accident site to re-download the recorder data on

September 29, 2003 (the day he met with Mr. Kaiser), October 3, 2003 (one day before the FRA

inspection), and October 22, 2003.6 It appears to this Court that, at the same time BNSF

concealed its knowledge of facts related to Mr. Hildebrant‟s downloading activities, it continued

to represent to Plaintiffs and this Court that no other downloads had taken place.

The September 29, 2003 download is particularly relevant to this proceeding. Discovery

of the September 29, 2003 download was made by happenstance. During a court-ordered data

inspection on November 10, 2006, Plaintiffs witnessed Mr. Hildebrant accidentally open a file

that was downloaded on September 29, 2003. This Court ordered the data inspection, at

Plaintiffs‟ request, to allow them an opportunity to compare the partial printout that had been

provided to them by BNSF with a data file from July 2005. This was necessary because BNSF

repeatedly had represented to Plaintiffs and this Court that no other electronic version of the

recorder data existed that was relevant to the September 26, 2003 accident. Once again, this is

because the write-protected disk and Mr. Hildebrant‟s computer had been destroyed. BNSF

represented to Plaintiffs that, at that time, the September 29, 2003 download was not related to

the September 26, 2003 accident and again reiterated that no electronic versions of the recorder

data existed.

5 BNSF informed this Court on February 13, 2006, that it was not BNSF‟s policy to maintain a write-protected disk.

This misrepresentation is included in the misrepresentation and false testimony section of this memorandum.

6 Mr. Hildebrant testified, under oath, that except for the one occasion shortly before the July 17, 2005 site

inspection, he never re-downloaded the recorder data and did not return to the accident site during the week after the

accident. This topic will be addressed in the misrepresentation and false testimony section of this memorandum.

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Plaintiffs, who had grown increasingly suspicious of BNSF‟s position regarding the

alleged unavailability of electronic versions of the recorder data, had little choice but to file yet

another motion to compel. In that motion, Plaintiffs requested that they be allowed to search Mr.

Hildebrant‟s H drive for the September 29, 2003 download and any other files relating to the

September 26, 2003 accident.7 Plaintiffs located the September 29, 2003 file which obviously

contained data from the September 26, 2003 accident. Plaintiffs also located downloads dated

October 3, 2003 and October 22, 2003, both of which contained recorder data related to the

September 26, 2003 accident. There were also dozens of other data recorder files that were

downloaded that were unrelated to the September 26, 2003 accident, including files created after

January 2004, around the time Mr. Hildebrant claimed he last transferred data to the H drive,

and August 1, 2007, the date of Mr. Hildebrant‟s retirement.

On November 10, 2006, Plaintiffs‟ counsel Sharon Van Dyck and expert consultant Larry

Farnham attended the court-ordered data inspection at BNSF‟s Northtown Facility. During that

inspection, Mr. Hildebrant misclicked a key and inadvertently opened a file identified with the

subject Ferry Street and the date of September 29, 2003. Upon discovering this September 29,

2003 file, which, previously, Mr. Hildebrant and BNSF had denied even existed, Ms. Van Dyck

and Mr. Farnham immediately were escorted out of the room. Some time later, Ms. Van Dyck

and Mr. Farnham were allowed to return to the room where a file dated September 26, 2003 was

open on Mr. Hildebrant‟s laptop computer. BNSF counsel represented to Ms. Van Dyck that the

September 29, 2003 file that she had seen, before being escorted out of the room, was not related

to this case. By accidentally opening the September 29, 2003 file, Mr. Hildebrant allowed

Plaintiffs to discover, contrary to BNSF‟s previous representations, that there were indeed

7 Additional BNSF misconduct related to its handling of the recorder data and interference with access to that data is

discussed in more detail in the misrepresentation and false testimony section of this Memorandum.

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electronic versions of the HCA data on Mr. Hildebrant‟s H drive. This inadvertent discovery

immediately called into question Mr. Hildebrant‟s previous assurances and representations that

he had not re-downloaded the recorder data or returned to the Ferry Street Crossing bungalow on

September 29, 2003. This is one of many instances in which BNSF‟s credibility was placed on

the line.

Shortly before Plaintiffs‟ July 17, 2005 site inspection, during which Plaintiffs‟ experts

observed Mr. Hildebrant print out the recorder data which Plaintiffs‟ experts used from that point

forward, Mr. Hildebrant again made an unaccompanied visit to the “bungalow” which housed

the event recorders. At trial, Mr. Hildebrant admitted that during that unaccompanied visit in

July, 2005, he altered the format, title, and headings of the event recorder data. Plaintiffs,

understandably, suspect that other changes may have been made to the data at that time, the night

of the accident, and other times unknown. BNSF contends that there was never any attempt on

its part to defraud or mislead Plaintiffs. BNSF continued to urge Plaintiffs and this Court to

accept as true BNSF‟s representations that it had provided Plaintiffs with unaltered paper copies

of the event recorder data showing the accident-related train movement on the evening of

September 26, 2003. Simply stated, BNSF would now have this Court find that it did not tamper

with or fabricate any of the recorder data, even though it now appears to all, including the jury,

that BNSF either lost, altered, and/or destroyed the very evidence that it claims would prove

definitively that the gates were functioning properly at the time of the accident.8

Unfortunately, there is no first-generation or native format data that is now available to

answer the question about what really happened on that fateful evening of September 26, 2003.

Further, Mr. Hildebrant has admitted to lying under oath about his handling of the recorder data

8 At trial, Plaintiffs‟ forensic computer analyst testified that the easiest way to manipulate computer, like the HCA

and HXP download data, is to collect a number of downloaded data files to get the “look” needed and then and paste

the data from those files.

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in this case; making BNSF‟s assurances even more suspect. This Court finds that BNSF‟s

handling of the HXP and HCA event recorder data is sanctionable misconduct.

b. Other Evidentiary Abuses

BNSF prevented Plaintiffs, through their repeated misrepresentations, the destruction and

loss of evidence, and ignorance, from obtaining access to and/or receiving various track, signal,

and work records. This Court finds that the following acts amount to evidentiary abuses

perpetrated by BNSF: (1) the destruction of the “disabled crossing forms;” (2) the concealment

of “railway detector car” evaluations until a time when BNSF determined that it would be to its

advantage to disclose and use them; (3) the failure to admit and disclose BNSF‟s knowledge of

previous signal problems at the Ferry Street Crossing; (4) the failure to disclose and produce

PATS/PARS records until the month before trial; (5) the failure to maintain complete HXP

history logs; (6) the destruction of signal desk communications; and (7) the destruction of signal

system blueprints. These records and documents related to maintenance and work that was done

on the track and equipment related to the Ferry Street Crossing; work that was performed the day

before and on the day of the September 26, 2003 accident.

Many of these lost, misplaced, destroyed, and selectively preserved items of evidence

were critical to this case. Other evidence was disclosed to Plaintiffs very late in the proceedings,

including during the month and days before trial and at trial. BNSF‟s failure to properly handle

critical evidence and timely disclose requested and court-ordered documents and electronic

evidence, not only compromised and undermined the record in these proceedings, but saddled

Plaintiffs with the exorbitant time, labor, and cost expenditures that necessarily followed.

Additionally, due to BNSF‟s delays and untimely disclosures, critical fact witnesses were

deposed more than four years after the accident; leaving their memories compromised by the

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passage of time. After finally unearthing some of these documents and learning of the

destruction of others, it was revealed that a work gang had, in fact, worked on the approach track

at the Ferry Street Crossing the day before the accident and that, shortly after the accident, the

signal system had been revised. The shop drawings, which would have confirmed that

reconfiguration, mysteriously disappeared and were never found. Evidence was either destroyed,

lost, and/or produced so late in this case, that relevant witnesses could no longer recall their work

on or events related to the Ferry Street Crossing around the time of the accident.

BNSF has attempted to rationalize the loss or destruction of evidence in this case as

routine “recycling” or destruction occurring in the ordinary course of business. BNSF offered

testimony regarding its standard practice or “recycling” employees‟ personal computers and the

limited tenure for the storage and retention of certain records. This Court is not persuaded.

Under no set of circumstances, is this Court willing to accept BNSF‟s contention that the loss or

destruction of evidence after Plaintiffs sent BNSF their February 3, 2004 evidence preservation

request, was the result of mere coincidence, inadvertence, or part of regular record retention

policies. BNSF knew or should have known that litigation was imminent soon after learning of

the accident. There is no getting around the fact that four young adults were killed in an accident

involving a BNSF locomotive at a railroad crossing. Correspondingly, BNSF should have taken

reasonable steps to preserve evidence related to the Ferry Street Crossing.

This does not mean that potential defendants in every case should necessarily be required

to completely preserve an accident scene. But in cases such as this, involving multiple fatalities,

when there can be little doubt that litigation will follow, defendants clearly have a duty to

preserve evidence that is reasonably related to the accident; especially if a defendant already has

an established evidence handling and preservation protocol in place. In this case, there were

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several instances in which BNSF violated its own evidence preservation policies. This includes,

but is not limited to, BNSF‟s failure to keep a write-protected disk of the event recorder data and

maintain current signal system blueprints. It is hard to imagine a defendant railroad legitimately

contending that evidence including work records, recorder history logs, and communications

records are irrelevant and should be destroyed or that witnesses with knowledge regarding work

performed near or on the track involved in the accident are irrelevant. Thus, this Court finds

that BNSF failed, altogether, in its attempts to adequately preserve or produce numerous pieces

of critical evidence in this case.

2. Misrepresentations and False Testimony

This Court has lost count of the total number of misrepresentations BNSF made to

counsel, the parties, and this Court throughout the proceedings. This Court‟s findings regarding

BNSF‟s misrepresentations and false testimony are discussed below.

a. BNSF represented to both this Court and Plaintiffs, during the February 13, 2006

hearing on Plaintiffs‟ motion to compel, that it was not BNSF‟s policy to create a

write-protected disk of HXP and HCA data. It was later revealed that it was,

indeed, BNSF‟s policy to maintain that recorder data on write-protected disks.

b. PATS/PARS records are maintenance records containing information regarding

the time and location of work performed by maintenance crews on the railway.

BNSF, through several different employees, repeatedly represented to both this

Court and Plaintiffs that PATS/PARS records were not relevant. BNSF counsel

characterized Plaintiffs‟ request for PATS/PARS records as “ridiculous.” On

October 8, 2007, during Plaintiffs‟ fifth motion to compel discovery, when it

appeared that the undersigned was going to allow some discovery of the

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PATS/PARS records, BNSF quickly shifted gears and offered that access to the

PATS/PARS database should be limited to Track 1 because that was the “only”

track arguably involved in this case. Not only was this misleading, but it was

false. After further discovery, on the eve of trial, Plaintiffs confirmed that

PATS/PARS records referring to Tracks 0, 2, and 9 also included track work and

inspections performed within the Ferry Street Crossing approach circuit; making

these records very relevant. Despite numerous attempts by Plaintiffs, it was not

until December 19, 2007, that BNSF finally revealed that work had been

performed on the tracks within the Ferry Street Crossing‟s approach circuit.

BNSF did not disclose and produce these PATS/PARS records until less than two

months before trial and only after being ordered by this Court to make those

records available. Despite Plaintiffs‟ requests for all PATS/PARS and work order

records, BNSF did not produce a previously undisclosed work order dated

September 25, 2003 (the day before the accident) until less than a month before

trial was scheduled to begin. With that work order in hand, Plaintiffs attempted to

depose BNSF employee Jay Arvidson. Because of BNSF‟s abuses leading to the

late discovery of this evidence, Mr. Arvidson‟s deposition took place less than

three weeks before trial. During his deposition, Mr. Arvidson revealed that he

had been working on the track the day before the accident and at that an eight-foot

section of rail had been replaced within the Ferry Street Crossing circuitry

approach. Once again, it appears that BNSF either misled or misrepresented

what was contained in the PATS/PARs records. BNSF‟s insistence on limiting

discovery to Track 1 appears to have been a diversion or an artificial filter that

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only further delayed and interfered with the discovery of relevant evidence,

namely those records which included inspection and track work that was

performed on the subject track during the day before and the day of the accident

c. In his December 19, 2007 deposition, BNSF employee Steven Mendell testified

that Tracks 1 and 2 were the only columns listed in the PATS/PARS database.

During his March 31, 2008 deposition, less than two months before trial, Mr.

Mendell openly admitted that BNSF also keeps PATS/PARS information in data

files or columns for Tracks 0 and 9. Plaintiffs confirmed that Track 9 files

included records showing that work was done near the Ferry Street Crossing on

the day before the accident.

d. BNSF employee Lynn Ross was the claims representative dispatched to the

accident scene and the first to interview the engineer and conductor involved in

the accident. Ms. Ross represented that BNSF had worked diligently and

cooperated with law enforcement in the investigation of the September 26, 2003

Ferry Street Crossing accident. Ms. Ross testified that BNSF provided the

Minnesota State Trooper Accident Investigation team with all relevant evidence

when requested. Discovery revealed quite a different story. BNSF stalled and

failed to provide law enforcement with access to the following: (1) the HXP and

HCA downloads; (2) the event recorder data from the locomotive; (3) access to

the locomotive; and (4) the measurements from the locomotive and the

locomotive‟s snowplow while the state accident reconstruction team was

conducting its investigation. State Trooper Scott Trautner, the lead investigator

on the State Trooper Accident Reconstruction team testified about Ms. Ross‟

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refusal to turn over BNSF‟s recorder data. He described one particularly tension-

filled encounter with Ms. Ross, during which he accused her of stonewalling the

investigation by refusing to provide the above-referenced information. Sergeant

Trautner believed that BNSF‟s conduct related to the handling of evidence from

the accident scene investigation, including the event recorder data, warranted a

criminal investigation. In the end, the state troopers concluded their investigation

and submitted their final report without ever having had the benefit of viewing

BNSF‟s recorder data, measuring the BNSF locomotive and snow plow involved

in the accident and inspecting the subject locomotive.

e. Mr. Hildebrant testified, under oath, during his May 9, 2007 deposition that he

only downloaded the HXP and HCA data on two separate occasions: September

26, 2003 and July 17, 2005. Mr. Hildebrant specifically denied that he returned to

the Ferry Street Crossing and/or downloaded the HXP and HCA data on

September 29, 2003. Mr. Hildebrant also attested to these facts in his May 17,

2007 affidavit. It was only through Plaintiffs‟ multiple motions to compel and

requests for this Court‟s intervention that they were able to expose this critical

and blatant misrepresentation by Mr. Hildebrant. It also warrants mention that

BNSF selected Craig Hildebrant to sit at counsel table with BNSF‟s trial counsel

as BNSF‟s corporate designee during the entire six-week trial.

f. Through tenacious discovery efforts, that included multiple motion hearings and

sheer perseverance, Plaintiffs exposed two significant misrepresentations on the

part of BNSF regarding the September 29, 2003 HXP and HCA data download.

First, immediately after Mr. Hildebrant accidentally opened the file containing the

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previously undisclosed September 29, 2003 HXP and HCA data download during

a court-ordered inspection, Plaintiffs‟ counsel and expert consultant were escorted

out of the examination room. After twenty minutes, Plaintiffs representatives

were allowed to return and were advised by BNSF that the September 29, 2003

file was not related in any way to the September 26, 2003 accident. Second, not

long thereafter, Mr. Hildebrant submitted an affidavit stating that the September

29, 2003 file was not related to the September 26, 2003 accident. In a subsequent

deposition, however, Mr. Hildebrant admitted that the September 29, 2003 file

was, indeed, related to the September 26, 2003 accident and that he was aware of

that fact at the time of his first deposition and at the time he misclicked on the file

during the November 10, 2006 court-ordered inspection at BNSF‟s Northtown

Facility. Mr. Hildebrant could not explain why he had denied this, under oath, on

at least two previous occasions. Mr. Hildebrant also admitted that he conducted

additional recorder data downloads on October 3, 2003 and October 22, 2003.

Mr. Hildebrant was unable to say whether there were any additional downloads

on his H drive.

3. Witness Abuses and Obstructing Law Enforcement

a. BNSF employee Randy During testified at trial that he felt that he was being

pressured to give testimony favorable to BNSF. Mr. During, who had worked for

the railroad most of his life and took great pride in his job, was clearly

uncomfortable during his testimony.

b. Due to the long lapse in time, numerous witnesses were unable to recall pertinent

information concerning events surrounding the September 26, 2003 accident. If

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BNSF had responsibly performed its discovery and evidence preservation duties,

these witnesses could have been found much earlier in the litigation process and

memories and recall most likely would not have been so severely compromised.

c. Shortly after the September 29, 2003 “misclick” incident, Plaintiffs were

scheduled to depose Aaron Ratledge, BNSF‟s corporate designee for locomotive

event recorder data. BNSF specifically instructed Mr. Ratledge not to bring his

laptop computer to his deposition. Mr. Ratledge testified that he had used his

computer to view the data in preparation for his deposition and could not answer

many of Plaintiffs‟ questions without his computer.

d. On several occasions, the Minnesota State Patrol requested that BNSF produce

downloaded data from the HXP and HCA event recorders. BNSF never did.

BNSF also refused to provide the Minnesota State Patrol with the locomotive

event recorder data. BNSF never made the locomotive which was involved in the

accident available for inspection and measurement despite the Minnesota State

Patrol‟s request for such access. Finally, BNSF also failed to provide the

Minnesota State Patrol with the measurements for the locomotive and the

locomotive‟s snowplow.

4. Conclusion

This Court is satisfied that the record, which has developed over a period of six years,

overwhelmingly supports a finding that BNSF did, in fact, engage in conduct and decision

making that compromised critical evidence, interfered with witnesses, impeded the investigation

by law enforcement, and misled and/or misrepresented a number of facts to Plaintiffs and this

Court. BNSF has attempted to explain away this misconduct in piecemeal fashion by attributing

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much to inadvertence, coincidence, honest mistake, and/or legitimate business practices. This

Court is simply not persuaded. Taken alone, some of BNSF‟s abuses might not be sanctionable,

and indeed might have been understandable given the complexities of this case. But the breadth

of BNSF‟s misconduct in this case is staggering; beginning within minutes of the accident, up to

and through the trial. Plaintiffs have established that BNSF‟s misconduct did indeed the strain

limits of the civil justice system and this Court is on firm ground to impose significant sanctions.

II. SANCTIONS LAW

The power of courts to impose sanctions in Minnesota is derived from two basic sources:

(1) rules and statutes; and (2) the inherent power of the court. Often, these two sources are

indistinct; meaning that in many instances in which courts rely on rules and statutes they also

invoke the inherent power of the court as a legitimate basis for sanctioning misconduct.

Obviously, there are cases where courts rely strictly on rules or statutes to sanction misconduct.

Contrary to BNSF‟s assertions, however, there are also cases in which the inherent power of the

court has been invoked, standing alone, to sanction parties. See Patton v. Newmar, Corp., 538

N.W.2d 116, 118−19 (Minn. 1995) (“Patton II”). Determining whether to impose sanctions and

if, indeed, there is a sufficient factual basis to support such a decision, are questions of fact for

the Court and, as such, are subject to an abuse of discretion standard. Dillon v. Nissan Motor,

Co., Ltd., 986 F.2d 263, 267 (8th Cir. 1993). This Court will briefly address Minnesota‟s rules

and statutes relating to sanctions and follow with a comprehensive analysis of the court‟s

inherent power to levy sanctions.

1. Rules and Statutes

There is a panoply of sanctions-related rules and statutes that apply to litigants in

Minnesota. Specifically, Minn. Stat. § 549.211 and Minnesota Rules of Civil Procedure 11.03,

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26.07, and 37.01 grant courts the authority to sanction parties and/or counsel. These provisions,

however, address distinct forms of misconduct, leaving the opportunity for some types of

misconduct to go unsanctioned. Rule 11.03, for example, applies only to signed documents and

pleadings. Rule 37.01 applies only to unresponsive or incomplete discovery responses.

Further, these rules typically require a twenty-one (21) day “safe harbor” period. The

nature of the misconduct in this case, which included, inter alia, destruction, mishandling, and

tampering with critical evidence, misrepresentations to this Court and opposing counsel, and

sundry other problems with witnesses, does not fit neatly into the existing sanctions framework

provided by the rules of procedure and relevant statutes. In many instances, Plaintiffs did not

become aware of BNSF‟s discovery abuses in time for the rules and statutes to effectively apply

to them and afford any meaningful remedy. In fact, abuses continued to be discovered in the

days leading up to and through trial. Obviously, an application of these rules to conduct that was

still being unearthed at the time of trial would have no effect in changing BNSF‟s conduct or

curing any prejudice to Plaintiffs. Also, as noted above, the rules and statutes do not readily

address all forms of misconduct. Accordingly, this Court turns to its inherent power to

determine the appropriateness of sanctions for BNSF‟s misconduct.

2. Inherent Power of the Court

The thrust of Plaintiffs‟ sanction request relies on the inherent power of the court to

sanction misconduct; claiming that the courts‟ inherent power allows for open-ended sanctions.

BNSF contends that the inherent power of the court is non-existent when it is unaccompanied by

the power of a rule or statute (i.e., Minn. §Stat. 549.11 or Minn. R. Civ. P. 11.03). This Court

has given serious consideration to the parties‟ divergent positions regarding the Court‟s inherent

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power to impose sanctions for misconduct and is more persuaded by the position advanced by

Plaintiffs.

The inherent power of Minnesota‟s courts is considerable and exists to provide courts

with the means to ensure the efficient, just, and fair disposition of matters heard in court. The

Minnesota Supreme Court has stated that the courts‟ inherent power exists to fulfill “the practical

necessity of ensuring the free and full exercise of the court‟s vital function-the disposition of

individual cases to deliver remedies for wrongs and justice freely and without purchase;

completely and without denial; promptly and without delay, conformable to the laws.” Patton II,

538 N.W.2d at 118−19 (quoting Clerk of Court’s Compensation for Lyon County v. Lyon County

Commissioners, 308 Minn. 172, 177, 241 N.W.2d 781, 784 (1976); County of Ramsey v. Stevens,

283 N.W.2d 918, 925 (Minn. 1979)). Thus, it is clear that Minnesota‟s courts have inherent

power to control the vital functions of justice and integrity for those matters coming before them

with the use of sanctions when warranted; a call that is up to the court to make. Sanctions are

not appropriate, however, merely because a party does not prevail on the merits. Radloff v. First

Am. Nat’l Bank of St. Cloud, N.A., 470 N.W.2d 154 (Minn. Ct. App. 1991). There being no

question that this Court has the inherent power to sanction misconduct, the undersigned will next

consider the standards for determining appropriate sanctions.

In Patton v. Newmar, both the Minnesota Court of Appeals and Supreme Court

announced that trial courts could invoke their inherent power to impose sanctions for

misconduct. 538 N.W.2d at 119; Patton v. Newmar, Corp., 520 N.W.2d 4, 7 (Minn. Ct. App.

1994) (“Patton I”) rev’d on other grounds, 538 N.W.2d 116 (1995). The Patton II Court held

that the courts‟ inherent power gave trial courts discretion to not only sanction the intentional

19

spoliation of evidence, but negligent spoliation as well. Id. This inherent power may be invoked

within the trial court‟s discretion. Id.

Patton and its progeny rely heavily on cases discussing the inherent power of federal

courts to impose sanctions. Minnesota courts often rely on federal standards when announcing

standards under its rules of civil procedure. See Id. (announcing reliance on the standards for

determining sanctions that were laid out in Dillon, 986 F.2d at 263 and Marrocco v. General

Motors Corp., 966 F.2d 220, 223 (7th Cir. 1992)). See also Gibson v. Coldwell Banker Burnett,

659 N.W.2d 782 (Minn. Ct. App. 2003) (holding that federal "[c]ases interpreting Fed.R.Civ.P.

11, though not binding on this court, provide valuable guidelines for understanding the purpose

and application of Minn. R. Civ. P. 11."). As such, crafting the appropriate sanctions for BNSF‟s

misconduct necessarily requires a review of those federal cases that are intertwined with

Minnesota‟s sanctions laws.

In Patton I, the Minnesota Court of Appeals developed the standard for determining

sanctions under the courts‟ inherent power. In doing so, the Patton I Court relied on principles

well-established in federal cases in which the courts invoked their inherent powers. See Dillon,

986 F.2d at 267−68; Capellupo v. FMC Corp., 126 F.R.D. 545, 550 (D. Minn. 1989). While the

Patton I Court addressed the inherent power of the court to sanction in spoliation cases, it also

discussed and elucidated a standard for imposing sanctions based on the courts‟ inherent power

for all misconduct. Patton I, 520 N.W.2d at 8. Specifically, the Patton I Court promulgated a

six-factor test for determining the appropriateness and severity of possible sanctions. These

factors include:

(1) the degree of fault or willfulness of the party who altered or destroyed the

evidence;

(2) the degree of prejudice suffered by the opposing party;

20

(3) whether there is a lesser sanction that will avoid substantial unfairness to the

opposing party and, where the offending party is seriously at fault, will serve to

deter such conduct by others in the future;

(4) whether any evidence has been irreparably lost;

(5) the policy favoring adjudication on the merits; and

(6) whether sanctions unfairly operate to penalize a party for the misconduct of his or

her attorney.

Id. While the Patton II Court limited its discussion to sanctions for spoliation, it also relied on

the same federal cases cited in Patton I and agreed that Minnesota courts do, indeed, possess the

inherent power to sanction. Patton II, 538 N.W.2d at 118−19. Moreover, the Patton II Court

expressly stated that it was accepting and applying the federal standards upon which Patton I

relied. Id. at 119. As such, the Patton I six-factor framework is instructive when considering

whether to impose sanctions not only for spoliation, but for broader abuses as well.9 This Court

has applied the Patton I six-factor test to BNSF‟s misconduct that is the subject of this motion

and crafted her sanctions, accordingly.

a. Bad Faith10

Bad faith, contrary to BNSF‟s contentions, is not a dispositive consideration for imposing

sanctions in Minnesota. Patton II, 538 N.W.2d at 118−19 (holding that the negligent destruction

of evidence is sanctionable under the courts‟ inherent powers). In addition to Patton II’s holding

that a finding of bad faith is not required to sanction for spoliation, Dillon (from which the

9 It should be noted that while Patton I was overturned and remanded to the district court, it was remanded on a

separate issue and the six-factor test was left untouched. In fact, the Patton II Court overturned the portion of the

Patton I decision that found that the district court‟s sanctions were too severe. The Patton II Court‟s decision to

overturn that portion of the Patton I decision actually reaffirms the notion that district courts have a particularly

advantageous viewpoint for determining the appropriateness and severity of sanctions when invoking their inherent

power.

10

Bad faith, n. 1. Dishonesty of belief or purpose. “A complete catalogue of types of bad faith is impossible, but the

following types are among those which have been recognized in judicial decisions: evasion of the spirit of the

bargain, lack of diligence and slacking off, willful rendering of imperfect performance, abuse of a power to specify

terms, and interference with or failure to cooperate in the other party's performance.” Restatement (Second) of

Contracts § 205 cmt. d (1979). Black‟s Law Dictionary (8th Ed. 2006).

21

Patton II Court adopted its sanctioning standards) and Patton I both used a sanctioning

framework in which bad faith is considered, among other factors, when deciding the severity of a

particular sanction; not as a dispositive consideration of whether to impose a sanction in the first

place. Bad faith is only one factor to consider when deciding the merits of a sanction claim in

Minnesota.11

While bad faith is not determinative on the issue of sanctions, it is, nonetheless, relevant

when determining the type and severity of a particular sanction. Although BNSF‟s history of

misconduct in this case borders on chronic and systemic, this Court is not prepared to ascribe a

wholesale malevolent intent or bad faith on the part of BNSF. Many of Plaintiffs‟ allegations

amount to nothing more than legitimate discovery disputes. Likewise, BNSF engaged in some

conduct that, while sanctionable, does not warrant the severity of sanctions typically imposed

after a finding of bad faith. That being said, this Court is prepared to find that that the majority

of BNSF‟s misconduct was perpetrated in bad faith.

BNSF engaged in a pattern of misconduct that included: (1) the loss, destruction, and/or

fabrication of electronic and physical records; (2) the failure to follow its own policies for

accident investigation and coordination with law enforcement; (3) the obstruction of and

interference with Plaintiffs‟ investigation; (4) the interference with Plaintiffs‟ access to witnesses

and the accident site; (5) the destruction or production of erroneous circuitry drawings; (6)

knowingly advancing lies, misleading facts, and/or misrepresentations by BNSF

employees/agents in depositions, sworn affidavits, and/or trial testimony. This Court finds that

this misconduct was perpetrated in bad faith.

11

The necessity of a bad-faith finding before awarding attorneys‟ fees is discussed in the analysis section of this

memorandum.

22

BNSF has attempted to explain away each instance of misconduct as either an innocent

mistake or mere coincidence. This Court finds nothing serendipitous or coincidental about the

majority of BNSF‟s evidentiary abuses, many of which took place after Plaintiffs‟ February 3,

2004 evidence preservation letter was sent to BNSF. BNSF has admitted that it “bungled12

evidence,” engaged in “sloppy evidentiary maintenance and preservation,” and that “there has

been [a] clear and convincing showing of negligence.” (April 21, 2008 Tr., BNSF Attorney

Thornton at 25, 40).

BNSF has also attempted to consign much of its misconduct to one BNSF employee,

Craig Hildebrant, whom counsel described as a “rogue” employee. This Court finds this last-

ditch characterization on the part of BNSF‟s new counsel to be utterly preposterous. At no time

in these proceedings did BNSF ever suggest that Mr. Hildebrant had acted outside of the scope

of his employment at BNSF. It is undisputed that Mr. Hildebrant was acting within the scope of

his employment at all times material to this litigation. While Mr. Hildebrant‟s actions were

egregious, they are also attributable to BNSF. Mr. Hildebrant, a long-time BNSF employee until

his retirement in 2007, was involved at all stages of litigation and all of his activities were

advanced on behalf of BNSF.

Up until the April, 21, 2009 sanctions hearing, during which BNSF‟s new counsel first

raised the suggestion that Mr. Hildebrant was a rogue employee whose conduct had not been

authorized by BNSF, BNSF had always characterized Mr. Hildebrant as a loyal and trustworthy

employee. Of all its employees, from the front line to the upper echelons of management, BNSF

selected Mr. Hildebrant to sit at counsel table as its corporate designee during the entire six-week

trial; hardly the type of responsibility an employer would assign to a rogue employee. In their

12

Presumably, BNSF substituted the word bungle as charming alternative to the phrase negligent destruction and/or

misplacement of critical evidence.

23

memorandum opposing sanctions, BNSF champions the steps Mr. Hildebrant took to

authenticate and carefully download the recorder data. It was not until the April 21, 2009

sanctions hearing that BNSF changed its view of Mr. Hildrebrandt and attempted to parse his

misconduct from that of BNSF. This novel and untimely theory which appears to be born out of

convenience for BNSF, if anything, is not persuasive and borders on the absurd. Because Mr.

Hildrebrandt was a trusted BNSF employee and all of his activities were within the scope of his

employment, any sanctionable conduct on his part is attributable to BNSF. Thus, this Court

finds that BNSF‟s misconduct was perpetrated in bad faith and the severity of this Court‟s

sanctions shall reflect that finding.

As previously mentioned, not all of BNSF‟s misconduct was the product of bad faith.

BNSF‟s misconduct, even if it were the product of negligence, coincidence, or mistake still

resulted in Plaintiffs having to file multiple motions to compel discovery and incur exorbitant

attendant expenses. Plaintiffs were also faced with the daunting challenge of conducting

discovery on the eve and during trial. As noted above, negligent misconduct that results in a

detriment to the opposing party is sanctionable. See Patton II, 538 N.W.2d at 119; Foust v.

McFarland, 698 N.W.2d 24, 31 (Minn. Ct. App. 2005).

b. Prejudice

BNSF is correct in it assertion that prejudice is a key factor in any sanctions

determination. This Court is unwilling, however, to accept BNSF‟s further conclusions that: (1)

the sole consideration for this Court, when determining the appropriateness and severity of a

particular sanction, is the prejudice, if any, experienced by Plaintiffs; and (2) prejudice should be

narrowly defined; limited to the evidentiary advantage of the offending party.

1. Role of Prejudice

24

BNSF contends that prejudice is the only principle to consider when determining if and

how an offending party should be sanctioned. Prejudice, however, while vital, is not the sole

consideration for courts invoking their inherent powers. As previously metioned, there are six

factors to consider when determining the appropriateness of sanctions; one of them being

prejudice to the non-offending party.13

Beyond these six factors, coursing through Minnesota‟s

sanctions laws, undoubtedly is the over-arching tenet that courts have the free and full exercise to

protect the integrity and civility of the law and “to deliver for wrongs and justice.” Patton II,

520 N.W.2d 118−19 (citing Clerk of Court’s Compensation for Lyon County, 308 Minn. at 177).

The United States Supreme Court has incorporated this philosophy in its sanctions cases. In

Chambers v. Nasco, upon which Minnesota courts have relied both directly14

and indirectly, the

U.S. Supreme Court offers this instructive analysis of the courts‟ inherent power:

It has long been understood that „[c]ertain implied powers must necessarily result to our

Courts of justice from the nature of their institution,‟ powers „which cannot be dispensed

with in a Court, because they are necessary to the exercise of all others.‟ For this reason,

„Courts of justice are universally acknowledged to be vested, by their very creation, with

power to impose silence, respect, and decorum, in their presence, and submission to their

lawful mandates.‟ These powers are „governed not by rule or statute but by the control

necessarily vested in courts to manage their own affairs so as to achieve the orderly and

expeditious disposition of cases.‟ (citations omitted)

501 U.S. 32 at 43. While Chambers concerned federal courts, Minnesota courts often rely upon

and mirror federal standards. See Gibson v. Coldwell Banker Burnett, 659 N.W.2d 782 (Minn.

Ct. App. 2003). In some cases, Minnesota courts actually have more power to sanction based

upon misconduct, as is the case in negligent spoliation cases. See Patton II, 538 N.W.2d at 119

(Minnesota recognizes the power to sanction for negligent spoliation, which is not allowable in

13

The other five factors are discussed separately.

14

Mahoney & Emerson v. Private Bank of Minnesota, 2009 WL 1852789 (Minn. Ct. App. 2009) (stating that “[t]he

United States Supreme Court has addressed this issue, and has held that such awards are available where a party acts

in "bad faith, vexatiously, wantonly, or for oppressive reasons.” Chambers v. NASCO, Inc., 501 U.S. 32, 45-46

(1991) . . . We conclude that the federal rule is appropriately followed in this proceeding”).

25

federal courts). Other cases have discussed intention or bad faith as a “factor” in determining

sanctions. This is further support for the contention that factors other than prejudice should be

considered. See Foust, 698 N.W.2d at 33. Thus, Minnesota courts not only have the power to

sanction when the non-offending party has been prejudiced, but also may consider other factors,

including the driving purpose behind sanctions law, that of preserving the vital functions and

integrity of the court systems. Accordingly, while this Court recognizes that considering

prejudice is vital to any sanctions determination, this Court also must consider BNSF‟s

misconduct within the context of the five other factors set forth in Patton I, as well as, the need

to preserve the justice and integrity of the court system.

2. Definition of Prejudice and Application to the Present Case

BNSF has based much of its opposition to Plaintiffs‟ sanctions motion on an erroneous

definition of prejudice. BNSF contends that prejudice should be narrowly defined as the

evidentiary advantage that the offending party gains through its misconduct. Incredulously,

BNSF contends that because Plaintiffs received a favorable verdict, all of BNSF‟s misconduct

should somehow be immune from possible sanctions. Again, this Court rejects BNSF‟s limited

and self-serving definition of prejudice and its corresponding conclusion.

BNSF relies primarily on Foust v. McFarland15

to support its contention that an

evidentiary advantage is the sole consideration when determining whether to impose sanctions.

15

BNSF also relies upon Foss v. Kincade to support its definition of prejudice as an evidentiary advantage. 766

N.W.2d 317 (Minn. 2009). Foss was a spoliation case in which a bookcase toppled and injured an infant who had

been climbing on its shelves. The bookcase was subsequently destroyed. The bookcase‟s condition, however, was

only relevant to the issue of notice and the defendants admitted that they knew that the bookcase was capable of

tipping over. In other words, the evidence destroyed in Foss was completely irrelevant to the case because

defendants had already admitted to the only point to which the evidence could have been relevant. Simply put, its

destruction did not harm or affect the opposing in any way; not an evidentiary advantage, not in additional time,

costs, or resources, nor in any other conceivable harm. Thus, in terms of its sanction holding, Foss stands for the

unremarkable position that a district court does not abuse its discretion for finding that a party is not prejudiced

when the destroyed evidence is no longer relevant because the offending party has fully admitted its worth,

completely, in the non-offending party‟s favor.

26

In Foust, the appellate court observed that “[s]poliation sanctions are typically imposed where

one party gains an evidentiary advantage over the opposing party by failing to preserve

evidence.” 698 N.W.2d at 30. Foust is readily distinguishable from and has limited application

in the instant case for two reasons.

First, Foust involved the spoliation of evidence related to the issue of damages. Foust’s

ruling is limited to situations involving spoliation. The present case, however, involves not only

spoliation but other abuses as well, including misrepresentations to Plaintiffs and this Court,

discovery abuses, witness abuses, and a persistent pattern of obstruction to the civil-justice

system. Because of the nature of this case and Foust’s limitation, this Court must necessarily

look beyond any evidentiary advantage that BNSF might have enjoyed.

Second, BNSF‟s contention that evidentiary advantage is the sole consideration in

determining whether to impose sanctions, even in cases limited to spoliation, is flawed. Again,

BNSF relies on the phrase “[s]poliation sanctions are typically imposed where one party gains an

evidentiary advantage over the opposing party by failing to preserve evidence. Id. (emphasis

added). This Court has already found that BNSF engaged in a persistent pattern of abuses

beyond spoliation. The sheer magnitude of BNSF‟s discovery and evidentiary abuses renders

this case anything but “typical.”

It defies logic and any notion of common sense to presuppose that the only form of

prejudice encountered by Plaintiffs was an evidentiary advantage to BNSF. BNSF‟s misconduct

placed Plaintiffs at a tremendous disadvantage, forcing them to expend vast amounts of time and

resources in an attempt to adequately prosecute their case. Plaintiffs have submitted detailed

affidavits to this Court outlining the amount of time and expense that can be directly attributed to

BNSF‟s misconduct. These amounts include thousands of hours of additional work and over

27

one-hundred thousand dollars of additional expense. This is prejudice. These additional hours

and costs created an almost insurmountable fiscal and resource roadblock which Plaintiffs were

forced to overcome. Without the benefit of the many skilled attorneys and expert consultants

retained by Plaintiffs, the likelihood of their success on the merits was in jeopardy. Additionally,

instead of focusing on relevant case theories and evidence, Plaintiffs were forced to focus on

unearthing BNSF‟s abuses and hire costly experts to speculate on what the missing or destroyed

evidence might have established; all through the fog created by BNSF‟s abuses. Ultimately, due

to BNSF‟s lack of candor to both Plaintiffs and this Court, these proceedings were delayed for

over one year. To say that Plaintiffs were not prejudiced because BNSF did not gain an

evidentiary advantage is not only illogical and contrary to Minnesota law, but laughable.

BNSF‟s legal grounds for limiting the definition of prejudice to that of an evidentiary

advantage is also misguided. Beyond using the word “typically” to preface its motivation for

upholding a district court‟s imposition of sanctions, the Foust Court also stated that “[p]rejudice

is determined by considering the nature of the item lost in the context of the claims asserted and

the potential for correcting the prejudice.” Id. at 30 (citing Patton II, 538 N.W.2d at 119). Thus,

under Foust, in spoliation cases, this Court is required look contextually at the evidence

destroyed, determine how it prejudiced Plaintiffs, and determine how to correct that prejudice.

Looking past evidentiary advantage is not foreign to courts invoking their inherent

power. For example, in Capellupo v. FMC Corp., upon which the Patton I Court relied when

developing its sanction standard, the court discussed the economic and time burdens created by

the offending party as an appropriate basis for imposing sanctions. 126 F.R.D. at 550. The

Capellupo Court found that “[p]arties liable for document destruction have been assessed their

opponents' fees and costs for investigating, researching, preparing, and arguing evidentiary

28

motions and motions for sanctions.” In Wachtel v. Health Net, Inc., a jurisdiction that has

adopted a six-factor test similar to the one used in Patton I, the court found prejudice occurred

when the offending party caused needless delay in the proceedings and forced its opponent to

prepare for motions and trial with inadequate information. 239 F.R.D. 81, 101−02 (D. N.J.

2006) (citing Poulis v. State Farm Fire and Casualty Co., 747 F.2d 863 (3d Cir. 1984). While

these are federal cases, they are, nonetheless, instructive here because they involve the same

types of misconduct as in the instant case and incorporate the same legal principles relied upon

by Minnesota courts. Further, the theory of imposing a sanction of attorneys‟ fees, which BNSF

admits is the most common and appropriate type of sanction, does not turn on what evidentiary

advantage the offending party may have enjoyed. Instead, it centers on the time, expense, and

delay that the non-offending encountered due to the misconduct. In short, prejudice is not

confined to an evidentiary advantage. Rather, the courts must look at all of the misconduct and

the resulting harm to the non-offending party.

BNSF also contends that Plaintiffs could not have been prejudiced because of the large

verdict returned in their favor. Again, this proposition is based on BNSF‟s contention that an

evidentiary advantage is the only conceivable form of prejudice. This Court has already rejected

BNSF‟s narrow definition of prejudice. Other courts invoking the inherent power of the court to

sanction have done so when the non-offending party prevailed on the merits. See Dillon, 986

F.2d at 266 (jury returned a favorable verdict to non-offending party); Buscher v. Montag Dev.,

Inc., 770 N.W.2d 199, 205 (Minn. Ct. App. 2009) (sanctions imposed after non-offending

prevailed on its summary judgment motion). Essentially, BNSF‟s contention is that parties

engaging in misconduct, no matter the severity or intention, are immune from sanctions if they

lose at trial. BNSF‟s contention hinges on this Court accepting two principles: (1) an extremely

29

narrow definition of prejudice (evidentiary advantage); and (2) using prejudice as the sole factor

for imposing sanctions. This Court has already rejected both of these principles and BNSF‟s

corresponding position and no further discussion on this point is necessary.

BNSF also contends that the only party that was prejudiced by the evidence it destroyed,

misplaced, or mishandled was BNSF itself. BNSF presses this argument further by claiming that

its evidentiary practices opened the door for Plaintiffs‟ triumph at trial and that had all of the

evidence been properly preserved not only would BNSF have won, but there might not have

been a lawsuit at all. Boiled down, BNSF is asking this Court to make a factual finding that the

lost or destroyed evidence supported BNSF and that, because Plaintiffs prevailed at trial, BNSF‟s

other misconduct should not now be sanctioned. To do so would overlook BNSF‟s extensive

history of misconduct that includes the myriad discovery and evidentiary abuses that have

plagued this case, almost from its inception. It makes no sense to accept the word of a party that

has destroyed and lost evidence when they claim that the evidence happened to only favor the

offending party. BNSF‟s misconduct involved much more than a possible evidentiary advantage

and as such is sanctionable. Thus, this Court finds that, absent BNSF‟s misconduct in this case,

Plaintiffs‟ counsel would have been able to prepare and present their case under more civil, sane,

and fiscally appropriate conditions. BNSF‟s actions, however, erected a formidable obstacle to

that pursuit and prejudiced Plaintiffs in the form of staggering costs and time demands.

c. Least Restrictive Sanction and Deterrence

The parties agree that courts must impose the least restrictive sanction possible under the

circumstances. This limitation on the courts‟ sanctioning power is well-established in both

Minnesota state and federal cases. See Patton I, 520 N.W.2d at 8. The parties, however, differ

in their interpretation of what it means to be the least restrictive. BNSF contends that this Court

30

must limit any sanction to what is necessary to cure the prejudice to Plaintiffs. Again, BNSF

would define prejudice as the evidentiary advantage, if any, that BNSF enjoyed because of its

misconduct. Plaintiffs, on the other hand, contend that this Court should severely punish BNSF

in order to deter future misconduct. Plaintiffs argue that, in order to accomplish this end, this

Court must sanction BNSF with monetary sanctions ranging from $22,000,000.00 to

$45,000,000.00; a request which this Court perceives as an attempt by Plaintiffs to resurrect their

request for punitive damages which this Court has already ruled on and denied.

Under Patton I’s six-factor test, the courts‟ inherent power to impose sanctions is

tempered by the duty to impose the least restrictive sanction that “will serve to deter such

conduct by others in the future.” Patton I, 520 N.W.2d at 8. Capellupo, upon which Minnesota

courts have relied, also discusses deterrence as a factor that courts should consider when

invoking their inherent power. 126 F.R.D. at 532−33. Under Minnesota‟s sanctions laws and

rules, such as Minn. Stat. § 549.21 and Rule 11, the purpose of sanctions is “to deter baseless

litigation, frivolous claims, harassment and other „unnecessary delay or needless increase in the

cost of litigation.‟” See Spicer, Watson & Carp v. Minnesota Lawyers Mut. Ins. Co., 502

N.W.2d 400, 405 (Minn. Ct. App. 1993) (citing Minn.Stat. § 549.21, subd. 2); Uselman v.

Uselman, 464 N.W.2d.2d 130, 142 (Minn. 1990). Thus, under Minnesota law, deterrence of

misconduct is a factor to be considered by the court when imposing sanctions.

Deterrence and prejudice should be considered when determining the least restrictive

sanction that may be imposed, but factors such as punishment or a punitive effect have no place

in a sanctions determination. While Capellupo applied an attorneys‟ fees “multiplier” to arrive

at an appropriate sanction, the notion of sanctioning misconduct for intentional spoliation on a

punitive basis was roundly rejected in Minnesota in Foust v. McFarland. 698 N.W.2d at 30−31.

31

Admittedly, the Foust Court made its determination based only on the possible difference

between intentional and unintentional spoliation; not the broad range of abuses found in this

case. Id. Additionally, the spoliation alleged in Foust affected only the element of possible

damages; not liability as in this case. Id. at 30. This Court will follow the Patton I six-factor test

when addressing BNSF‟s misconduct.

This Court has already denied Plaintiffs‟ request for punitive damages and views

Plaintiffs‟ requests for a sanctions award ranging from $22,000,000.00 to $45,000,000.00 to be

nothing more than an attempt to resurrect that previously denied request. Not only is this Court

reluctant to consider this request, but under Minnesota law it is, in fact, barred from doing so.

Accordingly, Plaintiffs‟ request for a sanctions award based on doubling the verdict or the

application of an attorneys‟ fees multiplier is DENIED.

d. Irreparable Loss

There is no doubt that evidence in this case has been irreparably lost. This factor is of

less importance for this Court‟s consideration because the case has already been decided on the

merits and the imposition of sanctions pertaining to the importance of the lost evidence, such as

default judgment or discovery sanctions, has already been granted or denied. The lost evidence

does have significance, however, when considering the highly critical nature of the lost,

destroyed, and/or fabricated evidence.

Both parties agree that, had BNSF properly handled and disclosed evidence, not only

would this trial have been much shorter and less costly, but that it is entirely conceivable that this

trial would not have gone forward. BNSF has argued that it was the only party prejudiced by its

evidentiary abuses. This Court, however, is not persuaded by BNSF‟s convenient argument that

the evidence that it destroyed or mishandled would have vindicated BNSF. Common sense

32

dictates that a party should not be allowed to destroy and mishandle evidence, whether

intentionally or unintentionally, and then argue to the court that it should be immune from

sanctions because the abuse prejudiced only the offending party. This is particularly true in

cases, such as this case, where the evidence was of critical import, the potential benefit of that

evidence to either party was indiscernible, and the evidence is now irreparably lost.

e. Merits

This factor is not applicable to this case because it has been decided on its merits.

f. Unfair Penalty

The sixth factor to consider under Patton I is “whether sanctions unfairly operate to

penalize a party for the misconduct of his or her attorney.” BNSF, after retaining talented and

well-seasoned counsel for the trial proceedings, decided to employ the services of a different

firm for the post-trial proceedings. New counsel for BNSF is exceptionally qualified and has

ably handled most of the post-trial work in this case. During the April 21, 2009 sanctions

hearing, BNSF‟s new counsel opined that BNSF‟s trial counsel was “out-lawyered and that the

case was “poorly tried.” (April 21, 2009 Tr., BNSF Attorney Thornton at 74) BNSF has also

attempted to elucidate a number of mistakes that its own trial counsel may have made. BNSF

may be entitled to the counsel of its choice, but it is not entitled to retry this case. During the

post-trial hearings, this Court reminded counsel that BNSF was not entitled to a “do over” simply

because it decided to retain new counsel after the trial. This Court also informed counsel that she

considered it a privilege to witness some of the finest lawyering she had ever seen during her

entire legal career. This Court admonished counsel for his disparaging remarks about BNSF‟s

trial counsel. Further, this Court finds that misrepresentations made to this Court by BNSF‟s

33

trial counsel were likely due to the poor handling and destruction of evidence on the part of

BNSF‟s employees under the direction of other BNSF employees and/or management.16

g. Notice

BNSF has argued that it never received proper notice that Plaintiffs intended to seek an

award of sanctions against BNSF. Presumably, BNSF is proposing that it should have received

notice consistent with the twenty-one (21) day safe harbor provisions outlined in Minn. R. Civ.

P. 11 and Minn. Stat. § 549.211. Plaintiffs did not bring their sanctions motion pursuant to those

rules. Indeed, those rules are not applicable because of the breadth, nature, and timing of

BNSF‟s ongoing misconduct. The record is clear that BNSF knew that Plaintiffs would be

seeking sanctions. Plaintiffs first noticed their sanctions motion in February 2008, but due to

BNSF‟s continued abuses and Plaintiffs‟ ongoing difficulties in unearthing those abuses, the

parties agreed that the sanctions motion would be heard after the trial.17

What followed involved

hundreds of pages of written memoranda, protracted settlement discussions that included

amounts for any possible sanctions award, mediations, and the numerous attempts to reschedule

the sanctions motion. The record before this Court does not support BNSF‟s contention that it

did not have notice. Further, given the nature and impact of BNSF‟s misconduct, a twenty-one

(21) day safe harbor provision was not only not practicable, but not possible.

16

For purposes of this sanctions motion, the conduct of BNSF‟s trial counsel is not in the crucible. Plaintiffs have

elected to pursue other available remedies to address their allegations regarding any misconduct on the part of

BNSF‟s trial counsel. Accordingly, this Court will not address or make any findings regarding the possible

sanctionable misconduct of BN SF‟s trial counsel.

17

The matter of scheduling the hearing on Plaintiffs‟ sanction motion was discussed during several conference calls

with counsel and this Court. After continuing the proposed hearing date a number of times, counsel agreed that the

most prudent and cost-effective course to follow would be to combine the motions for a two-day hearing. Counsel

agreed that allegations regarding post-trial misconduct would not be included in Plaintiffs‟ costs and sanctions

motion hearings.

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III. ANALYSIS

After outlining the appropriate legal framework for sanctioning BNSF‟s misconduct, this

Court now addresses Plaintiffs‟ requests within the context of that framework.

1. Costs

Plaintiffs were forced to incur a number of costs that would not have been necessary had

BNSF acted appropriately under the circumstances. BNSF contends that the impostion of any

monetary sanction requires that it be directly linked to any increased cost attributable to the

misconduct of the offending party. While this Court disagrees with that blanket objection, even

this narrow standard advanced by BNSF would support an award of the costs requested in this

case. As such, the Court finds that Plaintiffs are entitled to be reimbursed for all expenditures

attributable to BNSF‟s misconduct. Accordingly, BNSF will be responsible for reimbursing

Plaintiffs for their costs associated with investigating, researching, preparing, arguing, and

presenting at all of the proceedings arising from or further complicated by BNSF‟s misconduct.

This amount includes travel and lodging expenses that were denied as non-taxable in

Plaintiffs‟ costs motion. Specifically, this Court denied Plaintiffs‟ request for these items

because the purpose of costs motion is not to subsidize the cost of business for the prevailing

party‟s attorney. Because of the differing legal standards, however, this request requires a

different analysis in the context of Plaintiffs‟ sanctions motion. Instead, this Court will consider

whether Plaintiffs were harmed or incurred additional costs and expenses because of BNSF‟s

misconduct. Plaintiffs clearly did. In the context of this particular request, Plaintiffs were

required to schedule and attend several out-of-state depositions and incurred significant lodging

and travel expenses. These expenses can be directly linked to BNSF‟s misconduct.

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Accordingly, this Court awards Plaintiffs $16,647.69 for expenses incurred due to BNSF‟s

misconduct.

Plaintiffs also waived a number of expenses for purposes of their costs hearing but

reserved those requests for this Court‟s consideration, in their sanctions motion. These expenses

include: expert witness fees paid to Myron Lofgren, Scott Trautner, and Robert Halstead; costs

for the Ferry Street Crossing inspection; and certain transcription costs. These costs were

incurred because of the obstructions, evidentiary confusion, and mistrust created by BNSF‟s

misconduct. These costs certainly could have been included in Plaintiffs‟ costs motion but

because they were incurred as a result of BNSF‟s misconduct and the deep-seeded mistrust that

accompanied it, these costs are properly before this Court in Plaintiffs‟ sanctions motion.

Plaintiffs also submitted affidavits linking the necessity of these costs to BNSF‟s misconduct.

This Court finds that these costs were directly attributable to BNSF‟s misconduct and awards

Plaintiffs $90,111.21 for costs incurred as result of BNSF‟s misconduct.

2. Attorneys’ Fees

Plaintiffs seek to recover attorneys‟ fees for time that can be attributed to BNSF‟s

misconduct. BNSF‟s persistent pattern of delay, selective preservation of evidence, destruction

of evidence, evasive responses to Plaintiffs' discovery requests, and lack of candor resulted in

crushing prejudice to Plaintiffs in the form of forgetful witnesses and extraordinary expenditures

of time, effort, and money. Plaintiffs have estimated the amount of time they expended that can

be directly attributed to BNSF‟s misconduct. BNSF contends that Plaintiffs‟ request should be

denied for two reasons: (1) an award of attorneys‟ fees requires a finding of bad faith by the

Court, which is not present in this case; and (2) Plaintiffs‟ fees request is premised on estimates,

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not well-kept records and, as such, do not provide the Court with the necessary factual basis for

determining attorneys‟ fees. This Court will now address BNSF‟s arguments.

a. Bad Faith

In Minnesota, a finding of bad faith is not typically required before sanctions may be

imposed; instead, bad faith is one factor to be considered when determining the severity of the

sanction. The parties agree that a finding of bad faith conduct is a condition precedent to an

award of attorneys‟ fees. Because awarding attorneys‟ fees is rare under the American Rule, a

finding of bad faith is generally required before attorneys‟ fees may be awarded. See Chambers,

501 U.S. 32 at 45−46; Radloff, 470 N.W.2d at 155-56. While BNSF has attempted to convince

this Court that its misconduct was not perpetrated in bad faith, this Court has made detailed

findings to the contrary. Having already found that BNSF‟s misconduct constitutes bad-faith

litigation conduct, this Court now turns to BNSF‟s second contention.

b. Factual Basis for Determining Fees

Plaintiffs have requested that this Court award attorneys‟ fees on two separate grounds.

The first is based on the amount of time that Plaintiffs‟ attorneys worked on this case that can be

directly attributed to BNSF‟s misconduct. This request is limited only to extra time that

Plaintiffs were forced to work because of BNSF‟s misconduct; not the amount of hours that were

required regardless of BNSF‟s misconduct. To support this request, Plaintiffs‟ counsel submitted

detailed affidavits outlining the estimated extra time that they were required to work because of

BNSF‟s misconduct. Plaintiffs provided an estimate of counsels‟ hourly wages because

Plaintiffs‟ counsel were retained pursuant to a contingent-fee agreement. Plaintiffs contend that

hourly charges directly attributable to BNSF‟s misconduct total $1,152,140.00. Plaintiffs‟

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second request is based on contingency fees that Plaintiffs‟ counsel would be entitled to receive

based on the verdict returned in Plaintiffs‟ favor. This request totals $8,640,000.00.

1. Hourly Rate Attorneys’ Fees

BNSF objects to Plaintiffs‟ hourly rate attorneys‟ fees request, contending that Plaintiffs‟

request should be based on precise and contemporaneously prepared time sheets and not guesses

or estimations. While BNSF admits that attorneys‟ fees and related expenses are an appropriate

sanction after a finding of bad faith, it objects to awarding them, in this case, because Plaintiffs‟

fee request is imprecise and cannot be linked to BNSF‟s misconduct. No one disputes that

attorneys‟ fees should be linked to specific misconduct. BNSF, however, is once again mistaken

in its position that the fruits of misconduct can only come in the form of an evidentiary

advantage to the offending party. BNSF continues to ignore the fact that Plaintiffs were forced

to expend vast amounts of time and money solely because of BNSF‟s misconduct. Having

already dispensed with these arguments, this Court turns to the factual bases for Plaintiffs‟

requests.

Plaintiffs have filed detailed affidavits and BNSF objects to the legitimacy of calculations

set forth in these affidavits. It now becomes necessary for this Court to determine whether

Plaintiffs‟ requests are sufficiently documented to support an award of attorneys‟ fees.

Plaintiffs‟ estimations are based on those specific instances when BNSF‟s misconduct led to

increased time spent on this case. Rather than providing a generic tally of hours worked,

Plaintiffs have identified specific misconduct that lead to an increase in Plaintiffs‟ workload,

fulfilling the requirement that Plaintiffs‟ requested fees be linked to BNSF‟s misconduct.

The bulk of BNSF‟s objection rests on the fact that Plaintiffs‟ stated number of hours are

estimations and not the product of precise and contemporaneously maintained time records.

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Plaintiffs‟ counsel, however, are not hourly fee based attorneys. Rather, their practice is to enter

into contingency-fee arrangements where they receive payment only if they receive a favorable

verdict or settlement for their clients. As such, Plaintiffs‟ counsel do not keep the time sheets

that BNSF claims are required to support an award of attorneys‟ fees. While these hypothetical

time sheets would make it easier for this Court to make her factual determination on this issue,

there is no legal authority requiring this precise form of record keeping for attorneys who are

paid pursuant to a contingent-fee agreement. In fact, the industry standard is that these records

are not kept at all.

Plaintiffs‟ affidavits were detailed and accurately describe BNSF‟s misconduct and the

increased hours that were required because of that misconduct. Plaintiffs‟ affidavits are well-

reasoned, thoughtful, and believable. Additionally, Plaintiffs limited their requests to the number

of hours that they were certain were incurred. Plaintiffs did not include hours in their request

that they could not reasonably estimate. For example, Mr. Bongard‟s affidavit did not include

any number of hours because he felt that he could not reasonably estimate how many extra hours

he spent on this case due to BNSF‟s misconduct. Thus, this Court finds that Plaintiffs‟ affidavits

provide a reliable foundation for this Court‟s factual findings.

There are several hours, however, that should not be included in this Court‟s sanctions

award. Mr. Shapiro included the total time spent on this case in his affidavit. Mr. Shapiro also

estimated in his affidavit, however, that he would have spent fifty hours on this case regardless

of BNSF‟s misconduct. As such, Plaintiffs cannot link these fifty hours to BNSF‟s misconduct

and these hours should be subtracted from the total award (50 hours at an hourly billable rate of

$250.00, totaling $12,500.00). Additionally, Mr. Pottroff estimated that he spent an extra 700

hours on this case due to BNSF‟s misconduct, which this Court finds is an accurate

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representation given the facts and circumstances of this case and Mr. Pottroff‟s vital role in its

prosecution. Mr. Pottroff represents that be believes that his billable rate would be $600.00 if he

were charging clients in a metropolitan area such as Minneapolis. Mr. Pottroff also represented,

however, that when billing clients on an hourly basis in the much smaller community of

Manhattan, Kansas, his hourly billing rate is $350.00. This Court is reluctant to accept Mr.

Pottroff‟s hourly rate estimate of $600.00 given his practice of billing clients in Kansas at an

hourly rate of $350.00. $400.00 is a realistic and competitive hourly rate for attorneys in the

Twin Cities with the skill and training of Mr. Pottroff. As such, the portion of the sanctions

award for Mr. Pottroff‟s fees should be calculated at an hourly rate of $400.00 instead of $600.00

(an hourly reduction of $200.00 x 700 hours, totaling $140,000.00).

This Court finds that the balance of Plaintiffs‟ requested attorneys‟ fees is reasonable,

sufficiently detailed, and linked to BNSF‟s misconduct. Accordingly, this Court awards

Plaintiffs $999,640.00 for attorneys‟ fees attributable to hours of work linked to BNSF‟s

misconduct.

2. Contingency-based Attorneys’ Fees

BNSF objects to Plaintiffs‟ contingency fee based request, contending that any request

for attorneys‟ fees must be linked to specific misconduct. This Court agrees with BNSF. Unlike

Plaintiffs‟ request for hourly fees, the contingency based fees cannot be linked to specific

misconduct. Instead, contingency fees represent the damages that BNSF was found, by the jury,

to have caused Plaintiffs; not the extra time and costs resulting from BNSF‟s misconduct. This

Court has already addressed the extra time and costs Plaintiffs incurred as a result of BNSF‟s

misconduct in this Court‟s hourly fee award. A contingency-based attorneys fees award, in this

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case, would not be the least restrictive sanction available to this Court to deter future misconduct.

Accordingly, Plaintiffs‟ request for an award of contingency fee based sanctions is DENIED.

3. Disgorgement

This matter was delayed for one year due to BNSF‟s misconduct. Because of that delay,

BNSF was allowed to retain $21,600,000.00, the amount the jury ultimately awarded Plaintiffs,

for an additional year. Plaintiffs now request that BNSF disgorge the return on investment that

BNSF enjoyed during that one-year delay. Plaintiffs also request that the sanction award include

the 4% post-verdict interest that Plaintiffs would have enjoyed for one year absent the delay.

BNSF objects to this amount being awarded because it does not reflect any prejudice that

Plaintiffs experienced and because Plaintiffs also advocated for a one-year continuance of the

trial in this case.

Before going any further, this Court must briefly address BNSF‟s contention that the one-

year delay was caused by Plaintiffs. Plaintiffs do not dispute that, in the end, they stipulated to

the one-year continuance of this trial. Plaintiffs did so reluctantly and with much trepidation.

During that time, Plaintiffs embarked upon a challenging and costly course of discovery that

continued right through trial. This Court has not lost track of the fact that BNSF controlled much

of the evidence in this case, which put Plaintiffs and this Court at a distinct disadvantage when it

came time to scheduling logistics. It was not easy for this Court to rearrange her schedule a

second time to accommodate a six-week jury trial. Tremendous court resources were consumed

in the management of this litigation. If evidence had been properly preserved, discovery requests

timely answered, witnesses cooperative, and had BNSF been reasonably candid with Plaintiffs

and this Court, a one-year delay most likely would not have been necessary and, perhaps, the

need for a trial would have obviated altogether. This Court remains convinced, and the record

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supports the finding that the one-year delay in the proceedings can be primarily attributed to

BNSF‟s misconduct.

This Court will now address Plaintiffs sanctions request under the Patton I six-factor test.

Two of Patton I’s six factors are particularly pertinent to Plaintiffs‟ request. The first

consideration is whether Plaintiffs were prejudiced by the one-year delay caused by BNSF‟s

misconduct. The second consideration involves determining the least restrictive sanction that

can be levied against BNSF that will also serve to deter future misconduct.

There is no doubt, based on the record before this Court, that Plaintiffs were prejudiced

by the one-year delay of the trial. Had the trial taken place as originally scheduled, Plaintiffs

would have enjoyed post-judgment interest of 4% for a period of one year. Additionally,

Plaintiffs‟ counsel were burdened by massive costs and the evolving complexities that continued

to emerge while Plaintiffs discovered further evidentiary and witness abuses up to and through

the trial. Witness memory and recall were further compromised by the passage of an additional

year. Once can only imagine the creative financing and debt obligations Plaintiffs took on to

keep their case afloat during the one-year delay This Court finds that Plaintiffs experienced

prejudice due to the one-year delay. Accordingly, this Court awards Plaintiffs $864,000.00 for

the post-judgment interest that they lost due to the one-year delay caused by BNSF‟s

misconduct.

The second, and more complex, consideration is determining the least restrictive sanction

that may be imposed that will also serve as a deterrent against future misconduct. Over BNSF‟s

objection, this Court has recognized deterrence as a factor to consider when determining an

appropriate sanction. BNSF‟s wide-ranging misconduct has no place in Minnesota‟s courts. In

addition to the crushing time and monetary burdens placed on Plaintiffs, BNSF‟s misconduct has

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taxed the time and resources of the court system. The inherent power of the court exists to

ensure that courts have a mechanism to prevent these abuses on the judicial system and to ensure

that individual matters are subject to the basic tenets of justice and integrity. Through its

misconduct, BNSF retained the use of $21,600,000.00 for an additional year. During that time

period, according to BNSF‟s Vice President Charles Shewmake, BNSF enjoyed a return on its

investments ranging from 10% to 10.7%. Thus, BNSF profited from the one-year delay of the

trial by retaining the $21,600,000.00 verdict and realizing a profit on the investment of those

funds.

Allowing BNSF to benefit from its misconduct runs counter to the interests of justice and

fairness. BNSF, rightfully, reminds this Court that she has a duty to impose the least restrictive

sanction possible under the circumstances. But when encountering conduct as egregious as that

of BNSF‟s, this Court also has a duty to impose sanctions of a sufficient severity in order to deter

future misconduct of the same caliber. This Court finds that Plaintiffs‟ request for disgorgement

balances this Court‟s duty to impose the least restrictive sanction under the circumstances along

with the corollary goal of deterring future misconduct. Accordingly, this Court awards Plaintiffs

$2,210,000.00 for the return on the investment and use of funds BNSF enjoyed during the one-

year delay, that correspondingly Plaintiffs were denied.

4. Punitive Damages

Plaintiffs have requested sanctions awards ranging from $22,000,000.00 to

$45,000,000.00 in order to “punish and deter” BNSF. BNSF contends that this is merely a

resurrection of Plaintiffs‟ punitive damages request, which this Court has already denied. This

Court agrees. An award of that magnitude could only be viewed as being designed to punish

BNSF, and severely at that. In Foust v. McFarland, the Minnesota Court of Appeals rejected the

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notion that spoliation sanctions should punish the offending party. While the present case goes

beyond spoliation, this Court, having already rejected Plaintiffs‟ request for punitive damages, is

reluctant to punish BNSF with the amount of sanctions that Plaintiffs now seek. Additionally,

these requested sanctions cannot be linked to BNSF‟s misconduct or to any resultant harm to

Plaintiffs. Also, granting these sanctions would violate this Court‟s duty to impose the least

restrictive sanction necessary to deter future misconduct. Thus, Plaintiffs‟ request for sanctions

to punish BNSF in the amount of $22,000,000.00 to $45,000,000.00 is DENIED.

IV. CONCLUSION

What happened at the Ferry Street Crossing in the accident that claimed the lives of four

young adults on the evening of September 26, 2003? That is the $24,000,000.00 question.

Plaintiffs maintain that the crossing gates and warning devices were not functioning properly at

the time of the collision. BNSF counters that the crossing gates and warning devices were, in

fact, functioning properly but the driver of Plaintiff Frazier‟s Chevrolet Cavalier tried to drive

around the lowered gates at the time of collision.

At all times material to this proceeding, including the night of the accident, BNSF has

had the exclusive control of critical evidence, including the event recorder data that monitored

the train movement and warning device functions on September 26, 2003. The saga of what

happened to that critical evidence while in the exclusive control of BNSF ended up taking center

stage throughout the majority of these proceedings. In the early stages of discovery, this Court

was more inclined to deny or limit Plaintiffs‟ discovery requests based on BNSF‟s persuasive

representations that it had already provided Plaintiffs with the requested discovery in a suitable

alternative format. This Court was also persuaded, on more than one occasion, to place

restrictions on the scope of Plaintiffs‟ discovery requests. This Court‟s orders contained, inter

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alia, chronological parameters for document requests, geographic boundaries for site inspections,

and/or limits on field inspections and BNSF employee witness interviews.

Put simply, BNSF had presented a fairly compelling impression that Plaintiffs‟ discovery

requests were overly broad because their counsel were on a fishing expedition designed to

unearth highly technical documents, sophisticated software programs, and codes that could be

funneled to a national railroad litigation consortium for use in pending cases against railroads

throughout the United States. It was only through the dogged determination of Plaintiffs‟

counsel and through their repeated and costly motions to compel discovery, that this Court began

to see a pattern of behavior on the part of BNSF that raised serious questions about the intentions

and veracity of BNSF regarding its handling of critical evidence in this case.

If BNSF, with all of its sophisticated and state of the art technology, had been in a

position to produce the very evidence, the HXP and HCA event recorder data, that would have

definitively established that the Ferry Street Crossing gates and warning devices were

functioning properly at the time of the accident, then why did BNSF choose not to make that data

available in the first place? If BNSF had presented the Patrol team and Plaintiffs‟ counsel with

the write-protected disk that Mr. Hildebrant claims he delivered to the Signal Supervisor in

accordance with BNSF protocol, there is a very good chance that the Patrol report would have

been put to bed without any lingering questions and Plaintiffs might have found some closure in

that report and decided against commencing this action against BNSF. Ironically, it appears that

BNSF‟s failure to be forthcoming only strengthened the resolve of Plaintiffs to find the truth.

The quest for the truth in this case has been painful and expensive. This Court need not reiterate

the costly ordeal that followed after Plaintiffs‟ commenced suit and served BNSF with their

February 3, 2004 formal evidence preservation request.

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Based on the record before this Court, there is no doubt in this Court‟s mind, that BNSF‟s

misconduct in this case must be sanctioned. This Court has tried to fashion a sanction that is the

least restrictive and, at the same time, designed to deter future misconduct. It is this Court‟s

hope that, in the future, BNSF will practice what it preaches, namely to use all of its

sophisticated technology to monitor the safe operation of its trains while preserving its records

and evidence relating to train movement and warning devices on its tracks. It is this Court‟s

further hope that in the future, BNSF will cooperate with the law enforcement agencies assigned

to investigate railroad accidents and provide law enforcement with all evidence in its control that

may assist with that investigation. Finally, it is this Court‟s hope that, in the future, BNSF will

be more forthright in its interactions with opposing counsel and the Court. Hopefully, the

lessons learned in this case will promote more expeditious claims handling and dispute

resolution.