Encompass Insurance Company v. Norcold Inc

• Court: District Court, W.D. Washington
• Decided: January 6, 2025
• Docket: 2:23-cv-00231
• Status: Unknown

Opinion

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3 4 5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 ENCOMPASS INSURANCE CASE NO. 2:23-cv-231 8 COMPANY, ORDER 9 Plaintiff, 10 v. 11 NORCOLD, INC., 12 Defendant. 13 ESSENTIA INSURANCE COMPANY, 14 Intervention Plaintiff, 15 v. 16 NORCOLD, INC., 17 Intervention Defendant. 18

19 1. INTRODUCTION 20 Defendant Norcold, Inc. moves to exclude the opinions and testimony of 21 Subrogation-Plaintiffs Encompass Insurance Company (“Encompass”) and Essentia 22 Insurance Company’s (“Essentia”) (collectively, “Plaintiffs”) expert forensic 23 electrical engineer, Jeff Marsh. Dkt. No. 56. Norcold also moves to strike Marsh’s 1 declaration filed in support of Plaintiff’s opposition to the motion to exclude him. 2 Dkt. No. 67. Having reviewed the record, the parties’ briefing, and the law, and

3 being fully informed, the Court DENIES the motion to exclude and DENIES the 4 motion to strike. 5 2. BACKGROUND 6 This product liability action arises from a January 2021 fire that destroyed 7 the garage, recreational vehicle (“RV”), and other property belonging to Stephen 8 and Stephanie Phillips (“insureds”). Dkt. No. 1. Subrogation-Plaintiffs Encompass

9 and Essentia, both of which are insurance companies that indemnified the insureds 10 for portions of their losses, bring claims against Norcold, a manufacturer and 11 distributor of refrigerators. Id. They allege that a defective Norcold refrigerator 12 inside the insureds’ RV caused the fire. Id. 13 Plaintiffs retained the investigative firm Jensen Hughes to provide expert 14 opinion and testimony about the origins of the fire. Dkt. No. 61 ¶ 5. On March 4, 15 2024, Plaintiffs timely disclosed their experts and accompanying report. Dkt. Nos.

16 56-1, 56-2. The report, prepared by Jensen Hughes, contains six opinions: Opinions 17 5.1 through 5.6. Dkt. No. 56-2. This motion to exclude attacks the reliability and 18 admissibility of Opinions 5.2 and 5.3. Dkt. No. 56. Plaintiffs have designated Jensen 19 Hughes Senior Electrical Engineer Jeff Marsh to testify about these two contested 20 opinions. See Dkt. Nos. 56-1; 56-3 at 8 (Marsh Deposition) (“I am not offering an 21 opinion on anything else other than 5.2 and 5.3.”).

22 Opinions 5.2 and 5.3 read, in full, as follows: 23 1 5.2 Opinion: The GE Dehumidifier was eliminated as the source of the fire. 2 5.2.1 Basis: No electrical arcing was identified within the dehumidifier 3 that would indicate that it was capable of starting the fire.

4 5.3.2 Basis: The radiographic examination of the dehumidifier did not reveal any evidence of the anomalous electrical activity within the 5 product.

6 Basis: Since no evidence of electrical failure of the dehumidifier was found, the dehumidifier was eliminated as a probable cause of the fire. 7 5.3 Opinion: The Delongi oil-filled radiant heater did not start the fire. 8 5.3.1 Basis: No electrical arcing was identified within the dehumidifier 9 that would indicate that it was capable of starting the fire.

10 5.3.2 Basis: The radiographic examination of the dehumidifier did not reveal any evidence of the anomalous electrical activity within the 11 product.

12 Basis: Since no evidence of electrical failure of the dehumidifier was found, the dehumidifier was eliminated as a probable cause of the fire. 13 Dkt. No. 56-2 at 32. 14 During his deposition, Marsh admitted that the report’s bases for Opinion 5.3 15 had been copy and pasted from Opinion 5.2, which explains why the bases for 16 Opinion 5.3 reference the dehumidifier rather than, as they should, the heater. Dkt. 17 No. 56-3 at 41-44 (referring to this mistake as a “typographical error”). According to 18 Marsh, the word “dehumidifier” should have been replaced with the word “heater,” 19 but the gist of Basis 5.3.1 is still valid. Id. at 42 (“[T]here was no electrical arcing 20 identified in the heater, though it says the dehumidifier[.]”). By contrast, Marsh 21 admitted that “[t]here was no radiographic examination of that heater, and that 22 5.3.2 should not be included there.” Id. at 42. 23 1 3. DISCUSSION 2 3.1 Legal standard. 3 Rule 702 of the Federal Rules of Evidence governs the admission of expert 4 opinion testimony in federal court: 5 A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise 6 if the proponent demonstrates to the court that it is more likely than not that: (a) the expert’s scientific, technical, or other specialized knowledge 7 will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the 8 testimony is the product of reliable principles and methods; and (d) the expert’s opinion reflects a reliable application of the principles and 9 methods to the facts of the case.

10 Fed. R. Evid. 702. Rule 702 is to be applied with a “liberal thrust favoring 11 admission, [but] it requires that expert testimony be both relevant and reliable.” 12 Messick v. Novartis Pharms. Corp., 747 F.3d 1193, 1196 (9th Cir. 2014) (cleaned 13 up). “Expert opinion testimony is relevant if the knowledge underlying it has a valid 14 connection to the pertinent inquiry. And it is reliable if the knowledge underlying it 15 has a reliable basis in the knowledge and experience of the relevant discipline.” 16 United States v. Sandoval-Mendoza, 472 F.3d 645, 654 (9th Cir. 2006) (emphasis 17 added) (quotation marks and citation omitted). 18 The Rule 702 reliability inquiry assesses “not the correctness of the expert’s 19 conclusions but the soundness of his methodology.” Daubert v. Merrell Dow 20 Pharms., Inc., 43 F.3d 1311, 1318 (9th Cir. 1995). The Supreme Court in Daubert 21 set forth several factors that courts may consider in assessing reliability, such as 22 testing, peer review and publication, error rates, and scientific consensus. Daubert 23 1 v. Merrell Dow Pharm., Inc., 509 U.S. 579, 593–94 (1993). But the inquiry is 2 “flexible,” id., and courts have “broad latitude” in deciding “whether Daubert’s

3 specific factors are, or are not, reasonable measures of reliability in a particular 4 case[.]” Kumho Tire Co. v. Carmichael, 526 U.S. 137, 153 (1999). “Shaky but 5 admissible evidence” is to be attacked by “[v]igorous cross-examination, 6 presentation of contrary evidence, and careful instruction on the burden of proof”— 7 not exclusion. Daubert, 509 U.S. at 596. 8 Along with proving relevance and reliability, parties offering expert opinion

9 testimony must comply with procedural requirements. Rule 26(a) mandates that 10 retained experts provide a report containing “a complete statement of all opinions 11 the witness will express and the basis and reasons for them.” Fed. R. Civ. P. 12 26(a)(2)(B)(i). Rule 37 “gives teeth to [Rule 26(a)] by forbidding the use at trial of 13 the information required to be disclosed by Rule 26(a) that is not properly 14 disclosed.” Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th 15 Cir. 2001); see Fed. R. Civ. P. 37(c)(1) (“If a party fails to provide information… as

16 required by Rule 26(a)..., the party is not allowed to use that information or witness 17 to supply evidence on a motion, at a hearing, or at trial, unless the failure was 18 substantially justified or harmless.”). Whether to exclude an expert opinion under 19 Rule 37 as a sanction for untimely disclosure is a matter of judicial discretion. 20 Fjelstad v. Am. Honda Motor Co., 762 F.2d 1334, 1337 (9th Cir. 1985). 21

22 23 1 3.2 Opinion 5.2, eliminating the dehumidifier as the source of the fire, is reliable and admissible. 2 Plaintiffs’ expert report explains the basis of Opinion 5.2—that the 3 dehumidifier did not start the fire. It explains that on June 29 and July 29, 2021, 4 Plaintiffs’ experts, together with representatives from Norcold, conducted a 5 destructive evidence examination of the dehumidifier, which Plaintiffs had taken 6 and preserved from the fire scene. Dkt. No. 56-2 at 11. As part of this examination, 7 Plaintiffs’ experts “[v]isually examined and photographically documented the 8 remnants of the dehumidifier… in its as-received condition,” “[d]isassembled the 9 dehumidifier to visually examine and photographically document internal electrical 10 components and wiring of the dehumidifier[,]” and “[x]-rayed the dehumidifier… 11 and circuit boards[.]” Id. at 14 (including photographs and x-ray images). The visual 12 examination revealed “[n]o electrical arcing… within the dehumidifier that would 13 indicate it was capable of starting the fire.” Id. at 32. Likewise, “the radiographic 14 examination of the dehumidifier did not reveal any evidence of the anomalous 15 electrical activity within the product.” Id. The report thus concludes: “Since no 16 evidence of electrical failure of the dehumidifier was found, the dehumidifier was 17 eliminated as a probable cause of the fire.” Id. 18 Norcold disputes the reliability of this opinion, contending that Plaintiffs’ 19 experts “improperly ignored the fact that many internal electrical components and 20 internal electrical wiring were missing at the time of his examination.” Dkt. No. 56 21 at 5. According to Norcold, these missing parts, all of which were lost to the fire, 22 include “the line cord for the dehumidifier (including its male plug),” “the duplex 23 1 receptacle in the RV into which the line cord was plugged at the time of the fire,” 2 “severed internal conductors whose missing portions were not located at the fire

3 scene,” “a connector with missing wiring,” and “the humidistat of the 4 dehumidifier[.]” Id. at 6-7. Norcold contends that these missing parts could have 5 started the fire, or at least, if examined, clarified the fire source, and that Marsh 6 admitted this in deposition. Id. (citing Dkt. No. 56-3 at 39-40) (Q: “If the thermal 7 cutoff for the dehumidifier failed internally, the compressor would not have shut off 8 if it overheated; correct?” A: “That's correct.” Q: And if that happened, this could

9 lead to an internal failure of the dehumidifier… is that correct?” A: “It could 10 overheat. Correct.” Q: “And that would be a potential fire cause; correct?” A: “That is 11 correct.”). 12 Norcold may be correct. The unpreserved electrical components, if they had 13 been recovered and examined, may have revealed different information about the 14 source of the fire. But Plaintiffs’ experts cannot travel in time; they are restricted to 15 the materials recovered from the fire. As Encompass explains, “The evidence that

16 was available for examination, including the internal components and wiring 17 located inside the metal housing of the dehumidifier revealed no evidence of a 18 failure, such as electrical arcing, localized resistive heating on a conductor, or the 19 failure of contacts on control devices. The opinion that the dehumidifier was not the 20 ignition source of the fire was based on the evidence available for examination and 21 not speculative on what evidence was not available.” Dkt. No. 60 at 7. This

22 explanation is enough to persuade the Court that Plaintiffs’ experts utilized the 23 materials available to them and applied sound testing methodologies to arrive at 1 their conclusion that, on a more-probable-than-not basis, the dehumidifier did not 2 cause the fire. Norcold may argue that the missing electrical components render

3 this opinion “shaky,” but any alleged shakiness should be addressed through the 4 crucible of cross-examination and the adversarial process. Daubert, 509 U.S. at 596. 5 Outright exclusion is unwarranted. 6 3.3 Opinion 5.3, eliminating the heater as the source of the fire, is reliable and admissible. 7 Plaintiffs’ experts also examined the heater. Dkt. No. 56-2 at 11. Specifically, 8 they “[v]isually examined and photographically documented the remnants of the oil 9 radiant electric heater… in its as-received condition,” “[d]isassembled the heater’s 10 control panel, exposing components and electrical connections,” and “[v]isually 11 examined and photographically documented the heater’s thermostat switch, level 12 switch and heater element[.]” Id. (including photographs). They concluded from this 13 examination that the heater did not start the fire. 14 But rather than properly stating their observations from these examinations 15 as bases for their opinion, the experts erred in their report by copying-and-pasting 16 the bases for their opinion regarding the dehumidifier (i.e., the wrong opinion) into 17 the section of their analysis dealing with the heater. See Dkt. No. 56-3 at 41-44 18 (referring to this as a “typographical error”). In its motion to exclude Marsh’s 19 opinion, Norcold seizes on this error, asserting that “the Jensen Hughes Report does 20 not set forth any factual basis or foundation for [Marsh’s] opinion that the radiant 21 heater did not start the fire.” Dkt. No. 56 at 8. The Court, however, is not inclined to 22 grant such significance to an obvious typographical mix-up. The report makes clear 23 1 that Marsh’s team directly inspected and disassembled the heater to assess whether 2 the electrical components exhibited signs of malfunction. And Marsh, in his October

3 2024 deposition, stood by the report’s conclusion that the heater, on a more-likely- 4 than-not basis, did not start the fire, given that “there was no electrical arcing 5 identified in the heater[.]” Dkt. No. 56-3 at 44. The Court is persuaded that the 6 absence of electrical arcing inside the heater, as revealed by the experts’ visual 7 examination, gave them a sufficiently reliable basis to conclude that the heater did 8 not start the fire. Again, to the extent Norcold disputes this conclusion, their

9 dispute goes to the weight, not the admissibility, of the evidence. Likewise, as with 10 Opinion 5.2 (see supra, § 3.2), the Court is not swayed by Norcold’s remaining 11 arguments that Plaintiffs’ experts failed to inspect missing electrical components 12 not recovered from the fire scene. 13 Finally, the Court rejects Norcold’s argument that Plaintiffs, by failing to 14 state the basis for Opinion 5.3 due to their copy-and-paste error, violated their Rule 15 26(a) disclosure requirements. On the face of the expert report, the nature of Jensen

16 Hughes’s copy-and-paste error is plain, as is the fact that the experts inspected not 17 just the dehumidifier, but also the heater. And even if the Jensen Hughes report did 18 fail to state a basis for Opinion 5.3 in violation of Rule 26(a), Marsh clarified this 19 error on the record in his deposition, at Dkt. No. 56-3 at 41-44, and the Court 20 therefore finds the error harmless and inappropriate as grounds for a Rule 37 21 sanction. Exclusion is thus unwarranted.

22 23 1 3.4 The Court need not rely on the Marsh Declaration to resolve the motion to exclude his expert opinion testimony. The Court therefore 2 denies the motion to strike the Marsh Declaration. In his declaration in opposition to Norcold’s motion to exclude his expert 3 testimony, Marsh offers multiple factual assertions that are not contained in his 4 expert report. For example, he asserts that malfunctioning electrical equipment 5 often emits distinct odors, and that at no time did Stephen Phillips sense such odors 6 emanating from the dehumidifier or heater. Dkt. No. 62 ¶¶ 7-8. 7 In its reply in support of the instant motion, Norcold moves to strike Marsh’s 8 entire declaration for the proliferation of such untimely assertions. As for Marsh’s 9 assertion that Phillips did not smell any malodorous emissions from the electrical 10 equipment, for example, Norcold points out that “Marsh admitted [under deposition 11 that] he never spoke with Mr. Phillips” and that “Marsh never identified this basis 12 either in the JH Report or before the disclosure deadline[.]” Dkt. No. 67 at 3. 13 Therefore, according to Norcold, this basis of opinion is “untimely” and “not based 14 on personal knowledge.” Id. 15 Norcold’s argument has some merit. But the Court need not rely on the 16 Marsh Declaration to resolve the instant motion to exclude. See supra §§ 3.2-3.3 17 (finding Opinions 5.2 and 5.3 admissible based on the report itself). To the extent 18 the Marsh Declaration provides retroactive, untimely bases for Opinions 5.2 and 19 5.3, the Court finds the declaration unpersuasive and unnecessary, as the Jensen 20 Hughes report itself, read in the light of Marsh’s deposition, gives adequate bases 21 for Opinions 5.2 and 5.3. As such, the Court finds no reason to strike the Marsh 22 Declaration from the record. The Court thus DENIES Norcold’s motion to strike. 23 1 This decision, of course, does not amount to a free pass for Marsh to testify at trial 2 on matters outside his knowledge, experience, or the bounds of the expert report.

3 4. CONCLUSION 4 In sum, the Court finds that Opinions 5.2 and 5.3, eliminating the heater and 5 dehumidifier as sources of the fire, are reliable and admissible. As such, the Court 6 DENIES Norcold’s motion to exclude. And because the Court need not rely on the 7 Marsh Declaration to resolve the motion to exclude, the Court DENIES Norcold’s 8 motion to strike the Marsh Declaration.

9 It is so ORDERED. 10 Dated this 6th day of January, 2025. 11 a Jamal N. Whitehead 12 United States District Judge 13 14 15 16 17 18 19 20 21 22 23