WRONGFUL DISCHARGE: Fact issues preclude summary judgment as to whether cable manager who was fired after Facebook criticism of Governor was terminated for stated reasons of failing to meet purported 50% travel requirement and allowing an employee to perform unauthorized electrical work… recommendations by Cavan.

Charles Smith was employed in 2012 by Cablevision as regional VP of network management. Charter acquired Cablevision in 7/13 and Smith was VP of Video Operations starting in 7/14. The department split in 5/15 and he became VP of Sustained Video Operations. His 2014 evaluation assigned an overall 3.2 or “Achieved Expected Performance.” He received top scores of 4 in Job Knowledge and Communicates Effectively and a 2 in Develops Relationships. For the 7 remaining categories he received a 3. The evaluation was conducted by his manager Charlotte Field and was issued 10/6/15. 2 days later she issued a corrective action report — or warning — identifying concerns as to effectiveness of his leadership, failure to implement metrics to assess team performance, project completion, and effective communication. His peers conducted an anonymous “360 Review” about this time with positive reviews as well as criticisms. In 5/16 he changed to VP of ISP (Inside Plant) responsible for the Mountain States area.

He was evaluated in 2016 by his new manager Gary Heimstead. He received an overall 3.3 or Achieved Expected Performance. He received a top rating of 4 in 3 categories and 3 in 6 categories. “Top three areas for development” included improving the sense of urgency within management at all levels, ensuring proper documentation of network and network services, and spending more time in the field and meeting people face-to-face. Shortly thereafter Heimstead issued a corrective action notice listing 4 deficiencies, which he eventually resolved without further disciplinary action.

Smith took time off in 7/17 for a church mission to Honduras to help disabled and disadvantaged children and mothers. It was intended to be for 2 weeks but he was injured and hospitalized for 10 days. After a life flight to Miami he spent another 14 days in the hospital. The time was classified as FMLA leave. In 10/17, during his recovery, he posted a comment on Facebook from his private account: “Cut the Helena fat and stop playing games Governor. No program is going to make little disabled kids more intelligent. Cut the feel good nonsense and govern.” Another Facebook participant shared the post, resulting in complaints and media directed at Charter. Smith felt that it was taken out of context but deleted it at Charter’s request. The parties dispute whether he violated Charter’s social media policy or code of conduct. HR Senior Manager Stephanie Gainous attests that he was suspended for 2 weeks without pay and given a final written warning in lieu of termination. Smith disputes that termination was on the table because his right to free speech was implicated.

He returned to work 11/20/17 but was terminated 1/29/18 for 2 stated reasons: (1) “knowingly allowing Duan Auge to continue performing as a management Area Critical Infrastructure Engineer after his position was changed to an ISP II Engineer” and (2) “in December 2017, you failed to fulfill the 50% travel requirement to your management area.” Smith sued in Yellowstone Co. State Court in 3/18 alleging wrongful discharge. Charter removed to this Court and requests summary judgment.

Smith alleges that his discharge was wrongful for lack of good cause under MCA 39-2-904(1)(b). He also stated a claim under 904(1)(c) that Charter violated its personnel policy, but withdrew this claim after Charter moved for summary judgment.)

Smith argues that fact questions exist as to whether Charter had good cause to terminate him under MCA 39-2-904(1)(b). First, he asserts that Auge was not performing electrical work and was instructed along with all staff on numerous occasions that it was prohibited. Second, he contends that substantial evidence shows that there was no 50% travel requirement during 2017 and points to the handbook which only required quarterly visits to his sites. Third, he asserts that the evidence shows that he was terminated because of his Facebook post, constituting pretext. Fourth, he argues that prior work records, evaluations, and corrective action reports referenced in Charter’s arguments were resolved and not related to the stated reasons for discharge and are thus irrelevant to the determination of “good cause.”

Charter states that Smith was discharged “after years of documented performance issues, pervasive morale issues in the area under his supervision, and multiple specific and plain violations of Company policy in the months leading up to his termination.” It reasons that “the cumulative effect of these deficiencies paint a clear picture: Mr. Smith was disengaged as a leader, lacked control over his department, demonstrated poor judgment, and failed despite multiple chances to effectively manage his employees. Thus it advances his entire work record as cumulative evidence of “good cause” beyond the reasons set forth in his final corrective action reports.

In general, “reasons for discharge other than those set forth in a discharge letter are irrelevant, and thus inadmissible.” McConkey (Mont. 2005). Charter argues that this rule only concerns MCA 39-2-801, the “blacklisting statute,” and not the WDEA. The Court disagrees. Galbreath (Mont. 1995) adopted the rule confining termination reasons to those stated in discharge letters from §39-2-801 and applied it to straight WDEA claims. Nevertheless, additional evidence offered to substantiate the reasons given in a termination letter is relevant and admissible. Jarvenpaa (Mont. 1998). Therefore the Court will confine its determination of good cause to the reasons set forth in Smith’s termination letter, together with any relevant evidence that may substantiate those reasons.

Charter asserts that it “discovered Mr. Auge, an engineer reporting to Mr. Smith, had for years been performing unauthorized electrical” work. It proffers an email from Auge to Smith and Auge’s manager Walt Jones to show that he “had always performed electrical work for Charter,” along with Smith’s and Jones’s depositions. Smith disagrees that Auge was performing electrical work and that Auge’s email established that he had always performed it and argues that his and Jones’s depositions contradict Charter’s contention, resulting in a material fact issue. He also points to Jones’s testimony that this policy was not put in place until sometime in 2017 or 2018, and there is no evidence that Auge performed electrical work after then.

There are fact issues as to whether Auge was performing unauthorized electrical work, and thus fact issues as to whether this constituted good cause for Smith’s termination. First, Charter’s reliance on Auge’s email as proof that he “had always performed electrical work for Charter” is unavailing. Auge had been an employee of Charter and Cablevision since 2013 and his email outlines his apparent dissatisfaction with his assignment to a new position as a “headend tech.” He states that “I was hired as an electrician” and outlines certain “perks” that he had “as an electrician for this company.” He also expresses concerns with being “on call” in context of his past & current positions versus the proposed new position and with his job duty changes and his qualifications. The varying content of the email disputes Charter’s final corrective action reporting holding Smith accountable for Auge, who “has not been working in his role as assigned to him in 8/20/13.” Clearly, Auge has not held the same position or title since 8/13. He held multiple positions and was unhappy with Charter’s view of his “on call” responsibilities as he changed from an electrician to Critical Infrastructure Engineer to ISP Engineer to headend tech. That Auge styles himself as an “electrician” or that he was hired as an electrician falls far short of demonstrating that he was actually performing the unauthorized work of an electrician during the relevant period, much less with Smith’s authorization. The manner in which he perceives his trade is not the same as the actual tasks he performed during a specific period when a specific policy limiting electrical work was in place. Smith forwarded Auge’s email to Gainous and Heimstead, suggesting that Auge “has said a few things which are very troubling.” What is “troubling,” however, is unclear. Is it that Auge styled himself an electrician, that he felt unqualified, or that he refuses to work nights and be on call? The email lacks clarity, as Auge discusses multiple topics, positions, and tasks.

Second, Charter relies on Smith’s deposition testimony that unauthorized electrical work was “dangerous” and “a liability for the company,” that he was surprised at Auge’s level of discomfort as an ISP Engineer, and that Smith was ultimately responsible for his market area. But none of this supports Charter’s position that Auge was performing unauthorized electrical work or that Smith knew that he was doing so. Indeed, Smith explained in his deposition the difference between a critical service engineer and a headend tech — the former was involved with overseeing and reviewing electrical work while the latter “wire RF equipment … phone lines to modems … low-voltage Ethernet stuff.” Drawing inference in the non-moving party’s favor, a juror could find that Auge’s use of the title “electrician” was a generic trade reference despite his title/position changing over time, because he still worked with electricity, either through oversight or wiring “low-voltage Ethernet stuff.”

Third, Charter’s reliance on Jones’s deposition only creates more ambiguity. It cites it as “describing the electrical work that Mr. Auge reported performing at Charter.” However, in reviewing its cite in full, Jones appears to be describing Auge’s responsibilities, but like Auge’s email, there is no clear timeline that clarifies his positions and responsibilities in context of Smith’s management or alleged knowledge of Auge’s alleged unauthorized electrical work. Smith proffers a fuller version of Jones’s deposition, which shows that Auge’s duties excluded electrical work at the time he was moved to a headend engineer position in the “‘2017 slash’ 18 time frame,” around the time that Auge wrote his 12/17 email. Jones testifies that he could not recall the specific date when the policy to have vendors perform electrical work was implemented, but it was in the “2017/2018 time frame.” Without evidence establishing that a policy barring electrical work was in place at the specific time that Auge performed specifically identified electrical work with Smith’s knowledge, fact issues remain as to when Auge’s positions changed, when the policy was implicated, Auge’s performance of unauthorized electrical duties after policy implementation, and Smith’s knowledge of Auge’s performance of unauthorized electrical work. A jury could determine that the reason given for Smith’s termination was false, arbitrary, or capricious and unrelated to the needs of the business. There are material fact issues as to whether Charter had good cause to terminate Smith for “knowingly allowing Duane Auge to continue performing as a management Area Critical Infrastructure Engineer after his position was changed to an ISP II Engineer.

The 2nd stated reason for discharge in Smith’s final corrective action reads:

In December 2017, you failed to fulfill the 50% travel requirement to your management area. You completed 5% travel. Dan did not inform Gary Heimstead, Regional VP, ISP, of any reason he was not able to fulfill this requirement.

Charter argues that 50% travel was “an express job requirement,” repeatedly communicated to Smith. Smith responds that there was no 50% travel requirement.

Heimstead, Smith’s supervisor, testified that there was a directive which required 50% travel for himself and Smith starting “around February of 2017.” He could not remember if it was announced in an email but testified that it “came up” in a meeting in 2/17. Heimstead’s supervisor Thomas Gaebel testified that a high degree of travel was required for a leadership presence in the field “at around 50% as a target to achieve.” But his testimony does not identify to whom the requirement applied or when it was announced or implemented.

Charter also points to Smith’s 2017 performance review which states a “need to get in front of employees more” and “spend more time in the field and meet face to face with the people.” It also relies on Gainous’s declaration that she spoke with Smith on the phone before he returned to work after his injury regarding any accommodations he may need: “Specifically, I wanted to confirm that he was able to travel at least 50% of the time, which was a requirement of the role of a VP, ISP.” She declares that he told her he was “able to travel 50% of the time, and that the only accommodation he needed was to be able to stop and stretch from time to time.”

Charter also proffers a follow-up email chain between Gainous and Heimstead (and others) regarding her call with Smith. In the most recent email of the chain she represents to Heimstead that Smith said that “he is able to drive 50% of the time to visit his sites.” The preceding email from Heimstead to Gainous questions whether he can drive, explaining: “He’s required to do site visits 50% of the time. If he can do that, I’m fine, if not he can’t perform his job functions.”

Finally, Charter asserts that Smith’s travel requirement was set forth in his ADA Job Description and Essential Functions form which included a “physical demands” requirement that he be able to drive “frequently,” which is defined as 46-100%.

While some of Charter’s proffered evidence is probative of a policy to encourage management to travel to sites under their responsibility, none establishes an absence of material fact as to the specific requirements of its policy.

First, Charter’s reliance on the ADA form is entirely unpersuasive. Neither the “position summary” nor the “essential duties and responsibilities” identifies a travel requirement. “Driving (for work)” is itemized under “Physical Demands” and provides that an employee must be capable of driving 46-100% of the time. But the form also includes other functions that Smith must be capable of performing including the ability to read, see, sit, stand, walk, and type 46-100%. Obviously an employee would not be able to simultaneously perform each of these functions 46-100% of the time. The form plainly does not purport to require that Smith actually perform all the listed functions for the percentages of time indicated; it simply requires that he be capable of performing them for that duration if required to do so. His position could physically demand that he drive 46-100%, nothing more.

The 2017 Performance Review and Gainous-Heimstead emails may provide evidence that Charter can rely on to support its position at trial, but fall far short of establishing absence of material fact issues regarding its travel requirement. The Performance Review, for example, undoubtedly encourages Smith to travel more, get out in the field, and meet with his employees, but it does not establish or reference a specific travel requirement. In context, they appear to be a discussion of whether Smith could perform the essential functions of his position as outlined in the ADA job description or whether an accommodation was required under the ADA.

While this evidence may be used to support Charter’s claim of an individual travel requirement, Smith responds with evidence that tends to negate the alleged 50% requirement. He points to Charter’s “ISP Playbook” which he contends governed job requirements for ISP employees. The Playbook in effect for 2017 only required site visits quarterly for Smith’s position. The 2018 Playbook was amended to provide a 50% requirement. But the stated reason for Smith’s termination relating to travel is confined to 12/17 when the 50% policy had yet to take effect.

Smith also points to his 1/5/18 individual development plan which included the “Action Step” that he “visit each site at the beginning of the quarter with the Manager and ISP Engineer(s) in charge.” A reasonable juror could find that he was justified in concluding that he was only responsible to make quarterly visits to remote sites. After all, the Playbook and development plan appear to be declarations of Charter’s policy and establish the requirements of Smith’s position. While it cannot be disputed that Charter wanted him to travel more, its argument that he was under an “express job requirement” to travel 50% of the time is simply not supported by its own materials. Material fact issues exist as to whether there was a 50% travel requirement for Smith in 12/17 and thus whether Charter had good cause for his termination on that basis.

Charter makes other arguments related to low morale in Smith’s region and his prior work history. The Court need not consider these assertions outside of whether they substantiate the 2 stated reasons for termination.

Charter attempts to tie low morale to absence of a leadership presence by Smith, asserting that “many employees reported that they had not seen him on site for months.” It advances the testimony of Gaebel and the declaration of Gainous. However, nothing in Gaebel’s testimony ties morale issues in the Mountain West Region to Smith or his lack of travel. Gainous’s declaration relates that she met with 12 employees in the Mountain states region 12/12-14/17 to investigate complaints of low morale. The investigation may have some probative value in support of Charter’s claim that Smith needed to travel more but it does not support its position that he was subject to a 50% travel requirement. Her investigation largely uncovered that employees do not like working for Charter compared to their former company — Bresnan — but also noted other concerns including that certain employees wanted to see more of management. She notes that “a couple said they haven’t seen [Smith and Heimstead] in 7-8 months, but ‘maybe they are coming out to see us.'” Another note addresses a lack of communication. She also notes the lack of team meetings and a desire among employees to meet monthly. Her investigation revealed low morale in general and a lack of communication on different levels which may suggest that Smith needed to travel more, but it sheds no light on any specific travel requirement. Charter’s low morale does not substantiate its assertion of good cause to terminate Smith for failing to meet a 50% travel requirement.

Charter’s reliance on Smith’s work history is similarly attenuated. His 4/6/17 Corrective Action Report contains no references relating to the reasons stated for his termination. Indeed, the stated reason for the warning relates to ISP response time and service restoration, availability of ISP sparing tools, and other technical issues and procedures. Heimstead testified that Smith resolved these issues and his subsequent performance review noted improvement. The October warning related to his Facebook post, which may be probative of his indifference towards Charter’s social media policy but does not substantiate either of the stated reasons for termination. Neither low morale nor prior written warnings are relevant to whether its stated reasons for terminating Smith constitute good cause.

Recommended, Charter’s motion for summary judgment be granted with respect to Smith’s claim that it violated its written personnel policy (which he withdrew) and denied in all other respects.

Smith v. Charter Communications, 44 MFR 226, 6/19/20.

Eric Holm (Holm Law Firm), Billings, for Smith; Joshua Kirkpatrick, Michelle Gomez, and David Gasrtenberg (Littler Mendelson), Denver, for Charter.

VENUE: Forum selection clause in employment contract is enforceable, suit transferred to employer’s home state of Georgia… Molloy.

TSYS Merchant Solutions of Columbus, Georgia, seeks to transfer venue in this employment contract dispute with John Fayle based on the contract’s forum-selection clause:

Applicable Law. Any dispute in the meaning, effect, or validity of this Agreement shall be resolved in accordance with the laws of the State of Georgia without regard to the conflict of law’s provisions thereof. This Agreement shall be governed by and construed under the laws of the State of Georgia or, at the Company’s sole option, by the laws of the state or states where this Agreement may be at issue in any litigation involving the Company. Venue of any litigation arising from this Agreement shall be in a federal or state court of competent jurisdiction in Muscogee County, Georgia. (emphasis added).

Caselaw governing interplay between public policy and forum-selection clauses has been applied with variable results. Ultimately, following Magistrate Lynch’s analytical approach in Frontline Processing (D.Mont. 2013), TSYS’s motion is granted.

In Federal Court, federal law applies “to the interpretation of” forum selection clauses. Doe 1 (9th Cir. 2009). They may be enforced through forum non conveniens in a motion to transfer under 28 USC 1404(a). Atlantic Marine (US 2013). A court “may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented” provided such a transfer is “for the convenience of parties and witnesses” and “in the interest of justice.” §1404(a). When a motion is filed under this provision, “a district court should transfer the case unless extraordinary circumstances unrelated to convenience of the parties clearly disfavor a transfer.” Atlantic Marine.

What constitutes an “exceptional reason” or “extraordinary circumstance” is governed by the Bremen (US 1972) factors:

A forum-selection clause is controlling unless the plaintiff makes a strong showing that: (1) the clause is invalid due to “fraud or overreaching,” (2) “enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision,” or (3) “trial in the contractual forum will be so gravely difficult and inconvenient that [the litigant] will for all practical purposes be deprived of his day in court.” Yei A. Sun (9th Cir. 2018).

But these exceptions must be viewed “through the lens provided by Atlantic Marine,” Yei A. Sun, which means the plaintiff bears the burden of establishing that transfer is unwarranted and the court “should not consider arguments about the parties’ private interests.”

Fayle argues that transfer is inappropriate because Montana has a strong public policy against forum-selection clauses, as articulated by MCA 28-2-708:

Every stipulation or condition in a contract by which any party to the contract is restricted from enforcing the party’s rights under the contract by the usual proceedings in the ordinary tribunals or that limits the time within which the party may enforce the party’s rights is void. This section does not affect the validity of an agreement enforceable under [the Uniform Arbitration Act].

If correct, Fayle’s argument would be dispositive as the satisfaction of Bremen‘s public policy factor is sufficient “to render a forum-selection clause unenforceable.” Gemini Techs (9th Cir. 2019).

Our Court recently addressed this argument in 2 cases with different results. In Bjorgen (D.Mont. 2018), Judge Christensen correctly granted a motion to transfer on the grounds that “the Montana Supreme Court found that ‘forum selection clauses are not presumptively void as against public policy.'” (quoting Polzin (Mont. 2008)). After Bjorgen was decided, the 9th Circuit addressed the venue question in the context of Idaho law in Gemini Techs. Idaho St. 29-110(1) states:

Every stipulation or condition in a contract, by which any party thereto is restricted from enforcing his rights under the contract in Idaho tribunals, or which limits the time within which he may thus enforce his rights, is void as it is against the public policy of Idaho.

The 9th Circuit held that the plain language of this statute satisfied Bremen‘s public policy factor. Although explicitly expressing “no opinion” on the outcome under Montana law, it recognized the similarity between the statutes. As a result of that decision, our Court more recently denied a request to transfer venue in Swank, relying on §28-2-708. But even considering Gemini, in my view Swank misses the mark given Polzin and the difference between the statutes.

The Montana Supreme Court’s inconsistent treatment of forum selection clauses and §28-2-708 was thoroughly addressed in Frontline: while Montana may have previously interpreted the statute to invalidate forum selection clauses on public policy grounds, see Polaris (Mont. 1985), Keystone (Mont. 1998); see also Rindal (D. Mont. 1992), Mills (D.Mont. 2009), it has most recently clarified the confusion when it held that “forum selection clauses are not presumptively void as against public policy,” Polzin; see also Milanovich (Mont. 2007). Swank‘s conclusion and Fayle’s argument are therefore unpersuasive and “simply untenable” in the language of Frontline.

Gemini does not impose a different result. It did not rule on the public policy implications of similar Montana and Idaho statutes, and the statutes here are distinguishable. While the Idaho statute explicitly states that it embodies public policy, there is no such language in §28-2-708. That difference is telling because the Montana Legislature has included such language in other statutes. See, e.g., MCA 28-2-2116 (choice of law and venue in construction contracts), 28-2-702 (contracts that exempt one’s own fraud or willful injury of another). In this case it is a distinction with a difference.

As in Frontline, because Fayle’s challenge to the forum selection clause is based entirely on the public policy embodied in §28-2-702 and Swank, there is no other evidence on which to conclude that it is unenforceable. Fayle v. TSYS Merchant Solutions, 44 MFR 227, 7/2/20.

Douglas Scotti (Frampton Purdy), Whitefish, for Fayle; Mark Williams & Peter Ivans (Williams Law Firm), Missoula, and Nathan Chapman (Kabat Chapman & Ozmer), Atlanta, for TSYS

MEDICAL RECORDS CHARGES: Montana limits applicable to paper copies requested by patients, not their attorneys, and not to electronic records… putative class action alleging overcharges dismissed… Molloy.

Ryan Deming, Briana Frasier, Michael McFarland, and Lucas Griswold (collectively “Deming”) allege that a group of Montana hospitals and their records vendor Ciox Health (collectively “Ciox”) overcharged for copies of medical records in violation of Montana law. Ciox seeks to dismiss for failure to state a claim. The motion is granted.

Both state and federal law impose limits on fees for medical records. Under the federal Health Insurance Portability & Accountability Act and its regulations, providers and their vendors may charge a “reasonable, cost-based fee,” limited to the cost of labor, supplies, postage, and preparing an explanation of the records. 45 CFR 164.524(c)(4). The Health Information Technology for Economic & Clinical Health Act further limits the fee for electronic health records to the labor cost in responding to the request. 42 USC 17935(e)(3). However, these limits apply only to records requested by patients for personal use and not to requests from 3rd parties such as insurers or law firms. Ciox (DDC 2020).

MCA Title 50 Ch. 16 Part 8 imposes additional limits on health care providers that are subject to HIPAA. §50-16-801(4), 802. Title 50 Ch. 16 Part 5 governs providers not subject to HIPAA. §50-16-502. Under both parts, “a reasonable fee for providing copies of health care information may not exceed 50 cents per page for a paper copy or photo copy. A reasonable fee may include an administrative fee that may not exceed $15 for searching & handling recorded health care information.” MCA 50-16-816, 540.

Plaintiffs engaged Western Justice Associates about PI suits. The attorneys ordered 3 years of their medical records. For each request Ciox charged a $15 basic fee and a per page fee of 50 or 75 cents. In some cases it also charged a $2 electronic data archive fee. In one instance it charged a shipping fee even though the records were delivered electronically. Invoices did not describe the time or labor involved. The parties agree that Ciox is subject to HIPAA and Part 8 and that because attorneys placed the requests, federal law does not limit the fees, but dispute whether Part 8 limits the fees.

Deming claims that Ciox violated §50-16-816, the Montana CPA, and the implied covenant of good faith & fair dealing. He moved for class certification in 2/20 before any of the Defendants appeared, but the parties eventually agreed that class discovery was necessary. The motion for class certification was denied subject to renewal pending completion of discovery. Ciox moved in 4/20 to dismiss under Rule 12(b)(6).

Although Ciox presents numerous arguments in support of its motion, the dispositive issue is application of §50-16-816:

Unless prohibited by federal law, a reasonable fee for providing copies of health care information may not exceed 50 cents for each page for a paper copy or photocopy. A reasonable fee may include an administrative fee that may not exceed $15 for searching and handling recorded health care information.

Ciox argues that the statute merely defines “reasonable fee,” applying only if some other provision limits the allowable fees, and does not apply to electronically transmitted records. Deming contends that it limits fees for medical records in any circumstance. Applying principles of interpretation for Montana statutes, Ciox has the better interpretation.

Deming asserts that §816 is “a standalone statute requiring that the charge for providing medical records be reasonable.” But it does not require anything; it is purely definitional. Its plain text does not authorize or command providers to take any action, nor does it explain when a fee must be reasonable. More compelling than the text is the structure of Part 8, which shows that §816 merely explains what is meant by “a reasonable fee” as used elsewhere in the statute. It does not apply unless some other provision already limits providers to charging “a reasonable fee” for records.

Only one provision in Part 8 explicitly limits providers to charging “a reasonable fee:” “A health care provider required to disclose health care information pursuant to compulsory process may charge a reasonable fee, not to exceed the fee provided for in 50-16-816, and may deny examination or copying of the information until the fee is paid.” §812(5) (emphasis added). This limits the allowable charge to “a reasonable fee,” which is defined via reference to §816, confirming that 816 is definitional. Indeed, even Part 8’s “Definitions” section defines “reasonable fee” by reference to §50-16-816. §803(7). Deming’s contention that 816 governs the allowable fees in all situations would render the subpoena provision superfluous, in contravention of the MCA 1-2-101 command to “give effect to all” provisions.

By contrast, Part 5 limits healthcare providers to charging “a reasonable fee,” as provided in its version of §816, in 4 situations. Like Part 8, it limits the fees that can be charged in response to a subpoena. §536. However, it also limits the allowable fees for a patient’s own request for records, §541(2), a patient’s authorization to disclose records to a 3rd party, §526(2), and a patient’s request for amended or corrected records, §545(2). Importantly, Part 5 predates HIPAA and Part 8. In enacting Part 8 to govern HIPAA-regulated entities, the Legislature only duplicated the fee limitation regarding subpoenas. Unlike Part 5, Part 8 is silent on the fees allowed in response to requests for 3rd-party disclosure, like the requests here. Deming would have the Court import the provision governing 3rd-party requests from Part 5, notwithstanding the Legislature’s choice not to. But “the office of the judge is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted or to omit what has been inserted.” §1-2-101.

Rather than engage with the text, Deming appeals to Part 8’s purpose to be more restrictive than HIPAA and a snippet of legislative history indicating that “where federal rules don’t apply, current State standards remain in place.” (HB 647 (2003) Legislative History). According to Deming, because federal law does not govern records requests by 3rd parties, Ciox, state law must limit the fees. But neither the purpose nor the legislative history can overcome the Legislature’s failure to impose the same standards on 3rd-party fee requests in Part 8 that exists in Part 5. Further, Deming’s policy arguments about protecting Montanans are overstated considering the federal protections. Had Deming rather than his attorneys requested the records, HIPAA and HITECHA would have limited the fees. 45 CFR 164.524(c)(4), 42 CFR 17935(e)(3).

Finally, as Ciox argues, §816’s plain text does not apply to electronic records, but limits fees “for each page for a paper copy or photocopy.” Deming’s contention that discovery is needed to determine if Ciox’s method qualifies as a photocopy lacks support. And while his argument is well-taken that under this interpretation, fees are limited for the more burdensome process of providing paper copies but not for likely cheaper electronic copies, it is more properly addressed to the Legislature. Part 8 was enacted in 2003 and §816 has not been updated since. As Congress did with HITECHA, the Legislature may need to update the fee statute to comport with practices of our digital world. But in its present form, §816 does not limit fees that can be charged for electronic medical records.

Because state law does not limit fees that can be charged when 3rd parties request electronic records, Deming’s claim under §816 fails. His CPA and implied covenant claims also fail because they are premised on Ciox’s alleged unlawful charge.

Ciox’s motion to dismiss is granted.

Deming, Frasier, McFarland, and Griswold individually and on behalf of all others similarly situated v. Ciox Health, St. Vincent Healthcare, Bozeman Health Deaconess Hospital, Kalispell Regional Healthcare, St. James Healthcare, and Community Medical Center, 44 MFR 228, 7/30/20.

Domenic Cossi, Jory Ruggiero, and Maxwell Kirchoff (Western Justice Associates), Bozeman, for Plaintiffs; Jay Lefkowitz & Joseph Sanderson (Kirkland Ellis), NYC, and Matthew Hayhurst & Randy Tanner (Boone Karlberg), Missoula, for Ciox; Ian McIntosh (Crowley Fleck), Bozeman, for the hospitals.

INSURANCE: Motion to dismiss putative class action challenging subrogation practices of GEICO and related entities granted in part including rejection of boilerplate allegations of personal jurisdiction over non-contracting entities based on a conspiracy theory… Molloy.

James Lee was in an MVA caused by another driver 8/5/19. He was injured and his vehicle was totaled. Lees were insured by GEICO and GEICO General. The at-fault driver was insured by The General Ins. with $25,000/$50,000 bodily injury and $20,000 property damage. Lees received $25,000 from the at-fault driver’s bodily injury coverage and an unspecified amount from GEICO and GEICO General under their med-pay. They also received $3,156.65 from the at-fault driver’s insurer and at least $14,194 from GEICO and GEICO General for property damage. However, they allege that they suffered at least $24,660.18 property damage including $19,124.90 for loss of their vehicle, $2,586.72 for loss of use, and $2,948.56 for damage to its contents. They also claim damages for the cost of a rental vehicle, future medical expenses, loss of income, loss of consortium, and attorney fees. Little detail is provided on the status of their claim against the at-fault driver except that it has not settled. However, GEICO and GEICO General have already subrogated $14,194 from the at-fault driver’s insurer, which Lees claim will prevent them from fully recovering.

Lees sued in State Court 4/3/20 on behalf of themselves and a putative class challenging the practices of GEICO and GEICO General and other GEICO entities with which they do not hold policies. The case was removed to this Court 5/12/20 and Lees filed an Amended Complaint for failure to pay UIM under their policy, violations of the MUTPA, breach of contract and the implied covenant, and conversion. They allege that the GEICO entities with which they did not have a policy are liable on a civil conspiracy theory and aiding & abetting. The GEICO entities moved to dismiss on the basis that Lees lack standing, the Court lacks personal jurisdiction over the non-contracting entities, and Lees failed to state plausible claims for relief.

I. Standing

GEICO seeks to dismiss for failure to state a claim under Rule 12(b)(6). However, standing is jurisdictional, so the motion is construed as a 12(b)(1) motion for lack of jurisdiction. White (9th Cir. 2000). To have standing, a “plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo (US 2016).

GEICO first argues that Lees failed to show injury in fact. “To establish injury in fact, a plaintiff must show that he or she suffered an invasion of a legally protected interest that is concrete and particularized and actual or imminent, not conjectural or hypothetical.” Id. “An injury is imminent if the threatened injury is certainly impending, or there is a substantial risk that the harm will occur.” MEIC (9th Cir. 2014). Lees allege that GEICO’s subrogation impaired their ability to recover from the at-fault driver by depleting the available coverage. GEICO does not contest their concrete interest in recovery from the at-fault driver. Indeed, Montana law recognizes an insured’s right to be “made whole” before an insurer is entitled to subrogation. However, GEICO contends that the alleged harm to that interest is too speculative because it is “impossible to know” whether Lees will fully recover until after their claim against the at-fault driver is resolved. That is not the standard. They have alleged damages in excess of the at-fault driver’s remaining coverage. Paired with the reasonable inference that the subrogation weakens their litigation position against the at-fault driver and her insurer, this is enough to establish a “substantial risk” that they will not be made whole. Id.

GEICO also makes a cursory argument that any harm to Lees is not traceable to its conduct. But had it not subrogated $14,194 they could pursue that amount from the at-fault driver’s insurer. Concerns about double recovery and the amount to which they are ultimately entitled are merits issues. Lees have shown at this stage that GEICO’s conduct poses a substantial risk to their interest in being made whole.

GEICO argues that public policy disfavors allowing Lees’ claims to go forward, contending that their position disincentivizes insurers from making payments up front and treats subrogation differently from offsets. But federal courts sitting in diversity must apply the law of the forum state, and GEICO’s policy concerns have been rejected in Montana, where the insured’s right to be made whole takes precedence over the insurer’s right to subrogate. “When the sum recovered by the Insured from the Tortfeasor is less than the total loss and thus either the Insured or the Insurer must to some extent go unpaid, the loss should be borne by the insurer, for that is a risk the insured has paid it to assume.” Van Orden (Mont. 2002) (quoting Skauge (Mont. 1977) (emphasis in original).

II. Personal Jurisdiction

GEICO also seeks to dismiss the GEICO entities with which Lees do not hold policies for lack of personal jurisdiction under Rule 12(b)(2).

Lees contend that personal jurisdiction exists under Rule 4(b)(1)(A), which confers specific jurisdiction over claims arising out of “the transaction of any business within Montana,” and 4(b)(1)(B), which confers specific jurisdiction over claims arising out of “the commission of any act resulting in accrual within Montana of a tort action.” However, GEICO submitted a declaration from Sarah Davis, an underwriting supervisor who has been with the company for 23 years, affirming that GEICO Advantage, GEICO Choice, and GEICO Marine “do not write/provide auto insurance in Montana or subrogate any claims.” Lees argue that she only establishes that they are “not currently” operating in Montana and that “upon a demonstration of non-participation in Montana subrogation over the past eight years, the companies so demonstrating should be dismissed.” But it is Lees’ burden to demonstrate that jurisdiction is proper, and if they are unable to show that GEICO Advantage, GEICO Choice, and GEICO Marine operated in Montana, they likely cannot show that they are subject to personal jurisdiction under 4(b)(1).

But this Court lacks personal jurisdiction over all the non-contracting defendants, not just those 3, for a more fundamental reason: Lees have not shown that their claims arise from those entities’ conduct in Montana. They do not allege that the non-contracting Defendants participated in handling their claim or the decision to subrogate. Rather, they allege that the non-contracting Defendants are liable for “aiding and abetting” the wrongful subrogation and “civil conspiracy.” Montana courts have not addressed whether an alleged conspiracy establishes jurisdiction under 4(b)(1), but even if sufficient under state law, the conspiracy theory of personal jurisdiction, at least as pled here, fails under the Due Process Clause.

The 9th Circuit has neither recognized nor rejected the constitutional validity of basing personal jurisdiction on an alleged conspiracy, although it seems skeptical of the concept. The only published opinion on the issue concluded that personal jurisdiction under the theory does not exist where the plaintiff “alleges no facts to even suggest a conspiracy.” Underwager (9th Cir. 1995). The later unpublished Chirila (9th Cir. 2002) acknowledged “a great deal of doubt surrounding the legitimacy of this conspiracy theory of personal jurisdiction,” but as in Underwager, ultimately concluded that the allegations of conspiracy were too conclusory. Similarly, this Court reasoned in Steinke (D.Mont. 2003) that it lacked personal jurisdiction because the plaintiff had “not specifically alleged a conspiracy.” Among courts following a similar approach, a general rule has emerged that — assuming a conspiracy theory of personal jurisdiction is viable — to comport with due process “a plaintiff must set forth non-conclusory allegations that the defendant was a member of a conspiracy, that the defendant’s or his co-conspirator’s acts in furtherance of the conspiracy caused harm in the forum, and that the conspiracy individually targeted a known forum resident.” W. States Wholesale Natl. Gas Antitrust Litig. (D.Nev. 2009); see also UMG Recording (C.D. Cal. 2015) (“Even if the theory is viable, to comply with traditional notions of fair play and substantial justice, it must be based on more than conclusory allegations of the existence of a conspiracy.”); Brown (N.D. Cal. 2019) (collecting cases).

The allegations of a conspiracy here are too conclusory to establish personal jurisdiction over the GEICO entities with which Lees do not hold policies. The Amended Complaint merely repeats the general allegation that Defendants acted “jointly” or “engaged in concerted action” to assert wrongful subrogation claims. But the “statement that ‘[defendants] have been acting in concert’ is, by itself, merely conclusory and therefore not entitled to an assumption of truth.” Krypt (N.D. Cal. 2020). And that same allegation is reiterated 9 times without any detail about how the conspiracy commenced or was conducted. Only a single paragraph of the Amended Complaint alleges any concrete action by Defendants:

In addition to the adjustment of Plaintiffs’ claims within the state of Montana, Defendant Insurance Companies also jointly adjust and assert automobile subrogation claims in the State of Montana by (a) working together to design the adjustment procedures and subrogation assertion strategies knowingly designed to deprive insureds of their made whole rights; (b) jointly employing claims adjusters under a single jointly administered employment arrangement; (c) jointly training these adjusters to utilize for all such companies the same procedures in adjusting, including the procedures for collection of subrogation arising from damages suffered by Montana insureds; (d) jointly managing and directing these adjusters on specific procedures for asserting subrogation, and adjusting and evaluating subrogation rights, including the procedures for investigation and evaluation of the insureds losses and collection of subrogation arising from damages suffered by Montana insureds; (e) jointly compensating the adjusters for such conduct, and (f) jointly paying to such adjusters bonuses reflecting common profitability experienced by the collective companies through the implementation of the jointly developed and administered adjustment and subrogation strategies.

But with respect to the alleged conspiracy, it does no more than assert that Defendants acted “jointly.” It “does not allege the conspirators made an agreement specifically regarding [Montana] or its residents,” as required to establish personal jurisdiction based on a conspiracy. W. States.

What’s more is that these are boilerplate allegations, repeated verbatim from a complaint filed by the same counsel against other insurers. See, e.g., Johnson v. State Farm Mutual Auto Ins. (D.Mont. 2020). Nearly the entire pleading is recycled, with counsel barely bothering to use the party names, instead opting for the generic “Plaintiffs” and “Defendant Insurance Companies.” Nonspecific allegations that can be and have been swapped from case to case are insufficient to support personal jurisdiction under a conspiracy theory. Such a practice does not comport with the “traditional notions of fair play and substantial justice” embodied in the Due Process Clause. Walden (US 2014). The non-contracting GEICO entities are dismissed for lack of personal jurisdiction. The conspiracy and aiding & abetting claims, pled only as theories of liability, are also dismissed.

III. Failure to State a Claim

GEICO seeks to dismiss the remaining claims under 12(b)(6.

A. UIM

GEICO’s motion makes clear that it is not seeking to dismiss Lees’ UIM claim. (See Doc. 11 at 2 (seeking “an order dismissing all claims alleged in Plaintiffs’ First Amended Complaint except their Underinsured Motorist claim”).) Nonetheless, it argues that the claim should be dismissed because Lees “omit key facts.” Its argument relies on facts outside the pleadings, which is improper on a 12(b)(6) motion. Lee (9th Cir. 2001); Rule 12(d). The motion to dismiss is denied as to the UIM claim.

B. UTPA Claim

GEICO seeks to dismiss the UTPA claim to the extent that it is based on the failure to advance-pay medicals. Lees concede that Mears (D.Mont. 2012) forecloses their claim based on medicals that were not covered by the at-fault driver’s insurance. The motion to dismiss is granted on those limited grounds.

C. Contract Claims

GEICO argues that Lees cannot maintain a breach of contract or implied covenant claim against the non-contracting defendants. Because they are dismissed for lack of personal jurisdiction, this argument is unnecessary to consider. It also argues that Lees cannot maintain a claim for tortious breach of the implied covenant. Because Lees do not contest that point, the motion to dismiss is granted on those limited grounds.

D. Conversion

GEICO argues that Lees’ conversion claim is barred by the UTPA preemption provision at MCA 33-18-242(3):

An insured who has suffered damages as a result of the handling of an insurance claim may bring an action against the insurer for breach of the insurance contract, for fraud, or pursuant to this section, but not under any other theory or cause of action.

Lees respond that the alleged wrongful subrogation does not qualify as handling of an insurance claim. However, based on the allegations in the Amended Complaint, the subrogation at issue was part & parcel of their claim to GEICO after the accident. Indeed, the subrogation only occurred because they submitted a claim to GEICO under the property damage coverage.

Their argument is also inconsistent with Montana law which allows insurers to subrogate when reasonable “to prevent duplicate payments for the same element of loss.” MCA 33-23-203(2). However, before exercising that right, an insurer must determine whether the insured has been made whole. Van Orden. By itself, then, subrogation does not convert the insured’s recovery; only wrongful subrogation can result in conversion. The Amended Complaint recognizes this. Count 4 alleges that the subrogation only amounts to conversion in this case “because the insurer has failed (a) to make an investigation and determination of all of the losses of the insured, and (b) to assure that the Plaintiffs have been made whole for all their damages as recognized by Montana law.” It goes on to allege that GEICO had “not attempted to investigate, evaluate or quantify the amount of Plaintiffs’ losses which are outside of the coverage’s provided by GEICO and GEICO General.” The failure to conduct a reasonable investigation also forms the basis, in part, of Lee’s UTPA claim. Ultimately, that the same conduct underlies both claims underscores that the UTPA preempts the conversion claim.

GEICO’s motion to dismiss is granted in part: the non-contracting GEICO entities are dismissed for lack of personal jurisdiction, the civil conspiracy and aiding & abetting claims are dismissed, the UTPA claim is dismissed to the limited extent that it is based on failure to advance pay medicals, the breach of the implied covenant claim is dismissed to the limited extent that it is based on a tortious breach, and the conversion claim is dismissed. The motion is denied in all other respects.

James Lee Const. et al v. Government Employees Ins. Co. et al, 44 MFR 229, 8/11/20.

Alan Lerner (Lerner Law Firm), Kalispell, Allan McGarvey (McGarvey, Heberling, Sullivan & Lacey), Kalispell, Brian Joos & Judah Gersh (Viscomi, Gersh, Simpson & Joos), Whitefish, and Evan Danno (Danno Law Firm), Kalispell, for Lees; Ian McIntosh & William Morris (Crowley Fleck), Bozeman, Sheila Carmody (Snell & Wilmer – Phoenix), and Courtney Henson (Snell & Wilmer – Tucson), for Defendants.

DISCOVERY: Vehicle rental company compelled to produce thoroughly educated & prepared 30(b)(6) designees to address topics listed in wrongful death Plaintiffs’ notices (all topics, not just topics specifically identified in Order, to avoid further pettifogging and taking a mile when given an inch), failure to provide knowledgeable designees shall be contempt of court… given Plaintiffs’ failure to specifically request what they now seek and that the materials were ultimately disclosed, sanctions under 37(c) are not appropriate, any other result would value the discovery motion more than the discovery… Molloy.

A Dodge truck pulling a horse trailer owned by Guinnane Ranch and driven by Edwin with Katherine Guinnane as a passenger was in a collision in 7/15 with a Dodge Journey driven by Robert with Nancy Dobbins as a passenger. The Journey was rented from Enterprise RAC of Montana/Wyoming and owned by EAN Holdings. Both Edwin and Robert were killed and Katherine and Nancy suffered serious injuries. Katherine, on behalf of herself and her husband’s estate, in conjunction with Guinnane Ranch, sued Nancy as PR of Robert’s estate alleging negligence and negligence per se and the Enterprise Defendants alleging negligent maintenance.

Plaintiffs seek sanctions against Enterprise for failing to timely supplement discovery regarding maintenance policies and training manuals and failing to produce a qualified prepared witness for their Rule 30(b)(6) deposition. Argument was heard 8/12/20.

A. Training Materials

The crux of this dispute is whether “maintenance policies” could be expected to include employee training materials. Both Enterprise’s Rule 26(a) disclosures and Plaintiffs’ Rule 26(b) discovery requests use the terms “maintenance policies” or vehicle “servicing” or “checklists,” but neither the disclosures nor the requests reference employee training. As a result, Enterprise produced only 3 pages of records in 5/20. Surprised by the dearth of maintenance policies for such a large rental company, Plaintiffs sought and received confirmation that the 3 pages were the “totality of all documents” in Enterprise’s possession.

Plaintiffs emailed Enterprise 4/23/20 to schedule a 30(b)(6) deposition, including 43 topic areas as to Enterprise RAC and 44 as to EAN Holdings. None of the areas referenced employee procedures or training. Counsel for Enterprise responded that he would need to confer with co-counsel and the client, but no further response was provided. Plaintiffs renewed their requests 6/5. Enterprise did not respond. Plaintiffs made a 3rd request 6/11, and even though Enterprise did not respond, Plaintiffs indicated that notices would be sent for a 6/22 deposition. Enterprise finally responded 6/16 with a name, location, and availability of its 30(b)(6) deponent. Plaintiffs agreed to delay the deposition until 7/9.

The day before the deposition, Enterprise objected to many of the topic areas. Plaintiffs responded, noting the unreasonable delay. Enterprise responded that they had “prepared a witness to testify on all topics except those few to which we have objected in total as completely irrelevant.” When asked to justify this delay at the 8/12 hearing, counsel for Enterprise admitted that he could provide no good reason:

The Court: But explain the chronology of this request. As I read the record, and I might not be entirely accurate on the days, but roughly 2 months before the actual 30(b)(6) deposition you had the topics, and sometime during that period there was a request to meet and confer. And then there was no response, literally, and then you get the 30(b)(6) notice, and then the day before the deposition there’s, I guess, objections, is what you call them. But why did it take so long? And if you were anxious for meet and greet and to discuss this, which I think the rules contemplate, why didn’t you do that?

Douglas Baldridge: I can’t defend that, is the answer. I can’t defend that our objections were sent out the day before.

Plaintiffs took the 30(b)(6) deposition of Enterprise’s corporate representative George McNeir 7/9. He referenced several training manuals that had not been produced or specifically identified as a topic for the deposition. A deposition of Marlon Miles proffered similar information. As a result, on 7/15, Plaintiffs sent a letter demanding the documents identified by the 2 employees including:

1. Training Power Point presentations

2. Training packets, McNeir

3. Training road maps, McNeir

4. Training video, Miles

5. New employee handbook, Miles

6. Enterprise Holdings Curriculum.

Plaintiffs further demanded “any additional maintenance policies or training materials, “relying on Enterprise’s obligations under Rules 26(a) and (e). The present motion was file 7/27. 2 days later Enterprise produced:

1. New Hire Orientation – Day 3

2. Digital Image

3. Management Trainee Branch Orientation

4. Trunk to Trunk Inspection Participant Guide

5. Risk Management PowerPoint

6. New Hire Orientation – Day 1

7. Trunk to Trunk Inspection Leader Guide

8. Vehicle Inspection Best Practices

On 8/6 Enterprise produced:

1. Checklist

2. Management Trainee Roadmaps

3. Service Agent and Driver Training.

The emails accompanying both disclosures disavow any obligation to produce the documents. Discovery is closed and we are moving toward a fixed trial date. No further discovery is allowed by virtue of the PTO, absent another order.

The first question is whether Enterprise was required to produce these training materials as part of its initial disclosures. A party has a duty to provide “a copy — or a description by category and location — of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody or control and may use to support its claims or defenses.” Rule 26(a)(1)(A)(ii). However, this obligation is limited to supporting the disclosing party’s claims and defenses. Webster (D.Mont. 2019); see also 2000 Amendment to Advisory Committee Note to 26(a)(1) (“A party is no longer obligated to disclose witnesses or documents, whether favorable or unfavorable, that it does not intend to use.”). Enterprise has stated that it “did not intend to rely upon [these documents] within the scope of their Rule 26 initial disclosures.” Thus so long as it did not intend to use them “to support its claims or defenses” it did not have a Rule 26(a) obligation to produce them.

The next question is whether these materials fell within the purview of Plaintiffs’ discovery requests under Rule 26(b). Rule 26(a)(1) “does not limit the scope of discovery or prohibit the proponent of discovery from seeking additional information.” Allen (D.Kan. 2012). Plaintiffs’ requests included interrogatories related to “standard maintenance procedure” and production related to “policy/procedure manual(s)” and “vehicle maintenance,” “documents relating to the servicing and maintenance of the Dodge Journey,” and Enterprise’s “pre-rental standard procedure” and “policies, procedures or checklists used.” Enterprise argues that Plaintiffs neither alleged negligent training nor requested employee training materials, and employee training was not a noticed 30(b)(6) topic. Thus, until the 30(b)(6) depositions, it distinguished “maintenance” from “training,” even if that literalism was the product of gamesmanship. That distinction crumbled at the 30(b)(6) deposition when the designee repeatedly referred to training materials when asked about maintenance policy.

If a party fails to provide information as required by Rule 26(a) or (e), “the party is not allowed to use that information at a trial unless the failure was substantially justified or is harmless.” Rule 37(c)(1). The Court may also order payment of reasonable expenses or fees, “inform the jury of the party’s failure,” or impose other sanctions outlined by Rule 37(b)(2)(A). Enterprise did not violate 26(a), but 26(e) imposes a duty to supplement disclosures “in a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect.” Rule 26(3)(1)(A). The 30(b)(6) deponent’s references to training materials made clear that these documents reasonably fell within the purview of Plaintiffs’ requests, notwithstanding Enterprise’s prior literal interpretation. Thus supplemental disclosure under 26(e) was required.

But that disclosure has since occurred. It is therefore unclear why Plaintiffs continue to insist that sanctions are warranted. Because the training materials are not part of Enterprise’s 26(a) disclosures, it is prevented from relying on them at trial. And with trial 2 months away, Plaintiffs have plenty of time to review them. Given Plaintiffs’ failure to specifically request what they now seek and that the materials were ultimately disclosed, sanctions under 37(c) are not appropriate. Any other result would, as Enterprise suggests, “value the discovery motion more than the discovery.”

II. 30(b)(6) Deposition

Rule 30(b)(6) requires an organization subject to proper notice to produce a witness who can answer questions about the subject in the deposition notice. (See also Sched. Or. requiring parties to meet & confer “to identify each person the organization will designate to testify and the topic areas that will be addressed”). That includes matters beyond those personally known to the witness. Great Am. Ins. (D.Nev. 2008) (collecting cases). Because the designee speaks on behalf of the entity, he “cannot be a potted plant.” Pioneer Drive (D.Mont. 2009).

Plaintiffs identify 21 ways they believe McNeir was not adequately prepared. Enterprise has responded to each allegation. Ultimately, 30(b)(6) required more than Enterprise provided. The amendments to the Rules and in particular 30(b)(6) were intended to put an end to the kind of antics Enterprise adopted here. The meet & confer requirement has no specific time limit but reason dictates that a hiatus of nearly 2 months falls far short of the “just, speedy and inexpensive” resolution of cases,” Rule 1, and the spirit of the amended rule.

McNeir was not prepared to discuss the Enterprise Defendants’ finances (topics 37-40), corporate relationship or structure (topics 1-4), insurance coverage (topic 5), record and maintenance procedures (topics 28-32), rental operation statistics (topics 33-36), corporate knowledge of tire policy (topics 18-22), or the full rental history of the Journey (topics 7-17). Because those topics were properly identified in the deposition notice, Enterprise was obligated to educate and prepare its designee to address them. Enterprise argues that it issued a “blanket objection” to some of those topic areas prior to the deposition. But a party cannot simply object to deposition topics and not prepare its designee. Those objections must be resolved through a meet & confer process or a protective order. Enterprise did neither.

First, despite being provided with the topic lists in 4/20, it — admittedly without justification — did not notice its objections until the day before the deposition. Thus it cannot now argue that it attempted to resolve any dispute about the topics in good faith prior to the deposition.

Second, 30(b)(6) does not provide a mechanism by which a party can simply refuse to produce or prepare its designee on noticed topics. To the contrary, 30(c)(2) indicates that the examination is to proceed subject to objection. While Enterprise could have sought a protective order to challenge those areas that it believed were irrelevant, it did not do so. And now that ship has sailed. It was obligated to provide a witness or witnesses who could accurately answer questions about the relationship between the Enterprise entities, as well as their insurance, including information about their profits, number of vehicles, rental days, operational history, and corporate knowledge of safety concerns. It did not do so.

Rule 37(c) allows a range of sanctions for failure to comply with 30(b)(6). See Pioneer Drive (“Many courts treat the failure of an organization to produce a prepared and educated witness under Rule 30(b)(6) as tantamount to a nonappearance at a deposition, meriting the imposition of sanctions.”) A variety of sanctions have been invoked when a party fails to produce an adequate 30(b)(6) deponent, including:

(1) costs and attorneys’ fees incurred in filing a motion to compel, (2) monetary sanctions against the non-complying party and its counsel, (3) an order compelling compliance with Rule 30(b)(6) and requiring an educated deponent to be produced, (4) requiring a corporation to redesignate an adequately prepared witness to testify in the new deposition at the corporation’s expense. Great Am. Ins. (collecting cases).

Other courts have precluded witnesses from testifying on subjects about which the designee was unable to provide knowledge and specific responses. Reilly (2d Cir. 1999). The jury could also be instructed that it may draw adverse inferences where wrongdoing prevented the opposing party from gaining discoverable information.

Given the nature of this 30(b)(6) violation, sanctions like those in Pioneer Drive are warranted. Enterprise must designate a person or persons to be deposed by Plaintiffs on all matters in its prior 30(b)(6) notices, at a location of Plaintiffs’ choosing (because of COVID, video remote is permissible). (While the Court would normally limit the new deposition to topics specifically identified above, Enterprise has demonstrated that if given an inch it will take a mile. To avoid further pettifogging, all topics in the deposition notices may be addressed.) Enterprise must pay Plaintiffs’ costs and expenses as well as 1 attorney’s fees for retaking the deposition(s). They shall take place before 9/7/20. To ensure that this does not happen again, it shall file a statement with the Court prior to the deposition(s) identifying whom it has designated on each topic. Failure to provide knowledgeable designees shall be treated as contempt of court. Rule 37(b). However, unlike Pioneer Drive, attorney fees are not awarded on the present motion. As discussed above, Plaintiffs do not prevail under Rule 37(c).

Guinnane et al v. Dobbins and Enterprise Rent-A-Car et al, 44 MFR 230, 8/14/20.

James Geddes, Katherine DeLong, and Trent Gardner (Goetz, Baldwin & Geddes), Bozeman, for Plaintiffs; Patrick Sullivan & Randall Colbert (Poore Roth & Robinson), Butte, for Dobbins; Douglas Baldridge & Theodore Randles (Venable LLP), DC, for Enterprise.