CRIMINAL DEFAMATION: Montana statute unconstitutionally overbroad for lack of specific “actual malice” mens rea, contrary to Lynch’s implied reading… sua sponte summary judgment for disbarred attorney charged with criminal defamation of judicial election opponent… Molloy.

Magistrate Lynch’s Findings & Recommendation.

Robert Myers ran against Judge Langton in 2016. He claimed that Langton was unfit for office and ran several ads accusing him of abusing his power, purchasing and using illegal drugs, and drinking with minors. ODC filed misconduct complaints against Myers based on the ads, and the Montana Supreme Court disbarred him in 12/17. After learning in 5/17 that the Missoula Co. Sheriff’s Dept. was investigating a criminal defamation complaint filed against him by Langton, Myers commenced this action challenging constitutionality of Montana’s criminal defamation statute, §45-8-212. The State requests summary judgment that the statute is constitutional on its face and as applied to Myers.

Myers claims the statute is unconstitutionally overbroad & vague because it does not have an actual malice requirement, does not require the State to show falsity, and shifts the burden to the defendant by making truth an affirmative defense. He claims it is unconstitutional as applied to him because he is inhibited from continuing to speak out against Langton even if his statements are true and without actual malice.

It is well-established that “true communications are constitutionally protected” and not actionable as defamation in a civil suit or criminal prosecution. Helfrich (Mont. 1996); Sullivan (US 1964); Garrison (US 1964). Consistent with this principle, §45-8-212(3) recognizes that truth is a justification that precludes criminal liability for defamation. However, Myers contends that because of the way the statute is structured it does not require the State to prove falsity and improperly makes truth an affirmative defense that a defendant must allege and prove to avoid conviction. While this may be one plausible reading, the State offers an equally plausible reading pursuant to which it bears the burden of proving falsity. §212(3) can reasonably be read as setting forth exceptions to criminal defamation, rather than affirmative defenses. Under this reading, if defamatory matter is true, it is not punishable as criminal defamation and the State would have the burden of proving falsity as an element of the offense to obtain a conviction.

Where a statute is susceptible to different constructions, one of which raises constitutional concerns and the other does not, the Court must read it so as to avoid the constitutional problem. The State’s construction is the more reasonable because it avoids any constitutional problems raised by relieving it of having to prove falsity and construing truth as an affirmative defense that must be proven by the defendant.

Further, as the State points out, when the Montana Legislature intends to establish an affirmative defense to a criminal offense, it has done so expressly. See MCA 45-3-115 (“A person charged with prostitution [and related offenses] … may assert an affirmative defense that the person is a victim of human trafficking.”); MCA 80-18-11 (affirmative defense for possession or cultivation of marijuana). Unlike these statutes, MCA 45-8-212 says nothing about truth being an affirmative defense to criminal defamation or placing the burden of proof on the defendant. Had the Legislature intended for truth to be an affirmative defense to criminal defamation it could have explicitly designated it as such. Instead, it drafted §212(3) to effectively preclude criminal liability for true statements, thereby leaving it to the State to prove falsity.

Finally, construing the statute to require proof of falsity is consistent with the rule of lenity, which provides that when a criminal statute is subject to more than one reasonable but conflicting interpretation it should be construed in favor of the defendant. Stoner (Mont. 2012).

Sullivan held that in a civil defamation action by a public official seeking damages for a false statement regarding his official conduct, he must prove that “the statement was made with ‘actual malice’ — that is, with knowledge that it was false or with reckless disregard of whether it was false or not.” Garrisonextended that holding to criminal defamations and declared Louisiana’s criminal libel statute unconstitutional because it did not establish truth as an absolute defense and punished false statements concerning public officials without requiring proof of actual malice.

The State agrees that Montana’s statute does not expressly include the actual malice standard, but argues that the Court should interpret it as incorporating the requirement. 1st, it relies on the principle that the Legislature is presumed to be aware of case law when it enacts or amends a statute. Swanson (Mont. 2002). The Legislature enacted §45-8-212 in 1973 and has amended it several times. Because Sullivan and Garrison had been decided several years earlier, the Court presumes that the Legislature intended to comply with them when it enacted 45-8-212 in its present form. 2nd, he State relies on the principle that the Montana Supreme Court presumes that statutes are constitutional and will adopt an interpretation that renders one constitutional rather than one that renders it invalid. Because 45-8-212 does not contain any intent element on its face, it is susceptible to different interpretations, one of which requires proof of actual malice and one which does not. If the Court were to accept Myers’s interpretation and read it as allowing for criminal liability without proof of actual malice, it would be unconstitutional under Sullivan and Garrison. The Court can avoid this problem by interpreting it more narrowly as requiring actual malice in cases involving public matters. The latter is consistent with Montana’s principles of statutory construction and is supported by the Montana Supreme Court’s application of the actual malice standard in civil defamation cases. Roots (Mont. 1996). Like its criminal counterpart, the civil statute, §27-1-802, does not expressly incorporate the actual malice standard. The Montana Supreme Court has nevertheless applied the Sullivan standard and held that a “public figure cannot recover damages upon a claim for defamation without a showing of actual malice.” Roots. This suggests that it would do the same in the criminal context where the rule of lenity applies.

Recommended, the State’s motion for summary judgment be granted.

– – –Judge Molloy’s Opinion & Order.

Robert Myers argues that it was error for Judge Lynch to judicially construe MCA 45-8-212 to include an actual malice standard; conclude that there was not an intent element, which made the statute ambiguous; apply Montana’s reasonable doubt burden of proof; ignore Myers’s vagueness argument; assume that the statute as written does not conflict with 1st Amendment precedent; and fail to address the constitutionality of the claims presented in his Response to Summary Judgment. He is a disbarred lawyer proceeding pro se. Despite his legal background, his pro se status requires his filings to be construed liberally, Bernhardt (9th Cir. 2003), complicating review of his objections. In light of his status, his objections are considered specific enough to elicit de novo review in those areas identified. Ultimately, §45-8-212 is substantially overbroad because it does not include an actual malice requirement, Sullivan(US 1964), Garrison (US 1964), and its overbreadth cannot be cured by a narrowing interpretation.

A defamatory statement must be “made with ‘actual malice’ — that is, with knowledge that it was false or with reckless disregard of whether it was false or not.” Sullivan. Myers argues that 45-8-212 is facially invalid because it does not include an “actual malice” requirement. It “should not be deemed facially invalid unless it is not readily subject to a narrowing construction by the state courts and its deterrent effect on legitimate expression is both real and substantial.” Erznoznik (US 1975); Broadrick (US 1973). In the 1st Amendment context, “a law may be invalidated as overbroad if a substantial number of its applications are unconstitutional, judged in relation to the state’s plainly legitimate sweep.” Stevens (US 2010). Substantial overbreadth does not exist if the statute’s application can “be cured through case-by-case analysis of the fact situations to which its sanctions may not be applied,” Broadrick,and “there must be a realistic danger that the statute itself will significantly compromise recognized First Amendment protections of parties not before the Court,” Jews for Jesus (US 1987); Taxpayers for Vincent (US 1984).

Because Myers challenges a state statute, Montana’s rules of statutory construction apply. Harris (9th Cir. 2013). First, the Court must presume that when the Montana Legislature enacts or amends a statute it is aware of existing law, including decisions interpreting statutes. Swanson (Mont. 2002). Thus when Montana enacted 45-8-212 in 1973 it is presumed to have been aware of Sullivan and Garrison. However, the 1973 statute was based on the 1962 version of the Minnesota Criminal Code, which did not consider Sullivan or Garrison. Moreover, Helfrich (Mont. 1996) held that the statute was unconstitutionally overbroad for including language that prevented truth from being an absolute defense. The 1997 Legislature was forced to amend it to remove the offending language. As a result, the Legislature’s omnipotence as to the state of the law has been enervated in this context. (While Myers did not object to Lynch’s determination that the statute does not improperly make truth an affirmative defense, Shumway (Mont. 2019) may raise a question whether §45-8-212(3)(a) remains appropriately drafted (where an exception to a criminal statute is separate from the enacting clause, the exception is to be proven by the defense).)

2nd, statutes are presumed constitutional and courts must “construe statutes narrowly to avoid an unconstitutional interpretation if feasible.” Morris(Mont. 2006). In doing so, they must be read “as a whole, without isolating specific terms from the context in which they are used by the Legislature.” Id.Nevertheless, criminal regulation of 1st Amendment expression is subject to exacting review. Ytterdahl (Mont. 1986); Gooding (US 1972). Courts must look no further if the plain meaning clearly conveys the intent behind the statute. Holeman (Mont. 1996). Moreover, Supreme Court precedent does not “authorize a court in interpreting a statute to depart from its clear meaning.” US v. Sullivan (US 1948). The explicit terms of 45-8-212 do not include an actual malice requirement. Recognizing the indefensibility of such broad language, the State argues for a narrowing interpretation that includes the requisite mental state. The question then is whether “actual malice” is contained “in substance” in the statute. Montana has never specifically held that 45-8-212 is limited to situations involving “actual malice.” The next question is whether it could do so. It has read constitutional standards into criminal cases involving “fighting words” under the 1st Amendment. O’Shaughnessy (Mont. 1985) (narrowly construing a Whitefish City ordinance to apply only “to words that have a direct tendency to violence”); Lance (Mont. 1986) (narrowly construing intimidation statute to require “true threat”). However, those statutes included the basic element or phrase at issue, providing an arguably ambiguous starting point from which the Court could apply a narrowing construction, while 45-8-212 does not mention “actual malice” or falsity. As was the case in Helfrich, Turner (Minn. 2015) struck the part of its defamation statute that prevented truth from being an absolute defense, but it went a step further, holding that it was unconstitutional and could not be narrowly interpreted to include the absent mental state because that “would constitute a serious invasion of the legislative domain.” (quoting Stevens). The Minnesota Legislature responded by amending its criminal defamation statute to add a scienter requirement based on a matter’s “false” character. Such legislative amendment is necessary here.

There is an argument that a general mens rea statute could provide the necessary scienter. Phelps (10th Cir. 1995); Osborne (US 1990) (an absent mens rea requirement may be “cured by another law that plainly satisfies the element of scienter”). MCA 45-2-103(1) states that for most offenses (excluding deliberate homicide), “a person acts while having one of the mental states of knowingly, negligently, or purposely.” This is not a saving grace for 45-8-212, because “actual malice” is a unique mental state that could not be achieved by reading a “knowingly, negligently, or purposefully” requirement into it. “No recognition is given the reckless disregard and knowing falsity standard mandated by” Sullivan and Garrison. Armao (Penn. 1972). To read such a requirement into it goes beyond mere judicial activity to “judicial legislation.” Id. The Court cannot “rewrite a law to conform it to constitutional requirements,” and to read 45-8-212 as the State desires “requires rewriting, not just reinterpretation.” Stevens. See also Lenio (11th Judicial Dist.) (Judge Ulbricht holding that reading “actual malice” into the statute “would constitute a serious invasion of the legislative domain” and ultimately finding 45-8-212 overbroad) (quoting Stevens)).

I reluctantly disagree with Judge Lynch’s view. Because §45-8-212 is unconstitutionally overbroad, I do not address Myers’s remaining arguments including his alleged vagueness claim. That said, as the line between knowledge and ignorance becomes even more nuanced in the age of electronic communications and social media, specific statutory guidance is imperative. O’Shaughnessy, Smith (US 1974), Stevens.

Summary judgment is granted in favor of Myers. Rule 56(f)(1); Gospel Missions (9th Cir. 2003) (upholding sua sponte grant of summary judgment in favor of nonmovant where the movant’s filing of its own summary judgment motion addressed the issues on which summary judgment was granted).

Myers v. Ravalli Co. Atty. Fulbright and AG Fox, 44 MFR 197 (Lynch), 198 (Molloy).

Robert Myers, Hamilton, pro se; Asst. AGs Stuart Segrest & Matthew Cochenour.

FELA/LIA/FRSA: $2,171,154.50 verdict for termination of conductor who claimed injury in fall from locomotive over RR’s contention that he falsified report of off-work injury upheld… $42,732.47 prejudgment interest added to $500,000 emotional distress award plus $657,107 attorney fees, $81,713.22 expenses, $233,993.70 expert fees, $23,308.94 taxed costs… Christensen.

BNSF Conductor Zachary Wooten of Columbia Falls was unlawfully terminated in 9/15 in retaliation for reporting an injury which he claimed he sustained when he exited a locomotive near Coram 7/31/15 to conduct a “roll by” inspection of another train. He claimed that while trying to open the locomotive door he heard a pop and felt pain in his right wrist, and that after finishing the roll-by he grabbed the handrails to climb back on the locomotive and his wrist gave way and he fell onto the ballast, suffering “severe and disabling” injuries to his wrist and arm. He informed his superiors of his injuries and the condition of the door handle. Following an investigation, BN terminated him for dishonesty. He sued alleging violations of FELA, LIA, and FRSA. A Missoula jury found 11/5/18 that BN had not violated LIA but had violated FELA and FRSA. It assigned to him 25% contributory negligence and awarded $17,570 for lost wages & benefits to the date of trial, which the Court reduced by 25%, $1,407,978 future lost wages & benefits reduced to present value, and $500,000 for mental & emotional humiliation or pain & anguish, and $249,999 punitives. Wooten moves for attorney fees and non-taxable costs. BN moves for JML, new trial, to alter or amend judgment, remittitur, and oral argument. BN’s motions are denied in their entirety and Wooten’s motions are granted in part and denied in part.

The Court’s analysis of BN’s arguments on Wooten’s FRSA claim are aided by recent clarifications provided in Rookaird v. BNSF (9th Cir. 2018) and Frost v. BNSF (9th Cir. 2019). BN argues that JML is warranted because Wooten failed to prove “the knowledge” and “contributing factor” elements and the “same action affirmative defense.” As pointed out by Wooten, this is the 5th iteration of BN’s arguments for JML, and the Court again finds them unpersuasive. For example, BN argues that it “proved by clear and convincing evidence it would have taken the same unfavorable personnel action absent Plaintiff’s protected activity.” It states that dishonesty is a “stand-alone dismissible offense,” it followed its internal investigation and discipline procedures, and “disinterested individuals” reviewed and approved of Wooten’s dismissal. Further, it asserts that it consistently disciplines employees for dishonesty “absent any injury report” and “does not discipline the vast majority of employees who report injuries.” It made these exact same arguments to the jury. It repeatedly claimed that it would have terminated Wooten for being dishonest but points to no dishonestly outside the report itself. The jury reasonably concluded that its accusations of dishonesty were hollow. It also weighed BN’s claims that it routinely terminates dishonest employees against Wooten’s evidence that it had not fired numerous employees who had been found to be dishonest, one of whom had been dishonest in reporting an injury. The jury’s determination that it failed to carry its burden of clear & convincing evidence was reasonable.

BN advances numerous arguments in support of its request for a new trial. For example, it asserts that it suffered significant prejudice as result of the Court’s decision not to bifurcate trial of Wooten’s FRSA claims from his FELA and LIA claims and to further bifurcate “issues of punitives damages.” Looking back after an 11-day trial, the Court is reaffirmed in its decision — significant overlap existed in the evidence related to the various claims advanced by Wooten which greatly increased the benefit of trying all claims together. Nor is the Court convinced that the combined trial was particularly prejudicial to BN or that the jury was incensed by undefined “punitive testimony.” Wooten’s claims are not as complicated and easily confused as BN asserts, and the jury was given limiting and curative instructions — just not the unnecessarily redundant limiting instructions BN requested.

BN asserts that a number of evidentiary errors warrant a new trial. For example, it argues that several pre-trial rulings allowed Wooten to “game the system” by concealing evidence on his cell phone that would have proven that he suffered his injuries after drinking to excess and falling down a steep hill. To the extent that it has implicated the ruling on the limits of Rusty Weber’s testimony, the Court relies on its articulated reasons for limiting that testimony under Rules 403 & 613(b) including that BN had not established that there was an inconsistent statement to be impeached, Weber was in the throes of alcoholism and admitted that his memory could have been impaired and he was likely drunk at the time. Going back to the pre-trial rulings that BN complains of, the Court denied its motion to compel the forensic examination of Wooten’s phone and request for the 2nd deposition of Greg Smith because they were filed 3 months after the close of discovery and BN had not shown good cause for again deposing Smith. BN claims that as a result of the disclosure of billing records, it “now knows that Plaintiff’s ‘forensic expert’ was conducting repeated testing while simultaneously moving for a protective order.” However, it fails to connect relevancy of its revelation with any legal reason to support a new trial other than the bald assertion that it has “significant concerns that a fraud has been perpetrated on the Court.” The Court does not share BN’s concern and will decline its invitation to “conduct an independent investigation in order to determine whether it has been the victim of fraud.” (Chambers (US 1991). This is an invitation to engage in a 1-sided fishing expedition based on BN’s misplaced reliance on suspect evidence from a suspect source.

BN asserts that it was inconsistent for the jury to find that it had not violated the LIA before finding that it was negligent under FELA, and also inconsistent to find Wooten contributorily negligent while simultaneously finding that BN violated FRSA because the only way the jury could have found Wooten negligent is to have found that he had a preexisting injury. “Where there is a view of the case that makes the jury’s answers to special interrogatories consistent, they must be resolved that way.” Ellerman (US 1962). Indeed, the verdict must be upheld unless it is “impossible ‘under a fair reading’ to harmonize the answers.” Magnussen (9th Cir. 1996). Here, it is far from impossible. The Court proceeds to walk through but one possible harmonization of the verdict. First, the jury was asked whether Wooten proved that BN had violated the LIA and found that he had not. Since it was instructed that he needed to prove that the door latch was “not safe to operate without unnecessary danger of personal injury,” it is entirely possible that it was not convinced that the latch posed such a threat. However, the outcome in the FELA claim is not dependent on the outcome in the LIA claim, although BN’s violation of the LIA would establish negligence per se under FELA. Accordingly, the jury was not obligated to find no negligence simply because it did not find “unnecessary danger.” Indeed, it was directed to next assess whether Wooten proved that BN was negligent in connection with the incident. BN did not need to overlook an “unnecessary danger” to be found negligent. Thus it was entirely consistent to conclude that BN was negligent in maintenance of the door or latch. Second, the jury did not need to find that Wooten “was injured to some degree before reporting to work” to find him contributorily negligent, as argued by BN. Facts elicited at trial could very reasonably have been interpreted to show that he was negligent when he continued to perform his work duties after feeling and hearing the “pop” in his wrist. To be sure, assignment of 25% responsibility to Wooten seems entirely reasonable and consistent with this level of negligence. Nonetheless, he could have been entirely responsible for his injury at work and still notify BN of a work-related personal injury and still be retaliatorily discharged in violation of FRSA. It hardly needs to be pointed out that the jury could have logically progressed to a finding of retaliation by finding that Wooten had reported a work-related injury in good faith — that was his theory of the case from beginning to end. The verdict is internally consistent and consistent with the clear weight of the evidence.

BN takes issue with the basis for awarding front pay, emotional distress, and punitive damages and the verdicts themselves. The Court is obligated to uphold the jury’s finding “unless the amount is grossly excessive or monstrous, clearly not supported by the evidence, or based only on speculation or guesswork.” Del Monte Dunes (9th Cir. 1996).

The jury awarded Wooten $1,407,978 for lost wages & benefits in the future, reduced to present value (“front pay”) for BN’s violation of FRSA. FRSA provides for reinstatement, backpay, and compensatory damages. In a variety of contexts, reinstatement is considered an equitable remedy with front pay an equitable alternative if it would be inappropriate to reinstate the plaintiff. The parties are not disputing whether Wooten should be reinstated, but whether front pay is appropriate and whether it should have been determined by the Court instead of the jury. Reinstatement is not appropriate because of the years since the incident and because this protracted & aggressively litigated suit demonstrates significant hostility and animosity between BN and Wooten. Consequently, front pay is the appropriate remedy. Moreover, because the Court finds front pay to be an equitable remedy under FRSA and because it submitted the issue of front pay to the jury after the testimony of Wooten’s economist Jeffrey Opp, the Court will treat the award as advisory. Opp presented a reliable mathematical process by which the jury could calculate a reasonable award to compensate Wooten for what would have been a life-long career and the award falls squarely within Opp’s “projected future lost railroad earnings.” Although front pay is not intended to compensate a plaintiff for “sitting by and idly doing nothing,” Opp’s analysis took Wooten’s potential earnings in his current career as an insurance salesman into account. BN is one of the best-paying jobs available to individuals with limited education in Kalispell, and Wooten loved the job and had ambitions within the company. Treating the front pay award as advisory, the Court is satisfied that it is a sound award that is supported by the evidence and is not grossly excessive.

The jury awarded Wooten $500,000 for mental & emotional humiliation or pain & anguish. BN claims that he failed to prove that he suffered emotional distress, relying heavily on its contention that emotional distress must be supported by objective evidence. However, the 9th Circuit does not impose an objective evidence requirement on emotional distress awards. Passantino (9th Cir. 2000). While BN points out that the award in Passantino was supported by objective evidence, this argument misses the point. Giving the jury award “great deference,” and viewing the evidence in the light most favorable to Wooten, the Court cannot conclude that it is grossly excessive, monstrous, clearly unsupported by the evidence, or based only on speculation or guesswork, First Alliance Mortgage (9th Cir. 2006), particularly in light of the fact that he came from a “railroad family” in a small “railroad town” and was wrongfully terminated and decried as a liar by the railroad. He testified to the emotional impact this had on him, and the Court found his testimony compelling.

The Court is not convinced that simply because BN had anti-retaliation safeguards it should be able to avoid punitives under FRSA. It repeatedly emphasized its safeguards but the jury nonetheless found that it retaliated against Wooten in violation of FRSA. Inherent in this conclusion is the finding that its safeguards did not prevent discrimination. In other words, its safeguards are ineffective. If they are ineffective, they need to be fixed. Allowing BN to point to those safeguards to escape punitive liability does not further this goal, does not further Congress’ goal of bringing railroads to account for discrimination, and does not further the goal of punitives themselves. As to BN’s argument that Wooten needed to prove appropriateness of punitives by dear & convincing evidence, the instruction that the jury needed to find by a preponderance of the evidence that BN’s conduct was malicious, oppressive, or in reckless disregard of his rights substantially mirrors the Model Civil Jury Instructions for the 9th Circuit and comports with a conventional rule of civil litigation. BN claims that this standard is incongruous when it must prove its defenses by clear & convincing evidence but does not explain how this is so and the Court does not find it so. The Court does not consider the punitives award grossly excessive, monstrous, unsupported by the evidence, or based only on speculation or guesswork.

Wooten asks the Court to amend the jury award to give him backpay under FRSA, interest on this backpay, prejudgment interest on his emotional distress award, and a tax “gross up.” The Court will amend the judgment to provide prejudgment interest on the emotional distress award in the amount of $42,732.47. It will not amend the judgment to reallocate part of the FRSA award to back pay or provide a tax gross up. As to the tax gross up, the Court cannot be positive that the jury did not take tax consequences of a lump sum into account — the award falls between Opp’s calculations of the loss amount — and the Court does not find the award excessive or unsupported and is not convinced that the balance of equities requires BN to shoulder tax consequences of a protracted front pay award intended to compensate Wooten for 30 years of missed employment with BN.

Wooten submits that a reasonable rate for his representation would be $600/hr for William Jungbauer, $400/hr for John Magnuson, $325/hr for Christopher Bowman, $400/hr for Michael McReynolds, $150/hr for paralegal Nate Miller, and $100/hr for administrative assistant Shivohn Colwell. (BN appropriately argues that time by an administrative assistant should be considered clerical and subsumed in firm overhead. Nadarajah (9th Cir. 2009).) Wooten claims that his legal team deserves these rates because it brought “decades of experience specifically dealing with the railroad industry” which made it particularly suited to handling intricacies of litigating his FRSA suit. Indeed, his team has demonstrated a thorough & reliable understanding of the state of FRSA litigation on a national scale. Nevertheless, the Court has more to weigh than merely its experience & effectiveness. And, naturally, BN claims that these rates are exorbitant.

Generally, “the relevant community is the forum in which the district court sits.” Blum (US 1984). However, rates outside the forum may be used “if local counsel was unavailable, either because they are unwilling or unable to perform because they lack the degree of experience, expertise, or specialization required to handle properly the case.” Barjon (9th Cir. 1997). Wooten claims that rates outside Montana should be considered because the complexity of this litigation required the caliber of representation that could only be attained by attorneys with “nationwide experience in railroad litigation.” BN claims that Wooten’s counsel’s fees should be limited to prevailing rates for Missoula lawyers: $220 for lead counsel, $195 for secondary counsel, and $95 for paralegals. While the Court is certainly reluctant to state that Montana attorneys are unable to perform this type of litigation because of lack of experience, expertise, or specialization, it is also unaware of a Montana firm that is currently representing claimants in FRSA litigation at this level. To be sure, FRSA litigation is highly specialized and Wooten’s attorneys have risen to national prominence in this area for good reason. Although the Court declines to define the relevant community as broadly as “attorneys with nationwide experience in railroad litigation,” it will expand the relevant community to include the Pacific Northwest with an eye toward the Western District of Washington where Yaeger & Jungbauer Barristers have recently had reasonableness of their fees evaluated in 2 cases. Wooten has submitted affidavits of his attorneys in support of their rates, surveys of market rates on a national scale, and declarations of other attorneys with similar railroad litigation practices that support their requested rates. Additionally, the Western District of Washington in 2016 awarded Jungbauer $425/hr, Bowman $275/hr, and paralegal Miller $110/hr. The rate for local counsel who sat 2nd chair was determined to be $350/hr. These rates do not seem particularly unreasonable considering the risk in taking an FRSA claim on a contingency, YJB’s national prominence in FRSA litigation, the knowledge required to litigate an FRSA claim, and the competency & diligence required to successfully litigate this particularly contentious claim. The Court determines that the prevailing rates for YJB’s services are $425 for Jungbauer, $350 for Magnuson and McReynolds, $275 for Bowman, and $110 for Miller.

BN has taken an extremely hostile view of YJB’s hours calculation. For example, it has objected to all but 33 of Jungbauer’s nearly 755 hours. This is unreasonable. “Trial courts need not, and indeed should not, become green-eyeshade accountants. The essential goal in shifting fees (to either party) is to do rough justice, not to achieve auditing perfection.” Fox (US 2011). BN claims that Wooten’s request impermissibly intermingles time litigating his FELA and LIA claims with that litigating his FRSA claim. However, it made the circumstances supporting his FELA claim central and directly relevant to his FRSA claim. Owing to the overlap and thorough intertwining of these claims, the Court is not convinced that had they been bifurcated the hours on the FRSA claim would have been significantly less. Contrary to BN’s assertion, Wooten did not create this problem; BN did when it wrongfully terminated him after claiming that he lied in making an injury report. Moreover, Wooten asserts that he has made a good faith effort to parse out the work on these claims, and the Court is obligated to defer to YJB’s calculation. Id. Nonetheless, the Court finds a commingling of activities that pertain to both the FELA and FRSA claims. This overlap was probably inescapable, but nevertheless warrants an adjustment, which can be accomplished by a 10% “haircut.” Moreno (9th Cir. 2008). As to BN’s assertion that the Court should compare hours in other cases to determine reasonableness of YJB’s calculation, the Court does not find a comparison of hours in randomly selected FRSA cases across the country to be useful. This case was fought tooth & nail from the beginning and involved protracted & contentious discovery disputes, extensive motion practice, an 11-day trial, and a dismaying lack of cooperation between the parties. BN claims that the hours Wooten claims is so “stunning” as to result in “no award at all.” The Court does not share its alarm at the sheer number of hours claimed. YJB calculates that its team expended nearly 2,400 hours litigating this case since its inception in 9/15. The trial consumed 11 long days. Disregarding that attorneys for both parties likely spent upwards of 16 hours a day throughout the trial, the Court can confidently estimate that Jungbauer, Magnuson, Bowman, and Miller spent at least 8 hours in the courtroom each day. That means that roughly 15% of their time was spent physically trying the case. In this Court’s experience with cases as heavily litigated as this one, this is not surprising. As noted by Wooten, the Court has limited information to compare the hours expended by BN, but of the information available, it spent over 3 times the hours spent by YJB litigating motions to compel in front of the Magistrate. After reviewing YJB’s timesheets, the Court finds that — apart from the 10% haircut and the specific items to be removed from the lodestar calculation, the hours were reasonably expended, meticulously recorded, and not excessive, redundant, or otherwise unnecessary. BN’s argument that YJB engaged in inappropriate “block billing” is without merit.

BN claims that YJB’s time seeking to enjoin its investigation into Mark Voelker’s conduct is inappropriate because it was “unsuccessful” and “did not have any bearing on [Wooten’s] claims.” Wooten counters that merely because a motion was unsuccessful does not mean it was unreasonable, and asserts that he sought the injunction because of a concern that BN’s investigation of his co-workers would create a “chilling effect” that would make it harder to pursue justice. While the Court appreciates the potential chilling effect BN’s investigation would have, it continues to believe that this chilling effect did not have any impact on Wooten. Additionally, YJB has already filed a complaint against BN in this Court on behalf of Voelker. Hours expended on Voelker’s behalf appear unrelated to this case, but his deposition and assistance to YJB in this case — although not presented at trial — were reasonably expended and billable on Wooten’s behalf. The Court will reduce only 14.8 hours which were expended litigating the injunction of Voelker’s investigation.

BN asserts that Wooten’s counsel should not be compensated for time litigating propriety of their use of internal BN documents obtained through their contact with Michael Hart — “misconduct that was worthy of sanctions” or fees accrued during the deposition of Nancy Ahern when the documents surfaced. Wooten responds that the Court did not impose all of the sanctions requested. The Court fails to see how this is relevant. The fact is that “Wooten’s counsel used internal BNSF documents at Ahern’s deposition that he knew or reasonably should have known were misappropriated by Hart, without providing notice to BNSF or the Court.” The Court will not now allow YJB to recover fees for time litigating the Hart matter or propriety of sanctions. However, merely because the documents surfaced at Ahern’s deposition does not mean that its time at that deposition should be excluded. 49.65 hours will be excluded.

BN asserts that Wooten should not recover fees for the “hundreds of hours chasing ‘goblins’ in discovery and seeking discovery sanctions.” It provides no support for its contention that this time is unrecoverable; it merely asserts that the information related to the FELA claim and “had no bearing on the outcome of the FRSA case.” Again, BN made the facts of Wooten’s FELA claim relevant to his FRSA claim. For example, the Court cannot be convinced that his search for video evidence of the incident “had no bearing on the outcome of the FRSA case” when it claimed that his version was fabricated.

BN contends that Wooten should not be entitled to fees incurred in seeking recovery of fees. It fails to cite authority on this. The 9th Circuit permits “fees-on-fees” and they are warranted here. Thompson (9th Cir. 1995). Moreover, the Court sees no reason to reduce YJB’s fees-on-fees.

The lodestar amount after the time reductions and “haircut” totals $657,107, which the Court is satisfied is reasonable.

Wooten’s claimed costs total $18,141.50 in airfare and $3,716.07 in ground transportation. BN asserts that he should not be able to recover airfare for 3 attorneys and an investigator to attend the pretrial conference when only lead counsel was required to attend. Although only lead counsel is required to attend, the Court encourages attendance of all counsel, which furthers the objectives of these conferences, especially when there are out-of-state attorneys who may be unfamiliar with the Court, opposing counsel, or the particular expectation of practice in this District. The Court also found Larkin’s contributions helpful in forming a preliminary understanding of the underlying facts. Thus the Court will not exclude YJB’s airfare attending the pretrial conference, but will exclude Larkin’s ground transportation cost of $215.82 which appears to be an error in light of his flight receipts.

BN claims that YJB’s airfare should be reduced by 50% because the tickets were first class. Wooten counters that first-class tickets are approximately 25% more expensive than main cabin but that baggage fees close the gap. This is only partly borne out by Wooten’s submissions. Comparing 1-way with 2 checked bags, first-class is only 14% more, but comparing round-trip with 1 checked bag, first class is 34% more. Additional costs incurred through YJB’s decision to fly first class are the definition of excessive & unnecessary. The Court will reduce their airfare for trial by 14% and all other airfare by 34%, for a total award of $16,210 in travel costs.

Wooten seeks to recover YJB’s hotel expenses totaling $28,682.49 plus $11,751.50 for meals at the GSA per diem rate. These requests are adequately supported, were reasonably incurred, and are not excessive or unnecessary.

Wooten requests $36,652.18 for fees incurred by YJB through PACER and WestLaw. BN argues that these fees are typically “baked into the hourly fee award.” The 9th Circuit allows recovery of “reasonable charges for computerized research” if “separate billing for such expenses is the prevailing practice in the local community.” Redland (9th Cir. 2006). In this Court’s experience, the general practice of the local community is indeed to include legal research fees in an attorney’s hourly rate. Wooten has presented no evidence to the contrary, but presents evidence that YJB has a “full-coverage plan.” The Court will not award legal research fees.

Wooten requests $28,432.86 for videography and transcription. BN objects that rates charged for transcription should be lower in accordance with LR 54.1(b)(1)(C). Wooten correctly notes that LR 54.1(b) applies to taxable costs. The charges here reflect the amount that YJB would pass on to a fee-paying client. While the Court agrees that Wooten should not recover $4,645.25 costs paid in relation to the Hart matter, it believes that costs incurred during Voelker’s deposition would have been passed on to Wooten. The Court awards $23,787.61 in videography and transcription costs. The Court does not find BN’s remaining challenges persuasive. In the Court’s experience, litigation will always result in investigation of matters that are not ultimately relevant to presentation of the case but that, in due diligence, must be investigated and would normally result in fees passed on to a fee-paying client.

Wooten submits documentation showing that litigation resulted in $244,107.77 expert fees. Characteristically, BN objects to nearly every aspect of this request. These objections are largely recitations of arguments that the Court has thoroughly discussed and found lacking and will not be rehashed. BN’s claim that Wooten is required to provide receipts showing that he paid the amounts requested is unsupported. The Court will not reduce his expert fees based on its insinuation that he misrepresented what was actually charged on his invoices. BN’s argument regarding expert fees in relation to Wooten’s cell phone are without merit — he successfully prevented BN from obtaining his phone and compelling him to turn over a forensic exam of the phone. BN made these expenses necessary, even if it did not reap the fruits of this expense. Its argument that Wooten’s experts charged amounts that are unreasonable in Missoula is belied by the fact that it spared no expense retaining the best experts to present its side. The Court will not unilaterally extinguish one side’s ability to fight fire with fire. Nonetheless, there are instances where Wooten has failed to provide sufficient documents to assess necessity of certain charges. However, these instances are not as pervasive as BN represents. While the Court is loath to state the obvious, the undersigned was present at trial and is very familiar with the case. The overwhelming majority of the charges do not need the punctilious specificity that BN requests to find them logically related and necessary to the litigation. The Court again declines to become a “green-eyeshade accountant” and will pursue “rough justice” in relation to this fee award. The Court awards Wooten $233,993.70 after deducting Authentic Inc.’s $1,695 invoice and David’s Welding’s invoices totaling $8,419.07.

BN properly objects to taxing of YJB’s pro hac vice fees. Additionally, the Court will not tax $47 in fees associated with litigating the Hart matter. Fees of the Clerk will be limited to the $400 case filing fee.

Wooten requests $1,470 for service of summons and subpoenas. BN objects to $75 which it asserts was accrued without a waiver request. The Court will not tax the $75 accrued serving a summons when the party did not exercise its duty to avoid “unnecessary expenses” by requesting waiver. Rule 4(d)(1).

The Court will tax costs associated with transcripts and videos used at trial, after trial, or in summary judgment. LR 54.1(b)(1)(B)(ii). BN’s objections that the transcript must be used at trial “to either refresh the witness’ memory or for impeachment purposes” misstates the LR. Its objection that transcript costs are limited to the rate for reporter’s fees misconstrues the LR. Fees for printed or electronically recorded transcripts will be taxed at $19,844.89.

Wooten seeks $1,823.05 in witness fees. “Costs and fees for witnesses paid under 28 USC 1821 are allowed for each day a witness testifies at trial. Otherwise, the moving party must establish the witness’s presence was required.” LR 54.1(b)(2). The Court agrees with BN that Wooten has submitted $154 fees for deposition testimony that should not be paid. Fees for witnesses will be taxed at $1,669.05.

Wooten seeks $4,355.91 in fees for exemplication, but made no effort to conform his request with LR 54.1(b)(3)(A) (“Reasonable costs of reproducing exhibits on the moving party’s will-offer exhibit list are allowed. Otherwise, the moving party must establish the reasonable necessity of reproducing the exhibit.” BN’s objection regarding fees for exemplication is sustained.

Wooten seeks $2,151 in fees incurred in setting up video conferencing that enabled 2 experts to testify remotely. “For expert witnesses, the party seeking costs may be entitled to recover only the statutory fees and mileage unless the presiding judge orders otherwise prior to the time costs are sought.” LR 54.1(b)(2)(B). BN is correct that these fees do not fall within this definition.

Wooten v. BNSF, 44 MFR 202, 4/23/19.

William Jungbauer, John Magnuson, and Chris Bowman (Yaeger & Jungbauer Barristers), St. Paul, for Wooten; Michelle Friend & Benjamin Rechtfertig (Hedger Friend), Billings, Scott Stearns & John Newman (Boone Karlberg), Missoula, and Joseph Breitenbach (Christensen Fulton & Filz), Billings, for BN.

SSD: Revised epilepsy Listing applies, not former Listing relied on by doctor, but a 2nd remand for further development of the record would serve no purpose where claim has been pending for 6 years and SSA can only find isolated pieces of arguably inconsistent evidence… remanded for immediate award of benefits pursuant to “credit as true” rule… Lynch.

Jason S.N. applied for disability benefits in 10/12 alleging disability based on epilepsy with an onset date of 4/1/12 and an amended onset date of 1/1/12. His application was denied at all administrative levels, and in 12/14 he sought judicial review. The parties filed a stipulated motion to remand, and on 5/4/15 the Court remanded for further proceedings. 6 months later the Appeals Council remanded to ALJ Lloyd Hartford for (1) consideration of lay witness testimony from AN’s girlfriend, (2) consideration of the medical source opinions including from treating neurologist Carlos Sullivan, treating physician Amy McIntyre, and consultative examiner Mark Mozer, and (3) evaluation of his subjective symptom testimony. The Appeals Council instructed Hartford to (1) update the medical records, (2) reevaluate whether Plaintiff’s impairments met or equaled the severity of a listed impairment and — as necessary — obtain evidence from a medical expert to make the 3-step determination, and (3) give further consideration to Plaintiff’s RFC and, in doing so, evaluate the treating and nontreating medical source opinions and explain the weight given to them, (4) further evaluate Plaintiff’s subjective complaints and consider testimony from his girlfriend, and (5) obtain supplemental evidence from a vocational expert to clarify the effect of the assessed limitations on his occupational base.

Hartford held a 2nd hearing 8/8/16. He did not elicit testimony from a medical expert at the hearing or consult with one afterwards. 7 months after the hearing, he denied Plaintiff’s claim. Plaintiff seeks judicial review and an award of benefits. SSA moved to dismiss for lack of subject jurisdiction on the basis that there was no final decision for §405(g) purposes because Plaintiff had not exhausted his administrative remedies. The Court rejected that argument, finding that under the circumstances, Hartford’s decision was a “final decision” for purposes of 405(g) jurisdiction, and that even if Plaintiff did not exhaust his administrative remedies, he sufficiently raised a colorable due process violation such that the exhaustion requirement should be waived. The Commissioner then filed the administrative record. Having determined based on her review of the record that Hartford’s 3/17 decision is not supported by substantial evidence, she moved to remand for further administrative proceedings. Plaintiff agrees that Hartford erred but argues that the Court should remand for an immediate award of benefits.

Remand for an award of benefits is appropriate only in “rare circumstances” when the “credit as true” test is satisfied. Treichler (9th Cir. 2014). SSA concedes that the 1st requirement is satisfied because Hartford erred in evaluating evidence, including treating medical source opinions, in determining that Plaintiff was not disabled. Focusing instead on the 2nd part, it argues that further proceedings would be useful because there are issues that must be resolved before a disability determination can be made. It takes the position that further development of the record is necessary because no medical expert or treating or examining source has opined on whether he satisfies the current version of Listing 11.02 for disability based on epilepsy, which requires that his seizures persist despite adherence to prescribed treatment and occur with a certain frequency. It argues that the record contains conflicting evidence as to frequency of seizures and adherence to treatment, and that even assuming 11.02 is satisfied, further proceedings are necessary to determine when his disability began. It maintains that the case should be remanded to resolve these issues and allow a medical expert to review the file to determine whether Plaintiff satisfies the current version of Listing 12.02.

According to Plaintiff, there is no need to further develop the record on these issues because his neurologist found that his epilepsy satisfies the former version of Listing 12.02, which was in effect through the 8/16 hearing on remand. Sullivan completed seizure questionnaires in 5/14 and 7/16, finding that as of the 4/1/12 alleged onset date, Plaintiff’s epilepsy satisfied 11.02 for convulsive epilepsy and 11.03 for non-convulsive epilepsy. He stated that Plaintiff was compliant with treatment but his seizures nevertheless persisted with the specified frequency. Plaintiff contends that Sullivan’s opinions establish that his epilepsy has been of listing-level severity since the alleged onset date, which means that there are no outstanding issues to be resolved on remand.

However, shortly after Sullivan’s 7/16 assessment, the neurological listings were revised and Listing 11.03 was removed and combined with 11.02, which applies to “new applications filed on or after the effective date of the rules, and to claims that are pending on or after the effective date.” 81 Fed. Reg. 43048-01. SSA similarly expects that “Federal courts will review our final decisions using the rules that were in effect at the time we issued the decision. If a court reverses the Commissioner’s final decision and remands a case for further administrative proceedings after the effective date of the final rule, we will apply the final rule to the entire period at issue in the decision we make after the court’s remand.”

While the former 11.02 considered by Sullivan was still in effect at the time of the 2nd hearing in 8/16, the revised version went into effect in 9/16, several months before Hartford’s 3/17 decision. Because Plaintiff’s claim was still pending after the effective date of revised 11.02, the former version considered by Sullivan no longer applies.

Plaintiff nevertheless maintains that the Court has discretion to apply the former 11.02 because it was still in effect at the time of Hartford’s 1st decision in 6/14, which became SSA’s final decision for purposes of his 1st court action. But Hartford’s 6/14 decision is not at issue. By the time of his 3/17 decision, which is the subject of the present action, revised 11.02 had been in effect for nearly 6 months. Thus the revised 11.02 applies.

Consistent with this determination, Hartford considered revised 11.02 in his 3/17 decision on remand. However, notwithstanding the Appeals Council’s directive to call on a medical expert if necessary, he simply rejected Sullivan’s opinion partly because it was based on the former 11.02. He did not propound interrogatories after the hearing or otherwise consult with a medical expert to determine whether Plaintiff satisfied the revised 11.02. SSA evidently agrees that his 3-step analysis is not supported by substantial evidence and proposes that on remand the Appeals Council have a medical expert assist in determining whether Plaintiff meets 11.02 during the relevant period.

Even assuming that revised 11.02 applies, Plaintiff takes the position that there is no need to obtain additional evidence from a medical expert because there is sufficient evidence in the record establishing that the listing’s criteria are satisfied. While it is not this Court’s role to weigh the evidence or otherwise substitute its judgment for SSA’s, it agrees that substantial evidence establishes that Plaintiff satisfies revised 11.02.

SSA cites a few discrepancies in the record such as Sullivan finding that Plaintiff takes his meds regularly, while his med levels were often low and on 2 occasions were below therapeutic dosage. But the evidence that SSA points to is insufficient to warrant further development of the record. Plaintiff’s claim has been pending for more than 6 years, during which there have been 2 hearings and a stipulated remand. The record is expansive, and the fact that SSA can find some isolated pieces of arguably inconsistent evidence is not surprising. While it claims that medical expert review is necessary to determine whether Plaintiff satisfies revised 11.02, it does not explain why additional review is necessary other than to address frequency of his seizures, adherence to treatment, and the onset date. Sullivan’s opinions address all of these issues and are sufficient to establish that his epilepsy satisfied revised 11.02 as of the 4/1/12 alleged onset date. If Sullivan’s opinions were credited as true, along with Plaintiff’s subjective testimony which SSA concedes was not properly discounted, Hartford would be required to find for Plaintiff. Remand for further proceedings would serve no useful purpose and only cause further delay. Because there are no outstanding issues on which further proceedings would be useful, and no serious doubt as to whether Plaintiff is disabled, the case is remanded solely for calculation of benefits.

Jason S.N. v. SSA, 44 MFR 203, 5/14/19.

Eric Rasmusson (Terrazas Henkel), Missoula, for Plaintiff; Heather Griffith (SSA).

PERSONAL JURISDICTION: Discovery allowed into whether Defendants acted in “strategic joint venture” with retailer of railing which resulted in fall from balcony specifically targeted the Montana home-improvement market to satisfy purposeful availment prong of minimum contacts requirement… Christensen.

Daniel Rodoni was socializing on his cousin’s 2nd-story balcony 4/4/15 when the rail gave way, causing him to fall to the pavement. He alleges that the polyvinyl chloride railing was designed with an incompatible adhesive which caused it to break. The railing was designed outside Montana but purchased within Montana. Royal Outdoors, Royal Group, Westlake Chemical, and Axiall Corp. move to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2). Rodoni contests only dismissal of Royal Outdoors and Royal Group (Royal Defendants). The Court therefore grants the motion as to Westlake and Axiall without prejudice, and denies the motion as to Royal Defendants subject to renewal after jurisdictional discovery.

Royal Defendants argue that the alleged design defect did not “accrue” in Montana where the only event that occurred in Montana was the injury to Rodoni. They cite Tackett (Mont. 2014) and Ascencio (D.Mont. 2016) for the proposition that Montana law requires more than mere injury within the State to “establish accrual of a tort action” in satisfaction of its long arm statute. Rodoni cites Bendure (D.Mont. 2016) and Joss (D.Mont. 2009) to support his assertion that jurisdiction is proper under Montana’s long arm statute when a design or manufacturing defect causes injury to a plaintiff within the State. Royal Defendants respond that Bendure and Joss are incompatible and therefore superseded by Tackett and Ascencio. The Court disagrees.

A federal court interpreting Montana’s long arm statute looks to the Montana Supreme Court’s interpretation. The Montana plaintiff in Tackett alleged that the defendant fraudulently induced him to wire money to Florida for an inspection of his Florida home. Reviewing the case under the “accrual” provision, the Court determined that the communication did not give rise to personal jurisdiction where the contract was intended to be performed entirely out of state and where the only conduct in Montana was that the plaintiff learned of his injury there. The Montana plaintiff in Ascencio brought a defamation claim against an out-of-state company that conducted background checks, arguing that she was harmed when it informed a potential employer of her criminal record. This Court determined that personal jurisdiction was not proper because the tort accrued where the service was performed, not where she felt her injury. Royal Defendants assume that — in the context of a design defect — the location of relevance (the “injury causing event”) occurs where the product was designed. Not so. Not all defectively designed products will fail and cause injury to consumers. A plaintiff has no cause of action in strict product liability prior to her injury. Rodoni’s design defect claim “accrued” and the “injury causing event occurred” when he “gently leaned” against Royal Outdoor Products’ railing, which failed and caused him to fall from a 2nd-story balcony. Thus personal jurisdiction is proper under Montana’s long arm statute.

Royal Defendants argue that the Constitution prohibits this Court’s exercise of personal jurisdiction because its sole act of placing a product into the “stream of commerce, without more,” is not a valid basis under the Due Process Clause. Rodoni responds that personal jurisdiction is proper because Royal Defendants engaged in nationwide product distribution, consistent with Joss. Alternatively, he asks for the opportunity to subpoena Royal Defendants and Home Depot’s customs broker(s) to ascertain who the importer of the railing is and to subpoena the contracts between them. He alleges that Royal Defendants and Home Depot entered into a contract for “materials to be furnished in Montana.” Royal Group’s 2005 Annual Information Form provides that it “typically enters into strategic joint venture arrangements with local partners in respect of its international operations” and describes the company as a “leading producer of innovative, attractive, durable and low-maintenance building and home improvement products for the North American marketplace,” and states that “approximately 9% of Royal Group’s overall sales come from” its home improvement line. These facts on their own do not show that Royal Defendants specifically targeted the Montana home-improvement market, but given that the information necessary to establish jurisdiction is entirely controlled by Royal Defendants, the facts alleged by Rodoni offer sufficient basis to infer that discovery is warranted. It may well be that Home Depot or “the importer of record” acted with Royal Defendants in a “strategic joint venture” to sell its products to Montanans. (Rodoni points out that there seems to be “a sufficient commonality of interest” between Home Depot and Royal Defendants as illustrated by the fact that they share the same counsel in this suit.) If a joint venture was created, Rodoni may be able to show that agency principles impute Home Depot’s contacts to Royal Defendants, or he may uncover facts that suggest that Royal Defendants specifically targeted Home Depot or other distributors in Montana or solicited Montana clientele independently of its affiliation with any retailer. The Court will allow him the benefit of jurisdictional discovery. (The Court will not address arguments as to the 2nd or 3rd prongs of the test at this time.)

Rodoni v. Royal Outdoor Products et al, 44 MFR 204, 5/30/19.

Lon Dale & Michael Bybee (Milodragovich Dale Steinbrenner), Missoula, for Rodoni; Matthew Baldassin (Crowley Fleck), Missoula, and Matthew Dolphay (Crowley Fleck), Helena, for Defendants.

SANCTIONS: Default judgment denied on wrongful discharge claims by allegedly disabled psychiatric therapist trainee due to spoliation of training documents and discovery abuses, but sanctions ordered to place her in position she would have been in with extended discovery and adverse inference instruction as to spoliated documents… Christensen.

Rachel Webster began working for Psychiatric Medical Care as a Program Therapist in 6/17 at $65,000/yr. She traveled to Missouri along with 2 other new hires for training the following week. PMC terminated her 6/21. She sued in 8/17 alleging that she was terminated based on her disability (MS and trigeminal neuralgia). In 1/19 she added Cabinet Peaks Medical Center in Libby, which contracted with PMC. PMC theorizes that she was terminated due to performance issues. However, key evidence — her personnel file including her training evaluation — was destroyed within days of her termination. Further, PMC did not timely inform her of the destruction. Webster requests sanctions because PMC destroyed her training records, withheld an email referencing the destruction until the day before discovery closed, withheld the templates used to assess her performance in training until after the close of discovery, failed to produce other documents regarding her performance “including an email that disproves one of PMC’s claimed reasons for terminating” her, failed to disclose witnesses known to PMC to have discoverable information, and failed to produce a copy of its insurance policy for 10 months and failed until the hearing to produce an unredacted copy including policy limits. (At the hearing, PMC’s counsel stated that it would correct its error in failing to produce an unredacted copy of the policy. The copy that the Court has seen is 100% redacted such that no words are readable. The Court assumes that PMC has followed through on its counsel’s representation.) Webster alleges spoliation, which is sanctionable under the Court’s inherent authority, and contends that PMC failed to timely produce — or produce at any time — discoverable and responsive information & evidence, which is sanctionable under Rule 37.

Webster relies on 29 CFR 1602.14 — promulgated in part under the ADA — to establish a duty at the time her training documents were shredded: “In the case of involuntary termination of an employee, the personnel records of the individual terminated shall be kept for a period of one year from the date of termination.” PMC responds that the touchstone of the inquiry is foreseeability and that litigation was not foreseeable at the time the records were shredded. However, regardless of the precise legal framework, PMC had a duty to retain the documents. “There is no question that the duty to preserve relevant evidence may arise even before litigation is formally commenced.” Apple (ND Cal. 2012). “Although the Ninth Circuit has not precisely defined when the duty to preserve is triggered, trial courts in this Circuit generally agree that, ‘as soon as a potential claim is identified, a litigant is under a duty to preserve evidence which it knows or reasonably should know is relevant to the action.’” Id; Napster (ND Cal. 2006). Litigation was foreseeable at the time of Webster’s discharge. PMC argued at the hearing that the circumstances of her termination did not put PMC on notice of a possible suit. But setting aside whether it was aware of her medical diagnoses — a factual issue likely to be significant in resolution of this case on its merits — a sophisticated entity like PMC should always recognize the possibility of a suit when it terminates a professional. Further, she did not delay in putting it on notice of her claims: she sent a litigation-hold letter only 5 days after her termination. By that time her training documents had been destroyed. An employee should not shoulder the blame for a corporate employer’s unwillingness to maintain records for a reasonable time after firing the employee. PMC had a duty to preserve her employment documents, and may be held accountable for failing to do so.

The day after Webster was fired, VP of Operations Lynsey Perry emailed Regional Mgr. Justin McGhee. It was produced the day before discovery closed and is the only document that Webster has received discussing destruction of her file. McGhee had previously emailed Perry asking, “Does the team need to hold on to any of Rachel’s orientation paperwork? I wasn’t sure if Jan needs any of it or if they can shred it.” In the email that was produced, Perry replied, “It can be shredded.” Absent any argument as to when it should have been produced, the Court cannot determine that PMC failed to fulfill its discovery obligations by not producing it until the day before close of discovery, although this is problematic on its face. Nevertheless, the Court will consider this email in its analysis of PMC’s culpability and Webster’s prejudice.

Webster argues that PMC failed to timely disclose names and contact information of employees with discoverable information about her termination. On the last day of discovery, PMC supplemented its initial disclosures with the names of 5 employees with vague descriptions of the information they may possess. It has never disclosed the names of its CFO and CEO, both of whom discussed her termination with Perry. PMC contends that it had no obligation to disclose them earlier or — in the case of the CFO and CEO — at all. Even absent a discovery request, litigants must provide within 14 days of the pretrial conference “the name … of each individual likely to have discoverable information — along with the subjects of that information — that the disclosing party may use to support its claims or defenses, unless the use would be solely for impeachment. Rule 26(a)(1)(A)(i), (C). if the initial disclosures later prove to be incomplete, the litigant “must supplement or correct its disclosure … in a timely manner” unless “the additional or corrective information has … otherwise been made known to the other parties during the discovery process or in writing.” Rule 26(e)(1)(A); but see 2000 Committee Advisory Note (“Lawyers must be careful to recognize that informal disclosure during the discovery process will rarely satisfy Rule 26(a)(1).”). Rule 26(a)(1) extends only to evidence “that the party may use to support its claims or defenses.” Id. (PMC moved to supplement its response to the motion for sanctions, stating that it “inadvertently did not cite to the 2000 Committee Advisory Notes,” which provide that a witness must be disclosed only if the disclosing party intends to use that witness. The Court denies that motion as moot; further, it does not see an initial failure to cite beneficial law as good cause for amendment. However, because the Court is obligated to apply the correct legal standard, it will consider the Advisory Notes.) Rule 26(a)(1) “relieves parties of the duty to disclose the names of all persons with relevant and discoverable information or all relevant documents, including harmful witnesses or ‘smoking gun’ documents that the party does not intend to use.” Id. Generally, the fix for failure to comply with Rule 26(a) is exclusion. Rule 37(c)(1). PMC has the better argument regarding the scope of 26(a)(1) initial disclosures. It was not obligated to disclose every witness with discoverable information pursuant to 26(a)(1)(A)(i), and it is unclear whether it determined that it may use the witnesses prior to its supplemental disclosure. Although the summaries of information known to each witness were less than complete, this can be easily remedied. The Court will order PMC to supplement its disclosures with a fuller description of the “subjects of … information” known to the witnesses previously disclosed. Rule 26(a)(1)(A)(i). The larger problem with PMC’s supplemental disclosures is their untimeliness. By failing to supplement prior to the day before discovery closed, it effectively barred Webster from developing the facts as to these potential witnesses. Further, given its other discovery violations and general pattern of untimely responses, Webster struggled — and in some instances was unable — to receive the information she needed from other sources. Its broader pattern of nondisclosure renders its failure to timely supplement its Rule 26 initial disclosure far more damaging that it likely would have been. Because the witnesses may aid Webster as much or more than PMC and because their exclusion would not assist in finding a fair & accurate resolution on the merits, exclusion under Rule 37(c)(1) is not an appropriate remedy. Rather, the Court will grant her the opportunity to cure any prejudice caused by PMC’s failure to timely meet its discovery obligations.

Within 14 days of the pretrial conference a litigant must produce “for inspection and copying … any insurance agreement under which an insurance business may be liable to satisfy all or part of a possible judgment in the action or to indemnify or reimburse for proceedings made to satisfy the judgment.” Rule 26(a)(1)(A)(iv). It is uncontroverted that PMC failed to timely disclose its policy and disclose the liability limits in any manner prior to the hearing on the motion to suppress. The award of fees & costs to Webster appropriately remedies this failure.

The Court stops just short of finding that PMC generally acted in bad faith. Certainly it is not innocent; all litigants must produce discoverable information freely, and PMC is a sophisticated business entity that likely understands its discovery obligations. Thus it is fair to hold it accountable for its discovery conduct, but it would be a step too far to issue a default judgment. Nor, as to spoliation — the most serious issue — did it destroy Webster’s file with the level of culpability necessary to warrant the harsh sanction of default judgment. Although it has not discharged its basic discovery obligations with the diligence & fairness expected by the Court and required by the FRCivP, Webster’s file was shredded primary out of carelessness rather than bad faith. Its general pattern of nonresponsiveness throughout the discovery period also primarily arose from failing to give the case the attention it deserved. Because it ignored or underestimated the merits of her case, it failed to timely recognize and disclose relevant witnesses and documents. This does not render its conduct excusable, but it does not rise to bad faith. However, it did act willfully & dishonestly in responding to Webster’s RFP for “a complete copy of all files” maintained regarding her,” that it was “not aware of responsive documents it is withholding based on its objections, other than based on attorney client privilege/work product.” As discussed at the hearing, it was aware that responsive documents existed and were being withheld because they had been destroyed. It was willfully dishonest and appears to have been attempting to cover up its spoliation. While its behavior is not acceptable and in at least one regard arguably constitutes bad faith, the Court can fashion an appropriate remedy short of default judgment.

Webster argues that she has been irreversibly prejudiced by PMC’s conduct such that a default judgment is the only appropriate remedy. The Court agrees that she has been prejudiced, but disagrees that judgment in her favor is necessary. PMC contends that she was not prejudiced as to the destroyed training documents because it never claimed to have fired her because of lack of competence or inability to complete training, but due to her failure to obtain a state license and a vague sense that “PMC’s environment may not be the best match for her skills and work style.” Its position is overly simplistic, if not disingenuous. Certainly documents showing that she performed well at training would tend to disprove that it terminated her for a legitimate reason. Given that she is attempting to show that she was fired because of a disability, her ability do the tasks assigned is powerful evidence in her favor. “Because ‘the relevance of destroyed documents cannot be clearly ascertained when the documents no longer exist,’ a party ‘can hardly assert any presumption of irrelevance as to the destroyed documents.’” Leon (9th Cir. 2006); Alexander (8th Cir. 1982). Webster did not know of the training documents or their destruction prior to depositions and thus did not have the opportunity to explore their significance. PMC cannot — particularly after engaging in an obstructionist pattern of discovery — ask Webster to simply trust its interpretation of evidence when she has not been freely able to develop her own theories. She has suffered prejudice, both by destruction of the evidence (which by all accounts favor her theories) and by nondisclosure of the evidence. However, it is not too late to remedy that prejudice and reach a decision on the merits. She has similarly been prejudiced by PMC’s refusal to search for and share information throughout the discovery process. This translated to an inability to seek other discoverable information, both through discovery requests and depositions. Simply put, she does not know as much as PMC knows regarding her termination, and the imbalance can only be attributed to PMC. Again, though, time & money are sufficient remedies.

The Court previously allowed Webster to bring in an additional defendant. Trial has been reset for 10/19, giving the parties substantial time to conduct further discovery. The Court is unconvinced that Webster will not be able to receive all of the discovery — aside from the destroyed training documents — to which she is entitled. And the jury will receive an adverse instruction directed to the spoliated documents. With lesser sanctions in place, a jury will be able to reach a fair determination on the merits. The Court will order sanctions directed to placing Webster in the position she would have been in had no evidence been destroyed and all discoverable evidence been timely produced. Because the Court and Webster have not seen the training documents, it is unclear precisely what position she would be in had they been preserved and produced. Although imperfect, the best remedy is to issue an adverse instruction to infer that they showed that her performance had been satisfactory. She also may use the destruction as evidence suggesting that her termination was pretextual. She will also be able to re-depose witnesses to address limited issues raised by destruction of the templates, with PMC paying her expenses. Additionally, PMC is ordered to do what it should have done when it first received her discovery requests — search for and produce all responsive documents. It will have 30 days to complete this task. Because it has failed to properly engage in the discovery process, the Court is unconcerned about the time & pressure it will face and any expense it will incur in meeting its obligations. It must also within 14 days adequately supplement its initial disclosures. Failure to comply with this Order will result in further sanctions, which may include default judgment. Although the Court rejects Webster’s proposed sanction, because she was justified in seeking relief, PMC is ordered to pay her reasonable fees & costs incurred in filing her motion.

Webster v. Psychiatric Medical Care, 44 MFR 205, 5/30/19.

Cory Laird & Seamus Molloy (Reep Bell Laird & Jasper), Missoula, and Patrick Kirby (Kirby Law Office), Spokane, for Webster; Veronica von Grabow & Melisa Panagakos (Jackson Lewis), Denver, for PMC.