ERISA: Claims Administrator acted legally but perhaps not morally in denying preapproval of stem cell transplant for systemic sclerosis pursuant to Plan’s experimental/investigational exclusion despite claim by doctors that it is medically necessary to prevent death… Molloy.

Lana Robertson seeks a declaration that a medical procedure is covered by her health benefits plan. At issue is the tension posed by the human person who is facing certain death absent the treatment, and an ERISA plan and administrator that resort to legalisms supported in some sense by the idea of the rule of law to deny her a chance at life. Sadly, in this and so many other cases decided pursuant to a law intended to protect employees, there seems to be little concern about the moral consequences of denial of benefits. The decision by the plan administrator is akin to the “death panels” ostracized for political purposes. Yet the legalistic arguments and the law seem to dictate an untenable moral determination. Judge Noonan of this Circuit noted aptly in Persons and Masks of the Law, “Abandonment of the rules produces monsters; so does the neglect of persons.” To paraphrase him, at the intersection of the conflict between rules and persons, the process of the rule of law is to be understood. “A chief difficulty to understanding, however, is the presence of masks, formed by rules and concealing the person.” The legal reasoning justifying resolution of the pending motions is monstrous in its concealing the likely life-ending consequences of applying rules and ignoring the person. However, for the reasons stated below, which sound in the legal rules of interpretation and not in equity, Robertson’s motion is denied and Defendants’ motions are granted.

Stallion Oilfield Holdings is Plan Sponsor and Plan Administrator. BCBS of Texas is Claims Administrator and Claims Fiduciary. It is a division of Health Care Service Corp. Robertson is enrolled in the Select Plan Managed Care Program. She was diagnosed in 7/11 with diffuse systemic sclerosis. Without treatment it can attack internal organs and is fatal once it infiltrates the lungs or heart. She initially received drug-oriented treatment under the Plan, which was ineffective. Richard Burt of Feinberg School of Medicine recommended a hemapoietic stem cell transplant. BCBS denied preapproval, concluding that it is “experimental, investigational, and unproven,” referencing HCS’s Medical Policy. An independent review upheld the denial, again referencing HCS’s Medical Policy. Robertson submitted her final appeal in 2/14 with more than 300 pages of medical records and articles and physician letters. A different review organization again affirmed the denial. Robertson sued Stallion and BCBS seeking a declaration that the Plan covers the procedure.

Robertson claims that a violation of ERISA procedural requirements requires a de novo review and that BCBS “did just that” by failing to engage in a medical necessity analysis and by withholding the information it relied on in making its determination. Only “when an administrator engages in wholesale and flagrant violations of the procedural requirements of ERISA, and thus acts in utter disregard of the underlying purpose of the plan,” will the denial be reviewed de novo. Abatie (9th Cir. 2006, en banc). There is no proof that BCBS engaged in “wholesale and flagrant violations.” Robertson also argues that an inherent conflict of interest that affects a determination alters the standard of review and that BCBS had such a conflict because of its pecuniary interest and its interest in establishing precedent for future denials for the procedure. BCBS does not fund the plan, and Robertson has produced no evidence demonstrating that it, as a division of HCS, had a vested pecuniary interest in denying coverage or that it sought to establish precedent for future denials. Not only does the abuse of discretion standard apply, there is no conflict of interest to be weighed in determining whether BCBS abused its discretion.

Robertson insists that the clinical trial exclusion does not apply to the procedure. The provision that “treatment provided as part of a clinical trial or a research study is “Experimental/Investigational” is unambiguous. There is no question that Robertson sought to enroll in a phase 3 clinical trial, which is described as a “study” that will provide treatment to the participants in both the “control” and “experimental” arms of the program. BCBS arguably construed the exclusion in a legally reasonable way. Moreover, Burt acknowledged that the procedure is not “standard therapy” for severe systemic sclerosis. The literature Robertson submitted shows that it is still under investigation and is associated with treatment-related mortality, but is not “in general use in the medical community.” Robertson claims that the clinical trial is not testing whether the procedure is safe & effective, but whether a less intense regimen is safer and as effective as the standard regimen. Although this argument may have merit, she cites no authority or Plan provision supporting her restricted definition of “clinical trial,” while the clinical trial exclusion broadly excludes “treatment provided as a part of a clinical trial.” BCBS also relied on the HCS Medical Policy in denying coverage. Robertson claims that the HCS guidelines have not been peer-reviewed or incorporated into the Plan documents, and that it demonstrates that the procedure is more effective than drug therapy, which has been ineffective. The Policy provision states that the Plan documents govern, and a claim “stands or falls by the terms of the plan.” Kennedy(US 2009). Where BCBS reasonably relied on the Plan’s clinical trial exclusion, its additional reliance on the Medical Policy is of no consequence regardless of whether it supports coverage. BCBS did not abuse its discretion in relying on the clinical trial exclusion to deny benefits.

Robertson insists that BCBS abused its discretion by not making a medical necessity determination, which would “trump” the experimental/investigational exclusion. However, the Plan unambiguously states that benefits are not available for experimental/investigative services. To interpret it to cover all medically necessary treatments regardless of any exclusions or limitations would render those exclusions meaningless. Johnson(4th Cir. 2013).

Robertson also maintains that the exclusion is unenforceable under the reasonable expectations doctrine. While she may reasonably expect coverage for any treatment that is medically necessary, the experimental/investigational exclusion is plain, conspicuous, and enforceable. Winters (9th Cir. 1995).

Robertson included in her final appeal 4 instances where BCBS entities approved the same procedure because it was medically necessary despite a prior determination that it was experimental/investigational. One of those involves BCBS of Illinois, which is also a division of HCS. Although it is disconcerting that BCBS entities may be making inconsistent determinations, the Plan language under which those determinations were made are not part of the record and cannot be used in analyzing this case.

Robertson’s medical condition cannot be conflated with her legal condition so that the Court is “left with a definite and firm conviction that a mistake has been committed.” Salomaa (9th Cir. 2011). BCBS acted legally in denying preapproval of the procedure because her enrollment in the clinical trial is excluded as experimental/investigational under terms of the Plan.

Robertson v. BCBS of Texas and Stallion Oilfield Holdings, 42 MFR 443, 4/15/15.

Donald Harris (Harris & Associates), Billings, and Tucker Gannett (Harris & Warren), Billings, for Robertson; Stanley Kaleczyc, Daniel Auerbach, and Kimberly Beatty (Browning, Kaleczyc, Berry & Hoven), Helena, and Rebecca Hanson (Foley & Lardner), Chicago, for BCBS; Shane Coleman & Michael Manning (Holland & Hart), Billings, and Michael Beaver (Holland & Hart), Greenwood Village, Colo., for Stallion.

INSURANCE: “Claim” per claims-made-and-reported Real Estate E&O Policy must be made within policy period, not extended reporting period… claim was made when Realtor received notice of suit following expiration of policy period, not 7 months earlier when suit was filed, was untimely, insurer not required to defend or indemnify $2,191,828.90 consent judgment… Molloy.

Continental Casualty issued a Real Estate Professional E&O Policy to Re/Max Realty Consultants for 9/6/07-9/6/08. It states that “a claim must be first made during the policy period.” It defines “claim” as

an oral or written demand received by the Insured for money or services, including a demand alleging personal injury, arising out of an act or omission in the rendering of professional real estate services. The service of suit or the institution of an arbitration proceeding against the Insured will be considered a demand.

As to notice of claims to the insurer:

The Insured, as a condition precedent to our obligations, must promptly give written notice to us during the policy period or any renewal policy period:

a. of any claim made against the Insured during the policy period;

b. of any notice, advice or threat, whether written or verbal, that any person or organization intends to hold the Insured responsible for any alleged breach of duty or other act or omission.

This condition will not be a barrier to coverage for those Insureds who do not have personal knowledge of a claim or potential claim. However, all Insureds must promptly comply with this condition upon obtaining such knowledge.

Re/Max was advised 6/27/08 that the policy was set to expire 9/6. It received a renewal invoice 8/28 informing it that coverage would terminate 9/6 if not renewed. Re/Max did not renew. The non-renewal automatically triggered the extended reporting period, defined as

the period of time after the end of the policy period for reporting claims by reason of an act or omission, which occurred prior to the end of the policy period and is otherwise covered by this Policy.

There is also an “automatic extended reporting period” of 60 days if the policy is canceled or non-renewed. With this automatic extension, Re/Max’s extended reporting period terminated 11/5/08.

On 4/18/08, Larry & Patricia Schleusner filed a State Court action against Re/Max and an agent alleging damage as a result of conduct while acting as their agents. Their counsel mailed notice of the action and a copy of the complaint to Re/Max 11/4/08, and Re/Max received the notice 11/5. According to Schleusners, former Re/Max owner Judith Wahlberg reviewed the letter and complaint and sent the claim to Continental the day she received it. Continental asserts that it received notice 11/18, after termination of the extended reporting period. Schleusners contend that this date is both disputed and immaterial. Continental declined coverage 11/21. Whether Schleusners chose to sue Re/Max with or without insurance was a tactical litigation choice.

Schleusners settled with the agent in 10/13 and with Re/Max in 4/14. Both confessed to $2,191,828.90 entry of judgment and assigned their claims for coverage from any insurers to Schleusners. Judgment was entered, and on 7/31/14 Schleusners filed suit in State Court for a declaratory judgment, which Continental removed to this Court. Continental requests summary judgment that it is not obligated to provide coverage because notice was not timely. Schleusners request a declaration that Continental breached its duty to defend.

The policy is on its face a claims-made-and-reported policy, conditioning indemnity and defense on claims made during the policy period and reported prior to expiration of the extended reporting period. Whether the claim was timely turns on whether the suit against Re/Max 4/18/08 constituted making a claim or whether a claim was initially made 11/5/08 when Re/Max was made aware of the claim. Continental asserts that a “claim” requires that a demand for money or services be received by the insured and it must be received when the policy is in effect. Schleusners argue that the policy “must be interpreted as allowing a claim to be first made at some time prior to when it is received by the insured.” Continental is correct. Pursuant to the plain language of the policy, a claim was made 11/5/08 when Re/Max received notice of the underlying suit, not 4/18 when the suit was initially filed. It then is necessary to decide whether a claim made during an extended reporting period is timely. The clear policy language indicates that to trigger coverage, a claim must be made on the insured within the policy period itself. Consequently, the claim, made beyond the policy term, was not timely.

Schleusners look to the “personal knowledge” provision to argue that the notice requirements are ambiguous. To the extent that this makes the policy ambiguous, it at most makes it as applied a claims-made policy as opposed to a claims-made-and-reported policy. It can be reasonably interpreted to allow an insured to report a claim outside the policy period or the extended reporting period as long as it “promptly” does so once it has personal knowledge. This interpretation, while construing the policy in the light most favorable to the insured, does not make a claim filed after termination of the policy period timely. If it did, instead of turning the policy into a mere claims-made policy, it would effectively turn it into an occurrence policy. The Court cannot rewrite the policy. Because the claim was not timely made, there is no coverage as a matter of law, even if the report to the carrier inures to the insured’s benefit as to notice.

Because the condition precedent of a timely claim was not met, Continental had no duty to defend or indemnify, and Schleusners’ bad faith claim also fails as a matter of law. Summary judgment for Continental.

Schleusner v. Continental Casualty, 42 MFR 433, 4/10/15.

David Cotner & Trent Baker (Datsopoulos, MacDonald & Lind), Missoula, for Schleusners; Maxon Davis & Jeffry Foster (Davis, Hatley, Haffeman & Tighe), Great Falls, and Steven Crane (Berkes, Crane, Robinson & Seal), LA, for Continental.

ATTORNEY FEES: $342,881 fees & costs awarded out of ex-girlfriend’s 16% share of deceased’s $2,808,425 stock account for defense by 3 other beneficiaries of frivolous claim to entire account, affirming Cebull’s award following remand from 9th Circuit to allow objections as to amounts… Watters.

James LeFeber executed a Scottrade Transfer on Death Beneficiary Plan a month before his death in 2010 at age 71. His former girlfriend Kristine Davenport claimed his entire account based on a purported 2007 oral contract. The others named in the TOD — Shane LeFeber, Patricia Faller, Christopher Gibbons, Kimberly Chabot — did not contest the TOD. Davenport sued in State Court alleging a conspiracy of the others to interfere with the purported oral contract, and that they had murdered LeFeber by giving an overdose of pain medications he took for terminal cancer and then illegally cremated him. When she refused to release Scottrade if it distributed the proceeds pursuant to the TOD, it filed an interpleader in Federal Court and placed $2,808,425.21 in the Court registry and was dismissed. Judge Cebull concluded 7/31/12 that all of Davenport’s claims were frivolous and that her share of the Scottrade account in the registry must be reduced by the other parties’ fees & costs because her claims caused the “unnecessary lawsuit.” Following a review of invoices submitted by Fallers’ counsel he determined that $181,031.12 in attorney and paralegal fees & costs was reasonable for Patricia and $13,706.78 (including $33.18 costs) for her husband Arnold (who is not a beneficiary of LeFeber’s account but was named an alleged conspirator), and $148,143.21 for Shane LeFeber. He also awarded $6,142.53 fees & costs to Scottrade. Davenport appealed, asserting 39 claims of error and challenging Cebull’s award of fees & costs to Fallers and Shane.Scottrade (9th Cir. 2014 unpublished) stated:

Davenport’s serious claims — that the other beneficiaries used undue influence to negate an oral agreement for her to get all of LeFeber’s assets, and indeed killed the decedent to gain their objectives — required more than the assertions of an interested party to proceed, specially since it is undisputed that the alleged oral agreement was never recorded, witnessed or reduced to a signed writing. Given this factual context, Davenport had to produce real evidence of a dispute; instead, her evidence consists of speculative assertions in uncorroborated, self-serving affidavits.

It held that Cebull properly awarded fees to Scottrade pursuant to federal interpleader law, and that he properly recognized that he had authority to award fees to Fallers and Shane, but that Davenport should have explicitly been given the opportunity to object to the amounts. Her objections have now been lodged and briefed.

Davenport mostly argues why Patricia should not get fees at all. By now it should be very clear that the only issue is the amount to be awarded, so the Court will not consider any of her objections or arguments as to whether fees are appropriate. Nor will it consider any of her arguments “incorporated by reference” to her other filings. LR 7.1(d)(2); Sandgathe (9th Cir. 2002).

Davenport objects that the amount of fees requested by Patricia impermissibly includes “fees on fees.” However, Cebull awarded fees pursuant to his inherent authority under federal law after finding her conduct vexatious. Under federal law, fees are ordinarily awarded for hours expended in preparing the fee application.Rosenfeld (9th Cir. 1975). “It would be inconsistent to dilute an award of fees by refusing to compensate an attorney for the time spent to establish a reasonable fee.” Manhart (9th Cir. 1981). Montana similarly supports fees incurred in preparing a fee application when necessary “to make the injured party whole … where the action into which the prevailing party has been drawn is without merit or frivolous.” Motta (Mont. 2013). Davenport raised no other objection to these fees. The Court finds them reasonable.

Davenport argues that Patricia’s fees are “unreasonable and excessive,” noting that they were $35,000 more than Shane LeFeber’s fees. Cebull’s determination remains persuasive, that “although the Beal Law Firm bill is much larger than that charged to Shane LeFeber, Shane LeFeber was not alleged to have murdered James LeFeber with a morphine overdose and many of Davenport’s allegations of undue influence were aimed at Patricia [who] is also the personal representative of James LeFeber’s estate.” Cebull found that Patricia’s attorneys’ activities were relevant & necessary, stating that in light of the significant amount of money at stake — more than $1.5 million for Shane and $112,000 for Patricia — “the experienced and well-respected lawyers in this case were justified in expending significant resources on this case to ensure a good result for their clients,” the time expended “was multiplied by Davenport and her outrageous claims and lack of scruples,” and Patricia’s lawyers were “therefore required to thoroughly investigate Davenport’s claims, respond to more than twenty motions, and file their own motions — almost all of which were well-taken.” This Court is also persuaded by Dennis Lind who has been licensed for 42 years and is managing partner of an 18-attorney firm in Missoula. Lind affirms that Beal’s rates ($195/hr) are reasonable and appropriate based on his knowledge of and experience with local rates. He points out that Beal’s rates were actually below market rates in Missoula, and attests that all the work by Beal Law Firm was necessary, reasonable, and appropriate. Davenport fails to point to even one conference that was not “justified.”

Davenport objects that Patricia’s attorneys’ billing statements are so “vague” that she cannot evaluate the hours. They set out the rate of pay and billable hours in .1 increments of time, and break the hours out by client, subject, and date click to find out more. They are sufficiently clear that anyone can understand what work was done, for whom, for how long, and on what date. Baykeeper (ND Cal. 2011). Davenport’s objections and ability to list numerous issues with Patricia’s fee request prove the billing statements’ clarity.

Davenport argues that fees should not be awarded against her because she is indigent. This is not a proper objection to reasonableness of the award. The Court will construe it as seeking a 0 amount. She provided no evidence of indigency. She did not file an affidavit or file a claim of indigency or even provide any work history. The Court does not find her indigent and the fee award remains reasonable as it is.

Davenport argues that instead of spending $231 to prepare Thad Huse’s subpoena and $55 to serve it, Patricia could have just “retrieved the documents from Huse and given them to her other attorneys.” Huse represented James LeFeber and prepared his will. To acquire documents related to his representation of James Faller, Patricia had to subpoena them. Attorneys do not hand over documents regarding a client to another client simply with a simple request.

Davenport argues that Jacqueline LeFeber’s Declaration was unnecessary. However, her allegations against Jacqueline in her 3rd-party complaint necessitated the Declaration. It was Davenport’s actions that created additional work for everyone. That the Declaration was never used is irrelevant.

Davenport argues that Patricia’s motions to declare her a vexatious litigant and as to her Initial Disclosures were unsuccessful. That some motions were unsuccessful does not change Patricia’s entitlement to fees for them. Cabrales(9th Cir. 1991) (a party who is ultimately successful is entitled to all reasonable fees despite prior adverse rulings). Davenport provides no evidence that the time spent on either motion was excessive.

Davenport argues that fees incurred by Patricia responding to Davenport’s complaint to ODC and work on LeFeber’s probate case should not be included in the award. There are no billing entries related to the probate case, and the ODC fees stem directly from this case. Davenport filed her complaint against Patricia’s counsel for representing to Cebull that Davenport had been disbarred. In light of her conduct throughout this case and noting Cebull’s previous determination that she routinely engaged in vexatious conduct throughout the case, the Court perceives her ODC report as a mere litigation tactic.

Davenport argues that Patricia claims “thousands” of impermissible costs under 28 USC 1920, specifically, printing costs, deposition costs, and meals. All of these costs are recoverable under §1920, which requires that generation of taxable materials be “reasonably necessary for use in” the case “at the time the expenses were incurred.” Williams (10th Cir. 2009); Haagen-Dazs (9th Cir. 1990) (§1920(4) enables a court to award copy costs for any document “necessarily obtained for use in the case”). Patricia notes that the deposition costs were incurred in taking Davenport’s and Raymond Tipp’s depositions. One was a party and the other the decedent’s prior counsel. Both were used in Patricia’s motion for summary judgment. The summary judgment briefs citing both depositions are evidence enough. The costs are recoverable under §1920 and LR 54.1. Patricia’s counsel billed Patricia for lunch during the depositions. Lunch expenses are recoverable when billed to a client. Greenfield (D.Or. 2001).

This Court agrees with Cebull that the time spent was absolutely necessary and was neither redundant nor excessive and the fees & costs are reasonable. Patricia is entitled to $181,031.21 fees & costs to be deducted from Davenport’s share of the Scottrade account. Prejudgment interest is not available, as previously determined. Proceeds of LeFeber’s account will remain in the Court registry until any appeals have been concluded or the period for noticing an appeal has passed.

(Many of Davenport’s arguments and the Court’s conclusions as to Shane are similar to those for Patricia.) Davenport devotes 48 of her 50-page brief explaining why Shane should not get fees at all. As to the amount requested by Shane, she argues that the fees are “unreasonable and excessive.” As even the most recent filings make clear, the time Shane’s attorneys spent was and continues to be multiplied by Davenport’s refusal to obey orders and her prolific filings. Fred Simpson, whose 20-year practice consists primarily of civil litigation, affirmed that Jeffrey Oven’s and Michael Tennant’s rates ($245 for Oven and $180 for Tennant) are reasonable based on his knowledge of and experience with local rates. He pointed out that Davenport’s discovery requests requiring production of over 1,000 pages of documents as well as the intensive factual investigation to rebut her claims all played into the amount of hours. The Court accepts Oven’s and Simpson’s unrefuted testimony that the time spent was absolutely necessary and neither redundant nor excessive. The Court also accepts Shane’s attorney and paralegal rates ($120 for paralegal) as consistent with the amounts charged by skilled lawyers and paralegals in the community who handle these types of cases. An award of $139,953 fees is reasonable.

As to Davenport’s objections to Shane’s costs, Shane points out that $3,200 went toward retaining his medical expert Deric Weiss, whose testimony that LeFeber died of cancer was required only after Davenport frivolously alleged that Shane and the other beneficiaries conspired to murder him. Davenport asserted varying claims over the last 3 years, with just enough legal training to require significant argument and investigation to rebut them. Shane’s costs of $8,190.21 were reasonable & necessary to his defense.

Arnold Faller is entitled to $13,706.78 fees & costs, $11,189.10 of which has already been distributed to him, so $2,517.68 shall be deducted from Davenport’s share of the Scottrade account.

Scottrade v. Davenport et al, 42 MFR 404 (Patricia), 42 MFR 417 (Shane), 42 MFR 424 (Arnold), 4/10/15; 9th Circuit order 12-35711, 10/23/14.

Tom Singer (Axilon Law Group), Billings, for Scottrade; Kristine Davenport, Missoula, pro se; Jon Beal & Katie Ranta (Beal Law Firm), Missoula, for Fallers; Jeffrey Oven & Michael Tennant (Crowley Fleck), Billings, for Shane; Kimberly Chabot and Christopher Gibbons, pro se.

RR CROSSING COLLISION: RR failed to show that employee against whom negligence as to crossing safety resulting in train/truck collision is alleged was fraudulently joined in attempt to defeat diversity… no complete preemption by ICCTA, thus no federal question jurisdiction, as negligence claim would have “merely incidental” effects on RR’s operations… Plaintiff’s motion to remand granted… Watters.

(The facts are from Samuel Staley’s complaint.)

A BNSF mainline and a siding run through Hysham. The west crossing is protected by automatic gates and lights. The other, a quarter mile to the east, has only crossbuck signs. Lynn Ludwig was designated “point of contact” for any issues in Hysham in 9/12. Town officials began complaining to her that trains were standing unoccupied on the siding for extended periods and blocking the west crossing, forcing motorists to use the east crossing. Not only was the east crossing unprotected, parked trains blocked southbound motorists’ view of any approaching eastbound trains on the mainline. Ludwig and BN ignored the officials and continued to block the west crossing. Staley was driving a beet truck south through Hysham 10/13/13. A train was standing unoccupied on the siding in a manner that completely blocked the west crossing, forcing him to use the east crossing. As he approached the east crossing, the parked train blocked his view of the mainline. When he began crossing, an eastbound train collided with his truck, causing severe injuries.

Staley sued BN and Ludwig in State Court in 9/14 alleging that they breached the standard of care by repeatedly blocking the west crossing and forcing motorists to use the east crossing, obstructing the view of oncoming eastbound trains for southbound motorists at the east crossing, arrogantly ignoring complaints about the unsafe crossing practices, failing to sound a warning at the east crossing in violation of Montana and federal law, failing to operate the train at a safe speed when approaching the east crossing which constituted a “unique, specific and individual hazard,” failing to keep a proper lookout for vehicles approaching the east crossing, failing to install proper warning signs and signalization at the east crossing, and“otherwise failing to use due care under the circumstances.” Defendants removed to this Court on the basis of diversity. They acknowledge that Staley and Ludwig are Montanans, but contend that he fraudulently joined her to avoid federal jurisdiction. They also claim federal jurisdiction on the basis that his negligence claims are preempted by the ICCTA. Staley moved to remand, arguing that he pled sufficient facts to state a cause against Ludwig and that his claims are not completely preempted because even if successful they will not unreasonably burden BN’s operations as it had previously separated trains to avoid blocking the west crossing.

Both Staley and Defendants have attached additional evidence to their briefs. “Fraudulent joinder claims may be resolved by `piercing the pleadings’ and considering summary judgment-type evidence such as affidavits and deposition testimony.” Morris (9th Cir. 2001). In an email to Engineering Support Supervisor Josh Capps, town official Robert Keele raised the issue of rail traffic blocking the west crossing. Keele noted that

one of my council members did speak with the train master in Forsyth, and in response one train has been broken to allow crossing at this intersection. This occurred about a month ago and has not been done since.

Capps forwarded Keele’s email to Ludwig and stated:

I sent an email to the trainmaster regarding this issue 2 weeks ago, so if you and Rob make it into Forsyth please discuss this with him because the last train that was there had more than enough room to cut the crossing. Mr. Keele, Lynn Ludwig will now be your point of contact for any issues in Hysham since I no longer work in Montana.

However, Keele noted in an email to Ludwig 9/7/12 that although he may have been “beating a dead horse,” parked trains continued to block the west crossing, on one occasion for 2½ days. On 10/14/13, the day after Staley’s accident, Keele emailed Ludwig that he could not “begin to express the level of frustration I have with you and BNSF regarding this issue,” that his requests that BN modify its practice of blocking the west crossing “have gone largely unanswered and even more so, arrogantly ignored.” Ludwig responded that she had been in contact with the County regarding the crossing and had not ignored his complaints.

Defendants attached an affidavit from Ludwig in which she claims she had no involvement in placing the trains at the west crossing. She claims that as a roadmaster she only supervises employees maintaining the track and coordinates work at crossings, and in that capacity she “had contact with Treasure County officials on road and crossing surface issues.” Other BN departments determined where to place trains. She states that she did not ignore Keele’s complaints, but forwarded them to the proper department, and after that there was nothing more she could do. She also states that she had no authority as to placement of warning signs or lookouts at the east crossing.

Fraudulent joinder. Defendants have not met their burden of showing that Staley cannot state a cause against Ludwig. To hold the employee personally liable under Montana law, he must be either personally negligent or have taken “actions that were tortious in nature.” Crystal Springs (Mont. 1987). Where there are allegations against an employee personally, the Montana Supreme Court has allowed the employee to be named as a defendant. Dagel(Mont. 1991). Staley claims that Ludwig negligently ignored complaints and the alleged unsafe conditions at the west crossing. He points out that Keele’s previous point of contact, Capps, apparently played some role in rearranging a train that had been blocking the west crossing, and since he had left Montana he notified Keele that Ludwig would be the “point of contact for any issues in Hysham.” According to Staley, Ludwig ignored Keele’s emails until after Staley’s accident. He also claims that she never told Keele to contact someone else as to trains blocking the west crossing. These allegations are sufficient to pursue a negligence claim against Ludwig personally. The alleged lack of response and ignoring safety complaints support Staley’s claim that she was personally negligent. Ludwig’s general denial of Staley’s allegations that she ignored complaints is similar to an answer and is insufficient to overcome the burden of showing fraudulent joinder. “Were courts to find fraudulent joinder whenever presented with a defendant’s self-serving affidavit, few cases would ever be remanded and federal jurisdiction would greatly expand.” Smith (ED Ky. 2010). Ludwig’s affidavit shows that there is contradictory evidence as to Staley’s claim that safety complaints went “largely unanswered and … arrogantly ignored.”

Preemption. Defendants contend that this action would impermissibly manage or regulate train operations. The Court finds that, as alleged, it would not unreasonably burden or regulate BN’s operations, and thus, because the ICCTA does not wholly displace Staley’s negligence claims, it is not completely preempted. As in Elam (5th Cir. 2011), Staley is asserting simple negligence. He does not rely on Montana’s antiblocking statute, MCA 69-14-262, but alleges that BN created an unsafe condition that constituted a “unique, specific and individual hazard.” As alleged, the situation was not likely to be frequently replicated. Nor does Staley plead facts that would “unreasonably interfere with interstate commerce.” AAR (9th Cir. 2010). Nor has Congress manifested an intent for the ICCTA to preempt all negligence claims against railroads. Elam. Since ICCTA does not completely preempt a negligence claim that would have “merely incidental” effects on a railroad’s operations, id., Staley’s claims are not completely preempted. This does not mean that BN cannot raise a preemption defense in State Court, but only that the preemptive force of the ICCTA is not so strong that it preempts the entire area of negligence law against railroads. Therefore, Staley’s allegations are not “necessarily federal in character,” and this Court does not have federal question jurisdiction. Staley’s motion to remand is granted.

Staley v. BNSF and Ludwig, 42 MFR 386, 2/27/15.

Zander Blewett & Kurt Jackson (Hoyt & Blewett), Great Falls, for Staley; Jeff Hedger & Michelle Friend (Hedger Friend), Billings, for Defendants.