STUDENT TRAVEL breach of contract claims related to COVID disruptions rejected on summary judgment… class certification denied… Cavan/Watters.

Global Travel Alliance sells educational travel packages to students. The named-Plaintiffs are Montana parents and students who booked trips in 2020 which were hindered by the COVID pandemic.

Global trips are generally booked a year in advance pursuant to its General Booking Conditions and Release Agreement and are paid in installments. Global has the right to “cancel any trip or portion of a trip, make an alteration in itinerary, or accommodation,” if a trip is rendered unsafe. A Standard Cancellation Policy provides for a refund based on the number of days prior to departure if a trip is canceled. The Cancellation Policy “strongly recommends” that travelers consider purchasing trip protection under which a traveler may cancel for personal reasons and receive a full refund less certain fees if a trip is canceled at last 24 hours prior to departure.

The travelers in this case were from Ben Steele Middle School, Laurel Middle School, and Castle Rock Middle School in Billings, and Sacajawea Middle School in Bozeman. Their trips were scheduled for spring 2020. On 3/13/20 the US declared a national emergency in response to the COVID pandemic. On the same date Global wrote its travelers detailing the Cancellation Policy, outlining Trip Protection Plan coverage, and reiterating its right to cancel for safety reasons. Days later it began postponing and rescheduling trips. It notified travelers that if they declined to participate in their rescheduled trip, it offered an option for a transferable trip voucher to be used later. Travelers from Ben Steele, Laurel, and Castle Rock were also offered an option for a “flexible independent trip (“Billings FIT trip”) to DC, Gettysburg, and Philadelphia in 6/21. If all those options were declined, Global would treat their refusal as a traveler cancelation and refunds would be offered pursuant to the Cancellation Policy.

KS’s and KC’s trip with Ben Steele was scheduled to depart 5/6/20. When the pandemic required it to be postponed Global offered to reschedule with a 75% travel voucher or 50% refund. Ben Steele travelers were also later offered the option of participating in the Billings FIT trip. Lisa Sides on behalf of KS and Erin & Jackie Clauch on behalf of KC rejected all options and demanded a full refund. Global issued them a 50% refund.

KW’s trip with Laurel was scheduled to depart 5/7/20. When postponed, Global offered the same 3 options. Laurel travelers were also later offered the Billings FIT trip. Jennifer Wersland on behalf of KW demanded a full refund. Global issued a 50% refund.

KS’s trip with Castle Rock was scheduled to depart 4/9/20. Global presented the same options. Julie Swanson on behalf of KS accepted and was issued a 75% travel voucher.

EW’s trip to Europe with Sacajawea was scheduled to depart 6/16/20. When it was postponed the trip leader declined to reschedule and requested a 70% cash refund or 75% travel voucher. EW accepted the refund.

Trips for schools other than Sacajawea were rescheduled in May and June 2021 and successfully completed. The remaining trips also were rescheduled and went forward. Some travelers from each school participated in the rescheduled trips while others opted to take the Billings FIT trip, accept the travel voucher, or cancel their trips.

Plaintiffs sued Global asserting a class action. Magistrate Cavan recommended that the Court grant Global’s motion for summary judgment and motion to strike or deny class certification.

The Magistrate found that summary judgment for Global was appropriate because the contract unambiguously permitted it to cancel travel or make alterations for safety reasons. He determined that the pandemic was an event that rendered the original trips unsafe. He found that Global acted in accordance with the contract when it rescheduled trips in light of the pandemic. Because the trips were only postponed, he determined that Plaintiffs’ argument that Global rescinded the contract failed. He found that rescheduling the trip was “plainly consistent with the parties’ intent at the time of contracting to provide a safe educational experience.” He determined that while the voucher program was not accounted for in the contract, Global’s offering vouchers or alternative trips was not a breach of any contract provision.

The Magistrate also recommended granting Global’s motion to strike or deny class certification because Plaintiffs have not provided evidence that the Rule 23(a) requirements of numerosity, commonality, typicality, and adequacy of representation have been met. He noted that in the year since the initial motion to deny certification they have failed to produce any new evidence or conduct any additional discovery to address the deficiencies. Plaintiffs filed objections.

Plaintiffs argue that the Magistrate incorrectly applied a reasonableness test when analyzing whether the contract was breached. The Magistrate stated that the Booking Agreement

permits Global Travel to cancel travel or make alterations to a travel plan for safety reasons. There is no dispute that Plaintiffs’ scheduled trips were “rendered unsafe” by the COVID-19 pandemic. Therefore, the parties’ contract permitted Global Travel to make changes to the travel plan to provide for traveler safety. This is precisely what Global Travel did in rescheduling Plaintiffs’ trips for a later date when the travel could be safely completed.

The Court acknowledges that postponing a trip for a year may, in some circumstances, be a broad interpretation of “make an alteration in itinerary.” If, for example, a trip needed to be altered because of a temporary storm, postponing travel for a year may not be a reasonable application of the contract’s safety provision. But under the circumstances presented here, there is no dispute that a global pandemic rendered the action necessary, and it was plainly consistent with the parties’ intent at the time of contracting to provide a safe educational experience.

The Court, therefore, finds Plaintiffs’ argument that Global Travel rescinded the contract unavailing. Global Travel did not cancel any scheduled trips or rescind the Booking Agreement.

Plaintiffs argue that this analysis injects negligence standards into breach of contract analysis. This argument is founded on what seems to be a willful misreading of his analysis. Plaintiffs chop up the language of his order in support of their argument, stating that he analyzed whether the alteration was “‘necessary,’ ‘reasonable,’ and consistent with the parties’ intent at the time of contracting.” Reading the recommendation in its full context makes clear that he did not apply negligence standards. The only time he uses words like “necessary” and “reasonable” is in an aside, discussing whether a change in itinerary for a day versus a year or more may change the analysis. He clearly stated that under the plain language of the contract — the appropriate standard and the standard Plaintiffs claim he did not employ — Global was permitted to change the itinerary in response to a trip being rendered unsafe. This was not error, and Plaintiffs’ objection is founded on a misrepresentation and is not well-taken.

Plaintiffs also argue that the Magistrate incorrectly determined that an alteration in itinerary included rescheduling a trip. They state: “Rescheduling a trip for the following year is not an alteration in the itinerary. Reference to any standard dictionary definition of ‘itinerary’ makes that clear.” But their own supplied definition states that an itinerary can be “the proposed outline [of a journey or tour].” Plainly, a change in the route or outline of a journey can include a change in the dates including rescheduling the route or outline for the following year.

Plaintiffs object that the Magistrate interpreted the booking agreement based on the deposition testimony of lay witnesses, did not consider “Global Travel’s improper use of the Standard Cancellation Policy,” and erred by referring to the Trip Protection Program. They do not ever explain what legal authority supports a contrary result.

The Magistrate found that the plain language of the contract allowed Global to reschedule trips when a trip was rendered unsafe, and that the pandemic rendered the original itinerary unsafe. Accordingly, it did not breach the contract by rescheduling trips and applying the cancelation policy to any student who wanted a refund. There was no interpretation of deposition testimony or improper use of the cancelation policy. Reference to the Trip Protection Program has nothing to do with this legal analysis; it is not a proper objection that “it is unclear why [reference to the Trip Protection Program] is included in the recommendations” because it does not present legal argument and authority such that the District Court is able to identify the issues and reasons supporting a contrary result. Plaintiffs do not even identify a contrary result.

Plaintiffs argue that the Magistrate rejected their rescission claim without due analysis. They state that the proposed 8th grade trip a year later is materially different such that the object of the contract cannot be performed because the students are now not in the same school or with the same student body and their high school careers are well underway. Their briefing makes no mention of rescission based on the students being older or in different schools, only that “Global Travel rescinded the Contract when it canceled the Contract’s sole object, e.g. the scheduled class trip.” This demonstrates that the analysis regarding cancelation necessarily includes analysis regarding rescission. It cannot be error for the Magistrate to fail to analyze facets of an issue that are never presented to him and are now only being raised on objection. Further, the contract says nothing about the purpose of the trip being exclusively an “Eighth Grade Class Trip.” It does not limit participants to 8th grade students, nor does it promise that the trip will only occur when all students are in the 8th grade. The Magistrate correctly determined that summary judgment for Global is appropriate on Plaintiffs’ rescission claim.

Plaintiffs argue that the Magistrate applied the wrong standard when considering the motion to strike class certification, stating that he applied the standard applicable to an affirmative motion for certification. They argue that Rule 23(d)(1)(D) requires Global to shoulder the burden of proof and that the Magistrate did not properly apply the burden. Confusingly, they do not provide any legal analysis or caselaw regarding what the outcome should be; they merely note that they believe the wrong standard was applied. Nevertheless, the Court, in applying the 23(d)(1)(D) standard, determines that striking the class claims is appropriate.

Class certification has been previously denied and Plaintiffs have produced no new evidence in more than a year. Global argues that the proposed class cannot ever be certified because of the previously identified issues of commonality, typicality, and capability of common resolution. Plaintiffs have provided no new evidence, new argument, or any authority stating that these defects could be cured at some point in the future. Basic issues regarding commonality and typicality — such as whether all parties have suffered the same injury and whether it is capable of classwide resolution — persist. Striking the class claims is appropriate.

Plaintiffs object that they have not actually had a year to conduct discovery as they and Global agreed to stay the class discovery pending a ruling on the summary judgment motions. This argument minimizes that it was their tactical choice to stay their discovery requests and “streamline the case.” They state that “there is no factual basis to conclude that Plaintiffs should have completed or presented discovery on class certification.” Neither this Court nor the Magistrate has held that discovery needed to be completed at this point to survive a motion to strike; however, Plaintiffs present no new argument beyond a request for more time. They have not stated what further evidence in support of class certification they hope to find, nor have they provided any sort of schedule or timeline for the Court.

Finally, Plaintiffs state that the Magistrate conflated damage differences as a lack of commonality or typicality. This objection is unavailing. He relied on his previous findings on certification. Plaintiffs did not object to those findings when they were adopted by this Court. They cannot now complain of errors in that analysis.

Magistrate Cavan’s proposed findings & recommendations are adopted in full. Global’s motion for partial summary judgment is granted. Its motion to strike or deny class certification is granted.

Sides et al v. Global Travel Alliance, 44 MFR 295a/b, Cavan’s proposed findings & recommendations 1/18/23, Watters’s order 3/24/23.

John Morrison (Morrison, Sherwood, Wilson & Deola), Helena, and John Heenan (Heenan & Cook), Billings, for Plaintiffs; Ian McIntosh (Crowley Fleck), Bozeman, and Kristen Meredith (Crowley Fleck), Helena, for Global.

DISCOVERY: Rule 35(b)(1) “like reports” does not require insurers or their medical examiners to deliver reports for all earlier exams of the condition from all persons examined, but only earlier exams of the Plaintiff regarding the same condition to which the insurers and their Rule 35 examiners may have access… DeSoto.

Levi & Michele Cheff seek UIM from American States Preferred and General Ins. for injuries Levi sustained in an MVA 1/29/19 which he claims resulted in vision convergence insufficiency, dizziness, other vestibular issues, and shoulder problems requiring surgeries.

On 9/25/20 Defendants’ counsel emailed Cheff’s counsel requesting Levi to attend a neuropsychological evaluation pursuant to a condition of his policies that they have “no duty to provide coverage under the policy unless” the insureds “submit to examination, at [Defendants’] expense, by physicians of [Defendants’] choice, as often as [Defendants] reasonably require.” Neuropsychologist Craig McFarland evaluated Levi, issuing a report 11/17/20 and an addendum 11/30. Defendants emailed both reports to Plaintiffs’ counsel 12/1/20.

Plaintiffs filed this suit 1/20/22. In 6/22 the parties stipulated to 2 additional exams under the policies and Rule 35 at Defendants’ request: Levi agreed to submit to an ophthalmological exam by Randy Kardon and a neurological exam by Mark Bromberg.

In 12/22 the parties requested a status conference to discuss the scope of production required under Rule 35(b)’s mandate that “the party who moved for the examination must, on request, deliver to the requester a copy of the examiner’s report, together with like reports of all earlier examinations of the same condition.” (Emphasis added by the parties). Relying on Bryant (D.Colo. 2019), Plaintiffs contend that “all Rule 35 examiners hired by the Defendants must produce ‘like’ reports of any examinations of any person, including non-parties, performed on a similar condition, with all personal identifying information redacted to protect patient privacy.” Defendants counter that “Rule 35 examiners are not required to produce ‘like’ reports for non-parties that were not conducted pursuant to Rule 35” and “Rule 35 does not require the production of doctor-patient privileged medical records for individuals who are not a party to a lawsuit and who are not under the custody or legal control of a party to the lawsuit.” After discussion with the parties, the Court ordered briefing.

Plaintiffs submitted their opening brief 12/22/22, subpoenaed McFarland, and moved to compel subpoena compliance under Rule 45(d)(2)(B)(i) seeking “like reports” under their interpretation of Rule 35(b):

1. The last 20 “like reports” that Bohyer, Erickson, Beaudette & Tranel has received from McFarland with “like reports” to be neuropsychological reports of exams of individuals with claims of TBI with personal information redacted.

2. The last 20 reports of neuropsychological reports of exams performed by McFarland for any defendant excluding Bohyer, Erickson, Beaudette & Tranel with personal information redacted.

3. The last 20 neuropsychological reports of exams of individuals with claims of TBI furnished to anyone exclusive of any reports furnished in categories 1 and 2 with personal information redacted.

Defendants objected that because McFarland conducted his exam under terms of an insurance policy, Rule 35 does not apply to him and even if it applies it should not be interpreted to require production of health information of non-parties without their knowledge or consent.

Plaintiffs seek similar “like reports” from Kardon and Bromberg. Defendants maintain that such broad disclosure should be denied.

Rule 35 does not apply to the 10/26/20 pre-litigation exam by McFarland because it was not ordered by the Court, but was a function of Levi’s policy.

Plaintiffs cite Chastain (D.Utah 1964) and Cooper (S.D.Fla 2007) in support of their contention that McFarland’s exam conducted pursuant to the insurance contract should fall under Rule 35(b)(6) which applies to exams made by agreement. Those cases are distinguishable because they do not involve pre-litigation contractual obligations but simply informal agreements to conduct IMEs. Chastain noted the custom of agreeing to IMEs without a court order and commended counsel’s cooperation. This Court likewise acknowledges the often-observed custom of agreeing to IMEs and further observes that had Levi’s exam by McFarland resulted from a simple agreement between the parties, Plaintiffs’ argument that falls

under Rule 35 would be well-taken. However, it was a contractual obligation, not a voluntary agreement, and Rule 35 does not apply.

Accordingly, McFarland cannot be compelled to produce “like reports of all earlier examinations of the same condition” as required by the Rule and Plaintiffs’ motion to compel subpoena compliance is denied.

As to the scope of production required under Rule 35(b) by Kardon and Bromberg, Plaintiffs contend that Bryant provided “a definitive decision.” However, Bryant is both distinguishable and an anomaly; at best, federal courts are split as to whether disclosure of “like reports” is limited solely to exams of the plaintiff or extends to reports by the examiner from exams of other parties with the same condition.

Bryant determined that disclosure under 35(b)(1) extends to an examiner’s “like reports” from exams of other patients with the same condition(s) as the plaintiff. But the context of the plaintiffs’ argument in Bryant was crucial to the decision and that same context is not at issue here.

The plaintiffs in Bryant opposed the defendants’ motion for a Rule 35 exam because defendants’ doctor had “a reputation as a biased physician that routinely provides retained medical examination reports to help Defendants and insurers attempt to reduce the value of claims asserted against them.” Thus the issue was whether the plaintiffs had demonstrated good cause for the conditions they sought to place on the exam in light of the doctor’s reputation for bias. Specifically, the plaintiffs sought “production of all reports, notes, drafts, and other materials from [the doctor’s] file in conjunction with his Rule 35 examination of [the plaintiff]” and “copies of previous reports of his examinations of the same condition [as the plaintiff] in other individuals.” The court engaged in a plain language analysis of Rule 35 and the advisory committee’s notes from the 1970 amendment and concluded that, while the plaintiffs were only entitled to the doctor’s final reports, not drafts or notes, “an examined party is entitled to production by the examiner of ‘all’ reports to which the examiner has access, regarding examinations of the same condition(s) suffered by the examined party.” To address the defendants’ concerns with disclosing confidential 3rd-party medical information, the court ordered patients’ names and other identifying information redacted.

On the other end of the spectrum, Howard (N.D. Ga. 2014) rejected the plaintiff’s similar argument that additional conditions should be included in its Rule 35 order. The plaintiffs proposed a condition that required the defendant to provide to the plaintiff’s counsel:

Any and all reports, including a copy of [the examining doctor’s] report and findings of the Plaintiff, memorandum, notes, photographs, and all other materials prepared by [the examining doctor] must be delivered to the Plaintiff’s counsel, “together with like reports of all earlier examinations of the same condition” from all persons [the examining doctor] has examined for Complex Regional Pain Syndrome within 5 days of [the examining doctor] issuing any said report(s). See Rule 35(b)(1).

Characterizing the plaintiff’s interpretation of Rule 35 as “incorrect,” the court held that this provision “requires the defendant to deliver to the plaintiff only like reports of all earlier examinations of the plaintiff regarding the same condition to which the defendant may have access.” (Emphasis added).

Bryant is distinguishable as the Rule 35 objections were premised on allegations of a biased examiner while Plaintiffs here have made no such allegations and in fact stipulated to Defendants’ doctors examining Levi. Additionally, as Defendants point out, Plaintiffs’ interpretation of Rule 35(d) presents a multitude of privacy concerns as well as conflicts with doctors’ obligations to protect their patients’ confidential healthcare information. Putting aside those significant concerns, the Court’s own plain language analysis, including a complete reading of Rule 35 and the advisory committee’s notes to the 1970 amendment, places (b) in a vastly different light than Plaintiffs and the Bryant court contend.

First, the Court agrees with Defendants that (a)(1) limits Rule 35’s application to “a party whose mental or physical condition … is in controversy.” Unrelated non-parties plainly do not fall within the scope of the Rule because they have not placed their condition at controversy in this litigation.

Next, Bryant relies on a selective reading of the 1970 advisory committee notes which state that the amendment “embodies changes required by the broadening of Rule 35(a) to take in persons who are not parties.” Contrary to Plaintiffs’ argument that this supports their position that reports of persons who are not parties should be disclosed, the committee intended “to extend the rule to provide for an order against the party for examination of a person in his custody or under his legal control.” Thus (a) defines “persons who are not parties” as persons in the custody or under the legal control of a party; for example, “a parent or guardian suing to recover for injuries to a minor.” There is nothing in the notes to imply that the Rule should be extended to unrelated non-parties who have been treated by the same physician for the same condition.

Discovery rules, while “intended to foster broad and comprehensive discovery disclosures,” McDonald (D.Mont. 2014), “should not be expanded by disregarding plainly expressed limitations,” Schlagenhauf (US 1964). Additionally, Because Rule 35 is “in derogation of the statutory privilege” it should be strictly construed. Sher (DC Cir. 1952).

A reasonable interpretation of the plain language of Rule 35(b) in context with its other provisions and the advisory committee notes does not justify plaintiffs receiving exam reports of others, completely unrelated to the pending litigation, examined by defendants’ chosen physicians. Rule 35(b)(1) does not require Defendants or their medical examiners to deliver like reports for all earlier exams of the same condition from all persons examined; it only requires production of like reports of all earlier exams of the Plaintiff regarding the same condition to which Defendants and their Rule 35 examiners — Kardon and Bromberg — may have access. Plaintiffs’ motion to compel subpoena compliance by McFarland is denied.

Cheff v. American States Preferred Ins. and General Ins. of America, 44 MFR 294, 3/2/23.

Lon Dale, Hannah Stone, Alyssa Probst, and Michael Sherwood (Milodragovich, Dale & Steinbrenner), Missoula, for Plaintiffs; Paul Tranel, Jesse Beaudette, and Brandon Shannon (Bohyer, Erickson, Beaudette & Tranel), Missoula, for Defendants.

NURSING HOME MALPRACTICE: Nursing home not immune from COVID-based claims of estates of deceased patients under Public Readiness & Emergency Preparedness Act, motion to dismiss denied… Cavan/Watters.

Magistrate Cavan’s Findings & Recommendations.

This action was originally brought by the Estate of Robert Petersen in Yellowstone Co. State Court 1/18/22 against Canyon Creek Memory Care in Billings. Defendants removed to this Court invoking diversity and federal question jurisdiction and federal officer removal. Plaintiff then joined as Plaintiffs the Estates of Mary Ann Simons and Charlotte Guilford. Before the Court is Canyon Creek’s motion to dismiss.

In mid-20 Petersen, Simons, and Guilford were residents of Canyon Creek. Petersen and Guilford had dementia and Simons had complications following a stroke. The Estates allege that Canyon Creek failed to provide essential care, services, and duties owed to them which ultimately resulted in their deaths.

Plaintiffs allege that Canyon Creek failed to fulfill their duties to Petersen and Simons before and during a COVID outbreak: prior to the outbreak staff neglected him, did not regularly help him use the bathroom, groom him, bathe him, or consult with his healthcare power of attorney before changing his medications. Nonetheless, he was allegedly well-nourished, hydrated, and able to assist in daily activities. On 7/8/20 he tested positive for COVID but was asymptomatic. Plaintiffs allege that Canyon Creek was short-staffed and did not check on him regularly. He lost significant weight and eventually was unable to talk, swallow, or stand and was transported to the hospital due to fever, high heart rate, low blood pressure, and severe dehydration. Staff advised that he also suffered from confusion, deconditioning, and acute kidney injury caused by severe hydration. He also had pressure injuries to his sacrum and left hip. He died 9/18/20.

Simons tested positive for COVID 7/6 and was asymptomatic. At the request of her husband she was transported to the hospital where she was diagnosed with acute metabolic encephalopathy secondary to hypernatremia and acute kidney injury caused by severe dehydration. She also had pressure injuries to her sacrum and buttocks. She died 8/10/20.

Guilford became a Canyon Creek resident 6/30/20. On the day of her admission her representatives asked if there were COVID cases at Canyon Creek after observing a staff member in protective equipment. Staff responded that there were no COVID infections. Plaintiffs allege that had her representatives been informed that a resident had tested positive for COVID they would have removed her. Later in July they were told that she tested positive for COVID. She died from COVID complications 8/22/20.

The Estates allege (1) negligence as to Petersen and Simons, (2) negligence/negligence per se as to Petersen and Simons, (3) negligence as to Guilford, (4) negligent management, (5) negligent misrepresentation, (6) violation of the MCPA, (7) violation of the right to dignity under the Montana Constitution as to Petersen and Simons, and (8) punitives.

Canyon Creek moves to dismiss for lack of subject jurisdiction and failure to state a claim pursuant to Rules 12(b)(1) and 12(b)(6). It argues that it has immunity under the Public Readiness & Emergency Preparedness Act and thus the Court lacks jurisdiction. The Estates respond that PREPA does not provide complete immunity and argue that they have alleged sufficient facts to maintain the causes.

PREPA authorizes the Secretary of DHHS to issue a declaration that “a disease or other health condition or other threat to health constitutes a public health emergency.” 42 USC 247d-6d(b)(1) (2005). If such a declaration is issued, PREPA provides “a covered person” immunity from liability for “all claims for loss caused by, arising out of, relating to, or resulting from the administration to or the use by an individual of a covered countermeasure.” Immunity “applies to any claim for loss that has a causal relationship with the administration to or use by an individual of a covered countermeasure.” If immunity applies, an injured person may be compensated “for covered injuries directly caused by the administration or use of a covered countermeasure” from the “Covered Countermeasure Process Fund.”

In 3/20 the Secretary declared “the spread of SARS-CoV-2 or a virus mutating therefrom and the resulting disease, COVID-19” a public health emergency. The Declaration defines “covered countermeasures” to include:

(a) Any antiviral, any drug, any biologic, any diagnostic, any other device, any respiratory protective device, or any vaccine manufactured, used, designed, developed, modified, licensed, or procured:

I. To diagnose, mitigate, prevent, treat, or cure COVID-19, or the transmission of SARS-CoV-2 or a virus mutating therefrom;

“Administration” of covered countermeasures “extends only to physical provision of a countermeasure to a recipient, such as vaccination or handing drugs to patients, and to activities related to management and operation of programs and locations for providing countermeasures to recipients, such as decisions and actions involving security & queuing, but only insofar as those activities directly relate to the countermeasure activities.” The Declaration further provides that “whether immunity is applicable will depend on the particular facts and circumstances” and makes clear that “a liability claim alleging an injury not directly related to the countermeasure activities is not covered.”

The Estates have stated plausible claims which do not fall under PREPA. None of the claims alleges any injury as a result of administration of a covered countermeasure. While Petersen, Simons, and Guilford did contract COVID while at Canyon Creek, their claims related to Canyon Creek’s failure to care for them. As to Petersen and Simons, the Estates allege negligence for failing to provide sufficient nutrition and hydration, breaching duties owed under the Federal Nursing Home Reform Act, failing to provide adequately trained staff, and violating their right to dignity under the Montana Constitution. As to Guilford, the Estates allege negligence for failing to establish a system to prevent, identify, and control infections, failing to provide adequately trained staff, and misrepresenting that Canyon Creek was free of COVID infection. In short, the Complaint does not allege injury resulting from Canyon Creek’s administration or use of covered countermeasures; it alleges injury as a result of its inaction in providing essential care.

Canyon Creek argues that there is a “causal nexus” between the Estates’ injuries and its management of “their COVID-19 countermeasure program” including testing and use of personal protective equipment. It repeatedly points to a handful of paragraphs in the Complaint which reference countermeasures. But the paragraphs merely mention covered countermeasures, not that any injury resulted from administration of covered countermeasures. As several courts have recognized, “the mere mention of countermeasures in the complaint does not confer immunity.” Harris (ND Cal. 2022).

Canyon Creek points out, for example, that when Guilford’s representatives brought her to Canyon Creek “they observed a staff member wearing head-to-toe personal protective equipment.” But this goes to the Estates’ allegation that it misrepresented that there were no COVID cases at the facility, not to a failure to administer or use PPE. Nowhere in the Complaint do the Estates allege that its administration of PPE caused Guilford’s infection and ultimate death.

Canyon Creek also argues that the Estates “take issue with Canyon Creek’s decision to use their own COVID-19 testing and decline testing that was provided by the government.” It is true that the Complaint mentions that Canyon Creek declined the State’s free testing and that the National Guard was deployed to Canyon Creek to help provide care. However, they do not allege that Canyon Creek’s failure to test Petersen, Simons, or Guilford caused their injuries.

At most, the Complaint allegations can be construed to allege that Canyon Creek failed to employ testing. But “courts across the country” have “distinguished between malfeasance and nonfeasance and maintain that the Act is designed to protect those who employ countermeasures, not those who decline to employ them.” Walsh (ND Ill. 2022); Dupervil (ED NY 2021) (alleged failures by a nursing home to separate residents, enforce social distancing, restrict visitors, cancel group activities, ensure adequate staffing, enforce masking, and screen for COVID symptoms could not be found to be “administering or even prioritizing or purposefully allocating” a covered countermeasure under PREPA.

Nevertheless, it is possible for inaction claims to fall within PREPA. The Declaration provides: “Where there are limited Covered Countermeasures, not administering a Covered Countermeasure to one individual in order to administer it to another individual can” fall under PREPA. The example relates to a scenario where a limited countermeasure is administered to one who is more vulnerable to COVID rather than to one who is less vulnerable.

Accordingly, the great majority of courts have concluded that “there is only immunity for ‘inaction claims’ when the failure to administer a covered countermeasure to one individual has ‘a close causal relationship’ to the administration of that covered countermeasure to another individual.” Lyons (CD Calif. 2021).

Canyon Creek makes no argument to suggest that any covered countermeasure was not administered to Petersen, Simons, or Guilford because it was administered to others. In sum, none of the Estates’ claims allege that their injuries were caused by or related to Canyon Creek’s use or failure to use a covered countermeasure. Nor is it clear from the Complaint that the claims alleged are directly related to any countermeasure activity. Dismissal is thus inappropriate.

There is an exception to PREPA immunity where the injury occurs through willful misconduct, defined as “an act or omission that is taken (i) intentionally to achieve a wrongful purpose; (ii) knowingly without legal or factual justification; and (iii) in disregard of a known or obvious risk that is so great as to make it highly probable that the harm will outweigh the benefit.” The claimant must meet certain procedural and exhaustion requirements and the action must be filed in the DC District Court. Canyon Creek argues that the Estates’ punitives claim is a willful misconduct claim under PREPA and that it must be dismissed because they did not exhaust administrative remedies and did not file in the DC District Court. It points to a paragraph in the Complaint alleging that Canyon Creek was “intentionally understaffed” and staff were not appropriately trained. The Estates also allege that it acted “in conscious or intentional disregard” or “with indifference to the high probability of injury to Petersen, Simons, and Guilford.” However, they do not claim that it acted “intentionally to achieve a wrongful purpose” as required by §247d-6d(c)(1)(A). Maglioli (3rd Cir. 2021) (allegations of “conduct that was grossly reckless, willful, and wanton” constituted “standard language for a punitive-damages request,” not sufficient to allege intent to achieve a wrongful purpose). Accordingly, dismissal of the Estates’ punitives claim should be denied.

 

 

– – – 

 

Judge Watters’s Order.

Canyon Creek objected to Judge Cavan’s findings & recommendations, arguing that Plaintiffs’ injuries resulted from administration of covered countermeasures under PREPA so that it is entitled to immunity and that the Court must give deference to an advisory opinion from DHHS Office of General Counsel which explains that the choice not to administer a covered countermeasure falls under PREPA and its immunity.

After a careful review of Canyon Creek’s objections and Plaintiffs’ response, the Court adopts Judge Cavan’s findings & recommendations in full. Canyon Creek is not entitled to immunity under PREPA. Its motion to dismiss is denied.

Estates of Peterson, Simons, and Guilford v. Canyon Creek, 44 MFR 293a/b, Cavan’s findings & recommendations 12/19/22, Watters’s adoption order 3/1/23.

John Heenan (Heenan & Cook), Billings, and Philip McGrady (McGrady Law), Whitefish, for the Estates; Oliver Goe & Daniel Hoven (Browning, Kaleczyc, Berry & Hoven), Helena, for Canyon Creek.

NURSING HOME MALPRACTICE: Nursing home not immune from COVID-based claims of estates of deceased patients under Public Readiness & Emergency Preparedness Act, motion to dismiss denied… Cavan/Watters.

Magistrate Cavan’s Findings & Recommendations.

This action was originally brought by the Estate of Robert Petersen in Yellowstone Co. State Court 1/18/22 against Canyon Creek Memory Care in Billings. Defendants removed to this Court invoking diversity and federal question jurisdiction and federal officer removal. Plaintiff then joined as Plaintiffs the Estates of Mary Ann Simons and Charlotte Guilford. Before the Court is Canyon Creek’s motion to dismiss.

In mid-20 Petersen, Simons, and Guilford were residents of Canyon Creek. Petersen and Guilford had dementia and Simons had complications following a stroke. The Estates allege that Canyon Creek failed to provide essential care, services, and duties owed to them which ultimately resulted in their deaths.

Plaintiffs allege that Canyon Creek failed to fulfill their duties to Petersen and Simons before and during a COVID outbreak: prior to the outbreak staff neglected him, did not regularly help him use the bathroom, groom him, bathe him, or consult with his healthcare power of attorney before changing his medications. Nonetheless, he was allegedly well-nourished, hydrated, and able to assist in daily activities. On 7/8/20 he tested positive for COVID but was asymptomatic. Plaintiffs allege that Canyon Creek was short-staffed and did not check on him regularly. He lost significant weight and eventually was unable to talk, swallow, or stand and was transported to the hospital due to fever, high heart rate, low blood pressure, and severe dehydration. Staff advised that he also suffered from confusion, deconditioning, and acute kidney injury caused by severe hydration. He also had pressure injuries to his sacrum and left hip. He died 9/18/20.

Simons tested positive for COVID 7/6 and was asymptomatic. At the request of her husband she was transported to the hospital where she was diagnosed with acute metabolic encephalopathy secondary to hypernatremia and acute kidney injury caused by severe dehydration. She also had pressure injuries to her sacrum and buttocks. She died 8/10/20.

Guilford became a Canyon Creek resident 6/30/20. On the day of her admission her representatives asked if there were COVID cases at Canyon Creek after observing a staff member in protective equipment. Staff responded that there were no COVID infections. Plaintiffs allege that had her representatives been informed that a resident had tested positive for COVID they would have removed her. Later in July they were told that she tested positive for COVID. She died from COVID complications 8/22/20.

The Estates allege (1) negligence as to Petersen and Simons, (2) negligence/negligence per se as to Petersen and Simons, (3) negligence as to Guilford, (4) negligent management, (5) negligent misrepresentation, (6) violation of the MCPA, (7) violation of the right to dignity under the Montana Constitution as to Petersen and Simons, and (8) punitives.

Canyon Creek moves to dismiss for lack of subject jurisdiction and failure to state a claim pursuant to Rules 12(b)(1) and 12(b)(6). It argues that it has immunity under the Public Readiness & Emergency Preparedness Act and thus the Court lacks jurisdiction. The Estates respond that PREPA does not provide complete immunity and argue that they have alleged sufficient facts to maintain the causes.

PREPA authorizes the Secretary of DHHS to issue a declaration that “a disease or other health condition or other threat to health constitutes a public health emergency.” 42 USC 247d-6d(b)(1) (2005). If such a declaration is issued, PREPA provides “a covered person” immunity from liability for “all claims for loss caused by, arising out of, relating to, or resulting from the administration to or the use by an individual of a covered countermeasure.” Immunity “applies to any claim for loss that has a causal relationship with the administration to or use by an individual of a covered countermeasure.” If immunity applies, an injured person may be compensated “for covered injuries directly caused by the administration or use of a covered countermeasure” from the “Covered Countermeasure Process Fund.”

In 3/20 the Secretary declared “the spread of SARS-CoV-2 or a virus mutating therefrom and the resulting disease, COVID-19” a public health emergency. The Declaration defines “covered countermeasures” to include:

(a) Any antiviral, any drug, any biologic, any diagnostic, any other device, any respiratory protective device, or any vaccine manufactured, used, designed, developed, modified, licensed, or procured:

I. To diagnose, mitigate, prevent, treat, or cure COVID-19, or the transmission of SARS-CoV-2 or a virus mutating therefrom;

“Administration” of covered countermeasures “extends only to physical provision of a countermeasure to a recipient, such as vaccination or handing drugs to patients, and to activities related to management and operation of programs and locations for providing countermeasures to recipients, such as decisions and actions involving security & queuing, but only insofar as those activities directly relate to the countermeasure activities.” The Declaration further provides that “whether immunity is applicable will depend on the particular facts and circumstances” and makes clear that “a liability claim alleging an injury not directly related to the countermeasure activities is not covered.”

The Estates have stated plausible claims which do not fall under PREPA. None of the claims alleges any injury as a result of administration of a covered countermeasure. While Petersen, Simons, and Guilford did contract COVID while at Canyon Creek, their claims related to Canyon Creek’s failure to care for them. As to Petersen and Simons, the Estates allege negligence for failing to provide sufficient nutrition and hydration, breaching duties owed under the Federal Nursing Home Reform Act, failing to provide adequately trained staff, and violating their right to dignity under the Montana Constitution. As to Guilford, the Estates allege negligence for failing to establish a system to prevent, identify, and control infections, failing to provide adequately trained staff, and misrepresenting that Canyon Creek was free of COVID infection. In short, the Complaint does not allege injury resulting from Canyon Creek’s administration or use of covered countermeasures; it alleges injury as a result of its inaction in providing essential care.

Canyon Creek argues that there is a “causal nexus” between the Estates’ injuries and its management of “their COVID-19 countermeasure program” including testing and use of personal protective equipment. It repeatedly points to a handful of paragraphs in the Complaint which reference countermeasures. But the paragraphs merely mention covered countermeasures, not that any injury resulted from administration of covered countermeasures. As several courts have recognized, “the mere mention of countermeasures in the complaint does not confer immunity.” Harris (ND Cal. 2022).

Canyon Creek points out, for example, that when Guilford’s representatives brought her to Canyon Creek “they observed a staff member wearing head-to-toe personal protective equipment.” But this goes to the Estates’ allegation that it misrepresented that there were no COVID cases at the facility, not to a failure to administer or use PPE. Nowhere in the Complaint do the Estates allege that its administration of PPE caused Guilford’s infection and ultimate death.

Canyon Creek also argues that the Estates “take issue with Canyon Creek’s decision to use their own COVID-19 testing and decline testing that was provided by the government.” It is true that the Complaint mentions that Canyon Creek declined the State’s free testing and that the National Guard was deployed to Canyon Creek to help provide care. However, they do not allege that Canyon Creek’s failure to test Petersen, Simons, or Guilford caused their injuries.

At most, the Complaint allegations can be construed to allege that Canyon Creek failed to employ testing. But “courts across the country” have “distinguished between malfeasance and nonfeasance and maintain that the Act is designed to protect those who employ countermeasures, not those who decline to employ them.” Walsh (ND Ill. 2022); Dupervil (ED NY 2021) (alleged failures by a nursing home to separate residents, enforce social distancing, restrict visitors, cancel group activities, ensure adequate staffing, enforce masking, and screen for COVID symptoms could not be found to be “administering or even prioritizing or purposefully allocating” a covered countermeasure under PREPA.

Nevertheless, it is possible for inaction claims to fall within PREPA. The Declaration provides: “Where there are limited Covered Countermeasures, not administering a Covered Countermeasure to one individual in order to administer it to another individual can” fall under PREPA. The example relates to a scenario where a limited countermeasure is administered to one who is more vulnerable to COVID rather than to one who is less vulnerable.

Accordingly, the great majority of courts have concluded that “there is only immunity for ‘inaction claims’ when the failure to administer a covered countermeasure to one individual has ‘a close causal relationship’ to the administration of that covered countermeasure to another individual.” Lyons (CD Calif. 2021).

Canyon Creek makes no argument to suggest that any covered countermeasure was not administered to Petersen, Simons, or Guilford because it was administered to others. In sum, none of the Estates’ claims allege that their injuries were caused by or related to Canyon Creek’s use or failure to use a covered countermeasure. Nor is it clear from the Complaint that the claims alleged are directly related to any countermeasure activity. Dismissal is thus inappropriate.

There is an exception to PREPA immunity where the injury occurs through willful misconduct, defined as “an act or omission that is taken (i) intentionally to achieve a wrongful purpose; (ii) knowingly without legal or factual justification; and (iii) in disregard of a known or obvious risk that is so great as to make it highly probable that the harm will outweigh the benefit.” The claimant must meet certain procedural and exhaustion requirements and the action must be filed in the DC District Court. Canyon Creek argues that the Estates’ punitives claim is a willful misconduct claim under PREPA and that it must be dismissed because they did not exhaust administrative remedies and did not file in the DC District Court. It points to a paragraph in the Complaint alleging that Canyon Creek was “intentionally understaffed” and staff were not appropriately trained. The Estates also allege that it acted “in conscious or intentional disregard” or “with indifference to the high probability of injury to Petersen, Simons, and Guilford.” However, they do not claim that it acted “intentionally to achieve a wrongful purpose” as required by §247d-6d(c)(1)(A). Maglioli (3rd Cir. 2021) (allegations of “conduct that was grossly reckless, willful, and wanton” constituted “standard language for a punitive-damages request,” not sufficient to allege intent to achieve a wrongful purpose). Accordingly, dismissal of the Estates’ punitives claim should be denied.

 

 

– – – 

 

Judge Watters’s Order.

Canyon Creek objected to Judge Cavan’s findings & recommendations, arguing that Plaintiffs’ injuries resulted from administration of covered countermeasures under PREPA so that it is entitled to immunity and that the Court must give deference to an advisory opinion from DHHS Office of General Counsel which explains that the choice not to administer a covered countermeasure falls under PREPA and its immunity.

After a careful review of Canyon Creek’s objections and Plaintiffs’ response, the Court adopts Judge Cavan’s findings & recommendations in full. Canyon Creek is not entitled to immunity under PREPA. Its motion to dismiss is denied.

Estates of Peterson, Simons, and Guilford v. Canyon Creek, 44 MFR 293a/b, Cavan’s findings & recommendations 12/19/22, Watters’s adoption order 3/1/23.

John Heenan (Heenan & Cook), Billings, and Philip McGrady (McGrady Law), Whitefish, for the Estates; Oliver Goe & Daniel Hoven (Browning, Kaleczyc, Berry & Hoven), Helena, for Canyon Creek.

DEPOSITION rulings in tax lien case involving pro se Defendants, email notices, telephonic and in-person depositions, improper service by US, objections to questions… Defendants order to attend in-person depositions at Federal Courthouse, pay travel expenses of one US attorney and costs of stenographer… mitigating facts preclude US’ request for default… Molloy.

The US filed this action 4/20/21 pursuant to 26 USC 7401 & 7403 seeking a tax lien against property owned by Thomas Millett and Michelle McLaughlin in Flathead Co. On 7/21/22 the US sent Millett interrogatories, RFAs, and RFPs. Millett responded 8/22 with nonresponsive answers to many inquiries and objecting on various grounds including 1st and 5th Amendment. On 11/30/22 Defendants produced their untimely initial disclosures.

On 9/1/22 the US emailed Defendants at simplytom65@yahoo.com — the registered email address for both — to schedule depositions, suggesting October 11 & 12 in Missoula. Millett responded that they were unavailable on those dates and Missoula was unacceptable. He proposed a single day at a hotel in Kalispell 10/13, 10/14, 11/9, or “around Christmas.” The US responded that 2 depositions on separate days were required and suggesting the December date. Millett responded that they would be available by telephone 12/22 and 12/23. The US insisted on in-person depositions at least in part because of the voluminous exhibits. Millett replied accusing the US of bad faith and reiterating that Defendants would only be available for 1 day of depositions. The US responded that as noticing party it got to choose the manner, time, and location of depositions and they would proceed 12/22. It sent a deposition notice reflecting those days to simplytom65@yahoo.com. Millett acknowledged receipt and requested reimbursement details.

On 12/18 counsel for the US tested positive for COVID. She emailed Defendants informing them and stating that the deposition would need to be rescheduled. Millett replied indicating that he and McLaughlin would be available 1/4 and 1/5 in Missoula. The US re-noticed the depositions for 1/4 for Millett and 1/5 for McLaughlin.

On 1/2/23 co-counsel for the US De Palma arrived in Missoula after having traveled to Bozeman prior to the holidays. On 1/3 US counsel Bissell flew out of DC to Missoula but her flight was delayed and she was stuck in Minneapolis. At 8:06 a.m. 1/4 the US received an email from Millett:

I regret to inform you that I cannot attend today’s deposition in-person due to experiencing some minor flu-like symptoms. However, I am ready, willing and looking forward to being deposed today (Wed Jan 4) beginning at 9am over the telephone. Due to the obvious inconvenience to you this will cause I will waive the 7 hour time limit per deposition day in order for you to ask all of your questions and if needed, will make myself available to finish up my deposition on Thurs Jan 5 before or after Ms. McLaughlin is deposed. Unfortunately, I will not be available to be deposed on Friday Jan 6 due to having to travel out of the state of Montana on that day and will not return until approximately March 1. A copy of the airline ticket can be provided upon request.

Beneath Millett’s note McLaughlin wrote:

This is Michelle McLaughlin. I also regret to inform you that I will not be attending my deposition tomorrow (Jan 5) in-person due to having a minor heart condition that is flaring up due to the stress that this deposition is causing. I will make myself available to be deposed tomorrow, Jan 5, my scheduled day, beginning at 9am by telephone. I will not be available to be deposed after Jan 5 due to previously scheduled appointments on Jan 6 and Jan 9 as well as travelling out of the state beginning Jan 10 and not returning to Montana for 6 weeks. If you would like a copy of my airline ticket I will provide it if asked.

The US responded that because it had been “given no other choice at this last minute” the depositions would be conducted electronically but would need to be completed in person later. Defendants thanked the US’ counsel for her understanding and clarified how the electronic exhibits would be shared, and also forwarded their heavily redacted airline receipts.

Millett’s telephonic deposition commenced at 9 a.m. 1/4/23. While De Palma was present in person in Missoula and prepared to complete the deposition, Bissell — stuck in Minnesota due to weather — ultimately deposed Millett over the phone. Although that deposition lasted over 2 hours the US indicates that a number of Millett’s answers were unresponsive or evasive. During the first half he refused to answer many inquiries on relevancy grounds including his travel plans, where he was born, where he grew up, where a previous job was located, and who he currently works with. He also invoked attorney-client privilege — despite proceeding pro se — when asked if he spoke to anyone in preparing for the deposition. He further objected to whether he filed federal tax returns in 2004 “as the question violates my 5th Amendment right including but not limited to being compelled to be a witness against myself as an answer may be used to criminally prosecute me.” He raised that same objection when asked about filing tax returns in 2005, 2006, 2007, 2008, 2009, 2010, 2011, and 2012. The US informed him that an adverse inference could be drawn from his invocation of the 5th. Nevertheless he invoked it at least once more.

2 hours into the deposition the US determined that it was necessary to contact the Judge because deponents “typically have to answer questions when they’re asked.” Bissell was told to file a Rule 37 motion if necessary. When the deposition resumed Millett stated:

So the reason I am objecting to some of these questions is I truly believe that some of them are irrelevant, however, from my understanding of depositions, I can object, but for the most part, I have to answer the questions; would you agree with that? [US generally agrees.] So what I will do is — see, I do not want to relinquish my right to object, even at a later date, that’s why I’m objecting. What I will do is, if I feel that it is — that I can object, I will object, but I will answer the question for you; is that satisfactory to you? Because that way I feel that I retain my right to object at a later date. Is that OK?

The US responded that “that is the standard and the law” but it “will still be filing a motion under Rule 37.” To Millett’s credit, thereafter when he objected to a question he answered it and did not invoke the 5th. The deposition was left open to allow for a future in-person deposition with exhibits.

At 10:21 p.m. the night before her 1/5 deposition McLaughlin emailed the US:

First. I want it to be known that Mr. Millett can not speak for me and does not speak for me. When he accepted the change in deposition date from December 22 to January 5 due to you getting sick with covid I did not authorize him to do that for me. In fact, I believe he is prohibited from doing that for me, making decisions for me and speaking for me.

Second. Since I never agreed to any change in deposition date and was not properly served the notice I consider the January 5 deposition date to be invalid and will not be attending. Also since there is a motion on the table for dismissal of this suit I don’t want to waste my time or yours on a deposition when I believe the motion will be granted and my deposition will not be needed.

Third. From now on please send all notices, requests and other communication that is for me to this e-mail address . . . ellehcim111@gmail.com. You may consider this my ‘in writing’ consent to be served by e-mail.

This was the first email the US received from ellehcim111@gmail.com. It responded the next morning that the deposition would proceed as scheduled. It opened at 9 a.m. and adjourned at 9:25 after unsuccessful efforts to contact McLaughlin by phone.

On 1/6 the US moved to extend the discovery deadline because the in-person depositions needed to be completed and Defendants were traveling for the next month. The deadline was continued to 3/6.

On 1/13 the Court granted Defendants’ motion for judgment on the pleadings insofar as McLaughlin retains a half-interest in the real property in light of her joint tenancy when it was acquired. That ruling did not prevent the US from proceeding on its claims related to Millett’s alleged half-interest.

On 2/9 the US moved to continue the remaining trial deadlines commensurate with the extended discovery deadline. That request was granted and trial is now set for 5/17/23 with discovery to close 3/10 and motions due 4/6. Also on 2/9 the US moved for sanctions under Rules 30 & 37 on the grounds that Millett refused to be deposed in person and provided nonresponsive and evasive responses during his telephonic deposition and McLaughlin refused to be deposed at all. A hearing was held 3/3/23 in Missoula. Millett and McLaughlin were present and Bissell appeared for the US.

The US argues that since discovery opened Defendants have attempted to evade and obscure the process, warranting default judgment or an order compelling them to attend in-person depositions and for fees & costs for not attending their in-person deposition in January. Defendants respond that they were not properly served with a deposition notice, the partial granting of their motion for judgment on the pleadings has narrowed the scope of discovery making the US’ discovery requests no longer proportional, and a deponent is not subject to the identified sanctions for failing to respond to questions during a deposition. As with most discovery disputes, the answer is provided by the Rules of Civil Procedure which must be read collectively and with the goal of “securing the just, speedy, and inexpensive determination of every action and proceeding.” Rule 1.

Defendants insist that they were not properly served with the deposition notice because they did not consent to electronic service “in writing” as required by Rule 5(b)(2)(E). They are correct as it relates to McLaughlin. Rule 5 allows service “by other electronic means that the person consented to in writing.” An advisory committee note states that the written consent “must be express, and cannot be implied from conduct.”

There are 3 potential sources of written consent. The 1st is Defendants’ “Pro Se Requests for Leave to File by E-mail” and the “Agreements to Allow Pro Se Party to File by E-Mail.” However, these forms only address their ability to file documents electronically, not their receipt of such documents. The 2nd source is the “Pro Se Registration Form For The Electronic Case Filing System (CM/ECF)” forms executed 6/5/22. They state that “by registering for electronic service, you waive your right to receive notice of documents by first class mail. See Federal Rule of Civil Procedure 5(b)(2)(E).” However, that disclosure further states: “Instead, you will be sent a Notice of Electronic Filing via email.” This consent is therefore limited to service related to documents filed in the docket as the form states that the individual is registered “to file documents electronically and receive service of documents and notice of electronic filings sent to my email via the Court’s electronic filing system (CM/ECF).” Neither consent form conveys generalized consent to electronic service.

However, the US provides with its reply brief an email dated 7/21/22 wherein it asked Millett if he would accept service of discovery requests by email and he responded, “Service by e-mail is fine.” His contention that he agreed to only receive a single discovery request via email is unpersuasive. While consent cannot be implied from the mere prior use of email to communicate during discovery, this express written statement is sufficient for Millett to have agreed to electronic service consistent with 5(b)(2)(E). This does not extend to McLaughlin, as one pro se party cannot represent another.

Even so, both Millett’s and McLaughlin’s failure to timely object constitutes waiver of the US’ defective service. While McLaughlin ultimately did challenge proper notice in her 11th-hour email, she did so after already agreeing to appear via phone and after US counsel made arrangements for the deposition and traveled to Missoula. Thus Defendants’ challenges to their deposition notices lack merit. Nevertheless, that McLaughlin was not properly served bears on what sanctions are appropriate.

Defendants argue that discovery must be proportional to the needs of a case and the US’ motion ignores that the Court has since ruled that McLaughlin owns an independent half-interest in the real property. However, the US has the right to engage in discovery, which covers “any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case.” Rule 26(b)(1). Obtaining the deposition testimony of the 2 Defendants is undeniably within the scope of appropriate discovery. Even though McLaughlin maintains a separate interest, the allegation of Millett’s fraudulent conveyance of his interest and McLaughlin’s nominee status remain at issue. Notably, however, the US stated at the 3/3 motion hearing that it is seeking foreclosure. Such relief has not been pled and the deadline for amended pleadings has long since passed.

Millett argues that Rule 37 does not allow for sanctions for failing to respond to questions during a deposition until after a judge has ordered a deponent to answer. He is both right and wrong. While the broad sanctions available under 37(b) & (d) are not available prior to an order if a party attends his deposition, 37(a) permits the deposing party to seek an order compelling a deponent to respond and requires that if such an order is issued a court must award expenses to the movant unless “the opposing party’s nondisclosure, response, or objection was substantially justified” or “other circumstances make an award of expenses unjust.” Rule 37(a)(5)(A)(ii), (iii); see 37(a)(5)(C) (the court may award such expenses if the motion is granted in part and denied in part). Thus while the more severe sanctions under 37(b) & (d) are not available, 37(a) sanctions are. Estrada (9th Cir. 1995) (when a pro se attended his deposition but refused to testify “the proper remedy is a court order to testify under Rule 37(a), and not dismissal under Rule 37(b)(2)(C)”).

The US insists that “a party’s refusal to engage in discovery and answer questions during a deposition is sanctionable.” While correct, it ignores the nuance discussed above. Millett attended his deposition — albeit telephonically — and consistently refused to answer questions based on his assessment that they were not relevant. Thus his conduct falls under Rule 37(a). The next question is whether it violated the Rules. It did. “An objection at the time of the examination — whether to the evidence, to the party’s conduct, to the officer’s qualifications, to the manner of taking the deposition, or to any other aspect of the deposition — must be noted on the record, but the examination still proceeds; the testimony is taken subject to any objection.” Rule 30(c)(2). Millett undisputedly violated this rule. Thus a sanction is warranted. He is compelled to attend an in-person deposition and respond to the US’ inquiries as provided in the Rules. Moreover, because his violation was not “substantially unjustified” nor do “other circumstances make an award of expenses unjust,” he is also required to pay the US’ expenses — exclusive of attorney fees — associated with the 1/4 deposition. These expenses include travel costs of one attorney as the other was delayed prior to arriving in person and the cost of the stenographer. He is warned that if he fails to comply with the Rules following this order he will be subject to the more severe sanctions available under 37(b) or (d).

McLaughlin’s 11-hour reasons for failing to appear for her deposition were consistent with Defendants’ repeated attempts to impede this suit. Such defiance represents more than a marginal failure to comply with the discovery rules and thus sanctions are warranted under Rule 37(d)(3). Nonetheless, default judgment — as requested by the US — is an extreme remedy and there are mitigating facts. For example, her statements at the 3/3 hearing indicate that certain representations may have been made by Millett on her behalf and without her knowledge. Moreover, while there are facts that support waiver, the impropriety of the notice cannot simply be set aside, especially when a lesser sanction is available. That is the proper remedy. She is cautioned that failure to comply with the Rules following this Order will subject her to the more severe sanctions under Rule 37(b) or (d).

Defendants are compelled to attend in-person depositions 3/6 and 3/7 at the Federal Courthouse in Missoula. Millett is ordered to pay the US’ expenses exclusive of attorney fees associated with his 1/4 deposition including travel of one attorney and costs of the stenographer. The discovery deadline is extended to 3/10/23.

US v. Millett and McLaughlin, 44 MFR 292, 3/3/23.

Thomas Millett and Michelle McLaughlin, Marion, pro se; Chelsea Bissell & Lolita De Palma (DOJ Tax Division), DC.