Murer v. Montana State Compensation Mutual Insurance Fund

No. 92-459

IN THE SUPREME COURT OF THE STATE OF MOWTANA

JACK MURER, JAY HARBRIGE, Y MACK, SUSAN
VERNON, WILLIAM MGAN, STEVE PRICKETT, JAMES
BROWN, KEITH MORDJA, and BRUCE NELSON, in
their individual capacities and also in their
capacities as representatives of a class of
workers' compensation and occupational disease
claimants and beneficiaries described herein,
Petitioners and Appellants,
-v-

MONTANA STATE COMPENSATION MUTUAL INSURANCE FUND,
AND ALL PIAN I AND I1 INSURERS OF THE CLASS OF
CLAIMANTS AND BENEFICIARIES,
Defendants and Respondents.

APPEAL FROM: Workersi Compensation Court
For the State of Montana
The Honorable Timothy Reardon, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Allan H. McGarvey, McGarvey, Heberling, Sullivan &
McGarvev. Kalis~ell.Montana
*
For ~espondent :
State Compensation Mutual Insurance Fund, Helena,
Montana: Montana Department of Labor & Industry,
Helena, Montana; Bradley J. Luck & Michael C.
Prezeau, Garlington, Lohn & Robinson, Missoula,
Montana; William J. Mattix & Joe C. Maynard, Crowley
Law Firm, Billings, Montana; Kristine L Foot,
.
Missoula, Montana; SueHarold, Schaumberg, Illinois;
Geoffrey R. Keller, Billings, Montana; Thomas A.
Marra, Great Falls, Montana; Oliver H. Goe, Helena,
Montana; Norman H. Grosfield, Helena, Montana; Alan
J. Joscelyn, Gough, Shanahan, Johnson and Waterman,
Helena, Montana; Paul Haffeman, Cure Borer & Davis,
Great Falls, Montana; and Kyle A. Gray, Paul D.
Miller and James Ragain, Holland & Hart, Billings,
Montana.
Justice R. C, HcDonough delivered the Opinion of the Court.

This is an appeal from an order of the Workers1 Compensation
Court. We affirm.
The issue is whether the Workers' Compensation Court erred in
denying class certification to the claimants.
Claimants are nine workers injured between July 1, 1987 and
June 30, 1991. These claimants, and the alleged class they
represent, are entitled to various benefits: maximum total
disability, partial disability, rehabilitation and/or death
benefits, For maximum benefits for total disability the
respondents (insurers) have paid $299, claiming there is a
permanent "capvs on such benefits under statutory provisions
substantially identical to the following:
Notwithstanding subsection (3), beginning July 1, 1987,
through June 30, 1989, weekly compensation benefits for
temporary total dfsahility xay net excsec! the stat's
average weekly wage of $299 [or the limit as provided],
established July 1, 1986.
See 5 39-71-701(5), MCA (1987), cf. 5 39-71-702(6), MCA; § 39-71-
703(3), MCA; 5 39-71-721(8), MCA; and § 39-71-1024(3), MCA (1987).
The same statutory provisions were continued by the 1989
Legislature and expired on June 30, 1991. The essence of the
claimants' claim is that the weekly benefit limitations of the
subsections were temporary in nature and therefore after the cap
expired on June 30, 1991, the insurers are obligated to bring past
weekly benefit payments up to two-thirds of the time-of-injury
wage, limited only by the State's average weekly wage for the year
in which the claim arose. The insurers have refused to make such
payments.
The claimants then filed a class action suit in the Workers1
Compensation Court, asking for a declaratory ruling as to the
meaning of the subsections. They seek judgment ordering the
restitution of the benefits improperly withheld. The claimants'
counsel has represented that the proposed class of claimants would
consist of as many as two thousand claimants and there appear to be
more than two hundred insurers.
Although the Workers' Compensation Court rules do not provide
for class action certification, the Workers' Compensation Court
applied Rule 23, M.R.Civ.P., to this question. We have previously
approved the Workers' Compensation Court seeking guidance from the
Montana Rules of Civil Procedure. See Moen v. Peter Kiewit & Sons,
Co. (1982), 201 Mont. 425, 434, 655 P.2d 482, 486.
Our scope of review is whether the trial court's decision is
an abuse of discretion. City Johnson v. City of Opelousas (5th
Cir. 1981), 658 F.2d 1065, 1069; Boggs v. Alto Trailer Sales, Inc.
(5th Cir. 1975), 511 F.2d 114, 117. A class action is a
"procedural device for promoting the economic and efficient
dispostion of justiciable controversies." Harriss v Pan American
.
World Airways, Inc. (N.D.Ca1. 1977), 74 F.R.D. 24, 42. Therefore,
trial courts are vested with discretion because they are in the
best position to determine the most efficient manner of resolving
controversies, taking into account the particular circumstances of
the case and the court's own resources. This is especially true of
the Workers' Compensatian Court because it is the only court in the
State of Montana having trial court jurisdiction over the subject
matter. The Workers1 Compensation Court is best acquainted with
its case load, time schedules, and resources. The trial court is
in the best position to consider the most fair and efficient
procedure for conducting any given litigation. See Boninger v.
Pacific Northwest Bell, Inc. (9th Cir. 1977), 564 F.2d 1304, 1309.
As one of the reasons for denying the class action, the
Workers1 Compensation Court stated that this action did not comply
with Rule 23(a), M.R.Civ.P., which sets forth the prerequisites to
a class action, all of which the claimants must meet. Inasmuch as
the failure of one of the prerequisites is fatal to the
certification of a class action, we will not discuss the other
reasons the Workers' Compensation Court gave in denying the class
action. Rule 23(a), M.R.Civ.P., states:
Rule 23(a). Prerequisites to a class action. One or
more members of a class may sue or be sued as
representative parties on behalf of all only if (1) the
class is so numerous that joinder of all members is
impracticable, (2) there are questions of law or fact
common to the class, (3) the claims or defenses of the
representative parties are typical of the claims or
defenses of the class, and (4) the representative parties
will fairly and adequately protect the interests of the
class.
The Advisory Committee's notes reflect prudence and caution in the
authorization of class actions and our approach to Rule 23(a) is in
this view and spirit, especially as an appellate court. The
Workers' compensation Court held that, here, subsection (3) of the
prerequisites has not been met. Such prerequisite essentially
provides that one or more members of a class may sue or be sued as
representative parties on behalf of all, only if the claims or
defenses of the representative parties are typical of the claims or
defenses of the class.
The requirement of Rule 23 (a)( 3 1 , is typicality. The Workers'
Compensation Court found that the appellants failed to satisfy this
requirement. The court in its order stated:
The petitioners are nine identified individuals. Though
the petition does not specify which insurers these nine
have claims pending against, the Court does not believe
that a purported "class actionw was ever intended as a
vehicle to ferret out not only class members but
defendants as well. Even if we were to assume that these
nine individuals can represent a Mclass*t they can only
represent a class of which they are a member, i.e.
claimants who have claims against the same insurer as the
representative. The Court has found no authority and
petitioners cite none which would permit an unknown
number of class members, yet to be identified to blindly
sue an unknown number of defendants. In essence, the way
in which the pleadings are drafted creates not only a
class of petitioners but also a "class of defendants."
There would be many different situations among the estimated two
thousand claimants who would be included within this class action
so that the typicality of the Rule requirement could not be met.
Claimants would include unrepresented claimants and those who are
already represented by other attorneys, who are suffering either
from an industrial injury or occupational disease; claimants whose
cases are either open or have been settled; claimants who may be
entitled to either a temporary total or permanent total wage
supplement impairment, rehabilitation, or death benefit: and
different rates for various claimants, depending on whether they
were injured or were disabled by an occupational disease. There
would be other variables relative to the award of attorney fees and
the imposition of penalties with two thousand claimants and two
hundred insurers. There are times when competent counsel are not
able to fairly and adequately protect the interest of the class.
Generally in the application of the typicality requirement of
Rule 23(a) (3), the plaintiffs are not entitled to bring a class
action against defendants with whom they have had no dealings.
There are numerous defendants in this action with which the
plaintiffs have had no dealing. The leading case construing this
requirement is La Mar v. H & B Novelty and Loan Co. (9th Cir.
1973), 489 F.2d 461. The court stated: "in our view, under proper
application of Rule 23 of the Federal Rules of Civil Procedure, the
plaintiffs here are not entitled to bring a class action against
defendants with whom they had no dealing."
La Mar, 489 F.2d at 464.

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The third prerequisite was that the claims of the
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Obviously this requirement is not met when the
"representative" plaintiff never had a claim of ~ 7 1 1 ~
type
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defendant. There is nothing in the rule to
suggest that the zeal or talent of the "representativen
plaintiff's attorney can supply this omission. We
believe that this prerequisite is also lacking when the
plaintiff's cause of action, although similar to that of
other members of the class, is against a defendant with
respect to whom the class members have no cause of
action. Those who purchased tickets from the appellee
airlines, from whom the representative plaintiff
purchased no tickets, have no cause of action by reason
of such purchases against the airline from whom the
representative plaintiff purchased. In brief, typicality
is lacking when the representative plaintiff's cause of
action is against a defendant unrelated to the defendants
against whom the cause of action of the members of the
class lies.
La Mar, 489 F.2d at 465. In La Mar, the Ninth Circuit Court of
Appeals set forth two specific exceptions regarding the typicality
requirement of Rule 23(a), Fed.R.Civ.P. One would be if the
injuries suffered were the result of a conspiracy or concerted
scheme between the defendants. That is not the case here.
The second exception might occur relative to instances in
which all defendants are juridically related in a manner that
suggests a single resolution of the dispute will be expeditious.
What constitutes a juridical relationship or link is difficult to
define and articulate. The connective link must go beyond mere
commonality or parallel actions between defendants. See Newberg on
Class Actions, 2nd Edition, 1984. The appellants allege that the
cases which have found a juridical link to exist between defendants
are fact based. One such fact-based juridical link is where the
various defendants are related instrumentalities of a single state,
such as various law enforcement agencies or welfare agencies. This
is not the case here; even though the State Compensation Mutual
Insurance Fund is an instrumentality of the State, the other
defendants are not.
The only Montana related case cited was Union Pacific Railroad
v. Woodahl (D.Mont. 1970), 308 F.Supp. 1002. This also concerned
the application of a state statute by state officials. That case
is different than the present situation because there all of the
defendants were instrumentalities of the State of Montana: the
attorney general and all county attorneys. Such parties involved
instrumentalities of a state who are charged with the enforcing of
or acting in accordance with the challenged state statute. Again
the great majority of the defendants here are not instrumentalities
of the State, nor is there any type of association or contractual
relationship between the defendants. There is also no linXage
between the defendants, such as industry-wide collective bargaining
agreements, or any other type of industry-wide agreement, any type
of holding entity or claims management association, or the like.
We therefore conclude there is no showing of sufficient
juridical links among the defendants from which we can determine
that the Workers' Compensation Court abused its discretion in
denying certification for failure to comply with the prerequisite
of Rule 23(a)(3), M.R.Civ.P.
Affirmed.

We Concur:
 March 30, 1993

CERTIFICATE OF SERVICE

I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:

Allan M. Mcgarvey and Roger M. Sullivan
McGarvey, Heberling, Sullivan & McGarvey
745 So. Main
Kalispell, MT 59901

State Compensation Mutual Insurance Fund
Legal Division
5 So. Last Chance Gulch
Helena, MT 59624

Montana Department of Labor & Industry
P.O. Box 1728
Helena, MT 59624-1728

Bradley J. Luck & Michael C. Prezeau
Gariington, Lohn & Robinson
P.O. Box 7909
Missoula, MT 59807-7909

William J. Mattix & Joe C. Maynard
Crowley Law Firm
P.O. Box 2529
Billings, MT 59103

Kristine L. Foot
Attorney at Law
P.O. Box 4947
Missoula. MT 59806

Sue Harold, Esq.
Corporate Law Dept.
1400 American Lane
Schaumberg, IL 60196

Geoffrey R. Keller, Esq.
225 Petroleum Bldg.
2812 First Ave. No.
Billings, MT 59101

Thomas A. Mama
Attorney at Law
P.O. Box 1525
Great Falls, MT 59403

Oliver H. Goe
Attorney at Law
P.O. Box 1697
Helena, MT 59624-1697

Norman H. Grosfield
Attorney at Law
P.O. Box 512
Helena. MT 59624-0512

Alan J. Joscelyn
Gough, Shanahan, Johnson & Waterman
P.O. Box 1715
Helena. MT 59624-1715

Paul Haffeman
Cure, Borer & Davis
P.O. Box 2103
Great Falls. MT 59403

Kyle A. Gray, Paul D. Miller & James Ragain
Holland & Hart
Ste. 1400, 175 No. 27th St.
Billings, MT 59101

ED SMITH
CLERK OF THE SUPREME COURT