JACK MURER, et al. Petitioner
STATE COMPENSATION INSURANCE FUND Respondent/Insurer.
Submitted: April 8, 1998
ORDER FOR CONTEMPT AND LIMITING USE OF CONFIDENTIAL
To allow counsel for claimants to assess the adequacy of
efforts made by insurer to identify and pay claimants due
benefits under Supreme Court decisions in this case, WCC
ordered insurer to provide computer printouts identifying
claimants who may be entitled to such benefits. Following
letter from counsel for insurer, WCC inquired into whether
claimant's counsel should be found in contempt of court
for using the information to solicit plaintiffs for a bad
faith action against the insurer. The Court also inquired
into whether attorney had made misrepresentations to the
Court during the Court's process of gathering information
concerning the insurer's charges.
Because the WCC had failed to order that claimant's
counsel could not use the computer printouts as a means for
contacting potential plaintiffs, counsel would not be held in
contempt for that action. However, WCC was persuaded beyond
any reasonable doubt that some statements made to the Court
by counsel were a smokescreen to conceal counsel's real
purpose in making contacts from the Court. Counsel found in
contempt relating to those statements and is fined $500.
Attorneys: Conduct and Tactics. Because the WCC had
failed to order that claimant's counsel could not use
computer printouts provided to him by the insurer as a means
for contacting potential plaintiffs for a bad faith case,
counsel would not be held in contempt for that action, even
though it was not contemplated by the parties and counsel
acknowledged the listed individuals had rights of privacy.
However, WCC was persuaded beyond any reasonable doubt that
some statements made to the Court by counsel during the
Court's inquiry into the matter were a smokescreen to
conceal counsel's real purpose in the challenged conduct.
Counsel found in contempt relating to those statements and
was fined $500.
Contempt. Because the WCC had failed to order that
claimant's counsel could not use computer printouts
provided to him by the insurer as a means for contacting
potential plaintiffs for a bad faith case, counsel would not
be held in contempt for that action, even though it was not
contemplated by the parties and counsel acknowledged the
listed individuals had rights of privacy. However, WCC was
persuaded beyond any reasonable doubt that some statements
made to the Court by counsel during the Court's inquiry
into the matter were a smokescreen to conceal counsel's
real purpose in the challenged conduct. Counsel found in
contempt relating to those statements and was fined $500.
Following the latest Supreme Court decision in this case,
Murer v. State Compensation Mut. Ins. Fund, 942 P.2d
69 (Mont. 1997) (Murer III), this Court assumed
supervision over the State Compensation Insurance Fund's
(State Fund) efforts to identify and pay those claimants due
benefits under that decision and a prior decision in
Murer v. State Compensation Mut. Ins. Fund, 267
Mont. 516, 885 P.2d 428 (1994) (Murer II). This
Court has actively directed and monitored those efforts.
As a part of the Court's supervision, I directed the
State Fund to furnish computer information to Mr. Allan M.
McGarvey, petitioners' attorney, so he could assess the
adequacy of the efforts and recommend improvements. As a
result of the Court's direction, in late September 1997,
the State Fund furnished Mr. McGarvey with computer printouts
identifying claimants who may be entitled to Murer
benefits. The printouts provided the addresses of the
claimants and in many cases identified the amounts
potentially due them.
On March 10, 1998, the Court received a copy of a letter from
Mr. Bradley J. Luck, who represents the State Fund, to Mr.
McGarvey. The letter set forth information indicating that
Mr. McGarvey had used the computer lists provided pursuant to
this Court's directive to solicit plaintiffs for a bad
faith class action against the State Fund. Apparently, the
action alleges that the State Fund has unreasonably delayed
paying Murer benefits to many claimants entitled to
On March 12, 1998, I issued an Order Regarding
Confidentiality and Claimant Contact. In that Order, I
forbade Mr. McGarvey from contacting claimants on the
computer lists and ordered him to forward the lists, and any
similar documents furnished by the State Fund, to the Court.
On March 23, 1998, I issued an Order to Show Cause. That
Order directed Mr. McGarvey to show cause with respect to the
following three issues:
1.Whether Mr. McGarvey should be precluded from receiving
further information concerning the identity of claimants who
are owed Murer benefits.
2.Whether Mr. McGarvey's use of the information furnished
by the State Fund violated implicit Court limitations on the
use of the information.
3.Whether Mr. McGarvey's representations to the Court
regarding his use of the information were false.
After a telephone conference call with Mr. Luck and Mr. James
H. Goetz, who represented Mr. McGarvey in the show cause
proceeding, an Order Identifying Statements Which Are the
Basis for the Contempt Proceeding was issued on April 3,
1998. The Order identified specific portions of two letters
and transcript references to statements made by Mr. McGarvey
in a March 20, 1998 hearing. The statements identified by the
Court were to the effect that the State Fund had
"voluntarily" provided Mr. McGarvey with the
computer lists (March 18, 1998 letter at 1; Tr. of March 30,
1998 Hearing at 7:18-20), hence no restriction applied to
their use, and that the calls had involved a "spot
check" in connection with the present case (March 16 and
18, 1998 letters; Tr. of March 30, 1998 Hearing at 7:24-8:4,
12:17-13:22; 15:5-12; 17:23-18:13).
On April 8, 1998, a hearing was held in Helena. Mr. McGarvey
was represented by Mr. Goetz, the State Fund by Mr. Luck. At
the Court's direction, Mr. Luck subpoenaed six claimants
contacted by Mr. McGarvey. Four of those claimants - Richard
Matsko, Diane Hansen, Paul Batterman, and Garland Hall --
testified at the hearing. Mr. McGarvey also testified.
Contacts Made by McGarvey
The information provided by Mr. McGarvey shows that by
October 1997, he had decided to file a bad faith tort action
against the State Fund arising out of its alleged failure to
promptly identify and pay Murer benefits to all
claimants due them. Meanwhile, he was involved in the process
ordered by this Court to identify Murer claimants,
send them written notice of an attorney fee hearing to be
held on February 17, 1998, and ultimately pay the benefits
due them. During a hearing held November 21, 1998,
Mr. McGarvey agreed that the list of claimants compiled by
the State Fund was adequate and was indeed over-inclusive.
Notices of the February 17th hearing were then
mailed, and the hearing was in fact conducted on February
Either before or after the February 17th hearing,
Mr. McGarvey determined that the bad faith tort action
against the State Fund should be filed by March 23, 1998, to
avoid statute of limitations problems. (See Tr.
March 20, 1998 Hearing at 4.) Using the September 1997
computer printouts furnished by the State Fund, in early
March 1998, Mr. McGarvey put together three lists of
claimants he intended to contact. (April 8, 1998 Hearing Ex.
3 at 9, 27 and 42.) He limited the list to claimants living
in the Butte, Helena, and Great Falls areas because those
were the venues he was considering for the new lawsuit.
(McGarvey Test. at April 8, 1998 Hearing, and see
Hearing Ex. 3 at 9, 27 and 42.) He further limited the list
to those claimants who were, based on the computer printouts,
due the highest amounts of Murer benefits. (April 8,
1998 Hearing Ex. 3 at 9, 27 and 42.)
On March 5 and 6, 1998, Mr. McGarvey talked to between eight
and ten claimants on his lists. (McGarvey Test. at April 8,
1998 Hearing; Hearing Ex. 3.) Testimony from four of the
claimants indicated that the focus of Mr. McGarvey's
conversations with them was the new lawsuit.
Contempt of Court is governed by statute. Section 3-1-501,
MCA, specifies the matters for which an individual may be
held in contempt, as follows:
3-1-501. What acts or omissions are
(1) The following acts or omissions in respect to a court
of justice or proceedings in a court of justice are
contempts of the authority of the court:
(a) disorderly, contemptuous, or insolent behavior toward
the judge while holding the court tending to ...