United States District Court, D. Montana, Billings Division
BRADLEY D. ROUTH, Plaintiff,
TRAVELERS CASUALTY INSURANCE COMPANY OF AMERICA, and John Does 1-5, Defendants.
OPINION AND ORDER
P. WATTERS UNITED STATES DISTRICT JUDGE.
the Court is Defendant Travelers Casualty Insurance Company
of America's motion to bifurcate count one and stay
counts two and three. (Doc. 10). For the foregoing reasons,
the Court DENIES the motion.
November 11, 2013, a vehicle in which Bradley Routh was a
passenger was rear-ended by an uninsured motorist. (Doc. 7 at
¶¶ 4-6). The vehicle in which Routh was a passenger
was insured by a policy (the Policy) that contained uninsured
motorist coverage. (Doc. 7 at ¶ 9). Travelers issued the
Policy. (Doc. 7 at ¶ 9). Routh sought uninsured motorist
benefits from Travelers under the Policy. (Doc. 7 ¶ 10).
Travelers refused to provide uninsured motorist benefits to
Routh. (Doc. 7 at ¶ 10). Routh filed a complaint against
Travelers. (Docs. 6 and 7). Count one of the complaint
requests a declaratory judgment that Travelers "must
adjust his claim and pay him benefits pursuant to the
uninsured motorist policy at issue." (Doc. 7 at ¶
16). Count two of the complaint alleges Travelers committed
bad faith in its investigation and settlement of Routh's
claim in violation of Mont. Code Ann. § 33-18-201(4) and
(6). (Doc. 7 at ¶¶ 17-20). Count three of the
complaint alleges Travelers committed common law bad faith in
its investigation and settlement of Routh's claim. (Doc.
7 at ¶¶ 21-22). Travelers does not dispute the
uninsured motorist was liable for the accident or that the
Policy provides uninsured motorist coverage. (Doc. 2 at
¶ 7 and Doc. 11 at 3). Instead, Travelers disputes
whether Routh was injured in the accident. (Doc. 11 at 3).
parties dispute which rule governs the motion to bifurcate.
Routh argues Federal Rule of Civil Procedure 42(b) controls.
Under Rule 42(b), the court may bifurcate claims for
convenience, to avoid prejudice, or to expedite and
economize. Travelers argues Montana Code Annotated §
33-18-242(6)(a) controls. Under § 33-18-242(6)(a), an
insured may file an action for bad faith together with any
other cause of action the insured has against the insurer.
The actions may be bifurcated for trial "where justice
so requires." Mont. Code Ann. § 33-18-242(6)(a).
courts apply state substantive law and federal procedure law
to diversity cases. Goldberg v. Pacific Indem. Co.,
627 F.3d 752, 755 (9th Cir. 2010) (citing Erie R.R. Co.
v. Tompkins, 304 U.S. 64 (1938)). But the line between
procedural and substantive law is often hazy. Erie,
304 U.S. at 92 (Reed, J., concurring). A state procedural
rule, though undeniably "procedural" in the
ordinary sense of the term, may exist to influence
substantive outcomes. Shady Grove Orthopedic Associates,
P.A. v. Allstate Ins. Co., 559 U.S. 393, 419-420 (2010)
(Stevens, J., concurring) (citation omitted). Thus, when a
State chooses to use a traditionally procedural vehicle as a
means of defining the scope of substantive rights or
remedies, federal courts must recognize and respect that
choice. Shady Grove, 559 U.S. at 420 (Stevens, J.,
Shady Grove, Justice Stevens formulated a two-step
framework to negotiate this "thorny area." 559 U.S.
at 421 (Stevens, J., concurring). Justice Stevens'
concurrence controls the Shady Grove plurality
because it concurred in the judgment on the narrowest
grounds. See Marks v. United States, 430 U.S. 188,
193 (1977) (When "no single rationale explaining the
result enjoys the assent of five justices, the holding of the
Court may be viewed as that position taken by those Members
who concurred in the judgments on the narrowest
grounds."); Baumann v. Chase Inv. Services
Corp., 747 F.3d 1117, 1124 (9th Cir. 2014) (applying
Justice Stevens' concurrence).
first step is determining whether the federal rule and state
law conflict. To do so, the Court considers whether the
federal rule is "sufficiently broad to control the issue
before the court, thereby leaving no room for the operation
of seemingly conflicting state law." Shady
Grove, 559 U.S. at 421 (Stevens, J., concurring)
(internal quotations and citation omitted). If a "direct
collision" exists, the federal rule and state law
conflict. Shady Grove, 559 U.S. at 422 (Stevens, J.,
concurring). The federal rule controls unless it violates the
Rules Enabling Act. Shady Grove, 559 U.S. at 422
(Stevens, J., concurring).
second step is determining whether the federal rule violates
the Rules Enabling Act. A federal rule violates the Rules
Enabling Act if it abridges, enlarges, or modifies any
substantive right. Shady Grove, 559 U.S. at 422
(Stevens, J., concurring) (citing 28 U.S.C. 2072(b)). The
inquiry is not always simple because "it is difficult to
conceive of any rule of procedure that cannot have a
significant effect on the outcome of a case." Shady
Grove, 559 U.S. at 422 (Stevens, J., concurring)
(internal quotation and citation omitted). Almost "any
rule can be said to have substantive effects affecting
society's distribution of risks and rewards."
Shady Grove, 559 U.S. at 422 (Stevens, J.,
concurring) (internal quotation and citation omitted).
Because "one can often argue the state rule was really
some part of the State's definition of its right or
remedies, " the bar for finding a Rules Enabling Act
violation "is a high one." Shady Grove,
559 U.S. at 422 (Stevens, J., concurring). The mere
possibility that a federal rule would alter a state-created
right is not sufficient, there must be little doubt.
Shady Grove, 559 U.S. at 422 (Stevens, J.,
there is not a "direct collision" between Rule
42(b) and § 33-18-242(6)(a). Under the federal rule,
bifurcation is appropriate for convenience, to avoid
prejudice, or to expedite and economize. Under the Montana
law, bifurcation is appropriate where justice requires. The
Montana Supreme Court has interpreted §
33-18-242(6)(a)'s use of "where justice so
requires" to include convenience, fairness to the
parties, and the interests of judicial economy. Malta
Public School Dist. A and 14 v. Montana Seventeenth Judicial
Dist. Court, Phillips County, 938 P.2d 1335, 1338 (Mont.
1997). Thus, under either rule, the Court considers the same
factors. For the purpose of appellate review, the Court will
apply Rule 42(b).
42(b) confers broad discretion on the Court to bifurcate
trials. Hangarter v. Provident Life and Ace. Ins.
Co., 373 F.3d 998, 1021 (9th Cir. 2004).
argues count one should be bifurcated from counts two and
three because it will be prejudiced if it has to defend the
bad faith claims before liability for the accident has been
determined, citing Fode v. Farmers Ins. Exch., 719
P.2d 414 (Mont. 1986) and Palmer by ...