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Montana Merchandising Inc. v. Dave's Killer Bread, Inc.

United States District Court, D. Montana, Great Falls Division

September 25, 2017

DAVE'S KILLER BREAD, INC., et al., Defendants.


          John Johnston, United States Magistrate Judge.

         I. Background

         Plaintiffs Montana Merchandising Inc., Hinebauch Grain Inc., and OCC-O'Conner Crops and Cattle LLC (hereinafter collectively “MMI”) filed a Motion to take Appropriate Disciplinary Action Against Annamarie A. Daley and Ian McIntosh. (Doc. 42). MMI argues that Ms. Daley, an attorney for Defendants Dave's Killer Bread, Inc. and Flowers Foods, Inc. (hereinafter collectively “DKB”), disclosed confidential settlement discussions in violation on Montana Code Annotated § 26-1-813 and that Ms. Daley and Mr. McIntosh violated several provisions of the Montana Rules of Professional Conduct (“MRPC”) and the American Bar Association Model Rules of Professional Conduct (“ABA Model Rules”). (Id.) The parties fully briefed the issue, and the Court conducted a hearing on the motions on June 8, 2017. (Doc. 84). The motion is ripe for decision.

         II. Facts

         DKB filed an action against MMI in Oregon before this case was filed. (Doc. 63 at 7). MMI moved to dismiss the case, transfer venue to Montana, or for a stay. (Id.) In its motion, MMI argued that DKB was guilty of forum shopping and that settlement discussions occurring in Montana regarding identical claims warranted a change of venue to Montana. (Id.) DKB responded by arguing the settlement discussions were more limited than MMI had led the Oregon Court to believe. (Id.) Ms. Daley filed a Declaration in support of this argument. (Doc. 43-1). Ms. Daley's Declaration is a central subject of the motion before the Court.

         III. Standards

         Local Rule 83.2(a) sets the standard for professional conduct in this Court and provides the following:

For a willful violation of any professional rules or standards in connection with any pending matter, an attorney is subject to appropriate disciplinary action and to referral of the matter to the appropriate authority for disciplinary proceedings.

L.R 83.2(a).

         Mont. Code Ann. § 26-1-813 provides that all mediation-related communications between the parties, communications between the parties and the mediator, and evidence presented to the mediator are confidential. MRPC Rules 8.4(c) and (d) provide that it is professional misconduct for an attorney to “engage in conduct involving dishonesty, fraud, deceit, or misrepresentation” or conduct that is “prejudicial to the administration of justice.” ABA Model Rule 1.6 provides that “[a] lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of . . . information relating to the representation of a client.” ABA Model Rule 3.1 provides that an attorney must only make “meritorious claims and contentions.” ABA Model Rule 3.3 provides that an attorney must disclose “legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by the opposing party.” ABA Model Rule 3.4 provides that a lawyer must not “unlawfully obstruct another party's access to evidence” or “conceal a document or other material having evidentiary value.” ABA Model Rule 4.1 provides that a lawyer shall not knowingly make a false statement of material fact or law to a third person. ABA Model Rule 8.3 provides that a lawyer must “maintain the integrity of the profession, ” and must inform the appropriate professional authority if a lawyer knows that another lawyer has violated an ABA Model Rule.

         IV. Analysis

         A. Mont. Code Ann. § 26-1-813

         MMI contends that Ms. Daley disclosed “absolutely confidential” information regarding the parties' unsuccessful January mediation in violation of Mont. Code Ann. § 26-1-813. (Doc. 42 at 2). MMI argues that the matters discussed in mediation are “absolutely confidential” and “can, under no circumstances, be disclosed” and that “Section 26-1-813 mandates that every mediation is private and confidential and that no information whatsoever can be divulged concerning what transpired during the mediation.” (Doc. 42 at 2).

         DKB argues that Ms. Daley made her Declaration to correct MMI's own disclosure of what occurred during the mediation, which it contends was misleading to the Oregon Court. (Doc. 63 at 2). Ms. Daley's Declaration states in pertinent part:

3. During the mediation that occurred between the parties in January 2017, the parties spent most of the time with the mediator discussing whether [MMI] would provide copies of the producer contracts. [DKB] left the mediation still without any producer contracts except the one redacted page.
4. The purpose of the January 2017 mediation was solely to discuss the parties' disputes regarding the 2015 and 2016 harvest years.

(Doc. 43-1 at ¶¶ 3-4).

         DKB contends that MMI urged the Oregon Court that the unsuccessful mediation generally encompassed all of MMI's claims. DKB cites to MMI's Motion to Dismiss, Transfer Venue, or, in the Alternative, to Stay, which MMI filed in the Oregon Court and in which it states“[T]he parties made a good faith effort to resolve their dispute, and discussed each claim, defense and/or issue raised ...

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