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BNSF Railway Co. v. Montana Eighth Judicial District Court

Supreme Court of Montana

March 12, 2019



         On December 11, 2018, Nancy Ahern and BNSF Railway Company (collectively "BNSF") petitioned this Court for a Writ of Supervisory Control and Stay of Proceedings in the Eighth Judicial District Court, Cause No. BDV-14-001. BNSF asks this Court to vacate the District Court's Sanctions Order, which entered a default against BNSF for discovery abuses and ordered BNSF to produce certain documents which BNSF describes as privileged. We ordered a response and Robert Dannels, Plaintiff in the underlying action, responded and opposed the Petition.

         The cause underlying this Petition is a 2014 bad faith claim filed by Dannels against BNSF. Dannels is a former BNSF employee. After obtaining a judgment against BNSF in a Federal Employers' Liability Act (FELA) action, Dannels sued BNSF under common law and § 33-18-201, MCA, which prohibits certain claim settlement practices. The parties became embroiled in a number of discovery disputes. On January 26, 2017, the District Court ordered BNSF to provide Dannels with some of the discovery sought, determining that despite BNSF's assertions, much of the discovery was not protected attorney-client communications or protected opinion work product.

         Pertinent to the present matter are BNSF's responses to two discovery requests. In Interrogatory No. 5, Dannels asked if BNSF generates reports containing information about claims made by injured BNSF workers and the outcome of their claims. In Request for Production No. 7, Dannels asked BNSF to identify and produce each such report utilized in the last fifteen years. After the District Court first attempted to compel BNSF to answer, BNSF offered supplemental responses as follows: BNSF's Supplemental Answer to Interrogatory No. 5:

BNSF Claims Department currently runs thousands of reports each year. While some of these reports are run on a set schedule and retained in a central location, with set distribution lists, numerous Claims Department employees are able to run reports on their own and thousands of potentially responsive ad hoc reports are run each year. Providing the information requested would require an inquiry to all Claims Department employees with the ability to run reports in order to gather the requested information and take hundreds of hours of additional time.
BNSF is working to identify whether it routinely runs any reports containing information about claims made by injured employees and the outcome of these claims. Discovery will be supplemented in accordance with the Rules of Civil Procedure.

         BNSF never supplemented this response further.

         BNSF's Supplemental Response to Request for Production No. 7:

BNSF incorporates its response to Interrogatory No. 5 as though fully set forth. It is not possible to disclose any reports identified in Interrogatory No. 5 without extensive redactions because the reports contain confidential settlement information, personal or confidential information of individuals not a party to this suit and other confidential and proprietary information. BNSF's review of this information is ongoing and it will supplement this response with a privilege log if any documents are identified.

         Following receipt of these responses, Dannels scheduled depositions of three experts identified by BNSF: Charles Shewmake (BNSF's former general counsel and Vice President of Claims), Rick Lifto (former Assistant Vice President of Claims), and Eric Hegi (current Assistant Vice President of Claims). Hegi was also identified by BNSF as its Rule 30(b)(6) designee.[1] During the depositions, Dannels learned that Shewmake had prepared monthly case summaries on closed FELA claim files and that Hegi prepared the monthly summaries after Shewmake retired. Dannels sought production of these summaries and BNSF refused to provide them. Because BNSF had disclosed that these three expert witnesses were expected to testify at trial that Dannels' FELA claim was evaluated reasonably, BNSF made reasonable offers, liability was never reasonably clear, and the claims department used good-faith practices, Dannels moved to compel BNSF to produce: (1) Dannels' entire claims file; (2) the monthly case summaries referenced in the witnesses' depositions; (3)non-disparagement clauses of all former employees listed as witnesses; and (4)documents setting forth the procedures and methodologies BNSF used in setting loss reserves for FELA cases.

         Dannels then deposed Dione Williams, BNSF's Director of Claims Services. Contrary to BNSF's Supplemental Answer to Interrogatory No. 5, Williams testified that BNSF runs monthly reports on pending claims and lawsuits and that Williams prepares an annual executive presentation on FELA claims. Williams admitted that BNSF can run various reports about FELA litigation, such as the number of litigated claims, the verdicts, and BNSF's win/loss record. Williams admitted his department regularly runs such reports and could generate the reports in about a week.

         On February 22, 2018, the District Court issued an Order on Dannels' Motion to Compel. The District Court found BNSF had waived work-product privilege because its expert witnesses had unfettered access to the information, including information BNSF unjustifiably withheld from production, and that BNSF's actions precluded Dannels from meaningfully cross-examining these witnesses. The District Court ordered BNSF to produce: "all documents" directly related to the handling, evaluation, and settlement of Dannels' underlying claim, except those documents that "legitimately meet" the definition of attorney-client privilege; to specify documents or redactions on a privilege log; to highlight portions of documents for which BNSF asserted attorney-client privilege; the monthly summary reports over the last twenty years; and documents showing methods and criteria used for reserving or accruing losses related to FELA claims since Berkshire Hathaway purchased BNSF.

         The District Court noted it was "seriously considering" sanctions against BNSF, and it asked the parties to submit proposed orders regarding sanctions. On April 18, 2018, the District Court held a hearing on the sanctions motion. On November 16, 2018, it issued a Corrected Order on Sanctions. As part of the sanctions, the District Court entered a default judgment on liability and causation against BNSF. The District Court also ordered BNSF to produce the following:

(A)All actuarial reports of Willis Towers Watson (including its predecessors and successors) from 2010 to date relating to FELA claims, including risk financing, results expected and obtained, and insurance;
(B)All annual executive slide presentations on FELA claims, as identified in the deposition of Dione Williams, ...

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