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Court's Penchant for Expanding Liability

After an encouraging course correction last year, the Montana Supreme Court has once again veered onto the Watch List. It has long been dominated by plaintiffs’ lawyers and thus has a penchant for expanding liability.

Well known is the Treasure State’s high court for a record of activismlack of adherence to precedent, and defiance of the U.S. Supreme Court on matters of federal law. It has invalidated basic legal reforms, such as those that raise the threshold for liability, require a punitive damage verdict to be unanimous, or permit juries to allocate fault among all who contribute to a plaintiff’s injury. The court also has allowed excessive awards for punitive damages, made it difficult for insurers to obtain reimbursement for expenses paid on behalf of policyholders who subsequently win awards through litigation, and thwarted an attempt by Montana voters to refine the state’s system of electing supreme court judges.

In May 2016, the Montana Supreme Court was up to its old tricks, finding in Tyrrell v. BNSF Ry. Co. that state trial courts could decide cases filed by out-of-state railroad workers allegedly injured outside Montana’s borders. It refused to apply a 2014 U.S. Supreme Court ruling allowing state courts to hear out-of-state plaintiffs’ claims for out-of-state injuries only when the defendant is incorporated or has its principal place of business in the state. Rather than adhere to that simple logic set forth by the highest court in the land, Montana’s high court instead engaged in a strained reading of that precedent and limited its application to disputes arising abroad while exempting cases involving railroad workers.

The court deserves credit, however, for declining to create a new right to sue when the legislature did not intend to do so. In Ibsen, Inc. v. Caring for Montanans, Inc. the court found that plaintiffs cannot use the state’s consumer protection law to bring an action alleging violations of the state’s insurance code. It appropriately found that “a party is not entitled to obtain private enforcement of a regulatory statute that is not intended by the legislature to be enforceable by private parties.”

But those forced to litigate in Montana courts remain on edge, wondering whether the high court will eventually uphold or strike down a 2003 law that reasonably limits punitive damages to the lesser of $10 million or 3% of a defendant’s net worth. The state’s plaintiffs’ bar hates this law and has challenged its constitutionality. The issue has gone before the Montana Supreme Court once in 2014 in a case involving a wildly disproportionate $240 million punitive damage award against an automaker. That sum was reduced by the trial court judge to $73 million, and the case then settled before a definitive ruling. And in 2015, when the Montana Supreme Court overturned a $52 million verdict on other grounds, it avoided the need to rule on the law’s constitutionality. So we and many others are watching closely what may happen next.

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