Montana Supreme Court Affirms Sexual Harassment and Retaliation Findings

Source: Montana Law Week

SEXUAL HARASSMENT: HRC correctly determined that electric co-op office manager was subjected to severe and/or pervasive sexual harassment by GM and not mere “flirting” and was retaliated against… HRC’s “front pay” of $505,957 improperly increased to $1,379,338 by Court, proper damages total is HRC’s $758,454.52… $519,837 fees properly awarded, enhancement properly rejected… Laird affirmed, reversed.

Shalaine Lawson, a CPA, began employment with NorVal Electric Cooperative in Glasgow in 12/10 and became office manager and CFO in 1/15. She received satisfactory evaluations and was given wage increases. In 5/17 GM Craig Herbert began personal interactions with her. During a work-related car ride in 5/17 he asked why she had begun wearing false eyelashes, stating that “when women go and try to improve their looks it’s because they’re looking to have an affair.” Lawson, disturbed by his insinuation, ceased wearing false eyelashes to work. In 6/17 when they were discussing an upcoming conference with NorVal’s bank Herbert asked if she had ever “fooled around” with a banker connected to the conference. Disturbed by the comment, she did not attend the conference. Later that month she mentioned taking her son to a football camp in Bozeman and having a massage while there. Later that day Herbert asked if her husband gave her massages, adding, “I just wanted you to know that given the opportunity I give a really good massage and if we’re ever given the opportunity I would like to get you relaxed.” She did not respond and left Herbert’s office feeling “degraded, dirty, and really uncomfortable.”

Soon thereafter Lawson was in Herbert’s office discussing NorVal’s annual audit and mentioned that her back hurt. He told her to turn around and cross her arms, closed the office door, and approached her from behind. He embraced her, lifted her up, and popped her back, smelling her hair in the process. She felt his actions were inappropriate. After not speaking in several days she was in his office to discuss a work matter. At the end of the conversation he requested a hug, “just for friends,” and then gave her a hug.

In 7/17 while Lawson was using the copy machine Herbert said “you are filling your pants out nicely.” She interpreted it as expressing interest in a sexual relationship and threw the pants away. During that summer he entered her office when she was alone and inquired about her sex life. In 8/17 during a time that NorVal was doing power shutoffs she entered his office and asked, “Are there things that turn you off?” He used the term “turn off” in a sexual manner several times throughout the day in her presence.

During NorVal’s 9/17 board meeting, without Lawson present, several members joked about a sexual relationship between her and Herbert. One had previously accused them of having an affair after her promotion to office manager. She learned of the accusation through Herbert and was upset by it and NorVal’s failure to investigate or allow her to respond. In 10/17 Lawson and Herbert were at a conference in Great Falls. They had arranged to have a work meeting. He asked her to meet him in his hotel room for the meeting and had a key for her. The Hearing Officer found that his purpose was to allow her to enter his room separately to avoid raising suspicions and to engage in sex. She refused and became upset. He texted her later and asked to have the meeting beside the hotel pool, which they completed without incident.

On 10/6, back in NorVal’s offices, Lawson felt that she needed to tell Herbert that she needed to report the hotel incident or find another job. Although she suspected that he would fire her, she informed him that she had documented it. She considered this her initial complaint of sexual harassment because of NorVal’s policy requiring discrimination and harassment to be reported to the supervisor or GM. The HO concluded that Lawson’s actions during the meeting constituted the oral making of a harassment complaint. On 10/9 Herbert and Lawson again met and, despite her request for a Board member to attend, none was present. Herbert informed her that “they needed to work it out or she needed to go,” to which she requested guidance as to how to report her complaint in writing. He told her to speak only with him. When she questioned the propriety, he repeated it. He verbally notified the Board of her complaint. She asked him repeatedly how she could formally submit her complaint. He did not provide instructions and the Board did not meet with her despite her repeated requests.

On 10/10/17 Lawson received a letter from NorVal’s attorney Matthew Knierim notifying her that she was being formally reprimanded by Herbert for creating a toxic environment, failing to understand the chain of command, challenging his authority, criticizing the Board over tax issues, and complaining over a co-worker’s performance, and “this is not acceptable and if it occurs again, you will be immediately terminated for cause.” (Knierim wrote the letter at Herbert’s instance but he had no knowledge of Lawson’s sexual harassment concerns and complaint.) Herbert delivered the letter to Lawson in the office and texted her to call him that evening at which time he offered her a severance package if she would leave immediately. She declined the offer, asserted that she had done nothing wrong, and stated that she just wanted the sexual harassment to end.

The next day Herbert told Lawson that he did not want to sleep with her. He showed her a picture of a woman on his computer and told her that they had spent several months traveling for work, staying in the same room, lying on the same bed, and it was not “a big deal.” Over the following weeks Lawson continued to inquire of Herbert how to properly report her sexual harassment complaint, with no response. She attempted to communicate with Knierim, who said she would have to report to Herbert.

Herbert began treating Lawson in a way she felt degrading or belittling during their work conversations. He told her to notify him whenever she intended to leave the office and removed her from her role as minutes-taker for Board meetings without any job-related justification. She began showering less and stopped wearing nice clothes to “ward him off.” She began suffering a loss of self-worth and confided in her husband about Herbert’s behavior and its effect on her. Her husband began contacting attorneys for advice about recourse for sexual harassment.

He also contacted LCPA Elizabeth Drydahl who strongly recommended Lawson’s hospitalization on account of her severe depression and “plan to harm herself” resulting from “very inappropriate attention from a coworker.” Lawson’s husband took her to the ER where she was diagnosed with “depression and suicidal ideation” and referred to psychiatric NP Jennifer Durward who issued multiple letters forbidding her return to work until conclusion of the sexual harassment investigation. Her eventual report noted that Lawson suffered from a “stress reaction” stemming from “sexual harassment on the job.” Lawson also sought a no-contact order against Herbert from the PD,citing his anger over her accusations.

Lawson contacted the HRB and scheduled an appointment for 11/2/17. She called out of work beginning 11/3/17 for the “extreme stress and anxiety caused by your continued harassment and retaliation and threats.” On 11/10/17 she received a letter from Herbert dated 11/6 notifying her that she was banned from NorVal’s property, her work email and credit card had been revoked, and there would be a meeting to determine her employment. She then received a letter from Knierim dated 11/7 stating that she would be terminated immediately if she pursued a nocontact order. (Knierim testified that he was unaware of her sexual harassment complaint when he drafted this letter.) On 11/21, in response to a request from Lawson to extend her sick leave, Herbert wrote her stating that it would soon expire, reaffirming that he was the sole means of communication with NorVal, and that “all of your previous complaints lodged with NorVal have been investigated.”

Lawson formally filed a complaint with the HRB 11/24/17. Herbert withdrew the severance offer. He disputed her request for extended medical leave because it was based on Durward’s notes, who he stated was “not a physician.” On 1/2/18 Lawson received a payout of her accrued vacation & sick leave but Herbert informed her that she would continue to be listed as an employee until NorVal’s attorneys decided otherwise or she accepted employment elsewhere. She made several attempts to communicate with Herbert and the Board to obtain the results of the asserted investigation but received no response. On 2/5/18 Herbert wrote her that NorVal had filed its Answer with HRB. According to NorVal, she had falsely alleged sexual harassment to cover up “serious deficiencies in your job performance” including a backlog in her work. He told other employees that she was being investigated for possible fraud. No evidence to support such a claim was produced and neither of the 2 accountants hired to fill in for Lawson were asked to investigate such a claim.

On 2/27/18 Lawson amended her complaint to include retaliation. In 4/18 NorVal’s counsel asked her to provide a statement from a “qualified physician” verifying that she was unable to perform her duties. She conferred with Dr. Chris Laviola, PhD, who recommended that she remain off work due to her depression and suicidal ideations. Lawson provided this information to NorVal but received no response. Durward also treated Lawson through 2019, during which she observed a significant reduction in her well-being and connection to the Glasgow community. At the time of Lawson’s suspension her salary was $84,567/yr with 1,184.91/mo benefits. The HRB issued an initial report in 5/18 concluding that no harassment or retaliation had occurred. Lawson filed an objection with the HRC which concluded that the HRB’s initial report was erroneously based on incomplete information or misapprehension of the law and remanded for a hearing. After extensive discovery a contested case hearing was held and Hearing Officer Caroline Holien concluded that she had been subjected to sexual harassment and retaliation and awarded $192,384.89 back pay, $13,635.51 interest on lost wages, $50,000 for emotional distress, and attorney fees. Finding reinstatement not feasible, she found that Lawson was entitled to front pay. Citing Duke (4th Cir. 1991) for the principle that “because of the potential for windfall, [front pay’s] use must be tempered,” she noted that OHA has historically followed the WDEA which allows for lost wages for a maximum of 4 years, and thus awarded $415,786.06 (present value $378,215.59 if paid in a lump sum), reasoning that Lawson worked for NorVal for 7 years prior to going on medical leave and 4 years of front pay would not be unreasonable or an unjust windfall. Both parties appealed to the HRC. NorVal challenged Holien’s finding of discrimination and Lawson argued that she erred by citing the WDEA. The HRC affirmed the finding of discrimination and concluded that use of the WDEA as guidance for calculation of Lawson’s front pay award and the amount of the award were not clearly erroneous. Its final decision slightly altered Holien’s calculations resulting in a small increase in the award: $189,094.30 back pay, $13,402.30 interest on lost wages, $50,000 for emotional distress, and $505,957.92 for a total of $758,454.52 plus attorney fees.

Both parties petitioned for judicial review. Judge Laird upheld the finding of discrimination but concluded that use of the 4-year cap for front pay was arbitrary & capricious and, utilizing Lawson’s expert Ann Adair’s “conservative calculation,” increased Lawson’s front-pay award to $1,379,338, for a total award of $1,631,834.60 plus attorney fees. She conducted a “lodestar” analysis and awarded $519,837 fees and $48,258.88 costs. She declined to apply a multiplier, reasoning that she had already considered Todd Shea’s contingency risk and that the circumstances of his representation did not necessitate a multiplier. NorVal appeals. Lawson cross-appeals Laird’s fee calculation. NorVal argues that the incidents between Herbert and Lawson and its responses do not rise to “severe and/or pervasive” harassment necessary to constitute sexual discrimination as defined in the HRA. It contends that the context of Herbert’s actions was not adequately considered and therefore Laird erred by affirming Holien’s determination that Lawson was subjected to sexual discrimination. However, Holien’s findings are supported by substantial evidence that Herbert subjected Lawson to unwelcome verbal and/or physical conduct of a sexual nature in her work environment. And in consideration of the totality of the circumstances we have little difficulty affirming Holien’s conclusion that a reasonable person would find NorVal’s workplace hostile & abusive. Herbert’s behavior does not constitute “mere intersexual flirtation” as NorVal describes it. NorVal contests Holien’s determination that Lawson was retaliated against by arguing that none of the “constellation” of occurrences fell within the actions listed in ARM 24.9.603(2) and in any event were not materially adverse. However, while not all of the actions constituted material adverse actions, collectively there can be no doubt. There was likewise substantial evidence that NorVal took the actions in retaliation for engaging in protected activities and not for a non-discriminatory purpose such as those offered by NorVal that were merely pretextual. Laird did not err in affirming Holien’s decision that Lawson was subject to retaliation.

Laird erred in increasing Lawson’s front-pay award. Damages are a factual determination for which a court may not substitute its judgment for the agency’s, and may reverse on only narrow grounds including that the agency’s decision is arbitrary & capricious, which Laird determined. §2-4-704(2)(a); MSU-N (Mont. 2021). It is clear that neither Holien nor the HRC applied the WDEA as binding authority. The HRC explained that Holien used it only for guidance. More significantly, Laird’s reasoning that the agency’s reference to the WDEA for a 4-year award was not supported by the findings overlooks that the HRC alternatively determined that Holien’s 4-year award was not clearly erroneous, but rather a correct determination of front pay. Holien premised the 4-year award on Lawson’s 7 years of employment, her likely future difficulties finding similar work, and that this amount would not be unduly speculative, unsupported by the record, or an unjust windfall. The WDEA was no more than a reference point for an award that was otherwise justified by the record. Whether the record may also support a higher award, as Lawson advocates, is not the standard. Board of Oil & Gas Conservation (Mont. 2012) (“A review under the arbitrary and capricious standard ‘does not permit a reversal merely because the record contains inconsistent evidence or evidence which might support a different result. Rather, the decision being challenged must appear to be random, unreasonable or seemingly unmotivated based on the existing record.'”) Under these circumstances, we are hard pressed to conclude that the award was arbitrary & capricious. We conclude that Laird erred in reversing HRC’s front-pay award and therefore reinstate HRC’s determination of front pay.

The record indicates that Shea has practiced law for more than 30 years and attained a good reputation. He initially agreed to charge Lawson $250/hr for his services and $110/hr for paralegal services, but switched to a contingency when it became clear that she would not be able to maintain his fees during the litigation. From 2017 to 2022 he participated in the investigative process before the HRB, appeals to the HRC leading to a contested case hearing, a favorable decision from Holien, and favorable proceedings before the HRC and Court and has handled the appellate proceedings before this Court.

In the District Court he sought compensation at $325/hr and offered expert testimony that this was reasonable given his skills and experience. Laird took guidance from the Kerr (9th Cir. 1975) “lodestar/multiplier test.” She calculated the hours reasonably expended, considered Shea’s skill and performance, the quality of his performance, and the result he obtained, and assessed the difficulty of the case, and concluded that $325/hr and his hours were reasonable and awarded $519,837 fees. She reasoned that the award should not be further enhanced by a “multiplier” because she had considered within her initial lodestar analysis factors that may support a multiplier such as quality of the result, extent of delay, and the economic undesirability of representing the particular class of claims. She reasoned that the increase to $325 reflected “the contingency risk that Shea undertook to represent his client as well as the resulting four-year delay in payment for his services” and “the excellent results obtained and delays in payment.”

Lawson argues that it was inconsistent for Laird to find that Shea charged a reasonable rate of $325 while also finding that $325 reflected the risks & burdens of the litigation, because the $325 is specifically reasonable only for “non-contingency cases.” NorVal notes that the US Supreme Court and this Court have held that a lodestar calculation cannot be enhanced merely based on the risk of contingency representation. Ihler (Mont. 2000) (citing Dague (US 1992)) (“Dague prohibits an enhancement based on contingent risks”).

A “lodestar” amount is calculated by “multiplying the number of hours reasonably spent on the case by an appropriate hourly rate in the community for such work.” Gendron (Mont. 2020) (quoting Tacke (Mont. 2010)). These reasonableness determinations are based on an initial list of factors:

(1) the amount and character of the services rendered;
(2) the labor, time and trouble involved;
(3) the character and importance of the litigation in which the services were rendered;
(4) the amount of money or the value of the property to be affected;
(5) the professional skill and experience called for;
(6) the attorneys’ character and standing in their profession; and
(7) the results secured by the services of the attorneys.

“These factors are nonexclusive, and a district court may rely on other considerations in determining reasonableness.” Id. There is a “strong presumption that the lodestar figure represents a reasonable fee.” Ihler. While a case may justify a multiplier or enhancement, the claimant “has the burden of proving that the requested enhancement is ‘necessary to the determination of a reasonable fee.'” Ihler (citing Dague). To avoid double consideration a multiplier must be determined based on further factors not already considered in the lodestar calculation such as the extent of delay and economic undesirability of representing the class of claims. Audit Services (Mont. 1992); Ihler.

Lawson contends that Laird’s analysis based on the Kerr framework shortchanged consideration of factors such as novelty and difficulty of the questions, her attorney’s preclusion from other employment, time limitations imposed by the circumstances, and awards in other cases. However, while the Kerr factors are not stated identically with the factors of the Montana test, there is considerable overlap and most of the Kerr factors were at least touched upon in Laird’s lodestar analysis. (Notably, her assessment of hours indicated that the case “should have been a simple routine sexual harassment case” were it not for the complications attributed to NorVal’s conduct throughout and the HRB’s initial dismissal.) She stated that she considered additional factors in coming to her lodestar determination, which was her prerogative. Gendron (“A district court may rely on other considerations in determining reasonableness.”). Further, she had wide discretion in determining a reasonable fee award. Id. Thus while the Kerr framework is somewhat different than Montana’s stated framework, and Laird may not have considered all Kerr factors, she had considerable latitude and the award is presumed to be reasonable. We are persuaded that she properly concluded that the award was reasonable and that Lawson has not demonstrated that a multiplier or enhancement was necessary to achieve reasonableness.

NorVal Electric Co-op ordered to pay over $2 million for GM’s sexual misconduct

Story by: AJ Etherington, Billings Gazette.

A Hi-Line electric cooperative has been ordered by a Valley County district judge to pay more than $2 million to the victim of a years-old sexual harassment complaint against the company’s general manager.

NorVal Electric Co-op in Glasgow has been ordered to pay its former office manager and financial officer, Shalaine Lawson, $1,631,834 after Judge Yvonne Laird upheld a ruling by the state’s human rights commission finding NorVal’s general manager, Craig Herbert of Glasgow, sexually harassed Lawson while she was his direct subordinate and then retaliated after she she made a complaint.

The final judgement means NorVal will have to pay the damages plus interest, costs to Lawson of $48,258 and attorney’s fees of $519,837 plus costs or fees incurred trying to collect on the final judgment. After interest is factored in, the total cost to NorVal will likely top $2.4 million.

Herbert remains NorVal’s general manager.

Lawson brought her complaint to the HRC after she confronted her boss and the cooperative’s board about a long-running string of sexually inappropriate comments and touching by Herbert that started in early 2017. Instead of addressing the matter, NorVal’s board deferred to Herbert who retaliated against her, according to the findings of fact from the commission.

In February, Judge Laird affirmed the HRC’s decision. Laird also increased the award Lawson was owed from the company by recalculating front pay damages— meaning wages Lawson would have earned had she been allowed to remain with the company.

Beginning in 2017, Herbert began making inappropriate comments and suggesting he wanted to have an affair with her. On occasions he would touch her by “popping her back” or hugging her, and he often made comments about her sex life. In late 2017, while attending a work-related conference, Herbert invited Lawson to his hotel room for a meeting. Lawson refused and days later confronted Herbert about his conduct.

NorVal’s policy for making a complaint about sexual harassment required the employee to report any complaint to their immediate supervisor or the general manager if the supervisor is the offender. Lawson was left with no recourse. Still, she continued trying to resolve the matter and “move on” by involving the board of directors. After everything failed, she made a complaint to the Montana Human Rights Bureau, which investigated.

The case has gone on for years with the HRB complaint being filed on Nov. 24, 2017, and the final judgement from Laird coming just this past Tuesday — a span of four years.

In addition to the compensation owed Lawson, Laird also ordered NorVal: to amend its harassment policies and procedures so the company can identify, investigate and resolve discrimination complaints; train employees on preventing and remedying discrimination; and obtain approval from the Montana HRB for all of its harassment policies, procedures and training.

Laird, the judge, also sanctioned NorVal’s attorney, Maxon Davis with Davis, Hatley, Haffeman & Tighe, P.C. in Great Falls, for what she called “dilatory tactics” used throughout the case. Dilatory tactics are when lawyers use the procedures of the court system in an abusive way to delay the progress of the court’s proceedings.

The sanctions applied only to post-judgement actions regarding fees and costs owed to Lawson for added attorney fees due to Davis’ omitting information needed by the court to make a decision.

The case of Lawson vs. NorVal has also caught the attention of the federal government. In October 2019, the federal Equal Employment Opportunity Commission filed a lawsuit with U.S. Judge Brian Morris in Great Falls. The suit alleges the same facts as the Montana case, but comes with the teeth of the federal government to issue disciplinary fines against the company and to further compensate Lawson. The federal lawsuit came after efforts by the EEOC to engage NorVal in “informal methods of conciliation” to resolve the case outside of court failed. NorVal rejected any conciliation agreement with the EEOC and the commission described any further efforts as “futile or non-productive.” A hearing for summary judgement is set for Jan. 12, 2022.

Both parties’ attorneys, Davis and Shea, declined to comment on the case. NorVal has 30 days to file an appeal to the Montana Supreme Court, otherwise they have 90 days to pay on the judgment.

Yellowstone settles arsenic lawsuit with Park County

Story by: Michael Wright, Bozeman Daily Chronicle.

The federal government will pay $1 million to the Gardiner-Park County Water and Sewer District to settle a lawsuit the district filed over high levels of arsenic coming into its system from Yellowstone National Park.

The settlement agreement brings an end to the lawsuit the district filed in U.S. District Court in 2018 alleging that poor pipe maintenance resulted in high levels of arsenic getting into the district’s sewage ponds. Having arsenic in the ponds makes cleaning sludge out of the ponds more expensive and complicated.

After more than a year-and-a-half of legal wrangling and settlement talks, the two sides signed an agreement in February that the government would pay the district $1 million. Judge Susan P. Waters signed an order dismissing the case because of the settlement in mid-March.

A payment to the sewer district for the town at the park’s northern gate has already been made. Todd Shea, the attorney who represented the district, declined to comment.

Yellowstone National Park spokeswoman Linda Veress said in an email Friday morning that the money will pay for rehabilitating the district’s septic system “after years of naturally-occurring arsenic flowed out of Yellowstone National Park and caused deposits in Gardiner’s sewer lines and holding pond.”

“The park is pleased to have resolved this matter with the neighboring community of Gardiner,” Veress wrote.

Yellowstone has used the Gardiner-Park County Water and Sewer District’s sewage treatment plant for many years, according to court documents. The district uses sludge ponds to treat wastewater, and the ponds have to be emptied periodically.

High arsenic levels change where the sludge can be dumped, affecting the cost of removing it. The cost of emptying the ponds was estimated at more than $2 million in March 2015.

An engineer at the district told the district in 2015 that high levels of arsenic coming from the park were getting into the sewage treatment facility.

The lawsuit says the arsenic wasn’t coming directly from the park’s wastewater but likely from a different source, like leaky pipes or manholes inside the park. The district’s engineer recommended dealing with the arsenic infiltration problem before removing any of the sludge.

The district sent multiple letters to park officials in 2015 and 2016 seeking some resolution to the arsenic problem but received no written response until fall 2016, according to the lawsuit.

In separate discussions with the agency, however, park officials acknowledged the high levels of arsenic were coming from the park and said the National Park Service would help pay for sludge removal.

In a September 2016 letter, the park acknowledged the problems with its pipes but said it likely wouldn’t have money available to pay for the repairs until this year. The letter also acknowledged the agency was responsible for the sludge removal costs but didn’t say when that money would be available.

The park pledged to replace the sewer line in 2017, and a park spokeswoman said at the time that the money for the project was available.

State Finds NorVal GM Harassed, Retaliated Against Employee

Source: A.J. Etherington. Glasgow Courier, 10/30/19.

The Montana Human Rights Bureau (HRB) released the decision of the Office of Administrative Hearings on the case of Shalaine Lawson against NorVal Electric Cooperative on Oct. 22. The decision ruled in Lawson’s favor and determined that NorVal general manager Craig Herbert had sexually harassed and discriminated against Lawson and then retaliated against her after she attempted to report her claim to Herbert, Norval’s board and the HRB.

The findings highlight a long and slow escalation of harassment from May to October 2017 that show Herbert made inappropriate comments and inquiries into Lawson’s sex life and appearance. Those comments included alluding to her having affairs or suggesting that her appearance meant she wanted to have an affair. The escalation culminated in Herbert inviting Lawson up to his hotel room while they were at the Montana Electrical Cooperative Association Convention in 2017. Lawson refused to meet him in his room following the request.

Following the convention, Lawson informed Herbert of her views about his behavior and sought to report his behavior. Under NorVal’s sexual harassment policy, the only method of reporting for an employee is to their direct supervisor. Unless the supervisor is the harasser, then the report can be made to the general manager. In Lawson’s case, Herbert was both. As a result, Lawson was unsuccessful in reporting her claim or in having it investigated. She then attempted to make a report to the NorVal board, however Herbert blocked her from making the report and instead stated she must make the report solely to him.

Eventually, Lawson attempted to bring her complaint to the attention of NorVal’s attorney, Matt Knierim, but he too refused to hear her complaint and sent her back to Herbert. The findings noted that after exhausting all other options of making a report, Lawson eventually filed a claim with the HRB, sat for depositions, investigations and the three days of hearings in the case.

After her attempts to report to Herbert and her subsequent report to the HRB, Lawson alleged she suffered what was described in the hearing findings as, “a constellation of retaliatory acts as a result of her protesting Herbert’s harassing conduct.” The documents ruled that Lawson was subject to “adverse employment action” after Herbert attempted to intimidate Lawson and told other NorVal employees and Lawson herself that he was investigating her for fraud.

“Herbert’s efforts to malign and to defame Lawson after she complained of his conduct had a direct effect on her ability to return to her position,” wrote the hearing officer, before going on to say, “No professional can or should tolerate an individual’s effort to diminish his or her reputation based upon fabrications and exaggerations. Calling into question Lawson’s ability to ethically and effectively perform her job duties had a material and adverse effect on Lawson’s employment and her potential future employment in that region of Montana.”

The hearing officer described Herbert’s defense against the complaint as illogical and self serving. Writing in the decision, the officer even highlighted concerns that evidence presented by NorVal was inconsistent with the same evidence presented in discovery. Specifically, detailed sentences about the complaint and Herbert’s response had been removed from a timeline produced by Herbert to support his testimony.

The officer wrote, “Herbert testified he begins a timeline on every employee at or near the employee’s time of hire to ‘protect himself.’ While that may be the case, Herbert offered no credible explanation as to the discrepancies between the two timelines NorVal produced during discovery and for hearing.”

Reached for comment, NorVal Attorney Max Davis, stated that any decision about an appeal or Herbert’s employment was up to the board. He denied knowing when the next board meeting would be. Herbert was also reached for comment and, on Oct. 28, said the board was scheduled to meet at the end of October, but he declined to say what day. In regards to whether the board would discuss an appeal he stated, “I’m sure they are going to discuss it.” Both Herbert and Davis provided no comment on the HRB decision.

Phone calls were placed to all eight board members but, at press time, only Lee Risa had been reached by the Courier and he referred all questions to NorVal attorney Max Davis.

The state’s decision follows on the heels of the US Equal Employment Opportunity Commission filing a federal lawsuit in Great Falls on Oct. 16 against NorVal for the same incidents. It was unclear at press time whether the decision by the HRB in Helena would affect the federal lawsuit, but questions were sent to EEOC attorney Amos Blackman. The HRB decision also follows on a suit filed in Valley County District Court by Lawson against NorVal, Herbert, the eight board members, Chris Christiansen, Lee Risa, Sam Gundermann, Rick Molvig, Kurt Breigenzer, Ron Reddig, Gary Meyer and Rocky Kittelson, NorVal Attorney Matt Knierim and 10 John Does. (For more on those lawsuits see EEOC Sues NorVal in the Oct. 23 edition of the Glasgow Courier).

EEOC Sues NorVal

Allege GM Sexually Harassed Employee, Retaliated After She Reported It.

Source: Glasgow Courier, A.J. Etherington.

The U.S. Equal Employment Opportunity Commission has filed a lawsuit in Federal Court in Great Falls, Mont., alleging that NorVal Electric Cooperative’s General Manager Craig Herbert sexually harassed a female employee and then subsequently retaliated against her when she tried to report his conduct.

In a press release, the EEOC said NorVal, “violated federal law when its general manager sexually harassed a female employee and then retaliated against her when she objected to his conduct and sought to report it.”

The 11-page lawsuit filed on Oct. 16 alleges that Herbert harassed then NorVal office manager Shalaine Lawson with unwelcome sexual comments and physical touching.

The EEOC release stated, “from May to October 2017, NorVal’s office manager faced unwelcome sexual comments and physical touching from her direct supervisor, NorVal’s general manager. The conduct escalated during a business trip when he suggested that they meet in his hotel room, which she adamantly refused. When she sought to report his conduct, he made escalating threats against her job.”

According to a civil suit filed by Lawson in Valley County District Court, Herbert, the board and NorVal’s attorney – Matt Knierim – all allegedly insisted that the only person she was allowed to make a formal complaint of sexual harassment to was Herbert directly. Unable to report the harassment inside the company, Lawson then filed a complaint with the Montana Human Rights Bureau and the EEOC.

“In response [to her complaint], NorVal took steps to terminate her. NorVal and its general manager’s hostility toward her and the severe emotional distress it caused, forced her to take unpaid leave and has prevented her from returning,” said the EEOC press release.

Reached for comment, NorVal attorney Maxon Davis of the law firm Davis, Hatley, Haffeman & Tighe, P.C. in Great Falls, stated that they had already argued against the case in front of the Human Rights Commission in March of 2019, but he added that, to date, no decision had been made. He also alleged that the initial investigator had dismissed the case, and that it was only after an appeal that the HRC sent the case to an administrative hearing.

In fact, a remand order filed by the Human Rights Commission directly addressed the early dismissal of the case by the investigator. According to the order, the investigator cited a lack of corroborating first-hand witnesses as a justification to use discretion to dismiss the case. The commission reversed that decision citing that witnesses were not interviewed because they “lacked firsthand knowledge.”

The commission ruled, “The lack of investigation into corroborating witnesses, in light of the identity of the alleged harasser and the failure of the policy to provide an alternative for reporting and addressing harassment, is an abuse of discretion.” The case was then remanded by the commission to undergo a hearing in front of the Office of Administrative Hearings.

During the administrative hearing in March, Davis said, “NorVal presented evidence vigorously disputing Ms. Lawson’s accusations.” When asked to address the evidence directly, Davis pointed to a number of witnesses who had testified against her, but he provided no specific names nor did he quote testimony (the evidence presented and the complaint filed with the state were both unavailable at press time). He also reiterated that no decision from the Human Rights Commission had been reached since the hearing ended in March, a span of seven months.

“We gave considerable evidence that she was not sexually harassed and that she was not retaliated against. And, that remains our position with this new lawsuit,” said Davis referring to the EEOC suit filed on Oct. 16. He also remarked on the EEOC intervention saying that he believed the federal government filing a lawsuit after a Human Rights Hearing was unprecedented. He stated directly, “I’ve never seen that before.”

Sexual harassment and discrimination in the workplace is a violation of federal law under Title VII of the Civil Rights Act of 1964, which also prohibits retaliation for making a complaint for a Title VII violation. Before filing the lawsuit, the EEOC said they attempted to reach a pre-litigation settlement through its voluntary conciliation process. The filing documents state, “The EEOC was unable to secure from Defendant [NorVal Electric Cooperative] a conciliation agreement acceptable to the EEOC.” Davis confirmed an attempt at conciliation was made before the lawsuit was filed.

According to the EEOC’s website, federal lawsuits filed by the EEOC are relatively rare. In fiscal year 2018, the EEOC filed only 41 lawsuits for sexual harassment out of 66 total discrimination lawsuits filed across the country. The 41 sexual harassment lawsuits are a small sample of the 7,609 sexual harassment charges received by the commission in that same year, making federal lawsuits for sexual harassment a rare step for the federal government to undertake.

According to the EEOC report for FY 2018, “data show that retaliation continued to be the most frequently filed charge filed with the agency, followed by sex, disability and race. The agency also received 7,609 sexual harassment charges – a 13.6 percent increase from FY 2017 – and obtained $56.6 million in monetary benefits for victims of sexual harassment.”

“The EEOC’s Select Task Force on the Study of Harassment in the Workplace notes that power disparities can be a risk factor for harassment,” said EEOC Seattle Field Office Director Nancy Sienko. “Here we found that the company’s top executive not only sexually harassed his direct subordinate, but also used his position to circumscribe her ability to report his conduct. It’s critical that we send the message loud and clear — nobody is above the law.”

The EEOC has increased enforcement efforts over the last few years with increases in lawsuits in 2018, rising from 2017 by almost 50 percent. Lead Trial Attorney for the EEOC Amos Blackman noted that eliminating policies and practices that discourage or prohibit individuals from exercising their rights under employment discrimination statutes is one of six national priorities identified by the Commission’s Strategic Enforcement Plan.

As the lawsuit filed by the EEOC goes forward, a separate civil lawsuit by Lawson in Valley County District Court in Glasgow goes further in naming NorVal Electric and Craig Herbert directly, but also names the NorVal Board of Directors and NorVal Attorney Matt Knierim for their roles in allegedly preventing Lawson from making a complaint.

That 25-page complaint, filed by Lawson’s attorney Todd Shea, of Shea Law Firm, P.L.L.C in Bozeman filed on Oct. 9, 2019, documents in greater detail the sexual harassment complaints and the alleged mishandling of the report. Specifically, it alleges that board members and Knierim were aware of Lawson’s complaint and did nothing to either hear her complaint or investigate the accusations, stressing that she must make the complaint to Herbert himself. As a result, Lawson took a leave of absence after escalating retaliation from Herbert and without being given the chance to make her reported claim to the board. The civil suit alleges that Lawson has suffered psychologically as a result of the harassment.

Davis was asked about the civil suit in District Court, but was unaware of it as of Oct. 21and therefore did not want to comment on the filing.

The Courier reached out to NorVal Electric and spoke to Craig Herbert who referred questions to his lawyer, Maxon Davis. The Courier also reached out to the board, leaving messages for many that were not returned before press time, but spoke to two board members who provided no comment and referred inquiries to Davis.

Reached for comment, Lawson’s lawyer Todd Shea, said that he and his client are currently awaiting the Human Rights Commission decision from the hearings in March.

The Courier also reached out to the State of Montana Human Rights Commission in order to acquire a copy of that complaint and the evidence presented at the hearing, but the documents are not public until a decision by the commission is reached. A request to obtain the documents was made nonetheless.


UIM Limit Paid to Injured Motorcyclist

Source: Montana Law Week

INSURANCE: UIM limit paid to injured motorcyclist after challenge to insurer’s reducing clause vis-à-vis separate recovery from tortfeasor’s employer.

Domino’s Pizza driver Daniel Goerss turned in front of motorcyclist Will Bakke in 5/16, throwing him 20 feet into a utility box. Bakke suffered a lumbar burst fracture, fractured
left femur, and fractured coccyx and underwent 4 surgeries.

Goerss’s insurer Progressive paid its $25,000 policy limit. Progressive was also the UIM carrier. Bakke sued Domino’s. He requested UIM from Progressive 5/24/17. Adjuster Adam McMurray in Bozeman responded 5/25 with “another copy of the policy declarations confirming the policy limit of $25,000 available as well as a copy of the UIM portion” of the policy and “please note the Limit of Liability under the coverage which
states- The damages under this Part III will be reduced by all sums:
1. paid because of bodily injury by or on behalf of any persons or organizations that may be legally responsible;
2. paid under Part I – Liability To Others; and
3. paid or payable because of bodily injury under any of the following or similar laws:
a. workers’ compensation law; or Verdict/settlement/judgment reports invited.
b. disability benefits law.

So this means that this UIM coverage will come into effect if it is proven the damages incurred exceed all underlying liability coverages. In the event the excess liability coverage with [redacted] for Domino’s is not adequate and this coverage is
triggered we will need copies of the policy declarations for all underlying liability coverages” and “I will also need the information previously requested and full documentation of all damages claimed.”

Bakke and Domino’s insurer mediated 5/9/19 and settled on undisclosed terms.

Bakke’s attorney wrote Progressive 5/22/19 reiterating his request for UIM and advising that its reliance on its reducing clause was a violation of Montana law. He advised that there was little question that Goerss is judgment proof — he was 19 when he hit Bakke’s motorcycle and is unemployed. He stated that the reducing clause is hardly clear, particularly as to how it may apply to Bakke, but that Progressive appeared to claim
that because Goerss was a Domino’s employee and because Bakke chose to pursue an independent, long, and expensive claim against Domino’s, Bakke’s UIM became excess coverage only, which would only be payable if Domino’s coverage was not enough to cover his injuries. He stated that there is no support for this argument to avoid previously paid for UIM benefits in Progressive’s declaration page or policy, and that it conflicts with a black letter Montana principle that an “insurer is under a duty to construe the factual assertions from the perspective of the insured rather than solely from the insurer’s own perspective.” Staples (Mont. 2004). He stated that it also runs afoul of Montana’s reasonable expectations doctrine, and that the reasonable expectation of Bakke’s declaration page and UIM policy for which he paid premiums would indicate that he would be entitled to $25,000 UIM after being struck by Goerss given that Goerss was underinsured as defined under the policy. He asserted that Progressive’s reducing clause is “nothing more than subrogation that Progressive is attempting to award itself” in violation of Montana’s “made whole” doctrine and is subject to the “common fund” doctrine which provides that “when a party through active litigation creates, reserves or increases a fund, others sharing in the fund must bear a portion of the litigation costs including reasonable attorneys’ fees.” Hall (Mont. 2011). He asserted that Progressive is the “passive beneficiary” of Bakke’s claim against Domino’s at no cost to Progressive, which further violates the law. He further asserted that Progressive’s interpretation of its reducing clause would result in unjust enrichment to Progressive, while Skauge (Mont. 1977) held that if one party to the insurance transaction must bear the loss, it should be the insurer, since that is the risk the insured paid it to assume.

Progressive adjuster Carla Giroux in Stevensville wrote Bakke’s attorney 5/28 “thank you for providing the additional information needed to evaluate Mr. Bakke’s injuries and potential future needs related to this pending underinsured motorist injury claim” and advising that “we have issued payment in the amount of $25,000 which represents Mr. Bakke’s underinsured motorist coverage.”

Shea Law Firm Defends Stalking Charge Getting it Dismissed.

Gallatin County Sheriff’s Office Deputy filed a stalking charge against a fellow deputy, who was represented by the Shea Law Firm. The deputy charged with stalking was terminated from Gallatin County Sheriff’s Office but then successfully sued and obtained reinstatement of his position and settled with Gallatin County.

The Shea Law Firm defended the stalking charge and the Court dismissed the charge finding the charges “stupid.”

Case Unripe for Summary Judgment

Source: Montana Law Week

INSURANCE: Uncertainty and unresolved facts & claims in sewer line easements suit make this declaratory action as to defend/indemnify duties unripe for summary
judgment… Gilbert.

Gardiner-Park Co. Water & Sewer Dist. claims that Donald & Gina Knight constructed 2 homes on their property that improperly overlay and endanger its sewer line. It claims that they constructed a house for their son Landon in 2014 over its sewer lines despite its objections. It claims that this house could crush the old clay tile line, causing disruption or leakage into the Yellowstone River. It claims that they constructed a 2nd
house over the line subsequent to and in violation of a 2015 easement signed by Donald Knight. Knights contest validity of his signature, claiming that he signed following surgery and while under the influence of medication. The District alleges that prior to construction it agreed to pay for and construct a new manhole to reroute the line and accommodate the 2nd house.

This rerouting allegedly involved obtaining another easement from Knights’ neighbors, Obers. Both easements prohibited construction within 5 feet of the line without the District’s permission. However, the District’s underlying suit claims that Knights constructed the 2nd house over the line in violation of both easements. A survey prepared for the District concluded that parts of both homes were within the easements. The District also alleges that Knights caused a retaining wall to collapse, threatening support for part of the line above the river. Its underlying suit accordingly brought claims of intentional trespass, intangible trespass, public & private nuisance, negligence/strict liability, and breach of contract against Knights. Its underlying
suit seeks a declaration that Knights violated the easements, an award of damages, costs, and attorney fees, and an order directing removal of structures threatening the line and violating the easements (both homes and a shed) at Knights’ expense.

Knights counterclaimed against the District alleging that it was aware of placement of the homes and improperly waited to raise concerns until 4/16. They dispute validity of the 2015 easements, claiming that Donald Knight was taking strong pain killers at
the time of signing. They claim that the District improperly forced them to remove parts of the 2nd home’s roof & porch, causing damage to their property. They request damages, attorney  fees & costs, denials of the District’s claims, and injunctive orders prohibiting removal of any structures and directing that the homes “remain in place.”

MACo Joint Powers Insurance Authority filed a declaratory action asking the Court to declare that it has no duty to defend or indemnify the District based on “clear exclusions” in the policy. MACo and the District request summary judgment. The Court heard argument 2/11/19. A notice and affidavit of Todd Shea filed 2/8/19 indicate that the District has filed a contribution & indemnification claim against Standish Excavation as a 3rdparty Defendant in the underlying suit. Further, there are expected amendments to the pleadings by some or all of the parties as a result of this and further discovery is anticipated.

The District raises the issue of ripeness, relying on cases holding that “where there remain unresolved relevant issues in the underlying case, inseparable from the issues presented in the declaratory judgment action, the duty to indemnify is not ripe for resolution.” American Reliable (D.Mont. 2018); Skinner (Mont. 2005). The concern is that ruling on the duty to indemnify before allowing the facts to be determined in an underlying action fails to be a final adjudication on the indemnification issue. Such
a ruling may be subject to amendment or nullification when the underlying case is finally resolved. Northfield v. MACo (Mont. 2000).

MACo responds that its summary judgment motion seeks a ruling that it is not obligated to defend or indemnify the District. It points out that there is a long line of Montana cases that have decided whether coverage exists by analyzing whether the allegations of the underlying complaint trigger the duty to defend. Further, since the duty to defend is broader than the duty to indemnify, if there is no duty to defend, the underlying claim
falls outside the scope of coverage. Twite (Mont. 2008). “Put another way, while an insurer’s duty to defend is triggered by allegations, an insurer’s duty to indemnify hinges not on the facts the claimant alleges and hopes to prove but instead on the facts, proven, stipulated or otherwise established that actually create the insured’s liability.” Freyer (2003). MACo further relies on Grindheim (D.Mont. 1995) (“An insurer’s duty to defend
its insured arises when the insurer, through reference to pleadings, discovery, or final issues declared ready for trial, has received notice of facts representing a risk covered by the terms of the policy.”). Thus, MACo argues, if a claim falls unequivocally outside the policy’s coverage, there is no basis for imposing a duty to defend. MACo contends that the District is attempting to eliminate the duty to defend analysis by merging it into the
narrower duty to indemnify analysis. It points to case law holding that an insurer “had no duty to defend [the insured] because the complaint cannot be construed to give rise to a claim under the terms of the policy.” Weitzel (Mont. 2016). It rejects the District’s argument that unresolved factual issues preclude a determination of coverage, since the Supreme Court has recognized that “factual disputes between the parties relevant to
coverage must be resolved in favor of coverage.” Id. It argues that Northfield and American Reliable are not on point because they addressed only the issue of indemnification and did not analyze the duty to defend.

The District counters that MACo misconstrues its ripeness argument. It relies on authority that where there are unresolved relevant issues in the underlying case that are inseparable from the issues in the declaratory action, the duty to indemnify is not ripe. It argues that there are unresolved issues here that are inseparable from MACo’s summary judgment motion seeking a ruling that it is not obligated to defend or indemnity the District for Knights’ claims. It takes issue with MACo’s effort to distinguish Northfield as only addressing indemnification since the opinion notes at the outset that MACo had already assumed the defense, so the duty to defend was not at issue. It reiterates
that it relies on Northfield for the holding denying Northfield’s request for a declaratory ruling on its potential indemnification obligations because there were unresolved factual issues in the underlying case. Northfield also relied on the DJA, which authorizes a court to refuse to enter a declaratory ruling if doing so “would not terminate the uncertainty or controversy giving rise to the proceeding.” §27-8-206. In Northfield, MACo successfully
defended against Northfield’s motion by contending that the plaintiffs in the underlying case could subsequently amend their complaint and therefore Northfield’s motion seeking declaratory relief on its indemnification obligation was premature. The District maintains that American Reliable ultimately determined that it could not rule on whether there was an occurrence under the policy because of ongoing factual issues in the underlying case. Given this decision, it determined that American Reliable’s duty to defend was ongoing.

There are not only unresolved factual issues in the underlying litigation here, but also claims that have not been filed. This case is not to the stage where there is sufficient finality of pleadings, discovery, or final issues declared ready for trial, such that the Court can determine MACo’s duty to indemnify or defend. If the Court ruled on the summary judgment motions at this juncture, such rulings may be subject to nullification or amendment after further amendment of the pleadings, further discovery, or further proceedings. The Court is cognizant of MACo’s desire to have a ruling based on the state of the pleadings at the time it filed its summary judgment motion. However, doing so “would not terminate the uncertainty or controversy giving rise to the proceeding.” There is sufficient basis to deny MACo’s motion in keeping with the DJA §27-8-206.

The parties are preparing amended pleadings, most significantly Knights’ assertion of a 3rd-party claim which, if filed, would be crucial to MACo’s assessment of its position and the Court’s determination of the matters presented by the summary judgment motions now before the Court. The District has just recently asserted a 3rd-party contribution & indemnification claim, bringing a new party into the underlying case. Discovery has already been extended into 5/19,  and the addition of a new party may give rise to further requests for amendment of the Scheduling Order. The procedural status
puts this case beyond the level of uncertainty and unresolved facts in Northfield or American Reliable.

MACo’s motion for summary judgment and the District’s cross-motion for summary judgment must be denied.

Yellowstone National Park, Gardiner to address arsenic in sewage

Written by: Brett French,  Billings Gazette

Three years after filing suit against Yellowstone National Park and four years after a problem was first identified, a settlement conference has been set for May 9 between the park and the Gardiner-Park County Water and Sewer District over excessive levels of arsenic in the Gardiner sewage ponds.

“It looks like we have made some headway,” said Todd Shea, a Bozeman attorney representing the sewer district.

The sewer district sued in 2016 saying the park had not been responsive to requests to address the issue. The problem has been identified as either a leak into the pipes that deliver wastewater from Mammoth Hot Springs, Wyoming — the headquarters for the park’s staff — or manholes that are allowing arsenic-laden runoff into the system. Tests of the wastewater showed the arsenic levels coming from the park were 40 times higher than water from Gardiner’s wastewater system.

Mammoth does not have its own wastewater treatment facility. Tests performed on the drinking water at Mammoth ruled out that as the source of heavy arsenic.
Arsenic is a naturally occurring element found in rocks and soil and is prevalent in the water coming from Yellowstone’s thermal hot pools and geysers. If ingested in large enough quantities, arsenic can cause a variety of ailments in humans affecting organs as diverse as the heart and liver, lungs and nervous system.

U.S. drinking water is permitted to contain up to 10 parts per billion of arsenic, according to the National Institute of Environmental Health Sciences. Some states have stricter standards, but Montana adheres to the federal level.

Tests by the Montana Department of Environmental Quality in 2015 showed high arsenic levels in rivers that drain from Yellowstone National Park into Montana, including 367 ppb in the Firehole, 197 ppb in the Gibbon and 300 ppb in the Yellowstone River.

In 2015 the Montana Department of Environmental Quality advised the Gardiner Water and Sewer district that sludge should be removed from its treatment ponds and new liners installed. But undertaking that task made no sense if the arsenic problem was not addressed.

After twice advising Yellowstone officials of the problem by letter with no response, the complaint said the park’s staff finally acknowledged its role for the issue during a meeting and agreed to help fund the sludge removal from the wastewater ponds, a project estimated to cost about $2 million.

More than a year and a half after first mailing the park’s staff for specifics on how it would help, the Gardiner Water and Sewer District was told by park officials that the agency would not be able to address the problem until 2020 due to a lack of funding, according to the complaint. That’s when the district sued.

Since that lawsuit was filed in U.S. District Court in 2016, the sewer district amended its complaint last year and then both parties sought a suspension of the proceedings which Judge Timothy Cavan denied in November. He also ordered the park to respond to the amended complaint by Dec. 22.

That was the same day that the government shutdown began, the longest in U.S. history and stretching to Jan. 25.

Just two days before the shutdown, a settlement conference between the sewer district and park was approved by the court in an attempt to keep the case from going to trial. The settlement talks will be overseen by U.S. Magistrate Judge Jeremiah Lynch. Magistrate judges assist district courts.

The first conference was set during the government shutdown, so another was scheduled for May 9 before Lynch in Billings at 9 a.m.

Appeal of Investment Accounts Interpleader Dismissed

Source: Montana Law Week

APPEAL BOND: Appeal of investment accounts interpleader dismissed at request of Appellant for inability to post bond… order.

Dennis Bohnert has an investment account, a traditional IRA, and a Roth IRA with Edward Jones. His stepdaughter Lisa Copiskey filed a motion in Tribal Court in 9/15 contending that they belong to her. Tribal Court granted the motion and prohibited Bohnert from dissipating any funds. Copiskey requested that Jones not release any funds to Bohnert. He requested access to the accounts for living expenses and defense costs. Both appealed to Tribal Appeals Court in 5/16 contesting the orders. Jones placed a hold on the accounts and advised that it would release funds to Bohnert if the parties agreed on an amount. Because they continued making competing demands to the funds, Jones filed an interpleader in 9th Judicial Dist. Court. Bohnert opposed the interpleader and counterclaimed against Jones. Judge Best dismissed the counterclaim and awarded Jones $24,959 attorney fees & costs, 2/3 apportioned to Bohnert. (MLW 1/28/17). Bohnert appealed and moved for a stay and waiver of appeal bond, which Jones opposed. The motion was denied 4/18/17. Bohnert filed 2 motions in the Supreme Court seeking the same relief and both were also denied. He now moves to dismiss his appeal due to the fact that he has made “numerous attempts to obtain the funds to prosecute his appeal, i.e. the purchase of a Supersedeas Bond from a commercial surety,” by moving for a stay and waiver of bond in District Court and the Supreme Court in view of Jones withholding monies totaling $286,005.80 and he is unable to sell his home and cannot borrow against it due to Jones’ judgment lien.

For good cause shown, Bohnert’s appeal is dismissed.