                                         No. 03-743

               IN THE SUPREME COURT OF THE STATE OF MONTANA

                                         2005 MT 217


GARY WINSLOW,

              Plaintiff and Appellant,

         v.

MONTANA RAIL LINK, INC., a Montana corporation,

              Defendant, Respondent and Cross-Appellant.


APPEAL FROM:         The District Court of the First Judicial District,
                     In and For the County of Lewis and Clark, Cause No. CDV 97-552,
                     Honorable Thomas C. Honzel, Presiding Judge

COUNSEL OF RECORD:

              For Appellant:

                     Erik B. Thueson, Thueson Law Office, Helena, Montana

                     Dennis Patrick Conner, Conner & Shannon, Great Falls, Montana

                     James T. Towe, Towe Law Office, Missoula, Montana

              For Respondent:

                     Randy Cox and Natasha Prinzing Jones, Boone & Karlberg,
                     Missoula, Montana

                     David Potter and Jennifer Eggers, Oppenheimer, Wolff & Donnelly,
                     Minneapolis, Minnesota


                                                      Submitted on Briefs: June 8, 2004

                                                                 Decided: September 6, 2005


Filed:

                     __________________________________________
                                       Clerk
Justice Jim Rice delivered the Opinion of the Court.

¶1     This case involves claims of negligent management resulting in discharge from

employment brought by Gary Winslow (Winslow) against Montana Rail Link, Inc. (MRL),

in the First Judicial District Court, Lewis and Clark County. The District Court initially

dismissed Winslow’s claim for lack of jurisdiction, which was reversed by this Court in

Winslow v. Montana Rail Link, Inc., 2000 MT 292, ¶ 27, 302 Mont. 289, ¶ 27, 16 P.3d 992,

¶ 27 (Winslow I). After remand, the case went to trial and the jury concluded that MRL had

acted negligently and awarded Winslow compensatory damages.                   The jury further

determined that punitive damages should be assessed, but specifically found that MRL had

not acted with malice regarding its termination of Winslow’s employment, an apparent

inconsistency. The District Court then ruled that, pursuant to § 27-1-221, MCA, a finding

of malice is a prerequisite for imposition of punitive damages, and dismissed the jury without

allowing deliberation on punitive damages. Winslow appeals from the rulings of the District

Court, but does not challenge the jury’s verdict on his negligence claim and the damages

awarded thereunder. He seeks only “a new trial limited to a determination of the amount of

punitive damages.” Additionally, Winslow asks this Court to grant attorney fees and

sanctions.

¶2     Given this posture of the case, we conclude it is unnecessary to address a number of

issues Winslow has raised on appeal, as they are directed to the trial and the unchallenged

verdict on Winslow’s negligence claim, including whether MRL: (1) made misrepresenta-

tions to the jury; (2) interjected collateral sources; (3) presented an unlawful defense that its

                                               2
compliance with the grievance procedure under the collective bargaining agreement absolved

it of liability; and whether the District Court: (4) deprived Winslow of his right to present

evidence that MRL had an ongoing hidden business plan designed to discourage the reporting

of work-related injuries; and (5) failed to instruct the jury that an award of interest could be

awarded pursuant to § 27-1-212, MCA.1

¶3     MRL cross-appeals from the District Court’s denial of its summary judgment and

Rule 50(b), M.R.Civ.P., motions. We affirm all issues.

¶4     The following issues are dispositive on appeal:

¶5     Did the District Court err in denying MRL’s summary judgment and Rule 50(b)

motions by incorrectly concluding that § 39-2-703, MCA, provides Winslow with a statutory

cause of action?

¶6     Did the District Court err in denying MRL’s motion for summary judgment and its

subsequent Rule 50(b) motion on the merits of Winslow’s negligent management claim?

¶7     Did the District Court err by not allowing the jury to deliberate on the amount of

punitive damages?




       1
        Within his extensive briefing, Winslow also offers a very brief request that the
Court strike the jury’s determination that he was contributorily negligent on the grounds
that the jury’s determination that punitive damages should be assessed makes
contributory negligence irrelevant, and that contributory negligence is not mentioned by
the mismanagement statute. We conclude that our resolution of the punitive damage
issue herein resolves this request and that contributory negligence was a proper
consideration herein. However, we reserve further judgment on these issues in some case
when they have been fully briefed.

                                               3
¶8     Did the District Court abuse its discretion in concluding that MRL properly responded

to discovery and should not be subject to sanctions?

                 FACTUAL AND PROCEDURAL BACKGROUND

¶9     Winslow, who is a member of the Brotherhood of Locomotive Engineers (BLE) labor

union, obtained employment at MRL as a switchman in 1988. The terms of Winslow’s

employment agreement were governed by a Collective Bargaining Agreement (CBA)

between BLE and MRL.          The CBA provided that Winslow, after completing the

probationary period, could not be dismissed absent just cause and without an impartial fact-

finding hearing, which included mandatory procedures concerning the assessment of

discipline and subsequent internal appeals. In addition, MRL required its employees to be

honest, and to report all information related to on-duty and off-duty injuries affecting job

performance.

¶10    On March 13, 1992, Winslow’s treating physician, Dr. Earl Book (Dr. Book),

diagnosed Winslow with a left femoral hernia. On March 24, 1992, Winslow filed an injury

report with MRL claiming that he “strained something,” but did not disclose that a hernia had

been diagnosed two weeks earlier. Winslow claimed that he did not think he had to inform

MRL about the hernia diagnosis because it did not interfere with his ability to work. Even

though Dr. Book recommended hernia-repair surgery, Winslow opted to not seek further

treatment at that time because the pain dissipated. However, between 1992 and 1995

Winslow experienced increasing pain in his groin area.



                                             4
¶11    On September 7, 1995, Winslow attempted to “throw” a railroad switch, and as a

result felt a hot, burning pain in his groin, inhibiting his ability to walk. Winslow filed an

MRL injury report describing the pain, and signed a written authorization allowing MRL to

obtain medical information from “any physician . . . who has examined or treated [Winslow]

in regard to the injury.” The following day, Dr. Book examined Winslow and concluded that

the groin pain was related to the hernia he had originally diagnosed in 1992. Upon the

advice of Dr. Book, Winslow decided to have hernia-repair surgery.

¶12    On September 8, 1995, Winslow informed his supervisor, Tim VanOrden

(VanOrden), that he had a hernia and was making arrangements to have it repaired. MRL’s

claims manager, Mark Bjorlie, commenced an investigation and obtained Winslow’s medical

records which disclosed that his hernia was first diagnosed in 1992. Although Winslow

would claim that he never represented to anyone that the hernia was caused by the throwing

of the switch on September 7, 1995, MRL asserted in later proceedings that Winslow led

VanOrden to believe that his hernia initially appeared on September 7, 1995, and that the

hernia-repair surgery was first recommended by Dr. Book the following day.

¶13    After Winslow’s hernia-repair surgery, he submitted his medical bills to MRL for

payment. In October Winslow was briefly re-hospitalized to be tested for possible blood

clots, which further increased medical costs. Thereafter, Winslow attempted to pay the

medical expenses through Blue Cross/Blue Shield (Blue Cross), which administers MRL’s

self-insured medical plan.



                                              5
¶14    Winslow returned to work in October 1995 and began to receive notices from Blue

Cross that indicated it was not paying Winslow’s medical bills. Winslow gave the notices

to VanOrden. MRL subsequently sent Winslow a written order requiring him to attend a

fact-finding hearing to address his “failure to provide factual information regarding [his]

injury.”

¶15    The MRL fact-finding hearing commenced on January 10, 1996, the purpose and

effect of which were contested at trial. Winslow attended, but was not represented by

counsel. At the hearing, VanOrden stated that Winslow led him to believe that the hernia

first appeared on September 7, 1995, and that surgery was first recommended at that time.

MRL noted that Winslow initially denied having knowledge of the hernia in 1992, but finally

admitted that he was aware of it when confronted with his medical records, and argued that

Winslow’s failure to report that he had a hernia three years earlier rendered his claim

fraudulent. Winslow countered by arguing that MRL presented no evidence at the hearing

that he had represented that his hernia was as a direct result of the switch incident, that he

had not been dishonest with VanOrden, and that his injury report was accurate.

¶16    On January 19, 1996, MRL notified Winslow that he was being terminated from

employment because Winslow had been repeatedly dishonest, and had failed to report all of

the facts to MRL surrounding his hernia in violation of MRL rules. MRL further concluded

that Winslow’s hernia was not work-related, and informed Winslow’s medical providers to

this effect.



                                              6
¶17    Following the termination of his employment, and after MRL denied Winslow’s

internal appeal, Winslow submitted his case to arbitration before the Special Board of

Adjustment (SBA) as provided in the CBA. The SBA met on December 20, 1996, affirmed

Winslow’s termination, and concluded that Winslow received a fair and impartial fact-

finding hearing.

¶18    On August 29, 1997, Winslow filed a complaint in the First Judicial District Court,

Lewis and Clark County, claiming that MRL “negligently mismanaged its investigation” and

that he was wrongfully discharged. Winslow argued that, pursuant to § 39-2-703(1), MCA,

MRL’s termination constituted “mismanagement and neglect.” Section 39-2-703(1), MCA,

provides in pertinent part:

       Every person or corporation operating a railway or railroad in this state is
       liable for all damages sustained by any employee of such person or
       corporation in consequence of the neglect of any other employee thereof or by
       the mismanagement of any other employee thereof and in consequence of the
       willful wrongs, whether of commission or omission, of any other employee
       thereof when such neglect, mismanagement, or wrongs are in any manner
       connected with the use and operation of any railway or railroad on or about
       which he is employed.

¶19    The District Court initially dismissed Winslow’s complaint for lack of jurisdiction on

MRL’s Rule 12(h), M.R.Civ.P., motion, concluding that Winslow’s claim “requires

interpretation of the CBA and is therefore preempted” by the Railroad Labor Act (RLA), 45

U.S.C. §§ 151-188. Winslow I, ¶ 26. However, this Court reversed, concluding that the

plain language of Winslow’s complaint properly invoked the mismanagement provisions of




                                             7
§ 39-2-703, MCA, made no reference to the CBA, and therefore was not preempted by the

RLA. Winslow I, ¶ 27.

¶20    After remand, the case proceeded to jury trial on Winslow’s claims that MRL was

liable for negligent mismanagement and retaliatory discharge. On June 11, 2003, the jury

returned a verdict concluding that each party was negligent, allocating 61.25 percent liability

to MRL, and 38.75 percent liability to Winslow. Applying this determination to the damage

award, the District Court entered a judgment against MRL in the amount of $384,328.43.

After the jurors were polled about the verdict, one of the jurors was excused to fulfill a

commitment he had explained during jury selection. The next day, the parties met in camera

to discuss the apparent inconsistency in the jury’s special verdict, on punitive damages–that

MRL had not acted with malice with respect to its termination of Winslow, but that punitive

damages should nonetheless be assessed. After taking arguments, the District Court

concluded that punitive damages could not be assessed under the verdict pursuant to § 27-1-

221, MCA, which requires a finding of actual malice or actual fraud. Consequently, the

District Court accepted the jury’s verdict and released the eleven remaining jurors.

¶21    Throughout the proceeding, Winslow asserted that MRL engaged in discovery abuses

which delayed and multiplied the proceedings and prevented him from receiving a fair and

speedy trial. However, the District Court declined to impose sanctions.

¶22    On July 7, 2003, Winslow filed a notice of appeal. On July 29, 2003, MRL filed a

notice of cross-appeal.

                               STANDARD OF REVIEW

                                              8
¶23    This Court reviews a district court’s ruling on summary judgment de novo. Wombold

v. Assocs. Fin. Servs. Co. of Mont. Inc., 2004 MT 397, ¶ 29, 325 Mont. 290, ¶ 29, 104 P.3d

1080, ¶ 29. Thus, we apply the same Rule 56, M.R.Civ.P., criteria as applied by the district

court. Peyatt v. Moore, 2004 MT 341, ¶ 13, 324 Mont. 249, ¶ 13, 102 P.3d 535, ¶ 13.

Summary judgment is proper only when no genuine issues of material fact exist and the

moving party is entitled to judgment as a matter of law. Watkins Trust v. Lacosta, 2004 MT

144, ¶ 16, 321 Mont. 432, ¶ 16, 92 P.3d 620, ¶ 16 (citing Rule 56(c), M.R.Civ.P.).

¶24    A judgment as a matter of law entered pursuant to Rule 50(b), M.R.Civ.P., may be

granted only when it appears, as a matter of law, that a party could not prevail upon any view

of the evidence. Massee v. Thompson, 2004 MT 121, ¶ 25, 321 Mont. 210, ¶ 25, 90 P.3d

394, ¶ 25. Motions for judgment as a matter of law are proper only when there is a complete

absence of evidence to warrant submission to a jury. Kneeland v. Luzenac Am. Inc., 1998

MT 136, ¶ 53, 289 Mont. 201, ¶ 53, 961 P.2d 725, ¶ 53.

¶25    Prejudice is never presumed on appeal, and a judgment will not be reversed merely

because the lower court erred. In order to reverse, it must affirmatively appear that the error

has affected substantial rights of the defendant regarding the merits of the case. State v.

DeTienne (1985), 218 Mont. 249, 257, 707 P.2d 534, 539.

¶26    This Court generally will defer to the decision of a trial court regarding sanctions for

failure to comply with discovery procedures because the trial court is in the best position to

know whether parties are disregarding the rights of opposing parties in the course of

litigation. Lewistown Propane Co., v. Moncur, 2002 MT 349, ¶ 22, 313 Mont. 368, ¶ 22, 61


                                              9
P.3d 780, ¶ 22. We review discretionary district court rulings for abuse of discretion.

Anderson v. Werner Enter., Inc., 1998 MT 333, ¶ 13, 292 Mont. 284, ¶ 13, 972 P.2d 806,

¶ 13. Moreover, the party assigning error to the trial court’s discovery rulings must show

prejudice. Anderson, ¶ 13.

                                        DISCUSSION

¶27      Did the District Court err in denying MRL’s summary judgment and Rule 50(b)

motions by incorrectly concluding that § 39-2-703, MCA, provides Winslow with a

statutory cause of action?

¶28      On cross-appeal, MRL argues that § 39-2-703, MCA, does not provide Winslow with

a statutory “mismanagement” cause of action. MRL explains that this Court concluded, upon

rehearing in Dillon v. Great N. Ry. (1909), 38 Mont. 485, 100 P. 960, that:

         Upon further consideration . . . we think there is not any room for doubt that
         in enacting sections 5251 and 5252, Rev. Codes [later codified as § 39-2-703,
         MCA], the Legislature did not intend to create any new right of action, but
         merely recognized a right of action existing at common law and sought to
         make that right available, notwithstanding the negligence of a fellow servant.

Dillon, 38 Mont. at 504, 100 P. at 966. MRL explains that the Legislature did not recognize,

let alone codify, a common-law action for mismanagement of employee terminations. MRL

argues that Winslow I did not precisely consider whether § 39-2-703(1), MCA, provides

plaintiffs with a statutory cause of action, but merely “assumed” that it did, and,

consequently, Winslow I, in contrast to Dillon, cannot be considered stare decisis on this

issue.




                                              10
¶29    We reasoned in Winslow I that § 39-2-703, MCA, “in very broad language,” provides

that railways are “‘liable for all damages sustained by any employee’ as a consequence of

the ‘mismanagement’ of any other employee when such mismanagement is ‘connected with

the use and operation’ of any railway.” Winslow I, ¶ 19 (citations omitted). We concluded

that § 39-2-703, MCA, is not limited to personal injuries caused by co-workers to the

exclusion of mismanagement in the handling of an employee termination. Winslow I, ¶¶ 19-

20. We explained that “[a]lthough personal injury resulting from the neglect of a co-worker

would be included within the ambit of the statute, so are damages which result from

mismanagement connected with the operation of the railroad.” Winslow I, ¶ 19.

¶30    When this Court, in deciding a case presented, states a principle or rule of law

necessary to the decision, such pronouncement becomes the law of the case and must be

adhered to throughout its subsequent progress, both in the trial court and upon subsequent

appeal. Marie Deonier v. Paul Revere Life Ins. Co., 2004 MT 297, ¶ 75, 323 Mont. 387,

¶ 75, 101 P.3d 742, ¶ 75. The issue of whether § 39-2-703, MCA, provides Winslow with

a statutory cause of action was sufficiently addressed in Winslow I to serve the purposes of

law of the case and will not be revisited here. Therefore, we conclude that the District Court

did not err in denying MRL’s summary judgment and Rule 50(b), M.R.Civ.P., motions based

upon the law of the case established in Winslow I.2


       2
         We further clarified the statutory interpretation of § 39-2-703, MCA, in Haux v.
Mont. Rail Link., Inc., 2004 MT 233, ¶ 14, 322 Mont. 456, ¶ 14, 97 P.3d 540, ¶ 14
(“Although MRL argues, quoting Dillon . . . that the ‘legislature did not intend to create
any new right of action, but merely recognized a right of action existing at common
law’. . . the language of the statutory section clearly provides for a right of action for

                                             11
¶31    Did the District Court err in denying MRL’s motion for summary judgment and

its subsequent Rule 50(b) motion on the merits of Winslow’s negligent management

claim?

¶32    Alternatively, MRL argues that the District Court erred when it denied its motion for

summary judgment and its subsequent Rule 50(b) motion for judgment as a matter of law on

Winslow’s negligent mismanagement claim. MRL explains that the holding in Winslow I

was based upon a motion to dismiss and was determined solely upon the allegations of the

pleadings. MRL therefore contends that the Winslow I Court did not substantively determine

whether Winslow’s claims were preempted by the RLA or the Employee Retirement Income

Security Act (ERISA). In light of the evidentiary record, which was not reviewed in Winslow

I, MRL contends that the issue of preemption must be reconsidered.

¶33    Regarding preemption under the RLA, MRL argues that Winslow’s claim of negligent

mismanagement is based directly on rights created by Winslow’s CBA and therefore

constitutes a “major dispute” as defined under the RLA, and therefore subject to the RLA’s

mandatory arbitral mechanism for settlement. MRL explains that a major dispute under the

RLA relates to the formation or modification of the contractual rights provided for by a CBA,

whereas minor disputes involve interpretation or application of agreements covering rates of

pay, rules, or working conditions. MRL argues that Winslow challenged the grievance

process and work rules thereby attempting to alter existing contractual rights which

constitutes a “major dispute.” MRL contends that Winslow presented his state-law claim of


mismanagement.” (emphasis omitted)).

                                             12
negligent mismanagement in a manner that necessarily required the court or jury to interpret

existing provisions of his CBA, and that this fact alone mandates preemption since claims

“founded directly on rights created by [CBAs]” are preempted by the RLA.3 Cramer v.

Consol. Freightways, Inc. (9th Cir. 2001), 255 F.3d 683, 689. Thus, in consideration of the

evidence adduced, MRL argues that this Court must reverse the District Court’s denial of

MRL’s motion for judgment as a matter of law because Winslow’s negligent mismanagement

claim is preempted by the RLA.

¶34    Winslow responds that the RLA does not preempt his negligent mismanagement claim

because the law of the case doctrine applies per Winslow I, and therefore the issue may not

be re-litigated. Winslow also explains that other jurisdictions have recognized state law

claims that are not preempted by the RLA. Moreover, Winslow argues that he continually

objected to the relevancy and admissibility of evidence of the CBA’s grievance process and

decision that MRL offered, and that he therefore had a right to attack the validity and fairness

of the grievance process, the decision against Winslow arising therefrom, and whether MRL

had properly complied with the process.         Consequently, Winslow asserts that MRL

misrepresents that the CBA’s presence in the case was due solely to Winslow’s own claims.




       3
         MRL explains that Winslow made numerous claims founded upon the terms of
the CBA including: (1) that MRL acted unreasonably by failing to follow CBA
procedures; (2) that MRL failed to provide Winslow rights that he was entitled to under
the CBA; (3) that the arbitration process created in the CBA did not adequately protect
Winslow during MRL’s fact-finding process; and (4) that the termination process
established in the CBA, was unreasonable.

                                              13
¶35    The United States Supreme Court has held that a state claim is independent of a CBA

for preemption purposes so long as the state claim can be resolved without interpreting the

CBA itself. Lingle v. Norge Div. of Magic Chef (1988), 486 U.S. 399, 410, 108 S.Ct. 1877,

1883, 100 L.Ed.2d 410, 421. In Hawaiian Airlines, Inc. v. Norris (1994), 512 U.S. 246, 257,

114 S.Ct. 2239, 2249, 129 L.Ed.2d 203, 214, the United States Supreme Court explained that

“substantive protections provided by state law, independent of whatever labor agreement

might govern, are not pre-empted under the RLA.” See also Missouri Pac. R. Co. v.

Norwood (1931), 283 U.S. 249, 51 S.Ct. 458, 75 L.Ed. 1010. The United States Supreme

Court also held in Terminal R.R. Assn. of St. Louis v. Trainmen (1943), 318 U.S. 1, 6-7, 63

S.Ct. 420, 423, 87 L.Ed. 571, 578, that “the enactment by Congress of the [RLA] was not

a preemption of the field of regulating working conditions themselves . . . .” The United

States Supreme Court further limited the scope of RLA preemption in Andrews v. Louisville

& Nashville R. Co. (1972), 406 U.S. 320, 324, 92 S.Ct. 1562, 1565, 32 L.Ed.2d 95, 97, when

it held that a state law claim of wrongful termination was preempted, not because the RLA

broadly preempts state law claims based on discharge or discipline, but because the

employee’s claim was firmly rooted in a breach of the CBA itself.

¶36    Winslow has consistently argued that his theory did not involve the CBA, but instead

pertained to allegations that MRL used a false pretext to fire him in order to further a scheme

designed to intimidate railroad workers so that they would not file injury reports. After

review of the record, we conclude that Winslow’s claims are not “firmly rooted” in a breach

of the CBA itself, but instead are premised upon the provisions of § 39-2-703, MCA, which


                                              14
is a state law claim. See Winslow I, ¶ 27. Thus, we conclude that the District Court properly

denied MRL’s motion for summary judgment and its subsequent Rule 50(b), M.R.Civ.P.,

motion as to RLA preemption.

¶37    As to ERISA, MRL argues that Winslow’s state law claims about improper handling

of medical benefits and negligent management of employee benefit plans are preempted by

ERISA, which is a “comprehensive statute designed to promote the interests of employees

and their beneficiaries in employee benefits plans.” Shaw v. Delta Air Lines, Inc. (1983),

463 U.S. 85, 90, 103 S.Ct. 2890, 2896, 77 L.Ed.2d 490, 497. Winslow responds that MRL

did not properly raise its ERISA preemption argument on appeal and waived it as an

affirmative defense under Rule 8(c), M.R.Civ.P.

¶38    Other jurisdictions have held that ERISA preemption in benefits-due actions “must

be pleaded timely as an affirmative defense.” Wolf v. Reliance Std. Life Ins. Co. (1st Cir.

1995), 71 F.3d 444, 449-50. This Court has previously held that “an affirmative defense is

waived if not set forth affirmatively.” Nitzel v. Wickman (1997), 283 Mont. 284, 312, 940

P.2d 451, 456. Moreover, “an affirmative defense . . . is waived if it is not raised in the

answer to a claim.” Marias Healthcare Services, Inc. v. Turenne, 2001 MT 127, ¶ 9, 305

Mont. 419, ¶ 9, 28 P.3d 491, ¶ 9. Because MRL failed to raise its ERISA argument until

years after the commencement of the litigation, we conclude the District Court properly

denied MRL’s ERISA defense on the basis of waiver.

¶39    Did the District Court err in disallowing the jury to deliberate on the amount of

punitive damages?

                                             15
¶40    The jury returned a verdict regarding punitive damages which determined that MRL

did not act with malice with respect to its termination of Winslow, but that punitive damages

should be assessed. Immediately after the verdict was entered, one of the twelve jurors was

excused by the District Court, precluding further deliberations unless undertaken by “less

than twelve” jurors pursuant to § 3-15-106, MCA, which permits such deliberations only

upon agreement between the parties and approval of the court. Subsequent to the dismissal

of the juror, the following conversation occurred in camera:

       THE COURT: The other issue is that I did release [the juror]. [The juror] told
       us when he started this three weeks ago that he had to be out of town . . . on
       the 12th and I believe I said at that time we were going to be done by the 12th.
       We are still not done, although it may be that the jury will not be asked to do
       anything tomorrow. That remains to be seen as to what happens. But in any
       event, I did excuse him because he said he would not be available from the
       12th on. I understand that could possibly cause a problem, but that’s what I
       did. Go ahead, Mr. Conner, you wanted to make a record of that–Mr.
       Thueson.

       MR. THUESON: No, Your Honor, we’re okay with it.4

       MR. CONNER: Just what is the defense position though? Did they consent to
       this?

       MR. POTTER: We’re going to take the Court’s invitation and appear
       tomorrow morning and put our position on the –

       MR. CONNER: Are they going to consent?

       MR. COX: We don’t have to state that right now and we’re not going to.

       ....


       4
        Mr. Thueson and Mr. Conner are counsel for Winslow. Mr. Cox and Mr. Potter
are counsel for MRL.

                                             16
       MR. POTTER: We were not consulted, and we don’t take a position. We’ll
       let you know in the morning.

       THE COURT: Okay.

Although Winslow’s counsel did not object to the dismissal of the juror, MRL took the

position the following morning that it would not consent to a jury of eleven members and

noted that it was not consulted in the matter prior to the juror’s dismissal.

¶41    Winslow argues that MRL used “offensive trial tactics” by sitting on its hands when

the District Court informed the parties that it had dismissed one of the twelve jurors and

objecting to the dismissal only after the juror was no longer available, and therefore, the loss

of a juror should not bar his claim to a new trial on punitive damages. MRL contends that

it lost the benefit of a full jury through no fault of its own, and that an eleven-person jury

could not validly consider punitive damages because the requirements of § 3-15-106(1),

MCA, including MRL’s consent in open court to deliberation by less than twelve jurors, had

not been established.5

¶42    On appeal, Winslow does not take issue with the District Court’s dismissal of the

juror for the juror’s pre-announced commitment. Although that position is consistent with

his comments at trial, it would appear that Winslow had no timely opportunity to object

because he learned of the dismissal only after it had occurred. That notwithstanding, we

       5
         “A trial jury consists of 12 persons or, with the approval of the court, it may
consist of any number less than 12 upon which the parties agree in open court.” Section
3-15-106(1), MCA.


                                              17
cannot accept Winslow’s argument that MRL somehow waived its objection to the juror’s

dismissal by accepting the District Court’s invitation to place its position on the record the

next morning, when it objected. Under these circumstances, we cannot conclude that MRL

either consented or acquiesced to the juror’s dismissal.

¶43    Consequently, given the District Court’s unchallenged dismissal of the juror, however

troubling, the only way the trial could have continued was with less than twelve jurors

pursuant to § 3-15-106(1), MCA. That provision requires the parties to agree in open court

to deliberation by a lesser number of jurors. Such an agreement did not exist here, as MRL

did not consent in open court to a jury of less than twelve persons.

¶44    We must conclude that the District Court did not err by not allowing the jury to

deliberate regarding punitive damages. Because, for this reason, deliberations on punitive

damages could not have occurred in any event, we need not reach the District Court’s

interpretation of the verdict pursuant to § 27-1-221, MCA, or the other issues Winslow raises

relative to punitive damages, including challenges to the punitive damage instructions, the

verdict form and the jury’s determination of contributory negligence by Winslow.

¶45    Did the District Court abuse its discretion in concluding that MRL properly

responded to discovery and should not be subject to sanctions?

¶46    Winslow argues that MRL persistently engaged in discovery abuses that delayed the

proceedings, prevented a fair trial, and precluded the admission of relevant evidence.

Winslow contends that MRL should be sanctioned for obstructing witnesses, concealing

information, and for improper use of boilerplate objections. MRL responds by arguing that

                                             18
the District Court, after thorough review, concluded that MRL properly responded to

discovery, did not obstruct witnesses, did not conceal information, and did not improperly

state objections.

¶47    This Court has previously held that when litigants and their attorneys abuse the

Montana Rules of Civil Procedure, they are subject to sanctions. Bulen v. Navajo Ref. Co.,

Inc., 2000 MT 222, ¶ 19, 301 Mont. 195, ¶ 19, 9 P.3d 607, ¶ 19. Furthermore, when litigants

use willful delay, respond evasively, or disregard court directions as part and parcel of their

trial strategy, they must suffer the consequences. Bulen, ¶ 19.

¶48    The lengthy litigation which marked this matter involved numerous unique questions

of law leading to the first appeal in Winslow I, which addressed the legal validity of

Winslow’s claims after they had been dismissed by the District Court. On remand, the

prosecution of Winslow’s claims involved difficult issues of proof. Plaintiff’s counsel

skillfully established Winslow’s claims in the face of resolute advocacy by defense counsel.

It is in the context of this long and difficult litigation that the sanctions issues arise.

¶49    We review a district court’s sanction orders under the deferential abuse of discretion

standard “because the trial court is in the best position to know whether the parties are

disregarding the rights of opposing parties in the course of litigation and which sanctions for

such conduct are most appropriate.” Lewistown Propane, ¶ 22 (quoting McKenzie v.

Scheeler (1997), 285 Mont. 500, 506, 949 P.2d 1168, 1172). Even so, we have reviewed

each of the numerous motions to compel, for protective orders, and for sanctions and the

orders issued by the District Court in response thereto. After that careful review, and in the

                                               19
context of this complex and groundbreaking litigation, we cannot conclude that the District

Court abused its discretion, nor that Winslow has established that the trial court’s discovery

rulings caused “prejudice” or “materially affected [his] substantial rights.” Anderson, ¶ 13.

We therefore affirm the District Court on these issues.

¶50    Affirmed.


                                                   /S/ JIM RICE


We concur:


/S/ KARLA M. GRAY
/S/ W. WILLIAM LEAPHART




Justice Patricia O. Cotter concurs.

¶51    I concur in the ultimate result reached by the Court, but I disagree with the Court’s

analysis of the issue of the dismissed juror and the denial of further deliberations on punitive

damages.

¶52    At ¶ 42, the Court correctly notes that Winslow had no opportunity to object to the

dismissal of the juror because he did not learn of it until after it had occurred. The Court,

                                              20
however, declines to conclude that the District Court erred by dismissing the juror sua

sponte, because Winslow failed to specify on appeal that such action was error. So, the

Court calls the court’s dismissal of the juror “troubling,” and leaves it at that. I do not share

the Court’s reluctance to address whether error occurred, as I think an important component

of our job is to identify error when we see it, so that the same error might be avoided in the

future.

¶53       I would conclude that, in dismissing the juror without the advance consent of the

parties, the District Court erred. By doing so, the court handed the party with the most to

lose--in this case, MRL--a fait accompli. With the juror already excused and gone, all MRL

had to do to escape consideration of the punitive damages conundrum was refuse to agree

to a jury of eleven, which it did. This was both unfair to Winslow and inconsonant with the

intent of § 3-15-106, MCA, which contemplates both approval of the court and agreement

of the parties before a jury of fewer than twelve may proceed. I would hold that it is error

for a district court to excuse a juror while questions remain as to the meaning and intent of

a jury verdict, without first giving the parties a meaningful opportunity to consent or object.

¶54       However, though I believe the District Court erred, I would nonetheless conclude that

we can give Winslow no affirmative relief on appeal because Winslow does not seek or

appear willing to accept a complete retrial on both liability and punitive damages. Winslow

makes it clear that he wants to retain the benefits of the compensatory verdict (albeit

unreduced for comparative fault), with remand for trial on punitive damages only. The

statutes allowing for an award of punitive damages do not contemplate such relief.

                                               21
¶55    Section 27-1-220(1), MCA, provides, in pertinent part, that “a judge or jury may

award, in addition to compensatory damages, punitive damages for the sake of example and

for the purpose of punishing a defendant.” (Emphasis added.) In addition, § 27-1-221(6),

MCA, provides that liability for punitive damages must be determined by the trier of fact.

Thus, a fact-finder cannot assess punitive damages until it has first decided to give

compensatory damages, and has decided that the proof supporting those damages also

justifies, by clear and convincing evidence, an award of punitive damages. A punitive case

cannot be heard in a vacuum, nor can one fact-finder assess compensatory damages and then

leave to a wholly different fact-finder the question of whether the plaintiff’s proof from the

first case entitles him to punitive damages. The case cannot be split. Because Winslow has

chosen to retain the benefits of the compensatory award--a logical decision in light of the

difficulty of the case--I would conclude we cannot remand for trial on punitive damages

alone. Therefore, I concur in the result reached by the Court.



                                           /S/ PATRICIA O. COTTER

Justice James C. Nelson joins in the concurrence of Justice Patricia O. Cotter.

                                            /S/ JAMES C. NELSON




                                             22
23
