Folsom V.Whitefish Police MPEA
2017 MT 204
| Mont. | 2017Background
- Folsom, a Whitefish police officer, alleged the Montana Public Employees’ Association (MPEA) breached its duty of fair representation (DFR) and committed common-law fraud by mishandling and misrepresenting actions on his CBA grievance after the City moved to terminate him.
- MPEA field rep initiated Steps 1–2 of the grievance; Step 3 was rejected by the City as untimely; MPEA counsel Picotte later handled the matter, made assurances he would pursue litigation, but did not act.
- Folsom sued the City (wrongful discharge) and MPEA (DFR and fraud); discovery requests produced deemed admissions against MPEA after counsel failed to respond.
- District Court granted summary judgment for Folsom on DFR and fraud (liability), held an evidentiary hearing on damages, awarded $47,550 in attorney fees as compensatory damages and $50,000 punitive damages for fraud, and dismissed the City after Folsom settled with the City for no compensation.
- On appeal, Montana Supreme Court reversed in part: it held the fraud claim was subsumed in the DFR claim, vacated the attorney-fee and punitive awards, and remanded for further proceedings, and held the trial court abused discretion by denying MPEA post-judgment relief based on counsel’s gross neglect.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Is common-law fraud independently cognizable vs. DFR? | Folsom: fraud based on separate misrepresentation (Picotte’s October 25, 2013 statement) is distinct from MPEA’s earlier perfunctory handling. | MPEA: fraud claim is not independent; it is subsumed by the DFR because both arise from the same duty and conduct. | Held: Fraud claim is subsumed by DFR on this record and not independently cognizable. |
| 2. Did insufficient proof of causation preclude lost-wage recovery? | Folsom: he met burden or MPEA’s pleadings judicially admitted employer had no cause. | MPEA: plaintiff must prove employer breached CBA; union breach alone does not prove lost wages causation. | Held: Court correctly required proof that City breached CBA; Folsom failed to meet causation burden. |
| 3. Were attorney fees properly awarded as compensatory damages? | Folsom: fees are a compensable element because union’s breach forced him to hire counsel. | MPEA: American Rule bars fees absent statute/contract or recognized exception (citing Jacobsen/Petaja). | Held: Award of fees to prosecute the DFR claim was erroneous; fees are recoverable only if they were incurred enforcing rights against the employer and causation is proved. |
| 4. Could punitive damages stand without compensatory predicate and against a union? | Folsom: punitive damages permissible (district court treated nominal/fee award as compensatory). | MPEA: punitive damages require a compensatory predicate and may be barred under federal precedent for DFR claims. | Held: Punitive damages require a compensatory damages predicate under §27-1-220(1) MCA; the punitive award was erroneous. Court did not decide whether Foust’s per se federal bar applies to Montana DFR; special concurrence would reject Foust. |
Key Cases Cited
- Vaca v. Sipes, 386 U.S. 171 (explains union duty of fair representation and that mere negligence is insufficient for breach)
- Int’l Bhd. of Elec. Workers v. Foust, 442 U.S. 42 (1979) (U.S. Supreme Court rule limiting punitive damages on federal DFR claims)
- Jacobsen v. Allstate Ins. Co., 351 Mont. 464 (Mont. 2009) (reaffirming the American Rule barring attorney-fee recovery absent statute/contract or narrow exception)
- Petaja v. Montana Pub. Employees’ Ass’n, 383 Mont. 516 (Mont. 2016) (Montana precedent applying Jacobsen to deny fees as damages on DFR absent recognized exception)
- Akins v. U.S.W., Local 187, 237 P.3d 744 (N.M. 2010) (New Mexico Supreme Court refused to adopt Foust’s per se bar and allowed punitive damages on state DFR claim; persuasive comparative analysis)