Employer Pays For Ignoring Montana Wrongful Discharge Lawsuit

As busy professionals, HR Managers have hundreds of pages of paper that cross their desk each week.  A recent Montana Supreme Court Case highlights the importance of paying attention when served with a Montana Wrongful Discharge lawsuit and immediately providing a copy of the lawsuit to your Montana labor and employment attorneys.  In Frye v. Roseburg Forest Products Company, 2020 MT 10, the Court refused to set aside a default judgment when Roseburg’s HR manager failed to timely respond to legal papers.

Facts

Jerome Frye worked for Roseburg Forest Products (Roseberg) in Missoula until November of 2018 when Roseburg terminated his employment.  Roseburg is a large, multi-state corporation with its headquarters in Oregon. On December 21, 2018, Frye filed a complaint against Roseburg in Montana’s Fourth Judicial District Court in Missoula County, alleging violations of Montana’s Wrongful Discharge from Employment Act.  Frye served Roseburg through its Registered Agent, Minta Johnson, at the physical address of Roseburg’s Missoula office on January 4, 2019.  The summons directed Roseburg “to file [its] answer and serve a copy thereof on Plaintiff’s attorney within 21 days after service of the summons” and advised, “in case [Roseburg’s] failure to appear or answer, judgment will be taken against [Roseburg] by default, for the relief demanded in the complaint.”

Johnson is a controller at Roseburg’s Missoula facility.  She is not an attorney.  Johnson sent the summons and complaint to John Mikkelson, who is the Human Resources Manager at the Missoula office. Mikkelson is also not an attorney.  Upon receiving the complaint and summons, Mikkelson opened an investigation into Frye’s allegations, reviewed Frye’s work history with Roseburg, and interviewed relevant parties at the Missoula office.  Mikkelson determined that Roseburg had very good defenses to Frye’s claims; however, Roseburg did not file an appearance or answer the complaint with the District Court.

The District Court entered default against Roseburg on February 8, 2019.  Frye moved for default judgment on March 7, 2019.  The court set a hearing for March 21, 2019 and sent courtesy notice of the hearing to Roseburg’s physical address. Roseburg did not appear at the hearing.  The court entered default judgment against Roseburg in the amount of $237,659.60.  Frye mailed a notice of entry of judgment to Roseburg on April 12, 2019.  Counsel for Roseburg entered a notice of appearance and moved to set aside the default judgment on April 19, 2019.  The court denied the motion to set aside, and Roseburg appealed the case to the Montana Supreme Court.

No Excusable Neglect To Set Aside the Default

On appeal to the Montana Supreme Court, Roseburg argued that its neglect in answering the complaint was excusable under the circumstances and the default judgment should be set aside.  Specifically, it argued that Roseburg did not seriously disregard the judicial process because, although Johnson and Mikkelson failed to appreciate the procedural requirement of filing a response, they reacted to the allegations in earnest by opening an internal investigation into Frye’s employment with the company.  Roseburg also maintained that its neglect was excusable because Frye failed to make a reasonable attempt to reach out to it before obtaining a default judgment.

With respect to Roseburg’s argument that Johnson and Mikkelson failed to appreciate the procedural requirement of filing a response, the Court found that both Johnson and Mikkelson were aware of the contents of the summons.  The plain language of the summons put both Johnson and Mikkelson – and through them Roseburg – on notice an answer to the allegations were due to the Court within 21 day of receipt of the summons and warned that judgment would be entered if they failed to respond.  The Court held that “when a party, aware of the contents of the document served, ignores the command of the summons, there is no excusable neglect.”  The Court went on to say, “excusable neglect requires some justification for an error beyond mere carelessness or ignorance of the law on part of the litigant or his attorney.”

Regarding Roseburg’s argument that the internal investigation shows that Roseburg was not ignoring the complaint, the Court held that Roseburg still neglected to follow the legal process and that litigants have an affirmative obligation to monitor litigation.  Failure to do so is not excusable neglect that would justify setting aside a default judgment.

The Court also rejected Roseburg’s argument that Frye and his counsel failed to notify them of the default.  The Court stated that Frye was under no obligation to provide Roseburg with any further notice after it served the complaint and summons on its registered agent. Concluding there was no excusable neglect, the Court upheld the default judgment in the amount of $237,659.60.

Bottom Line

This case serves as a stark reminder of what can happen when an employer fails to pay attention to Montana Wrongful Discharge lawsuits.  When an employer is served with a summons and complaint, they should immediately contact their employment counsel and discuss the matter with them.  Failure to do so can result in a significant judgment against the employer without the opportunity to present a defense.  Should you have any questions, please contact Jason Ritchie, at Ritchie Manning Kautz PLLP, Billings, Montana via email at jritchie@rmkfirm.com or telephone at (406) 601-1400.