NO. 91-492 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1992 

JAMES D. KING, 

Plaintiff and Appellant, 

SPECIAL RESOURCE MANAGEMENT, INC., 

ENTECH, INC., and THE MONTANA 

POWER COMPANY, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Second Judicial District, 

In and for the County of Butte/Silver Bow, 

The Honorable Ted L. Mizner, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Stephen C. Pohl, Bozeman, Montana (argued); Charles 

P. Bowen, Bozeman, Montana 

For Respondent: 

Patrick T. Fleming (argued), Robert T. OILeary, 

Montana Power Company, Butte, Montana 

Submitted: September 4, 1992 
Justice Fred J. Weber delivered the Opinion of the Court. 

Plaintiff, James D, King, brought an action for wrongful 

discharge from employment based on the implied covenant of good 

faith and fair dealing against defendants Special Resource 

Management, Inc., Entech, Inc., and Montana Power Company in the 

Second Judicial District Court, Silver Bow County, Montana. The 

case was tried before a jury. After the close of the evidence, the 

District Court dismissedthe action against defendants Entech, Inc. 

and Montana Power Company. The jury found in favor of defendant 

Special Resource Management, Inc. Plaintiff appeals. We reverse 

the jury verdict in favor of Special Resource Management, Inc. and 

affirm the judgments in favor of Montana Power Company and Entech, 

Inc. 

The issues are restated as follows: 

1. Did the District Court conunit reversible error by granting 

eight peremptory challenges to the defendants Montana Power Company 

and its two subsidiary corporations based on a diversity of 

interests between defendants? 

2. Did the District Court commit reversible error by granting 

defendants1 motion in limine prohibiting some expert testimony, and 

by refusing to allow plaintiff's personnel expert to present 

opinion testimony without further foundation? 

3. Is King entitled to a new trial against Entech, Inc. and 

Montana Power Company? 

James D. King (King) initially began working for Montana Power 

Company (MPC) in June of 1980 as a Cost and Schedule Engineer for 

1 
the Colstrip 3 and 4 projects, and later became a Cost and Schedule 

Supervisor. Prior to his employment with MPC, Mr. ~ing worked as 

a Construction Accountant on a large power plant construction 

project in Michigan, a position which required him to perform 

proj ect-related accounting functions. When the Colstrip project 

neared completion, Mr. King transferred to Special Resource 

Management, Inc. (SRM) as a supervisor of ~ccounting and 

Administration, He worked in that capacity from March 31, 1986, 

until his termination effective July 17, 1987, as part of a 

reduction in force at SRM. Mr. King's claim relating to that 

termination arose prior to the enactment of the Wrongful Discharge 

From Employment Act and, therefore, proceeded as a claim for breach 

of the implied covenant of good faith and fair dealing. 

SRM is a wholly-owned subsidiary of Entech, Inc., which is a 

wholly-owned subsidiary of the Montana Power Company (MPC). Over 

Mr. King's objection, the District Court granted eight peremptory 

challenges to these three defendants, based on a diversity of 

interests between SRM and the other two defendants, MPC and Entech. 

During the trial, the District Court directed verdicts for MPC 

and Entech. The jury found that defendant SRM did not breach the 

implied covenant of good faith and fair dealing. Mr. King moved 

for a new trial after the court entered judgment in favor of all 

defendants. The District Court denied this motion. King appeals 

the judgment entered by the District Court against all three 

defendants. Of the three defendants, only SRM filed a respondent's 

brief. After King noted this in his reply brief, MPC and Entech 
filed a supplemental brief claiming that King had no legal basis 

for asserting a right to a new trial against them. 

Did the District Court commit reversible error by granting 

eight peremptory challenges to the defendants Montana Power Company 

and its two subsidiary corporations based on a diversity of 

interests? 

Mr. King contends that the three co-defendants should not have 

been allowed more than four peremptory challenges unless they could 

demonstrate lvhostilityll between themselves. He argues that the 

interests of MPC and Entech were not hostile to those of SRM and 

that the District Court incorrectly based the decision to grant 

additional peremptory challenges on a determination of I1diversityl1 

rather than nhostility.n King further contends that this 

constitutes reversible error and, therefore, a new trial must be 

granted. The defendants contend that there was indeed hostility 

between them and that the District Court correctly allowed them 

eight peremptory challenges. Alternatively, SRM argues that even 

if the defendants were not hostile, Montana law requires King to 

demonstrate prejudice in order to procure a new trial and King 

cannot show that he was prejudiced. We will first address the 

question of prejudice. 

The side with the greater number of peremptory challenges 

clearly has a tactical advantage created by its ability to 

eliminate potentially unfavorable jurors without cause. Section 

25-7-224(1), MCA, provides that I1[e]ach party is entitled to four 
peremptory challenges . . . ." The words "each party" have been 

interpreted to mean "each side," unless the co-defendants are 

hostile to one another. Leary v. Kelly Pipe Co. (1976), 169 Mont. 

511, 515, 549 P.2d 813, 816. In Leary, this Court stated that a 

party who claims that he was prejudiced by a grant of extra 

peremptory challenges to his opponents who in fact are not hostile 

must also show that he was prejudiced by that action. Leary, 549 

P.2d at 816. This Court adopted a three-part test for prejudice in 

such circumstances: (1) the party must have exhausted his 

peremptory challenges, (2) he must have suffered material injury 

from that action by the court, and (3) as a result of that action, 

one or more objectionable jurors sat on the case. Leary, 549 P.2d 

at 816. 

Later, in Hunsaker v. Bozeman Deaconess Found. (1978), 179 

Mont. 305, 588 P.2d 493, we discussed the difficulty of proving 

prejudice when our attention is focused on juror conduct. Because 

difficulties encountered during appellate review had become 

magnified by the usual procedures used by most trial courts at the 

time we decided Hunsaker, we offered therein our suggestions for 

procedural changes which would enable the trial courts to make 

informed decisions based on thorough briefings by the parties, 

thereby making it possible to review the accuracy of the ruling & 

the time it was made. We stated: 

The District Courts should seriously consider the 

use of the pretrial conference as the best procedure to 

be used in resolving questions such as the number of 

peremptory challenges to be allowed each side. If for 

some rare reason the District Court holds no pretrial 

conference, the question of peremptory challenges should 
be raised by appropriate written motion filed before the 

commencement of jury selection, and it should set forth 

all facts and references tending to support his claim of 

hostility. In any case, the opposing party or parties 

should be given adequate time to respond to the claims of 

hostility. 

The trial court should, as a bare minimum, rule on 

the peremptory challenge issue before the questioning of 

jurors begins. To afford a basis for review, it should 

expressly set forth in the record the reasons for its 

ruling and the facts on which it relies in making its 

decision. 

Hunsaker, 588 P.2d at 501. 

This procedure eliminates the need for us to review the entire 

record using a hindsight approach to determine whether the parties 

were in fact "hostile" during the course of the trial. Thus, our 

review excludes materials beyond the point at which the ruling was 

made, including proof of actual prejudice, and we examine only the 

information available to the district court prior to its ruling. 

Although we encouraged district courts to use these procedures 

in Hunsaker, the record therein did not include sufficient 

information to allow this Court to review the basis and rationale 

for the district court's ruling; therefore, we decided that case 

using the Learv three-prong test. Hunsaker, 588 P.2d at 500. This 

Court's decisions after Hunsaker have applied the Learv test for 

prejudice only where the record was insufficient for review. See, 

e.q., Gee v. Egbert (1984), 209 Mont. 1, 679 P.2d 1194; and Adams 

v. Cheney (1983), 203 Mont. 187, 661 P.2d 434. When the District 

Court followed the recommended pretrial procedures or the record 

was otherwise adequate to determine whether the District Court 

properly considered appropriate factors, we have focused our review 

on pretrial information that was available at the time of the 
court's ruling on the number of peremptory challenges. See 

Williams v. Rigler (1988), 234 Mont. 161, 761 P.2d 833: and Lauman 

v. Lee (1981), 192 Mont. 84, 626 P.2d 830. 

The Learv test requires adversely affected parties to show 

they were actually prejudiced by a grant of additional peremptory 

challenges to the opposing party. This places an almost impossible 

burden on the objecting party. Moreover, when we focus our review 

on the actual conduct of a juror, we ignore the correctness of the 

trial court's decision and that decision becomes virtually 

unreviewable. Hunsaker, 588 P.2d at 499. As noted by Justice Shea 

in that opinion, "our attention is focused on the conduct of the 

jury, which in most cases we are in no position to determine." 

It is the policy of the law to look with disfavor on any 

attempt to invade the jury's internal decisionmaking processes in 

order to impeach verdicts, except in rare circumstances. Blades v. 

DaFoe (Colo. 1985), 704 P.2d 317, 322 (citing Kentucky Farm Bureau 

Mut. Ins. Co. v. Cook (Ky. 1979), 590 S.W.2d 875). In Kentucky 

Farm Bureau, the court stated: 

It may be that peremptory challenges should be 

abolished in civil cases and only challenges for cause 

allowed. We are informed this is the present English 

practice. As long as they are retained as part of the 

trial process, however, we believe that their proper 

allocation between litigants is a substantial right which 

so pervades the process that its erroneous application 

requires reversal as a matter of law if the issue is 

properly preserved by the adversely affected litigant. 

Kentuckv Farm Bureau Mut. Ins., 590 S. W. 2d at 877. See also, 

Thompson v. Presbyterian Hosp., Inc. (Okla. 1982), 652 P.2d 260 

(grant of additional peremptory challenges in absence of "serious 
disputevf is prejudicial as a matter of law). While these 

jurisdictions are by no means the only ones which find prejudice as 

a matter of law fox improper allocation of peremptory challenges, 

some courts require that actual prejudice be shown before a new 

trial is granted. See, emu., Electric Serv. Co. of Duluth v. 

Lakehead Elec. Co, (Minn. 1971), 189 N.W.2d 489. 

If we require a showing of prejudice as in Learv, we cannot 

evaluate the effect of an improper grant of peremptory challenges 

without invading the internal processes of a jury. We also should 

not disregard the advantages bestowed upon one side by having 

additional peremptory challenges granted to them. We previously 

modified Lear~ to the extent that prejudice need not be 

demonstrated when a trial court follows the guidelines set forth in 

Hunsaker. See Williams, 761 P.2d 833. We now expressly overrule 

Learv v. Kellv Pipe Co. to the extent it requires a showing of 

prejudice to reverse a jury verdict for an incorrect grant of 

peremptory challenges to one side. 

Having concluded that Learv is an improper standard, we now 

restate the rule to be applied in the future: Additional 

peremptory challenges are granted to multiple parties on one side 

only if they are hostile to one another. The trial court 

determines hostility prior to the beginning of voir dire and bases 

its decision only on the facts presented to it before its ruling. 

Whether or not the pretrial procedures were followed prior to the 

determinatian of hostility, if an appellate review determines that 

peremptory challenges were improperly granted, prejudice is 
presumed as a matter of law. 

The parties seeking additional peremptory challenges must 

request them prior to trial. In the rare instance when the 

District Court holds no pretrial conference, the question of 

peremptory challenges should be raised by appropriate written 

motion filed prior to voir dire, setting forth all facts and 

references tending to support its claim of hostility. The trial 

court should rule on the peremptory challenge issue before voir 

dire begins. If a pretrial order is used, the District Court is 

required to include its decision on the number of peremptory 

challenges in the pretrial order. See Rule 5(c), Unif. Dist. Court 

Rules. To afford a basis for review, the trial court should 

expressly set forth in the record the reasons for its ruling and 

the facts on which it relied in making its decision. 

The district courts have no discretion in granting additional 

peremptory challenges. Multiple parties on one side are either 

hostile or they are not hostile. A trial court correctly grants 

additional peremptory challenges to one side only if there are 

multiple defendants or plaintiffs who are "hostile" to one another. 

It is clear that we must look to the factual record to determine 

whether there is a stated rationale for the District court's 

decision and a sound basis for the grant or refusal of additional 

peremptory challenges. 

Our standard of review for a district court's conclusions of 

law is whether they correctly apply the proper law. Steer, Inc. v. 

Dept. of Revenue (1990), 245 Mont. 470, 803 P.2d 601. The record 
in this case indicates that the District Court heard arguments from 

both sides and reviewed the law before ruling on the matter prior 

to jury questioning. The transcript provides: 

THE COURT: . - . In the meantime, the Court has had a 

chance to look at some of the law with regard to the 

preemptory [sic] challenges, and I'm not sure that the 

record is complete. I'd like to make a complete record, 

and the plaintiff's Counsel argue their position again. 

The Court has looked at the Hunsaker case, and also 

the Adams vs. Cheney case, and I would like to follow the 

guidelines of those cases if we can. . . . 

The Court has considered the various positions of 

the parties and it's a difficult case when you don't know 

what exactly the proof is going to be; but the Court 

thinks that there is a diversity of interest between 

Montana Power and Entech as opposed to SRM, and the issue 

was raised I believe in the motion for summary judgment 

and the facts in support in that motion. The Court 

denied the motion, but found that there was [sic] genuine 

issues in that case as to the motion for summary 

judgment, which I think also goes to the positions that 

may be taken during the course of the trial. 

And the Court will find a diversity sufficient to 

allow the extra preemptory [sic] challenges . . . . 

The District Court allowed extra peremptory challenges to the 

co-defendants in this case based on a "diversity of interests." 

SRM contends that Kudrna v. Comet Corp. (1977), 175 Mont. 29, 572 

P.2d 183, articulated a rule which allows additional peremptory 

challenges in three distinct situations: (1) where the interests of 

multiple parties are "diverse;" (2) where the defenses of the 

multiple parties are ltdifferent;ll or (3) where the defenses of the 

multiple parties are "ho~tile.~~ This language is excerpted from a 

direct quote from an A.L.R. annotation set forth in Kudrna. 
Kudrna, 572 P.2d at 186-87. A careful reading of Kudrna 

distinguishes the law in Montana: 

In a recent decision, Leary v. Kelly Pipe Co., 169 

Mont. 511, 549 P.2d 813, 816, (1976), this Court stated: 

"* * * Mullerv stands for the proposition that under 

our jury challenge statute * * * the words 'each partyt 

in reference to the permitted four peremptory challenges 

means leach sidet unless the positions of the codefendants 

are hostile to each other. The opinion suggests that 

hostility between nominal defendants may be shown 'by 

pleading, representation, or evidence.'" 

Kudrna, 572 P.2d at 186. 

This Court has consistently held that co-defendants are 

entitled to excess peremptory challenges only where their positions 

are "hostile" to each other. See ~illiams, 761 P.2d 833; Gee, 679 

P.2d 1194; Lauman, 626 P.2d 830; Hunsaker, 588 P.2d 493; Learv, 549 

P.2d 813; and Mullery v. Great Northern Ry Co. (1915), 50 Mont. 

408, 148 p. 323. Our most recent case involving a grant of 

additional peremptory challenges to one side reiterates the correct 

and relevant law: 

For this Court to uphold an uneven grant of peremptory 

challenges, we must be convinced that the District Court 

concluded from the pleadings, representations, or 

evidence that hostility existed and that the court set 

forth the reasons for its ruling. 

Williams, 761 P.2d at 835 (citing Hunsaker v. Bozeman Deaconess 

Foundation (1978), 179 Mont. 305, 313, 588 P.2d 493, 499). T h e 

District Court here incorrectly applied the law. The interests of 

multiple parties on one side must be "hostile" to one another. 

Although the District Court based its decision on "diversity," we 

will examine the record to ascertain whether the defendants were 
indeed "hostile" based on the information available to the court at 

the time of its ruling on peremptory challenges. 

SRM contends that hostility did exist between defendants 

because MPC and Entech took the position that any obligations that 

arose as a result of King's employment relationship were the 

obligations of SF34 only. They denied that King was their employee 

and that they played any part in his termination. Although SRM 

maintains that MPC and Entech were hostile to SRM, it admits that 

SRM was not hostile to MPC and Entech. SRM further argues that the 

same two attorneys could ethically represent all defendants, even 

with hostile interests present. King argues that all three 

defendants Igenjoy a familial relationship and an identity of 

interest which cannot be denied." 

Hostile is defined as: "having the character of an enemy; 

standing in the relation of an enemy. Feeling or displaying enmity 

or antagonism such as a hostile witness." Black's Law Dictionary 

879 (6th ed. 1990). In all prior cases in which this Court has 

addressed tghostility,tl the co-defendants were unrelated individuals 

or corporations accused of separate and distinct wrongful acts, 

neither of which is the case here. We noted in Hunsaker that no 

specific test for "hostility" has been articulated. 

This Court has never set forth any rules as to what codefendants must present to the trial court to prove they 

are uhostilew to each other. The closest we have come is 

we have indicated in Mullerv and that lfhostility*a 

can be shown by the "pleadings, representations, or 

evidence." 

Hunsaker, 588 P.2d at 499. 

Although we have not pronounced a test for the facts 
constituting "hostility," our prior decisions are most helpful. In 

Kudrna, we found hostile interests where there was no identity of 

interest, separate acts of negligence were charged, each party 

presented a separate defense and each defendant blamed the other's 

negligence as the cause of the collision. Kudrna, 572 P. 2d at 187. 

This Court said, "These defendants had interests and defenses 

antaaonistic in fact. The District Court recognized this hostility 

and properly allowed each defendant four peremptory challenges." 

Kudrna, 572 P.2d at 187 (emphasis supplied). In Mullery, this 

Court found no hostility where defendants filed a joint answer with 

common defenses, they were represented by the same attorneys, and 

no conflict of interest or any issue of any sort was disclosed by 

pleading, representation, or evidence. Mullerv, 148 P. at 326. In 

Williams, there was hostility where the claims against codefendants were involuntarily consolidated and one set of 

defendant's claimed they would assert an indemnification claim 

against the other. Williams, 761 P.2d at 835. In Hunsaker, the 

following factors were relevant: (1) the defense theories of the 

hospital and physicians meshed although they had separate 

representation, (2) the co-defendants did not blame one another or 

assert negligence on the part of the other, (3) jury instructions 

were synchronized and neither objected to any of the other's 

offered instructions. The Court noted that each defendant had its 

own interests to protect in that each could have suffered an 

adverse jury verdict, but there was no showing that their interests 

were hostile to each other. Hunsaker, 588 P.2d 500-01. 
Whether hostility is present is best addressed on a case by 

case basis. In this case, King's complaint asserted identical 

claims against all three defendants. Each defendant filed 

identical answers to King's complaint. These were signed by the 

same MPC staff attorney, Patrick T. Fleming, an employee of MPC. 

No cross-claims or claims for indemnification were filed by any 

individual co-defendant and no allegations were made that either of 

the other co-defendants were responsible for King's termination. 

Throughout the pretrial process, defendants filed consolidated 

motions and briefs. They consolidated their responses to discovery 

and their list of witnesses, exhibits and contentions in the 

pretrial order. All three defendants were represented by the same 

two MPC attorneys, who asserted their common representation and 

vigorously defended SRM's actions. All three defendants acted in 

concert, with no hostility exhibited by their efforts to prevent a 

verdict against SRM. Their consolidated position was that there 

was no breach of the covenant of good faith and fair dealing, but 

if the court found one, it was SRM's breach and not that of MPC and 

Entech. 

Applying the above rule in the present case, it is clear that 

we need only consider the pleadings, representations and evidence 

presented to the District Court at the time it made its ruling. We 

conclude that although the three co-defendants asserted allied 

positions with diversified financial interests, their differences 

do not reach the level of hostility required for a grant of four 

additional peremptory challenges. 
We hold that the grant of additional peremptory challenges to 

allied co-defendants constitutes reversible error under the 

circumstances of this case where no hostility was demonstrated 

between the co-defendants prior to voir dire. 

11. 

 id the District Court commit reversible error by granting 

defendants' motion in limine prohibiting some expert testimony, and 

by refusing to allow plaintiff's personnel expert to present 

opinion testimony without further foundation? 

Mr. King contends that the District Court made numerous errors 

which resulted in inappropriately restricting the opinion testimony 

of his expert, Alan Brown. Because our decision to reverse the 

District Court based upon an improper grant of peremptory 

challenges will result in a new trial, there is no reason to 

address this issue at this time. 

111. 

Is King entitled to a new trial against Entech, Inc. and 

Montana Power Company? 

At the close of the evidence during the trial, the District 

Court directed verdicts for Entech and MPC because SRM had failed 

to present evidence sufficient to pierce SRM's corporate veil. SRM 

was the only defendant to file a respondent's brief in this appeal. 

On the cover of its Appeal Brief, SRM removed the names of the 

other defendants from the caption, believing that King had no right 

to a new trial against them because King did not assert that the 

District Court erred by granting MPC and Entech directed verdicts. 
MPC and Entech responded to King's Reply Brief which argues that a 

new trial will be granted as to all defendants if the District 

Court's decision is reversed on the issues raised. They filed a 

Supplemental Reply Brief which raised the issue whether King has 

any legal basis for asserting a right to a new trial against Entech 

and MPC. 

MPC and Entech contend that King cannot have a new trial 

against either of them because King did not assert that the 

District Court erred in granting MPC and Entech directed verdicts. 

We disagree. King's Notice of Appeal preserves his right to appeal 

the directed verdicts against MPC and Entech because he has 

appealed the judgment entered by the District Court (the directed 

verdicts) against both MPC and Entech. 

The District Court concluded that the corporate veil could not 

be pierced and granted directed verdicts for MPC and Entech. We 

will not reverse this conclusion unless it is an incorrect 

interpretation of the law. Steer. Inc., 803 P.2d 601. After 

reviewing the record, we conclude that the District Court did not 

err by directing these verdicts as King failed to present evidence 

to support piercing SRM's corporate veil. 

Nonetheless, King claims that all three defendants have an 

interest in the outcome of these proceedings because the effect of 

a reversal is to make the judgment "void as if never rendered." He 

contends that when a new trial is granted the parties are all 

returned to the position they occupied before the trial and, 

therefore, he will be entitled to a new trial against all three 
defendants if the ~istrict Court's judgment is reversed. 

King contends that the holding of OIBrien v. Great Northern 

R.R. Co. (1966), 148 Mont. 429, 421 P.2d 710, applies to this case. 

In OIBrien, we said that to reverse a judgment makes it void as if 

never rendered and returns the parties to the position they 

occupied before the trial if a new trial is granted. OtBrien, 421 

P.2d at 716. This case is distinguishable from the facts in 

OIBrien and the cases it relied on because multiple defendants are 

involved who were granted relief based on different rules of law. 

MPC and Entech were released by directed verdicts while SRM was 

relieved from liability by the juryts verdict. 

Section 25-11-102, MCA, provides: 

Grounds for new trial. The former verdict or other 

decision may be vacated and a new trial granted on the 

application of the party aggrieved for any of the 

following causes materially affecting the substantial 

rights of such party: 

(I) irregularity in the proceedings of the court, 

jury, or adverse party or any order of the court or abuse 

of discretion by which either party was prevented from 

having a fair trial . . . 

Section 25-11-102(1), MCA. 

The justification for allowing King a new trial in this case 

is based solely upon an irregularity in jury selection. That 

justification does not apply to MPC and Entech because the District 

Court granted directed verdicts to them both at the close of the 

evidence and prior to the verdict of the jury. We are reversing 

the jury verdict releasing SRM from liability because the 

composition of the jury resulting from the District Courtls 

incorrect grant of excess peremptory challenges to non-hostile 
defendants may have materially affected King's rights. That 

rationale does not apply to MPC and Entech because the issue of 

their liability did not reach the jury. We conclude that King is 

not entitled to relitigate the issues against MPC and Entech. 

We hold that King is not entitled to a new trial against 

Entech, Inc. and Montana Power Company. 

The judgment in favor of Special Resource Management, Inc. is 

reversed and King is granted a new trial in accordance with this 

opinion. The judgments favoring Montana Power Company and Entech, 

Inc. are affirmed. 

MJfor ~ustice Karla M. Gray