DA 14-0632

IN THE SUPREME COURT OF THE STATE OF MONTANA

2015 MT 324

KENT D. ROOSE,

 Plaintiff and Appellee,

 v.

LINCOLN COUNTY EMPLOYEE GROUP HEALTH

PLAN; EMPLOYEE BENEFIT MANAGEMENT

SERVICES, INC.; JOINT POWERS TRUST;

JOHN DOES 1-50; JOHN DOES 51-100,

 Defendants and Appellants.

APPEAL FROM: District Court of the First Judicial District,

In and For the County of Lewis and Clark, Cause No. BDV-2009-878

Honorable Jeffrey M. Sherlock, Presiding Judge

COUNSEL OF RECORD:

For Appellants:

Robert C. Lukes, Peter J. Arant, Justin K. Cole, Garlington, Lohn &

Robinson, PLLP; Missoula, Montana

For Appellee:

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

William R. Bieler, Burk, Lee & Bieler, PLLC; Choteau, Montana

For Amicus Curiae Montana Defense Trial Lawyers Association:

David C. Clukey, James M. Duncan, Crowley Fleck PLLP; Billings,

Montana

Submitted on Briefs: June 17, 2015

 Decided: November 17, 2015

Filed:

__________________________________________

Clerk

November 17 2015

Case Number: DA 14-0632
2

Justice Michael E Wheat delivered the Opinion of the Court.

¶1 Employee Benefit Management Services, Inc. (EBMS) and Joint Powers Trust 

(JPT) appeal from the order of the Montana First Judicial District Court, Lewis and Clark 

County, granting Kent D. Roose’s (Roose) motion for class certification and declaratory 

judgment. We affirm. 

PROCEDURAL AND FACTUAL HISTORY 

¶2 On October 3, 2007, Roose was severely injured in an automobile crash on 

Highway 93. The driver of the other vehicle, Stearns, whose negligence is undisputed, 

was killed in the accident. Stearns’ liability insurance carrier tendered the limit of its 

liability coverage, and his estate also paid funds to Roose; however, these payments fell 

short of covering the more than $320,000 in medical expenses incurred by Roose for 

treatment at Kalispell Regional Hospital (the Hospital) after his injury.

¶3 At the time of the crash, Roose’s wife was an employee of Lincoln County. The 

County provided health benefits via a group health plan (the Plan) that was part of JPT, a 

pool of local government health plans. The JPT plans were administered by EBMS, 

which acted primarily as a third-party administrator, and which administers other local 

government plans in Montana.

¶4 The Plan contained an exclusion stating that medical benefits would not be paid 

when any automobile or third-party liability insurance was available to pay medical costs. 

Appellants informed Roose, the Hospital, and Stearns’ liability insurer of the exclusion.

¶5 The Hospital subsequently asserted a medical lien for $40,000. Stearns’ insurer 

tendered its $100,000 liability limit to Roose in the form of a check made out to both 
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Roose and the Hospital. The Hospital refused to sign the check or release its lien until 

Roose agreed to pay the Hospital $40,000 of the $100,000 payment, which Roose did.

¶6 Roose contacted EBMS and objected to the fact that the $40,000 hospital charge 

was paid out of the liability insurance funds, rather than from the Plan. He requested 

reimbursement for the $40,000 he paid to the Hospital out of the liability insurance 

payment he received. EBMS denied his request. In a letter dated August 6, 2009, EBMS 

rejected all allegations of wrongdoing.

¶7 In October 2009, Roose brought suit against EBMS, JPT, and Lincoln County, 

though the County was later dismissed as a party, requesting declaratory and injunctive 

relief, and class action certification. In 2013, we published our opinion in Diaz v. State 

(Diaz III), 2013 MT 331, 372 Mont. 393, 313 P.3d 124, wherein we held that exclusions 

such as the one contained in the Plan violated § 2-18-902(4), MCA, Montana’s 

made-whole law. Following the publication of Diaz III, Appellants reimbursed Roose the 

$40,000 paid to the Hospital.

¶8 On April 4, 2014, Roose filed a motion for partial summary judgment and class 

certification. Roose argued that Appellants violated § 2-18-902(4), MCA, through 

systematic practices that amounted to seeking subrogation against Stearns’ liability 

carrier before Roose was made whole. Roose also requested class certification on behalf 

of every member of Appellants’ plans subject to Montana law that contained the 

coverage exclusion. Roose requested a declaratory judgment that both the exclusion and 

Appellants’ systematic practices violate Montana’s made-whole laws. He also sought an 
4

injunction requiring Appellants to cease all illegal practices. Finally, Roose, as an 

individual, requested a trial seeking actual and punitive damages for bad faith.

¶9 On September 22, 2014, the District Court issued its order on the motion for 

summary judgment and class certification. The court found that certification was 

appropriate for an equitable relief class under M. R. Civ. P. 23(b)(2) and authorized a 

notice to be sent to potential class members to determine the viability of the class and to 

gauge the necessity of certifying a restitution subclass. The court granted a declaratory 

judgment stating that JPT, as an insurer governed by Title 2, MCA, was required to 

comply with Montana’s made-whole laws. Thus, JPT was required to provide coverage 

for medical expenses regardless of the availability of third-party liability coverage. Once 

the insured was made whole, JPT could seek reimbursement from the liability carrier. 

The court ordered Appellants to remove the illegal exclusion from their plans and to 

cease systematic practices that violated the made-whole laws. The court also ordered 

Appellants to process all claims incurred in the past without the application of the illegal 

exclusion. The court ruled on Roose’s bad faith claim in a different order and granted his 

motion for a jury trial on that issue.

¶10 Appellants timely appealed the District Court’s order regarding class certification.

STANDARD OF REVIEW

¶11 We review a district court’s decision on a motion for class certification for an 

abuse of discretion. Chipman v. Northwest Healthcare Corp., 2012 MT 242, ¶ 17, 

366 Mont. 450, 288 P.3d 193. The abuse of discretion question is “not whether this 

Court would have reached the same decision, but whether the district court acted 
5

arbitrarily without conscientious judgment or exceeded the bounds of reason.” Rolan 

v. New West Health Servs., 2013 MT 220, ¶ 13, 371 Mont. 228, 307 P.3d 291; 

Chipman, ¶ 17 (quoting Newman v. Lichfield, 2012 MT 47, ¶ 22, 364 Mont. 243, 

272 P.3d 625). The district court’s judgment on certification should be accorded the 

greatest respect because it is in the best position to consider the most fair and efficient 

procedure for conducting any given litigation. Chipman, ¶ 17. Further, “[t]rial courts 

have the broadest discretion when deciding whether to certify a class.” Sieglock v. 

Burlington Northern & Santa Fe Ry. Co., 2003 MT 355, ¶ 8, 319 Mont. 8, 81 P.3d 495 

(citing McDonald v. Washington, 261 Mont. 392, 399, 862 P.2d 1150, 1154 (1993)).

DISCUSSION

¶12 Appellants present two issues for review:

1. Did the District Court abuse its discretion when it certified the 

proposed class under Rule 23 of the Montana Rules of Civil 

Procedure?

2. If the class was properly certified, did the District Court abuse its 

discretion by defining the class over-broadly?

We will address each issue in turn.

¶13 1. Did the District Court abuse its discretion when it certified the proposed class 

under Rule 23 of the Montana Rules of Civil Procedure?

¶14 A class action is “an exception to the usual rule that litigation is conducted by 

and on behalf of the individual named parties only.” Mattson v. Mont. Power Co. 

(Mattson III), 2012 MT 318, ¶ 18, 368 Mont. 1, 291 P.3d 1209 (quoting Califano v. 

Yamasaki, 442 U.S. 682, 700-01, 99 S. Ct. 2545, 2557 (1979)). A class action allows the 

representative party to conserve the judiciary’s and the similarly-situated parties’ 
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resources by permitting the single litigation of common issues of fact and law. Morrow 

v. Monfric, Inc., 2015 MT 194, ¶ 8, 380 Mont. 58, 354 P.3d 558 (citations omitted). 

Class actions are governed by Rule 23 of the Montana Rules of Civil Procedure. In order 

for a class action to proceed it must first meet the four requirements of Rule 23(a). 

Morrow, ¶ 8. However, the class action proponent need not prove each element with 

absolute certainty. Once Rule 23(a) is satisfied a district court must then determine 

whether the class action conforms to the type of class actions available pursuant to 

Rule 23(b). Diaz v. Blue Cross & Blue Shield (Diaz I), 2011 MT 322, ¶ 27, 

363 Mont. 151, 267 P.3d 756. Rule 23 provides a district court with flexible 

management tools to adjust the certified class as the case proceeds. In Rolan v. New West 

Health Servs., we declined to override the district court’s determination as to the breadth 

of the class definition where the court included insureds who had never filed claims. 

Rolan, ¶¶ 23, 26. Further, we stated:

[C]lass action certification orders “are not frozen once made”; instead, the 

District Court maintains discretion to alter the class definition as the case 

proceeds. Amgen Inc. v. Conn. Ret. Plans & Trust Funds, ___U.S. ___, 

133 S. Ct. 1184, 1202 n. 9 [185 L.Ed.2d 308] (2013) (“Rule 23 empowers 

district courts to ‘alter or amend’ class-certification orders based on the 

circumstances developing as the case unfolds.”) (citing F. R. Civ. P. 

23(c)(1) and 23(c)(1)(C)); see Howe v. Townsend, 588 F.3d 24, 39 (1st Cir. 

2009) (“Courts can amend certification orders to reflect major changes or 

minor adjustments to the class.”) (citing F. R. Civ. P. 23(c)(1)(C)).

Rolan, ¶ 15.

¶15 Appellants argue Roose failed to demonstrate the class numerosity requirement 

under Rule 23(a)(1) and failed to demonstrate the class commonality and typicality 

requirements under Rule 23(a)(2)-(3). Further, Appellants argue because Roose’s claims 
7

are not common and typical to the class, he is an inadequate representative under 

Rule 23(a)(4). Each argument is addressed in turn below.

A. Rule 23

¶16 M. R. Civ. P. 23, “Class Actions,” states in part:

(a) Prerequisites. One or more members of a class may sue or be sued as 

representative parties on behalf of all members only if: 

(1) the class is so numerous that joinder of all members is 

impracticable;

 (2) there are questions of law or fact common to the class; 

(3) the claims or defenses of the representative parties are typical of 

the claims or defenses of the class; and 

(4) the representative parties will fairly and adequately protect the 

interests of the class.

The requirements listed in sections 23(a)(1)-(4) are often referred to, respectively, as 

Numerosity, Commonality, Typicality, and Adequacy of Representation. Diaz I, ¶ 27; 

Sieglock, ¶ 10; Wal-Mart Stores, Inc. v. Dukes, ___ U.S. ___,131 S. Ct. 2541, 2550 

(2011). The party seeking class certification has the burden of showing that the proposed 

class meets all four requirements. Morrow, ¶ 8; Diaz I, ¶ 27.

¶17 Once Rule 23(a)’s requirements are satisfied, then the court must determine the 

type of class action that is appropriate under Rule 23(b). Rule 23(b)(2) states the party in 

opposition to the class must have “acted or refused to act on grounds that apply generally 

to the class, so that final injunctive relief or corresponding declaratory relief 

is appropriate respecting the class as a whole.” M. R. Civ. P. 23(b)(2). A Rule 23(b)(2) 

class is considered a mandatory class. Unlike a damage class under Rule 23(b)(3), 

wherein the class members can opt out, 23(b)(2) class members generally cannot opt out. 

William B. Rubenstein, Newberg on Class Actions, § 4:1 (5th ed. Supp. 2015). Thus, 
8

relief awarded to a Rule 23(b)(2) class applies to all class members regardless of whether 

they are knowledgeable of the litigation and regardless of whether all have suffered the 

precise injury that was suffered by the representative party. Newberg on Class Actions, 

§ 4:28.

1. Rule 23(a)(1)—Numerosity

¶18 While Rule 23(a)(1) is often referred to as the “Numerosity” requirement, at its 

heart is that joinder is impracticable. Morrow, ¶ 10; Newberg on Class Actions, § 3:11. 

“Numerousness—the presence of many class members—provides an obvious situation in 

which joinder may be impracticable, but it is not the only such situation; thus 

Rule 23(a)(1)’s analysis may, in specific circumstances, focus on other factors as well.” 

Newberg on Class Actions, § 3:11 (emphasis added). The nonnumeric factors courts 

have looked to include judicial economy, geographic distribution of putative class 

members, the size of the members’ individual claims, and the ability to initiate individual 

lawsuits, amongst others, when determining whether joinder is impracticable and 

certification is appropriate. Morrow, ¶ 12; Vasquez v. Coast Valley Roofing, Inc., 

670 F. Supp. 2d 1114, 1121 (E.D. Cal. 2009); Newberg on Class Actions, § 3:12. The 

consideration of factors such as these is within the broad discretion of the district court. 

Jacobsen v. Allstate Ins. Co., 2013 MT 244, ¶ 25, 371 Mont. 393, 310 P.3d 452.

¶19 Appellants argue that the Rule 23(a)(1) element has not been satisfied because 

Roose “is in essence in a class by himself.” Appellants state that, in a search of their 

records, Roose was the only person they found to have had his made-whole rights 

violated by having liability payments applied to medical coverage when submitting 
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claims to EBMS. Appellants correctly point out that Roose must meet all of Rule 23(a)’s 

requirements and the failure of one is fatal to certification. Morrow, ¶ 8. Because no 

other class members were discovered Appellants contend that the class certification must 

fail because the Numerosity requirement cannot be met.1

¶20 The District Court considered Appellants’ argument but determined that sufficient 

potential class members existed to meet the Numerosity requirement. Explaining its 

rationale, the court stated:

Roose, however, has provided a compelling basis for believing that most 

persons whose rights were infringed upon never filed claims and, therefore, 

would not show up in [Appellants’] computers despite the accuracy of the 

search. The reasons why an insured would not have filed claims include 

the fact that [Appellants] informed both insureds and medical providers that 

no coverage existed if liability insurance was available. The evidence 

demonstrated, for instance, that EBMS informed the hospital taking care of 

Roose that based on the exclusion, liability insurance had to be exhausted 

before health insurance would pay anything. EBMS’s claims manual stated 

that if insureds or medical providers inquire, the customer service 

representatives should inform them that liability insurance has to be 

exhausted first. Thus, the medical providers would direct their claims to 

the liability insurer for payment, and [Appellants] would not process the 

health insurance claims. Since [Appellants’] systematic procedures created 

a situation where their insureds would not file claims, it would neither be 

realistic nor equitable to conclude that no insureds are entitled to restitution. 

All person[s] in [Appellants’] plans which are subject to Montana law are 

entitled to know that an unlawful exclusion has been taken out of their 

policy.

¶21 Based on the evidence presented to the District Court it determined parties other 

than Roose exist whose interests are directly affected by the outcome of this litigation. 

The District Court, in the best position to consider the evidence before it, looked to 

 

1 Review of the record indicates one other person other than Roose was actually discovered in 

EBMS’s computer search of similarly situated individuals.
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factors other than sheer numbers alone to determine joinder of all interested parties is 

impracticable at this stage in the litigation. In its evaluation of the evidence the District 

Court determined individuals other than Roose are certain to be found. Because the 

District Court was in the best position to judge it highly likely that other additional 

insureds, under the circumstances specific to the case, may have had their made-whole 

rights violated under the policy’s exception, and it properly considered factors relating to 

Rule 23(a)(1), the District Court did not clearly abuse its discretion—based on the facts 

as presently developed. Further, as is related to the type of class action that was certified, 

which is discussed below, all insureds subject to the unlawful exclusion at issue have a 

right to equitable and injunctive relief and mandatorily become members of such a class. 

Finally, as certification orders are not set in stone, should no other affected insureds be 

discovered to sufficiently satisfy Rule 23(a)(1), the District Court is able to decertify the 

class for failure to meet all of the requirements under Rule 23(a), which is precisely what 

the District Court indicated it would evaluate upon motion from EBMS and JPT.

¶22 The Dissent cites Smith v. Transworld Sys. Inc., 953 F.2d 1025 (6th Cir. 1992), to 

support the contention that mere conclusory allegations as to claims of numerosity are 

insufficient to establish compliance with Rule 23(a)(1). Dissent, ¶ 45. While the 

Dissent’s proposition is essentially correct, Smith is readily distinguishable from the 

present action. In Smith a third party inadvertently sent the plaintiff to the defendant 

collection agency over the payment of a debt incurred by the plaintiff, despite that the 

plaintiff had previously paid the debt to the third party. Smith, 953 F.2d at 1026. 

Through a series of correspondence the defendant attempted to collect payment of the 
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debt from the plaintiff. Smith, 953 F.2d at 1026-1027. The plaintiff ultimately brought 

suit against the defendant alleging the violation of various state and federal consumer 

protection laws, and later sought class action certification based on the boilerplate 

language used in the defendant’s correspondence. Smith, 953 F.2d at 1027, 1033. The 

defendant responded by claiming the defense of bona fide error. Smith, 953 F.2d at 1027. 

¶23 Here, unlike Smith, the Appellants have conceded that the exclusion contained in 

the policy is illegal. In contrast, the defendant in Smith claimed a bona fide error 

occurred that excused its conduct in violation of the laws at issue. Thus in this case, and 

not in Smith, the Appellants, by their own admission, “acted or refused to act on grounds 

that apply generally to [a] class [.]” M. R. Civ. P. 23(b)(2). Therefore, in this case and 

unlike in Smith, evidence of numerosity is not based on mere conclusory allegations 

made by the defendant; instead Appellants themselves have admitted to illegal 

conduct that affects every single policyholder whose policy contained the illegal 

exclusion—policyholders who certainly exist but are impracticable to join at this stage in 

the litigation.

¶24 We find the District Court’s reasoning reasonable and designed to facilitate a fair 

and efficient resolution of the matter. Accordingly, we will not reverse the court’s 

finding that the requirement of M. R. Civ. P. 23 (a)(1) was met.

2. Rule 23(a)(2)-(4)—Commonality, Typicality, and Adequate

 Representation

¶25 Commonality under Rule 23(a)(2) means that there must be “questions of law or 

fact common to the class” and Typicality under Rule 23(a)(3) means the representative 
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party’s claims or defenses must be “typical of the claims or defenses of the class.” 

M. R. Civ. P. 23(a)(2)-(3). Further, Rule 23(a)(4) states the parties representing the 

putative class must “fairly and adequately protect the interests of the class.” M. R. Civ. 

P. 23(a)(4).

¶26 EBMS and JPT also challenge the District Court’s holding that the requirements of 

Rule 23(a)(2)-(4), Commonality, Typicality, and Adequacy of Representation, were met. 

The thrust of Appellants’ argument is that Roose’s individual bad faith claim conflicts 

with the purposes of the class and destroys Commonality and Typicality. Further,

Appellants state because of his bad faith claim it puts Roose in a unique situation, thus 

making him an inappropriate representative for such a class.

¶27 EBMS and JPT first point out, correctly, that the District Court certified the class 

under M. R. Civ. P. 23 (b)(2). That rule states:

(b) Types of Class Actions. A class action may be maintained if Rule 23(a) 

is satisfied and if:

. . .

(2) the party opposing the class has acted or refused to act on 

grounds that apply generally to the class, so that final 

injunctive relief or corresponding declaratory relief is 

appropriate respecting the class as a whole[.]

Thus, they argue that Roose’s claim seeks individualized money damages and therefore 

falls outside the scope of Rule 23(b)(2).

¶28 Their argument is rooted in the U.S. Supreme Court’s decision in Wal-Mart 

Stores, Inc. v. Dukes. There, the U.S. Supreme Court held that class certification under 

federal Rule 23(b)(2) is inappropriate where “monetary relief is not incidental to the 

[requested] injunctive or declaratory relief.” Wal-Mart, 131 S. Ct. at 2557. Therefore, 
13

EBMS and JPT posit that, because the declaratory and injunctive relief ordered by the 

District Court could result in individual payments of benefits to class members, the class 

should not be certified under M. R. Civ. P. 23(b)(2).

¶29 Roose responds by pointing out that we have recognized the Wal-Mart limitation 

as applying to cases “when each class member would be entitled to an individualized 

award of monetary damages, or when each class member would be entitled to a different

injunction or declaratory judgment against the defendant.” Diaz I, ¶ 42 (emphasis in 

original). In the case of Diaz, as in this case, the declaratory and injunctive relief granted 

was uniform. Both courts simply declared the insurers’ exclusions illegal and required 

the insurers to cease violating Montana’s made-whole laws and restore benefits to their 

insureds. Roose acknowledges that the class as-certified is entitled to prospective relief 

only. The District Court has not certified a class for the purposes of restitution. Any 

monetary relief granted to individual class members as a result of these rulings would 

occur outside the scope of the class action and would be incidental to the declaratory and 

injunctive relief ordered by the district courts. Diaz I, ¶ 48. Applying our holding in 

Diaz I to this case, we conclude that the Wal-Mart limitation does not prohibit 

certification under M. R. Civ. P. 23(b)(2).

¶30 Regarding EBMS’ and JPT’s contention that Roose’s individual claim for bad 

faith damages creates a conflict that destroys Commonality and Typicality, the District 

Court considered Appellants’ argument and determined that nothing in the bad faith 

claim implicated issues in the class action. Such a finding is within the discretion of the 

District Court and we see no evidence that the court abused its discretion in so ruling. 
14

Furthermore, because the District Court certified the class under Rule 23(b)(2) as a class 

seeking to enjoin the Plan’s exclusion at issue and like exclusions, all class members 

need not have suffered Roose’s precise injury. At this stage in the litigation the bad faith 

claim Roose advances against Appellants for the ways in which Appellants may have 

acted while processing Roose’s insurance may exist separate and apart from the issue of 

whether the exclusion itself should be enjoined.

¶31 Finally, regarding Appellants’ adequacy of representation claim, the District Court 

stated no objection as to class counsel was made by Appellants, and for the reasons set 

forth above we are not persuaded Roose’s individual claims of bad faith make him an 

inappropriate representative to advance the interests of the as-certified Rule 23(b)(2) 

class.

¶32 We conclude that the District Court did not abuse its discretion in finding that the 

Rule 23(a) criteria were met and certifying the class under Rule 23(b)(2).

3. Rule 23(c)—Notice

¶33 The essence of the certification notice provision of Rule 23 is to protect the due 

process rights of all class members, specifically those who are absent. Newberg on Class 

Actions, § 1:15. For Rule 23(b)(2) mandatory classes certification notice is discretionary; 

whereas notice is required for Rule 23(b)(3) damage classes. M. R. Civ. P. 23(c)(2). The 

rationale behind discretionary certification notice in mandatory class actions is that 

members may not generally opt out of class participation; thus, requiring certification 

notice would serve little valuable function and cause the parties to sink unnecessary and 
15

potentially unsupportable costs into the early stages of the litigation. Newberg on Class 

Actions, § 8:3.

¶34 Appellants argue notice in this case was improper. They state the District Court 

used the Rule 23(c) notice provision as a method to satisfy the Numerosity requirement 

because at present Roose is the only known class member. However, as determined by 

the District Court based on the evidence it reviewed and as outlined above, the 

Rule 23(a)(1) requirement was properly satisfied at this stage in the litigation. Rule 23 in

its entirety provides management tools for a court to control litigation in the best and 

most efficient manner possible. Jacobsen, ¶ 25; Chipman, ¶ 17. Here, as permitted 

under the Rule, the District Court used its discretion to determine—under the facts as 

presently developed—notice to absent class members is appropriate.

¶35 Appellants argue, and the Dissent agrees, that class relief was not appropriate 

because Appellants were already in the process of correcting the policies to remove the 

illegal exclusion. Dissent, ¶¶ 51-52. In fact, it is the acknowledged unlawful conduct 

itself that makes potential relief appropriate in this case. Class certification should not be 

denied when to do so would prevent policyholders—Rule 23(b)(2) mandatory class 

members—from learning of the illegal exclusion, its removal, and its effect on their 

made-whole rights. The District Court properly acknowledged that, despite Appellants’ 

removal of the illegal exclusion, all policyholders are entitled to notice of its removal. 

Therefore, under Rule 23(b)(2), “final injunctive relief or corresponding declaratory relief 

is appropriate respecting the class as a whole[.]” M. R. Civ. P. 23 (b)(2). The court 
16

recognized its obligation to administer additional proper relief, should relief be 

appropriate in this case.

¶36 The District Court did not merely seek to use the notice provision to discover more 

class members. Instead, the District Court determined that the case and evidence at 

present show more class members do exist and are certain to be found. Accordingly, we 

will not disturb the District Court’s decision to use the notice provision as a tool to 

manage the litigation process.

¶37 2. If the class was properly certified, did the District Court abuse its discretion by 

defining the class over-broadly?

¶38 EBMS and JPT argue that the District Court abused its discretion by defining the 

class too broadly. According to EBMS and JPT, the class definition could create liability 

for non-parties to the lawsuit and would include claimants who are members of plans that 

no longer do business with EBMS and JPT and, therefore, would never receive payments.

¶39 In its order granting class certification, the District Court defined the class as 

follows:

1) All persons insured through EBMS-administered plans (including JPT 

plans) dating back eight years before Mr. Roose filed the suit (i.e., 

statute of limitations for contracts);

2) who, similar to Mr. Roose, have been enrolled in plans containing 

exclusions which require payment of medical bills by liability carriers 

before the EBMS plan is required to pay or result in reimbursement of 

the plan when both the plan and the liability carrier have paid;

3) who, similar to Mr. Roose, are subject to various systematic practices 

which implement the subject exclusions; and

4) excluding plans not subject to Montana law.

¶40 We do not see evidence of the dire consequences predicted by Appellants based on 

this definition. The definition appropriately narrows the class to individuals enrolled in 
17

plans administered by Appellant EBMS that contained the unlawful exclusion. Roose 

has stipulated that the District Court cannot order EBMS to provide restitution to 

non-JPT plan members. Because the declaratory judgment was issued against JPT, and 

the court granted only prospective injunctive relief, the class is limited to plans that are 

still part of JPT. Furthermore, the District Court considered Appellants’ argument and 

stated:

“The Court is also appreciative of [EBMS’ and JPT’s] concern that 

granting the Plaintiff’s request will unfairly involve plan owners, such as 

Lincoln County, with whom the Plaintiff has no connection. While this is 

true, the Court has no intention of affecting the rights of defendants not in 

this case. However, EBMS and JPT are Defendants in this case. This 

Court can make decisions concerning their conduct and this Order intends 

to do nothing more than that.”

¶41 Nothing in the record demonstrates that the District Court abused its discretion by 

defining the class as it did.

CONCLUSION

¶42 We conclude that the District Court did not abuse its discretion by certifying the 

class or by defining the class over-broadly. Accordingly, the judgment of the District 

Court is affirmed.

/S/ MICHAEL E WHEAT

We Concur: 

/S/ JAMES JEREMIAH SHEA

/S/ BETH BAKER

/S/ JIM RICE
Justice Laurie McKinnon, dissenting.

¶43 The Court confuses notice provisions of Fed. R. Civ. P. 23(c), the purpose of a 

23(b)(2) class, and has misapplied the prerequisites for establishing numerosity. In my

opinion, we should not conflate the requirements of Rule 23 to facilitate discovery for a 

plaintiff at the expense of procedural fairness to a defendant. While a district court is 

given wide discretion in certification of class actions; here, specific provisions of Rule 23 

have been conflated and result in a distortion of the Rule’s purpose and procedural 

fairness.

¶44 Montana and federal rules on class actions are the same and we have recognized 

the body of case law interpreting Fed. R. Civ. P. 23 as instructive. Chipman, ¶ 43. 

Consistent with federal jurisprudence, Montana establishes that the plaintiff bears the 

burden of showing that each of the elements of Rule 23(a) are met before proceeding to 

identify which type of class action may be maintained pursuant to 23(b). Morrow, ¶ 8; 

Diaz I, ¶ 27. Rule 23(c)(2) specifically provides that “[f]or any class certified under [23 

(b)],” the court either “may” or “must” provide notice, thus establishing that the 

prerequisites of 23(a) are to be satisfied before maintaining a class action under (b)(2) or 

(b)(3). Accordingly, before certifying a class, the trial court must conduct a “rigorous 

analysis” to determine whether the party seeking certification has met the prerequisites of 

Rule 23. Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1233 (9th Cir. 1996). “[T]here 

must not only be allegations relative to the matters mentioned in Rule 23. . . but, in 

addition, there must be a statement of basic facts. Mere repetition of the language of the 

Rule is inadequate.” Gillibeau v. Richmond, 417 F.2d 426, 432 (9th Cir. 1969). While 
19

the trial court has broad discretion to certify a class, its discretion must be exercised 

within the framework of Rule 23. Doninger v. Pacific Northwest Bell, Inc., 564 F.2d 

1304, 1309 (9th Cir. 1977). The failure to satisfy any one of the prerequisites is fatal to 

class certification. Morrow, ¶ 8; Diaz I, ¶ 27.

¶45 The Rule “does not set forth a mere pleading standard.” Wal-Mart, 131 S. Ct. at 

2551. Rather a party must “‘be prepared to prove that there are in fact sufficiently 

numerous parties, common questions of law or fact,’ typicality of claims or defenses, and 

adequacy of representation, as required by Rule 23(a).” Comcast Corp. v. Behrend, 133 

S. Ct. 1426, 1432 (2013) (quoting Wal-Mart, 131 S. Ct. at 2551) (emphasis in original). 

This Court, in Mattson v. Mont. Power Co. (Mattson II), 2009 MT 286, ¶ 67, 352 Mont. 

212, 215 P.3d 675, articulated the following approach, utilized by the federal courts, for 

addressing Rule 23 motions:

(1) a district judge may certify a class only after making determinations that 

each of the Rule 23 requirements has been met; (2) such determinations can 

be made only if the judge resolves factual disputes relevant to each Rule 23 

requirement and finds that whatever underlying facts are relevant to a 

particular Rule 23 requirement have been established and is persuaded to 

rule, based on the relevant facts and the applicable legal standard, that the 

requirement is met; (3) the obligation to make such determinations is not 

lessened by overlap between a Rule 23 requirement and a merits issue, even 

a merits issue that is identical with a Rule 23 requirement; (4) in making 

such determinations, a district judge should not assess any aspect of the 

merits unrelated to a Rule 23 requirement; and (5) a district judge has 

ample discretion to circumscribe both the extent of discovery concerning 

Rule 23 requirements and the extent of a hearing to determine whether such 

requirements are met in order to assure that a class certification motion 

does not become a pretext for a partial trial of the merits.
20

In Mattson II, we specifically rejected the trial court’s reliance on plaintiff’s allegations, 

which were not supported by facts, and held that the “District Court erred in concluding it 

was ‘required to take the Plaintiffs’ allegations in support of the class action as true.’” 

Mattson II, ¶ 67. Thus, “[m]ere speculation as to satisfaction of the numerosity

requirement is not sufficient. Rather, plaintiffs must present some evidence of, or 

reasonably estimate, the number of class members.” Polich v. Burlington N., Inc., 116 

F.R.D. 258, 261 (D. Mont. 1987). In Smith v. Transworld Systems, the plaintiff offered 

little more than conclusory allegations, as here, to support his claim of numerosity. The 

Sixth Circuit concluded:

Plaintiff’s allegations that the requirements of Rule 23(a) are satisfied are 

founded on the assertion that defendant’s forms are computer generated. 

According to plaintiff, this leads to the inference that: (1) “hundreds, if not 

thousands” of consumers are recipients of these forms, thus satisfying the 

numerosity requirement; (2) that the forms sent to the purported members 

of the class are all of the same “boilerplate” language, thus satisfying the 

requirement that there be common questions of law and fact among the 

class; (3) that since the purported class members must have received the 

same types of correspondence from the defendant and under the same 

circumstances as he did, his claims and defenses are typical of those of the 

class; and (4) “plaintiff will fairly and adequately protect the interests of the 

class, and he has retained competent counsel to represent the class.” 

Smith, 935 F.2d at 1033. The court found that sufficient facts had not been alleged to 

permit a reasonable inference that the mandatory prerequisites of Fed. R. Civ. P. 23(a)

had been met. See also, Edwards v. McCormick, 196 F.R.D. 487, 494 (S.D. Ohio 2000).

¶46 The Court’s attempt to distinguish Smith on the basis that Transworld had a bona 

fide defense, which this Court asserts Appellants do not have, is not only incorrect, but 
21

misleading. In Smith, the court’s resolution of the bona fide defense issue was pursuant 

to Transworld’s motion for partial summary judgment and simply had nothing to do with 

the court’s analysis of Rule 23 criteria. In response to Smith’s objection that the trial 

court had improperly reviewed the substantive merits of his class action claim by 

addressing the bona fide defense claim of appellees, the Sixth Circuit Court of Appeals 

stated: 

The appellant misconstrues the District Court’s rationale, however. The 

district court did not analyze the substantive merits of Smith’s class action 

claim; rather, the district court denied Smith leave to amend his complaint 

because Smith failed to allege facts “from which the Court could at least 

reasonably infer that the mandatory prerequisites of Rule 23(a) have been 

met.”

Smith, 953 P.2d at 1032. 

¶47 Here, the Court is doing precisely what the Smith court said it was not doing and it 

is misleading, to say the least, to construe Smith as support for the Court’s rationale. 

Furthermore, in my opinion, it is inappropriate for this Court to misconstrue the position 

and defenses of the parties by addressing the substantive merits of Roose’s class claim. 

We state “[h]ere, unlike Smith, the Appellants have conceded the exclusion contained in 

the policy is illegal.” Opinion, ¶ 23. However, what Appellants concede is that they 

changed their coordination of benefits provision in response to this Court’s decision in 

Diaz II. Appellants’ claim that Roose’s money was withheld under a medical lien filed 

by Kalispell Regional Medical Center pursuant to § 71-3-114, MCA. Therefore, it is 

hard to construe how they have conceded anything on the substantive merits of Roose’s 
22

class claim. Appellants’ claim pertaining to § 71-3-114, MCA, has never been addressed 

by the Court. 

¶48 The fundamental inquiry regarding numerosity is whether “the class is so 

numerous that joinder of all members is impracticable.” M. R. Civ. P. 23(a). While the 

court must determine numerosity on a case-by-case basis, at a minimum there must be 

some fact upon which the trial court may conclude that there are at least other members 

of the class and that their joinder is impracticable. The inquiry, as set forth by Rule 23(a) 

necessarily implies consideration of circumstances and characteristics of class members

in the context of whether joinder is impracticable. Here, litigation and discovery has 

been on-going for five years and Roose has yet to produce any evidence or fact indicating 

a person, other than himself, has been impacted by the application of the exclusion. In 

contrast, Sherri Houser and Terri Hogan, JPT and EBMS representatives, furnished 

affidavits indicating Roose was the only individual who had his claims treated in a 

manner where the hospital had applied a portion of the liability coverage to its charges. 

Roose specifically had money withheld under the Lincoln County Employee Group 

Health Plan (LC Plan) because of a medical lien filed by Kalispell Regional Medical 

Center pursuant to § 71-3-114, MCA. The situation is thus different from when there is 

no lien and the payment was withheld entirely as a result of a third party liability 

payment, as in Diaz v. State (Diaz II), 2013 MT 219, 371 Mont. 214, 308 P.3d 38. It was 

incumbent upon Roose, in carrying out his burden of establishing numerosity, to produce 

some evidence that other members of the defined class existed. Roose has supplied no 

more than conclusory allegations, while JPT and EBMS have supplied the court with 
23

specific and articulable facts. The only evidence before the District Court was that no 

member, other than Roose, had his liability coverage reduced by a hospital lien.1

¶49 Roose has included in his class definition, adopted by the District Court, health 

plans other than the LC Plan and clients other than JPT. These entities are non-parties to 

the suit and, although the District Court has acknowledged that it could not order these 

non-parties to pay, there exists no basis for including them in the class definition. The 

District Court’s assertion that we have approved this type of remedy in Diaz II and 

Ferguson v. Safeco Ins. Co. of Am., 2008 MT 109, 342 Mont. 380, 180 P.3d 1164, is 

misplaced. In both Diaz II and Ferguson, the defendants who ultimately paid were 

named defendants. In Rolan, where we allowed certification of a class of insureds of 

New West who may have had claims adjusted in violation of a “made-whole” 

determination by New West, New West was nevertheless a named party.2 We have 

 

1

 See also Doninger, 564 F.2d at 1309, where the Court affirmed the trial court’s denial of a 

class certification finding:

[O]nly two affidavits were submitted by the appellants, and both were of their 

trial counsel. The contents of those affidavits added little, if any, factual support 

to the class action allegations. Counsel for the appellants forthrightly and frankly 

admitted that neither he nor any of his clients “could . . . submit affidavits based 

upon personal knowledge, outlining specific facts to support the allegations made 

with regard to the elements necessary for a class.” The memoranda of authority

in support of appellants’ motions are likewise lacking in articulable facts, offering 

only vague and conclusory statements with little specific content. In sum, the trial 

court had before it only the most meager support for appellants’ class action 

allegations. On the other hand, PNB had come forward with substantial 

uncontroverted information tending to show the inappropriateness of class 

treatment. 

2

 In Rolan, this Court did not consider a claim that numerosity had not been established, but 

rather we considered “defendant New West’s contention that the District Court’s choice of class 

definition constituted an abuse of discretion on the grounds that the current definition (1) is 

imprecise, (2) improperly diverges from the definition adopted by Judge Sherlock following 

remand in Diaz I, and (3) will necessitate de-certification of the class.” Rolan, ¶ 16. Failure to 
24

previously recognized that “no authority [exists] that would permit an unknown number 

of class members to blindly sue an unknown number of defendants, creating in effect a 

‘class of defendants.’” Chipman, ¶ 38, citing Murer v. Montana State Comp. Ins. Fund, 

257 Mont. 434, 437, 849 P.2d 1036 (1993). The question of whether litigation may 

proceed against a class of defendants has been raised in numerous federal courts and 

rejected. See Brown v. Kelly, 609 F.3d 467, 477 n.8 (2nd Cir. 2010).3

¶50 The Court has conflated the notice requirements for a 23(b)(2) class and a 23(b)(3) 

class. Unlike a 23(b)(3) class, membership in a 23(b)(2) class is automatic and 

mandatory. Wal-Mart, 131 S. Ct. at 2558. Because the purpose and remedy of the two 

types of classes are fundamentally different, the Rule sets out different provisions for 

notice. In a 23(b)(2) class, absent class members are not required to receive notice and 

have no opportunity to opt-out of the lawsuit. Notice is therefore not required in a 

23(b)(2) class action and will only be needed to protect due process concerns when 

special circumstances exist. See Newberg on Class Actions § 8:3. The purpose of 

providing notice in a 23(b)(2) class “really serves only to allow those members the 

opportunity to decide if they want to intervene or to monitor the representation of their 

rights.” 7AA Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal 

Practice and Procedure § 1786, 497-98 (3d ed. 2005); Manual for Complex Litigation 

 

set forth sufficient facts as a prerequisite to class certification which demonstrate numerosity was 

not at issue in Rolan, as it is here. Nothing in Rolan stands for the proposition that the plaintiff 

does not have to meet his or her burden as to the prerequisites set forth in 23(a). 

3

 “Generally, plaintiffs cannot bring a class action against defendants with whom they have had 

no dealings.” Chipman, ¶ 38.
25

(Fourth) § 21:311, 287 (2004) (stating that notice for a 23(b)(2) class “serves limited but 

important interests, such as monitoring the conduct of the action”). 

¶51 Here, the District Court granted injunctive and declaratory relief and then ordered 

notice after its decision. However, notice serves no due process purpose if given after a 

substantive decision has been made by the court. Parties have no opportunity to 

intervene or monitor litigation unless notice is provided before the court makes 

substantive decisions. In 23(b)(2) class actions, because there is no opportunity to optout, a class member must be given the opportunity to intervene before substantive 

decisions are made in order to be afforded due process. Ostensibly, the District Court’s 

notice was to establish a prospective class of persons who may have monetary or 

restitution claims, which is inappropriate for a 23(b)(2) class for injunctive and 

declaratory relief. The District Court’s order provided that notice was to be given to 

insureds of both named and unnamed parties. On the record that existed at the time the 

certification order was made, the notice ordered by the court conflates the purpose of a 

23(b)(2) class and a 23(b)(3) class—neither of which are appropriate classes given the 

circumstances of this proceeding—and misconstrues the notice provisions of 23(c)(2). 

¶52 The injunctive and declaratory relief which may be appropriate for a 23(b)(2) class 

cannot be used to retroactively satisfy numerosity, a “prerequisite” for establishing a 

class. By allowing injunctive and declaratory relief pursuant to 23(b)(2) to serve as a 

subterfuge for finding class members for a monetary damages or restitution class, the 

Court has changed the procedural protections of Rule 23. To underscore that these 

proceedings are primarily an individual claim for monetary damages by Roose, it is 
26

significant that the LC Plan and other JPT plans have changed their policies on the 

coordination of benefits and corresponding claims practices following our 2011 Diaz I

decision. Rule 23(b)(2) injunctive and declaratory relief was not necessary to change the 

coordination of benefits provision given a change in the law, together with compliance by 

JPT and EBMS. Roose’s claim is fundamentally a claim for individual monetary and 

punitive damages, and is not merely incidental to injunctive relief. Roose has requested a 

separate trial for damages. His individual monetary claim should be prohibited under a 

23(b)(2) class. See Jacobsen, ¶ 76; Wal-Mart, 131 S. Ct. at 2557. 

¶53 The Court’s declaration that “it is the acknowledged unlawful conduct itself that 

makes potential relief appropriate in this case,” Opinion, ¶ 35, adds nothing to an analysis 

of whether class certification is appropriate. The Court fails to appreciate that the class 

certified by the District Court was a Rule 23(b)(2) class, meaning that individual claims 

for monetary damages may not predominate, and continues to blur the distinction 

between the types of classes which may be certified. A Rule 23(b)(2) class is entirely 

different from a Rule 23(b)(3) class. “That the plaintiffs have superficially structured 

their case around a claim for class-wide injunctive and declaratory relief does not satisfy 

Rule 23(b)(2) if as a substantive matter the relief sought would merely initiate a process 

through which highly individualized determinations of liability and remedy are made; 

this kind of relief would be class-wide in name only, and it would certainly not be final.” 

Jamie S. v. Milwaukee Pub. Schs., 668 F.3d 481, 499 (7th Cir. 2012) (emphasis added). 

When, as here, the “relief sought would simply serve as a foundation for a damages 

award, or when the requested injunctive or declaratory relief merely attempts to reframe a 
27

damages claim, the class may not be certified pursuant to Rule 23(b)(2).” Jacobsen, ¶ 98 

(citation and ellipses omitted). 

¶54 In my opinion, this Court allows Rule 23’s notice provision to serve as a discovery 

tool which inappropriately will be used to satisfy the numerosity requirement 

retroactively or to establish a monetary damages class prospectively. This approach 

changes the requirements of Rule 23 and creates issues of fairness and due process. 

While a trial court is afforded wide discretion in certifying a class action, the 

requirements and structural protections of Rule 23 must nevertheless be observed. This 

action is a named a 23(b)(2) class action with 23(c)(2)(A) notice, but may be more aptly 

described as a discovery dispute attempting to utilize the court’s Rule 23 management 

tools and authority. The United State Supreme Court has held that Rule 23 “sets the 

requirements [the courts] are bound to enforce.” Amchem Products, Inc. v. Windsor, 521 

U.S. 591, 620, 117 S. Ct. 2231 (1997). Courts are not at liberty to read the requirements 

out of the rules. Marcus v. BMW of North America, LLC, 687 F.3d 583, 597 (3rd Cir. 

2012). 

¶55 The Court is simply wrong when we state that the “evidence at present show[s] 

more class members do exist and are certain to be found,” Opinion, ¶ 36, when no 

evidence at all has been presented that there is another member of the class besides 

Roose. Indeed, the Court’s statement is a contradiction in itself by claiming that there is 

evidence and then acknowledging that other members are “certain” to be found. Opinion, 

¶ 36. Roose failed to provide sufficient evidence of numerosity which is fatal to his class 

action. It is therefore not necessary to address whether he has established commonality, 
28

typically, and that he is an adequate representative for the class. Certification of a class, 

for the reasons stated above, was contrary to the requirements of Rule 23 and was an 

abuse of discretion. 

/S/ LAURIE McKINNON