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MONTANA EIGHTH JUDICIAL DISTRICT COURT, CASCADE COUNTY

______________________________________________________________________________
)
MICHAEL D. SCHNITTGEN, )
) Cause No. ADV-13-168
Plaintiff, )
)
vs. ) FINDINGS OF FACT, CONCLUSIONS
) OF LAW, AND ORDER RE: RULE 11
BNSF RAILWAY CO., a corporation, )
)
Defendant. )
____________________________________)_________________________________________

INTRODUCTION

This matter is before the Court on Plaintiff Michael Schnittgens Motion for Rule 11
Sanctions filed on June 20, 2014. [Doc. 90]. Defendant BNSF Railway Co. responded on July
7, 2014. [Doc. 96]. Schnittgen replied on July 21, 2014. [Doc. 100]. The Court held a hearing
on September 23, 2014.
John A. Kutzman and Anthony S. Petru appeared for Schnittgen. Thomas L. Beam,
Anthony M. Nicastro, and Maxon R. Davis appeared for BNSF. Mr. Davis was retained by
BNSF after this motion was filed, and he is not responsible in any way for the Rule 11 violations
or sanctions.
The Court, having considered all of the pleadings, records, files and oral argument, issues
the following Findings of Fact, Conclusions of Law, and Order.
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FINDINGS OF FACT

1. On July 19, 2011, Plaintiff Michael Schnittgen and engineer Randy Zeman were
driving a BNSF train from Stanford to Great Falls.
2. A BNSF dispatcher in Ft. Worth, Texas, issued a track warrant authorizing the
train to proceed from milepost 205 to the Great Falls yard. The track warrant did not warn of
any open switches that might divert the train onto an adjacent track.
3. When the train reached Gerber, about 12 miles southeast of Great Falls,
Schnittgen noticed the track switch was open, diverting them onto an adjacent track. The train
collided with a parked train. Schnittgen was injured in the collision.
4. In its internal investigation, BNSF determined Andre Kaluza failed to close the
switch. BNSF also found Kaluza improperly reported to BNSF dispatch the switch was closed.
Kaluza admitted his failure. BNSF fired Kaluza.
5. BNSF cleared Schnittgen of wrongdoing. The collisions cause was so clear
BNSF did not request Schnittgen submit a drug and alcohol test.
6. Schnittgen sued BNSF for his injuries under the Federal Employers Liability Act,
45 U.S.C. 51, et seq., on February 26, 2013. [Doc. 1].
7. BNSF answered on June 28, 2013. [Doc. 4]. In its Answer, BNSF admitted the
collision occurred, but denied liability and asserted contributory negligence.
8. On July 10, 2013, Schnittgen demanded BNSF admit liability and withdraw its
contributory negligence defense.
9. In an Amended Answer filed on September 19, 2013, BNSF maintained its
contributory negligence defense, but averred:
6. Defendant admits that Plaintiff was working for BNSF as a
conducted on July 19, 2011 on a train near Great Falls and that Mr.
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Kaluza, an employee of 17 years, operated a sliding switch to
allow the Georgetown train to pull into the siding and off the
mainline tracks. Mr. Kaluza forgot to reline the switch and the
train Plaintiff was working on entered the siding and hit the
Georgetown train. Three locomotives and 10 cars of out of the 110
cars on Plaintiffs train derailed.

7. Defendant does admit that an employee of 17 years failed to
exercise reasonable care when he forgot to reline a switch to
mainline travel and if he had relined the switch then Plaintiffs
train would have traveled down the mainline instead of into the
siding and hitting the Georgetown train and derailing three
locomotives and 10 cars out of 110.

(Am. Ans. 6-7). [Doc. 11]. BNSF contends this admits liability.
10. On May 12, 2014, Schnittgen moved for partial summary judgment on liability
and contributory negligence. [Doc. 41.2]. Schnittgen separately served, but did not file, his
motion for Rule 11 sanctions. Schnittgen again demanded BNSF withdraw its contributory
negligence defense. BNSF refused.
11. The Court granted partial summary judgment for Schnittgen on August 28, 2014.
[Doc. 102].
CONLCUSIONS OF LAW
From the foregoing Findings of Fact, the Court enters the following Conclusions of Law:
1. Any Conclusion of Law in the preceding Findings of Fact is incorporated as a
Conclusion of Law.
2. This Courts findings of fact are reviewed on whether they are clearly erroneous
and the conclusions of law for abuse of discretion. See Davenport v. Odlin, 2014 MT 109, 9,
374 Mont. 503, 327 P.3d 478. A court abuses its discretion when it acts arbitrarily without
conscientious judgment or exceeds the bounds of reason resulting in substantial injustice. See
Larchick v. Diocese of Great Falls-Billings, 2009 MT 175, 39, 350 Mont. 538, 208 P.3d 836.
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3. By presenting a pleading to the Court, BNSF represents that to the best of its
knowledge, information and belief, formed after completing a reasonable inquiry:
(1) it is not being presented for any improper purpose, such as
to harass, cause unnecessary delay, or needlessly increase
the cost of litigation;

(2) the claims, defenses, and other legal contentions are
warranted by existing law or by nonfrivolous argument for
extending, modifying, or reversing existing law or for
establishing new law;

(3) the factual contentions have evidentiary support or, if
specifically so identified, will likely have evidentiary
support after a reasonable opportunity for further
investigation or discovery; and

(4) the denials of factual contentions are warranted on the
evidence or, if specifically so identified, are reasonably
based on belief or lack of information.

Rule 11(b), MRCP.

4. The purpose of Rule 11 is to discourage dilatory or abusive tactics and help to
streamline the litigation process by lessening frivolous claims or defenses. Byrum v. Andren,
2007 MT 107, 32, 337 Mont. 167, 159 P.3d 1062. Before a district court may impose
sanctions under Rule 11, it must conduct a hearing for that purpose, so the party will be
provided with due process before it is punished. Id.
5. Schnittgen notified BNSF of the alleged Rule 11 violations before filing his
motion. Schnittgen provided BNSF with a reasonable opportunity to withdraw its frivolous
defense before filing his Rule 11 motion. Schnittgen complied with Rule 11(c)(2), MRCP.
6. This Court followed the due process requirements under Byrum. BNSF was
notified of the Rule 11 motion. BNSF filed a written response. A hearing was held on
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September 23, 2014. The Court will hold a post-trial hearing before entering sanctions. The
Court complied with Rule 11(c)(1). MRCP.
7. This Court has broad discretion in imposing sanctions under Rule 11. See Morin
v. State Farm Mut. Auto. Ins. Co., 2013 MT 146, 33, 370 Mont. 305, 302 P.3d 96. A district
court has the flexibility to deal appropriately with violations of Rule 11 and to tailor sanctions to
fit the particular case. Id. (citing Gold Reserve Corp. v. McCarty, 228 Mont. 512, 515, 744 P.2d
160 (1987)). This Court is in the best position to evaluate the credibility of the evidence in a
Rule 11 proceeding. Id. (citing Bulen v. Navajo Refining Co., 2000 MT 222, 16, 344 Mont.
374, 188 P.3d 1013).
8. There are two grounds for imposing sanctions under Rule 11: the frivolousness
clause, meant to cover pleadings not grounded in fact or law; and the improper purpose
clause, meant to cover pleadings filed for an improper purpose. Id. at 37 (citing DAgostino v.
Swanson, 240 Mont. 435, 445, 784 P.2d 919, 925 (1990)).
9. Schnittgen asserts BNSF violates Rule 11 by equivocating its admission of
liability in paragraphs 6 and 7 of the Amended Answer and asserting contributory negligence.
10. Paragraphs 6 and 7 in BNSFs Amended Answer do not violate Rule 11. While
the Court agrees with Schnittgen that BNSF unreasonably equivocated its admission of liability
by irrelevantly referencing mistakes made by a 17-year employee, this equivocation does not
violate Rule 11.
11. BNSFs contributory negligence defense violates both the frivolousness clause
and improper purpose clause of Rule 11. See id. BNSF correctly notes contributory negligence
is an available defense under FELA. See 45 U.S.C. 53. To satisfy Rule 11, however, a defense
not only must have a basis in law, but also the factual contentions must have evidentiary support
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or will likely have evidentiary support after further investigation or discovery. The standard for
determining whether a pleadings has a sufficient factual basis is reasonableness under the
circumstances. See DAgostino v. Swanson, 240 Mont. 435, 445, 784 P.2d 919 (1990).
BNSFs factual explanation for its contributory negligence defense is feeble. BNSF
asserts Schnittgen failed to timely apply the emergency brake and maintain a proper lookout for
the parked train. BNSF concedes, however, the collision was unavoidable. BNSF posits, if
Schnittgen had applied the emergency brake sooner, his injuries may be less severe. In that
regard, BNSF contends its contributory negligence defense addresses damages.
BNSF fails to explain how it can admit liability for the train collision but blame
Schnittgen by asserting contributory negligence. See, e.g., Joseph v. United States, 121 F.R.D.
406, 412 (D. Haw. 1988) (imposing Rule 11 sanctions against the defendant for continuing to
deny liability and for asserting contributory negligence after becoming aware of facts
establishing liability); Hummer v. Pulley, Watson, King & Lischer, P.A., 536 S.E.2d 349, 380-81
(N.C. Ct. App. 2000) (same).
For contributory negligence, BNSF must prove Schnittgens conduct was a cause-in-fact
of his injury and the injury is the direct or indirect result, proximately caused by the negligent
act. See MPI2d 2.14; Pappas v. Midwest Motor Express, 268 Mont. 347, 350-51, 886 P.2d 918
(1994). Proximate cause is an act or omission which, in a natural and continuous sequence,
unbroken by any new, independent cause, produces injury, and without which the injury would
not have occurred. Id. at 351; see also Roe v. Kornder-Owen, 282 Mont. 287, 937 P.2d 39
(1997) (affirming dismissal of contributory negligence defense where there was no evidence the
plaintiffs conduct caused the collision). BNSF cleared Schnittgen of wrongdoing. BNSF
concedes the collision was unavoidable. Given those circumstances, there are no conceivable
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facts establishing Schnittgens alleged breach of a duty was a proximate cause of the collision
and his damages.
BNSF also lamely asserts its contributory negligence defense does not violate Rule 11
because it couched its pleading with the word, may. This is simply a last-ditch argument by
BNSF to maintain its defense at all costs, only compounding the frivolous, bad faith nature of its
pleading. To borrow lyrics from a Jimmy Buffett song, Thats my story and Im stickin to it
seems to aptly describe BNSFs strategy to maintain its frivolous defense. See Jimmy Buffett,
Thats My Story And Im Stickin To It , Off to See the Lizard, (MCA Records 1989).
Rule 11 does not permit a party to raise every conceivable claim or defense simply to
preserve them for trial. One court emphatically condemned the practice by holding, It would
appear [Defendants] assertion is that it may simply have thrown in boilerplate defenses into
its answer without anything to support them, speculating on what the future might unearth. Rule
11 of course would preclude that kind of pleading practice. Gould v. Lumonics Research, Ltd.,
1982 WL 594705, at *1 fn. 2 (N.D. Ill. Apr. 12, 1982). The Rule 11 violation here is of the
worst kind: it is personal. This is not a situation, for instance, where a defendant alleges laches
when it does not apply. Rather, BNSF deliberately and with no hesitation maliciously alleges
Schnittgen is at fault for this train wreck. In DAgostino, the court admonished all members of
the Montana bar that the language of Rule 11 is mandatory. If a district court finds that a
pleading or motion is groundless or filed for an improper purpose, the court shall impose an
appropriate sanction. 230 Mont. at 448. A failure to impose sanctions when circumstances
reveal the rule has been violated is reversible error. See id. at 446.
Given BNSF cleared Schnittgen of wrongdoing before he sued, the only conceivable
motivation for BNSFs assertion of contributory negligence is to emotionally grind down
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Schnittgen to abandon his case, accept some nuisance-value settlement, or to otherwise
intimidate or pressure him. Given the numerous opportunities Schnittgen provided BNSF to
withdraw its frivolous defense, the Court concludes asserting and maintaining contributory
negligence was an improper delay, deny, and defend tactic by BNSF. None of these purposes is
proper under Rule 11, and BNSFs conduct must be sanctioned.
12. Having found BNSF in violation of Rule 11, this Court must impose an
appropriate sanction. See Morin, 38. The overriding objective of imposing sanctions is
punishment for wasteful and abusive litigation tactics in order to deter the use of such tactics in
the future. Id. (citing DAgostino, 240 Mont. at 445); see also Hartsoe v. Tucker, 2013 MT 256,
14, 371 Mont. 539, 309 P.3d 39 (Courts have the inherent power to levy sanctions to curb
abusive litigation practices.) (citing Roadway Express, Inc. v. Piper, 447 U.S. 752, 765 (1980)).
13. This Court has the flexibility to deal appropriately with violations of Rule 11 and
to tailor sanctions to fit the particular case. Morin. 33. Each case of Rule 11 sanctions must
be based upon its own facts and circumstances. Id. 42.
14. There are myriad sanctions available to the Court, including, inter alia, the
payment of attorneys fees and costs; fines payable to the Court; a referral for attorney
disciplinary proceedings; requiring distribution of the sanction order to every member of the
offending attorneys firm; ordering distribution of the sanction order to all Montana judges; or
striking the offending pleading or affirmative defenses. See DAgostino, 240 Mont. at 446-47;
see also Pae Govtt Serv., Inc. v. MPRI, Inc., 514 F.3d 856, 859 fn. 3 (9
th
Cir. 2008) (if bad faith
is found, under the procedures outlined in Rule 11, the district court has wide latitude to impose
sanctions, including striking the offending pleading). The Court will strongly consider creative
sanctions, such as requiring apologies from BNSF executives and attorneys for the offending
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conduct. See, e.g., De Ponce v. Buxbaum, No. 90-CIV-6344 (SWK), 1992 U.S. Dist. Lexis
15730 (S.D.N.Y. Oct. 14, 1992) (cataloging the small but growing body of reported decisions
reflect[ing] the creative approaches taken by a number of judges in fashioning Rule 11
sanctions).
15. Trial is set for October 14, 2014. The Court will hold a post-trial on the
appropriate sanctions for BNSFs violations of Rule 11. See Cooter & Gell v. Harmarx Corp.,
496 U.S. 384, 395-96 (1990) ([I]t is well established that a federal court may consider collateral
issues after an action is no longer pending like the imposition of costs, attorneys fees, and
contempt sanctions, the imposition of a Rule 11 sanction is not a judgment on the merits of an
action Such a determination may be made after the principal suit has been terminated.);
Masalosalo v. Stonewall Ins. Co., 718 F.2d 955, 956-57 (9
th
Cir. 1983) (the filing of an appeal
does not deprive the court of jurisdiction over the question of whether sanctions are appropriate);
see also Rule 5(a)(ii), MRAP; Estate of Earl M. Pryun v. Axmen Propane, Inc., 2008 MT 329,
5, 346 Mont. 162, 163, 194 P.3d 650 (a district court retains jurisdiction over ancillary matters
while an appeal is pending).
ORDER
IT IS HEREBY ORDERED, Plaintiff Michael Schnittgens Motion for Rule 11
Sanctions is GRANTED.
IT IS FURTHER ORDERED, a post-trial hearing on sanctions will be held at a date
and time to be determined by the Court.
Dated: October 9, 2014.
/s/ Gregory G. Pinski_________________
GREGORY G. PINSKI
CHIEF DISTRICT JUDGE


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c: David R. Paoli/John A. Kutzman, P.O. Box 8131, Missoula, MT 59802
Anthony S. Petru, 350 Frank H. Ogawa Plaza, 4
th
Floor, Oakland, CA 94612
Anthony Nicastro/Brian Taylor, 401 North 31
st
Street, Suite 1650, Billings, MT 59101
Thomas L. Beam, 1001 17
th
Street, Suite 300, Denver, CO 80202
Maxon Davis, P.O. Box 2103, Great Falls, MT 59403