Common Fund Litigation:_Common_Fund

COMMON FUND LITIGATION: COMMON FUND DOCTRINE

MONTANA SUPREME COURT DECISIONS

Stavenjord v. Montana State Fund, 2006 MT 257, 334 Mont. 117, 146 P.3d 724 Where eligible claimants have the financial incentive to pursue benefits and more work must be done on their claims before they may obtain the benefits, unjust enrichment to non-participating beneficiaries is absent and therefore the common fund doctrine’s intended purpose is absent as well.

Stavenjord v. Montana State Fund, 2006 MT 257, 334 Mont. 117, 146 P.3d 724 The elements for establishing a common fund are straightforward. However, application of the doctrine is not warranted in every case that establishes a new rule of law from which other claimants may derive a benefit. Where benefits due to non-participating beneficiaries will not be readily identifiable on superficial review of case files, nor can benefits due be calculated with certainty, the “identifiable monetary fund or benefit” which the first element of the common fund doctrine requires is absent.

Stavenjord v. Montana State Fund, 2006 MT 257, 334 Mont. 117, 146 P.3d 724 There are three elements necessary to establish a common fund. First, a party, styled the active beneficiary, must create, reserve, preserve, or increase an identifiable monetary fund or benefit in which all active and non-participating beneficiaries have an interest. Second, the active beneficiary must incur legal fees in establishing the common fund. Third, the common fund must benefit ascertainable, non-participating beneficiaries. Ruhd v. Liberty Northwest Ins. Corp., 2004 MT 236, ¶ 16, 322 Mont. 478, 97 P.3d 561.

Stavenjord v. Montana State Fund, 2006 MT 257, 334 Mont. 117, 146 P.3d 724 Generally, Montana follows the American Rule which obligates each party to civil actions to pay her own attorney fees unless statute, contract, or equity allows otherwise. The Montana Supreme Court recognizes the common fund doctrine as an equitable exception to the American Rule. The common fund doctrine is “rooted in the equitable concepts of quasi-contract, restitutions and recapture of unjust enrichment,” and aimed at properly compensating active litigants and their counsel whose efforts result in correcting an injustice and creating a fund in which other non-participating beneficiaries maintain an interest.

MONTANA WORKERS' COMPENSATION COURT DECISIONS

Reesor v. Montana State Fund [06/04/08] 2008 MTWCC 28 Pursuant to the Montana Supreme Court’s reasoning in Stavenjord II, common fund status must be denied in Reesor. As in Stavenjord, claimants benefitting from the Reesor decision will be eligible for additional benefits depending on various factors that will require evidence varying from beneficiary to beneficiary, specifically, evidence regarding age, education, lifting restrictions and wage loss. While factors of age and education may be readily ascertainable from file reviews, determining appropriate lifting restrictions and wage loss will likely involve seeking additional evidence outside the file.