Settlement reached in lake case

Another chapter on Montana Power Company closed last Wednesday.

A lawsuit against Montana Power, which was once Montana’s largest corporate entity, was settled last week in Flathead County District Court over allegations that the company improperly maintained Flathead Lake levels as owner of Kerr Dam. The class-action lawsuit against Montana Power claimed that the high lake levels in the late 1990s caused significant shoreline erosion along the Flathead River and Flathead Lake. Attorneys for the class of property owners settled with Montana Power’s insurance company last week for $1.45 million.

Montana Power is no longer a corporate entity in Montana; it went bankrupt in 2001 after converting to a telecommunications company called Touch America. But it does have insurance coverage for the years that it operated Kerr Dam.

The class action lawsuit dates back to 1999, when Lakeside resident Rebecca Mattson filed the suit to recover damages from high lake levels that she claimed caused erosion on the Flathead River and Flathead Lake. Also named as defendant in the suit is PPL Montana, which took over operations of the dam after Montana Power went bankrupt.

Chicago attorney Michael Mulder, who represents the plaintiff class, said during Wednesday’s hearing before district court judge Kitty Curtis that the settlement helped avoid a lengthy trial for both sides. The trial was scheduled to last eight weeks. Mulder also said the settlement avoided a possibility that the class would lose at trial.

Mulder said in Curtis’ courtroom last week Montana Power and PPL Montana “had procedural and substantive” defenses should the case go to trial, “and we felt up to taking those on. We couldn’t have won against some of those defenses and we would have had to run the table.

“We might not have been successful at running the table. This way, the class is going to get something.”

Nearly all of the 3,300 members of the plaintiffs’ class were contacted about the settlement agreement with Montana Power, “and not one objection was received,” Mulder said. “An absence of objections demonstrates support of the settlement.”

The plaintiffs’ lawyers in the case will receive 33 percent of the settlement, plus costs that were outlined in the retainer agreement. Mulder said costs in the case were significant. The case went from Flathead County District Court to the Montana Supreme Court three times, and in each appeal the plaintiffs were successful in bringing it back to Flathead County for further litigation. Plaintiffs’ attorneys also had to navigate the class-action suit through Montana Power’s bankruptcy proceedings. “On at least two occasions we had to breathe life back into the case,” Mulder said.

Mulder said when Montana Power filed for bankruptcy, “It really changed the dynamics of this case.” The class was awarded a settlement of $150,000 for attorneys’ costs in the bankruptcy case, but the case continued against Montana Power’s insurance company.

Since Montana Power had insurance policies on a very narrow window of time that the company owned Kerr Dam while the alleged damages took place, proving those damages at trial would have been difficult, Mulder said.

The case is perhaps the longest-litigated case in Flathead County. The case centers on whether Kerr Dam operators in the 1990s allowed Flathead Lake levels to remain high in the fall, causing excessive shoreline erosion. Plaintiffs claim the excessive high water was a trespass, while defendants say the high water levels were within the scope of their federal permit to operate Kerr Dam. That original permit, dating back to the 1930s, allowed the dam operators to submerge or sub-irrigate portions of land along the Flathead River and Flathead Lake.

While Montana Power is now out of the lawsuit by settling with the plaintiff class, the portion of the case against PPL Montana remains. PPL Montana on July 29 appealed the case to the Montana Supreme Court over the district court’s finding of fact and jurisdiction.

An October trial date with PPL Montana remains on the books in Flathead County District Court, but both sides’ attorneys hinted last week that a settlement on that case might be in the offing.