State Drops Lawsuit, Settles with Flathead Businesses Sued by DPHHS

Lawsuit filed last year after businesses were accused of flouting statewide mask mandate; businesses countersued after judge ruled against state

By Andy Viano
Judge Dan Wilson presides over a hearing on Nov. 12, 2020 in a lawsuit brought by the Montana Department of Public Health and Human Services against five Flathead County businesses. Hunter D’Antuono | Flathead Beacon

The Montana Department of Public Health and Human Services (DPHHS) has agreed to drop its lawsuit against five Flathead County businesses and cover the defendants’ legal fees at a cost of more than $94,000, nearly five months after the businesses were accused of ignoring a statewide mask mandate imposed by former Gov. Steve Bullock.

The five businesses — Sykes Diner and Mercantile, Scotty’s Bar and Casino, Remington Bar and Casino, Ferndale Market, and Your Lucky Turn Casino — won a legal victory on Nov. 12 when Judge Dan Wilson denied DPHHS the temporary injunctions it was seeking, ruling the plaintiffs had failed to prove the defendants were not making a “reasonable effort” to force customers and employees to wear masks.

A little over a week after that ruling, the businesses filed a countersuit against the state, asking for damages and calling the state’s action politically motivated. Shortly after Gov. Greg Gianforte was sworn into office in January, he announced the state would be moving to drop the lawsuits, and on Thursday the cases and counterclaims were formally dismissed.

“As hard as 2020 was for Montana workers and business owners who were just trying to get by, the last thing we all needed was for the government to get in the way. But that’s exactly what happened in the fall,” Gianforte said during his Jan. 28 state of the state address. “A pandemic with severe economic fallout is bad enough. We don’t need government piling on.”

On Thursday, Bruce Fredrickson, an attorney who represents four of the five businesses that were sued, thanked the governor for his efforts in bringing this case to a close.

“The COVID pandemic and the restrictions that were placed on small businesses throughout Montana by the administration wreaked enough havoc on those businesses, without a very small number of businesses having to stand up and defend what was, in our opinion, an absolutely meritless lawsuit,” Fredrickson said.

Fredrickson also praised the businesses for confronting DPHHS back on Oct. 23 when the lawsuits were filed and not admitting to the violations, despite the fact that DPHHS did not ask for specific damages but rather for a restraining order to be put in place until the businesses stopped operating “in a manner that constitutes a public nuisance and is injurious to public health.” DPHHS inspectors observed little to no compliance with the mask mandate at the five businesses when they visited in October.

In open court, the businesses said they made their best efforts to get employees and customers to comply, but said some employees who were unmasked had medical reasons for doing so, questioned why inspectors did not ask the unmasked customers and employees they observed why they were not wearing a mask, and asked why their five businesses were, in their mind, singled out.

“It would have been very easy for (the businesses) to capitulate but they chose not to do that, and they made that choice knowing the easy thing would have been, ‘OK, we’re not going to spend any money and we’re going to do what you’re demanding us to do,’” Fredrickson said.

In their counterclaims and in court on Nov. 12, the businesses said they had been harmed financially by the lawsuits, suffering a loss of customer spending and reputational damage as a result. Thursday’s settlement does not award the businesses damages but does require the state pay all legal fees, $94,491.02, to the three law firms that represented the defendants.

“The bottom line is this lawsuit cost the taxpayers of Montana money,” Fredrickson said. “It cost these businesses money to defend this stuff and time away from their businesses, and in some cases lost revenue, reputation damage because of the publicity that these lawsuits created, and rather than moving forward (with the claims of damages), they recognize the governor’s efforts in bringing these things to a close, and are very appreciative of those efforts and want to get back to doing business.”

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