[00:00:00] Speaker 04: I'm Bill D'Alton, and I represent Jennifer Kransky in this matter. [00:00:07] Speaker 04: Jennifer is from Miles City, Montana. [00:00:10] Speaker 04: She brought claims against the VA, as well as certain individuals in the United States certified that they were all acting within their scope. [00:00:24] Speaker 04: I almost want to apologize for all the pleadings in this case. [00:00:28] Speaker 04: There are a lot of them. [00:00:31] Speaker 04: The reason there are a lot of pleadings is that we have a case that was very fluid from day one. [00:00:38] Speaker 04: There was a termination. [00:00:40] Speaker 04: Jennifer contested through the administrative process the termination. [00:00:46] Speaker 04: She wasn't successful with that. [00:00:50] Speaker 04: While that was going on, the United States decided that they would like to bring criminal complaints against Jennifer. [00:01:00] Speaker 04: They did. [00:01:01] Speaker 04: They followed with a number of agencies. [00:01:04] Speaker 04: They also went after her nursing license. [00:01:08] Speaker 04: She successfully fought those. [00:01:13] Speaker 04: The attempt to take away her nursing license ended with the board, the nursing board denying the request, and that was done April 18th, 2023. [00:01:27] Speaker 04: That was done after Kransky, what I call Kransky 1, was filed, and the motion was pending, motion was pending to dismiss on that. [00:01:37] Speaker 04: were here based on two dispositive issues that the district court ruled on. [00:01:45] Speaker 04: One was the claim preclusion. [00:01:49] Speaker 04: The court ruled that Jennifer's claims of malicious prosecution, retaliation, and abuse of process were excluded under claim preclusion. [00:02:04] Speaker 04: Additionally, the court ruled Jennifer's emotional distress claims could not move forward because the government had not, or the United States had not waived its sovereign immunity for those claims. [00:02:23] Speaker 04: The United States in their brief, it's almost like you're reading two different [00:02:30] Speaker 04: Concepts of the case the United States raises all these other additional issues in its brief That the court did not rule on we've argued that this [00:02:42] Speaker 04: that they cannot be raised now without a court ruling, that they need to be fully decided by the district court in order for you three judges to really adequately analyze those issues. [00:02:56] Speaker 02: But isn't it a jurisdictional issue? [00:02:58] Speaker 02: So we need to decide the jurisdictional issue, right? [00:03:06] Speaker 04: I'm not so jurisdictional issue. [00:03:10] Speaker 04: That's what I'm not certain about, because the court doesn't say for those issues that it did not rule on whether it was a jurisdictional issue. [00:03:22] Speaker 04: When we talk about this idea of issue preclusion, [00:03:31] Speaker 04: That certainly could be a jurisdictional issue, but the court doesn't give us any guidance on that issue. [00:03:37] Speaker 01: Could I just get a little more texture on this? [00:03:40] Speaker 01: Because she's navigating all these federal statutes, I understand that, and all these investigations and prosecutions, which after a lifetime career was incredibly surprising to her and upsetting. [00:04:00] Speaker 01: For the low-hanging fruit, so to speak, the Federal Tort Claims Act bars claims that arise out of a list of torts, like libel, slander, abuse of process, malicious prosecution, emotional distress being kind of a cousin of libel and slander. [00:04:20] Speaker 01: That's a legal question, it would seem to me, [00:04:28] Speaker 01: whether decided by the district court or us, we would have the opportunity to decide it. [00:04:33] Speaker 01: Why aren't those claims barred explicitly by the Federal Tort Claim Act? [00:04:40] Speaker 04: Because there's an officer exception. [00:04:42] Speaker 04: We brought in, we named them individually originally, Officer Hutton and Jackson, whether that's, I think the Federal Tort Claims Act is broad, that includes investigators, officers and whatnot, where they are subject to the claims within the Federal Tort Claims Act of the abuse of process and malicious prosecution claims. [00:05:08] Speaker 04: They are certainly within that. [00:05:09] Speaker 02: So then why doesn't the sovereign immunity apply? [00:05:12] Speaker 04: Because it's been waived for the officers. [00:05:17] Speaker 04: It's been waived for the two officers. [00:05:19] Speaker 04: That's why the government has waived it for the two officers. [00:05:22] Speaker 03: But there is an exception to the exception. [00:05:24] Speaker 03: Right. [00:05:25] Speaker 03: Right. [00:05:26] Speaker 03: This is where it gets really, the triple negatives in this area can get very confusing. [00:05:29] Speaker 03: But we have the discretionary function exception, which says that if something is when there's a discretion of an agent, whether they should file a report or not file a report, [00:05:39] Speaker 03: they get immunity in that situation. [00:05:40] Speaker 03: And I wasn't sure how much of that was brief below, but can you walk me through why you win when there's the discretionary function looming? [00:05:51] Speaker 04: Right. [00:05:52] Speaker 04: And in my complaint, I knew that was out there, right? [00:05:56] Speaker 04: And so in my complaint, I did allege the discretionary function would not apply to these two officers. [00:06:05] Speaker 04: And so why would it not apply? [00:06:07] Speaker 04: Because the way I understand it, and I didn't fully brief this, because they didn't act with their discretion. [00:06:19] Speaker 04: And I believe it would only apply if they acted within some sort of discretion. [00:06:23] Speaker 03: I think that as I understand the doctrine, it says that if there's a mandatory duty, they must do something, then the discretionary function doctrine does not apply. [00:06:31] Speaker 03: However, if it's what we'll call more of a judgment call, whether something there's enough evidence to proceed or we're going to do a subpoena or a search warrant, that falls into discretionary function. [00:06:40] Speaker 03: So I think for you to win on this one, you have to explain what was the mandatory duty for these agents or these officers either to not do something or to do something that they did not do. [00:06:54] Speaker 04: that they did not do. [00:06:56] Speaker 03: Whatever is the mandatory do they failed to live up to? [00:06:58] Speaker 04: Yeah and and my answer to that is we're at the motion to dismiss stage. [00:07:05] Speaker 04: I need to conduct more discovery on the policies of that particular agency to figure what they were required to do and not required to do. [00:07:16] Speaker 04: I can't do that sitting here because we're at the 12b6 stage. [00:07:20] Speaker 02: Well, you do have, though, that Hinton and Jackson's report was in the evidence file. [00:07:32] Speaker 02: It was the SLB reporting file. [00:07:35] Speaker 02: And it summarized the evidence, right? [00:07:37] Speaker 02: So by summarizing the evidence against Kransky in that letter, aren't they performing the classic discretionary function of assessing the weight of the evidence against her, according to the Gonzalez case? [00:07:49] Speaker 04: I wish I had a solid answer to that question. [00:07:52] Speaker 04: I don't. [00:07:53] Speaker 04: I'm just going to admit that right now. [00:07:55] Speaker 04: Again, without going through the policy manuals, I would be guessing, unfortunately. [00:08:02] Speaker 02: Because that letter was submitted prior to the final review, right? [00:08:07] Speaker 04: That that letter was submitted before the final you're correct Okay, but but again because we're in the 12b and I tried to get in discovery I would love to get into discovery into this to to and so i'm what i'm saying maybe um indirectly that Um, it needs to go further. [00:08:27] Speaker 04: Maybe that's the motion later on Uh that needs to be made but but without [00:08:33] Speaker 04: those facts developed in discovery, it's difficult to say. [00:08:38] Speaker 01: So you're just saying that you want to remand? [00:08:41] Speaker 04: Yes. [00:08:42] Speaker 04: Exactly. [00:08:42] Speaker 04: Exactly. [00:08:43] Speaker 04: I want to remand. [00:08:44] Speaker 04: I'd love to remand to go forward with discovery and move forward. [00:08:50] Speaker 04: Absolutely. [00:08:52] Speaker 04: Regarding the claims preclusion, to go back to that issue, we believe [00:09:01] Speaker 04: The judge erred by not applying what I call a great rule, a simple rule in Howard v. City of Coos Bay. [00:09:11] Speaker 04: It seems to me the district court judge used the transactional rule rather than the accrual rule. [00:09:24] Speaker 04: The Howard case states that if the claims have not accrued, you can bring them and claim preclusion does not apply. [00:09:38] Speaker 04: I think the United States admits, or not admits, they agree that the malicious prosecution claim did not accrue and it could go, claims of preclusion would apply to that claim. [00:09:53] Speaker 04: The government's argument on the other claims is, well, I'll leave that up to the government, but we've also are convinced and we've argued that the abuse of process has not accrued. [00:10:13] Speaker 04: It all is contingent on the Montana Department of Labor dismissing the complaint against Jennifer's license. [00:10:24] Speaker 04: We could, let's imagine if we could that the Department of Labor moves forward and they take the license, okay? [00:10:37] Speaker 04: They do take, they find the allegations valid and they take her license. [00:10:44] Speaker 04: Would we have those claims? [00:10:46] Speaker 04: No. [00:10:47] Speaker 04: because on the league armband they have not accrued, it was necessary to get that dismissed and therefore we believe they have not accrued the retaliation, the abuse of process until the department dismissed those claims against her license. [00:11:06] Speaker 03: Do you want to reserve the rest of your time? [00:11:09] Speaker 04: Oh, did I already reserve it? [00:11:12] Speaker 04: Well, that's my full time. [00:11:13] Speaker 03: Yes, yes, sorry. [00:11:14] Speaker 03: Thank you. [00:11:15] Speaker 03: We'll go to four minutes to keep it simple. [00:11:17] Speaker 03: OK, thank you. [00:11:29] Speaker 01: Thank you. [00:11:32] Speaker 00: When it works, it's great. [00:11:35] Speaker 00: May it please the court. [00:11:36] Speaker 00: My name is Abby Chuck, and I am from the United States Attorney's Office in the District of Montana. [00:11:42] Speaker 00: We ask that this court affirm, and it may do so on a variety of independent grounds. [00:11:48] Speaker 00: That includes issue preclusion, claim preclusion, the intentional tort exception, based on the Veterans Benefit Act, and based on failure to exhaust. [00:11:59] Speaker 00: So first I want to talk about issue preclusion. [00:12:02] Speaker 03: Let me just jump in. [00:12:02] Speaker 03: So you mentioned a bunch. [00:12:03] Speaker 03: I didn't hear sovereign immunity. [00:12:06] Speaker 00: Your Honor, sovereign immunity is tied into a number of those claims. [00:12:10] Speaker 00: It's tied into the intentional tort exception to the VBA, to failure to exhaust and claim preclusion. [00:12:18] Speaker 00: So first I want to start with issue preclusion, and this is very closely linked actually to the Veterans Benefits Act waiver of sovereign immunity issue. [00:12:26] Speaker 00: It's just a simpler way to get to the conclusion that the VBA's analysis would eventually get to. [00:12:33] Speaker 00: So to look at issue preclusion, we go all the way back to Kransky 1, where Kransky filed this complaint about six months after she was removed from her position. [00:12:43] Speaker 00: The court in Kransky 1 says, well, under the section under which she was removed does not allow for an appeal to district court. [00:12:53] Speaker 00: And because the VBA is a comprehensive remedial scheme, she cannot seek any [00:13:01] Speaker 00: Redress, yes, related to her removal action through tort claims, for example. [00:13:09] Speaker 00: So that decision in Kransky 1 was not appealed. [00:13:14] Speaker 00: We now are in Kransky 2, where she's again sought relief through tort claims that are related to the adverse action. [00:13:23] Speaker 00: So the court's conclusion in Kransky 1 that those kinds of claims are not allowed through the VBA can now be applied in Kransky 2. [00:13:31] Speaker 00: And that's really the simplest way that this court can affirm the district court's ruling, because all of the tort claims, these are all tort claims, can be dismissed through issue preclusion. [00:13:41] Speaker 02: So if I understand correctly from petitioner, the malicious prosecution, the retaliation, and the abuse of process claims are the three that he thinks he should go back and have remanded and have discovery on to determine if they come out of the policies or [00:14:00] Speaker 02: the discretionary function exception, correct? [00:14:05] Speaker 00: Your Honour, yes, those three and I also believe he is appealing the emotional distress claims as well. [00:14:10] Speaker 02: Of course, and the IIED, okay. [00:14:12] Speaker 02: Yeah. [00:14:12] Speaker 02: So, and tell me how those then are linked to the issue preclusion and the sovereign immunity. [00:14:18] Speaker 00: Absolutely, so the issue then within issue preclusion is whether they are related to the adverse action So all of these all all of these tort claims are related to the adverse action and they are for two reasons And this is when we get into the issue preclusion Elements and the one that's at issue here is are they identical, right? [00:14:36] Speaker 00: So he's alleging she pardon me. [00:14:39] Speaker 00: She is alleging that these claims are [00:14:42] Speaker 00: The conduct that's at issue in Kransky 2 is related to the referrals that are allegedly false to the nursing board. [00:14:50] Speaker 00: But this would require an inquiry into the legitimacy and accuracy of the underlying investigation, which necessarily looks at the exact same evidence that it was at issue in Kransky 1. [00:15:03] Speaker 00: So the issues are identical. [00:15:05] Speaker 00: additionally plaintiff it seems to me that he's that she's created an artificial divide based a temporal divide in the facts of this case so and that's my next question then so what about the retaliation does the retaliation somehow get carved out temporally [00:15:23] Speaker 00: So retaliation is not actually a cause of action in Montana. [00:15:27] Speaker 00: And so the FTCA pulls from state law to decide whether there's a cause of action. [00:15:32] Speaker 00: And because retaliation is not a cause of action in Montana, that should just be dismissed on those grounds. [00:15:37] Speaker 00: And that's something that the district court did recognize, that retaliation has no foundation in Montana law. [00:15:46] Speaker 01: Going back to the claim preclusion and sovereign immunity, [00:15:53] Speaker 01: What's your position then on the claim that, okay, there are non-law enforcement employees at issue? [00:16:00] Speaker 01: And he said, fine, we'll put those over here. [00:16:03] Speaker 01: But that the discovery and what remains uncertain relates to the law enforcement officials and the exception to the exception under the Federal Tort Claims Act. [00:16:18] Speaker 00: So the acceptance to the exemption, I like to think of it as the law enforcement proviso to get rid of some of the confusion there. [00:16:27] Speaker 00: So the intentional torts exception, there's kind of two pieces to it I would like to look at. [00:16:35] Speaker 00: First of all, emotional distress. [00:16:36] Speaker 00: We made an argument that the emotional distress claim is actually just a repackaged version of [00:16:42] Speaker 00: of defamation, and the defamation is not in the law enforcement proviso. [00:16:49] Speaker 01: So that is actually, it's only in- Well, that would go out under sovereign immunity. [00:16:57] Speaker 00: Yes, exactly. [00:16:58] Speaker 01: But now I'm asking about the malicious prosecution more specifically. [00:17:03] Speaker 00: So the conduct that's underlying that malicious prosecution claim is referral to the nursing board, [00:17:12] Speaker 00: This court, pardon me, Metz, which is a case that we all cited, and it referred to Arnsburg, which is from the Ninth Circuit, has recognized that when police officers are merely the conduit of the information, that's not sufficient to allow the law enforcement proviso to kick in. [00:17:29] Speaker 00: So here, we had the AIB investigation that did not involve any law enforcement, the decision to remove her that did not involve law enforcement, [00:17:37] Speaker 00: And she received two removal letters, and in both of those, she was warned that she would be referred to the nursing board. [00:17:46] Speaker 00: Then about a month later, she is referred to the nursing board. [00:17:49] Speaker 00: It is officers who carried that information to the nursing board, but this all flowed out of the actions of non-law enforcement officers, and would require, again, an investigation into the legitimacy and accuracy of the underlying investigation from the AIB. [00:18:03] Speaker 00: The letter, so this is not in the record, but it is stated in the plaintiff's complaint. [00:18:09] Speaker 00: The letter that those officers sent to the nursing board relied on the AIB investigation. [00:18:16] Speaker 00: So the law enforcement proviso. [00:18:18] Speaker 02: The investigative file was the investigative file from the board, not their own investigation. [00:18:24] Speaker 00: Based on what is in that letter. [00:18:26] Speaker 00: Right. [00:18:27] Speaker 00: That is what I understand. [00:18:28] Speaker 00: But again, this is this has not been developed below. [00:18:31] Speaker 00: And so I can't go beyond that. [00:18:35] Speaker 00: But I also don't think that that is necessarily the cleanest way to get to a dismissal in this case. [00:18:41] Speaker 00: So I think, as I stated, issue preclusion gets you there. [00:18:44] Speaker 00: But also the VBA, what underlies issue preclusion, does not waive sovereign immunity for the plaintiff to bring a claim in this court. [00:18:59] Speaker 00: And the Ninth Circuit in Weber or Weber, I'm not sure how to pronounce it, recognized that the VBA is a comprehensive remedial scheme that does not allow individuals who seek review of their removal action from the VA to pursue claims like tort claims in federal district court. [00:19:24] Speaker 00: So if we look at just the merits of the VBA, dismissal is also required. [00:19:29] Speaker 00: As to exhaustion, plaintiffs really put herself in a bit of a dilemma here, because the order of events is that the SF95, that's the document that's required to be filed with the agency to start the administrative process, that SF95 is filed before the complaint in Kransky 1. [00:19:51] Speaker 00: And then, as plaintiff argues, we disagree to some extent, [00:19:56] Speaker 00: the claims in Kransky 2 do not even accrue until after the complaint in Kransky 1. [00:20:03] Speaker 00: If they do not accrue until after, it is impossible that they would have been included in the SF95 filed before the complaint in Kransky 1. [00:20:12] Speaker 01: So either- That retaliation and abuse of process, those two claims fall in that category? [00:20:17] Speaker 00: Abuse of process had accrued. [00:20:20] Speaker 00: The United States argues abuse of process had accrued prior to the complaint in Kransky 1. [00:20:26] Speaker 00: For example, if this court looks at ER 456, this is the complaint from Kransky 1. [00:20:34] Speaker 00: She talks about the fact that the VA told the nursing board false and misleading statements. [00:20:40] Speaker 00: And so all of the facts that were necessary for accrual of abuse of process had accrued prior to Kransky 1. [00:20:48] Speaker 00: It's really malicious prosecution that the United States conceded accrued after the complaint in Kransky 1. [00:20:55] Speaker 00: And if that's true, the plaintiff needed to file another SF95, because the government cannot be expected to know about claims that have not accrued yet, and plaintiff has not done so. [00:21:06] Speaker 00: So there has not been exhaustion on those claims. [00:21:11] Speaker 00: There's a lot of moving parts here. [00:21:12] Speaker 00: Is there anything you'd like me to revisit? [00:21:16] Speaker 01: Well, just maybe a recap would be helpful, and that is, [00:21:23] Speaker 01: You're arguing that sovereign immunity bars emotional distress as related to labor, slander, and similar, correct? [00:21:32] Speaker 00: Yes, Your Honor. [00:21:33] Speaker 00: OK. [00:21:34] Speaker 00: And so that would take care of the emotional distress claims. [00:21:39] Speaker 01: And then as to malicious prosecution, [00:21:42] Speaker 00: and abuse of process could be dismissed under issue preclusion because the legal holding in Kransky 1 can be applied in Kransky 2. [00:21:55] Speaker 00: As to claim preclusion, abuse of process could be dismissed under claim preclusion because abuse of process had accrued prior to the complaint in Kransky 1. [00:22:09] Speaker 00: Then if we look at the VBA, that would be grounds to dismiss all of the claims, because that is a jurisdictional bar to the district court hearing the claim. [00:22:20] Speaker 01: And then I want to go back. [00:22:23] Speaker 01: There was one other one that you haven't mentioned. [00:22:26] Speaker 01: And you said retaliation is not a tort under Montana law. [00:22:33] Speaker 00: Correct. [00:22:35] Speaker 00: There's no such tort in Montana law. [00:22:37] Speaker 00: And if you look at the complaint in Kransky too, the facts that she alleges support her retaliation claim are identical to the facts that support her malicious prosecution claim. [00:22:50] Speaker 00: So it just really seems to be a restatement of malicious prosecution. [00:22:54] Speaker 00: And and that one should just be dismissed on the grounds that there are there's no such claim that the FTCA could pull could pull in to its analysis Anything further I'm happy to this is kind of fun. [00:23:10] Speaker 00: This is a web. [00:23:12] Speaker 00: Did you say it's kind of fun? [00:23:13] Speaker 00: It's kind of fun It's a bit of a web I Think we're good. [00:23:22] Speaker 03: Thank you very much. [00:23:23] Speaker 00: Thank you very much your honors [00:23:31] Speaker 04: I would just briefly address some of the issues that were raised as I raise this. [00:23:40] Speaker 04: First of all, the VBA Veterans Benefit Act. [00:23:47] Speaker 04: The court was clear that any claim that directly related to the termination [00:23:55] Speaker 04: would be excluded under the exclusivity of the VBA. [00:24:02] Speaker 04: That's in Kransky 1. [00:24:05] Speaker 04: Also in Kransky 1, the court does not dismiss [00:24:11] Speaker 04: With prejudice, the emotional distress claims, it dismisses them without prejudice. [00:24:18] Speaker 04: And therefore, I have to take that and run with it. [00:24:22] Speaker 01: But what about sovereign immunity as to that claim? [00:24:26] Speaker 04: Right. [00:24:27] Speaker 01: I mean, crediting that you can bring the claim, maybe it wasn't covered in the previous orders. [00:24:36] Speaker 01: But isn't it doomed by sovereign immunity? [00:24:39] Speaker 04: I would respectfully disagree. [00:24:42] Speaker 04: A claim of motion to stress is not excluded as a matter of law from the FTCA. [00:24:48] Speaker 04: That's she and VUS. [00:24:51] Speaker 04: But then again, we have another exception, right? [00:24:54] Speaker 04: That if it emanates out of one of the excluded claims, [00:25:01] Speaker 04: It comes under the FTCA and the the court said in this case it was under the defamation Allegations and therefore it was excluded we have disagreed with that again. [00:25:16] Speaker 04: It's it's a 12b process and we believe the allegations in the complaint should be interpreted into to Jennifer's favor and in that regard [00:25:31] Speaker 04: We don't believe, obviously, you're going to have overlap, right? [00:25:35] Speaker 04: You're going to have it with these allegations between the various claims. [00:25:40] Speaker 04: And we filed a very extensive amended complaint, 25 pages long. [00:25:46] Speaker 04: And we believe there are allegations in there that are outside of the defamation claim that supports emotional distress. [00:25:55] Speaker 02: Do you agree that the officers, Hunton and Jackson, who provided the letter to Kransky, were just providing what the agency had investigated? [00:26:08] Speaker 04: I would love to give you a solid answer, Judge, on that. [00:26:14] Speaker 04: I just can't because, again, I need to get into the discovery and find out exactly what happened. [00:26:22] Speaker 02: Do you have the letter? [00:26:23] Speaker 02: You don't know. [00:26:24] Speaker 04: I have the letter from the agents to the department. [00:26:29] Speaker 04: I think it was redacted. [00:26:35] Speaker 04: So do I have a letter? [00:26:37] Speaker 04: I think I have parts of it. [00:26:38] Speaker 04: I don't think I have the entire letter. [00:26:42] Speaker 04: And then I have found over the years of practicing that there's always something more in the file once you get a hold of it. [00:26:53] Speaker 04: So retaliation, the government brings up a point there's no such claim. [00:26:57] Speaker 04: I think it's too early to say that. [00:26:59] Speaker 04: I think that has to be discovered. [00:27:01] Speaker 04: There's nothing in the Montana jury instructions that talk about retaliation. [00:27:06] Speaker 04: It's more in the discrimination context, at least in statute in Montana. [00:27:11] Speaker 04: But that doesn't mean you can offer jury instructions [00:27:16] Speaker 04: on retaliation, which has been done under the common law. [00:27:20] Speaker 04: And therefore, the judge can decide whether they are going to accept an independent claim or not of retaliation. [00:27:28] Speaker 04: And so I think it's too early to make a rule. [00:27:32] Speaker 04: That needs to go back to this court to make a ruling later on in this case. [00:27:35] Speaker 04: And there's my time. [00:27:37] Speaker 03: Very well, counsel. [00:27:38] Speaker 03: Unless we have any other questions? [00:27:39] Speaker 03: Nothing else. [00:27:39] Speaker 03: Nope. [00:27:39] Speaker 03: All right. [00:27:40] Speaker 03: Thank you so much to both of you for your briefing and argument in this interesting case. [00:27:43] Speaker 03: This matter is submitted.