Title: NYE v DEPT OF LIVESTOCK

State: montana

Issuer: Montana Supreme Court

Document:

No. 80-478 IN THE SUPREfiE COURT OF THE STATE OF MONTANA 1981 MARGARET NYE , Petitioner and Appellant, VS. THE DEPARTMENT OF LIVESTOCK, et al., Defendants and Respondents. Appeal from: District Court of the Fifth Judicial District, In and for the County of Jefferson Honorable Frank Blair, Judge presiding. Counsel of Record: For Appellant: Patrick Flaherty argued, Great Falls, Montana For Respondent: John Bobinski argued, Helena, Montana 5 f t rJ 1 , " 1532 ? n Filed: Submitted: September 26, 1981 Decided: January 14, 1982 M r . J u s t i c e Fred J. Weber delivered t h e Opinion of t h e Court . Margaret Nye brought an a c t i o n i n t h e D i s t r i c t Court of t h e F i f t h J u d i c i a l D i s t r i c t , J e f f e r s o n County, Montana, seeking j u d i c i a l review of t h e termination of her employment and damages f o r slander and wrongful discharge. The D i s t r i c t Court denied t h e p e t i t i o n f o r j u d i c i a l review and dismissed t h e a c t i o n on its m e r i t s . Nye appealed. W e r e v e r s e t h e p o r t i o n of t h e order dismissing t h e wrongful discharge claim and remand t o t h e D i s t r i c t Court f o r f u r t h e r proceedings. Margaret Nye was h i r e d by t h e Department of Livestock of t h e S t a t e of Montana ("Department") i n October 1977. She i n i t i a l l y worked a s a permit c l e r k f o r t h e Department. The record does n o t d i s c l o s e t h e grade a t which t h e permit c l e r k p o s i t i o n was c l a s s i f i e d under t h e state employee c l a s s i f i c a t i o n plan. I n May 1979, Nye was promoted t o t h e p o s i t i o n of general o f f i c e c l e r k V a t a p o s i t i o n c l a s s i f i c a t i o n of grade 8. Nye s t a t e d a t t h e t i m e of her promotion t h a t she understood t h a t pursuant t o Department policy she would be p u t i n a probationary s t a t u s f o r s i x months. I n August 1979, Nye's supervisors i n t h e Department determined t h a t she was n o t performing adequately i n her new p o s i t i o n . On August 20, Nye was t o l d of t h e d e f i c i e n c i e s i n her work and was given a t e n day warning n o t i c e which informed her t h a t t h e d e f i c i e n c i e s must be corrected. Nye's work was s p o t checked during t h e ensuing t e n day period and her supervisors determined t h a t she had n o t corrected c e r t a i n d e f i c i e n c i e s . Nye was terminated on August 31, 1979. Nye invoked t h e Department's grievance procedures i n order t o challenge her termination. A three-person hearing committee was formed and a hearing was had on December 18, 1979. Both Nye and t h e Department w e r e represented by counsel. The p a r t i e s brought witnesses, presented e x h i b i t s , and submitted b r i e f s and proposed d e c i s i o n s t o t h e committee. The hearing committee then gave i t s opinion and recommendation t o t h e head of t h e Department of Livestock. The committee concluded t h a t departments of s t a t e government may r e q u i r e employees t o e n t e r i n t o a probationary period when they a r e promoted t o a new p o s i t i o n and t h a t t h e Department of Livestock's personnel p o l i c i e s properly included a probationary period f o r any promotion t o a new p o s i t i o n . Nye's r i g h t s were viewed as t h e r i g h t s of a probationary employee. The hearing committee found t h a t Nye knew and understood t h a t she had made mistakes i n her new p o s i t i o n . The committee a l s o found t h a t Nye misunderstood t h e t o t a l i t y of t h e mistakes made by h e r , and found t h a t she was under t h e impression t h a t t h e problems had been resolved. The committee determined t h a t t h e Department had n o t properly t r a i n e d and supervised Nye. The hearing committee decided t h a t termination was an unduly harsh method of dealing with Nye's d e f i c i e n c i e s , e s p e c i a l l y when her e x c e l l e n t p r i o r work record with t h e Department w a s considered. The committee determined t h a t because t h e Department's grievance procedure applied t o a l l employees, even probationary employees must be d e a l t with f a i r l y . The committee concluded t h a t t h e r e was a "lack of t o t a l f a i r n e s s " i n t h e termination of Nye. The hearing committee recommended t h a t Nye n o t be r e i n s t a t e d t o her previous p o s i t i o n and n o t be awarded back pay. ( I t i s unclear whether "previous p o s i t i o n " r e f e r s t o t h e permit c l e r k job o r t h e general o f f i c e c l e r k V job.) The committee f u r t h e r recommended t h a t Nye be awarded $1,495.36 a s compensation f o r t h e u n f a i r treatment given her by t h e Department. F i n a l l y , t h e committee recommended t h a t Nye be granted an e n t i t l e m e n t t o any grade 7 o r 8 p o s i t i o n i n t h e Department f o r which she was q u a l i f i e d . The e n t i t l e m e n t was t o apply t o any such p o s i t i o n which became vacant i n a two-year period. The r e p o r t and recommendations of t h e hearing committee were submitted t o t h e d i r e c t o r of t h e Department of Livestock i n accordance with Department grievance procedures. The d i r e c t o r refused t o follow the committee's recommendations and affirmed Nye's termination. Nye f i l e d s u i t i n D i s t r i c t Court seeking j u d i c i a l review of t h e agency a c t i o n , damages f o r slander, and, by way of an amended complaint, damages f o r wrongful discharge. The d i s t r i c t judge denied t h e p e t i t i o n f o r j u d i c i a l review and dismissed t h e cause on i t s m e r i t s because he determined t h a t Nye had only a c o n t r a c t a t w i l l . Nye appealed, and r a i s e d t h e following i s s u e s : (1) Did t h e D i s t r i c t Court e r r by denying j u d i c i a l review of t h e Department d i r e c t o r ' s decision? ( 2 ) Did t h e D i s t r i c t Court err by dismissing t h e slander complaint? and (3) Did t h e D i s t r i c t Court err by denying Nye's motion t o amend the complaint f o r the purpose of seeking damages i n wrongful discharge? J u d i c i a l Review Nye based her p e t i t i o n f o r review i n the D i s t r i c t Court upon t h e language of t h e Department's grievance policy and upon t h e Montana Administrative Procedure Act (MAPA). The Department of Livestock has adopted personnel p o l i c i e s developed by t h e Department of Administration. Policy 3-0130, D i s c i p l i n e Handling; Policy 3-0125, Grievances; Vol. I11 Montana Operations Manual. Policy 3-0125, Grievances, provides t h a t : " I f t h e employee i s n o t s a t i s f i e d with t h e outcome of t h e D i r e c t o r ' s decision, t h e grievance may be brought before t h e appli- c a b l e s t a t u t o r i l y authorized review body: t h e Board of Personnel Appeals, the Merit System Council, t h e Human Rights Commission, o r any appropriate f e d e r a l enforcement agency, while those grievances - n o t allowed r e d r e s s with -- t h e aforementioned m a y - be pursued a t t h e d i s t r i c t c o u r t l e v e l . " (Emphasis supplied. ) W e agree with t h e Department t h a t t h e concluding language of t h e above excerpt cannot, of i t s e l f , c r e a t e a r i g h t of j u d i c i a l review. Policy 3-0125 i s an a d m i n i s t r a t i v e regulation. I n Montana, only t h e l e g i s l a t u r e may v a l i d l y provide f o r j u d i c i a l review of agency decisions. "The l e g i s l a t u r e may provide f o r d i r e c t review by t h e d i s t r i c t c o u r t of d e c i s i o n s of a d m i n i s t r a t i v e agencies." Mont. Const. a r t . V I I , § 4 , cl. 2. A r i g h t of j u d i c i a l review cannot be c r e a t e d by agency f i a t . I n order f o r Nye t o have a r i g h t of j u d i c i a l review under M A P A , h e r s must be a "contested case." Section 2-4- 702 (1) ( a ) , MCA, provides t h a t I' [a] person who has exhausted a l l a d m i n i s t r a t i v e remedies a v a i l a b l e w i t h i n t h e agency and who i s aggrieved by a f i n a l d e c i s i o n i n a contested c a s e i s e n t i t l e d t o j u d i c i a l review under t h i s chapter." A s defined a t s e c t i o n 2-4-102 ( 4 ) , MCA, " ' [c] ontested c a s e ' means any proceeding before an agency i n which a determination of l e g a l r i g h t s , d u t i e s , o r p r i v i l e g e s of a p a r t y i s required by law t o be made a f t e r an opportunity f o r hearing." "The d e f i n i t i o n r e f e r s t o determinations which a r e ' r e q u i r e d by law' t o be made a f t e r an opportunity f o r hearing. This has broader meaning than merely a s t a t u t o r y requirement f o r an opportunity f o r hearing. I t includes s i t u a t i o n s where a hearing i s required as a matter of c o n s t i t u t i o n a l r i g h t . " Administra- t i v e Procedures Subcommittee Comments, T i t l e 2, Chapter 4 , P a r t 1, MCA (Annotations) . Appellant Nye has c i t e d no a u t h o r i t y , e i t h e r s t a t u t o r y O r c o n s t i t u t i o n a l , which i n d i c a t e s t h a t a person i n Nye's p o s i t i o n i s "required by law" t o be given an opportunity f o r hearing p r i o r t o a determination of her o r h i s r i g h t s o r p r i v i l e g e s . The research conducted by t h i s Court has n o t revealed any such l e g a l requirement. W e conclude t h a t t h i s case does n o t q u a l i f y as a contested case under MAPA. The D i s t r i c t Court d i d n o t err i n r e f u s i n g t o g r a n t Nye's p e t i t i o n f o r j u d i c i a l review. Slander Nye's complaint a l l e g e d t h a t her supervisors a t t h e Department of Livestock made statements about her a b i l i t y t o work and perform t h e t a s k s a t her work s i t e which w e r e e i t h e r i n t e n t i o n a l l y malicious o r made with g r o s s d i s r e g a r d f o r t h e t r u t h . The complaint a l s o a l l e g e d t h a t c e r t a i n Department administrators caused these statements t o be published i n Nye's n o t i c e of discharge, and t h a t t h e p u b l i c a t i o n was made with r e c k l e s s disregard f o r t h e t r u t h . Nye a l l e g e d t h a t she w a s i n j u r e d i n various ways a s a r e s u l t of t h e making of t h e above statements. The Department of Livestock argued t o the D i s t r i c t Court t h a t t h e intradepartmental p u b l i c a t i o n s complained of by Nye were a b s o l u t e l y p r i v i l e g e d under Montana law. W e agree. Section 27-1-804(1), MCA, provides t h a t a p r i v i l e g e d p u b l i c a t i o n i s one made i n t h e proper discharge of an o f f i c i a l duty. The language of s e c t i o n 27-1-804(1) has been applied by t h i s Court t o f a c t s q u i t e s i m i l a r t o those now before us. I n Storch v. Board of D i r . of E a s t . Mont. Reg. Five M.H.C. (1976), 169 Mont. 176, 545 P.2d 6 4 4 , t h e p l a i n t i f f was an employee of a s t a t e regional mental h e a l t h c e n t e r who had been discharged because he was unclean and unkempt and was l i v i n g with a woman n o t h i s wife. One of the bases f o r S t o r c h ' s s u i t a g a i n s t h i s employers was t h a t they had 1-ibeled him. This Court held t h a t t h e p r i v i l e g e afforded by s e c t i o n 27-1-804 (1) , MCA, i s absolute. " [I] t c o n s t i t u t e s an a b s o l u t e p r i v i l e g e with the only requirement being t h a t t h e i n t r a - department communication be one rendered while engaged i n an ' o f f i c i a l duty.' There can be no doubt t h a t t h e h i r i n g and f i r i n g of em- ployees i s p a r t of t h e ' o f f i c i a l duty' of Montana Regional Health Centers. . . "Whether statements made by such public o f f i c e r s i n r e l a t i o n t o t h e h i r i n g and f i r i n g of employees may be s u b j e c t t o a b s o l u t e p r i v i l e g e has been answered i n t h e affirma- t i v e many t i m e s . Under f a c t s s i m i l a r t o t h e i n s t a n t case, t h e United S t a t e s Supreme Court i n B a r r v. Matteo, 360 U.S. 564, 571, 79 S.Ct. 1335,-3 L.Ed. 2d 1434, 1 4 4 1 , s t a t e d t h a t i n s o f a r as a public o f f i c e r w a s a c t i n g within t h e scope of h i s a u t h o r i t y h i s com- munication was absolutely p r i v i l e g e d . " Storch, 169 Mont. a t 181-82, 545 ~ . 2 d a t 647-48. W e f i n d t h a t t h e absolute p r i v i l e g e afforded by s e c t i o n 27-1-804(1), MCA, a p p l i e s t o t h e f a c t s of t h i s case. Margaret Nye had no cause of a c t i o n f o r s l a n d e r , and the D i s t r i c t Court d i d n o t e r r by dismissing t h a t element of her complaint. Wrongful Discharge Nye sought t o amend her complaint t o add a claim f o r wrongful discharge, b u t t h e D i s t r i c t Court refused t o allow amendment. W e do n o t agree t h a t wrongful discharge could n o t l i e a s a matter of law, and remand t o t h e D i s t r i c t Court t o allow amendment of t h e complaint. The D i s t r i c t Court's order of d i s m i s s a l appears t o rest upon t h e f a c t t h a t Nye's employment was " a t w i l l . " Section 39-2-503, MCA. However, t h e t o r t of wrongful discharge may apply t o an a t w i l l employment s i t u a t i o n . I n f a c t , t h e theory of wrongful discharge has developed i n response t o t h e harshness of t h e a p p l i c a t i o n of t h e a t w i l l d o c t r i n e , under which an employment may be terminated without cause. See P i e r c e v. Ortho Pharmaceutical Corp. (1980), 84 N . J . 58, 417 A.2d 505. The determination of whether t h e cause of a c t i o n a r i s e s rests upon whether an u n f a i r o r u n j u s t i f i e d termination was i n v i o l a t i o n of p u b l i c policy. Keneally v. Orgain (1980), Mont. , 606 P.2d 127, 37 St.Rep. Administrative r u l e s may be t h e source of a public p o l i c y which would support a claim of wrongful discharge. P i e r c e , 417 A.2d a t 512. The S t a t e of Montana, through t h e Department of Administration, developed p o l i c y 3-0130, d i s c i p l i n e handling, and policy 3-0125, grievances. These r u l e s f o r t h e r e s o l u t i o n of employment d i f f i c u l t i e s w e r e adopted by t h e Department of Livestock. Policy 3-0130 s t a t e s t h a t " [w] hen p u n i t i v e d i s c i p l i n e i s necessary, j u s t cause, documentation of f a c t s and due process are required." Under p o l i c y 3-0130 " [ j l u s t cause i s determined i f t h e a l l e g e d a c t w e r e an a c t u a l v i o l a t i o n of an e s t a b l i s h e d agency standard, l e g i t i m a t e o r d e r , p o l i c y , labor agreement, f a i l u r e t o m e e t a p p l i c a b l e p r o f e s s i o n a l standards, o r a s e r i e s of l e s s e r v i o l a t i o n s , and i f t h e employee would reason- ably be expected t o have knowledge of t h e aforementioned." Due process i s defined i n policy 3-0130 as ". . . a l e g a l check designed t o ensure an employee: 1) i s informed of what a c t i o n i s being taken and t h e reasons f o r it, and 2) has an opportunity t o respond t o and question t h e a c t i o n and t o defend o r explain t h e questioned behavior o r a c t i o n s . " The a p p l i c a t i o n of t h e above r u l e s may be challenged through t h e grievance policy, 3-0125, which was designed i n p a r t t o "guarantee a l l e l i g i b l e S t a t e employees a c o n s i s t e n t , expeditious and e q u i t a b l e means of a d j u s t i n g grievances." W e f i n d t h a t t h e Department of Livestock f a i l e d t o apply i t s own r e g u l a t i o n s t o Margaret Nye, and thereby v i o l a t e d p u b l i c policy. Margaret Nye w a s terminated from her probationary s t a t u s p o s i t i o n a s an o f f i c e c l e r k V f o r performance d e f i c i e n c i e s r e l a t e d t o t h a t p o s i t i o n . I n t h a t termination, t h e Department followed i t s termination and grievance procedures. However, t h e same procedures were n o t applied t o t h e permit c l e r k - p o s i t i o n i n which Nye had achieved permanent s t a t u s . "'Permanent s t a t u s ' means t h e s t a t e an employee a t t a i n s a f t e r s a t i s f a c t o r i l y completing an appropriate probationary period i n a permanent p o s i t i o n . " 2-18-101 (6), MCA [now 2-18-101 ( l o ) , MCA] . Having completed her probationary period, Nye had permanent s t a t u s i n t h e permit c l e r k job. The f a c t t h a t she chose t o attempt t o advance within t h e Department d i d not e l i m i n a t e her permanent s t a t u s i n t h e permit c l e r k p o s i t i o n . Before t h e Department could remove Nye from t h e permit c l e r k p o s i t i o n i n which she had permanent s t a t u s , t h e Department had t h e o b l i g a t i o n t o follow t h e public policy expressed i n i t s own r e g u l a t i o n s . There was no showing of " j u s t cause" f o r removing Nye from her permanent s t a t u s i n t h e permit c l e r k p o s i t i o n . She was e n t i t l e d t o proper termination from her permanent p o s i t i o n . The d i s c i p l i n e p o l i c y d e f i n e s "employee" as " a l l employees who have served a probationary period and a r e i n permanent employment s t a t u s with t h e s t a t e of Montana." Margaret Nye was denied a " c o n s i s t e n t , expeditious and e q u i t a b l e " r e s o l u t i o n of her problem, contrary t o t h e public p o l i c y expressed i n t h e d i s c i p l i n e and grievance p o l i c i e s adopted by t h e Department of Livestock. The record i n d i c a t e s t h a t t h e Department d i d n o t r e a l i z e o r recognize t h a t it had an o b l i g a t i o n t o follow t h e same procedure with regard t o t h e permit c l e r k p o s i t i o n as w a s required f o r the o f f i c e c l e r k V p o s i t i o n . It appears t h i s w i l l r e q u i r e a change i n policy so f a r as Department operations a r e concerned. Under such circumstances it appears f a i r t o g i v e t h e Department t h e opportunity t o conduct f u r t h e r hearings and follow t h e procedures under i t s r e g u l a t i o n s t o determine i f t h e Department and Nye may work o u t an acceptable s o l u t i o n of t h e claim. W e a f f i r m t h e a c t i o n of t h e D i s t r i c t Court i n denying t h e p e t i t i o n f o r j u d i c i a l review and i n dismissing t h e claim of damages f o r slander. We, t h e r e f o r e , remand t h e case t o t h e D i s t r i c t Court with t h e following i n s t r u c t i o n s : (1) Enter an appropriate order r e i n s t a t i n g t h e complaint of Nye so f a r a s t h e claim of wrongful discharge i s concerned. ( 2 ) Enter an appropriate order holding t h e cause i n abeyance f o r such a period of time a s t h e D i s t r i c t Court s h a l l determine t o be reasonable i n order t o g i v e t h e Department of Livestock and t h e claimant an opportunity t o determine i f Nye s h a l l be immediately r e i n s t a t e d i n her permit c l e r k job, o r i f the Department d e s i r e s t o terminate her i n t h a t p o s i t i o n , t o follow t h e procedures provided i n t h e Department r e g u l a t i o n s , with t h e aim of securing a f a i r r e s o l u t i o n of t h e d i s p u t e between t h e p a r t i e s . ( 3 ) I n t h e event t h a t an e q u i t a b l e r e s o l u t i o n of t h e controversy i s n o t achieved, t h e D i s t r i c t Court s h a l l e n t e r such f u r t h e r order a s i s appropriate t o allow t h e amendment of t h e complaint f o r wrongful discharge and proceed t o t r i a l of t h e case. I d W e Concur: Chief . , J u s t i c e