No. 94-377

IN THE SUPREME COURT OF THE STATE OF MONTANA

1995

DONALD JARVENPAA,

Plaintiff and Appellant,

APPEAL FROM: District Court of the Ninth Judicial District,

In and for the County of Glacier,

The Honorable John Warner, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Robert P. Goff and Jean E. Faure, Church, Harris,

Johnson and Williams, Great Falls, Montana

For Respondent:

Gary R. Christiansen, Warden, Christiansen,

Johnson & Berg, Kalispell, Montana

Filed:

Submitted on Briefs: December 6, 1994

Decided: July 11, 1995
Honorable Dorothy McCarter, District Judge, delivered the Opinion

of the Court.

The plaintiff, Donald Jarvenpaa, brought this action alleging

that he was wrongfully discharged by defendant Glacier Electric

Cooperative, Inc. (Glacier). Glacier moved for summary judgment,

which was granted by the District Court for the Ninth Judicial

District, Glacier County. Jarvenpaa appeals from this order. We

reverse and remand.

Jarvenpaa began working for Glacier in 1962 and was Manager of

Operations at the time of the alleged discharge. On September 29,

1992, Jarvenpaa's supervisor advised him that his employment would

be terminated on December 31, 1992, because of problems with his

job performance. Jarvenpaa was also informed that he could choose

to retire prior to being dismissed and could accept a "Special

Early Retirement Package" (SERP) which was being offered to five

eligible employees. David Chapman, General Manager of the Board of

Trustees, stated in a letter to Jarvenpaa dated November 2, 1992,

l'[Ylou are being offered two options--retire under SERP or be

terminated December 31, 1992. I have not made, and do not herein

make any offer to negotiate further." Jarvenpaa responded on

November 10, 1992, that he did not believe that Glacier had any

basis to terminate his thirty-year employment, but "in view of your

ultimatum that if I do not accept the offer of early retirement I

will be terminated, I obviously have no alternative in this matter.

Accordingly, with reluctance, I accept the offer to retire under

SERP as set forth in your letter of November 2, 1992."

2
Jarvenpaa subsequently filed this suit for wrongful discharge.

The District Court granted Glacier's motion for summary judgment.

Although the court concluded that retirement can be a form of

discharge under § 39-Z-903(2), MCA, it found that, in this case,

retirement was not a discharge because the employee signed an

acknowledgement that his retirement was voluntary, and he accepted

the benefits of the retirement package; he could have waited to be

fired and then file an action for wrongful discharge. The court

also concluded that the "retire or be fired" ultimatum was not a

constructive discharge under § 39-2-903(l), MCA, because the choice

between discharge and retirement cannot be said to be so intolerable that voluntary termination, in this case retirement, is the

only reasonable alternative.

Our standard of review from a grant of summary judgment is the

same as that of the district court under Rule 56(c), M.R.Civ.P.

Summary judgment is proper when there is no genuine issue of

material fact and the moving party is entitled to judgment as a

matter of law. However, summary judgment is not a substitute for

a trial on the merits. Morton v. M-W-M, Inc. (19941, 263 Mont.

245, 249, 868 P.2d 576, 578-79.

All reasonable inferences must be drawn in favor of the party

opposing the motion. In making its determination, the court must

consider the entire record. Smith v. Barrett (1990), 242 Mont. 37,

40, 788 P.2d 324, 326.

3
Summary judgment motions, however, clearly are not favored.

'l[T]he procedure is never to be a substitute for trial if a factual

controversy exists." Reaves v. Reinbold (19801, 189 Mont. 284,

288, 615 P.2d 896, 898. If there is any doubt as to the propriety

of a motion for summary judgment, it should be denied. Rogers v.

Swingley (1983), 206 Mont. 306, 312, 670 P.Zd 1386, 1389; Cheyenne

Western Bank v. Young (1978), 179 Mont. 492, 496, 587 P.2d 401,

404.

The primary issue in this case, simply stated, is whether an

employee, presented with a choice between being fired or accepting

an early retirement package, has been "discharged" for purposes of

bringing an action under Montana's Wrongful Discharge From

Employment Act.

Montana has chosen to protect the rights of a worker to

challenge the validity of an employer's decision to terminate his

or her employment. While Montana law still provides that, absent

provisions to the contrary, employment is "at will," under the

Wrongful Discharge From Employment Act, an employer in most cases

must have good cause to fire an employee. "Good cause" is defined

in the Act as "reasonable job-related grounds for dismissal based

on a failure to satisfactorily perform job duties, disruption of

the employer's operation, or other legitimate business reasons."

Section 39-2-903(5), MCA.

In most cases the situation presented is one where the

employment was actually terminated by the employer. The Wrongful

4
Discharge From Employment Act, however, also allows for those

situations in which the employer has made working conditions so

intolerable that the employee is forced to quit--i.e., a constructive discharge. Under the Act, this type of situation is no less

wrongful than an actual firing. Constructive discharge is defined

in the Act as "the voluntary termination of employment by an

employee because of a situation created by an act or omission of

the employer which an objective, reasonable person would find so

intolerable that voluntary termination is the only reasonable

alternative." Section 39-2-903(l), MCA. This definition is

essentially the same as we defined constructive discharge in our

pre-Act cases. Kestell v. Heritage Health Care Corp. (1993), 259

Mont. 518, 524, 858 P.2d 3, 6-7. We have held that in determining

"whether an employee has been constructively discharged, the fact

finder must decide whether the employer has rendered working

conditions so intolerable that resignation is the only reasonable

alternative." Kestell, 858 P.2d at 7. This determination must be

based on the totality of the circumstances, not on the employee's

subjective judgment that working conditions are intolerable.

In the case before us, the termination was initiated by the

employer when it issued its ultimatum to the employee that he would

be fired if he did not accept the retirement package. The

employer's statements to this effect were clear and unequivocal.

Other courts have held that where an employer tells an employee to

resign or be fired, the resignation can be a constructive dis5
charge. Sheets v. Knight (Or. 1989), 779 P.Zd 1000; Cameron v.

Beard (Alaska 19931, 864 P.2d 538. - - See also Dept. of Air Force v.

Dept. of Emp. Sec. (Utah App. 1990), 786 P.2d 1361, 1365 (where

employee resigned in the face of inevitable discharge, the

termination was initiated by the employer and was not a voluntary

termination)

In Gates v. Life of Montana Ins. Co. (1982), 196 Mont. 178,

638 P.Zd 1063, appeal after remand 205 Mont. 304, 668 P.2d 213

(198X), a pre-Act case, the employer asserted that the employee

voluntarily resigned, but the employee argued that she signed a

letter of resignation under duress when she was given the option of

resigning or being fired. We noted that the threshold factual

issue of whether the employee's termination was voluntary or

involuntary should be submitted to the factfinder. Gates, 638 P.2d

at 1066. However, we have not yet been presented with a situation

in which an employee, such as Jarvenpaa, is given a "retire or be

fired" choice and chooses the alternative of accepting early

retirement rather than the alternative of being fired.

Discussions of when an offer of early retirement actually

amounts to a discharge occur most frequently in age discrimination

cases. While the elements of an age discrimination claim differ

from those in the case before us, the issues involved in determining whether this was in fact a forced termination or a voluntary

retirement are substantially the same. Therefore we look to those

cases for guidance.
An offer of early retirement does not by itself constitute

constructive discharge. Early retirement often provides a

beneficial way for older employees to leave the work place

[Mlost courts have found that an offer of early retirement constitutes a constructive discharge only when the

offer is made under terms and conditions where the

employee would be worse off whether or not he or she

accepted the offer. More simply stated, an offer of

early retirement constitutes a constructive discharge

when the choice is essentially either early retirement or

continuing to work under intolerable conditions, like the

threat of termination without benefits.

Smith v. World Ins. Co. (8th Cir. 1994), 38 F.3d 1456, 1461

(citations omitted).

Early retirement is not a discharge if the employee has the

power to choose to keep working.

Absent the right to decline an employer's offer of early

retirement and keep working under lawful conditions, the

"decision" to take the early retirement "option" is no

decision at all. A "choice" between not working with

benefits and not working without benefits amounts to, in

effect, compulsory retirement.

Hebert v. Mohawk Rubber Co. (1st Cir. 1989), 872 F.2d 1104, 1113.

Without this option to choose to keep working, "an employer's offer

of a choice between early retirement with benefits or discharge

without benefits is nothing other than a discharge." Hebert, 872

F.2d at 1113. In reaching this holding, the First Circuit considered and rejected the reasoning of the Sixth Circuit in Ackerman v.

Diamond Shamrock Corp. (6th Cir. 1982), 670 F.2d 66.

The standard for determining when a constructive discharge has

occurred is virtually the same as that found in the Wrongful

Discharge From Employment Act.
[Tlhe law regards as the functional equivalent of a

discharge those offers of early retirement which, if

refused, will result in work so arduous or unappealing,

or working conditions so intolerable, that a reasonable

person would feel compelled to forsake his job rather

than submit to looming indignities.

Vega v. Kodak Caribbean, Ltd. (1st Cir. 1993), 3 F.3d 476, 480. In

applying this standard to an offer of early retirement,

a plaintiff who has accepted an employer's offer to

retire can be said to have been constructively discharged

when the offer presented was, at rock bottom, "a choice

between early retirement with benefits or discharge

without benefits," or, more starkly still, an "impermissible take-it-or-leave-it choice between retirement or

discharge."

Veqa, 3 F.3d at 480.

In the case before us, the Board of Trustees voted on

September 28, 1992, to offer the SERP to all five eligible employees. One day later, Jarvenpaa was informed that he would be fired

if he did not accept the retirement package. He was specifically

threatened with loss of health insurance benefits if he waited to

be fired. From these facts, a reasonable jury could conclude that

Jarvenpaa was in fact forced to retire and that his termination was

not voluntary. A statement by an employer that the employee might

be discharged, with a consequent loss of benefits, creates a

contested issue of material fact regarding constructive discharge

even if the employee accepts an early retirement offer; a reasonable person, faced with a loss of benefits if he waits to be

discharged rather than accept retirement, might well feel compelled

to resign. Downey v. Southern Natural Gas Co. (5th Cir. 1981), 649

F.2d 302, 305.

8
The employer makes much of the fact that Jarvenpaa's lump sum

benefit under the SERP was considerably greater than his entitlement if he were terminated. However, there is no indication in the

record that Jarvenpaa was offered any greater benefits than any of

the other employees eligible for the SERP. Furthermore, these

benefits were substantially less than Jarvenpaa asserts he would

have received if he had been allowed to continue working until his

normal retirement, a choice which he did not have.

The problem with the employer's argument is the same as that

encountered in age discrimination cases; it would permit an

employer to escape the consequences of age discrimination or, in

this case, alleged wrongful discharge, by presenting an employee

with a Hobson's choice of being fired or of taking the retirement

package offered. The employer can thus rid itself of what it

perceives to be a problem employee without having to account for

its action. While the amount of the retirement benefit which he

received is relevant to the amount of damages due to Jarvenpaa if

he succeeds in this lawsuit, it is not determinative of whether his

termination was voluntary or not. "The fact that [the employee],

when confronted with the retire-or-be-fired choice, bargained for

all that he could get in the way of benefits simply does not change

the fact that this was, at bottom, a forced retirement, not a

voluntary one." Hebert, 872 F.2d at 1113.

One point that needs to be kept in mind is that we do not

decide here whether Jarvenpaa will prevail on his wrongful

9
discharge claim. We do not decide whether Glacier's actions to

terminate him were wrongful. That is for the trier of fact to

decide. What we do decide here is that the circumstances in this

case constitute a discharge, rather than a voluntary termination of

employment, and therefore Jarvenpaa's case is sufficient to survive

a motion for summary judgment.

We reverse the District Court's grant of summary judgment and

remand for proceedings consistent with this Opinion.

Ll p-r L&/tL~

Hon. Doroth$ McCarter, District

Judge, sitting in place of

Justice James C. Nelson

We concur:

I Chief Justice

Justices

Hon. Ted L. Mizner, District

Judge, sitting in place of

Retired Justice John C.

Harrison

10
Justice Fred J. Weber dissents as follows:

The opinion states the primary issue in this case as follows:

The primary issue in this case, simply stated, is

whether an employee, presented with a choice between

being fired or accepting an early retirement package, has

been "discharged" for purposes of bringing an action

under Montana's Wrongful Termination Act.

In its summary judgment, the District Court speaking to that same

issue stated:

Choosing to accept the available retirement option

was the same as entering into an employment contract or

settling a lawsuit, which is another form of agreement.

Jarvenpaa agreed that he would retire and accept the

benefits and detriments of doing so. Thus, while he may

have been discharged, such discharge could not be

unlawful.

Prior to discussing the merits of the holding of the opinion in

this case as compared to the District Court, I believe it is

essential to more fully set forth the basis on the part of the

District Court for its decision on summary judgment. Following are

pertinent portions of that Order:

The undisputed facts of this case are as follows:

Sometime prior to October 23, 1992, plaintiff Donald

Jarvenpaa's supervisor told him he, Jarvenpaa, would be

terminated on December 31, 1992. In the alternative,

Glacier offered Jarvenpaa the opportunitv to take earlv

retirement which would provide Jarvenpaa with over

$100,000 in retirement benefits (beyond what he would

receive if discharged) and would allow him to continue to

participate in Glacier's health care plan. Jarvenpaa

chose to retire and took a retirement package of over

$300,000, plus continued coverage under Glacier's health

care plan. This retirement package was available to

other qualified employees of Glacier.

Jarvenpaa clams that his choice to retire was a

"Hobson's choice," no choice at all, and that he was

coerced into resigning.

Glacier claims that Jarvenpaa's choice to accept

early retirement precludes any possibility of a finding

that Jarvenpaa was discharged.

11
The definition of the term "discharge" includes

resignation. § 39-2-903(Z), Mont. Code Ann. (1991). It

does not specifically include retirement. However, as

retirement is a form of termination of employment it

appears to be included in the statutory definition of

discharge.

On January 14, 1993, Jarvenwaa signed an EMPLOYEE'S

ELECTION TO ACCEPT SPECIAL EARLY RETIREMENT WINDOW which

states that Jarvenwaa's choice to accewt the earlv

retirement was "voluntarv and . . made of [Jarvenpaa's]

own free will."

Jarvenwaa accepted the benefits of earlv retirement.

Glacier paid Jarvenwaa over $100,000 for his election to

retire. Also, Jarvenpaa was allowed to continue to

participate in Glacier's employee health care plan (with

premiums paid by Jarvenpaa.)

Jarvenwaa's signed acknowledgement that his

retirement was voluntarv and his acceptance of the

benefits provided under the early retirement aqreement

precludes Jarvenwaa as a matter of law from recoverv

under Title 39, Chapter 2, part 9, Mont. Code Ann.

(Emphasis supplied.)

While not specifically quoted by the District Court in its Order,

it is undisputed that the plaintiff and his wife signed the

Employee's Election to Accept Special Early Retirement Window which

is attached to plaintiff's deposition as Exhibit H and which in

pertinent part states:

The undersigned employee of Glacier Electric

Cooperative, Inc. (the "Cooperative"), and his/her

spouse, acknowledge that they have been presented with a

copy of the Board Resolution that makes available a

Special Early Retirement Window (the "Retirement Window")

for certain employees of the Cooperative, and that they

have had a full explanation of the Retirement Window, and

opportunity to ask all questions concerning it that they

wish to ask.

The undersigned employee and his/her spouse

acknowledge that during the window period of 3 months,

they have had ample time to examine the provisions of the

Retirement Window and consult with anyone they wish. The

undersigned parties understand that the emplovee’s

election under the Retirement Window is voluntary and

state that this election is made of the employee’s own

free will.

The undersigned employee hereby elects to

participate in the Retirement Window. .

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The undersigned spouse of the undersigned employee

states that he/she agrees with the election of the

employee under the Retirement Window.

I conclude that the following undisputed facts which are

contained in plaintiff's deposition are also relevant on this

issue:

(Questioning by defense counsel)

Q: . ..Now. as I understand it, and we know from the

record that you elected the Special Early Retirement

Program, my understanding is you took the lump sum option

under that program and received money in a lump sum; is

that correct?

A: That's correct.

Q: And if I understand the payments that you received,

you basically got $302,000 as a lump sum under the

special program, you got 15,700 and some dollars for

contributions that you had made into the program, and you

also received 25,000 and almost $900 for accrued vacation

and leave and so forth. Is that accurate?

A: Sounds close.

Q: Can you think of any checks I missed out on?

A: Not offhand, no.

Q: Okay.

A: YOU got, what did you say, 302?

Q: I got 302.

A: Plus 157

Q: Plus 15, plus 25

A: Okay. Pretty close, I guess

An important fact to keep in mind is that, as a part of this Early

Retirement, the plaintiff received something over $340,000 in cash,

and after receipt of that, he then commenced the present lawsuit.

1 3
It is also important to keep in mind one of the facts which

was considered and referred to by the District Court. The special

retirement accepted by the plaintiff required the expenditure of

over $100,000 additional funds by defendant. Again, this is

demonstrated in plaintiff's deposition where he stated as follows:

Q: All right, now, what I want to ask you is, do you

know how much it cost the co-op to buy you that special

retirement program that you have taken the money from?

A: I have no idea.

Q: Okay. Well, I think that there's some

correspondence in here, maybe the November 2 letter, I'm

not sure, but are you aware the co-op paid about $106,000

to get you eligible for that Special Early Retirement

Program? Does that number mean anything to you?

A: No.

Q: Hundred thousand sound like a ball park figure?

A: Well, are you saying if I was terminated -- I know

if I was terminated, I'd get 200 according to that letter

there, and if I didn't, I would get 300.

Q: So you got really $100,000 more as part of your lump

sum because you took the special retirement; right?

A: Right.

Q: All right. Now, what I don't understand is why are

you saying you were actually discharged when you elected

the special --

A: I only had one option or the other.

Q: I understand that

A: Okay.

Q: Now, if you lose this lawsuit, are you prepared to

pay back to the co-op the hundred and some thousand

dollars 'chat they have paid to give you the special

retirement program that you took?

A: Do you think I should?

14
Q: I'm asking you.

A: No, I wouldn't.

Q: Why not?

A: Well, why would I?

Q: Why not?

A: I don't feel that I should

We emphasize that the extra $100,000 is clearly consideration for

early retirement paid by the defendant Glacier Electric to the

plaintiff.

In its Order the District Court pointed out that plaintiff was

not compelled to retire in the form that he did and was free to

remain employed until discharged when he would receive substantial

benefits, although less than he received by retiring, and seek

compensation for the discharge in a lawsuit. The District Court

stated:

Jarvenpaa was free to remain employed until

discharged and then seek compensation for the discharge

if he believed it to be without good cause. He would

have received all he was entitled to and if he was

successful in his lawsuit he would have received damages.

Instead, Jarvenpaa chose to accept early retirement and

the benefits appurtenant thereto. He did have a choice.

The retirement was available to him, and others, and it

did not entail the risk that he would be unsuccessful in

a lawsuit alleging an unlawful discharge.

This properly emphasizes the distinction between this case and

several of the cases cited in the opinion here. This was not a

case in which a plaintiff was required to resign or he would

receive no benefits.

By accepting early retirement, the plaintiff required that the

defendant spend over $100,000 of additional funds to purchase the

15
retirement benefits which he has now received. The analysis of the

District Court on this aspect was directly on point when the

District Court stated:

Choosing to accept the available retirement option

was the same as entering into an employment contract or

settling a lawsuit, which is another form of agreement.

Jarvenpaa agreed that he would retire and accept the

benefits and detriments of doing so. Thus, while he may

have been discharged, such discharge could not be

unlawful.

This is a key aspect of this case. This is directly

comparable to the settling of a lawsuit by agreement which includes

the payment of substantial monies to the settling plaintiff.

The opinion points out that in most cases the situation

presented is one where the employment was actually terminated by

the employer, which of course does not apply here. The opinion

then points out that the Wrongful Discharge Act covers those

situations where the employer has made working conditions so

intolerable that the employee is forced to quit--a constructive

discharge. I disagree with the analysis because I find no basis to

conclude there was something which could be called a constructive

discharge. I agree with the analysis of the District Court which

stated:

Glacier's notice that if he chose not to retire,

Jarvenpaa would be terminated for what Glacier considered

good cause but Jarvenpaa did not, does not constitute a

constructive discharge.

"'Constructive discharge' means the

voluntary termination of employment by a

employee because of a situation created by an

act or omission of the employer which an

objective, reasonable person would find so

intolerable that voluntary termination is the

16
only reasonable alternative." 5 39-2-903 (1) ,

Mont. Code Ann. (1991).

The choice between discharge and retirement cannot

be said to be "so intolerable that voluntary termination

[or retirement1 is the only reasonable alternative."

The Court

retired.

concludes that Jarvenpaa voluntarily

must fail.

Accordingly, his claim for wrongful discharge

Certainly the constructive discharge statute does not apply to

this type of a situation as there is an absence of a situation

which was so intolerable that voluntary termination was the only

reasonable alterative. That analysis is just not applicable here.

I agree with the holding of the District Court that plaintiff

Jarvenpaa voluntarily retired and therefore his claim for wrongful

discharge fails.

I have emphasized the facts in this case because such facts do

not warrant the technical legal application or analysis which is

applied in the opinion. The uncontradicted facts as established

primarily through the deposition testimony of plaintiff Jarvenpaa,

establish that there were numerous and clear grounds, as viewed by

the employer, to discharge Jarvenpaa. Those conditions were viewed

by the employer as being so intolerable as to require his

discharge. In its analysis, the employer took into consideration

the approximate 30 years of employment by plaintiff Jarvenpaa and

concluded it was fair to allow him to retire under the Special

Early Retirement package, even though that required an additional

expenditure of over $100,000 on the part of the employer. At a

time when plaintiff was represented by counsel, he executed his

17
Employee's Election to Accept in which he specifically stated as

follows :

The undersigned parties understand that the

employee's election under the Retirement Window is

voluntary and state that this election is made of the

employee's own free will.

This is not a case in which the employee was forced to sign this

without benefit of counsel. All of the exhibits to which reference

has been made were furnished by the defendant Glacier Electric to

plaintiff's counsel and were considered by that counsel who in turn

prepared various of the papers submitted by the plaintiff employee.

I agree with the analysis of the District Court which concluded

that Jarvenpaa agreed (with the advice of his own counsel) that he

would retire and accept the benefits and detriments of doing so.

Under that circumstance it is unjust to allow the present action to

continue.

I would point out that the opinion must be construed by the

employer as setting a precedent which tells the employer that it

made a mistake when it put up an additional $100,000 plus in order

to buy a retirement program and its peace--it should just have said

we have an adequate basis to discharge and then do so--making such

a discharge we will not consider the number of years of employment

or any positive factors in the employee's favor. The opinion has

the effect of inviting extended litigation in connection with the

various early retirement plans which have been recently used

throughout Montana, and even by the State government itself.

18
Chief Justice J.A. Turnage

(sitting for Justice W. Willi

and District Judge Ted L. Mimer

dissent.

ef Justice

19