No. 90-292 IN THE SUPREME COURT OF THE STATE OF MONTANA 1991

IN THE MATTER OF THE GRIEVANCE OF: DORIS I. BRANDER, Petitioner and Respondent,

DIRECTOR, MONTANA DEPARTMENT OF INSTITUTIONS, Respondent and Appellant.

APPEAL FROM: District Court of the First Judicial District, In and for the County of Lewis and Clark, The Honorable Dorothy McCarter, Judge presiding.

COUNSEL OF RECORD: For Appellant: James Obie, Legal Counsel, Department of Institutions,Helena,Montana For Respondent: Peter Michael Meloy, The Meloy Law Firm, Helena, Montana

Submitted on briefs: January 10, 1991 

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Signed The expense making changes is such that we cannot ,t for changesIntypographicalstyleorspacing.r I Justice Terry N. Trieweiler delivered the Opinion of the Court.

Doris I. Brander petitioned the District Court of the First Judicial District in Lewis and Clark County for judicial review pursuant to 5 2-4-702, MCA, of a decision by the ~irector of the Departmentof Institutions for the StateofMontana. Thatdecision rejected the findings of the Department s grievance committee to the effect that petitioner had been wrongfully denied employment within the Department. The District Court reversed the decision of the Director and remanded the matter to the Department of Institutionswith the order that it adopt the recommendation of the grievance committee. From that judgment, the Department appeals. We affirm. The Department asserts that the issue on appeal is: Whether the District Court applied the proper standard for reviewing an agency decision pursuant to 5 2-4-704, MCA? Brander asserts that the issue on appeal is more properly stated as follows: Whether the ~istrictCourt correctly concluded that the Directorof theDepartment of Institutionsfailed toproperlyapply § 2-4-621(3), MCA, when reviewing factual determinations made by its duly appointed grievance committee. Section 2-7-704, MCA, sets forth the statutory standards for judicial review of agency decisions. Itprovides in relevant part

as follows: 2-4-704. Standards of review. (1) 

# . . .r I (2) The court may not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact.. 

# . . The courtmay reverse ormodify thedecision if substantial rights of the appellant have been prejudiced because:

(a) the administrative findings, inferences, conclusions, or decisions are: (i) in violation of constitutional or statutory provisions;

(ii) in excess of the statutory authorityof the agency; (iii) made upon unlawful procedures; (iv) affected by other error of law; 

### (v) clearly erroneous in view of the reliable, probative, and substantial evidence on thewhole record;

(vi) arbitrary and capricious or characterizedbv abuse of discretion or clearly unwarranted exercise of discretion; (Underliningadded.) Section 2-4-621, MCA, is also found in the Administrative Procedure Act in that chapter which sets forth the procedures to be followedby stateagencies indeciding contested cases. Section 621 pertains to those situations where the agency official who renders the decision is not the person who personally heard or observed the evidence. Subsection (3) provides in relevant part

as follows: (3) 

# . . . The agency in its final order may reject or modify the conclusions of law and interpretation of administrativerules intheproposal fordecisionbutmay not reject or modifv findinas of fact unless the asency firstdetermines froma review of thecomwlete record and stateswith particularitv in the order that the findinss of fact were not based upon competent substantial evidence or that the proceedings on which the findings were based did not comply with essential requirements of law 

# . . . (Underliningadded.)r 1 We conclude that an answer to the issue raised by the appellant is dependent upon the answer to the issue raised by the respondent. We further conclude that a resolution of those issues is dispositiveof this case,and, therefore decline to address the second issue raised by the appellant. Summary of the Facts Doris Brander went to work at Warm Springs State Hospital as themedical records supervisor in 1976. From 1981 until 1986, she worked under the supervision of Jane Edwards,whowas the director of Treatment and Residential Services. During that time, petitionerhad strained relations with Edwards over theappropriate procedure tobe followed inthemedical recordsdepartment and over petitioner's approach to dealing with employeeswho were under her supervision. In February of 1986,Edwards became the superintendent of the Montana State Hospital. In that capacity, she recommended to Carroll South, the Director of the State Department of Institutions, that the position of medical records supervisor at Warm Springs be consolidated with the corresponding position at Galen State Hospital and that there be one supervisor for both institutions. That recommendationwas accepted by South in July of 1986 and petitioner was advised of the Department's intention in mid-August of 1986. Edwards appointed an interview committee consisting of four people to interview and evaluate applicants for the combined position. In early September the petitioner and Billy Holmlund,r jr her counterpart,at Galen State~ospital, were notified of the new position. Theywere invited to apply and were advised that theirs

were the only applications that would be accepted. On October 7,thecommittee interviewed thetwo applicants and evaluated them in fourareas. The formal appraisal, awarded points in (1) education and training; (2) work experience; (3) the interview; and, (4) past work performance. As a result of that appraisal, Holmlund received a total of 225 points and the petitioner received 137points. The followingday,petitioner was notified that Holmlund would be hired for the combined position of medical records supervisor of the Montana State Hospitals and petitioner was terminated from employment effective October 24, 1986.Petitioner filed an employee grievance which was finally accepted by the Department on December 2, 1986. Pursuant to Departmental rules for non-union grievances, a three person committee was selected to hear evidence of the petitioner's grievance. One committeemember was chosenby thepetitioner; one

was chosen by the Department; and, those two members selected a third member to act as chairperson of the committee. The grievance committee met on July 11, 1988. They heard testimony from the petitioner, Jane Edwards, and several other witnesses, including members of the evaluation committee. At the hearing, petitioner testified that she had not been hired because she had been treated in a discriminatory fashion by Edwards and because of other errorsmade in the evaluationprocess. Prominent

# . 1 among those errorswas the interview committeegsfailureto credit her with 30 points to which she was entitled because of her four years of education in the field of medical records. On July 15, 1988, the committee unanimously found that the petitioner and Edwards had a troubled working relationship which adversely affected her work evaluations (Ray Lappin, a member of the evaluation committeehad previously testified that in order to evaluate petitioners prior work performance the committee simply looked ather evaluation forms. This category, alone,resulted in petitioner's loss of 67 points compared to Holmlund in the formal appraisal that was done). Inaddition, thegrievance committee found as a matter of fact that the evaluation was unfair to the petitioner because of inadequate credit to her for her education, inadequate credit to her for her work experience, and general misapplication of the interview process which made it unreliable. The committee found that the cumulative effect of thesemistakes was a misapplication of the Department of Institutions personnel policies and procedures. As a result, the committee recommended that the petitioner be made whole by the payment of the salary for a combined medical records supervisor from the date of her termination, less any income shemight have earned in the interim. The committeegsunanimous recommendations were passed along to Carroll South, who had the responsibility for entering a final decision of the Department of Institutions. Without conducting an' 1 additional hearing or receiving any additional evidence, South rejected two of the committees factual findings: (1) He stated that there was nothing in the record to indicate that the grievance committee received into evidence any of thepetitioner's performance evaluations and that, therefore, therewas no evidence in the record to sustain the grievance committee's finding that petitioner's "troubled relationship with Edwards" adversely affected her appraisal.

(2) While agreeing that petitioner had been awarded 30 points less than she should have received in her formal appraisal,he determined that that deficiency, plus any other irregularities in the interviewand appraisalwere not sufficienttohave changedtheevaluation committee's overall result. Based upon these findings,South rejected the recommendations of the grievance committee. On November 10, 1988, Brander petitioned the District Court for the First JudicialDistrict in Lewisand Clark County toreview the Director's decision pursuant to the provisions of 5 2-4-702, MCA. The District Court considered a transcript of the grievance committee hearing, the records reviewed by the Director of the Departmentand thebriefs and arguments of theparties. Based upon that information, the District Court concluded that there was factual evidence to support the grievance committees factual findingsand thatby rejecting those factually supported findings, South violated 5 2-4-621(3), MCA. The District Court concluded that in doing so South exceeded his statutory authority and abused his discretion under 5 2-4-704, MCA. The District Court reversed the decision of the Department of Institutions and remanded with

an order that it adopt the recommendation of the grievance committee.On appeal, the Department argues that the District Court had no authority to reverse ormodify the Department'sdecisionunless the petitioner's substantial rights were prejudiced for one of the

reasons set forth in 1 2-4-704, MCA. That is correct. The appellant then, however, proceeds from the incorrect premise that the ~istrict Court's decision was based solely upon its reversal of factual findings made by the Department and sets forth authority, including City of Billings v. Billings ~irefighters, Local 251 (1982), 200 Mont. 421, 651 P.2d 627 and Chagnon v. Hardy Construction Co. (1984), 208 Mont. 420, 680 P.2d 932 for the proposition that an agency's factual determinations cannot be overturned unless they are clearly erroneous in view of the evidence in the record. The Department argues that since there

was evidence in the record (the testimony of Jane Edwards) to support the Director's findings,they were not clearly erroneous. The Department's argumentwould be persuasive if the District CourtIs decision was rendered pursuant to 1 2-4-704(2) (vi)

## , MCA, which provides in relevant part that: (2) 

# . .

# . The courtmay reverse or modify the decision if substantial rights of the appellant had been prejudiced because: (a) The administrative findings, inferences, conclusions, or decisions are:



### (v) clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record.a I However, theDistrict Courtls decisionwasbased upon the next subparagraph of § 2-4-704, MCA, which allows reversal if the Department s findings were, (vi) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion; 

# . . .11 The District Court concluded that it was an abuse of the Director s discretion to reject the factual findings of the grievance committee if, indoing so,heviolated S 2-4-621(3)

### ,MCA. That section, as previously pointed out, prohibits the Director, who neither heard nor personally observed the testimony from arbitrarily rejecting the factual findings of the grievance committee which actually did hear and observe the witnesses. Before he can do so, the Director must first determine from a reviewof the complete record that the grievance committee findings

were not based upon "competent, substantial evidence.l1 We agree with the District Court that if the Director rejected thegrievance committee's factual recommendations in violation of this section, it constituted an abuse of discretion within the meaning of 5 2- 4-704(2)(a)(v)

### ,MCA.

11. The remaining issue is whether the District Court properly concluded from its review of the record that there was competent, substantial evidence to support the factual findings of the grievance committee. We conclude that there was.* Thepetitioner testified that in 1985,Edwards threatened her with disciplinary action for going overher head in a dispute over the proper procedure for preserving medical records. She further testified that in a continuation of the bad relationshipwhich was caused by that experience and in the process of evaluating her as
an employee, Edwards criticized her ability to supervise other employees. The petitioner clearly testified that she was rated poorly as an employee by Edwards for these reasons. Ray Lappin, who succeeded Edwards as the petitioner's supervisor, and who served as a member of the selection committee testified that in order to evaluate the applicant's past work performance, thecommitteesimply lookedatherprevious evaluation foms. As a result of past evaluations, Holmlund received 100points in her formal appraisal and the petitioner received only 33. If that disparitywas the result of discriminatory action by Edwards, then it, in combination with the 30points that theDirectoradmits petitioner should have received forher prior educationwould have

more than made up the difference in the total number of points received by Holmlund and petitioner. The question is, therefore, whether there was substantial evidence to support the grievance committee's finding that petitioner's poor working relationship with Edwards was directly related to the termation of her employment.9 The petitioner testified that it did. The direct evidence of

one witness who is entitled to full credit is sufficient for the proof of any fact. Section 26-1-301, MCA. Therefore, the District Court was correct in its conclusion thatby rejecting thegrievance committee s findingsSouthviolated 3 2-4-621(3), MCA. For these reasons, the District Court decision and order is affirmed and this matter is remanded to the District Court for implementation of its judgment dated March 2, 1990 which orders that:



# . . .The decision of the Department of Institutions is reversed and the matter is remanded with the order to adopt the recommendation of the grievance committee. Affirmed.

We Concur: /

hief Justice 

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