NO. 87-412 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1988 

IN THE MATTER OF THE CLASSIFICATION 

APPEAL OF WARREN C. MEAD, et al. 

STATE PERSONNEL DIVISION OF THE 

DEPARTMENT OF ADMINISTRATION, STATE 

OF MONTANA, 

Petitioner and Respondent, 

-vsBOARD OF PERSONNEL APPEALS, DIVISION 

OF THE DEPARTMENT OF LABOR & INDUSTRY 

OF THE STATE OF MONTANA; and WARREN C. 

MEAD, SERGEANT; JACK D. WESTROPE, LIEUTENANT; and HARVEY E. OLSON, CAPTAIN, as 

Representatives of classes of similarly 

situated individuals in the Montana Highway 

Patrol, 

Respondents and Appellants. 

APPEAL FROM: District Court of the First Judicial District, 

In and for the County of Lewis & Clark, 

The Honorable Gordon Bennett, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Elizabeth L. Griffing argued, Dept of Labor & Industry, 

Helena, Montana 

Barry L. Hjort argued for Mead, et al., Helena, Montana 

For Respondent: 

+ Kathleen F. Holden argued, Dept. of Administration, 

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N _J - Helena, Montana , L 

Submitted: October 18, 1988 

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* - Decided: December 22, 1988 ..- - 7 - * 

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Clerk 
Mr. Justice L. C. Gulbrandson delivered the Opinion of the 

Court. 

This is an appeal from a reversal of a final order of 

the Board of Personnel Appeals and remand by the First 

Judicial District, Lewis and Clark County. We affirm the 

District Court's reversal and remand to the Board of 

Personnel Appeals for further findings. 

This case arose as an appeal of the classification 

process utilized by the Personnel Division (Division) of the 

Department of Administration in reallocating certain Montana 

Highway Patrol Officers' positions to classes under the State 

pay classification system. Prior to 1979, the classification 

series for Highway Patrol Officers consisted of the followinq 

positions and assigned grades: 

Officer I 

Officer I1 

Sergeant 

Lieutenant 

Captain 

Grade 12 

Grade 13 

Grade 14 

Gracle 15 

Grade 16 

In 1979, Officers within the Officer I class appealed 

to have their grade raised from grade 12 to grade 13, 

pursuant to S. 2-18-203, MCA. Such an appeal was permissible 

under the statute as it existed at that time. Officers I1 

were automatically upgraded one grade when the Officers I 

were successful in their appeal, pursuant to a previous stipulation between the Personnel Division, the Highway Patrol 

and the union representing the Officer I1 class. No other 

officers in the classification series were affected by that 

appeal. The Highway Patrol Officer classification series 

thus consisted of the following classes and grades following 

this successful reclassification of Officers L and IT: 
Officer I 

Officer I1 

Sergeant 

Lieutenant 

Captain 

Grade 13 

Grade 14 

Grade 14 

Grade 15 

Grade 16 

Consequently, on June 27, 1983, three Montana Highway 

Patrol Officers (Officers) , representing the ranks of 

Sergeant, Lieutenant and Captain, initiated this group 

grievance action before the Board of Personnel Appeals 

(Board) to achieve a reclassification of their positions and 

assigned grades pursuant to 5 2-18-1011, MCA, and 24.26.513, 

ARM. The Officers sought to compel the Personnel Division to 

adopt new position descriptions, develop new class 

specifications and reclassify their respective positions. 

The Highway Patrol submitted new position descriptions 

for the affected officers in the initial stages of this group 

grievance action. The Personnel Division audited those 

position descriptions and found them to be accurate. The 

Personnel Division then classified the positions using a 

"five factor" formula to assign the positions to proper 

classes. Neither party objects to the position descriptions 

or the class specifications as developed. 

The same "five factors'' were then applied to assign a 

grade to the class. The application of the "five factors" 

resulted in an assignment of the same grad.es as previously 

assigned to Sergeant, Lieutenant and Captain. The Officers 

appealed this reassignment to the Board of Personnel Appeals. 

A subsequent hearing was conducted before a Board 

Hearings Examiner. After hearing testimony from the 

Officers and the Division and reading briefs submitted by 

both parties, the Examiner issued proposed findings of fact, 

a conclusion of law and a recommended order on May 17, 1985. 
The Hearing Examiner, after finding that the Officers "were 

aggrieved," recommended that the Personnel Division 

reclassify the upper three classes of Officers by raising 

their respective grade levels one pay grade. The Personnel 

Division filed a timely exception to these findings and oral 

argument took place before the full Board on October 11, 

1985. 

On January 7, 1986, the Board issued its order 

affirming the Hearing Examiner's findings of fact and 

conclusion of law. However, the Board amended the 

recommended order to require, within thirty days, 'I a 

recommendation for reclassifying those positions in 

accordance with Section 2-18-20:! (c) , [sic] MCA, taking into 

consideration the various levels and grade hierarchies 

contained in the classification series . . . " Section 

2-18-202 (1) (c) , MCA, requires that: 

(1) In providing for the classification 

plan, the department shall group all 

positions in the state service into 

defined classes based on similarity of 

duties performed, responsibilities 

assumed, and compl-exity of work so that: 

(c) similar pay may be provided under 

the same conditions with equity to each 

position within the class. 

The Division submitted its recommendation for 

classification on February 21, 1986. The Division found that 

the onl-y difference between Officers I and I1 was that 

Officers I1 were required to have served six years, therefore 

the Division found only four distinguishable classes in the 

series really existed. It recommended that Officer I and I1 

he lumped ?nto the same class at qrade 13, with the retention 
of the original grades for the remaining classes of Officers. 

After oral argument before the full Board on May 23, 1986, 

the Board issued its final order rejecting the Division's 

recommendations for classification and adopting the Hearing 

Examiner's findings of fact, conclusion of law and 

recommended order. 

On June 27, 1986, the Division filed for judicial 

review before the District Court. The District Court heard 

the matter on February 6, 1987, took the matter under 

advisement, and issued its opinion and order on June 5, 1987. 

The District Court found: (1) That the Board's final order 

did not comply with 5 2-4-623, MCA; (2) that both the appeal 

and the final order of the Board violated 2-18-203(2), MCA, 

which prohibits appeal of the grade assigned to a class; and 

(3) that the Board abused its discretion hv not addressing 

each of the five factors in relation to the classification 

decision. Consequently, the District Court reversed the 

final order of the Board and remanded the case for further 

proceedings. 

The Board appealed from the District Court's opinion 

and order on August 19, 1987. The Officers filed a similar 

appeal on August 20, 1987. 

Issues 

1. Did the District Court exceed its scope of review? 

2. Did the District Court err in its conclusion that 

the Board of Personnel Appeals failed to complv with 

2-4-623, MCA? 

3. Did the District Court err in holding that the 

Board of Personnel Appeals lacked the authority to order 

resolution of the grievance filed in this matter? 
Did the District Court exceed its scope of review? 

This Court has recently held upon review of an agency 

decision that: 

[Flindings of fact will be upheld unless 

they are "clearly erroneous, " ... conclusions of law will be upheld unless 

they are an "abuse of discretion" [and] 

[aln abuse of discretion results if an 

agency's interpretation of a statute is 

clearly contrary to the legislative 

intent behind that statute. (Citations 

omitted. ) 

Swan Corp. v. Montana Dept. of Revenue (~ont. 1988), 755 P.2d 

1388, 1390, 45 St.Rep. 998, 1000. The Court in Swan noted. 

that review of the district court's holding in such matters 

will be governed by the same standards. This Court has 

further stated that: 

[A] finding is "clearly erroneous" when, 

although there is evidence to support it, 

a review of the record leaves the court 

with the definite and firm conviction 

that a mistake has been committed. 

(Citations omitted.) 

Wage Appeal of Montana State Highway Patrol Officers v. Board 

of Personnel Appeals (1984), 208 Mont. 33, 40, 676 P.2d 194, 

198. Having examined the record, this Court finds the 

District Court is correct in its conviction that a mistake 

has been committed. 

The Division's application of the five factors required 

by the rules and regulations governing the Division initially 

resulted in retention of the same classes and reassignment of 

the existing grades. The Board, however, ignored the 

Division's grade assignment, instead upholding the "practice" 

of maintaining one grade difference between supervisors and 
those they supervise. This ruling of the Board ignores the 

rules and regulations governing the classification process. 

Appellants cite this Court to Wilson v. Nord (Wash.App. 

1979), 597 P.2d 914. In Wilson, an employee was denied an 

opportunity to compete for a position which had been 

reclassified and upgraded, although existing administrative 

regulations required the state to allow eligible persons to 

compete against incumbents for those upgraded positions. The 

trial court upheld this denial of the right to compete 

although the incumbent had served only twenty-six months in 

the position, contrary to the general rule of thumb of only 

allowing incumbents with three years tenure in a reallocated 

position to automatically retain their positions. Upon 

appeal from the trial court's decision, the Washington Court 

of Appeals stated that "[flailure to follow the rule of thumb 

is not an abuse of discretion." Wilson, 597 P.2d at 918. 

The instant case also involves a failure to follow a 

"practice" or "rule of thumb." The Division's original 

classification failed to follow the practice of maintaining 

one grade level between each class of officer. We hold that, 

as in the Wilson case, the failure to follow that practice 

was not an abuse of discretion on the part of the Division, 

because it properly applied the "five factors" provided in 

its rules and regulations and provided legitimate reasons for 

deviating from the "practice." We further note that the 

Board's findings of fact, conclusion of law and recommended 

order did not examine the Division's use of the "five 

factors." Yet, the purpose of the Board is to review the 

actions of the Division and to ensure that the Division 

properly adheres to its rules, regulations and practices. 

Such a review necessitates an examination of the 
classification process utilized by the Division. We hold 

that the District Court did not exceed its scope of review 

and correctly remanded the case to the Board given the lack 

of findings addressing the "five factors." 

11. 

Did the District Court err in its conclusion that the 

Roard of Personnel Appeals failed to comply with S 2-4-623, 

MCA? 

The District Court remanded the action because of the 

Board's failure to issue findings of fact addressing the 

Personnel Division's recommendation. Section 2-4-623 (4), 

MCA, requires a ruling upon each proposed finding submitted 

by a party. The court held that the Division's 

recommendation amounted to proposed findings of fact and thus 

the Roard erred in issuing findings of fact and conclusions 

of law addressing the issues raised in the parties' briefs, 

but not the Division's recommendation for classification. As 

stated by the District Court: 

[O] nce the recommendation for 

classification was submitted, the hearing 

examiner's original findings of fact were 

no longer relevant because they were 

based on the original briefs. The board 

became obliged to issue findings of fact 

which addressed the recommendation. 

Therefore, its summary adoption of the 

hearing examiner's original findings, 

conclusions and proposed order is 

insufficient. Furthermore, to simply 

ignore the reclassification 

recommendation of the division, 

particularly when it was invited, is 

arbitrary and capricious in the extreme. 

Appellants contend the court erred in this 

determination as an express ruling on each finding is 
unnecessary, "[als long as the agency's decision and order on 

such party's proposed findings are clear." Montana Consumer 

Counsel v. Public Service Commission (1975), 168 Mont. 177, 

192-193, 541 P.2d 770, 7'77. They allege that, as in 

Consumer Counsel, the Board clearly rejected the Division's 

proposed findings and the Board therefore did not need to 

respond to the Division's recommendation with specific 

findings . 

We hold, however, that the District Court correctly 

remanded the case for further findings expressly addressing 

the Division's recommendation. The ruling in 

Consumer Counsel is inapposite to this case. In this case, 

unlike in Consumer Counsel, the Board specifically requested 

the Division to develop this recommendation, and therefore 

the Division is entitled to express findings of fact and 

conclusions of law. 

Did the District Court err in holding that the Board of 

Personnel Appeals lacked the authority to order resolution of 

the grievance filed in this matter? 

This issue will he broken into two parts: (1) Whether 

S 2-18-203 (2), MCA, gives the Roard the authority to order 

the change of the Officers' grades; and (2) whether or not 

5 2-18-203 (2), MCA, as amended in 1981, is unconstitutional. 

Section 2-18-203(2), MCA, states: 

(2) Employees and employee organizations 

will be given the opportunity to appeal 

the allocation or reallocation of a 

position to a class. - The grade assigned 

- to - a class --- is not an appealable subiect 

under 2-18-1011 thr&gh 2-18-1013. 

(Emphasis added. ) 
Once an employee appeals a classification of his or her 

position, the Board may then rule upon the appeal. As stated 

in S 2-18-1012, MCA: 

If upon the preponderance of the evidence 

taken at the hearing the board is of the 

opinion that the employee is aggrieved, 

it may issue an order to the appropriate 

agency or agencies of state government 

requiring such action as will resolve the 

employee's grievance. . . 

Appellants contend that S 2-18-1012, MCA, gives the 

Board full authority to resolve - any grievance brought by an 

employee, even if resolution of the classification appeal 

results in reallocation of the grade assigned to a class. In 

support of this contention, appellants cite to Hutchin v. 

State, Dept. of Fish, Wildlife & Parks (19841, 213 Mont. 15, 

688 P.2d. 1257, wherein this Court stated: 

It is apparent from Section 2-18-1012, 

MCA, that if the Board of Personnel 

Appeals determines that the employee is 

aggrieved, it has full discretion to 

resolve the employee's grievance. 

Hutchin, 688 P.2d at 1260. 

Contrary to appellants' contention, the District Court 

found that the Board is limited in a classification appeal by 

5 2-18-203(2), MCA, to determining whether a position has 

been properly classified by the Division. The court held 

that the Board was without authority to create new 

classifications or to assign grades to classifications, and 

it distinguished Hutchin by stating: 

Hutchin involved the discharge of a state 

employee for personal use of state owned 

property. In Hutchin the board directed 

that the discharqed employee "be 

reinstated as of the- date of this final 

order to the position he held with the 
department" at the time of his 

termination. That is the type of remedy 

that is uniquely within the discretion of 

the board. However, the board's order 

here usurps a function that has been 

delegated exclusively to the division. 

We agree with the District Court's holding that the 

board is limited to determining whether a position is 

properly classified. position is improperly classified, 

the Board may then order the Division to reclassify the 

position in accordance with its existing policy. 

Appellants also contend a conflict exists as both 

§§ 2-18-203 (2) and 2-18-1011 (1) , MCA, authorize employees to 

utilize the grievance procedure contained in SS 2-18-1011 

through -1013, MCA, but that these statutes do not contain 

any limitation on appealing the grade assigned to a class. 

Appellants thus contend the limitation contained in 

§ 2-18-203 (2), MCA, cannot be extended to the grievance 

procedure in §§ 2-18-1011 through -1013, since the 

Legislature did not expressly limit these statutes. 

Section 2-18-1011(1), MCA, does not provide an 

additional cause of action, rather, it sets forth the 

procedure whereby an aggrieved employee may file an appeal as 

allowed in S 2-18-203 (2), MCA. Section 2-18-1011 (1) , MCA, 

states: 

(1) An employee or his representative 

affected by the operation of parts 1 

through 3 of this chapter is entitled to 

file a complaint with the board of 

personnel appeals provided for in 

2-15-1705 and to be heard under the 

provisions of a grievance procedure to be 

prescribed by the board. 

Therefore, we hold that the specific limitation upon grade 

appeals as found in 5 2-18-203(2), MCA, would control, and an 
employee may not put the grade assigned to their class before 

the Board as an issue. Additionally, although appellants 

properly phrased their appeal as a classification appeal, 

thus properly placing the appeal before the Board, the 

Board' s decision was based upon the grades assigned to the 

classes. The Board improperly found the Officers were 

aggrieved due to the grade assigned to their class and 

because the Division did not follow its practice of 

maintaining a one grade difference between supervisors and 

those they supervise. 

As the District Court stated, the function of 

developing guidelines for classification is assigned to the 

Department of Administration. Section 2-18-202, MCA. "[Tlhe 

Board's Function is limited to determining whether a position 

is properly classified, it has no power to create 

classifications and assign them to grades." The Board's 

action in directing the Division to change the grades 

assigned is outside the scope of the Board's authority. 

We now turn to the question of whether S; 2-18-203 (21, 

MCA, deprives the Officers of equal protection under the law 

and of their fundamental right to due process. Appellant 

Officers contend that the statute, as upheld by the District 

Court, takes awav their right to full legal redress as 

guaranteed under Article 11, sec. 16 of the 1972 Montana 

Constitution. They contend 5S 2-18-1011 through 2-18-1.013, 

MCA, gives state employees a property right that demands an 

administrative review of all. Division actions which seek to 

take that right away. 

When the constitutionality of a statute is questioned, 

the presumption is in favor of the constitutionality of the 

statute. McClanathan lr. Smith (1980), 186 Mont. 56, 65, 606 
P.2d 507, 512. This Court has previously stated that when 

the Legislature sets terms and conditions of public 

employment, contractual rights are not created by statute, 

rather the Legislature merely declares "a policy to be 

pursued until the Legislature declares otherwise." Wage 

Appeal of Montana State Highway Patrol 0ffi.cers v. Board of 

Personnel Appeals (1984), 208 Mont. 33, 41, 676 P.2d 194, 

199. In the instant case, the Legislature had set forth a 

policy controlling a public employee's right to appeal 

actions taken by the Personnel Division in performing the 

classification process. Under the pre-1981 statute, public 

employees had a right to appeal the grade assigned to their 

class, however, that right was not absolute. While the 

Legislature may not alter or eliminate an accrued or vested 

right, the Legislature may alter the terms and conditions of 

employment prospectively, where those rights have not accrued 

or vested. Wage Appeal, at 199-200. 

We also note state employees are not a suspect class 

which come within the protections accorded by the Equal 

Protection Clause. Having determined that the challenged 

statute does not affect a fundamental interest or affect a 

suspect class, the question then becomes whether the statute 

rationally relates to a legitimate state interest. Pfost v. 

State (Mont. 1985), 713 P.2d 495, 501, 42 St.Rep. 1957, 1964. 

The amendment of 5 2-18-203(2), MCA, involved the 

regulation of an economic policy of this State, i.e. the 

setting of public employment salary levels. The appeal of 

the assignment of a grade to a class would allow employees to 

have the grade of their class changed without an accompanying 

change in the position classification. The end result would 

be classes having similar specifications being assigned a 
wide range of grades, making the comparison process utilized 

in classification unworkable. We hold the State has a 

legitimate interest in preserving the state pay 

classification system and that the amended statute rationally 

relates toward effectuating that objective. 

The decision of the District Court reversing the 

Board's ruling and remanding the case for further findings in 

regards to the Division's classification recommendations is 

affirmed. 

1 

We concur: A 

@p4 Justices -?&flL