NO, 93-616 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

19 9 4 

KATHARINE S. BOREEN 

Plaintiff and Appellant, 

GEORGE CHRISTENSEN, a/k/a 

GEORGE P. CHRISTENSEN, a/k/a 

I!CHRISg1 CHRISTENSEN, and 

F. GUY YOUNGBLOOD, acting 

individually and in the capacities 

of administrative officers af the 

DEPARTMENT OF MILITARY AFFAIRS, 

ZOiY94- <'A d * , 

APPEAL FROM: District Court of the First Judicial District, 

In and for the County of Lewis and Clark, 

The Honorable Jeffrey Sherlock, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Peter ~ichael Meloy, Meloy 6 Morrison, Helena, 

Montana 

For Respondent: 

Hon. Joseph P, Mazurek, Attorney General, James 

Scheier, Assistant Attorney General, Helena, Montana 

For Amicus: 

Stanley T. Kaleczyc, Browning, Kaleczyc, Berry & 

Hoven, Helena, Montana (Montana League of cities and 

Towns and Montana Association of Counties) 

Submitted on Briefs: July 26, 1994 

Decided: October 20, 1994 
Justice James C. Nelson delivered the Opinion of the Court. 

 his is an appeal from an order of the First Judicial District 

Court, Lewis and Clark County, dismissing the complaint of 

plaintiff/appellant Katharine S. Boreen (Boreen) alleging 

constructive discharge from her employment and violations of 42 

U.S.C. 55 1983 (5 1983) and 1988. We reverse and remand. 

The sole issue on appeal is whether the District Court erred 

in dismissing Boreen's complaint for failure to state a claim on 

which relief can be granted because she did not have a property 

interest in her employment and, theref ore, no due process rights 

under the Fourteenth Amendment. 

FACTUAL BACKGROUND 

Boreen's complaint alleges that she was employed by the 

Montana Department of Military Affairs until she was terminated on 

April 13, 1990. The complaint states that George Christensen 

(Christensen) and F. Guy Youngblood (Youngblood) "render[ed] her 

working conditions so intolerable that a reasonable person under 

the circumstances would have no other choice but to resign." She 

further alleges that, by virtue of the personnel policies of the 

State of Montana, she could not be terminated (constructively 

discharged) without just cause, and that she had a property 

interest in her employment by reason of these policies. 

Christensen and Youngblood were administrative officers at the 

Montana Department of Military Affairs who, according to Boreen, 

"acting as individuals, and acting under color of state law, in 

their capacities as administrative officers of the Department of 

2 
Military Affairsb1 deprived her of her property interest in 

employment by constructivelyterminating her without due process of 

law. She sought an award of compensatory and general damages and 

attorney fees. 

PROCEDURAL BACKGROUND 

Boreen filed her complaint on April 5, 1993. On July 2, 1993, 

Youngblood filed a motion to dismiss the complaint and for a 

protective order. The District Court heard argument on the motion 

to dismiss and protective order and granted leave to file an 

amended complaint on July 7, 1993. On July 19, 1993, Youngblood 

filed an answer to the amended complaint, stating that the 

complaint failed to state a claim upon which relief could be 

granted. He also filed a motion to dismiss the amended complaint 

as well as a motion for summary judgment. Counsel for both parties 

argued the motion to dismiss and for summary judgment on August 26, 

1993. On November 16, 1993, the District Court issued its order, 

granting the motion to dismiss, concluding that Boreen had no 

property interest in her state employment and therefore, had failed 

to state a claim under S 1983. This appeal followed. 

STANDARD OF REVIEW 

Our standard of review of district court rulings on motions to 

dismiss under Rule 12 (b) (6) , M.R.Civ.P., is set forth in Willson v. 

Taylor (1981), 194 Mont. 123, 634 P.2d 1180: 

A complaint should not be dismissed for failure to 

state a claim unless it appears beyond doubt that the 

plaintiff can prove no set of facts in support of his 

claim which would entitle him to relief. A motion to 

dismiss under Rule 12(b)(6), M.R.Civ.P., has the effect 

of admitting all well-pleaded allegations in the 
complaint. In considering the motion, the complaint is 

construed in the light most favorable to the plaintiff, 

and all allegations of fact contained therein are taken 

as true. 

Willson, 634 P.2d at 1182. (citations omitted.) The District 

Court's determination that Boreen's complaint failed to state a 

claim is a conclusion of law. Our standard of review of the trial 

court's conclusions of law is whether the tribunal's interpretation 

of the law is correct. Steer Inc. v. Department of Revenue (1990) , 

245 Mont. 470, 474-75, 803 P.2d 601, 603. 

PROPERTY INTEREST IN EMPLOYMENT 

Boreen contends that the personnel policies of the State of 

Montana provide her with a property interest in continued 

employment of which she cannot be deprived without due process of 

law and which is sufficient to trigger the remedial protection of 

5 1983. Those personnel policies, found in Title 2, Chapter 21, 

sub-chapter 65 of the ~dministrative Rules of Montana (ARM) are set 

forth in pertinent part as Appendix A to this opinion. 

The State counters that Boreen was an "at willn employee and 

that, pursuant to 5 39-2-503, MCA, and applicable case law, she has 

no property interest in continued employment. The State further 

contends that the "just cause" provisions in its personnel policies 

on which Boreen bases her claim do not create a property interest 

in employment. 

Boreen argues, and we agree, that the United States Supreme 

Court's decision in Cleveland Board of Education v. Loudermill 

(1985), 470 U.S. 532, 105 S.Ct. 1487, 84 L.Ed.2d 494, and other 

pertinent case law, should serve as our guide in deciding this 

4 
issue of first impression--whether the @'just cause" provisions of 

the administrative regulations which comprise the personnel 

policies of the State of Montana create a property interest in 

employment sufficient to trigger the due process protections 

afforded by the Fourteenth Amendment of the united States 

constitution and the remedial protections afforded under 5 1983. 

LOUDERMI LL 

Loudermill involved a security guard's challenge to his 

dismissal by the Cleveland Board of Education- On his job 

application Loudermill erroneously stated that he had never been 

convicted of a felony. Subsequently, on discovering that he had 

been convicted of grand larceny, the Board dismissed him for 

dishonesty in filling out his job application. 

In his suit in federal district court, Loudermill claimed that 

his due process rights were violated because he was discharged 

without an opportunity to respond to the charges against him and to 

challenge his dismissal prior to his removal from his position. 

Under 0hio law, Loudermill was a *@classified civil servant" subject 

to termination only for cause and with the right to obtain 

administrative review upon discharge from employment. Loudermill 

reached the United States Supreme Court with a companion case 

presenting the same issue involving Donnelly, a bus mechanic 

employed by the Parma Board of Education. 

In reviewing the precedential underpinnings for its decision, 

the ~oudermill Court set forth certain basic legal principles that 

govern the application of due process protection to employment 
termination cases: 

Respondents' federal constitutional claim depends on 

their having had a property right in continued 

employment. Board of Regents v. Roth, 408 U.S. 564, 576- 

578 (1972) ; Reagan v. United States, 182 U.S. 419, 425 

(1901) . If they did, the State could not deprive them of 

this property without due process. See emp phis ~ight, Gas 

& Water Div. v. Craft, 436 U.S. 1, 11-12 (1978); Goss v. 

Lopez, 419 U.S. 565, 573-574 (1975). 

Property interests are not created by the 

Constitution, l1they are created and their dimensions are 

defined by existing rules or'understandings that stem 

from an independent source such as state law. . . . I I 

Board of Regents v. Roth, supra, 408 U.S. at 577, 92 

S.Ct, at 2709. See also Paul v. Davis, 424 U.S. 693, 709 

(1976). 

Loudermill, 470 U.S. at 538. 

Concluding that the Ohio statute at issue created such a 

property interest, the court observed that Louderrnill was a 

ll\classified civil service empl~ye[e],~ entitled to retain [his] 

pasitio[n] 'during good behavior and efficient service,' who could 

not be dismissed 'except . . . for . . . misfeasance, malfeasance, 

or nonfeasance in office. (citation omitted. ) This statute, the 

court determined, supported the conclusion that Loudermill had a 

property interest in his continued employment by the school 

district. 

Rejecting outright the position of the plurality in Arnett v. 

Kennedy (1974), 416 U.S. 134, 94 S.Ct. 1633, 40 L.Ed.2d 15, that 

the employeets property right is defined by, and conditioned on, 

the legislature's choice of procedures for its deprivation, the 

Loudermill court stated: 

. . . the Due Process Clause provides that certain 

substantive rights - life, liberty, and property - cannot 

be deprived except pursuant to constitutionally adequate 

procedures. The categories of substance and procedure 
are distinct. Were the rule otherwise, the Clause would 

be reduced to a mere tautology. I1PropertyH cannot be 

defined by the procedures provided for its deprivation 

any more than can life or liberty. The right to due 

process "is conferred, not by legislative grace, but by 

constitutional guarantee. While the legislature may 

elect not to confer a property interest in [public] 

employment, it may not constitutionally authorize the 

deprivation of such an interest, once conferred, without 

appropriate procedural safeguard^.^^ 

Loudermill, 470 U.S. at 541. (Citation omitted.) 

The court then proceeded to delineate what administrative 

process was due Loudermill according to the due process guarantees 

of the federal constitution and prior case law. The court 

concluded that due process simply required oral or written notice 

to the employee with an explanation of the employer's evidence and 

the opportunity for the employee to respond in "something lessJ1 

than a full evidentiary hearing before termination, coupled with a 

full post-termination hearing "at a meaningful time." Loudermill, 

470 U.S. 546-47. As stated by the court, 

[hlere, the pretermination hearing need not definitively 

resolve the propriety of the discharge. It should be an 

initial check against mistaken decisions--essentially, a 

determination of whether there are reasonable grounds to 

believe that the charges against the employee are true 

and support the proposed action. 

Louderrnill, 470 U.S. at 545-46. (Citation omitted.) 

MONTANA CASE LAW 

While this Court has dealt with the termination of "at willM 

employment in the context of claims alleging violations of due 

process, we have not yet addressed the issue presented here-- 

whether an administrative regulation can create a property interest 

in continued employment sufficient to trigger the due process 
protections afforded by the Montana Constitution and the Fourteenth 

Amendment of the federal constitution, remedial under 5 1983. The 

two primary Montana cases cited by both parties which impact this 

issue are: Reiter v. Yellowstone Cty. (1981), 192 Mont. 194, 627 

P.2d 845, and ~edicine Horse v. Big Horn Cty. Sch. D. (1991), 251 

Mont. 65, 823 P.2d 230. Two recent federal court decisions, Stokes 

v. Lamma (D. Mont. 1993), CV-93-016-GF, an unpublished decision of 

the United States District Court of Montana--Great Falls and 

Hollister v. Forsythe (9th Cir. 1994), 22 F.3d 950, are also cited 

and argued by the parties, and will be discussed. 

In Reiter, an employee who had been a custodian for the 

Yellowstone County Courthouse, was discharged without a hearing and 

subsequently brought an action in the district court seeking 

reinstatement and back pay. Reiter argued that because he had 

served in his position for a long time and was a permanent 

employee, he had a property interest in continued employment and 

was entitled to procedural due process before termination. Relying 

on Perry v. Sindermann (l972), 408 U.S. 593, 602, 92 S.Ct. 2694, 

2700, 33 L.Ed.2d 570, (an employee ''who ha[d] held [a] position for 

a number of years, might be able to show from the circumstances of 

this service - and from other relevant facts - that he has a 

legitimate claim of entitlement to job tenure . . . Reiter 

claimed that his longevity of service, supervisory position, 

retirement and insurance benefits, and the promise of a hearing 

upon discharge were factors which gave him a I1legitimate claim of 

entitlement to continued employment." Reiter, 627 P.2d at 848. 
This Court concluded that the Itat willm statute, 5 39-2-503, 

MCA, which stated that "[a]n employment having no specified term 

may be terminated at the will of either party on notice to the 

other . . . ," was controlling. We held that, "[t]he Montana 

statute create[d] no property interest in employment if there [was] 

no specified term" and, therefore, Reiter had no property interest 

protected by the United States and Montana constitutions. Reiter, 

Moreover, in response to Reiter's contention that the implied 

covenant of good faith and fair dealing created a property interest 

in employment sufficient to trigger the necessity for due process 

procedures, we concluded that this argument could not circumvent 

the Itat willmt statute which "clearly denies his claim of 

entitlement to continued employment." Reiter, 627 P.2d at 849. We 

stated: 

Even though appellant may have had an implied 

contract with the county by virtue of his longevity of 

service, it would be a contradiction in terms to say that 

he had an I1implied specified" period of employment. A 

specified term is one which the parties expressed, and 

there was no expression here concerning the length of 

employment. Section 39-2-503, MCA, operates to fill the 

gap left by the parties by defining the relationship as 

an 11at-wi1119 employment. While the rule may well be 

outdated, it is uniquely a province of the legislature to 

change it. 

Reiter, 627 P.2d at 849. 

Importantly, Reiter did not raise, nor did we address, the 

effect on the "at willu nature of the plaintiff's employment of the 

parties conditioning termination on a demonstration of "just causett 

under an administrative regulation adopted by the government. In 
fact, we specifically pointed out that Reiter's employment "was not 

covered by any written contract or collective bargaining agreement 

or ordinance." Reiter 627 P.2d at 847. 

In Medicine Horse, citing our holding in ~eiter that the 

employee !I. . . had no property interest in his position by virtue 

of his years of service, absent a contractually specified term of 

ernpl~yment,~~ we held that, failing to present a written contract, 

state law or regulation stating or otherwise indicating that he had 

a property interest in his position as custodian, Scott Medicine 

Horse was an Itat willH employee without a constitutionally 

protected property interest in his continued employment. Medicine 

I Horse 823 P.2d at 233. 

Medicine Horse, employed by the Big Horn County School 

District for four years, was involved in a number of work-related 

problems which culminated in his discharge by the Board of Trustees 

at a meeting on December 20, 1988. He requested a hearing after 

being informed of the termination. The hearing took place on 

January 17, 1989, but the trustees did not take action after the 

hearing, and the discharge remained in effect. 

Medicine Horse appealed the discharge until it reached the 

~istrict Court on a petition for judicial review under the Montana 

Administrative Procedure Act. He contended on appeal that he 

should have been provided with written notice of the reasons for 

his termination and that he should have received a pre-termination 

hearing. Medicine Horse asserted that he was a permanent employee 

and, thus, had a property interest in continued employment. The 
Board maintained that he was an Itat will1I employee, had 

notification of the board's consideration of his termination and 

was provided with a post-termination hearing even though it was 

discretionary with the trustees. 

We agreed with the Board and concluded that Medicine Horse was 

an "at wi1l1l employee because his term of employment had no 

specific duration. We quoted Board of Regents v. Roth (19721, 408 

U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548, for the proposition that 

"[a] property interest in one's position must be created by 

existing rules or regulations, state laws, or understandings 

between employee and empl~yer.'~ Medicine Horse, 823 P.2d at 233. 

We then concluded that Medicine Horse was not entitled to a pretermination hearing because he could present 'I. . . no written 

contract, state law, or regulation specifically stating or 

otherwise indicating that he had a property interest in his 

position as a custodian." Medicine Horse, 823 P.2d at 233. 

In so holding, we rejected various arguments presented by 

Medicine Horse in support of his position. We disagreed that the 

written policy applicable to his position created a property 

interest. We concluded that, under the policy, he could be 

"terminated at any time and that a hearing may be provided . . . at 

the discretion of the trustees . . . [and that the] policy does not 

support the appellant's claim of a property interest in his 

position.f1 Medicine Horse, 823 P.2d at 233. We also rejected 

Medicine Horse's contention that he gained a property interest in 

his employment by passing his probationary period and that, having 
done so, he reasonably expected that his employment would continue. 

Medicine Horse, 823 P.2d at 233-34. Finally, we disagreed with 

Medicine Horse's contention that ''at willtt employment was not a 

viable doctrine in Montana, stating that "neither [the Wrongful 

Discharge From Employment Act] nor any other action by the Montana 

Legislature or this Court has nullified the 'at will1 designation 

or 5 39-2-503, MCA.lY Medicine Horse, 823 P.2d at 232. 

Notwithstanding the various arguments which we rejected, a 

careful reading of Medicine Horse reveals that, as in Reiter, we 

did not rule on the issue presented in the instant case. To the 

contrary, our decision in Medicine Horse, specifically left for 

future resolution the case where, unlike Medicine Horse, a 

plaintiff did present ". . . [a] state law, or regulation 

specifically stating or otherwise indicating that he had a property 

interest in his position. . . . Medicine Horse, 823 P. 2d at 233. 

THE INSTANT CASE 

We are, here, faced with that case--an employee who does point 

to specific administrative regulations which state that 

disciplinary actions, such as termination of employment, must be 

conditioned upon "just causetq and that due process procedures, 

including notice and an opportunity to respond, must be followed as 

a part of the disciplinary action or termination. 

In the instant case, the District Court stated that because 

Medicine Horse held that an at will employee did not have a 

property interest in continued employment and that the WDFEA did 

not alter the statutory at will definition, the WDFEA would not 
provide Boreen with a property interest in employment. The 

District Court stated that the federal district court's decision in 

Stokes, relying on Medicine Horse, held that the WDFEA did not 

create a property interest in employment by imposing the good cause 

requirement on the termination of an at will employee. The 

District Court then concluded that if the WDFEA did not create a 

property interest in continued employment, administrative 

regulations could not create such a property interest either. 

The problem with that reasoning is that, as discussed in some 

detail below, Stokes did not correctly interpret our prior case 

law, nor have we addressed directly the issue of whether the WDFEA 

creates a property interest in continued employment through the 

good cause requirement of H 39-2-904 (2) , MCA. That precise issue, 

moreover, is not presently before this Court, and we are not 

deciding that question in this case. 

What is at issue are administrative regulations of the 

Department of Military Affairs-the State of Montana--which mandate 

that disciplinary actian against its employees, including 

discharge, be taken only for '(just cause, " as defined, and then, 

only in accordance with the procedures set forth in such 

regulations. We conclude that the regulations at issue here 

support Boreents argument that she had a property interest in her 

continued employment. We further conclude that these regulations 

do provide Boreen with a specified term of employment. Under the 

regulations, Boreen was entitled to remain in her position of 

employment until there was just cause" for her termination. While 
Boreen's term of employment may not have been expressed in days, 

months or years, it was, nevertheless, expressed in relation to a 

definite period of time during which Boreen could reasanably expect 

her employment to continue--i.e., until her employer established 

one of the defined "just causen reasons why her employment should 

end. Here, the administrative regulations of the State confer upon 

employees such as Boreen, a specified term of employment and, in 

turn, create a property interest in the continuation of that 

employment, absent a demonstration by the employer of just cause 

why the employment should be terminated. Medicine Horse, 823 P.2d 

at 233. 

Moreover, our conclusion that the administrative regulations 

at issue provide Boreen with a property interest in continued 

employment does not nullify the at will statute. We simply 

conclude that Boreen is not an at will employee--i.e., one whose 

employment has no specified term, or, as we indicated in Scott v. 

Eagle Watch Investments Inc. (1991), 251 Mont. 191, 828 P.2d 1346, 

one who is subject to discharge "for a good reason, bad reason, or 

for no reason at all." Scott, 828 P.2d at 1349. 

As we stated in Dare v. Montana Petroleum Marketing Co. 

(l984), 212 Mont. 274, 687 P.2d 2.015, under certain facts, "the 

term of employment. . . [may go]. . . beyond the indefinite period 

contemplated in the at will employment statute, Section 39-2-503, 

MCA, and. . . [be] . . . founded upon some more secure and objective 

basis.I1 Dare, 687 P.2d at 1020. Unlike Reiter and Medicine Horse, 

who could point to no contract, statute or regulation protecting 
their employment, Boreen is covered by regulations that do protect 

her employment. While Reiter and Medicine Horse did not have a 

specified term of employment and thus, no entitlement to continued 

employment, Boreen is entitled to remain in her job until her 

employer establishes "just causevt that she should be terminated. 

While Reiter and Medicine Worse were simply employees at will, 

Boreen's employment has gone beyond the indefinite period 

contemplated in the at will employment statute, and is founded upon 

the "more secure and objective basis" of Itjust causet1 mandated by 

the State's personnel policies. See Dare, 687 P.2d at 1020. 

Boreen can only be terminated for "just cause; she may not be 

terminated for a bad reason or no reason at all. Scott, 828 P.2d 

at 1349. Simply put, Boreen is not an at will employee. Absent 

such an interpretation, the requirements of the regulation would be 

meaningless and illusory and would afford the employee little, if 

any, protection from or remedy for discharge without "just cause.lv 

Our decisions in Medicine Horse and Reitex, which interpret 9 39-2- 

503, MCA, are not affected by this ruling; a careful reading of 

those cases, in fact, suggests our decision here. 

In summary, we hold, that where, as here, the government 

employer has, by administrative regulation, limited its ability to 

impose on its employee the ultimate form of discipline, i.e., 

discharge, absent a showing of Ifjust cause," as defined in the 

regulation, then the employer has, by such regulation, abrogated 

the '!at will" employment relationship. Rather, the regulation 

creates a specified term of employment. Therefore, the employee is 
entitled to expect that his employment will continue until the 

employer demonstrates I1just causef' why the employee should be 

discharged. Moreover, we hold that such a regulatory scheme 

creates a property interest in the employee's continued employment 

which is protected by the due process provisions of the federal and 

Montana Constitutions. 

As mentioned above, following Medicine Horse, two federal 

courts, interpreting the decisions of this Court, ruled that the 

affected Montana employee had not demonstrated a constitutionally 

protected property interest in continued employment. Inasmuch as 

Stokes is referred to by the District Court in its decision and 

both Stokes and Hollister are raised and vigorously argued in the 

briefs, we will discuss those two opinions. In so doing, however, 

we emphasize at the outset that we are not constrained by the 

interpretations placed upon our decisions by the federal judiciary, 

and, as indicated by our opinion here, we necessarily do not agree 

with the conclusions of the federal courts involved. 

In Stokes, an action filed in United States District court for 

the District of Montana - Great Falls Division, Medicine Horse was 

discussed at length. In that case, Stokes resigned from her 

position with the office of the Clerk and Recorder in Pondera 

County. In addition to an action under the Wrongful Discharge from 

Employment Act, she filed her 5 1983 action alleging intolerable 

working conditions and contending that her constructive discharge 

deprived her of due process rights under the Fourteenth Amendment. 

The court dismissed her complaint, concluding that it failed to 
state a claim cognizable under 5 1983, and declined jurisdiction of 

the pendent WDFEA claim. Stokes, at 2. 

The defendants asserted that Stokes was an ltat will1' employee 

having no definite term of employment, no legitimate entitlement to 

public employment, and accordingly, no constitutionally protected 

property interest in her job under Montana law. Stokes contended 

that the WDFEA "statutorily createEd] a legitimate entitlement to 

continued public employment . . .I1 Stokes, at 4. 

The court concluded that Stokest position had been rejected by 

this Court in Medicine Worse, citing our holding that Medicine 

Horse was an "at will1f employee without a property interest because 

his employment was without a specified term. The court also cited 

our conclusion that "neither [the Wrongful Discharge from 

Employment Act] nor any other action by the Montana Legislature or 

[the Montana Supreme] Court has nullified the 'at-willt designation 

or section 39-2-503.l' Stokes, at 4-5. The federal district judqe 

concluded that the Montana Supreme Court made it clear that an "at 

will11 employee in the State of Montana had no property interest in 

her position of employment. citing our Scott decision, the court 

reiterated the caveat that although "Montana has implemented 

protective devices through both the Legislature and case law that 

operate to curb the harsh effects of the rule, . . . these devices 

. . . do not obliterate the at-will rule." Stokes, at 6. The 

court concluded that because the WDFEA did not nullify the at will 

doctrine, Stokes was an "at willv1 employee; that she had no 

property interest in her continued employment; that she, therefore, 
was not due the protection afforded by 5 1983; and that, 

accordingly, her complaint failed to state a claim upon which 

relief could be granted. 

The State and Boreen take opposite positions on whether the 

court correctly applied our holding in Medicine Horse to the 

factual situation presented in Stokes. In any event, Stokes is not 

authority for deciding the issue raised in this case. Like 

Medicine Horse, Stokes did not point to any administrative 

regulation under which she could only be discharged for just cause. 

That issue was not even raised in Stokes, much less decided. 

Moreover, while we stated in Medicine Horse, that the WDFEA 

had not nullified the at will statute, we did not address in that 

case, nor do we here, the question of whether the "good cause1I 

provision of the WDFEA, in and of itself, creates a property 

interest in continued employment. Our focus in Medicine Horse was 

on the government policy at issue and on the employee's failure to 

point to a contract or state law or regulation creating a property 

interest in his employment. 

Finally, we consider a recent case decided by the Ninth 

Circuit which did deal with the issue presented by Boreen. 

Hollister involved an appeal from the federal district court's 

dismissal of a 5 1983 claim brought by a legal secretary for the 

Rosebud County Attorney. Hollister worked as Rosebud County 

Attorney's legal secretary for ten years when she was informed on 

November 30, 1990, that she would be terminated effective January 

4, 1991. No reasons were given for the termination. The Board of 
County Commissioners held a grievance hearing without the presence 

of Hollister, but refused to reinstate her. 

Hollister brought a civil rights action in federal district 

court alleging that she had been deprived of a property right, her 

public employment, without due process, as well as other claims 

including a breach of the covenant of good faith and fair dealing 

and wrongful discharge under 15 39-2-901, MCA, et. seq. The 

district court granted summary judgment in favor of the defendant 

county attorney, concluding that under Montana law, Hollister had 

no property interest in her employment and therefore, there could 

be no violation of the Fourteenth Amendment. The court also 

declined to retain supplemental jurisdiction over the state claims. 

Hollister appealed to the court of appeals, maintaining that 

she was discharged without due process in violation of her 

Fourteenth Amendment rights, arguing that the Rosebud County 

Personnel Policy provided her with legal entitlement to continued 

employment because of the "just causegr provision, the requirement 

that she receive a post-termination hearing upon request if 

discharged and the requirement that she participate in the 

retirement program. Hollister, 22 F.3d at 951. 

The circuit court stated that in Montana, the at will 

employment statute governed the creation of a property interest in 

continued employment. The court cited this Court's interpretation 

of the statute, stating that "absent a specified term of 

employment, contained in a rule, regulation, state law, or 

understanding between employer and employee, an employee in Montana 
is an employee at will and has no property interest in his job." 

Hollister, 22 F.3d at 952. (Citation omitted.) The court 

concluded that in the instant case, Hollister could point to no 

policy that specified a term of employment, nor was there a statute 

or written contract specifying a term of employment; therefore, she 

was an at will employee. 

Citing Scott and Medicine Horse, the court further stated: 

The Montana Supreme court Is treatment of Mont. Code 

Ann. 39-2-503 in light of the subsequently enacted 

Wrongful Discharge From Employment Act, ... is consistent 

with this conclusion. The Act provides, inter alia, that 

an at-will employee who is discharged without flgood 

cause," is entitled to certain remedies, including lost 

wages and benefits up to a specified limit. Nonetheless, 

the Act does not abrogate the provisions of the at-will 

employment statute, and does not create in at-will 

employees a property interest in their jobs. 

Hollister, 22 F.3d at 953. 

The court concluded that this rationale applied with equal 

force to the Rosebud County Personnel Policy provisions relied upon 

by Hollister. M\[F]or cause1 and similar provisions in employment 

contracts, handbooks, or statutes, that fall short of an explicit 

agreement as to a term of employment do not give an employee a 

property interest in her job." Hollister, 22 F.3d at 953, citing 

Reiter, 627 P.2d at 849. Under Montana law, the court continued, 

neither a lljust cause1' hearing nor mandatory retirement plan 

provisions in the personnel policy can be read as implying a 

specified term of employment. "The provisions of the County 

Personnel Policy, taken individually or together, do not amount to 

an 'expression . . . concerning the length of employment. 'I1 

Hollister, 22 F.3d at 953. 
Without belaboring its reasoning, we simply do not agree with 

the court's application of our prior case law to the facts in 

Hollister. Simply put, we have not heretofore addressed the issue 

raised in Hollister, which issue is now raised in the instant case- 

-i. e. , a public employee who can point to a specific administrative 

regulation or government policy that conditions disciplinary action 

upon "just cause. Notwithstanding the federal court's 

interpretations of Reiter and Medicine Horse, we clearly suggested, 

in the latter case, a contrary interpretation under the appropriate 

facts. "Medicine Horse presented no . . . regulation specifically 

stating or otherwise indicating that he had a property interest in 

his position . . . The written policy . . . [allowing for 

termination at any time and a discretionary hearing] . . . does not 

support the appellant's claim of a property interest in his 

position." Medicine Horse, 823 P.2d at 233. 

By way of summary, in Reiter we rejected a claim that length 

of employment, being a supervisor and receiving job-related 

financial benefits would give rise to a property interest in 

employment. Reiter, 627 P.2d at 849. In Medicine Horse the 

employee did not base his claim on a l1just causeI1 regulation, but 

on an ambivalent school district policy and on his length of 

tenure. The two cited federal court decisions to the contrary 

notwithstanding, a close reading of our prior cases clarifies that 

we have not heretofore decided the issue presented in the instant 

case; we have never held that an at 

cannot be altered by the employer 

will employment relationship 

conditioning the employee's 
termination on a finding that there is "just causel1 or, as the 

State defines that term in the regulations at issue here, 

ttreasonable, job-related grounds for taking a disciplinary action 

based on failure to satisfactorily perform job duties or disruption 

of agency operations." § 2.21.6507(6), ARM. 

Finally, given the concerns expressed by amici, Montana League 

of Cities and Towns and Montana Association of Counties, to the 

effect that our decision here will have "significant impact upon 

local government operationsv1 and will wsubstantially redefine the 

nature of the employment relationship between public entity 

employers and their at will public employee^,^^ it is, perhaps, 

appropriate to emphasize the obvious. 

First, our decision in this case pertains only to those 

employees who, like Boreen, can point to some written contract, 

state law, or regulation which states or otherwise provides a 

specified term of employment and, hence, a property interest in 

continued employment. 

Second, nothing in this decision provides a public employee 

protected by the type of regulations or policies at issue here with 

1 ife-time job tenure and immunity from discharge. Our decision 

here confers upon a public employee like Boreen nothing more than 

what the regulations applicable to the employment at issue already 

provide. 

Third, we have determined that regulations such at those at 

issue here create a property right to continued employment, absent 

the employer's demonstration of just cause. As a consequence, 
Loudermill mandates that due process requires notice to the 

employee with an explanation of the employer's evidence and the 

opportunity for the employee to respond in "something lesst1 than a 

full evidentiary hearing before termination. Loudermill, 470 U.S. 

at 545-46. Such requirements, the purpose of which are merely to 

guard against a mistaken decision, do not impose an intolerable 

administrative burden upon the government when balanced against the 

catastrophic consequences to the employee of losing his or her job 

and very means of support. Loudermill, 470 U.S. at 543-45. 

On the basis of the foregoing discussion, we hold that 

Boreen's complaint did state a claim upon which relief could be 

granted, and, accordingly, we reverse and remand this case to the 

District Court for further proceedings consistent with this 

opinion. 

REVERSED and REMANDED. 

We Concur: 

Justices 
APPENDIX A 

2.21.6506 POLICY AND OBJECTIVES (1) It is the policy of 

the state of Montana that: 

(a) state employees who fail to perform their jobs in a 

satisfactory matter or whose behavior otherwise 

interferes with or disrupts agency operations be subject 

to disciplinary action, up to and including discharge; 

(b) disciplinary action be administered for just cause, 

as defined in this policy; and 

(c) an employee be informed of the cause for disciplinary 

action and offered the opportunity to respond. 

(Administrative Rules of Montana 6/30/84 2-1493 (page) 

2.21.6507 DEFINITIONS 

(6) "Just causeu means reasonable, j ob-related grounds 

for taking a disciplinary action based on failure to 

satisfactorily perform job duties or disruption of agency 

operations. Just cause includes, but is not limited to, 

an actual violation of an established agency standard, 

legitimate order, policy, or labor agreement, failure to 

meet applicable professional standard or a series of 

lesser violations, if the employee would reasonably be 

expected to have knowledge that the action or omission 

may result in a disciplinary action. 

(7) '!Due processIt means ensuring an employee: 

(a) is informed of the action being taken and the reason 

for it; and 

(b) has an opportunity to respond to and question the 

action and to defend or explain the questioned behavior 

or actions. 

(11) "Dischargen means, for purposes of this policy, the 

termination of an employee's employment for just cause. 

2.2 1.6509 FORMAL DISCIPLINARY ACTIONS (1) When formal 

disciplinary action is necessary, just cause, due process 

and documentation of facts are required. Formal 

disciplinary actions include, but are not limited to, 

written warning, suspension without pay, disciplinary 

demotion and discharge. 

(2) Management shall, when appropriate, use progressive 

discipline. However, the appropriateness of using 

progressive discipline in each case lies within the 

discretion of management. The specific disciplinary 
actions taken and the order in which disciplinary actions 

are taken depends on the nature and severity of the 

performance deficiency or behavior that disrupts agency 

operations. Discharge should not be an initial 

disciplinary action expect in severe cases of 

unsatisfactory performance or behavior that disrupts 

agency operations. 

(3) Each formal disciplinary action shall include a 

written notification to the employee which includes, but 

is not limited to, the following: 

(a) the just cause for the disciplinary action; 

(b) the disciplinary action to be taken, including dates 

and duration where applicable; 

(c) the improvements or corrections expected, and the 

consequences of failure to make the required improvement 

or correction, if applicable. 

(4) The employee shall be offered the opportunity to 

review, sign, and date any notice of a formal 

disciplinary action and shall have the opportunity for 

verbal and/or written response. The employee's signature 

indicates that the employee has had the opportunity for 

review, but not necessarily that the employee agrees with 

the action. If the employee refuses to sign, a witness 

to such refusal, in addition to the supervisor, shall 

sign and date the notice. 

(5) Where notices cannot be issued in person, they should 

be delivered by certified mail. 

(6) All formal disciplinary actions must be documented. 

Documents will be maintained in accordance with the 

employee record keeping policy, ARM 2.21.6601 et. seq. 

2.21.6522 CLOSING (1) This policy shall be followed 

unless it conflicts with negotiated labor contracts or 

specific statutes, which shall take precedence to the 

extent applicable. 
October 20, 1994 

CERTIFICATE OF SERVICE 

I hereby certify that the following certified order was sent by United States mail, prepaid, to the 

following named: 

Peter Michael Meloy, Esq. 

THE MELOY LAW FIRM 

P. 0. Box 1241 

Helena, MT 59624 

Won. Joseph P. Mazurek, Attorney General 

James Scheier, Assistant 

Justice Building 

Helena, MT 59620-1402 

Stanley T. Kaleczyc 

Browning, Kaleczyc, Berry & Hoven, P.C. 

P+O. Box 1697 

Helena, MT 59624 

ED SMITH 

CLERK OF THE SUPREME COURT 

STATE OF ,MONTANA