No. 94-245

IN THE SUPREME COURT OF THE STATE OF MONTANA

1994

RON STANLEY,

Plaintiff & Appellant,

v.

ALLAN G. HOLMS, d/b/a GREAT NORTHERN LEASING

COMPANY and GARDEN CITY RECONDITIONING: and

NEWCO, a corporation, d/b/a GREAT NORTHERN

LEASING COMPANY and GARDEN CITY RECONDITIONING, OCT 2J1994

Defendants & Respondents.

APPEAL FROM: District Court of the Fourth Judicial District,

In and for the County of Missoula,

The Honorable John S. Henson, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Richard Ranney, Williams & Ranney,

Missoula, Montana

For Respondents:

Milton Datsopoulos and Michael G. Black,

Datsopoulos, MacDonald & Lind,

Missoula, Montana

Filed:

Submitted on Briefs: September 8, 1994

Decided: October 27, 1994

clgrk
Justice Terry N. Trieweiler delivered the opinion of the Court.

Plaintiff Ron Stanley was hired by defendant Allan G. Helms as

manager of two of Helms' businesses, which for simplicity will be

referred to as Great Northern. After Stanley was terminated, he

brought this action in the District Court for the Fourth Judicial

District in Missoula County to recover wages allegedly due, based

on the parties' alleged agreement to share profits. The District

Court granted Great Northern's motion to dismiss for lack of

subject matter jurisdiction because Stanley failed to exhaust

administrative remedies. Stanley appeals the District Court's

order dismissing his complaint. We reverse.

The issue on appeal is:

Can a Montana worker sue a former employer in District Court

to collect unpaid wages, statutory penalties, and attorney fees, or

must the worker first exhaust administrative remedies by filing a

claim with the Commissioner of Labor and Industry?

FACTUAL BACKGROUND

Stanley's complaint alleges that he was hired by Allan G.

Holms, d/b/a Great Northern Leasing Company and Garden City

Reconditioning; and Newco, a corporation, d/b/a Great Northern

Leasing Company and Garden City Reconditioning, as manager of two

of the Great Northern businesses on or about June 1, 1993, and that

Holms agreed to pay Stanley a wage that was to include 20 percent

of the businesses net profits, subject to a minimum of $5000 per

month. Stanley managed the businesses in June, July, August, and

September 1993.
A t the end of September, Stanley indicated he was

uncomfortable with Great Northern's business practices and desired

to terminate his employment. Great Northern discharged Stanley,

effective the end of September 1993.

According to Stanley, even though the 20 percent of profits

for June, July, August, and September exceeded $5000, during each

month Great Northern paid Stanley only the $5000 minimum. Stanley

demanded the profit share, but Great Northern would not pay him.

Stanley filed suit in District Court in which he claimed back

wages, a statutory penalty pursuant to § 39-3-206, MCA, and

attorney fees and other costs, pursuant to § 39-3-214, MCA.

On February 9, 1994, Great Northern moved to dismiss pursuant

to Mont. R. Civ. P. 12(b)(l), on the basis that the District Court

lacked subject matter jurisdiction. On March 28, 1994, the

District Court granted Great Northern's motion to dismiss. Stanley

appeals from the District Court's order.

DISCUSSION

Can a Montana worker sue a former employer in District Court

to collect unpaid wages, statutory penalties, and attorney fees, or

must the worker first exhaust administrative remedies by filing a

claim with the Commissioner of Labor and Industry?

Here, the relevant inquiry is whether the complaint states

facts that if true would vest the district court with subject

matter jurisdiction. United States Natl. Bank of Red Lodge v. Montana Dept. of

Revenue (1977), 175 Mont. 205, 209, 573 P.2d 188, 190. This is a
question of law, therefore, we must determine whether the District

Court's interpretation of the law was correct. In re Marriage of Barnard

(1994) ( I 264 Mont. 103, 106, 870 P.2d 91, 93 (citing InreMam’ageof

Buti (1993), 258 Mont. 265, 269, 852 P.2d 616, 619).

Great Northern argues that when considering the District

Court's jurisdiction to entertain claims for wages we should

distinguish between wage claims brought pursuant to Title 39,

Chapter 3, Part 2, MCA, and those brought pursuant to Title 39,

Chapter 3, Part 4, MCA. Great Northern claims that the plain

language found in Part 2 establishes administrative remedies with

the Department of Labor, and without exhausting those remedies, an

employee may not file a complaint in district court. In support of

its argument, Great Northern relies on 5 39-3-209, MCA. That

section provides as follows:

It shall be the duty of the commissioner of labor to

inquire diligently for any violations of this part and to

institute actions for the collection of unpaid wages and

for the penalties provided for herein in such cases as he

may deem proper and to enforce generally the provisions

of this part.

Great Northern adds that as a matter of law it is not

necessary for an employee to sue when administrative remedies are

available but not exhausted. Therefore, Stanley is not entitled to

attorney fees or costs, nor are the penalties applicable. Finally,

Great Northern contends that because the statutory scheme was

amended in 1989 to increase rights in administrative proceedings,

the remedy must be exclusive. See 5s 39-3-216 and -217, MCA.

4
In response, Stanley relies on language found in several

sections of Part 2. Section 39-3-206(l), MCA, states:

An employer who fails to pay an employee as provided in

this part or who violates any other provision of this

part is guilty of a misdemeanor. A penalty must also be

assessed against and paid bv the emnloverto the emnlovee

in an amount not to exceed 110% of the wages due and

unpaid.

(Emphasis added.)

Section 39-3-207, MCA, states:

Any emplovee may recover all such penalties as are

provided for the violation of 39-3-206 which have accrued

to him at any time within 18 months succeeding such

default or delay in the payment of such wages.

(Emphasis added.)

Section 39-3-208, MCA, states:

Any contract or agreement made between an employer and an

employee the provisions of which violate, evade, or

circumvent this part is unlawful and void, but the

emolovee may sue to recover the wages earned, together

with the penalty specified in 39-3-206 or separately to

recover the penalty if the wages have been paid.

(Emphasis added.)

Section 39-3-214, MCA, states:

(1) Whenever it is necessarv for the emnlovee to enter

or maintain a suit at law for the recovery or collection

of wages due as provided bv this part, a resulting

judgment must include a reasonable attorney's fee in

favor of the successful party, to be taxed as part of the

costs in the case.

(2) Any judgment for the plaintiff in a proceeding

pursuant to this part must include all costs reasonably

incurred in connection with the proceeding, including

attorneys' fees.

(3) If the oroceedinq is maintained bvthe commissioner,

no court costs or fees are required of him nor is he required

to furnish any bond or other security that might otherwise be

required in connection with any phase of the proceeding.

(Emphasis added.)

5
Stanley contends that §§ 39-3-206 and -208, MCA, clearly allow

an employee to sue directly in district court since the statutes do

not mention the Commissioner of Labor. Also, § 39-3-214, MCA,

indicates that the Commissioner's role is discretionary and

cumulative. Stanley also relies on the history of the wage

enforcement statutes which did not originally provide for

administrative action. We agree with Stanley's statutory

interpretation.

TO determine whether or not Stanley must exhaust

administrative remedies, we look first to the statutory language,

and where that is unclear, to legislative intent. SeeBoegliv. Glacier

MountainCheeseCo. (1989), 238 Mont. 426, 429, 777 P.2d 1303, 1305.

The language in 5 39-3-206(l), MCA, states that a penalty is

to be assessed against and paid by the employer to the employee if

the employer violates statutory provisions; for example by failing

to pay the employee his or her wages. This provision suggests that

an employee may sue the employer in district court. If the

department pursues an administrative proceeding, it collects the

wages and attempts to pay the wages to the entitled claimant. In

administrative proceedings, the employer does not pay the employee

directly. see § 39-3-213, MCA.

In addition, the statutes do not expressly restrict suits to

the administrative process. Rather, § 39-3-209, MCA, provides that

the Commissioner shall inquire diligently for violations of this

part and sue for collection of unpaid wages and penalties "in such

6
cases as he may deem proper and to enforce generally the provisions

of this part." Section 39-3-211, MCA, states that if the

Commissioner determines that employees have wage claims, he shall,

if the employee files a written request, take an assignment of the

claim in trust for the employee and may maintain any proceeding to

enforce the claim. This language indicates that an employee can,

but is not required to, seek redress through the Department of

Labor and I,ndustry, and the Commissioner's duty to file suit is

discretionary.

The legislative history of Part 2 supports these inferences

drawn from the statutory language.

In testimony found in Chapter 40 of the 1967 Session Laws, Mr.

Emmons, then Commissioner of Labor and Industry, requested

statutory amendments to increase the Commissioner's power. At a

committee meeting, he was asked what authority the proposed

amendment gave him, and he responded that it would grant him the

authority to sue the employer. Mr. Emmons stated that he had

numerous complaints from unpaid workers, and mentioned that the law

was clear regarding when wages should be paid, but did not grant

the Commissioner power to enforce the law. He pointed out that,

therefore, many cases were dropped because workers could not afford

an attorney to file a civil suit. The committee minutes indicate

that the remedy was cumulative, i.e., the amendment was designed to

grant the Department authority so it could sue on behalf of

employees who could not afford an attorney. See Minutes,

Legislative Hearing S.B. 27, February 6, 1967, at 1. As a result,

7
under the current statutes, the Commissioner, in cases he "deems

proper, 'I may sue to collect unpaid wages. Section 39-3-209, MCA.

The other statutory provisions and administrative rules that

Great Northern claims require a claimant to exhaust administrative

remedies deal mainly with the Commissioner's powers once the

administrative process is pursued. None of the statutes expressly

state that administrative proceedings are exclusive. Sections

39-3-209, -211, -213, -216, and -217, MCA, set forth the procedures

and powers of the Commissioner to collect and dispose of wages.

Great Northern claims that recent amendments to 99 39-3-216

and -217, MCA, provide additional administrative remedies,

indicating they must be exclusive. However, neither do we find any

language in the statutory amendments or their legislative history

to suggest that the administrative remedies provided by Part 2 are

exclusive.

Great Northern cites numerous decisions for the proposition

that where administrative remedies are expressly provided, a

claimant must exhaust them before seeking judicial review.

Stanley, on the other hand cites several cases in which wage claims

were filed in district court and considered without apparent

exhaustion of administrative remedies. However, neither the

exhaustion cases cited by Great Northern, nor the prior wage claim

cases cited by Stanley, dealt with the precise issue presented

here.
More on point, is our decision in Boegli, 777 P.2d 1303. In

Boegli, the plaintiffs sued the defendant for overtime hours pursuant

to § 39-3-405, MCA. The issue in that case was whether plaintiffs

who were denied overtime compensation must seek relief exclusively

from the Commissioner of Labor under Title 39, Chapter 3. The

defendant moved to dismiss on the basis that the plaintiffs had

failed to exhaust their administrative remedy. The district court

granted the defendant's motion and dismissed the case. We

reversed, and concluded that 5 39-3-408, MCA, was clear and

unambiguous in its designation of cumulative remedies. Boegli , 7 7 7

P.Zd at 1305-06.

III Boegli, we relied on the cumulative language of 5 39-3-408,

MCA, for our conclusion that administrative remedies are not

exclusive. For that reason, Great Northern argues that the

cumulative remedy language has no bearing on this case which is

brought under Part 2.

Although Boegli dealt with Part 4, this Court did not make an

express distinction between Part 2 and Part 4. Nor is any

distinction warranted when the entire statutory scheme in Title 39,

Chapter 3, is considered. For example, § 39-3-408, MCA, which

provides for cumulative remedies, refers to the remedies provided

for in Part 4 at 5 39-3-407, MCA. That section provides that:

Enforcement of this part shall be treated as a wage claim

action and shall be pursued in accordance with part 2 of

this chapter, as amended. This part may also be enforced

in accordance with part 5 of this chapter for the benefit

of certain employees in the mineral and oil industry.

9
The commissioner may enforce this part without the

necessity of a wage assignment.

In other words, the only remedies provided for in Part 4 are

those set forth in 5 39-3-407, MCA, which incorporates those

remedies established in Part 2. Therefore, when 5 39-3-408, MCA,

refers to cumulative remedies, it necessarily refers to the

remedies provided for in Part 2.

Based on the statutory language of Title 39, Chapter 3, its

legislative history, and our decision in Boegli, we conclude that a

wage claimant pursuant to Title 39, Chapter 3, Part 2, may either

seek administrative remedies through the Department of Labor and

Industry or file his or her claim directly in district court.

Therefore, the District Court's order dismissing Staniey's ciaim is

reversed and this case is remanded to the District Court for

further proceedings consistent with this opinion.

We concur:

Chief Justice
October 27, 1994

CERTIFICATE OF SERVICE

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

following named:

Richard Ranney

WILLIAMS & RANNEY, P.C.

P.O. BOX 9440

Missoula, MT 59807-9440

Milton Datsopoulos

DATSOPOULOS, MacDONALD & LIND, P.C.

201 West Main, Suite 201

Missoula, MT 59802

ED SMITH

CLERK OF THE SUPREME COURT

STATE OF MONTANA