No. 92-332 IN THE SUPREME COURT OF THE STATE OF MONTANA

LEONARD E. VAINIO, as the Personal Representative of the Estate of HELEN MARIE VAINIO, Petitioner and Appellant, -- f 

## C' v. !.. f'-& -..,,. K<. , (;IERK OF$:.J:.'&l::!aZ COURT S.i~~~ 

### cciwiu~~id~. CANDI BROOKSHIRE and THE MONTANA HUMAN RIGHTS COMMISSION, Respondents and Respondents.

APPEAL FROM: District Court of the Second Judicial District, In and for the County of Silver Bow, The Honorable Mark P. Sullivan,Judge presiding.

COUNSEL OF RECORD: For Appellant: Kevin E. Vainio, Attorney at Law, Butte, Montana For Respondents: Leonard J. Haxby, Attorney at Law, Butte, Montana (Brookshire); David Rusoff, Human Rights Commission, Helena, Montana

Filed: Submitted on Briefs: January 14, 1993 Decided: May 13, 1993Justice William E. Hunt, Sr., delivered the opinion of the Court. Appellant Leonard Vainio, acting aspersonal representativeof Helen Marie Vainio's estate, appeals the decision of the Second Judicial District Court, Silver Bow County,affirming the order of the Montana Human Rights Commission (HRC) finding that Helen vainio's employee/supervisor committed sexual harassment against respondent Candi Brookshire, and the HRC's damage award of $20,000 to Brookshire for emotional distress. We affirm. Appellant presented 11 issues for this Court's consideration. We rephrase and consolidate the issues as follows: 1. Does § 49-2-506(1)(b), MCA, of the Montana Human Rights Act violate the Montana Constitution because the Act's procedural provisions do not allow for a jury trial? 2. Does 

### 5 49-2-506(1)(b)

## , MCA, constitute an unlawful delegation of judicial and legislative powers? 3. Did the District Court err in finding that Helen Vainio

was properly notified of the complaint? 4. Did theDistrict Court err in findingHelenVainio liable

on the basis of respondeat superior? 5. Did the District Court err inupholding the HRC's ruling striking part of appellant's witnesses and exhibits? 6. Did the District Court err in holding that the Workers' Compensation Act does not provide a remedy for sexual harassment? 7. Did theDistrict Court err in affirming the HRC's award of $20,000 in emotional distress damages?8. Did the District Court err in affirming the HRC'S decision not to allow theHRC1sinvestigativereport into evidence? On September 2, 1988, 

### rook shire filed a complaint with the HRC against Harvey Phillips and the Silver Slipper, a lounge and casino located in Butte. On September 19, 1988,Brookshire amended her complaint,alleging that shewas sexually harassed by Phillips during her employment at the silver Slipper prior tobeing fired on June 2, 1988. During the time of the sexualharassment, the Silver Slipper Bar was owned by Helen vainio, who is now deceased. The Silver Slipper has since been sold to Silver Slipper, Inc. On September 5, 1989, thematter was certified for hearing and Phillips, Brookshire, and Silver Slipper, Inc., were all properly served with notice. On April 12, 1990, a contested case hearing

was held in Butte. In her findings of fact, and conclusions of law, and order, the hearing examiner concluded that Phillips unlawfully sexuallyharassed Brookshire and that HelenaVainio, as owner of the Silver Slipper,was liable for the harassment. Silver Slipper, Inc., was found not liable. Appellant filed exceptions with the HRC to the hearing examiner's findings. On March 29, 1991, the HRC issued its order affirming the hearing examiner's order. Appellant appealed the HRC's opinion and order to the District Court. 

### A hearing was held on December 30, 1991, and on May 12, 1992, the District Court issued its order affirming the HRC. Appellant appeals from the District Court order.Appellant did not file a transcript of the contested case hearing for this Court to review, but did provide this Court with

a transcript of the District Court's hearing. I. Does 5 49-2-506(1)(b), MCA, of the Montana Human Rights Act violate the Montana Constitution because the Act's procedural provisions do not allow for a jury trial? Appellant contends 5 49-2-506(1)(b), MCA, unconstitutionally denied Helena Vainio's right to a jury trial. A legislature's enactment is presumed constitutional. Ingraham v. Champion International (lggO), 243 Mont. 42, 47, 793 P.2d 769, 772. A party challenging the constitutionality of a statute has the burden of proving it unconstitutional beyond a reasonable doubt. Romero v. J & J Tire (1989),238 Mont. 146, 149, 777 P.2d 292, 294. We have held that the Montana Human Rights Act does not unconstitutionally deny persons the right to a trial by jury. Romero, 777 P.2d at 296. Prior to enactment of the Civil Rights Act of 1991, which creates a statutory right to a trial by jury under TitleVII where there is a claim for compensatory or punitive damages, there was no right to trial by jury under Title VII. Slack v. Havens (9thCir. 1975), 522 F.2d 1091, 1094. In Romero,

we stated that legislative bodies may assign adjudication of statutory rights to administrative agencies in which a jury trial would be incompatible without violating the Seventh Amendment. Romero, 777 P.2d 

### at 296. Through its enforcement of the Human Rights Act, the HRC protects the State's interest in eliminatingdiscrimination. Appellant failed to prove beyond a reasonable doubt that the administrative contested case procedures under the Human Rights Act unconstitutionallydenied HelenVainiotsright to

a jury trial. We hold that Helen Vainio was not unconstitutionally denied a jury trial. 11. Does 9 49-2-506(1)(b),MCA, constitute an unlawful delegation of judicial and legislative powers? Appellant asserts that 9 49-2-506(1) (b)

### ,MCA,which allows the HRC 

### to award damages in discrimination cases, constitutes an unconstitutional delegation of authority by the legislature. Appellant asserts that the HRC has 'Iunbridled authorityu to award damages. Section 49-2-506(1)(b), MCA, grants the HRC the discretion to award tvreasonable" damages. Parties to contested cases before the HRC have the right to judicial review of all final HRC orders pursuant to 9 2-4-702,MCA. The

### HRC damage awards must be reasonable and they are reviewable in district court under an abuse of discretion standard. The HRC does not have unbridled authority to award damages. We hold that 9 49-2-506(1)(b), MCA, does not constitute an unlawful delegation of judicial and legislative powers. 111. Did the District Court err in finding that HelenVainio was a party to the action? Appellant asserts that Brookshire failed to name HelenVainio in her complaint to the HRC as required by § 49-2-501(1), MCA, and24.9.209(2), ARM. Section 49-2-501(1), MCA, states the following requirements for bringing an action against a party: A complaint may be filed by or on behalf of any person claiming to be aggrieved by any discriminatory practice prohibited by this chapter. The complaintmust be in the form of a written, verified complaint stating the name and address of the person 

# . . . alleged to have engaged inthediscriminatory practice and theparticulars of the alleged discriminatorypractice. The complaint listed Phillips and the Silver Slipper as respondents and stated the proper address and telephone number of the Silver Slipper. The complaint alleged unlawful discriminatory practices occurring throughout Brookshire's employment at the Silver Slipper. There is no requirement that a complaint filed under this statute name the individual owner of a business. Appellant also contends that Helen Vainio was not promptly served with Brookshire's harassment complaint. Section 49-2-504, MCA, requires the HRC to informally investigate discrimination complaints filed with the Commission. Helen Vainio was aware of Brookshire's complaint three months after Brookshire was fired. Appellant has not provided this Court with additional evidence to showotherwise. HelenVainio was properly served in this instance. We hold that the District Court did not err in finding that Helen Vainio was properly notified of Brookshire's complaint and was a party to this action. IV. Did the District Court err in finding Helen Vainio liable on the basis of respondeat superior?Section 49-2-303(1) (a),MCA,provides that it is unlawful for an employer to discriminate based on sex. Unlike the comparable federal law, TitleVII of the Civil RightsAct of 1964,theMontana Human Rights Act does not include an agent of the employer in the definition of "ernpl~yment.'~Section 49-2-101(8), MCA; 42 U.S.C. 5 2000e(b) (1964). Inemployment discriminationproceedingsbefore theHRC,only the employer ispotentially liable for discriminatory acts of its agents. The Equal Employment Opportunity Commission has exclusive jurisdiction under Title VII over any claim against

amanager. Under the theory of respondeat superior, employers are liable for the intentional sexual harassment in which supervisory personnel engage in the course of their employment. E.E.O.C. v. Hacienda Hotel (9thCir. 1989), 881 F.2d 1504, 1515. As a result of respondeat superior liability, a sexual harassment complaint need not specify acts committed personally by the employer. All that is needed to make Helen Vainio subject to the administrative proceeding is for Brookshire to allege that Phillips, 

### an agent of Helen Vainio, committed unlawful sexual discrimination. We hold that the District Court did not err in concluding that HelenVainio

was liable on the basis of respondeat superior. 

## v. Did the District Court err in upholding the HRC1sruling striking part of appellant's witnesses and exhibits? Administrative Rule 24.9.317(4), permits the hearing examiner

or HRC to limit the prosecution or defense of a contested case if

a party fails to comply or engage in discovery. This Court has

7held that the imposition of sanctions for failure to comply with discovery is regarded with favor. Huffine v. Boylan (1989), 239 Mont. 515, 517, 782 P.2d 77, 78. An appropriate sanction is the limitation of proof tomatters disclosed throughdiscovery. Vehrs

v. Piquette (1984), 210 Mont. 386, 393, 684 P.2d 476, 480. Any last minute tender of relevant documents will not cure the discovery problem. Dassori v. Roy Stanley Chevrolet Co. (1986), 224 Mont. 178, 728 P.2d 430. We will not overturn a trier of fact decision as to the determination of an appropriate sanction absent

an abuse of discretion. Dassori, 728 P.2d at 432. According to theminute entry of thehearing examiner,during

a prehearing conference onMarch 21 and 22, 1990, the attorneys in this case were ordered to exchange their list of witnesses, contentions,and copies of exhibits,and revise a final prehearing order. Previousto thisprehearing conference, appellant'scounsel failed to participate in the preparation of the prehearing memorandum or file any separate addendum for the March 21, 1990, conference. The conference was continued to the following day to give appellant's counsel the opportunity to prepare his additions and discuss them with Brookshire's counsel. Brookshire's counsel did not receiveappellant's witness or exhibit lists untilApril 9, 1990, and did not receive copies of appellant's proposed exhibits until April 11, 1990. Appellant's counsel hand-delivered his documents to theHRC offices onMonday,April 9,1990, at 5:05p.m. Based on appellant's failure to disclose the proper documents and witnesses, the hearing examiner struck the items from the final
8prehearing order. We hold that the District Court did not err in upholding the HRC's ruling striking part of appellant's defense. VI

# . Did the District Court err in holding that the Workers' CompensationAct does not provide a remedy for sexual harassment? Appellant argues that Brookshire's exclusive remedy for damages for emotional pain and suffering is under the Workers' CompensationAct, and not under the Montana Human Rights Act. The Workers' Compensation Act provides the exclusive remedy for physical injuries on the job. Section 39-71-119, MCA, defines injuries covered by the Act. The statute provides that personal injuries covered by theAct include "internal or external physical harm to the body 

# . . . caused by an accident.I1 Section 39-71-119(1) (a) and (2)

## , MCA. Brookshire's complaint did not allege internal or external physical injuries to her body. Sexual harassment 

### is an intentional act not arising from an accident. We hold that the Workers1Compensation Act is not an exclusive remedy for Brookshire1sclaim. VII. Did the District Court err in affirming the HRC's award of $20,000 in emotional distress damages? Section 49-2-506(1)(b)

### , MCA, delineates the forms of relief which the HRC may order if it finds that a person has engaged in unlawful discriminatory practices. The order issued by the HRC may:[Rlequire anv reasonable measure to correct the discriminatory practice and to rectify any harm. pecuniary or otherwise, to the person discriminated against 

# . . . . [Emphasisadded.] Section 49-2-506 (b)(I),MCA. Appellant contends that the HRC's award of $20,000 for emotional distress was clearly erroneous. We do not agree. The District Court found that Phillips's conduct toward Brookshire included, among other things, brushing his body against her buttocks,putting his hand up her skirt,grabbing her breasts, and requesting Brookshire to have sex with him. The statute provides that the HRC may order any reasonable measure to correct or rectify any harm. This includes emotional distress damages. The HRC1s award of $20,000 in emotional distress damages was not clearly erroneous. We hold that the District Court did not err in upholding theHRC's award of $20,000 inemotional distressdamages. VIII. Did the District Court err in affirming the HRC's decisionnot to allow the HRC's investigative report into evidence? Finally,appellant contends that therewas evidence contained in the HRC's investigative file which would establish that Helen Vainio was not made a party to the action. As we stated previously, Helen Vainio was properly noticed and is a party to this action. We affirm the decision of the District Court.JusticesJustice Terry 

### N. Trieweiler, concurring in part and dissenting in part:

### I concur with the majority's conclusions under Issues I1 throughVIII of themajority opinion. However, because 

### Iconclude that compensatory damages for emotional distress are recoverable under 3 49-2-506(1)(b), MCA, Ialso conclude that eitherparty had

a right to demand a jury trial of that issue pursuant to Article 11, 

### 5 26, of the Montana Constitution, which provides in part that "[tlhe right of trialby jury 

### is secured to all and shall remain inviolate." We have previously held that *'[t]he right to trial by jury in this state is the same as that guaranteedby the SeventhAmendment

[to the United States Constitution].'I (Citationomitted.) Linder



### v. Smith (1981), 193 Mont. 20, 23, 629 P.2d 1187, 1189. While 

### I do not agree that the right to trial by jury under Montana's Constitution should be limited by federal interpretations of the United States Constitution, 

### I conclude that even on the basis of those decisions, appellant had a right to a jury trial of the damage issue in this case. The majority relies on our prior decision inRomero v.J&J Tire (1989), 238 Mont. 146, 777 P.2d 292. However, in that case compensatory damages were not at issue, and the court correctly looked to federal case law interpreting Title VII of the Civil RightsAct of 1964 todeterminewhether a jury trialwas guaranteed under Montana's Human Rights Act. In that case,we held that:

### This Court has stated that indiscrimination cases under the Human Rights Act, it is helpful to look to federal law under Title VII of the Civil Rights Act of 1964, codified at 42 U.S.C. 

### ZOOOe, et seq, Snellv.Montalza

### Dakota UtihiesCo. 

### (1982), 198 Mont. 56, 62, 643 

### P.2d 841, 844. 

# . .. When 

### Congress creates new statutory 'public rights,* it may assign their adjudication to an administrative agency with which 

### a jury 

### trial would be 

### incompatible, without violating the SeventhAmendment's injunctionthat 

### jurytrial is tobe 'preserved

### * in suits at common law.'"

However, our holding inRomero 

### must be reexamined for several reasons, First of all, compensatory or legal 

### damages forpain and 

### suffering were not an issue in Romero. Second, the federal case law reliedupon inRomero 

### was decided before the 1991amendments to 

### Title VII of the civil Rights Act of 1964. Prior to those amendments, the only 

### relief provided for under the enforcement provisions of the Federal Civil Rights Act 

### was equitable relief. See Cubv.

### Loether (1974)~ 415 U.S. 

### 189, 94 S. 

### ct. 1005, 39 L. ~d. 

### 2d 260. The District Court could enjoin 

### the conduct complained of, order reinstatement of the effected employee,with or without back pay, or grant any other equitable relief that the court deemed appropriate. Curlk, 

### 415 U.S. at 197. 

### However, 

### in 1991, 42 

### U.S.C. '5 

### 1981a(a) (I)

### was added 

### to theFederal CivilRightsAct toprovide: 

### In an action brought by 

### a complaining party under section 706 

### or 717 of the 

### Civil Rights 

### Act of 1964 

### E42 U.S.C. 

### 2000e-5, 2000e-161 against a 

### respondent who engaged inunlawful intentional discrimination

# . ,

# .and provided that the 

### complainingparty cannot 

### recoverunder 

### section 1981 of this title, the complaining party may recover compensatory and punitive damages as allowed in subsection (b) of 

### this section,inadditionto any relief

### authorized by section 706(g) 

### of the Civil Rights Act of 1964 [42 U.S.C. 

### 2000e-5(g), 2000e-163, from the respondent. When 

### theAct was amendedto allow for compensatoryor punitive damages, 

### it was also amended to provide that: If 

### a complaining party seeks compensatory or punitive damages under this section

## -- (1) any party may demand a trial by 

### jury 

# .

# . . . 42 

### U.S.C. I

### 1981a(c) (1991). Because the Federal Civil Rights Act did not provide for general compensatory damages prior to 1991, 

### the federal cases decided prior to the amendment that 

### were relied upon by 

### the majority are 

### no longer instructive, A more helpful decision on this issue is the United States Supreme Court's decision in Cub. 

### In that case, the SupremeCourtwas asked to decidewhether parties had a right under the Seventh Amendment to trial by jury 

### of claims brought pursuant 

### to TitleVIII 

### of the Civil RightsAct of 1968 (42 U.S.C. 

### 5 3612 

### (1968)). The fair housing provisions of that Act allowed federal courts to grant relief, including actual damages and punitive damages. In that case, the 

### petitioner sought actual and 

### punitive damages based 

### on 

### her allegation that the respondents had refused to rent an apartment to her because of her 

### race. Respondents made a 

### timely demand for jury trial. However, the district court held that a 

### jury trial was not authorized under TitleVIII 

### of the Civil Rights 

### Act, and neither was it required by 

### the Seventh Amendment. The Seventh Circuit Court of Appeals reversed on the issue of respondents' right toa trialby jury,and the Supreme Court affirmed. In doing so, the Court held that:But when Congress provides for enforcement of statutory rights in an ordinary civil action in the district courts, where there is obviously no functional justification for denying the jury trial right, a jury trialmust be available if the action involves rights and remedies of the sort typically enforced in an action at law. We think it is clear that a damages action under 5 812 is an action to enforce "legal rights1Iwithin the meaning of our Seventh Amendment decisions. See, e.g., Rossv.Bemhard, [396 u.S. 531,] 533, 542;Dairy Queen, Inc.

### v. Wood, [369 U.S. 469,] 476-477. A damages action under the statute soundsbasically in tort--the statutemerely defines a new legal duty, and authorizes the courts to compensate a plaintiff for the injury caused by the defendant's wrongful breach. As the Court of Appeals noted, this cause of action is analogous to a number of tort actions recognized at common law. More important, the relief sought here--actual and punitive damages--is the traditional form of relief offered in the courts of law. Curtis, 415 U.S. at 195. The Court thenwent on to distinguish between actionsbrought pursuant to Title VIII, which provided for actual and punitive damages, and actions brought pursuant to TitleVII, which at that time allowed only reinstatement and back pay which the Court characterized as equitable remedies. As in Curtis, the rights enforced by Brookshire in this case were ultimately enforceable in a court of law. See 49-2-505(4), MCA; 

### 5 49-2-508,MCA; § 49-2-509 (1)(a)and (b)

## , (3), (5) and (6), MCA

# . This issuehas been previously decided by the State of Alaska in LoomisElectronics Protection,Inc.

### v. Schaefer (Ala. 1976)

## , 549 

### P.2d 1341.
In that case, Schaefer sued Loomis for discriminatory hiring practices. Loomismoved for a jury trial,which was denied. TheAlaska Supreme Court observed that tie constitutional guarantee of trial by jury in Alaska was similar to that found in the Seventh Amendment to the Constitution of the United States. Furthermore, it found that the statutory prohibition against discriminatory hiring practices in Alaska was similar to Title VII of the Civil Rights Act of 1964. It acknowledged that federal cases at that time had concluded that the reliefprovided for under TitleVII of the Federal Act was equitable in nature and that there was, therefore, no right under the United States Constitution to trial by jury of those claims. However, it distinguished the Alaska statute in the followingmanner, which is relevant to this case: TitleVII of the Federal Act contemplates

### On@ equitable relief. No such limitation is found in the language of AS 22.10.020 (c)

# . After authorizingthe superior courtto enjoin illegalactivities, throughtheapplicationof its traditional powers of equity, the legislature of Alaska went on to authorize the court to order 

### anyotherrelief; includingthepaymentofmoney. The language of the statute is clearly intendedtoprovide a litigantcomplete relief in an appropriate case. 

# . .

# .We believe the broad language of AS 22.10.020(c) indicates a legislative intent to authorize an award of compensatory and punitive damages for violations of

### AS 18.80, in additionto the equitable remedies suchas enjoining illegal employment activities and ordering back pay as a form of restitution.

After discussing the U.S. Supreme Court's decision in Curtis, the Alaska Supreme Court went on to conclude that: Similarly, in the instant case, where part of the relief sought is compensatory and punitive damages, we believe that Article I, 5 16, of the Constitution of Alaska, guarantees the parties therightto a jurytrial. Accordingly, the order of the superior court, striking petitioner's demand for a trial by jury, should not have been entered.

### Likewise, the damagesauthorizedby § 49-2-506(1) (b)

## ,MCA, and awarded in this case are the traditional form of relief offered in courts of law. Whether claiming such damages or defending against

a claim fordamages, theMontana Constitution, inArticle 11, 26, 

### and the Seventh Amendment to the United States Constitution, guarantee the right of either party to trial by jury. If such a fundamental constitutional rightcanbe evadedby simply delegating the initial determinationof such damages to a state agency other than a district court, then the constitutional right to trial by jury is renderedmeaningless. And, if the right to trial by jury is rendered meaningless for the employer in this case, then no one's right to trial by jury is secure from legislative interference in the future. This resultwas never intendedby the authors of the Montana Constitution, nor the founding fatherswhen they drafted the Bill of Rights to theUnited States Constitution. The right to trial by jury is themost fundamental protection in our state and in our country against tyranny by judges, legislators, bureaucrats, and other governmental officials. I conclude that, under the facts in this case, appellant was denied that constitutional right and that Brookshire's claim, while otherwise fully supportedby the record, should be remanded for a jury trial on the issue of compensatorydamages. 

# I Il/ JusticeMay 13,1993 CERTIFICATEOFSERVICE 

### Iherebycertifythatthefollowingorderwas sentbyUnitedStatesmail,prepaid,tothe followingnamed:

KEVINE.VAIN10 AttorneyatLaw 27WestPark Street Butte,

### MT 59701

Leonard

### J.Haxby AttorneyatLaw P.O. Box3008 Butte,

### MT 59702-3008



### DAVID

### M.RUSOFF HumanRightsCommission P.O.Box1728 Helena,

### MT 59624



### EDSMITH CLERKOFTHE

### SUPREMECOURT STATE

## ,PFMONTANb