No. 89-446 IN THE SUPREME COURT OF THE STATE OF MONTANA 1990

ERNEST ROEBER and THE STATE INSTITUTIONALEMPLOYEES FOR EQUAL HOURS, Plaintiffs and Respondents,

STATE OF MONTANA, DEPARTMENT OF INSTITUTIONSAND THE MONTANA DEVELOPMENTAL CENTER, Defendants and Appellants.

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. > APPEAL FROM: District Court of the Fifth Judicial District, In and for the County of Jefferson, The Honorable Frank Davis, Judgepresiding.

COUNSEL OF RECORD: For Appellant: NickA. Rotering,Esq., Departmentof Institutions, Helena, Montana For Respondent: Leonard J. Haxby, Esq., Butte, Montana

Filed: Submitted on Briefs: March 29, 1990 Decided: July 12, 1990Justice Diane G. Barz delivered the Opinion of the Court.

The State of Montana, Department of Institutionsand Montana DevelopmentalCenter appeal fromthejudgmentof the DistrictCourt for the Fifth Judicial District, Jefferson County, granting respondents' petition for declaratory judgment. We reverse and remand. Respondents are employees of theMontana Developmental Center inBoulder. TheDevelopmental Center isoperatedby theDepartment of Institutions. There are both union and non-union employees at the Developmental Center. Union employees are subject to a collective bargaining agreement from which respondents, as nonunion employees, are exempt. Respondents were hired from within the Center,by bid, and from outside the Center, by application. Each of the respondents received a personnel manual and other literaturedescribing the general terms of employment. Prior toJune, 1987,all Center personnelwho worked an eight hour shift were paid for their half-hour lunch break. In June, management notified both union and non-union employees they would be required to work an eight hour day with an unpaid half-hour lunch break effective June 8, 1987. The grievance filed by the union employeeswas successful and management restored their paid half-hour lunchbreak in accordance with the collectivebargaining agreement. Respondents filed a non-union grievance asserting management wrongfully terminated their paid half-hour lunch breaks and increased their working hours. Management denied this grievance.A threemember grievance committee held: Itwould seem that additional information, policies and regulations which may have significant bearing on this matter were not made available to the committee. It cannot be determined whether there is or is not, in fact, a contractural [sic] relationship as a result of said document; i.e., job announcement. 

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# . The committee referred the grievance to the Director of Institutions. The Director found as follows: It isthedecision of theDirectortoaccepttheholdings of the committee which indicated that the grievants failed to sustain the burden of proof and essentially affirmsmanagement's position. The Director accepts and upholds the decision of the committee which essentially supports management's position in this grievance. Respondents then filed a petition for judicial review asserting their right to retroactivepay and reinstatement of the paid half-hour lunchbreak. Before theDistrict Court ruled on the matter, respondentsfileda motion fordeclaratory judgmentseeking relief identical that prayed for the petition for judicial review. Theparties then stipulated to allow respondents to file

an amended petition. Respondents filed an amended petition for judicial review and motion for declaratory judgment. Contained within count I were the claims originally asserted in their petition for judicial review and within count I1 those set forth in the original motion for declaratory judgment. The District Court, on stipulation of counsel, converted the hearing on respondents1amended petition to a pretrial hearing on thematter. In its findingsof factand conclusions of law filed followingoral argument, the District Court found that:By oral stipulation of counsel, the petition for judicial review was converted to a declaratory judgment action pursuant to 5 27- 8-101, MCA, et seq.

[I]t [had] jurisdictiontodeterminethe legal rights of the.parties under the broad provisions of the Uniform Declaratory JudgmentsAct embraced by the cited statutes, and that counsel for both parties agree[d] thatthe judicial review of theadministrative decision [was] moot. There is no record of anoral stipulation between theparties aside from the ~istrict Court's finding. The lower courtordered appellantstoreinstatethepaid lunch half-hour and to reimburse respondents for their unpaid lunch breaks since June of 1987. Appellants argue the ~istrict Court substituted its judgment for that of the administrative decision maker by inferring facts not clearly in the record. We note the paucity of findings upon which the District Court could rely on review. Lower courtsmay remand petitions for judicial review for furtherproceedings pursuant to 5 2-4-704,MCA. The dispositive issue on appeal concerns the standard of review applied by the District Court in reversing the decision of the Director of Institutions. The lower court's findingsof fact, as set forth above, conform to the spirit of the Uniform Declaratory Judgments Act codified at 5 27-8-101 et seq., MCA. Section 27-8-102, MCA,makes evident thepurpose and nature of the Act: This chapter is declared to be remedial; its purpose is to settleand to afford relief from uncertainty and insecurity with respect to rights,status,and other legal relations;andit is to be liberally construed and administered. District courtshavesignificantlylesslatitudeupon judicial review of administrative decisions in contested cases pursuant to the Montana Administrative Procedure Act (MAPA), Title 2, Section 4,MCA. Section 2-4-704, MCA, provides: The review shall be conducted by the court without a jury and shall be confined to the record.

The courtmay not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact. The courtmay affirm the decision of the agency or remand the case for further proceedings. The court may reverse or modify the decision if substantial rights of the appellant have been prejudiced because:

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

(iii)made upon unlawful procedure; (iv)affected by other error of law; (v) clearly erroneous inview of thereliable, probative, and substantial evidence on the whole record;

(vi) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion; or (b) findings of fact, upon issues essential to the decision, were not made although requested. Appellants contend the judicial review of the administrativedecision was not moot and therefore review of that decision pursuant to MAPA was proper. District courts may not overturn agency decisions unless substantial, credible evidence supporting

a finding of fact is lacking. Hammerquistv. Employment Sec. Div. of the Montana Deptt.of Labor and Indus. (1988), 230 Mont. 347, 349, 749 P.2d 535, 536. District courts have greater discretion in reviewing conclusions of lawbecause of an enhanced ability to interpret and apply the law to the facts. City of Billings v. Billings Firefighters LocalNo. 521 (1982), 200Mont. 421,430, 651 P.2d 627, 632. Administrative conclusions of law must be upheld by district courts unless they constitute an abuse of discretion.

Clearly, the District Court the instant case possessed broader remedialpowersbyproceeding undertheUniform Declaratory JudgmentsAct thanhad it subjected theagency decision to judicial review pursuant to MAPA. We hold the ~istrict Court improperly proceeded under the Uniform Declaratory JudgmentsAct in this case. The purpose of declaratory relief is to liquidate uncertainties and controversies which might result in future litigation and to adjudicate rights of parties who have not otherwise been given an opportunity to have those rights determined. However, it is not the true purpose of the declaratory judgment to provide a substitute for other regular actions. Other jurisdictionshave denied the remedy of declaratory judgment where appeal by statute or otherwise from the actions of administrative bodies exists. (Citations omitted.) Matter of Dewar (1976), 169Mont. 437, 444, 548 P.2d 149, 153-54.Pursuant to 5 2-4-506,MCA,plaintiffsmay bring a declaratory action to challenge the validity of a rule. However, § 2-4- 102(10), MCA, sets forth the rules subject to that section: l1Rulelf means eachagency regulation, standard, or statement of general applicability that implements, interprets, or prescribes law or policy or describes the organization, procedures, or practice requirements of an agency. The term includes the amendment or repeal of a prior rule but does not include:

(a) statements concerning only the internal management of an agency and not affecting private rights or procedures available to the public;

(e) rules implementing the state personnel classification plan, the state wage and salary plan, or the statewide budgeting and accounting system;

The internal personnel policy at issue in the instant case is conspicuously and specifically excluded from the purview of this section. In this case, where respondents had a remedy of appeal fromtheadministrativedecision,declaratoryreliefwas improperly granted. We reverse and remand for judicial review pursuant to

Theeffectof theDistrictCourtfsruling would be toencumber the Department of Institutions and the Montana Developmental Center, with a sempiternal [adj.: everlasting;perpetual; eternal, Websterfs New World Dictionary 1295 (2nd College ed. 1986)l personnel policy unique to this facility. We note the policy change brought the affected employees into conformance with theState classificationplan codified at 88 2-18-201, et seq., MCA. Although the union employees are now paid for their lunch breaks thatpolicy is subject to change during theperiodic renegotiation of their collective bargaining agreement. We will not affirm a holding which has the effect of prohibiting 

## anv change in this policy. Reversed and remanded.

We concur:

JusticesJustice John C. Sheehy,dissenting:

The approach of the majority in this case to the Montana Administrative ProcedureAct (MAPA) is purblind in every sense of the word [purblind: partly blind; lacking in vision, insight or understanding. WebstergsNew Collegiate Dictionary (1981)l. Themajority seewell enough to finda single remedyby appeal from an administrative decision under 5 2-4-704, MCA. They fail to see that an equally valid remedy is provided in MAPA for declaratory judgmentsunder 5 2-4-506,MCA. That sectionprovides: 2-4-506. Declaratory iudsments on validity or application of rules. (1) A rule may be declared invalid or inapplicable in an action for declaratory judgment if it is found that the rule or its threatened application interferes with or impairs or threatens to interfere with or impair the lesal riqhts or privileqes of the plaintiff. (2) A rulemay also be declared invalid in such action on the grounds that the rule was adopted with an arbitrary or capriciousdisregard for thepurpose of the authorizing statute as evidenced by documented legislative intent.

(3) A declaratory judgment may be rendered whether or not the plaintiff has requested the asency to pass upon the validity 

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# . (Emphasis supplied.) Thus, under MAPA, a district court has not only review authority but is given declaratory authority to determine a legal question as to thevalidity or applicability of the rules of state government agencies. The district court has thepower to declare the rule invalid, or that its application, as in this case, is invalid.There are really no fact issues in this case. There is not any dispute from the State or its agency managers that, prior to June 1, 1987, the non-union employees here worked an 8-hour shift which included ahalf-hour lunch period. On or aboutJune 8, 1987, the State by letter unilaterally directed that these non-union employeeswould lose the paid lunch period and that an additional half-hour work period would be added to their schedules. The only issuesthat remainare legal issues, since the facts

are not in dispute. The employees maintain that they have an implied contract for the paid lunch period. The position of the State from the record and from its brief is that § 39-4-107,MCA, and thepolicies of theStatecontained in itsmanagement memos and employee handbook are the rules which govern the issue. It was most appropriatefor theDistrict Courtto regard thematter as one for declaratory judgment and to act under the jurisdiction specifically given to it by MAPA under 5 2-4-506, MCA, above. Not only did the ~istrict Court properly proceed to consider the legal issue here under its power of declaratory judgment provided in the Act, but the State recognized this power, and stipulated in writinq for the court's consideration of the legal issue under its declaratory jurisdiction:

Come now the parties hereto and hereby stipulate and agree that thepetitioners [employees] shall be allowed to file an amended petition in order to incorporate petition for furtherrelief and authorizing the court to issue an order allowing the filing of said amended petition.Let us review the procedure that occurred in this case. On September 16, 1987, Ernest F. Roeber filed a grievance on behalf of himself and all similarly situated non-union employees of the Montana Development Center at Boulder. His grievancewas that he and his fellow non-union employees had an express or implied contract with the State under which the work-day comprised an eight-hour shift which included a paid half-hour lunch period. Under the grievance procedures established by the Department, a three-member committee was convened which heard the grievance. After hearing, the grievance committee rendered the following decision:

Held: It would seem that additional information, policies and regulations which may have significant bearing on this matter were not made available to the committee.

Held: It cannot be determined whether there is or is not, in fact, a contractual relationship as a result of said document; i.e., job announcement, (seeexhibit 6a, 6b and 6c).

Recommendation: In the future, non-union job vacancy announcements should contain a statement which clearly indicates that the terms and conditions of hiring and employment are governed by volume I11 of the Montana OperationsManual. Thereafter, on January 26, 1988, the director of the Department of Institutionsentered a written decision, in part:

It isthedecision of theDirectorto accept theholdings of the committee which indicated that the grievants failed to sustain the burden of proof and essentially affirmsmanagement's position.Considering the recommendationmade by the committee, it is well taken, but must be taken under advisement. To require stipulation of this nature would put a higher degree of responsibility on non-union job positions at the Montana Developmental Center then presently is required in job posting relative to other agencies in state government and the Department of Institutions.

CONCLUSION: The Director accepts and upholds the decision of the committee which essentially supports management's position in this grievance. Thereafter,Roeber filed his petition for judicial review in the District Court. While the matter was there pending, Roeber, throughhis counsel, filedamotion foradeclaratory judgment from the District Court determining that thenon-union employeeshad an express or implied contractwith the State,which was impaired by the action of the Department. The District Court, by letter to all counsel, called attention to the motion and requested of counsel whether a judicial review proceedings could be converted into a declaratory judgment action. The parties met and orally stipulated that this should be done, and eventually the written stipulationabove set forthwas executedby counsel for Roeber and the State. In its findings of fact and conclusions of law, the District Court expressed frustration about the grievance procedure at the administrative level. The court stated:

The hearing at the local grievance level was, as this Court finds, a "nondecision. The committee concluded that it had insufficient evidence to make an informed decision. It passed it on by way of an administrative appeal to theDirectorof the Departmentof Institutions.On January 26, 1988, the Department disposed of the matter by a Director'sdecision. The Director, despite the "nonde~ision~~ character of the local committee's actions, treated it as one, holding that the plaintiff had failed to sustain their "burden of prooftt and that management had the right to make the change. BY upholdingmanagement s ttdecisionll therewas thuscreated twodifferent categoriesas far asthepaid one-halfhour lunch period was concerned--one for the union--a different one for non-union. The District Court went on to determine that it had jurisdictiontodeterminethe legal rightsof theparties under the broad provisions of the Uniform Declaratory Judgments Act, particularly because counsel for both parties had asreed that judicial review of the administrative decision was now moot. Moreover, the DistrictCourt found as a fact that there existed an implied contract between management and plaintiffs establishing a paid one-half-hour lunch as one of conditions of their employment. It found a breach by management of the implied contract of employment, so the court held in favor of the employees. Themajority opinion decidesthecaseasthoughRoeberandhis associates had elected a grievance form of remedy and could apply for none other. This flies in the face of 3 2-4-506, MCA, which provides that a declaratory judgment may be rendered "whether or 

### not the plaintiff has requested the agency1'to pass upon the applicability of the rule in question. This Court should be especially unwilling to be used as a pawn, where the appellant in this case stipulated in writing to the declaratory procedure adopted by the District Court, and then on appeal seeks to evade the results of its stipulation. In this case, the administration had attempted to impose the same non-paid lunch period upon theunion employees as upon the non-union employees. However, the collective bargaining agreement and grievance filed by union employees made the administration back up and reinstate for the union employees the paid lunch period. The District Court found that factor important. Thedistrict judgenoted inhismemorandum:

There was, of course, no written contract, except that made by the department with the collective bargaining unit. It seems to the Court that by agreeing with the union as it did on July 1, 1987, managementwent a long way toward acknowledging a long-standing agreement with all of its employees. The evidence was persuasive that this agreement existed. The agreement may have been contraryto theeight hourday statute (539-4-107,MCA); but even that statutehas escape clauses in the form of provisions for collective bargaining agreements as well as themutual agreement between management and employees not covered by union contract.

The court agrees with plaintiff that the long time conduct created an implied contract which could not be unilaterally changed as itwas 

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# . . The truth is the only means for redress for the non-union employees in this case is by means of declaratory judgment. The grievance procedure is not fitted to handle such questions of law as the impairment of contracts and the existence of implied contracts. These are legal questionsmore properly in the sphere of judicial action. The legislature considered the possibilities and provided a double remedy in cases such as this: one if a grievance procedure would remedy the situation, and the other, whether or not the grievance procedure sufficed, for a judicial remedy by declaratory relief.One wonders, now that the majority has ordered a further judicial review, what the District Court will find to review. It will not be helped by the llnondecision.ll Idissent andwould affirm the judgment of theDistrict Court.

I concur with bhe foregoing dissent of Justice Sheehy.

Justice