IN THE SUPREME COURT OF THE STATE OF MONTANA

MONTANA HUMAN RIGHTS DIVISION, Petitioner and Appellant,

v. CITY OF BILLINGS, COUNTY OF YELLOWSTONE, Respondent and Respondent.

ORDER

The first paragraph of the opinion is amended to read, "TheMontana Human Rights Commission, acting through its staff, the Montana Human Rights Division (herein referred to as HRC), appeals from summary judgment and a final judgment of dismissal in the Thirteenth Judicial District Court. We vacate the judgment and remand the cause for further action by the DistrictCourt." DATED this&&&day of September, 1982.

For the Court 

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Chief ~usticeNO. 81-453 INTHE SUPREME COURT OF THE STATE OF MONTANA 1982

MONTANA HUMAN RIGHTS DIVISION, Petitioner and Appellant,

VS. CITY OF BILLINGS, Respondent and Respondent.

Appeal from: DistrictCourt of the Thirteenth Judicial District, In and for the County of Yellowstone Honorable Diane G. Barz, Judge presiding. Counsel of Record: For Appellant: Frederick F. Sherwood argued, Helena, Montana For Respondent: McNamer, Thompson and Cashmore, Billings, Montana Charles Cashmore argued, Billings, Montana K. D. Peterson argued, CityAttorney, Billings, Montana

Submitted: May 20, 1982 Decided: August 16, 1982 Filed: 

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### ;982Mr. Justice Fred J. Weber delivered the Opinion of the Court. TheMontana Human Rights Commission (HRC) appeals from summary judgment and a final judgment of dismissal in the Thirteenth Judicial District Court, in this employment discrimination action. We vacate the judgmentand remand the cause for further action by the District Court. The sole issuebefore this Court is whether, as a matter of law, the HRCmay, aspart of its investigation of a discrimination complaint,require an employer to submit certain evidence relating to persons other than the complainants. Four persons filed discrimination complaintswith the HRC against the City of Billings. William Wong alleged that he was discriminated againstbecause of his Chinese ancestry, in his bid for promotion to Sergeant with the Billings Police Department. Jerry Klundt charged that he had been deniedmerit or step increases and had been demoted because of his Crow Indian background and in retaliation for union activities and for having filed a charge of discrimination. Win Poynter alleged that shehad been passed over forpromotion atBillings' Logan InternationalAirport because of her sex,and jobs forwhich shewas qualified had been filled by less qualifiedmale applicants. Jesse Gonzales (whohas since withdrawn his complaint) alleged that he was denied a five-yearpay increase as a civilian employee of the Billings Fire Departmentand assigned undesirable shifts despitehis senioritybecause of his sex and his MexicanAmerican background. During its investigation of these complaints, the HRC submitted a supplemental interrogatory to the city of Billings, requesting personnel files, employee evaluations,disciplinary records, test scores and applicationmaterials for complainantsand certain other employees and applicants for employmentwith the City of Billings. When the City did not complywith the HRC1srequest, the HRC issued subpoenas duces tecum, pursuant to section 49-2-203,MCA, demanding the information. The City answered that it "wouldnot voluntarily turn over to [the HRC] the personnel files and test scores for the individuals requested other than the charging parties without consent of the persons that are the subjects of the personnel files unless of course there was a court order directing us to do so." On March 12, 1981, the HRC filed a petition with the District Court, for enforcementof the subpoenas duces tecum, against the City of Billings. The City responded that the information soughtby the HRC ispersonal, and releasing itwithout prior consent of the individuals involved "may constitute an invasion of thosepersons' privacy and may render the City liable for that invasion." By stipulation, filed June 17, 1981,the parties agreed to the consolidation of the HRC's action against the City of Billings with a pending actionby the HRC against the County of Yellowstone. KatherineWebster had filed a complaint with the HRC, alleging that she was discriminated against in hiring by the Yellowstone County Sheriff's Department on the basis of her sex, race, and marital status. Like the City, the County had refused to produce employment applications and other informationpertaining to the other individuals who had applied for the position(s) forwhich Ms. Webster had applied. On August 7, 1981,after a July hearing on thematter, the District Court denied the HRC's motion for summaryjudgment,and granted themotion of the City and County for summary judgment. The accompanying memorandum of the District Court indicated the court's determination that (1)the disputed information is subject to theprotection of Article 11, Section 10,Mont. Const.; (2)respondents are not in a position to provide the informationwithout the consent of the individualswhose right of privacy is affected; and (3) the HRC had shown neither a compelling state interest in obtaining the information,nor exhaustion of other sources of obtaining the information. The District Court entered its judgment of dismissal in favor of the City and County on September 28, 1981. The HRC appeals. The complainants have filed complaints with the Federal Equal EmploymentOpportunity Commission alleging that respondents' actions violated TitleVII of the Civil Rights Act of 1964,as amended, 42U.S.C. 2000 et seq. That Commission, pursuant to section 706 of TitleVII, is awaiting the outcome of this action before moving on complainants' charges.

Article 11,Section 10,of the Montana Constitution states: "Right of Privacy. The right of individual privacyis essential to thewell-being of a free society and shall not be infringedwithout the showing of a compelling state interest." The Transcript of the 1972Constitutional Convention clearly indicates the significance to the delegates of this right, which nowhere appears in the Federal Constitution but has been judicially inferred from the provisions of the Bill of Rights. Delegate Campbell read into the record an editorial statement from the Montana Standard,February 3, 1972,here included in part:"Wethink the rightof privacy is like a number of other inalienable rights; a carefully worded constitutional article reaffirming this right is desirable. Wade Dahood ofAnaconda, Chairman of the Bill of Rights Committee, hit the nail on the head when he said: 'As government functions and controls expand, it isnecessary to expand the rights of the individual.' The right to privacy deserves specific protection." Tr. of the Montana Constitutional Convention,Vol. V, p. 1681. Indeed,at one point, the delegates struck out the phrase requiring a compelling state interest, because, in the words of DelegateHarper: 

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. . thatmay be interpretedby whatever state agency happens to have an interest in invadingmy privacy at thatparticular time." Tr. atp. 1682. David Gorman, in an article entitled "Rights in Collision: The IndividualRight of Privacy and the PublicRight to Know," 39Mont. L. Rev. 249, 251 (1978),noted that the delegates' decision to include the phrase after all was intended to strengthen rather than weaken the constitutional protection aff orded the individual right to privacy: "Whenthe amended provision was reported out of the Style and Drafting Committee the delegate who had offered the deleting amendment moved for reconsideration,supporting his motion by saying thathis general intent, to strengthen the protection of the individual, was not served by his amendment. The debate on themotion to reconsider (whichpassed) and the subsequent motion to reintroduce the

'compellingstate interest' testwas lively. Various delegates took thepositions that the standardwas implicit, that the right of privacy had been rendered absolute, that the amended provision was meaningless to a court, and that in default of any explicit standard the courts could choose to apply amere 'reasonableness' test to defeatprivacy rights. Itwas this last argument which apparently swayed the convention as a whole, and the 'compelling state interest' testwas restored. "Thisexplicit statement of the weight to be accorded to the right guaranteed by the provision places a heavy burden on the state. It has even been suggested that the task faced bythe state of showing a compelling interest is, inmost situations,an impossibleone. Clearly the delegatesplaced a very high value on the right of privacy, and they forcefully indicated that the courts were to accord it every protection available under thismost stringent standard of judicial review." 39 Mont. L. Rev. at 251. There can be little doubt that the federalprotection is less stringentand would allowdiscovery without requiring a showing of compelling state interestunder these circumstances. The Tenth Circuit Court of Appeals addressed the question in the context of privacy rights under the Fourth Amendment, in Equal EmploymentOpportunity Commission



### v. University of New Mexico, Albuquerque (10thCir. 1974), 504 F.2d 1296, 1302,a case raising a legal issue similar to the present one: "The law governing the limits on the administrative power of investigationhas evolved from the earlier judicial condemnationof fishing expeditions to that of enforcement of the subpoenapower 'if the inquiry iswithin the authority of the agency, the demand is not too indefinite,and the information sought is reasonably relevant.' United States

### v. Morton SaltCo., 338 U.S. 632, 652, 70 S.Ct, 357, 369, 94 L.Ed. 401 (1950)." The court concluded that,under federal law, 

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.. today thatwhich we have previously considered to be administrative 'fishing expeditions' are often permitted; and that administrative subpoenasmay be enforced for investigativepurposes unless they are plainly incompetentor irrelevant to any lawfulpurpose." 504 F.2d at 1303. In the present case, the HRC seeks informationwhich the District Court recognized as relevant to proper investigation by the HRC of the employment discrimination complaints; the subpoenas clearly indicate the information which is sought. Under the federal standard,discovery of the personnel files and recordswould not be restricted by a penumbral right of privacy.However, as noted,Montana's constitutionalright of privacy is explicit. This Court has recognized that the protection it offers ismore substantial than that inferred from the Federal Constitution. In State v. Hyem (1981), Mont. 

## , 630P.2d 202, 38 St.Rep. 891,we upheld the application of the exclusionary rule to private searches which invaded the privacy rights of individuals, a protection not found under the Federal Constitution. Thereinwe stated: "Privacy has been defined as the ability to control access to information about oneself. Fried,Privacy (1968),77Yale L.J. 475, 482, 483." 630 P.2d at 209, 38 St.Rep. at 898. The HRC argues that enforcementof the subpoenas duces tecum would not be an infringementof a privacy right here, because no privacy right existswhere there is no statutory privilege (seesection 26-1-801, et seq., MCA), and where

an employee or applicant for employmentvoluntarily submits the information to a third party. The HRC relies upon Hastetter v. Behan (1982), Mont. 

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## , 639 P.2d 510, 39 St.Rep. 100,wherein this Court relied upon federal case law in upholding the respondent's disclosure of appellant's telephone records. We quoted Smithv. Maryland (1979), 442 U.S. 735, 99 S.Ct. 2577, 61L.Ed.2d 220: "'Second,even if petitioner did harbor some subjectiveexpectation that the phone numbers he dialed would remain private, this expectation is not "one that society is prepared to recognize as 'reasonable.'" This Court consistently has held that a person has no legitimate expectationof privacy in information he voluntarily turns over to third parties.'"

(Citationsomitted.) 639 P.2d at 512-513, 39 St.Rep. at 103. We find the HRC's reliance upon Hastetter, supra, misplaced. This Court is notbound to give precedential value to dicta, Statev. Gopher (1981), Mont. 

## , 631P.2d 293, 296, 38 St.Rep. 1078, 1081-82,and we must abandon that language of -- Smith, supra,which, incorporated into Hastetter, 

## - appears to deny theprotection of section 10 to all communicationsvoluntarily given to third parties. --- Hastetter's holding was that the appellanthad no reasonable expectation of privacy in telephone records justifying constitutional protection. InHastetter, the disputed information was not the contents of the communication, the privacy of which was not addressed by this Court,but the factof communication. That informationwas known by appellant to be recorded by the phone company for a number of business purposes. We were notpersuaded that appellant could have reasonably expected the numbers he dialed to remain secret. In the present case, the personal information submitted to employers by prospective and current employees, and that contained inmaterials compiled by employers is quite different from the relatively innocuous telephone records in Hastetter. While we are aware that much of the information contained in employment files and records is harmless or is already a matter of general knowledge,we are not persuaded that the records are entirely free of damaging information which the individuals involved would not wish and in fact did not expect to be disclosed. The standard set forth in Hastetter iswhether the party involved subjectively ex

### -- petted the information to be and remain private, and whether society is willing to recognize that expectation as reasonable. This standardwas adopted by the Supreme Court in Katzv. United States (1967), 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed.2d 576. Employment records would reasonably contain,among lesssensitive information,references to family problems, health problems, past and present employers' criticismand observations,military records, scores from IQ tests and performance tests,prison records,drug or alcohol problems, and other matters,many of whichmost individuals would notwillingly disclose publicly. Some testing and disclosure (e.g., past employment records,prison records,drug or alcohol use) is

a necessary part of many applications for employment; other informationmay be compiled by present employers ormay be submittedby an employee in explanation of absence fromwork

or poor performance on the job. It is clear that there is frequently pressure upon an employee to communicate these matters to his employer in the privacy of his boss's office

or on an application for employment or promotion. And while, as far as we know,respondents gave their employees no specific assurances of confidentiality,we believe that employees would reasonably expect such communicationnormally would be kept confidential. Therefore,we find that under the circumstances of this case, the informationrequested by the HRC is subject to the protection of Montana's constitutional right of privacy (510). The HRC argues that because an employee knows information concerning his employmentmay be sought by prospective employers in the future,he may not reasonably expect it will never be divulged to anyone else. Itmay well be unreasonable for an employee to expect that this information will never be divulged to prospective employers. Itdoes not necessarily follow that, therefore, this information is unprotected by the right of privacy under all other circumstances,even where an employee can reasonably expect it will 

## - not be divulged, such as in an investigation or duringa public hearing inwhich the employee is only remotely involved. The right of privacy turns on the reasonableness of the expectation, which may vary, even regarding the same information and the same recipientof that information. We hold that the District Court correctly found that the information soughtby the HRC is protected by Montana's constitutional right of privacy. We note in passing the HRC's claim that respondents have no standing to assert the constitutional rights of their employees in refusing to comply with the HRC's subpoenas duces tecum. One who is neither injured nor jeopardized by the operation of a statute cannot challenge its constitutionality. Statev. Kirkland (1979), Mont

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, 602P.2d 586, 590, 36 St.Rep. 1963, 1966. Here, respondents argue thatdisclosing personal information about employees and applicants for employment without the consent of those individuals involved or without a court order forcing them to disclose,places them in jeopardy because it could lead to their being sued by those individuals for revealing private information. Other courts have held, and

we agree, thatpotential economic injury is sufficient to establish standing. In Falconv. Alaska Public Offices Commission (Alaska,1977), 570 P.2d 469, the court found a doctor had the right to deny, on behalf of his patients, government access to his files,because such disclosure could discourage prospective patients.

The delegates to the 1972 ConstitutionalConvention recognized that the rightof privacy is not absolute,and thatunder certain circumstances, the State's interest in obtaining information about individualsmay outweigh theindividuals' right of privacy. Tr. of the Montana Constitutional Convention,Vol. VI, p. 1851. In State ex rel. Zanderv. District Court (1979),181 Mont. 454, 458-459, 591 P.2d 656, 660, we recognized the rule: "From these cases and our constitutional language certainprinciples of law emerge. The right of individualprivacy is a fundamental constitutional right expressly recognized as essential to the well-being of our society. The constitutional guarantee of individualprivacy is not absolute. Itmust be interpreted,construed and applied in the light of other constitutionalguarantees and not in isolation. The right of individual privacy must yield to a compelling state interest. " See Hyem, supra, 630 P.2d at 205-206, 38 St.Rep. at 894: "Under the 1972Montana Constitution, the only exception to the restriction against the invasion of individualprivacy is a compelling state interest." Here we find a compelling state interest which itself arises from the Montana Constitution. Article 11, Section 4, of the Montana Constitution states: "Thedignity of the human being is inviolable. No person shallbe denied the equal protection of the laws. Neither the state nor any person, firm, corporation,or institution shall discriminate against any person in the exercise of his civil or political rights on account of race, color, sex, culture, social origin or condition, or political or religious ideas." This section was unanimously adopted by the delegates. Under the Montana Human Rights Act of 1974, section 49- 1-102, MCA, provides that the right to be free from discrimination includes the right to obtain and hold employment without discrimination. The Human Rights Commission, administrativewatchdog over discriminatory practices in Montana, possesses subpoenapower as provided under section 49-2-203,MCA:''1) The commissionmay subpoenawitnesses, take the testimony of any person under oath, administer oaths,and, in connection therewith, require the production for examination of books,papers, or other tangible evidence relating to amatter either under investigation by the commission staff or in question before the commission. 

# .." The investigative powers of the HRC must be broad enough to allow a thorough scrutiny of the circumstances surrounding complaints of discrimination. The scrutiny in the present casemust involve comparison of employee records, applications, evaluations,tests, etc. There is simply no other way for the HRC to determine whether the City and County discriminated in theways alleged by complainants. A consideration of the complainants' files alonewould not yield the comparative data which is essential here. To deny the HRC access to the material it seeks renders ineffectual a substantial portion of its statutory investigativepowers, and is a large step toward drawing the teeth of the HRC. Thatwe are unwilling to do. Respondents argue, and the District Court found, that because the HRC did not seek the consent of the individuals involved to its perusal of their employmentrecords, that it had not exhausted itsmeans of obtaining the information, and thus had not established a compelling state interest. We do not agree, for several reasons. In the first place there arewell over onehundred files involved. The time, cost, and inconvenienceof the search for individual employees,past and present, and the attempt to gain their consent,would be prohibitive. Undoubtedly,a goodmany individuals,particularly thosewho may have been hired or promoted because of an employer's discriminatory rejection of more qualified or equally qualified applicants,wouldrefuse the HRC access to the files. The respondents have suggested that, in that event, the files could be subpoenaed directly from the individual employees; thatwould be impracticable and would lead to yetmore litigation. Finally,

some employeeswhose files are soughtmay have died or left the area, or simply may be impossible to track down. The only reasonable,thorough and relatively efficientmeans of obtaining access to the files is through the employer. We do not find that the HRC has failed to establish a compelling state interest by failing to contact and obtain the permission of those employees and ex-employees of the City and County whose files they seek. The practical realities of the situation,and the greater importance of the protection from discrimination convince us that the HRC has made a sufficient showing of a compelling state interest,and that the disputed files and materials must be made available to the HRC. The respondents suggest that test scores and other arguably sensitivematerial could be altered in such a way that the names of the employees would not be disclosed to the HRC, and thus the intrusion would be less objectionable. The HRC correctly points out that many names are indicators of racial origin, frequently of sex,and in some cases of marital status, which informationmight not be available in the file itself. Furthermore, the HRC objects to any alteration of files because, at that point, the accuracy of the HRC's investigation depends upon the good faith of the employer, the very party chargedwith discriminatory behavior, whose temptation to doctor filesundoubtedly increases with the likelihood the HRC will find that employer guilty of discriminatorypractices.We agree with the HRC, that all information in the employers' personnel files,which could reasonably cast some light on the truth or falsity of complainants' allegations, and which is included under section 49-2-203,MCA, should be subject to the investigative subpoena of the HRC.

We have concluded that it is necessary that respondents provide the requested information to the HRC. It is also necessary to establish some substantial protection of the privacy of those individuals whose files aremade available to the HRC. It is apparent that theremust be a step by step learning process involved, inwhich the administrative agencies and the courtswill determine on a case by case basis how the right to privacy and the right to know should be balanced. The HRC argues that its regulation providing for confidentiality in investigations sufficiently protects the individuals involved. The regulation states: "Confidentiality. (1)Neither a chargenor information obtained in the investigation of a charge, nor any records required by the Commission to be filed with the Commission shall bemadematters of public information by the Commissionprior to the certifying of a case forpublic hearing (including hearing on a no cause finding,a defaulthearing or a hearing alleging violation of a conciliation agreement). This provision does not apply to such earlier disclosures to the Charging Party, the Respondent, witnesses, counsel,and representatives of interested Federal,State and local agencies asmay be appropriate or necessary to the carrying out of the Commission's functions under the act, nor to the publication of data or abstracts derived from such information in a form which does not reveal the identity of the chargingparty, respondent,or person supplying the information. The Commissionmay enter into agreementswith any federal, state,or local governmental agency for the deferral of complaints or sharing of information regarding complaintswhich agreementsmayrequire more stringent standards of confidentiality with regard to such complaints or such information." Administrative Rules of Montana $24.9.212. There is very limited protection in this regulation so far as the right of privacy is concerned. The restriction

on the Commission does not apply to an early disclosure to the charging party, the respondent, witnesses, counsel, and representatives of interested agencies. In itself, this disclosure could be sufficient to eliminate the effective protection of the right of privacy. In addition, if the HRC certifies a case for public hearing, then it is up to the Commission to decide the extent and nature of the information to be given at the public hearing. We do not find this regulation to be an adequate protection of the right of privacy. We are aware that clamping too tight a lid on the HRC's freedom to disseminate the information obtained from respondents establishesyet another constitutional conflict. In Kuiper v. District Court (1981), 

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### , 632 - P.2d 694, 696-698, 38 St.Rep. 1288, 1290-1292, this Court reversed a District Court order forbidding use of certain documents already in the possession of the appellant "for any purpose whatsoever," finding the order unconstitutionally proscribed appellant's freedom of expression. We agreed that FirstAmendment protection extended to litigation and to the fruits of discovery, 632P.2d at 698, 38 St.Rep. at 1291,and agreed with Judge Bazelon in In re Halkin (D.C. Cir. 1979), 598 F.2d 176, 186, thatwhile a protective order is not automatically a prior restraint, "the fact that [it] poses many of the dangers of a prior restraint is sufficient to require close scrutiny of its impact on protected FirstAmendment expression." 632P.2d at 697, 38 St.Rep. at 1291. We referred to the three-prong test used in Nebraska Press Ass'n. v. Stuart (1976), 427 U.S. 539, 96 S.Ct. 2791, 49 L.Ed.2d 683,and Halkin, supra, requiring the court to find that the harm posed by dissemination is substantial and serious, the restraining order is narrowly drawn and precise, and there is no less intrusive alternativemeans of protecting the public interest. InMountain States Telephone & Telegraph Company v. Department of Public Service Regulation (1981), Mont.



## , 634 P.2d 181, 38 St.Rep. 1479, this Court issued a protective order to prevent the public disclosure of "trade secrets"which the Court held could be obtained by the agency during its investigation. The broad rationale applies to this case: During an appropriate investigation,the agency is entitled to all pertinent informationpossessed by

an entity subject to its regulating power; when the public right to know collides with that entity's right to protect certain private information, a balancing of rights is necessary;a protective order may be fashionedwhich allows the agency the "fullestavailable information," while providing the public with "all information required to enable citizens to determine the propriety of governmental actions affecting them." We relied upon Pennzoil Co. v. Federal Power Commission (5thCir. 1976), 534 F.2d 627, 631: "Implicit in [F.C.C. v. Schreiber (1965), 381 U.S. 279, 85 S.Ct. 1459, 14 L.Ed.2d 3831 is the proposition that the balancing of the public and private interestsmight compel secrecy.



# . . Therefore, in reviewing this casewe must likewise determine whether the Commission abused its discretion in balancing the public and private interest." 634 P.2d at 187, 38 St.Rep. at 1485.We found that the District Court's failure to protect the trade secretswas improper because a satisfactory balancing of interests could have been achieved,and we issued a directive for a protective order. The order allowed full disclosure to the PSC and sought to limit the release of private informationby "provisions which protect the confidentiality of the trade secret information." 634 P.2d at 187, 38 St.Rep. at 1485-1486. In the case atbar,much of the problem with restricting dissemination by the HRC, or public access to the information in the disputed personnel files, lies in the fact that some of that information is undoubtedly neither sensitive nor private information, and, if viewed apart from the more damaging information, as it must be if a protective order is to be narrowly drawn, is neither subject to the protection of the privacy right,nor particularly relevant to the investigationathand. We conclude that the needs and rights of the parties and the persons whose files are sought,as well as the general public, are best met by allowing broad discovery to the HRC, but restricting the release of informationwhich suggests the identity of employeeswhose filesmay be used in investigating the alleged discriminatory practices by respondents. We therefore direct the District Court to prepare an order requiring respondents to furnish the requested information to the HRC, but providing that the HRC shallnot disclose the information to any individual, agency

or party (otherthan respondents) outside of the HRC except under the following circumstances: (1) In the event that the HRC deems itnecessary to hold a public hearing on the alleged discriminatoryprac-tices, or to disclose the information to anyone outside the HRC (other than respondents), it shall protect the privacy of any person(s) as to the elements of such informationby altering the information to provide for the anonymity of the person(s) involved. This will include the elimination of names, specific ethnic designations and other classifications which reasonablymight allow identification of the person(s) whose privacy right is to be protected; except that (2) In the event that the HRC determines that the release of information reasonably subject to a right of privacy claim is required in a way which may disclose the identity of person(s) involved; then prior to the release of that information the HRC shall obtain from the District Court a further order of authorization and protection. The orders of the District Court shall provide that failure by the HRC or other persons or agencies to whom the information is released to comply with the above order(s) shallmake the offending party subject to contemptproceedings. We suggest to the legislature that it consider legislation similar to 42U.S.C. 52000e8(e) which would protect the right of privacy by fines and penal sanctions. We vacate the judgment of the District Court and remand to the DistrictCourt for such further proceedings, including the entry of a protective order, as are required under this opinion.We concur: 

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