No. 89-341 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

OLIVE M. HELTBORG, as Personal Representative 

of the Estate of Otto Christian Heltborg, 

Plaintiff and Respondent, 

MODERN MACHINERY, f/k/a ALLIED EQUIPMENT, 

f/k/a INDUSTRIAL EQUIPMENT, 

Defendant and Appellant. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable Diane G. Barz, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

James D. Walen; Keefer, Roybal, Hanson, Staey & 

Walen, Billings, Montana 

Ronald B. MacDonald, argued; Datsopoulos, MacDonald 

& Lind, Missoula, Montana 

William T. Murphy, Washington Corporations, 

Missoula, Montana 

For Respondent: 

Donald W. Molloy, argued; Anderson, Edwards & 

Molloy, Billings, Montana 

Submitted: April 12, 1990 

Filed: 

Decided: July 10, 1990 
Justice Fred J. Weber delivered the Opinion of the Court. 

This appeal arises from a verdict following a jury trial in 

the Thirteenth Judicial District, Yellowstone County, Montana. 

The jury returned a verdict for plaintiff, finding that defendant 

had violated the covenant of good faith and fair dealing in its 

discharge of Mr. Heltborg. Defendant appeals. We reverse and 

remand. 

The issues are: 

1. Did the District Court err in allowing plaintiff's expert 

witness to render legal conclusions as to the existence and 

breach of an implied covenant, and as to whether defendant was 

negligent? 

2. Did the District Court err in instructing the jury on 

the issue of negligence, and in submitting a special verdict form 

which instructed the jury to consider whether Modern had 

negligently breached the covenant of good faith and fair dealing? 

3. Did the District Court err in excluding Heltborg's 

written statement to the Social Security Administration that he 

was incapable of fulfilling the physical and mental requirements 

of his job? 

4. Did the District Court err in denying defendant's motion 

for a judgment notwithstanding the verdict? 

Modern Machinery (Modern) is a heavy equipment dealer based 

in Missoula, Montana, and is a subsidiary of Washington 

Corporation. In the late 1970's the Modern stores began 
experiencing financial difficulties. These economic problems 

continued for a period of approximately eight years, resulting in 

losses to the company in excess of twelve million dollars. 

During this time several of Modern's stores were closed, 

including the stores in Phoenix and Tucson, Arizona, Gillette, 

Wyoming, and Kalispell, Montana. 

In 1986 the manager of the Billings, Montana store was 

informed that he must attempt to make the store profitable. The 

Billings store had reduced its employees by half in 1981, yet it 

had lost in excess of $100,000 for each of the years 1983 through 

1985. Trial testimony established that in 1986 the store again 

lost over $100,000 from ongoing operations, and was essentially 

insolvent or bankrupt for the year 1986. 

Mr. Chris Heltborg was employed in the Billings store as a 

service manager. He originally began working for Modern as a 

mechanic, but was promoted to service manager. When the business 

was healthy Mr. Heltborg had supervised up to eighteen mechanics. 

By 1986 Mr. Heltborg was supervising only three mechanics. Mr. 

Heltborg had some physical disabilities,.including diabetes, and 

congestive heart failure. He had also suffered a stroke in 1985. 

On April 30, 1986, Mr. Heltborg's employment with Modern was 

terminated. At 9:00 a.m., Mr. Heltborg and another long-term 

employee, Darrell Imhoff, were called into the office of Jerry 

Gibson, the store manager. Mr. Gibson simply informed them that 

they were terminated. Mr. Heltborg received no prior notice of 

this and no severance pay. At the time of the termination, Mr. 
Heltborg had been employed by Modern for twenty-two years. 

Modern did not rehire anyone to fill Mr. Heltborgts 

position. Mr. Gibson testified that a mechanic, Paddy Gwin, who 

had been employed by Modern for twenty-seven years, became the 

Itworking foreman. I* Mr. Gwin and two other employees assumed Mr. 

Heltborgts work. 

Four months after his termination, Mr. Heltborg and his wife 

were asphyxiated in their home due to a defective fireplace door. 

Mrs. Heltborg survived. Mr. Heltborg died after being 

hospitalized. Mrs. Heltborg, as representative of her husband's 

estate, brought suit against Modern, alleging breach of the 

implied covenant of good faith and fair dealing, negligence in 

the termination decision, and wrongful discharge. Upon Mr. 

Heltborg's termination, insurance coverage, including 

hospitalization insurance and $50,000 of life insurance coverage, 

had ended. Thus Mrs. Heltborg requested damages for lost wages, 

medical bills, and for the terminated life insurance coverage. 

The District Court dismissed the wrongful discharge claim on 

Modern's motion for summary judgment. The remaining claims were 

tried before a jury, which returned a verdict for plaintiff on 

the breach of the implied covenant of good faith and fair 

dealing. The jury awarded damages in the amount of $170,608. 

Following trial, Modern moved for judgment notwithstanding the 

verdict, and for a new trial. Both motions were denied. Modern 

appeals. 
Did the District Court err allowing plaintiff's expert 

witness to render legal conclusions as to the existence and 

breach of an implied covenant, and as to whether defendant was 

negligent? 

At trial, plaintiff presented an expert witness, Mr. Alan 

Brown, an expert in employment relations, to testify that 

defendant was negligent in its reduction in force, that the 

reduction in force was not legitimate, and that defendant 

breached an implied covenant of good faith and fair dealing. 

On direct examination, plaintiff's counsel established Mr. 

Brown's training and qualifications and knowledge of the facts 

surrounding Mr. Heltborg's termination. Mr. Brown's testimony 

stated commonly accepted methods of conducting a legitimate 

reduction in force and commonly accepted methods of terminating 

an employee. Counsel then elicited the following testimony from 

Mr. Brown: 

Q. Now, I would like to summarize, Mr. 

Brown. Given the facts and the testimony that you 

have reviewed in this case, is it your opinion 

that Modern Machinery conducted a legitimate 

reduction in force when it fired two high paid 

long-time employees? 

A. It is my opinion that they did not have a 

legitimate reduction in force. 

Q. Based on your investigation and reading, 

as well as your education and experience, do you 

have an opinion as to whether or not Modern 

Machinery had sufficient reliable facts upon which 

they could reasonably reach the decision to 

terminate Chris Heltborg? 

A. I have an opinion. 
Q. What is it? 

That they did not. 

Q. Assuming that there was, in fact, an 

implied obligation of good faith and fair dealing 

between the Defendant and Chris Heltborg, do you 

have an opinion as to whether or not Modern 

Machinery complied with that obligation? 

A. I have an opinion. 

What is it? 

A. They did not. 

Q. Do you have an opinion as to whether or 

not Modern Machinery violated the standard of care 

of a reasonably prudent employer and what they 

would follow regarding a legitimate right of the 

employee of 22 years service? 

A. Yes, I have an opinion. 

Q. What is that? 

A. They didn't exercise reasonable care. 

Q. Was Modern Machinery, in your opinion, 

negligent in the manner in which they terminated 

Chris Heltborg? 

A. Yes. My opinion is they were. 

Q. Do you have an opinion as to whether or 

not the breach of these obligations was the cause 

of the loss of Chris Heltborg's employment and his 

associated benefits of employment, including 

insurance? 

A. Yes. It is my feeling that this is a 

direct cause of his loss of these benefits. 

MR. MOLLOY: Your Honor, I have no more 

questions. 

Similar responses were elicited from Mr. Brown at other 

intervals in his testimony. Defendant contends that this 

testimony invaded the province of the jury, in effect 
instructing the jury how to decide the case. Defendant also 

contends this testimony exceeds the scope of expert 

testimony previously approved by this Court. 

In our analysis of this issue we begin by noting relevant Montana Rules of Evidence, which provide: 

Rule 702. Testimony by experts. 

If scientific, technical, or other 

specialized knowledge will assist the trier of 

fact to understand the evidence or to determine a 

fact in issue, a witness qualified as an expert by 

knowledge, skill, experience, training, or 

education may testify thereto in the form of an 

opinion or otherwise. 

Rule 704. Opinions on ultimate issue. 

Testimony in the form of an opinion or inference otherwise admissible is not objectionable 

because it embraces an ultimate issue to be 

decided by the trier of fact. 

The Commission Comments to Rule 704, M.R.Evid., state that 

"the Commission intends this rule to follow the existing 

Montana practice of not allowing the witness to give a legal 

conclusion or to apply the law to the facts in his answer." 

Montana's Rule 704 is identical to Federal Rule 704. 

The Advisory Committee Note to the federal rule states: 

Advisory Cornmitteels Note 

The basic approach to opinions, lay and expert, in these rules is to admit them when helpful 

to the trier of fact. In order to render this 

approach fully effective and to allay any doubt on 

the subject, the so-called flultimate issuev1 rule 

is specifically abolished by the instant rule. 

The abolition of the ultimate issue rule does 

not lower the bars so as to admit all opinions. 
testimony by an expert witness in regard to whether certain 

false statements would have Itthe capacity to influencell a 

loan officer. In reversing this ruling the appellate court 

concluded that this constituted an opinion on a factual 

issue rather than the legal question of whether statements 

were material, and was therefore admissible. Lueben, 812 

F.2d at 184. 

We adopt the above-quoted reasoning of the Fifth 

Circuit on this issue, although we recognize that on 

rehearing the Fifth Circuit vacated this portion of the 

opinion by concluding that the materiality of the false 

statements was a legal question for the court to decide. 

Lueben, 816 F.2d at 1033. 

This distinction between testimony which constitutes a 

legal conclusion and that which is a factual conclusion has 

been decisive in court decisions ruling on the scope of 

expert testimony. See e.s., Specht v. Jensen (10th Cir. 

1988), 853 F.2d 805, cert denied, - U.S. -, 109 S.Ct. 

792, 102 L.Ed.2d 783 (1989) (opinion by expert attorney on 

whether defendants1 conduct involved a "searchu within the 

meaning of the Fourth Amendment was a legal conclusion and 

should not have been allowed); Owen v. Kerr-McGee Corp. 

(5th Cir. 1983), 698 F.2d 236 (opinion by expert as to legal 

cause of accident was properly disallowed); Marx & Co., Inc. 

v. Diners1 Club, Inc. (2nd Cir. 1977), 550 F.2d 505, cert 

denied, 434 U.S. 861, 98 S.Ct. 188, 54 L.Ed.2d 134 (1977) 
(trial court erred in allowing attorney expert to give legal 

opinion construing contract terms at issue). 

Clearly an expert may testify to an ultimate issue of 

fact and we have previously so held. See, e.s., Scofield v. 

Estate of Wood (1984), 211 Mont. 59, 683 P.2d 1300 (court 

properly allowed highway patrolman to testify as to cause of 

accident); Wollaston v. Burlington Northern, Inc. (1980), 

188 Mont. 192, 612 P.2d 1277 (court properly allowed highway 

patrolman to testify as to cause of accident); State v. 

Petko (1978), 177 Mont. 229, 581 P.2d 425 (court properly 

allowed expert to testify that substance was marijuana even 

though this was an ultimate factual issue). We emphasize, 

however, that there is a distinction between testimony on 

the ultimate factual issue, and testimony on the ultimate 

legal issue. 

To clarify, had Modern provided its employees with a 

handbook or policy requiring advance notice before a 

termination, and requiring severance pay, an expert could 

testify to factual issues of whether the employer followed 

its own policies. Nonetheless, the expert could not follow 

this testimony with a legal conclusion on whether the 

employer violated the covenant of good faith and fair 

dealing. 

This Court limited the scope of expert testimony in 

Hart-Anderson v. Hauck (1988), 230 Mont. 63, 748 P.2d 937, 

decided in January 1988, which was over a year before the 
Under Rules 701 and 702, opinions must be helpful 

to the trier of fact, and Rule 403 provides for 

exclusion of evidence which wastes time. These 

provisions afford ample assurances against the 

admission of opinions which would merely tell the 

jury what result to reach, somewhat in the manner 

of the oath-helpers of an earlier day. They also 

stand ready to exclude opinions phrased in terms 

of inadequately explored legal criteria. Thus the 

question, #'Did T have capacity to make a will?" 

would be excluded, while the question, "Did T have 

sufficient mental capacity to know the nature and 

extent of his property and the natural objects of 

his bounty and to formulate a rational scheme of 

distribution?" would be allowed. McCormick § 12. 

Rules of Evidence (1972), 56 F.R.D. 183, 284-5. 

The Fifth Circuit in U.S. v. Lueben (5th Cir. 1987), 

812 F.2d 179, aff'd on rehearinq, 816 F.2d 1032 (1987), 

recently explained this illustration as follows: 

The two questions quoted above illustrate the 

major surviving exception to the rule that expert 

opinions on an ultimate issue are admissible: an 

expert may not express an opinion on a conclusion 

of law. This court used this exception to uphold 

the exclusion of the expert testimony in the two 

cases relied upon by the district court in excluding the expert testimony in this case. In 

Matthews v. Ashland Chemicals, Inc., this court 

stated that the expert's answer to the 

hypothetical question posed in that case would 

simply tell the jury what result to reach and 

would allow the expert to voice a legal conclusion 

as to the proximate cause of the injuries suffered 

by the plaintiff in that case. See 770 F.2d at 

1311. Similarly, in Owen 5 Kerr-McGee Corp., 

this court upheld the exclusion of expert 

testimony as to the legal cause of an accident. 

See 698 F.2d at 240. 

Lueben, 812 F.2d at 184. 

Lueben was accused of making materially false 

statements to a savings and loan institution, in violation 

of 18 U.S.C. § 1001 and 1014. The trial court disallowed 
present case went to trial. In Hart-Anderson a Billings 

attorney testified that defendant was 100% negligent, and 

that plaintiff was not negligent. He further testified that 

the insurance agents had violated three specific subsections 

of the Unfair Claims Settlement Practices Act in their 

handling of plaintiffvs claim. On appeal the plaintiff 

challenged the propriety of the testimony. The HartAnderson analysis quoted approvingly from Marx, as follows: 

[Sluch testimony lvamounts to no more than an 

expression of the [witnesst] general belief 

as to how the case should be decided." 

McCormick on Evidence, S 12 at 26-27. The 

admission of such testimony would give the 

appearance that the court was shifting to 

witnesses the responsibility to decide the 

case. McCormick on Evidence, 12 at 27. It 

is for the jury to evaluate the facts in the 

light of the applicable rules of law, and it 

is therefore erroneous for a witness to state 

his opinion on the law of the forum. 

(Citation omitted.) 

The court further cautioned that, 

[W]e must be especially careful not to allow 

trials before juries to become battles of 

paid advocates posing as experts on the 

respective sides concerning matters of 

domestic law. 

Hart-Anderson, 748 P.2d at 942-43. 

This Court reversed and remanded, concluding that the 

repeated legal conclusions simply instructed the jury how to 

decide the case and were highly prejudicial. The present 

case is directly comparable to Hart-Anderson. In the 

present case, just as in Hart-Anderson, there was an 
extended series of questions on the basic legal issues to be 

determined by the jury. 

The testimony by Mr. Alan Brown constituted a legal 

conclusion on the precise issue presented to the jury, that 

is, whether defendant had breached the covenant of good 

faith and fair dealing. Moreover, he was allowed to state 

his opinion that defendant was negligent in carrying out its 

reduction in force and that such reduction was not 

legitimate; that defendant violated the standard of care of 

a reasonably prudent employer; that defendant was negligent 

in its termination of Heltborg; and that breach of these 

obligations was a direct cause of Mr. Heltborg's loss of 

benefits. Mr. Brown's testimony was extensive, and he 

repeatedly stated legal conclusions which amounted to 

instructing the jury on how to decide the case. 

We recently addressed the scope of expert opinion in 

Mahan v. Farmer's Union Central Exchange, Inc. (Mont. 1989), 

768 P.2d 850, 46 St. Rep. 96. Mahan involved charges of age 

discrimination and breach of the implied covenant of good 

faith and fair dealing. Mr. Mahan was discharged from 

Farmers Union Central Exchange, Inc. when he was sixty years 

old. The expert witness in Mahan, the same Alan Brown as in 

the present case, was allowed to testify as to whether the 

company complied with or violated its own policies, in 

accord with our previous decisions of Crenshaw v. Bozeman 

Deaconess Hospital (1984), 213 Mont. 488, 693 P.2d 487, and 
Flanigan v. Prudential Federal Savings & Loan (1986), 221 

Mont. 419, 720 P.2d 257. 

However, in Mahan we also discussed the propriety of 

expert testimony by an expert statistician. In remanding 

the case, we stated: 

In any event, we affirm the position of the District Court that on retrial the statisticians may 

testify that their statistical tests show or do 

not show at terns of discrimination based on aqe, 

but may Aot testify to the ultimate conclusion 

that aqe discrimination in his termination was or 

was not exercised against Wayne Mahan in this 

case. The jury should be the final arbiter of 

that issue. Rule 704, M.R.Evid. (Emphasis 

supplied.) 

Mahan, 768 P.2d at 857. 

We hold that in the present case the trial court 

committed reversible error in allowing Mr. Brown to state 

legal conclusions on the very issues to be decided by the 

jury. We thus reverse and remand to District Court for new 

trial. 

Appellant raises other alleged errors which we will 

address for the court s guidance on retrial. 

Did the District Court err in instructing the jury on 

the issue of negligence, and in submitting a special verdict 

form which instructed the jury to consider whether Modern 

had negligently breached the covenant of good faith and fair 

dealing? 

At trial and on appeal Modern has raised issues 
involving the application of a negligence theory to an 

employment termination. As previously noted, plaintiff's 

complaint alleged breach of the covenant good faith and 

fair dealing in Count I, negligence in Count 11, and 

wrongful discharge in Count 111. 

Under Count 11, plaintiff's complaint alleged that 

Modern was negligent in failing to exercise ordinary and 

reasonable care in investigating the need to terminate Mr. 

Heltborg. In its answer, Modern asserted the affirmative 

defense to this allegation that it had employed a legitimate 

reduction in force as a result of economic conditions. 

Modern moved for summary judgment on all three counts 

listed in the complaint. its brief in support of summary 

judgment, Modern contended that negligence in the employment 

context is only actionable in conjunction with a breach of 

the covenant. Moreover, the pretrial order listed as an 

issue of law whether Montana recognizes a separate and 

distinct tort of negligence as opposed to negligently 

violating the covenant of good faith and fair dealing. 

At trial Modern objected to the following jury 

instructions which were given by the court: 

Instruction No. 18: 

When the legal duty to act in good faith exists in the 

employment relationship, as it does in this case, then 

there is a duty imposed upon the employer to exercise 

reasonable care in carrying out decisions concerning 

employment. This means that there is a duty on the 

part of the employer to use reasonable care under the 

circumstances in carrying out its business decisionmaking. 
Instruction No. 19: 

A reduction in force can constitute a just cause for 

termination of employment. However, you are instructed 

that the employer's right to reduce its personnel does 

not excuse its obligation to act fairly and in good 

faith or to use ordinary and reasonable care in the 

process and manner of termination of employment. 

Modern offered the following instructions, which were refused: 

Instruction No. 28: 

An employer who acts in good faith on an honest but 

mistaken belief that the discharge of an employee was 

warranted by a legitimate business reason has not 

committed a breach of the covenant of good faith and 

fair dealing. 

Instruction No. 26: 

In determining whether Modern . . . negligently 

terminated . . . employment, you are not to consider 

whether Modern Machinery made a correct decision or a 

good management decision. Modern Machinery has the 

absolute authority to make managerial decisions 

relating to the termination of employees to maintain 

the economic vitality of its company, regardless if 

those managerial decisions are good decisions or poor 

decisions. 

Modern contends that the given instructions militate against 

previously stated policies that an employer must have "wide 

latitude in deciding whom it will employtgl Gates v. Life of 

Montana (1982), 196 Mont. 178, 184, 638 P.2d 1063, 1067, and that 

an employer may engage in Illegitimate reductions in force 

necessary to maintain the economic vitality of the company," 

Flanisan, 720 P.2d at 261. Modern contends that there is no duty 

to use reasonable care in the process and manner of termination. 

Additionally, Modern contends that imposing a duty of reasonable 

care upon Modern in its decision making suffers from the lack of 
any definable standard of care. 

Modern contends that an employer should not be liable for 

negligence in making business decisions, including reduction in 

force decisions. It contends this would be an extension of 

negligence liability in the employment context. It contends this 

Court has previously affirmed a finding of negligence by an 

employer in only two instances: 1) where the employer violates 

its own written termination policies, as in Flanisan, and 2) 

where an employer fails to investigate allegations of misconduct 

before terminating an employee for cause, as in Crenshaw. 

This Court first allowed a negligence cause of action in an 

employment termination case in Crenshaw. In Crenshaw we 

concluded that the trial court did not err in giving a jury 

instruction defining negligence. Crenshaw involved allegations 

that the employer was negligent in not following its own employee 

handbook policies, and in not properly investigating charges 

against the employee. These failures were in conjunction with 

several acts by the employer which were characterized as acts of 

Itbad faith," such as making false charges against the employee 

and notifying the local job service of such charges. Crenshaw 

was later cited for the proposition that negligence forms a 

proper basis for recovery in an employee termination case. See 

Flanisan, 720 P.2d at 263; Rupnow v. City of Polson (1988), 234 

Mont. 66, 72, 761 P.2d 802, 806; Prout v. Sears, Roebuck & Co. 

(Mont. 1989), 772 P.2d 288, 291, 46 St.Rep. 257, 261. 

In Flanisan, the allegations of negligence were joined 
with allegations of age discrimination, and ulterior motives on 

the part of the employer in firing the employee. In both 

Crenshaw and Flanisan the alleged negligence was in conjunction 

with allegations properly forming a basis for a breach of the 

covenant. The negligence issues were not essential in either 

Crenshaw or Flanisan. 

In Gates I this Court stated: 

These cases emphasize the necessity of balancing the 

interests of the employer in controlling his work force 

with the interests of the employee in job security. In 

adopting the doctrine of good faith in employment 

contracts the courts did not seek to infringe upon the 

interests of the employer, but recognized that: 

'I . . . an employer is entitled to be 

motivated by and to serve its own legitimate 

business interests; that an employer must 

have wide latitude in deciding whom it will 

employ in the face of the uncertainties of 

the business world; and that an employer 

needs flexibility in the face of changing 

 circumstance^.^^ (Citation omitted.) 

Gates, 638 P.2d at 1066-67. 

In Flanisan we stated that a long-term employee's 

expectation of continued employment "does not foreclose an 

employer from engaging in legitimate reductions in force 

necessary to maintain the economic vitality of the company." 

Flaniqan, 720 P.2d at 261. 

In the present case, the instructions given allowed the jury 

to decide the legitimacy of a reduction in force and whether it 

was carried out in a negligent manner. We agree with Modern that 

these instructions placed the jury in the middle of general 

management decisions, in effect eviscerating the concept of 
employer latitude in decision-making. 

Moreover, in the present case the expert was allowed to 

compare Modern's reduction in force to that of other employers in 

general. The jury was then given the authority to review the 

adequacy of the employer's management decisions under a broad 

undefined "reasonable care1# standard. This type of decision 

cannot properly be scrutinized in hindsight for its legitimacy. 

Neither should negligence be based on the procedures of other 

employers. There is no justification for giving a jury the 

authority to review whether reasonable care was utilized in a 

reduction in force based on economic conditions. 

In Kerr v. Gibson's Prod. Co. of Bozeman (1987), 226 Mont. 

69, 733 P.2d 1292, this Court affirmed the review of a discharge 

during a reduction in force; however, the holding in Kerr was 

premised upon a breach of the covenant, not negligence in the 

reduction in force. In Kerr the employer had violated employee 

handbook policies in its termination procedures and in rehiring. 

Additionally, in Kerr, after discharging several employees, the 

employer then refilled the positions with lower paid employees. 

We affirmed the determination that this breached the covenant of 

good faith and fair dealing. The present case is distinguishable 

from Kerr to the extent that the present case is premised upon 

negligence of the employer in implementing a reduction in force. 

The present case is further distinguishable in that it is 

undisputed that the Billings Modern store had sustained large 

losses for several years. Modern made the decision to discharge 
two long term and highly paid employees based on economics and 

workloads. The present case does not involve handbook 

violations; neither was Mr. Heltborgls position refilled. 

This Court has recognized that an employer has a duty not to 

breach the covenant of good faith and fair dealing once the 

covenant has arisen in the employment relationship. Gates. This 

duty has been stated as a duty not to discharge for an improper 

reason, Crenshaw, 693 P.2d at 492. The breach of this duty 

considers the intentional conduct of an employer. We have not 

imposed upon the employer a duty to use reasonable care in 

decision-making, based upon a theory of negligence. 

We conclude that the employer is not under a duty to use 

reasonable care in decision-making. Therefore, in the present 

case, the management decision to implement a reduction in force 

for economic reasons is not susceptible to a negligence analysis 

by a jury. We conclude that Jury Instruction Nos. 18 and 19 were 

incorrect and should not be used on retrial. 

On appeal Modern also objects to the special verdict form 

which directed the jury to consider if Modern had negligently 

breached the covenant of good faith and fair dealing. The 

special verdict form submitted to the jury was as follows: 

QUESTION NO. 1 

Has the Plaintiff proved, by a preponderance 

of the evidence, that the Defendant breached the 

covenant of good faith and fair dealing? 

ANSWER : YES X 
PUESTION NO. 2 

Has the Plaintiff proved by a preponderance 

of the evidence that the Defendant negligently 

breached the covenant of good faith and fair 

dealing? 

ANSWER : YES X 

If your answers to Questions No. 1 and No. 1 

are llNolt go to the bottom of the Verdict Form, 

date and sign it and ask to be returned to Court. 

If your answer to either Question No. 1 and 

No. 2, or both is "Yesw go to Question No. 3. 

QUESTION NO. 3 

What damages, if any, do you find were caused 

to the Plaintiff? 

AMOUNT : 

Modern contends that it was error to submit to the jury 

the issue of whether Modern negligently breached the 

covenant of good faith and fair dealing. It contends that a 

cause of action only arises where the covenant is willfully 

breached. Although defendant did not object to this verdict 

form at trial, we address this issue for retrial. 

We conclude that in general a breach of the covenant of 

good faith and fair dealing does not involve negligent 

conduct, but intentional conduct. This holding accords with 

prior Montana cases involving a breach of the covenant of 

good faith and fair dealing in employment. See Gates 

(evidence indicated employer failed to follow its own 

termination policies); Crenshaw (evidence indicated employer 

acted in bad faith in discharging employee); Flanasan 

(evidence indicated employer may have had ulterior motive 
for discharge of employee); and Kerr (evidence indicated 

employer had ulterior motive in discharging employee). It 

also accords with the holdings of other jurisdictions in 

cases involving a breach of the covenant in an employment 

relationship. See Pugh v. Seens candies, Inc. (Cal.App.3d 

1988), 250 Cal.Rptr. 195, 213 ("Even an honest, though 

mistaken, belief that the employer for legitimate business 

reasons had good cause for the discharge would negate bad 

faithnn). Although previous Montana employment termination 

cases have discussed employer negligence, no case has 

allowed a neslisent breach of the covenant. 

We conclude that the verdict form improperly commingled 

the concepts of negligence and a breach of the covenant of 

good faith and fair dealing and should not be used on 

retrial. 

I11 

Did the District Court err in excluding Heltborg's 

written statement to the Social Security Administration that 

he was incapable of fulfilling the physical and mental 

requirements of his job? 

Mr. Heltborg applied for Social Security disability 

benefits after his termination. These benefits were denied. 

In his appeal to the Social Security Administration, Mr. 

Heltborg wrote a letter explaining his physical 

disabilities. A relevant portion of the letter stated: 

Although the men at the shop would help me with my 

21 
work, it was becoming more apparent that my disability was making it impossible to fulfill the 

physical and mental requirements of my job as 

Service Manager. Finally, the Managers of Modern 

Machinery realized that this was the case and I 

was dismissed from my job of 22 years. I feel 

that it would be impossible for me to go to work 

as either a mechanic or Service Manager as I would 

be unable to perform the job duties and there 

would be no way that I could be helped with my 

insulin reactions if I were working for other 

companies. 

Defendants attempted to have this document admitted at 

trial; however, the court granted the plaintiff's motion in 

limine, excluding the document. 

Defendant contends that Mr. Heltborg's ability to perform physical labor was a major issue at trial since plaintiff contended Mr. Heltborg should have been offered the 

option of taking a mechanic's job. Defendant contends that 

this document was relevant to defendant's assertion that Mr. 

Heltborg's physical condition prevented him from working as 

a mechanic. 

To be admissible at trial, evidence must be relevant, 

as defined in Rule 401, M.R.Evid. At trial plaintiff 

elicited testimony from Mr. Alan Brown and Mrs. Heltborg 

that Modern should have offered Mr. Heltborg work as a 

mechanic both before and after termination. Plaintiff 

presented this same allegation to the jury through its 

examination of defense witnesses. The admissions by Mr. 

Heltborg in his letter were certainly relevant to rebut this 

theory. 

The letter was also competent evidence. Although the 
letter had definite hearsay qualities (i.e., the statements 

by Mr. Heltborg were out of court statements and were 

offered for the truth of the matter asserted. Rule 801(c), 

M.R.Evid.), the statements were admissions of a party opponent and therefore fall within Rule 801(d)(2), M.R.Evid., an 

exclusion to the hearsay rule. See McCormick on Evidence 5 

263 (3rd Ed. 1984) ; 4 Wigmore, Evidence 5 1048 (Chadbourn 

Rev. 1972) ("The statements made out of court by a party 

opponent are universally deemed admissible, when offered 

against him.") ; Kekua v. Kaiser Found. Hosp. (Haw. 1979), 

601 P.2d 364, 370 (explaining the difference between an 

admission of party opponent which is excluded from the 

hearsay rule and a statement against interest which is an 

exception to the rules). 

We conclude that this letter was properly admissible 

under the evidentiary rules. 

Did the District Court err in denying defendant's 

motion for a judgment notwithstanding the verdict? 

Following trial, Modern moved for judgment 

notwithstanding the verdict on the issues of breach of the 

covenant and negligence. This motion was denied. On 

appeal, defendant contends the motion should have been 

granted, urging there was no evidence to support allegations 

that the covenant had been breached. Modern also urges that 
a cause of action for negligence in an employment 

termination should not be extended to general management 

decisions in a reduction in force, nor should the manner in 

which an employee is discharged provide a basis for a 

negligence cause of action. 

Although we agree that in general negligence does not 

afford a cause of action in a suit involving employment 

termination, we conclude that there existed issues of fact 

in regard to whether the covenant of good faith and fair 

dealing was breached, which were properly submitted for jury 

determination. We affirm the District Court's denial of the 

motion for judgment notwithstanding the verdict. 

Reversed and remanded. 

We Concur: 

chief' Justice 

sitting for ~ustic6 Diane Barz 
Justice John C. Sheehy, dissenting: 

This widow, Olive M. Heltborg, now shares the all-too-often 

experience of plaintiffs whose money damages verdicts are 

consistently (or better yet, inconsistently) reversed by the 

majority of this Court: It is like rowing a boat upwind among the 

ice floes on a wintry afternoon. The judicial climate here is not 

just frosty, it is freezing. 

Take this case. Please. 

This lawsuit is not about wrongful discharge from employment. 

Early in the game, the District Court removed wrongful discharge 

as an issue by granting summary judgment in favor of the defendant. 

There has been no appeal from that decision of the District Court. 

Yet here the majority confuse this case in their opinion as one 

for wrongful discharge. 

The majority opinion overall has these principal effects, 

all deleterious to formerly accepted principles of law: 

(1) Limiting actions for breach of the implied covenant of 

good faith and fair dealing to intentional breaches, thus 

eliminating any causes of action for negligent breaches. 

(2) Delimiting the scope of expert testimony. 

(3) Confusing the latitude of employers to make business 

decisions with concepts relating to the covenant of good faith and 

fair dealing. 

(4) Preventing punitive damages even for intentional breaches 

of the covenant. 

I. 

Neqliqence and the Covenant of Good Faith and Fair Dealinq 

The majority do not recognize or seem to know that the source 

of the implied covenant of good faith and fair dealing in contract 

relationships is not in the contract terms, but is implied by law. 

The fundamental error of the majority is their belief that the 

implied covenant was bargained for by the parties. In this, the 

majority ggadoptgg the errant reasoning of the California Supreme 

Court in Foley v. Interactive Data Corporation (Cal. 1988) , 765 
P.2d 373, and ignore, as did the California Supreme Court, the 

lucid explanation of the source of the implied covenant furnished 

by Justice Kaufman in his dissent: 

In attempting to emphasize its contractual origins, the 

majority characterized the covenant of good faith and 

fair dealing as a I1contract term . . . aimed at making 

effective the agreement I s promises1I . . That 

characterization is simply incorrect under the decisions 

of this Court and the authorities on which they rely. 

It is true that the law implies in every contract a duty 

of good faith and fair dealing. . . The duty to deal 

fairly and in good faith with the other party to a 

contract however I1is a duty imposed by law, not one 

arisins from the terms of the contract itself. In other 

words this duty of dealing fairly and in good faith is 

nonconsensual in origin rather than con~ensual~~ . . . While the nature of the obligations imposed by this duty 

is dependent upon the nature and purpose of the contract 

and the expectations of the parties, these obligations 

are not consensual, not agreed to in the contract; they 

are imposed by law and thus reflect a normative value of 

society as a whole . . . The interest which the duty of 

good faith is designed to preserve and protect is 

essentially not the parties1 interest in having their 

promises performed, but societvls interest in protecting 

its members from harm on account of nonconsensual conduct . . . (Emphasis in original; citations omitted.) 

Foley, 765 P.2d at 412, 413. 

When viewed from this context, the duty of good faith and fair 

dealing implied in contractual relationships is no different from 

the duty imposed by or found in law in any other relationship. A 

breach not only harms the party directly involved, but the harm 

accrues to society as a whole, and affects its stability and peace. 

The covenant is based on considerations of justice and fair play, 

applicable to all societal relationships. The covenant rises in 

contract cases not because the parties agreed to it, but because 

society as a whole imposes the covenant as a duty, a breach of 
which is not a breach of contract, but a wrongful act properly 

treated as a tort, since the wrong inflicts damages on the party 

wronged and the public fabric as a whole. 

In Nicholson v. United Pacific Insurance Company (1985), 219 

Mont. 32, 41-42, 710 P.2d 1342, 1348, we described the covenant: 

. . . the nature and extent of an implied covenant of 

good faith and fair dealing is measured in a particular 

contract by the justifiable expectations of the parties. 

Where one party acts arbitrarily, capriciously or 

unreasonably, that conduct exceeds the justifiable 

expectations of the second party. The second party then 

should be compensated for damages resulting from the 

other's culpable conduct. 

Note that in Nicholson, this Court said that the implied 

covenant would be breached by a party acting "arbitrarily, 

capriciously, or unreasonablv." When a party acts arbitrarily or 

capriciously, he is probably acting intentionally. If he is acting 

unreasonably, he may be acting intentionally, but he may be also 

acting negligently. It is the public policy of this State that a 

person acting negligently is also responsible for his acts or 

omissions if others are harmed thereby. Witness the statute: 

27-1-701. Liability for neqliqence as well as willful 

acts. 

Except as otherwise provided by law, everyone is 

responsible not only for the results of his willful acts 

but also for an injury occasioned to another by his want 

of ordinary care or skill in the management of his 

property or person except so far as the latter has 

willfully or by want of ordinary care brought the injury 

upon himself. 

No matter how the majority may try to slice it otherwise, it 

was firmly established in our cases that a negligent breach of the 
duty of good faith and fair dealing was actionable in this State. 

In Crenshaw v. Bozeman Deaconess Hospital (1984) , 213 Mont. 488, 

693 P.2d 487, 493, this Court (Harrison, J.) stated: 

In light of the foregoing, we find the Hospital s conduct 

showed a "want of attention to the nature or probable 

consequence of the act or omission1' and that their 

conduct fell below the "standard established by law for 

the protection of others against unreasonable risk." 

(Citing authority.) The allegation of negligence was 

clearly established in respondent's complaint. We hold 

the trial court committed no error in issuing the 

instructions to the jury. 

In Flanigan v. Prudential Federal Savings and Loan Association 

(1986), 221 Mont. 419, 720 P.2d 257, 263, this Court (Morrison, J.) 

said: 

Negligence has been recognized by this Court to be a 

proper basis for recovery in wrongful termination cases. 

Negligence was approved by this Court in Crenshaw v. 

Bozeman Deaconess Hospital (Mont. 1984), 693 P.2d 487, 

493, 41 St.Rep. 2251, 2259, . . . 

A reasonable belief in job security as a ground for 

application of the duty of good faith and fair dealing was 

acknowledged in Kerr v. Gibson's Products Company of Bozeman 

(1987), 226 Mont. 69, 733 P.2d 1292, 1295 (Turnage, C.J.) where we 

said: 

The covenant of good faith and fair dealing is implied 

when objective manifestations by the employer give rise 

to the employee's reasonable belief that he or she has 

job security and will be treated fairly. (Citing 

authority.) 

Gibson's repeatedly acknowledged respondent's work as 

satisfactory through promotions and pay increases. It 

was reasonable for respondent to believe that she had job 

security and would be treated fairly. 
Generally, we can anticipate that most breaches of the duty 

of good faith and fair dealing will be intentional on the part of 

the employer. Since it is the policy of the law under our 

Constitution of Montana (Art. 11, Sec. 16) to afford a speedy legal 

remedy for every injury of person, property or character, no sound 

legal reason can be advanced, and the majority advance none, why 

negligent breaches of the duty, which can be just as damaging to 

the wronged party as an intentional breach, should not find a 

remedy in our courts. 

We turn now to the specifics of this case, and our first 

observation is that the recitation of facts in the majority opinion 

slant toward the employer. his occurs because of the belief of 

the majority that this case involves an attack by Heltborg on the 

right of the employer to engage in a reduction in force. Nothing 

of the kind. Heltborg did not contest the right of Modern 

Machinery to reduce its work force. Rather, he contended that in 

reducing its work force it acted arbitrarily, negligently and 

unfairly and thus breached the duty of good faith and fair dealing 

in the employment contract. 

On appeal from a jury verdict, the evidence in the case is 

viewed in the light most favorable to the prevailing party, and, 

if the evidence conflicts, credibility of the witnesses and the 

weighing of the evidence are in the province of the jury and not 

the Supreme Court. Kukuchka v. Ziemet (1985), 219 Mont. 155, 710 

P. 2d 1361. This Court reviews evidence in the light most favorable 

to the party that won in the District Court, because of the 
presumption on appeal that the determination of the trial court is 

correct. Kyriss v. State (1985), 218 Mont. 162, 707 P.2d 5. 

From the viewpoint of the successful claimant, the facts are 

better stated thusly: Otto Heltborg worked continuously for Modern 

Machinery, or its predecessors, for over 22 years. In a brief 

and shocking meeting, on April 30, 1988, he was summarily fired, 

without notice, and without any opportunity to continue in his job. 

At the time he was a Service Manager, a position that was essential 

to the continued operation of Modern Machinery. The man who fired 

him admitted this and also admitted that Heltborgls job remained 

the same after he was fired. It was just Otto Heltborg and his 

salary that were eliminated. The company carried "key man" 

insurance on his life. 

Heltborg was the highest paid salaried employee of Modern 

Machinery when he was fired. The decision to fire him was based 

on his salary. His job was taken over by by people who were being 

paid less. After Heltborg was fired, his successor employee spent 

95 percent of his 8 hour shift for over 2% years doing the job that 

Heltborg had previously done. Two other employees also took some 

of the responsibility Heltborg had, after he was fired. Within 

weeks after Heltborg was fired, Modern Machinery hired additional 

employees, turned a profit in that year, and paid its president a 

handsome bonus. 

Modern Machinery presented a hard-nosed defense to justify the 

the termination of Heltborg. It established through its witnesses 

and in cross-examination of others that Modern Machinery was losing 
$175,000 a year; that no state law requires that notice be given 

to the employees before they are discharged; that it was not bad 

faith not to give a long-time employee severance pay; and that 

Heltborg was an at-will employee. 

The District Court discerned the issues of this case early in 

the proceedings. In denying Modern Machinery's motion for a 

summary judgment on the breach of covenant count, she said: 

In this case there is a question of material fact, 

regarding the legitimacy of the reduction in force, that 

must be resolved by a jury. While defendant argues that 

defense of economic necessity entitles it to summary 

judgment as a matter of law, plaintiff argues that the 

economic necessity and reduction in force defense is not 

legitimate because plaintiff's husband's job duties 

continued, but were performed by remaining employees. 

Plaintiff argues that there was not a reduction in force, 

but a reduction in salary, and that her husband was fired 

because he was one of the highest paid employees, not 

because of lack of work. 

It was on that stance that the issues went to the jury. The 

District Court instructed the jury that the law does not require 

an employer to adopt or maintain a particular set of personnel 

policies and procedures, and that there was no rule of law that 

requires an employer to give preference to longevity, give notice 

or pay in lieu of notice or severance pay, give employees a right 

to displace another employee at the time of discharge, give 

employees any right to be rehired, or require the employer to find 

other employment forthe discharged employee within its own company 

or elsewhere. On the other hand, the District Court instructed the 

jury that in this case a duty of good faith and fair dealing had 

arisen during his employment and existed at the time of his 
termination. It stated, however, that the covenant of good faith 

and fair dealing in a long-term relationship did not foreclose the 

employer from engaging in legitimate reductions in force necessary 

to maintain the economic vitality of the company, and that in 

determining whether or not Modern Machinery violated the duty of 

good faith and fair dealing, the jury had to balance the interest 

of the defendant in controlling its work force with the interest 

of the plaintiff in job security. The District Court told the jury 

that an employer is entitled to be motivated by and to serve its 

own legitimate business interest, and had to be given discretion 

in determining whom it would employ and retain in employment. 

The District Court then instructed that under the implied 

obligation of good faith and fair dealing, the nature and extent 

of the obligation depend on the reasonable expectations of the 

employee based on the employer's actions. As triers of fact, the 

jury was told that they had to determine whether the defendant had 

shown a fair and honest reason for termination, taking into account 

all of the facts and circumstances in reaching their decision. The 

court then told the jury that when the legal duty to act in good 

faith in employment relationships exists, a duty was imposed upon 

the employer to exercise reasonable care in carrying out decisions 

concerning employment. The District Court said that this meant 

that there was a duty on the part of the employer to use reasonable 

care under the circumstances in carrying out its business decisionmaking. In this particular, the court relied on Flaniqan, 720 P. 2d 

at 263. 
The court also instructed the jury that the employer's right 

to reduce its personnel did not excuse its obligation to act fairly 

and in good faith in the process and manner of termination of 

employment. 

It is clear that the instructions given to the jury by the 

District Court were proper, and were based upon express decisions 

from this Court. The majority of this Court have found no error 

in the instructions given, nor could they. Rather, the majority 

accomplishes a reversal here by jerking out from established law 

the concept of negligence, in a retrofit of law pertaining to a 

breach of the covenant. 

Particularly, the District Court avoided the problem raised 

in Hobbs v. Pacific Hide and Fur Depot (1989), 236 Mont. 503, 771 

P.2d 125, where this Court reversed because the instructions Ifdid 

not tell the jury that the implied covenant is measured in a 

particular contract by the justifiable expectations of the 

parties.I1 Of course, the District Court could not have anticipated 

the about-face taken by the majority in this case. 

In denying the post-trial motion of Modern Machinery for 

judgment notwithstanding the verdict, the District Court pointed 

out that the arguments made for that motion were the same as for 

the summary judgment motion and said: 

These factual issues precluded summary judgment and had 

to be decided by a jury. The jury heard the evidence and 

found in favor of plaintiff. Obviously, the jury did not 

believe that defendant had a fair and honest reason to 

discharge Otto Heltborg or that the reduction in force 

was legitimate or that the manner in which it was carried 

out was fair. 
The jury's verdict was supported by evidence put on by 

plaintiff that defendant selected the most highly paid 

employee in the shop for discharge, that his job 

continued to be done, that his job was essential to the 

continued economic viability of the company, and that his 

job was done by a lesser paid employee. 

In a way, it is too bad that Heltborg's widow utilized 

negligent breach as well as purposeful breach in pressing her claim 

in the District Court, for the evidence points as strongly to an 

intentional breach as it does to a negligent breach. The overturn 

in this case was unforeseeable in early 1989, and the District 

Court had little expectation that in submitting negligence issues 

to the jury based on our decided cases, she was making an 

application for reversal. 

Opinion Testimony and Ultimate Issues 

The rules for the admission of opinion testimony by lay 

witnesses and by experts were loosened by the adoption of Rule 701- 

705, Federal Rules of Evidence, and their counterpart found in the 

Montana Rules of Evidence. 

One of the reasons given for the loosening of the Rules as 

provided in those sections is that the same results could be 

obtained by posing hypothetical questions to the expert witness, 

but that method was cumbersome. 

The majority stumble in their dissertation on the expert 

opinion evidence in this case because they do not discern that the 

questions propounded to the expert were as much ultimate issues of 

fact as ultimate issues of law. The majority do not dig beneath 
the ultimate issues of fact to report to the reader the testimony 

of witness Brown underlying the eventual questions which are set 

out in the majority opinion and which are really no more than 

inferences of fact drawn from factual statements earlier testified 

to by the witness. 

The majority opinion has severely delimited the field of 

opinion testimony formerly permissible by experts. For example, 

what if in a future case, the lawyer proposes to the highway 

patrolman: Mr. Patrolman, What in your opinion was the cause of 

this accident? The cause of an accident may be an ultimate issue 

of fact, or it may be an ultimate conclusion of law. Under the 

majority opinion, if the question has the earmarks of an ultimate 

conclusion of law, the expert cannot testify. Yet clearly, in 

Montana, under cases all cited by the majority in their opinion, 

a highway patrolman may give his opinion as to the cause of an 

accident. 

Two of the Rules must be read together to understand their 

impac t and application: 

Rule 702. Testimony by Experts. If scientific, 

technical, or other specialized knowledge will assist the 

trier of fact to understand the evidence or to determine 

a fact in issue, a witness qualified as an expert by 

knowledge, skill, experience, training, or education may 

testify thereto in the form of an opinion or otherwise. 

Rule 704. Opinion on Ultimate Issue. Testimony in the 

form of an opinion or inference otherwise admissible is 

not objectionable because it embraces an ultimate issue 

to be decided by the trier of fact. 

The true test that should be applied by this Court or any 

other court in determining the admissibility of opinion evidence 
by experts is whether that testimony will be helpful to the jury 

to understand the evidence in determining a fact in issue. If it 

is so helpful it is admissible. 

The rules on opinion evidence by experts are especially 

applicable to litigation involving issues not ordinarily explored 

or known to the layman, the average trier of fact or jury. The 

application of the duty of good faith and fair dealing in the 

termination of long-term employees is not commonly known or 

understood. It is a field in which opinion evidence is 

particularly necessary. In such cases the courts allow the 

district court's wide latitude in determining the propriety of the 

introduction of expert testimony. For example in First National 

State Bank of New Jersey v. Reliance Electric Company (3rd Cir. 

1981), 668 F.2d 725, the court approved testimony by an expert on 

the Uniform Commercial Code, who testified to trade usage which 

showed that the plaintiff had failed to take an assignment in good 

faith, thereby negating his claim as a holder in due course. 

Whether the plaintiff was a holder in due course was the ultimate 

issue of fact to be decided by the jury, but it is also an issue 

of law. Nevertheless the circuit court held that the purpose of 

the testimony was to aid the jury in its understanding of banking 

customs and affirmed. 

In Brandt v. French (10th Cir. 1981), 638 F.2d 209, the court 

held that it was permissible for experts to suggest the inferences 

to be drawn from specialized knowledge of the facts, especially 

where the weight and credit to be given to the expert testimony was 
given to the jury through the courtls instruction. In Young v. 

Illinois Central Gulf Railroad Company (5th Cir. 1980) , 618 F. 2d 

332, where the expert would have testified, following a film 

demonstration, to the dangerous condition of the railroad crossing 

in question, the court held that the evidence should have been 

admitted for the purpose for which it was offered, to demonstrate 

an ultimate issue in the case. 

In Bieghler v. Kleppe (9th Cir. 1980) , 633 F. 2d 531, the Ninth 

circuit Court reversed a summary judgment where the plaintiff had 

offered an affidavit affirmatively showing the expert's 

qualifications as an expert in accident reconstruction, the study 

he had undertaken to form his opinion which was more than a bare 

conclusion that the defendants had been negligent, and that their 

negligence had caused the accident. What the majority opinion 

misses in our case, and does not report to the reader, is the 

underlying testimony which shows that Brown's testimony was more 

than barely legal conclusions. 

The majority cite Owen v. Kerr-McGee Corporation (5th Cir. 

1983), 698 F.2d 236. There the circuit court held that a question 

directed to the expert as to the "cause of the accident,'' without 

basis, was asking for a legal conclusion. However in the same 

case, the court approved a question in which the expert was allowed 

to testify as to whether defendants were following "safe 

practicesIn itself a legal conclusion, but also an issue of fact. 

The decision in Owen v. Kerr-McGee Corporation points up what 

I regard as a silly syllogism posed by McCormick (cited by the 
majority at page 7 of the slip opinion). McCormick states that the 

question "Did T have capacity to make a will?" would be excluded, 

while the question, "Did T have sufficient mental capacity to know 

the nature and extent of his property and the natural objects of 

his bounty and to formulate a rational scheme of di~tribution?~~, 

would be allowed. It seems obvious to me that the first question 

would directly assist the trier of fact while the second question 

would only confuse the average member of a jury. Indeed, Dean 

Ladd, in his article, also cited by the majority, in a wry comment 

on the McCormick posers, opined that very probably a jury could 

discern the difference even on the first question and as triers of 

fact would give whatever weight the testimony was entitled to 

receive. Ladd, Expert Testimony 5 Vanderbilt Law Review 414, 424, 

(1952). 

With that background, let us examine the questions posed to 

the expert Brown which the majority find offensive, by looking at 

the underlying testimony. Whether Modern Machinery conducted a 

leqitimate reduction in force in firing Heltborg was an issue of 

fact. Brown testified, as the majority opinion reflects, his 

opinion that they did not have "a legitimate reduction in force.@I 

Underlying that opinion, however, was a substantial basis of 

factual testimony based on his expertise: 

Q. Now, I was going to ask you if you could tell the 

Jury what those commonly used methods are for conducting 

a legitimate reduction in force? 

(Objection overruled.) 

Q. Do you remember my question? 

38 
A. Repeat it, please. 

Q. I don't know if I can. I want you to tell the Jury, 

if you would, what the commonly used methods are to 

conduct a legitimate reduction in force based upon your 

education, training, and experience in this field. 

A. All right. I guess I have to preface my remarks with 

a statement that says before you make a reduction in 

force a well-managed company has looked at all other 

options they have available to them. 

(objection overruled.) 

Q. I will ask you to assume that a company has considered other options, and they have reached a 

decision that there is no other reasonable or viable 

option to continue in business, and the only choice is 

to conduct a reduction in force. So, assume that is the 

fact. 

A. Okay. 

Q. And assume that has already been done. Now, what are 

the steps that are commonly followed? 

A. Okay. The first thing that companies normally do 

when they reach, they feel the only option they have 

available is to reduce the number of employees they have, 

is to look at the on-going functions that they are still 

going to perform as a company. Companies may have 

decided that they are going to eliminate a product line, 

eliminate a particular service, they are going to 

eliminate making a particular product, if they are in the 

manufacturing business. Or, they may be faced with a 

situation where their business is slow and they are going 

to try to continue to do everything they were doing 

before but they don't have full-time jobs performing 

these various functions. 

Q. What is the purpose of looking at the function 

that is going to continue after the reduction as far as 

that actually relates to the plant to reduce the force? 

A. Well, before you can plan appropriately on who 

should be eliminated from your organization, you first 

have to know what your organization is going to do, what 

kind of business you are going to be in, and what the 

functions you are going to perform are going to be. You 

don't want to get rid of the only people that can 

satisfactorily perform functions for you based on some 

other criteria. You need to know and have a plan what 
your business is going to be after the reduction in 

force. 

Q. After considering function which remains, what would 

the next step that is commonly used be? 

A. Then you look at the people that you have in your 

organization. And you determine what position that 

person is in and is that position soins to be there after 

the reduction in force. So you can identify the people 

whose jobs are going to be affected by your planned 

change in your business by your reduction in force. 

Q. If the job remains, how does that affect the employee 

who is actually doing the job? 

A. Well, if the job remains, obviously the employee that 

is doing the job would remain. 

Q. The next commonly accepted step would be what? 

A. Okay. Now you have identified the people that are 

affected by the reduction in force. These are the people 

whose jobs don't exist any more and that you don't have 

a place for performing the same types of functions they 

have done prior to your reduction in force. So once you 

have identified these people, then you have to determine 

what to do with those people. And the generally accepted 

practice is to attempt to place those employees elsewhere 

in your organization, put them in some job that they have 

the skill and the ability to perform, assuming that they 

are one of your senior employees. You try to take care 

of your senior employees utilizing their skills they 

already possess or that they can develop with a minimum 

amount of training and allow them to take somebody else s 

job in your organization so that ultimately a junior 

person in your organization wherever possible is a person 

who is ultimately displaced. 

Q. Is there another step after you go through that until 

you get to the displacement? 

A. Where, there is probably a step that you take 

concurrent with all of this, or, at least, most 

organizations do. And that is to look for people who 

want to volunteer to leave your organization. You know, 

you may need to get rid of ten people in your 

organization, and you may have 15 people that would 

dearly love to go if they got some kind of an incentive 

togo. . . . 

Q. You get volunteers as opposed to the person who was 
involuntarily asked to leave? 

A. That is correct. 

Q. Now, assume that you get through all of these steps, 

and that all of them have occurred, and you still, you 

don't have any volunteers, assuming that that has been 

offered as an option, and there is no severance package. 

What about the person who is left and who you have to 

say: ''1 am sorry, but your job is no longer available. 

We have decided after a review that you have to be 

terminated. Are there commonly accepted ways of dealing 

with that employee and the situation that he is in? A. 

Yes, there are. 

Q. What are those things? 

A. The first thing, of course, is to give that employee 

as much notice as possible so that the employee has an 

opportunity to try to plan and control his life. . . . Because, after all, if you selected the person in the 

first place, you have invested time, effort, and money 

in his training. And, presumably, he has been a good 

employee and you don't want to just throw him out or lose 

him if you have some place in your organization where he 

can be productive and held your-- 

Q. Does that include subsidiaries in terms of looking 

for available work? 

A. Absolutely. 

Q. Do you have an opinion in this case as to whether or 

not Modern Machinery was negligent in carrying out the 

so-called reduction in force that involved Chris Heltborg 

and one other long-time employee? 

A. Yes, I have an opinion. 

Q. What is your opinion? 

(objection overruled) 

A. My opinion is that they were, in fact, negligent. 

Q. And what is the basis of that opinion? 

A. Well, I find no evidence that they looked for any 

other alternatives. I find no evidence other than to 

have a curtailment, I find no evidence that they 

analyzed their work force, their on-going job functions 

to determine what, if in fact, they were going to have 
to do, whose jobs actually remained after the reduction 

in force. I find no evidence that indicates that they 

made any, gave any consideration to seniority, longevity. 

The onlv consideration that I find they qave is to who 

was paid the most. (Emphasis added.) 

For each question that was asked of the witness Brown that is 

set out in the majority opinion, we could pull from the record the 

underlying testimony that would demonstrate, as demonstrated 

foregoing, that this witness gave detailed, explicit bases for his 

opinions and that each of those questions related to an opinion on 

an issue of fact. 

Now I pose to the reader if it is not true that in the 

discussion of witness Brown underlying his testimony, he was 

stating elements of fact relating to commonly accepted practices 

in reductions in force, and proper methods of treating employees 

who were entitled to the benefit of the obligation of good faith 

and fair dealing. There was enough in the record to give the jury 

a basis for determining his credibility, and the weight to be given 

his evidence, and his opinion on the ultimate issue would be 

weighed by the jury in the light of the underlying testimony. 

Witness Brown testified to the recognized procedures that an 

employer should follow before terminating a long-term employee 

entitled to the protection of the implied duty placed on employers 

for good faith and fair dealing in the termination. Whether or 

not the employer conformed to those recognized procedures and 

exercised good faith and fair dealing was always a factual 

question, and the opinion testimony of Brown reflected no more than 

ultimate inferences based on his underlying testimony of facts. 
The expert should always be permitted to draw inferences for 

which the jury would not be competent to draw especially when the 

prejudicial impact of the opinion testimony did not outweigh its 

probative value to the trier of fact. United States v. Milton (5th 

Cir. 1977), 555 F.2d 1198. Rule 704 expressly permits testimony 

in the form of "an opinion or inference. 'I 

Brown's testimony as an expert met the true test for expert 

testimony set out in McGuire v. Nelson (1975), 167 Mont. 188, 200, 

The true test would seem to be whether the subject is 

sufficiently complex so as to be susceptible to opinion 

evidence, and whether the witness is properly qualified 

to give his opinion. Here, there is no doubt that the 

relationship of the suspension system of the front wheel 

of a CT200 99 C.C. Honda trail bike to its tire size 

would not be common knowledge to members of the jury, but 

a question of mechanical engineering. Also, there is no 

doubt that Prussing is well qualified to testify on the 

matter. In view of the fact that the jury can either 

reject or accept the expert witness' opinion or give 

limited weight to it, we fail to see how the admission 

of the evidence here could constitute a usurpation of the 

jury's function. 

The jury after all is the final arbiter, even of the expert's 

opinion. That facet of this case has been lost to the majority. 

Latitude for Business Decisions versus the Duty of Good Faith 

and Fair Dealinq 

We have pointed out above, without setting forth the 

instructions in full, that the District Court carefully instructed 

the jury on the essentials pertaining to the covenant of good faith 

and fair dealing in employment cases based upon the prior decisions 
of this Court. 

The majority opinion is rife with statements in retroflexion 

of the principles announced by this Court in earlier cases. We 

find such sentences as "We agree with Modern that these 

instructions placed the jury in the middle of general management 

decisions, in effect eviscerating the concept of employer latitude 

in decision-making." (Slip op. at 17, 18.) Again, "There is no 

justification for giving a jury the authority to review whether 

reasonable care was utilized in a reduction in force based on 

economic condition^.^^ (Slip op. at 18.) Then there is the 

improbable statement that "We conclude that the employer is not 

under a duty to use reasonable care in decision-making. (Slip op. 

How far the majority bend backwards in the majority opinion 

from our earlier positions of law on this subject is demonstrated 

in this paragraph from Dare v. Montana Petroleum Marketing Company 

(Weber, J.) (1984), 212 Mont. 274, 282, 687 P.2d 1015, 1020: 

Whether a covenant of good faith dealing is implied in 

a particular case depends upon objective manifestations 

by the employer giving rise to the employee's reasonable 

belief that he or she has job security and will be 

treated fairly. Gates, 638 P.2d at 1067, 39 St.Rep. at 

20. The presence of such facts indicates that the term 

of employment has gone beyond the indefinite period 

contemplated in the at will employment statute, 5 39-2- 

503, MCA, and is founded upon some more secure and 

objective basis. In such cases, the implied covenant 

protects the investment of the employee who in good faith 

accepts and maintains employment reasonably believing 

their job is secure so long as they perform their duties 

satisfactorily. Such an employee is protected from bad 

faith or unfair treatment by the employer to which the 

employee may be subject due to the inherent inequality 

of bargaining power present in many employment 
relationships. The implied covenant seeks to strike a 

balance between the interests of the employer in 

controllins the work force and the interests of the 

employee in iob security. Gates, 638 P.2d at 1066-67, 

39 St.Rep. at 20. 

In Kerr v. Gibson's Products Company of Bozeman (1987) , 226 

Mont. 69, 733 P.2d 1292, this Court permitted the review of a 

discharge during a reduction in force. There, the evidence 

indicated that the employer had an ulterior motive in discharging 

the employee. In this case, the jury found, as the District Court 

noted when it denied the post-trial motion, that the motive of 

Modern Machinery in discharging Heltborg was not legitimately for 

a reduction in force but to get rid of a highly paid, long-term 

employee. Under the concepts of fairness and justice that are the 

rock-based foundation of the covenant of good faith and fair 

dealing, an employer forced to reduce its work force because of 

economic conditions is not thereby absolved of the duty of good 

faith. Perhaps it is increased, because when forced lay-offs 

occur, the reduction should take place in accordance with the 

procedures outlined by Mr. Brown: proper notice, possible 

severance pay, assignments to other positions in the company or 

affiliated companies (Modern Machinery is one of many 

subsidiaries), or severance pay. Here, Modern Machinery failed 

completely to consider any of these options. It cold-bloodedly 

terminated a 22-year employee without so much as a thank-you. To 

say that the jury decision in this case eviscerated the latitude 

of the employer in decision-making is empty rhetoric; what has been 

disemboweled here are fairly established concepts of the duty of 
good faith and fair dealing on an employer forced to a reduction 

in force. 

The majority opinion is a return to the outmoded theory that 

a long-term employment may be terminated without cause. We 

condemned that in Nye v. Department of Livestock (1982), 196 Mont. 

222, 228, 639 P.2d 498, 502, saying: 

[Tlhe tort of wrongful discharge may apply to an at-will 

employment situation. In fact, the theory of wrongful 

discharge has developed in response to the harshness of 

the application of the at-will doctrine, under which an 

employment may be terminated without cause . . . The 

determination of whether the cause of action arises rests 

upon whether an unfair or unjustified termination was in 

violation of public policy. (Citing authority.) 

It was in Dare, above cited, that we moved away from requiring 

a finding of public policy, instead stating that implication of the 

covenant depended upon existence of "obj ective manifestations by 

the employer giving rise to the employee's reasonable belief that 

he or she has job security and will be treated fairly.I1 Dare, 687 

Not only had Modern Machinery acquired key-man insurance on 

Heltborg as an employee, but six months prior to his summary 

discharge, he had turned down an employment opportunity with 

another concern because he felt his employment at Modern Machinery 

was more secure. Modern Machinery's previous treatment of him and 

their attitude toward him gave rise as objective manifestations to 

his feeling of job security. 

IV. 

Elimination of Punitive Damaqes for Intentional Breaches of the 
Covenant 

The majority opinion now holds that the breach of the implied 

covenant of good faith and fair dealing in employment cases is not 

a tort, but a breach of contract. This has an unanticipated side 

effect, serendipitous for employers that now even intentional 

breaches will not merit punitive damages. 

Remedies for the breach of the implied covenant of good faith 

and fair dealing in employment cases now seem to have been 

statutorily subsumed in the Wrongful Discharge From Employment Act, 

5 39-2-901, et seq., MCA. At least it can be said for the Act that 

the remedies provided by the legislature for wrongful discharge are 

more generous than are those of the majority of this Court, since 

the Act includes punitive damages. Section 39-2-905, MCA. 

Conclusion 

I dissent from the majority opinion in all particulars and 

would affirm the judgment of the District Court. 

/ 

Justice 

I concur in the foregoing dissent of Justice John C. Sheehy. / 

Justice 

Justice John Conway Harrison joins in the foregoing dissent 

of Justice John C. Sheehy.