No. 89-460 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1990 

GLASGOW EDUCATION ASSOCIATION, affiliated 

with the Montana Education Association, 

Plaintiff and Appellant, 

-vsBOARD OF TRUSTEES, VALLEY COUNTY, SCHOOL 

DISTRICTS 1 AND lA, 

Defendant and Respondent. fr> 

7 

APPEAL FROM: District Court of the Seventeenth Judicial District, 

In and for the County of Valley, 

The Honorable Leonard Langen, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Emilie Loring argued; Hilley and Loring, Missoula, 

Montana 

For Respondent: 

Catherine M. Swift argued, Montana School Boards 

Assoc., Helena, Montana 

Filed: 

submitted: Jan. 9, 1990 
Justice John C. Sheehy delivered the Opinion of the Court. 

At all times herein relations between School District No. 1 

& 1A of Valley County, as employer, and Glasgow Education 

Association (Association), for the District employees, were 

governed by a written negotiated agreement. The agreement included 

a provision for arbitration of grievances, with the decision of the 

arbitrator to be binding and final. On receipt of an adverse 

decision from an arbitrator, the School District informed the 

Association that the District would not comply with the 

arbitrator's award. The Association brought a complaint in the 

District Court, Seventeenth Judicial District, Valley County, 

against the District for breach of contract, and to enforce the 

arbitration award. The School District filed its answer in the 

District Court, denying the breach of contract, and affirmatively 

defending that the award of the arbitrator sought to be enforced 

was illegal because the arbitrator had exceeded his authority in 

making the award. The School ~istrict also counterclaimed for an 

order vacating the arbitrator's award. There being no disputed 

facts, the District Court, on motions from both parties for summary 

judgment, entered its judgment vacating the arbitrator's award. 

The Association appealed the judgment to this Court. We reverse 

and order that the award of the arbitrator be reinstated. 

The basis of our holding is that under the agreement between 

the parties providing for final and binding arbitration, the 

arbitratorls award draws its essence from the agreement, that is, 

from the partiest intentions. We further determine that the 

ttmakewholett remedy of the arbitrator is correct under the 

agreement. 

The agreement provided, as a fringe benefit, District payment 

of a percentage of the employees1 health insurance premiums. The 

provision follows: 
ARTICLE 10. FRINGE BENEFITS 

10.1. The Board of School Trustees agrees to provide 

payment of 90 percent of the premiums for HEALTH 

insurance as detailed in the group insurance policy held 

by School District No. 1 for the 1986-88 school year. 

This payment shall include premiums for the full-time 

teacher and his or her dependents. Board contribution 

for the 1986-88 school year shall be: 

90% if the next years increase is between 0-10.9% 

88% if the next years increase is between 11-20.9% 

87% if the next years increase is between 21-29.9% 

85% if the next years increase is greater than 29.9% 

At the time of the grievance, the contract required the 

employer to pay 85% of the health insurance premiums. In fact, the 

employer paid 100% of the premiums for three groups of employees, 

(1) those whose premiums were completely paid by the employer prior 

to 1969; (2) those performing some administrative functions; and, 

(3) those employees married to other employees of the School 

Districts. The arbitrator pinned his decision to the last group. 

In August, 1987, a grievance was filed by Helen Hetrich, a 

teacher who was not married to another employee of the District and 

who requested that 100% of her insurance premiums be paid. Her 

grievance was extended to include all members of the bargaining 

unit for whom the District had not paid 100% of the insurance 

premiums. In 1987, when the grievance was filed, 16 teachers out 

of a total of 70-some had received 100% of premium payments. 

When the School ~istrict denied the grievance, an arbitrator 

was called in in accordance with the agreement between the parties. 

First off, in his written order, the arbitrator agreed with the 

association that the contract provision for insurance premiums 

clearly and unambiguously applied to all of the employees of the 
District contained in the bargaining unit. The arbitrator found 

that the contract provision prohibited the School District's 

practice of paying 100% of the health insurance costs for some unit 

members. 

The Association argued before the arbitrator that the 

appropriate remedy for the breach was that all unit members for 

whom the employer paid less than 100% of the health insurance 

premiums should be reimbursed for the amount they were required to 

pay for the term of the contract plus interest. On the other 

hand, the employer argued that the appropriate remedy was that the 

employer cease making the 100% payments to the favored unit members 

and that the employer be required to make all payments to all unit 

members in accordance with the contract. 

The arbitrator declined to require such payments by the 

District, as urged by the Association, based purely on the breach 

of contract. The arbitrator denied relief on that ground, saying: 

While the Employer improperly paid more than it should 

have for health insurance for some employees, it 

indisputedly paid the proper amount for the class of unit 

members for which the Association seeks the additional 

compensation. The class seeking additional relief 

received all that it was entitled under the contract. 

To grant members of the class additional relief would 

be inconsistent with the contract, their legitimate 

expectation under the contract and constitute a windfall. 

The fact that some employees received benefits in excess 

of what they were entitled under the contract does not 

justify a remedy that would require that all employees 

receive benefits in excess of what they were entitled 

under the contract (citing authority). 

Arbitrator's decision and award at page 13. 
The arbitrator, however, found a different situation to exist 

with respect to couples who were married and who worked for the 

District, and who received a contribution of 100% of their 

insurance premiums. The arbitrator found that the contract between 

the parties prohibited discrimination based on marital status. He 

determined that position from the following provisions in the 

agreement: 

6.1. The Board shall select employees as needed on the 

basis of merit, training and experience. No 

discrimination against any applicant or employee because 

of race, creed, color, national origin, sex or age shall 

exist. The Board shall take all necessary actions to 

comply with the letter and the spirit of state and 

federal laws prohibiting discrimination in employment. 

Every announcement or listing of a position shall include 

the statement that the District is an Equal Opportunity 

Employer. (Emphasis in contract.) 

The arbitrator determined that the foregoing Article 6.1 

incorporated the prohibition discrimination through marital 

status found in Montana state law, !j 49-2-203(1)(a), MCA, into the 

collective bargaining agreement. 

The arbitrator held that the payment of 100% of the insurance 

premiums to married couples who all worked for the District was 

discrimination based on marital status. He said: 

Here, the contract prohibits discrimination based on 

marital status. The Employer's policy grants greater 

benefits to married employees, both of whom work for the 

District. The policy constitutes unlawful marital status 

discrimination because non-married employees may not 

obtain these benefits because of their marital status, 

despite the fact that not all married persons receive the 

benefit. 

Arbitrator's decison and award at pages 16, 17. 
~iscrimination based on the identity and occupation of one's 

spouse is unlawful marital status discrimination under state law. 

Thompson v. School District (Mont. 1981), 627 P.2d 1229; Hulett v. 

Bozeman School District No. 7 (1986), 228 Mont. 71, 740 P.2d 1132. 

The School District does not actively dispute on appeal that the 

payments made by the School District on behalf of married couples 

working for the District constituted marital status discrimination 

in this case. 

The School District argues most strongly, however, that the 

arbitrator's award in this case violates the contract because the 

grieved employees will receive more than provided in Art. 10.1 of 

the agreement, and because the School District contends that the 

arbitrator went beyond his authority under the agreement to grant 

the award. 

We have noted above that the arbitrator had determined that 

the violations of the contract with respect to those employees who 

have been receiving 100% of the insurance premiums do not require 

a remedy that the disfavored employees be brought up to the level 

of the favored employees. The arbitrator took this position 

because the contract established the level of entitlement at the 

amounts paid for the disfavored employees. He found that a 

different remedy was necessary where the contract specifically 

incorporated the state and federal law of discrimination. He held 

that the incorporation of the language "board shall take all 

necessary actions to comply with the letter and spirit of state and 

federal laws prohibiting discrimination in empl~yrnent~~ not only 

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incorporated the state and federal protections against 

discrimination but also the remedies provided to address such 

violations. In stating the purpose of the grievance procedure, the 

agreement provided: 

23.2. The purpose of this procedure is to secure, at the 

lowest possible level, equitable solutions to the 

problems which may from time to time arise affecting the 

welfare or terms and conditions of employment of teachers . . . 

The arbitrator determined that the proper remedy for 

discriminating against an employee or class of employees is to 

bring the disfavored employee or class to that level of the favored 

employee or class. He, therefore, made an award ordering the 

School District to pay the unit employees who did not receive a 

100% employer health insurance contribution the difference between 

the 100% and the amount actually paid, plus interest at the rate 

of 10% for the term of the contract, at those amounts necessary to 

bring the employees to the level of the favored employees. 

The School District contends that the arbitrator, in making 

the award, modified, changed, or rewrote the contract, and, in 

incorporating the Ifmake wholev1 remedy in the contract, went outside 

the bounds of the contractual provisions. The School District 

contends that the case of Alexander v. Gardner-Denver Co. , 415 U. S . 

36, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974) is authority that an 

arbitrator may not invoke public laws to fashion a remedy that 

conflicts with the agreement between the parties, or which is based 

upon the arbitrator's view of the requirements of legislation, 

rather than on the interpretation of the collective bargaining 
agreement. The arbitrator, the School District contends, has only 

authority to resolve questions of contractual rights even though 

the contractual rights may be duplicative of substantive rights 

secured by a statute. Barrentine v. Arkansas-Best Freight System 

(1981), 450 U.S. 728, 101 S.Ct. 1437, 67 L.Ed.2d 641. 

This and other cases cited by the School District are not 

quite on point here. In the cases relied on by the School 

District, the employees had lost before the arbitrator, and when 

they later moved to enforce their statutory rights, the employers 

argued, unsuccessfully, that the arbitration award precluded 

subsequent judicial relief. The situation here is different. The 

agreement itself is not in conflict with general law, and the 

employerrs practice of paying 100% of the premiums based on marital 

status violated both the contract between the parties and state 

law. The actions of the School District violated particularly this 

provision of the agreement, 

24.5. The provisions of this agreement shall be applied 

without regard to race, creed, religion, national origin, 

age, sex or marital status. 

It was not necessary for the arbitrator, in making his award 

in this case, to resort to statutory law outside of the contract 

to fashion a remedy. The contract itself contained antidiscriminatory provisions requiring the Board to comply with state 

and federal laws prohibiting discrimination. The "make wholert 

remedy adopted by the arbitrator is a proper remedy in 

discrimination cases. Albermarle Paper Co. v. Moody (1975), 422 
U.S. 405, 95 S.Ct. 2362, 45 L.Ed.2d 280. The grievance procedure 

itself recommended !!equitable solutions to grievances arising 

between the parties." The "letter and the spiritft of state and 

federal laws prohibiting discrimination includes a remedy which 

brings the disfavored employees or class to the level of the 

favored employees or class. We hold that the arbitrator was 

working within the contractual provisions of the contract between 

the parties, whose intention in agreeing to final and binding 

arbitration within the contractual agreements was negotiated and 

bargained for, and that the award made by the arbitrator in this 

case drew its essence from the contractual provisions, that is, 

from the intention of the parties. See, United Steelworkers v. 

Enterprise Wheel and Car Corporation (1960) , 363 U.S. 593, 597, 80 

S.Ct. 1358, 1361, 4 L.Ed.2d 1424, 1428. When an arbitrator whose 

decision is final and binding acts within his contractual authority 

and not unlawfully, courts are without power to set aside his 

decision. 

As a second issue on appeal, the School District contends that 

the award of the arbitrator, which was retroactive to the beginning 

of the contract term was improper because of the provisions of 9 

23.4 that the teacher should initiate the first level of 

proceedings within 20 school days of the alleged occurrence of the 

grievance. The School District contends that this provision limits 

any award to adjustment for no more than 20 days prior to the 

bringing of the grievance. 
This second issue was brought to the arbitrator during 

arbitration on the employer's petition for clarification and 

reconsideration, and the arbitrator stated: 

The Employer also argues that the contract 

provision setting a 20 day period for filing grievances 

established the maximum time period that it is liable for 

a contract violation remedial relief. This conclusion 

is not supported by the contract or the other evidence. 

The 20 day period has a function similar to a statute of 

limitations; grievances filed beyond that period are not 

timely and the employer need not process them. The 20 

day period does not speak to limiting the appropriate 

remedial relief of a meritorious and timely grievance. 

Arbitrator's decision on employers petition on page 4. 

The arbitrator was correct again in interpreting the contract. 

No provision limits the remedy for grievances as contended for by 

the School District. The award by the arbitrator was proper. 

Accordingly, we reverse the judgment granted by the District 

Court, and since the facts are undisputed, reinstate the award 

ordered by the arbitrator in his decision of October 20, 1988. 

Justices 
Justice Fred J. Weber specially concurs as follows: 

I concur in the result reached in the majority opinion which 

concludes that the arbitrator's award was appropriate because of 

the contract provision which required that the Board shall take 

all necessary actions to comply with the letter and the spirit of 

state and federal laws prohibiting discrimination. My concern is 

our inability to address the resulting contradiction. 

The analysis by the arbitrator demonstrates my position. With 

his background experience in labor law, the arbitrator concluded 

that he could not require payments to the teachers under the terms 

of the contract. He stated: 

The class seeking additional relief received all that it 

was entitled under the contract. To grant members of the 

class additional relief would be inconsistent with the 

contract, their legitimate expectation under the contract 

and constitute a windfall. The fact that some employees 

received benefits in excess of what they were entitled 

under the contract does not justify a remedy that would 

require that all employees receive benefits in excess of 

what they were entitled under the contract. 

Under the specific limitations of the contract, the arbitrator 

concluded that he could not order benefits for the employees in 

excess of that to which they were entitled under the contract. 

Then he effectively disregarded the contract limitations by 

applying the federal Civil Rights Act. I am not able to explain 

our ability to enforce a general provision while disregarding 

express contractual limitations. 

The result of our opinion is that it gives clear notice to 

employers to avoid any reference to discrimination laws in employee 
contracts. That is not a worthwhile objective. 

My second concern is that our interpretation with regard to 

the Civil Rights Act may result in the elimination of the finality 

of arbitration as to the employee but not the employer. The 

contract here provides It[t]he decision of the arbitrator will be 

submitted to the Board and the Association and will be final and 

binding upon the parties.'' The aim is that the arbitrator's 

decision should be final and binding upon both parties. 

Unfortunately, that result might not occur if the arbitrator's 

decision had been favorable in this case to the employer Board. 

Employees asserting violations of the Civil Rights Act are 

able to bring suit through an administrative agency or district 

court without regard to their rights under the collective 

bargaining agreement. This could result in the employee's ability 

to proceed in the court system even though the employee had lost 

to arbitration. See Meltzer, B. "Labor Arbitration and Overlapping 

and Conflicting Remedies for Employment Di~crimination,~~ 39 

U. Chicago L. Rev., 30 (1971) ; Alexander v. Gardner-Denver Co. 

(1974), 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 147. 

The result is that the contract has been further emasculated 

by rendering the arbitration provision ineffective. This reaffirms 

the previous conclusion that employers somehow must eliminate any 

reference to discrimination laws in labor agreements. I am 

disturbed by the effect of our opinion. 
Justice Diane G. Barz concurs in the foregoing special 

concurrence. r 
Justice John C. Sheehy, concurring specially: 

The special concurrence of two Justices suggests that 

employers I1must eliminate any reference to discrimination laws in 

labor agreements.I1 I must point out that an employee who is the 

victim of illegal discrimination has a right to sue independent of 

the employment contract. In the cited case of Alexander v. 

Gardner-Denver Co. (1974), 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 

147, the United States Supreme Court held that civil rights cannot 

be prospectively waived by contract, and indeed form no part of the 

collective-bargaining process. When an employee sues, the Supreme 

Court held, for a Title VII violation, even after losing at 

arbitration, he is asserting a right given to the employee by 

statute independent of the arbitration process, the employee being 

the only possible victim of discriminatory employment practices. 

Thus, eliminating any reference in labor agreements to antidiscrimination laws will not change the right of employees to 

enforce such laws regardless of the collective-bargaining 

agreement. 

48% &. &L 

Justice