IN THE SUPREME COURT OF THE STATE OF MONTANA 

STATE OF MONTANA, ex el., DIVISION OF 

WORKERS' COMPENSATION, 

Relator, 

-vDISTRICT COURT OF THE THIRTEENTH JUDICIAL 

DISTRICT, and HONORABLE ROBERT W. HOLMSTROM, 

NATHANIAL B. BLAYLOCK, et al., GC'T2.2 1390 

Plaintiffs/Appellants, 

and 

DAVID L. CALDWELL, 

Ed 3;:zifi 

CLERKOFSUPREME COURT 

Plaintiff/Appellant, STATE OF MONTANA 

-vTHE DIVISION OF WORKERS' COMPENSATION, 

THE DEPARTMENT OF LABOR AND INDUSTRY, 

and THE STATE OF MONTANA, 

Defendants/Respondents. 

APPEAL FROM: Original Proceeding, Supervisory Control (89-259) 

District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable Robert W. Holmstrom, Judge presiding. 

(89-298) 

COUNSEL OF RECORD: 

For Appellant Class: 

Robert C. Kelleher, Sr. and Lee R. Kerr; Kelleher 

Law Offices; Billings, Montana 

For Appellant Caldwell: 

Timothy J. Whalen; Whalen & Whalen; Billings, 

Montana 

For Respondent and Relator: 

John H. Maynard, Tort Claims Division; Helena, 

Montana 

Chris D. Tweeten; Hughes, Kellner, Sullivan & Alke; 

Helena, Montana 

Submitted: June 28, 1990 a 

Filed: 

Decided: October 22, 1990 
Justice R.C. McDonough delivered the Opinion of the Court. 

This is an original proceeding of supervisory control 

consolidated with an appeal from a summary judgment entered in 

favor of the defendants by the District Court for the Thirteenth 

Judicial District, Yellowstone County, on the grounds that the 

defendants are entitled to quasi-judicial immunity. The District 

Court also ruled that the 42 U.S.C. 5 1983 claims of unnamed 

plaintiffs in this class action suit are not barred by a federal 

court dismissal of these claims under the doctrine of res judicata. 

We reverse the District Court's order and remand the case for 

further proceedings. The following issues are the subject of 

this appeal: 

(1) Is the State of Montana and its Division of Workerst 

Compensation protected by quasi-judicial immunity for their 

negligence in renewing the privilege of an employer to self-insure 

its workers1 compensation risk without requiring the self-insuring 

employer to post security to guarantee payment of benefits? 

(2) Does 42 U.S.C. 51983 provide a remedy under the due 

process clause for gross negligence? 

(3) Does the doctrine of res judicata act to bar named 

plaintiffs in the federal action from bringing their 51983 action 

in the state courts? 

The cause of action arises from the bankruptcy of Great 

Western Sugar Co. (GW), a Delaware corporation. GW employed 
Montana workers in its sugar beet processing factory near Billings, 

and self-insured its Workers1 compensation risk under Plan I of the 

Montana Workers1 Compensation Act, d 39-71-2101, MCA, et seq. 

(1985). 

From 1981 to 1985, Andrew Kiely and James Murphy were the 

Division of Workers1 Compensation (Division) employees who approved 

Plan I self-insurance applications. Plaintiffs1 claim that Kiely 

and Murphy failed to act on GW1s 1984 application for renewal. 

Plaintiffs further allege that GW officials were well aware GW was 

losing its solvency and yet failed to provide the security required 

by 1 39-71-2106, MCA (1985). In early 1985, GW filed a petition 

for bankruptcy. Plaintiffs allege that prior to the filing, GW 

failed to make timely payment of benefits due claimants under the 

Workers' Compensation Act, and that GW ceased making any such 

payments after the bankruptcy filing. In their answer, the 

defendants admit that they were negligent in failing to conduct an 

adequate review of GW1s financial condition in 1984, but deny that 

their negligence proximately caused the loss of plaintiffs1 

benefits. The suit was consolidated into a class action, the 

plaintiff class consisting of those former employees of GW who lost 

workers1 compensation benefits as a result of GW1s bankruptcy. 

The procedural history of this case is extensive. It began 

in the united States District Court for the ~istrict of Montana, 

Billings Division, where plaintiffs1 5 1983 claims were dismissed. 

Plaintiffs1 appeal to the Ninth Circuit was affirmed. It is now 

before this Court on appeal from a final judgment entered in the 
District Court for the Thirteenth Judicial District, Yellowstone 

County, pursuant to Rule 54 (b) , M.R.Civ.P. The District Court 

dismissed the state law claims of all members of the plaintiff 

class solely on the grounds of quasi-judicial immunity and our 

decision in Koppen v. Board of Medical Examiners (1988), 233 Mont. 

214, 759 P.2d 173, and also dismissed the claims under 42 U.S.C. 

1 1983 of the ten members of the plaintiff class who were named as 

plaintiffs in the earlier federal case as being res iudicata. It 

further held that the Fifth Amended Complaint states a claim for 

relief under 42 U.S.C. 5 1983. The defendants moved for 

reconsideration of that portion of the Court's order denying 

summary judgment as to the unnamed members of the federal plaintiff 

class, arguing that as a matter of federal law in the federal 

action, dismissal barred all potential plaintiffs despite the 

federal courtts failure to certify the case as a class action. The 

District Court held that there is no privity existing between the 

two groups of plaintiffs and therefore unnamed plaintiffs are not 

barred by the res judicata effect of the federal decision. 

This portion of the appeal is now before us pursuant to a writ 

of supervisory control issued August 30, 1989 accepting 

jurisdiction to determine whether the court below erred in refusing 

to dismiss the 5 1983 claims of the remaining members of the 

plaintiff class who were not named plaintiffs in the federal 

action. The plaintiffs appealed the District Court's grant of 

summary judgment. The defendantst writ and plaintiffst appeal were 

thereafter consolidated for oral argument. 
First, we will address the issue of whether the State and the 

~ivision are protected by quasi-judicial immunity for their 

admitted negligence in renewing the privilege of an employer to 

self-insure its workersf compensation risk without requiring the 

self-insuring employer to post security to guarantee payment of 

benefits. Our determination will actually be considerably narrower 

than the issue presented to us and in addition does not reach any 

consideration of causation. Central to this determination is the 

nature of the functions to be performed by the Division in this 

case. For immunity to apply the function of the Division must be 

quasi-judicial rather than administrative or ministerial. Our 

review of past cases points out that the distinction between these 

functions is anything but clear: 

Experience teaches that few, if any, ministerial officers 

are not called upon to exercise some judgment or 

discretion in the performance of their official duties. ... As distinguishing between acts quasi-judicial and 

acts ministerial in their character, the following 

definitions we think correctly state the law: "Quasijudicial functions are those which lie midway between the 

judicial and ministerial ones. The lines separating them 

from such . . . are necessarily indistinct; but, in 

general terms, when the law, in words or by implication, 

commits to any officer the duty of looking into facts, 

and acting upon them, not in a way which it specifically 

directs, but after a discretion in its nature judicial, 

the function is termed quasi-judicial. . . . "A ministerial act may perhaps be defined to be one 

which a person performs in a given state of facts, in a 

prescribed manner, in obedience to the mandate of legal 

authority, without regard to or the exercise of his own 

judgment upon the propriety of the act done. . . . ". . . In the same line, a ministerial act has also 

been defined as an act performed in a prescribed legal 

manner, in obedience to the law or the mandate of legal 
authority, without regard to, or the exercise of, the 

judgment of the individual upon the propriety of the acts 

being done. . . .I1 [Citations omitted.] 

State ex rel. Lee v. Montana Livestock Sanitary Board (1959), 135 

Mont. 202, 206, 339 P.2d 487, 489-490. In granting the defendants 

summary judgment, the District Court relied on this Court's 

decision in Ko~oen, where we held that the Board of Medical 

Examiners was immune from suit for allegedly failing to respond to 

complaints about a doctor's fitness to practice medicine and to 

limit or revoke his license to practice medicine under the commonlaw theory of quasi-judicial immunity. In Koppen we pointed to the 

discretion of the Board to weigh information, the fact that it 

could not revoke or suspend a licence without giving notice and 

an opportunity for hearing, that such a hearing would be governed 

by the Montana Administrative Procedure Act and that the decision 

reached would be subject to judicial review, as factors in 

determining that the acts performed by the Board came within the 

statutory definition of ''quasi- judicial function1' found at 5 2- 

15-102 (lo), MCA: 

"Quasi-judicial function1' means an adjudicatory 

function exercised by an agency, involving the exercise 

of judgment and discretion in makins determinations in 

controversies. . . . (Emphasis added.) 

Section 2-15-102(10), MCA. See Koppen, 759 P.2d at 176. 

The case before us is distinguishable from Ko~pen. In Ko~pen, 

the Board allegedly failed to respond to complaints, adversarial 

in nature, that it received regarding a physician's fitness to 

practice medicine and to take remedial action. Koopen, 759 P.2d 
at 174. We noted that the action or inaction by the Board in 

Koppen was its decision not to revoke or limit the physician's 

licence or initiate such action when faced with complaints 

concernins his professional conduct. Koppen, 759 P.2d at 176. 

There was no allegation that the Board failed to even consider the 

complaints. 

Here, we first note that there is no controversy from the 

outset as in Koppen. The facts merely involve the filing of an 

application rather than an adversarial setting involving a dispute 

or controversy. We conclude that immunity does not attach because 

the Division is not expressly designated a quasi-judicial board, 

see 5 2-15-124, MCA, see generally Title 2, Chapter 15, MCA, nor 

was it performing a quasi-judicial function as will be discussed 

below. The following statutes are relevant to our determination 

of the nature of the Division's function in this case: 

339-71-2101 (1985) : Requires Plan I employers to furnish 

satisfactorv proof to the division of their solvency and 

financial ability to pay the compensation and benefits 

in this chapter. . . 

339-71-2102 (1985): Employer "shall file proof of his 

solvencv within the time and in the form as may be 

prescribed by the rules or orders of the division." 

339-71-2104 (1985): Every Plan I employer "shall, at 

least 30 days before the expiration of each fiscal year, 

renew his application to be permitted to continue to make 

such payments as aforesaid directly to his employees for 

the next ensuing fiscal year . . . II 

339-71-2106 (1985) : "The division mav require any 

employer who elects to be bound by compensation Plan I 

to provide a security deposit. . . . The division is 

liable for the value and safekeeping of all such deposits 

or securities and shall, at any time, upon demand of a 

bondsman or the depositor, account for the same and the 
earnings thereof." 

339-71-2108 (1985) : I1Upon the failure of the employer 

to pay any compensation provided for in this chapter upon 

the terms and in the amounts and at the times when the 

same becomes due and payable, the division shall, upon 

demand of the person to whom compensation is due, apply 

any deposits made with the division to the payment of the 

same, and the division shall take the proper steps to 

convert any securities on deposit with the division or 

sufficient thereof into cash and to pay the same upon the 

liabilities of the employer accruing under the terms of 

this chapter, and the division shall, when necessary, 

collect and enforce the collection of the liability of 

all sureties upon any bonds which may be given by the 

employer to insure the payment of his liability. . . . II 

(Emphasis added.) 

The following administrative rules, corresponding to these 

statutes, are also pertinent to our determination: 

24.29.702 ELECTION TO BE BOUND BY COMPENSATION PLAN 

NO. 1 -- ELIGIBILITY (1) Any employer . . . may elect 

to be bound as a self-insurer under plan no. 1, if in 

accordance with 39-71-2102, MCA, the employer . . . submits, on forms provided by the division, satisfactory 

proof of solvency and financial ability to pay . . . and 

if, in accordance with 39-71-2103, MCA, the division 

finds the employer . . . to have the necessary finances. 

24.29.702A SOLVENCY AND ABILITY TO PAY (1) Proof 

of solvency and financial ability to pay compensation, 

benefits and liabilities is required. Employers . . . must demonstrate financial stability by providing audited 

financial statements that upon analysis indicate 

sufficient security, as determined by the division, to 

protect the interests of injured workers. These shall 

consist of analysis of financial conditions, current and 

historical, including, but not limited to, the following 

factors: quick ratio, current ratio, current liabilities 

to net worth, current liabilities to inventory, total 

liabilities to net worth, fixed assets to net worth, 

collection period, inventory turnover, assets to sales, 

sales to net working capital, accounts payable to sales, 

return on sales, return on assets, return on net worth, 

contingent liabilities, comparison to industry standards, 

income from ongoing operations and corporate bond rating. 

Only an employer . . . meeting financial standards 

acceptable to the division shall be granted permission 
to be bound as a plan no. 1 self-insurer. . . . 

24.29.702B WHEN SECURITY REQUIRED (1) Security 

must be deposited with the division by the employer . . . on order of the division under the following 

conditions: 

(a) Every employer . . . must deposit security with 

the division. The deposit requirement may be waived in 

whole or in part by the division for individual employers . . . only who provide substantive evidence that the full 

amount of the deposit is not needed. This evidence shall 

consider criteria for solvency and ability to pay as set 

forth in ARM 24.29.702A. 

(b) The employer . . . no longer has the solvency 

or ability to pay compensation, benefits, and liabilities 

as determined under standards applied in ARM 24.29.70211. 

(c) The employer . . . does not have sufficient 

securities on deposit with the division under section 39- 

71-2107, MCA, to meet current liabilities, in addition 

to all other liabilities. . . . 

24.29.702 ARM. The statutory scheme for approval of plan no. 1 

insurers further distinguishes this case from Kop~en. The statutes 

governing the Board of Medical Examiners provide that "the board 

mav make an investigation whenever it is brousht to its attention 

that there is reason to suspectw that a particular doctor is unfit 

to practice medicine or is guilty of unprofessional conduct. See 

§§ 37-3-323 and 37-3-322, MCA. Here, the statutory scheme mandates 

that the Division at least review a self-insurer's financial 

condition. Admittedly the statutes and administrative rules grant 

the Division discretion in renewing GWms application as a plan No. 

1 self-insurer. However, in this case the Division never exercised 

this discretion to determine GWms eligibility to self-insure its 

risk under plan no. 1. Rather, there was an admitted complete 

failure by the Division to undertake any of the review necessary 

to make such a determination. Thus, the negligence occurred at a 
stage where the Division's function was entirely ministerial: 

Official action, the result of performing a certain 

specific duty arising from designated facts, is a 

ministerial act. . . . Another way of expressing the 

same thought is that a duty is to be regarded as 

ministerial when it is a duty that has been positively 

imposed by law, and its performance required at a time 

and in a manner, or upon conditions which are 

specifically designated; the duty to perform under the 

conditions specified not being dependent upon the 

officergs judgment or discretion. . . . And that a 

necessity may exist for the ascertainment, from personal 

knowledge or from information derived from other sources, 

of those facts or conditions, upon the existence or 

fulfillment of which, the performance of the act becomes 

a clear and specific duty, does not operate to convert 

the act into one judicial in its nature. (Emphasis 

added. ) 

Meinecke v. McFarland (1949), 122 Mont. 515, 522, 206 P.2d 1012, 

1015. [Citations omitted.] The discretion afforded by the 

statutes and rules in this case was never exercised, rather, the 

Division breached its underlying duty, mandated by the statutory 

scheme for plan no. 1 insurance, to investigate GWgs eligibility 

to self-insure. Such act was purely ministerial, Meinecke, supra, 

and cannot be a basis for invoking quasi-judicial immunity: 

Accordingly, to be entitled to immunity the state must 

make a showing that such a policy decision, consciously 

balancing risks and advantages, took place. The fact 

that an employee normally engages in ggdiscretionary 

activitygg is irrelevant if, in a given case, the employee 

did not render a considered decision. . . . 

Johnson v. State (1968), 73 Cal.Rptr. 240, 249, n. 8, 447 P.2d 352, 

While our analysis here is limited to common-law quasijudicial immunity, the Itexercise of judgment and discretiongg 

required by S 2-15-102(10), MCA, to invoke such immunity is 
analogous to the discretionary function exception to the Federal 

Tort Claims Act (FTCA), 28 U.S.C. §2680(a). Under this exception 

the FTCA does not waive the immunity of the United States for 

claims based upon negligence of government employees exercising or 

performing discretionary functions on the part of a federal agency, 

regardless of whether the discretion is abused. 28 U.S.C. 

§2680(a); see Dalehite v. United States (1953), 346 U.S. 15, 73 

S.Ct. 956, 97 L.Ed. 1427; United States v. Varig Airlines (1984), 

467 U.S. 797, 104 S.Ct. 2755, 81 L.Ed.2d 660. While suits cannot 

be maintained against the United States for acts falling under this 

exception, such acts must involve the "permissible exercise of 

policy discretionw: 

[Tlhe discretionary function exception will not apply 

when a federal statute, regulation, or policy 

s~ecificallv prescribes a course of action for an 

employee to follow. In this event, the employee has no 

rightful option but to adhere to the directive. And if 

the employee's conduct cannot appropriately be the 

product of judgment or choice, then there is no 

discretion in the conduct for the discretionary function 

exception to protect. (Emphasis added.) 

Berkovitz v. United States (1988), 486 U.S. 531, 536, 108 S.Ct. 

1945, 1958, 1959, 100 L.Ed.2d 531, 540-541. The facts in Berkovitz 

are similar to the facts here. In Berkovitz the plaintiff alleged 

that the National Institutes of Health's Division of Biologic 

Standards (DBS) negligently failed to require certain tests prior 

to issuing a manufacturervs license to produce a polio vaccine. 

Prior to issuing a product license, statutory and regulatory 

provisions required DBS to receive all data the manufacturer was 

required to submit regarding the product, to examine the product, 
and to make a determination that the product complies with safety 

standards. Berkovitz, 436 U.S. at 542. The plaintiff alleged that 

DBS decided to issue a license without having first received the 

required test data, thus immunity did not bar his claims: 

Rather, the claim charges a failure on the part of the 

agency to perform its clear duty under federal law. When 

a suit charges an agency with failing to act in accord 

with a specific mandatory directive, the discretionary 

function exception does not apply. 

Berkovitz, 486 U.S. at 544. For similar reasons, the immunity we 

recognized in KoDDen is inapplicable in this case. In KoDDen, the 

Board exercised a quasi-judicial function in deciding not to take 

action in the face of adversarial complaints against a doctor. 

Here, there was no discretion exercised by the Division regarding 

renewal or non-renewal of GW' s status; rather, there was a complete 

failure at the administrative level to conduct the necessary 

preliminary review of GW1s financial condition that would enable 

the Division to make a decision to not renew. The duties imposed 

by the statutory scheme on the Division's employee were purely 

investigative, ministerial and administrative. Because the 

Division failed to perform its duty to review or examine GW1s 

application as prescribed by statute, and because simply performing 

this duty does not involve the use of quasi-judicial discretion, 

the Division is not protected by quasi-judicial immunity at this 

stage. The Division has simply not functioned as such under these 

facts. 

11. 5 1983 Claims 

Plaintiff's constitutional claims are based on 42 U.S.C. 9 

12 
1983, which provides: 

8 1983. Civil action for deprivation of rights 

Every person who, under color of any statute, ordinance, 

regulation, custom, or usage, of any State or Territory 

or the District of Columbia, subjects, or causes to be 

subjected, any citizen of the United States or other 

person within the jurisdiction thereof tothe deprivation 

of any rights, privileges, or immunities secured by the 

Constitution and laws, shall be liable to the party 

injured in an action at law, suit in equity, or other 

proper proceeding for redress. . . . 

With respect to defendantsf appeal regarding the effect of res 

judicata on plaintiffsf claims under 42 U.S.C. 5 1983 and whether 

this section provides a remedy under the due process clause for 

gross negligence, we note that it is now settled that states and 

their agents are not ffpersonsw for the purposes of § 1983: 

. . . it does not follow that if municipalities are 

persons then so are States. States are protected by the 

Eleventh Amendment while municipalities are not, Monell, 

436 U.S., at 690, n. 54, 98 S.Ct., at 2035, n. 54, and 

we consequently limited our holding in Monell Ifto local 

government units which are not considered part of the 

State for Eleventh Amendment purposes," ibid. 

Conversely, our holding here does not cast any doubt on 

Monell, and applies only to States or governmental 

entities that are considered Itarms of the Stateff for 

Eleventh Amendment purposes. . . . . . . . Obviously state officials literally are persons. 

But a suit against a state official in his or her 

official capacity is not a suit against the official but 

rather is a suit against the official office. Brandon 

v. Holt, 469 U.S. 464, 471, 105 S.Ct. 873, 877, 83 

L.Ed.2d 878 (1985). As such, it is no different from a 

suit against the State itself. . . . [citations omitted] 

We hold that neither a State nor its officials 

acting in their official capacities are "personsft under 

§ 1983. . . . 

Will v. Michigan Department of State Police (1989) , 109 S. Ct. 2304, 

2311-2312, 105 L.Ed.2d 45. The plaintiffs have no 5 1983 claim 
against the defendants in this case. 

There being no quasi-judicial immunity afforded to the 

Division and there being no valid claims under 42 U.S.C. 5 1983, 

the case is remanded for further proceedings on the plaintiffs' 

remaining claims. 

REVERSED AND REMANDED. 

(92 - 

We Concur: 

Justices \ 
Justice John C. Sheehy, specially concurring: 

I concur with the result in this case, but not for the reasons 

assigned by the majority. The state argues that it is immune here 

because its agents were engaged in quasi-judicial functions, i.e., 

issuing, suspending or revoking licenses, permits and certificates, 

and evaluating and passing on facts. These functions are 

statutorily designated as quasi-judicial. Section 2-15-102 (10) , 

MCA. The state had a reasonable expectation that Koppen would 

control this case, since Koppen had insulated from suit the State 

Board of Medical Examiners on a theory of quasi-judicial immunity. 

Koppen v. Board of Medical Examiners (1988), 233 Mont. 214, 759 

P.2d 173. 

A correct result based on legal principles should see the 

majority backing off completely from any immunity attributed to 

ministerial quasi-judicial acts or non-acts of state public 

officials. Then this Court would be applying the true public 

policy of this state, that the state is not immune from suit for 

the torts of its agents except where the legislature has 

specifically provided by law by a 2/3 vote of each house of the 

legislature. Art. 11, 5 18, Montana State Constitution. 

The legislature has acted to provide judicial immunity, 

distinguished from quasi-judicial immunity in 3 2-9-112, MCA. That 

statute provides immunity for acts or omissions of the judiciary, 

and limits I1judiciary1l to courts established under Art. VII of the 

State Constitution. There is no statutory provision excepting 

quasi-judicial acts of agencies from responsibility in tort law. 

15 
That kind of immunity was gratuitously afforded by this Court in 

Koppen and not by act approved by 2/3's of each house of the 

legislature. 

Because of Koppen, the majority, to achieve a proper result, 

are forced to distinguish between agencies decidinq not to act 

(Koppen) and agencies simply not acting (this case). Thus, the 

majority hold an agency is still immune if it decides to do 

nothing, regardless of the merits of taking action, or the 

overwhelming duty of the agency to act. Yet, in this case, the 

inaction of the state employees to revoke or limit Great Western's 

status as a self-insurer was in itself a type of decision. 

In Koppen, I concurred with the result not because exercising 

a quasi-judicial function merited immunity, but because the claim 

of the plaintiffs was too remote from state action or inaction to 

incur tort liability. It is easy to apply that logic here. In 

Koppen, the inaction of the state was not foreseeable as a 

proximate cause of the wrongs later committed by the doctor. In 

this case, the inaction of the state employee to assure the 

solvency of a self-insurer foreseeably caused the harm to the 

plaintiffs. The issuance by the state of a license to a medical 

doctor is not a guarantee that the doctor will not malpractice; but 

on the other hand, the failure of the state to rein in an insolvent 

self-insurer will certainly and foreseeably wreak damage on its 

injured employees. 

Nonetheless, I welcome the result here, for whatever reason 

given by the majority. Slowly, oh slowly, this Court is inching 
back from the harsh grants of state immunity in Peterson v. Great 

Falls School District (1989), 237 Mont. 376, 773 P.2d 316; Bieber 

v. Broadwater County (1988), 232 Mont. 487, 759 P.2d 145; State ex 

rel. Eccleston v. Third Judicial District Court (Mont. 1989), 783 

P.2d 363, 46 St.Rep. 1929 and Miller v. Fallon County (Mont. 1989), 

783 P.2d 419, 46 St.Rep. 2087. See Mitchell v. University of 

Montana (Mont. 1989), 783 P.2d 1337, 46 St.Rep. 2109; Koch, et al. 

v. Yellowstone County (Mont. 1990), - P.2d1 47 St.Rep. 1312. 

Justice William E. I-iunt, Sr. : 

I concur in the foregoing specially concurring opinion of 

Justice Sheehy. 

Justice John C. Harrison: 

L concur in the foregoing specially concurring opinion of 

Justice Sheehy. 
Justice Fred J. Weber dissents as follows: 

Great Western Sugar Company (GW) was a self insurer for 

workers1 compensation purposes. GW became insolvent and unable to 

pay its liabilities. The majority opinion describes the 

unfortunate position of the plaintiff workers who had been unable 

to collect their workers1 compensation benefits from GW. Having 

been unable to collect those benefits from GW, the plaintiffs have 

sued the Division of Workers' Compensation and the State of 

Montana. The State has admitted negligence through the Division 

of Workers1 Compensation in failing to conduct an adequate review 

of GW1s financial condition. The State does deny that such 

negligence was the cause of the loss of plaintiffs1 benefits. The 

majority has concluded that the admitted failure to examine reports 

submitted by GW is negligence, that such failure was ministerial, 

and as a result the Division and State can be held responsible. 

I disagree with that conclilsion. 

I conclude that the majority has disregarded this Court's 

holding in Koppen v. Board of Medical Examiners (1988), 233 Mont. 

214, 759 P.2d 173. I can find no meaningful distinction between 

the present case and Koppen. As a result I conclude that under the 

Koppen holding, there is quasi-judicial immunity so far as the 

Department and the State are concerned. 

In his special concurrence, Justice Sheehy reached the same 

conclusion. He points out that the functions of the Department in 

this case come within those functions which are statutorily 

designated as quasi-judicial under § 2-50-102 (lo), MCA. I agree 
with his analysis up to that point. I do not agree with his desire 

to overrule Koppen. I do conclude that there is no distinction 

between Koppen and the present case. 

The majority attempts to distinguish Koppen by suggesting 

there was no dispute in the present case as there was in Koppen. 

The majority concludes that immunity does not attach because the 

Division was not expressly designated a quasi-judicial board nor 

was it performing a quasi-judicial function. The majority 

emphasizes that the ~ivision never exercised any discretion because 

it just failed to undertake any review of the materials submitted 

to it. As a result the majority concludes that the negligent 

failure to review was ministerial. The key majority statement is 

the following: 

Because the Division failed to perform its duty to review 

or examine GW1s application as prescribed by statute, and 

because simply performins this duty does not involve the 

use of quasi-iudicial discretion, the Division is not 

protected by quasi-iudicial immunity at this stage. The 

Division has simply not functioned as such under these 

facts. (Emphasis supplied.) 

I do not believe that Koppen supports that view. In the opinion 

in Ko~pen, 233 Mont. at 215, 759 P.2d at 174, the majority stated: 

According to the complaint, the Board had received 

complaints about Dr. Kauffmants fitness to practice 

medicine but failed to respond to them. The complaint 

characterized this as a failure by the Board to discharge 

its duty under 5 37-3-202, MCA. . . . (Emphasis added.) 

The majority in Koppen, 233 Mont. at 217-18, 759 P.2d at 175, 

further stated: 

The District Court was correct in concluding that 

the Board is entitled to quasi-judicial immunity from 

suit. . . . The Board's quasi-judicial immunity is 

derived from the common law, which we hold to be 
controlling here. 

The Koppen majority, 233 Mont. at 219, 759 P.2d at 176, further 

stated with regard to the Board of Medical Examiners: 

The discretion vested in the Board to weiqh the 

information relative to Dr. Kauffman rendered it a quasijudicial body. This is also evident from the statutes 

dictating the procedures to be followed. . . . The task 

performed by the Board thus comes within the statutory 

definition of "quasi-judicial functionvt found at 5 2- 

15-102(10), MCA. (Emphasis added.) 

Following are the key holdings, for our purposes, of Koppen: 

The action or inaction by the Board under attack in 

this case is its decision not to strip Dr. Kauffman of 

his license when faced with complaints concerning his 

professional conduct. The Board's decision whether to 

initiate administrative proceedinss asainst a doctor is 

analogous to a prosecutor's decision whether to initiate 

court proceedings against an alleged criminal. We concur 

with the reasoning in Butz that the Board's discretion 

might be distorted if it is not immune from suit for 

damages arising from such a decision. We hold, 

therefore, that in the exercise of its quasi-judicial 

authority, the Board is entitled to the absolute immunity 

afforded executive officials under the rule in the Butz 

decision. (Emphasis added.) 

Koppen, 233 Mont. at 219, 759 P.2d at 176. In substance Koppen 

had contended that the Board of Medical Examiners had received 

complaints but failed to respond to them. That negligent failure 

to respond is directly comparable to the negligent failure to study 

the reports in the present case. I find no factual distinction 

between Koppen and the present case. In Koppen the Board of 

Medical Examiners failed to do anything. In the present case the 

Division failed to do anything. In both cases there was a failure 

to perform a mandated duty. If the majority opinion in this case 

is correct, then it seems that we have in effect overruled Koppen, 
at least in part. 

I disagree with the majority analysis which concludes that 

while the statutes and rules grant discretion to the Division in 

renewing GWts application, the Division never exercised the 

discretion to determine GWts eligibility to self insure. As a 

result the majority concluded that the complete failure by the 

Division to undertake anv review thus becomes ministerial. The 

majority concludes that the discretion afforded by the statutes and 

rules was never exercised and that such failure to exercise was 

purely ministerial. I do not believe that conclusion can be 

reached, based upon Koppen; and I also disagree with the 

fundamentals of that analysis. 

In Koppen this Court pointed out that quasi-judicial immunity 

is comparable to prosecutorial immunity in that it is not based 

upon the statutes of Montana, but upon the common law. Koppen then 

referred to the common law of quasi-judicial immunity as set forth 

in the Butz United States Supreme Court decision. Koppen then 

quoted the following from Butz: 

Judges have absolute immunity not because of their 

particular location within the Government but because of 

the special nature of their responsibilities. This point 

is underlined by the fact that prosecutors--themselves 

members of the Executive Branch--are also absolutely 

immune. 

We also believe that agency officials performing certain 

functions analogous to those of a prosecutor should be 

able to claim absolute immunity with respect to such 

acts. The decision to initiate administrative 

proceedinss against an individual or corporation is very 

much like the prosecutor~s decision to initiate or move 

forward with a criminal prosecution. (Emphasis added.) 
Koppen, 233 Mont. at 218-19, 759 P.2d at 176 (quoting Butz v. 

Economou (1978), 98 S.Ct. 2894, 2913, 2915). If the majority is 

correct in concluding that the failure to exercise discretion was 

purely ministerial, then apparently that rationale would apply to 

prosecutors as well. Under that rationale, a prosecutor could be 

sued for his negligent failure to initiate prosecution. I conclude 

that the failure to discharge a duty is not a ministerial act. 

I conclude that the failure to respond to complaints on the 

part of the Board of Medical Examiners in Koppen is directly 

comparable to the failure on the part of the Division of Workers' 

Compensation to examine the materials filed with it by GW in the 

present case. I would therefore conclude that under Koppen we are 

required to hold there is quasi-judicial immunity as to the 

defendants named in this case.