No. 88-323 

IN THE StJPREME COURT OF THE STATE OF MONTANA 

1989 

ROGER KOOPMAN, d/b/a CAREER CONCEPTS, 

Plaintiff and Appellant, 

-vsPATRICIA FAGGETT, 

Defendant, Respondent and Cross-Appellant. 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, 

The Honorable Joseph Gary, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

White & Seel; Karl P. Seel, Rozeman, Montana 

For Respondent : 

Landoe, Brown, Planalp & Kornrners; James M. Kommers, 

Bozeman, Montana 

C, 

Filed: 2 ,. . 

Submitted on Briefs: Nov. 17, 1988 

Decided : January 10, 

3 ,-I ED SMITH 

- - Clerk 
Mr. Justice John C. Sheehy delivered the Opinion of the Court. 

The District Court of the Eighteenth Judicial District, 

Gallatin County, granted judgment after bench trial in favor 

of Roger Koopman, d/b/a Career Concepts, and against Patricia 

Baggett on Koopman's claim based on an employment agency 

contract, but the District Court denied Koopman's claim for 

attorney's fees and costs. Koopman appealed to this Court 

from the denial of attorney's fees and costs, and Patricia 

Baggett cross-appealed from the judgment of the District 

Court that she was liable for an employment fee under the 

employment agency contract. We reverse the District Court's 

determination that Koopman was entitled to an employment fee, 

affirm the denial of attorney's fees and costs to Koopman, 

direct that attorney's fees and costs be awarded to Patricia 

Baggett, and remand for that purpose. 

The principal issue is whether Koopman, d/b/a Career 

Concepts, is entitled to a fee for emplovment agency services 

under the facts of this case. 

Patricia Baggett moved to Montana from Georgia, with her 

husband, in November 1986. She entered into an applicant 

contract with Career Concepts on December 9, 1986. After 

entering into the written agreement with Career Concepts, 

Patricia Baggett also went to the Montana Job Service in 

Bozeman, Montana. 

On January 13, 1987, Patricia Baggett heard on the radio 

about a job she might be interested in through a Job Service 

advertisement. She called the Job Service to inquire. She 

attended a seminar that afternoon conducted by the Job 

Service where she learned that the opening was with KBOZ, a 

local Eozeman radio station. The next morning, January 14, 

1987, Patricia Baggett went to the Job Service office, where 

she obtained a referral card. At 9 o'clock a.m. of the same 

morning, Harvey Hasler of Career Concepts telephoned the 

defendant to inform her of the job opening at KROZ. 
At 11:30 a.m. of the same morning, Patricia Baggett 

telephoned KBOZ to set up an appointment. The KBOZ employee 

informed the defendant that Career Concepts had already 

called and set an interview for her at 4 o'clock that 

afternoon. At about noon, Baggett learned from her husband 

that Career Concepts had called about the 4 p.m. interview. 

At 3:30 p.m. in the afternoon the Career Concepts employee 

again called Baggett and they discussed the KBOZ interview. 

From conflicting testimony, the District Court found that 

Career Concepts had arranged for the interview for Patricia 

Baggett prior to the time that she called KBOZ. 

After the 4 o'clock interview and a subsequent 

interview, Baggett accepted the position with KBOZ. When she 

refused to pay the fee und-er the contract, Koopman, d/b/a 

Career Concepts, sued her for the employment fee in the 

Justice Court in Gallatin County. Baggett cross-claimed for 

an amount of damages outside the jurisdiction of the Justice 

Court, and so the cause was removed to the District Court for 

a decision. There the District Court decided as we have set 

out above, from which this appeal has resulted. 

The legal issue in this case swirls around language in 

the employment contract signed by Baggett and prepared and 

formulated by Koopman. The essence of the argument is 

whether the Job Service could be construed as an "employment 

agency" under the terms of the contract so as to preclude the 

collection of the employment fee by Career Concepts. The 

District Court, relying on the definitions in S 39-5-502, 

MCA, determined that the Job Service was not an "employment 

agency;" that Career Concepts had completed its contract; 

that thereby Career Concepts was entitled to the employment 

fee, but not to an award of attorney's fees and costs. 

Although the employment contract provided for attorney's fees 

and costs to the prevailing party, the court considered that 
provision to be a penalty, and without sufficient notice 

being given to the person signing the employment contract 

that it was contained in the contract. 

Free state employment services are conducted through the 

"Job Service" offices, as they are popularly called. The 

state employment offices exist because of the passage by 

Congress in 1933 of the United States Employment Act. (29 

U.S.C.A., § 49 et seq.) Originally called the Wagner-Peyser 

Act, the United States Employment Service Act was intended to 

develop a national system of employment offices to assist 

persons in obtaining employment; its primary purpose is to 

connect an unemployed worker with a job. It is especially 

directed to migrant workers. See Frederick County Fruit 

Growers Association v. Marshall (1977 D.C. Virginia), 436 

F.Supp. 218. 

The Wagner-Peyser Act provides for federal monies to be 

appropriated for the purposes of the Act, and that in order 

to obtain the benefits of appropriations under the Act, a. 

state shall, through its legislature, accept the provisions 

of the Act, and designate or authorize the creation of a 

state agency vested with all power necessary to cooperate 

with United States Employment Service Act. 29 U.S.C. S 

49 (c) . Further, any state desiring to receive the benefits 

of the Act, must submit detailed plans for carrying out the 

provisions of the act within the state. 29 U.S.C., § 49(g). 

The establishment of employment service offices through 

the several states did not come about by accident. In Ribnik 

v. McBride (1927), 277 U.S. 350, 48 S.Ct. 545, 72 L.Ed. 93.3 

the United States Supreme Court heard a case involving New 

Jersey's Employment Agency Law. The law prohibited the 

charging of fees by private employment agencies over a 

certain amount, and in effect was considered by the Supreme 

Court to be price--fixing by the state. The Court invalidated 
the law on the basis of due process under the Fourteenth 

Amendment. Eowever a dissent in that case was written 

describing the evils of private employment agencies and 

suggested the creation of a federal system of public 

employment agencies. 

The dissent in Ribnik echoes what was said by Justice 

~randeis in Adams v. Tanner (1916), 244 U.S. 590, 37 S.Ct. 

662, 61 L.Ed. 1336. There, the majority set aside a law of 

the state of Washington regulating employment agencies. 

Justice Brandeis castigated in his dissent the inequities and 

wrongful practices of private employment agencies at the 

time . 

In creating the United States Employment Bureau, under 

the Act, in 1933, Congress set out the scope of the law in 29 

U.S.C., § 49(b): 

It shall be the province and duty of the bureau 

to promote and develop a national system of 

employment offices for men, women and juniors who 

are legally qualified to engage in gainful 

occupations, including employment, counseling, and 

placement services for handicapped persons, to 

maintain a veterans service to be devoted to 

securing employment for veterans, to maintain a 

farm placement service, to maintain a public 

employment service for the District of Columbia, 

and assist and establish and maintaining systems of 

public employment offices in the several 

states. . . . 

The state of Montana joined in the national effort, in 

1937, when the legislature passed what is now § 39-51-307, 

MCA, requiring the Montana Department of Labor to "establish 

and maintain free public employment offices in such number 

and in such places as may be necessary for the proper 

administration of this chapter and for the purpose of 

performing such duties as are within the purview of the act 

of conqress entitled [the Wagner-Peyser Act] ." 
In 1971, the legislature adopted "The Employment Agency 

Act" to regulate private employment agencies. Koopman, d/b/a 

Career Concepts, has qualified as a licensee under that Act. 

Career Concepts is an "employment agency" under the Act 

because its gross or net income is derived from fees received 

from applicants for offering, promising, procuring or 

attempting to procure empl-oyment for applicants. Section 

39-5-102 (I), MCA. 

The Employment Agency Act also defines the term 

employment agency as follows: 

(c) The term "employment agency" does not include 

labor unions organizations, temporary service 

contractors, propriety schools, musical booking 

services, agents for professional athletes, or the 

Montana State Employment Agency. (Emphasis 

supplied. ) 

Section 39-5-102 (1) (c) , MCA. 

Therein lies the nub of the controversy here. 

The Employment Agency Act also provides for the payment 

of fees when an applicant is referred by two agencies. 

39-5-310. Payment --- of fee when applicant referred 

& two agencies. When an applicant is referred to 

the same position by two employment agencies, the 

fee shall be paid to the agency that first 

contacted the applicant considering the specific 

opening, provided that such agency has given the 

name of the employer to the applicant and has 

arranged an interview or submitted a resume to the 

employer within ten days of such contact with the 

applicant. 

The contract signed by Patricia Baggett with the 

employment agency, Career Concepts, included a paragraph 

which mirrors S 39-5-310, MCA. The contractual provision 

follows: 

7. When an applicant is referred to the same 

position by two employment agencies, the fee shall 

be paid to the agency that first contacted the 

applicant concerning the specific opening, provided 
that such agency has given the name of the employer 

to the applicant and has arranged an interview or 

submitted a resume to the employer within ten days 

of such contact with the applicant. 

Koopman contends, and the District Court agreed, that 

since by definition under the Employment Agency Act, the Job 

Service Office acting as a Montana State Employment Agency, 

is not an "employment agency," that therefore the first 

reference to Baggett of this specific job by the Job Service 

is of no concern. In effect the District Court held that 

Career Concepts was the only "employment agency" under the 

Act which referred her to the job opening and therefore she 

must pay Career Concepts. 

That interpretation of the term "employment agency" in 

the employment contract is wrong for two reasons: (1) The 

purpose of the definition of "employment agency" under 

Montana's Employment Agency Act is to define those private 

agencies that must be licensed and regulated by the 

Department of Labor. The Job Service Offices, established by 

an act of the legislature require no license; and (2) public 

policy requires the recognition of the Job Service as a full 

employment agency on which applicants for employment can 

rely. 

A review of the federal and state statutes relating both 

to the Job Service Offices existing in Montana and private 

employment agencies shows that each of these exist for the 

same ultimate purpose, to connect an unemployed applicant 

with a job. It is the public policy of this state that the 

Job Service Offices shall exist side by side with any private 

employment agencies. Moreover, the Job Service agency is 

subsidized by the taxpayers as a free employment service 

which any citizen has the right to utilize. Therefore an 

interpretation of the employment contract which runs counter 
to the purpose for the existence of the state employment 

service runs counter to the public policy of the state. 

There is no question in this case that Koopman has 

insisted for quite some time that a Job Service referral is 

not a referral by an "employment agency" when the 

interpretation of his Career Concepts contract involves a 

collection of a fee where the Job Service office has also 

made a referral. On the basis of the contract, he has sued 

applicants in Justice Courts 112 times since 1983, and 12 

times in the District Court. We do not know if all of those 

suits involved the precise interpretation of the contracts in 

relation to the facts here, but if they do, they cause an 

intolerable burden to be placed upon the court system in 

Gallatin County. 

We therefore interpret the State Employment Agency Act 

to mean that the State Employment Offices (Job Service 

offices), which "procure or attempt to procure employment for 

applicants" are an "employment agency" even though they need 

not be licensed as an employment agency under the 

Employment Agency Act. Therefore, in construing Career 

Concepts1 contract, a Job Service referral must be regarded 

as one by an employment agency. 

When that is understood, the Career Concepts1 contract 

can be properly interpreted. 

To be entitled to a payment of a fee under 5 39-5-310, 

supra, Career Concepts must qualify on two of three 

possibilities when an applicant is referred to the same 

position by two employment agencies: One, Career Concepts 

must be the agency that first contacted the applicant 

concerning the specific opening, and two, it must give the 

name of the employer to the applicant and arrange an 

interview, or three, submit a resume to the employer within 

10 day^ of such contact with the applicant. 
In this case, Career Concepts is not the agency that 

first contacted the applicant concerning the specific 

opening, since she first learned of it through the Job 

Service Office. Accordingly under the contract and the 

statute, Koopman, d/b/a Career Concepts, is not entitled to 

an employment applicant's fee. 

The contract between Career Concepts and Patricia 

Baggett provides that Career Concepts, in the event of a 

breach of the agreement, is entitled to reasonable fees, 

costs, and expenses incurred including attorney's fees and 

court costs. Since it is not the prevailing party, in this 

case, Koopman, d/b/a Career Concepts, is not entitled to an 

attorney's fee, and his appeal must be denied. On the other 

hand, because of the reciprocity provisions of 5 28-3-704, 

MCA, Raggett is entitled to attorney's fees and costs for 

which we remand for determination to the District Court. 

We deny Baggett's request to return the cause for 

determination of punitive damages. 

Accordingly, the judgment in favor of Koopman d/b/a 

Career Concepts and against Patricia Baggett is reversed; and 

the cause is remanded to the District Court for the 

determination of attorney's fees and costs in favor of 

Patricia Ragqett . 

We Concur: 1 

1 i Justice I 

1 i