No. 533-373 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1984 

CITY OF BILLINGS, 

Petitioner and Appellant, 

STATE OF MONTANA HUMAN RIGHTS 

COMMISSION, and EMERSON GREEN, 

Respondents and Respondents. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable William J. Speare, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Peterson, Schofield & Leckie, Billings, Montana 

For Respondents : 

Anne L. MacIntyre, Dept. of Labor & Industry, 

(Human Rights) , Helena, Montana 

Boschert & Boschert, (Green), Billings, Montana 

Submitted on Briefs: November 17, 1983 

Decided: April 19, 1984 

Clerk 
Mr. Justice Fred J. Weber delivered the Opinion of the Court. 

The City of Billings appeals from an order of the 

District Court affirming the judgment of the Montana Human 

Rights Commission in favor of Emerson Green. We affirm the 

judgment of the District Court. 

The issues presented on appeal are: 

(1) Did the Montana Human Rights Commission follow 

proper procedure? 

(2) Was the decision of the Commission arbitrary, 

capricious and clearly erroneous? 

(3) Did the District Court apply the proper standard of 

review? 

Emerson Green worked as a custodian at the Billings 

International Airport from December, 1976 until March 27, 

1978. He was 71 years old at the time he was discharged. 

Green filed an age discrimination complaint with the Human 

Rights Commission. He alleged that he had been harassed by 

his supervisor and co-workers and that other employees were 

late for work without being reprimanded, while he was 

terminated for being late for work one time. The Human 

Rights Commission staff investigated Green's complaint. A 

hearing was held before a hearing examiner appointed by the 

Commission, pursuant to section 49-2-201(2), MCA. 

Uncontested testimony before the hearing examiner 

established that Emerson Green had worked the night shift 

from 9:30 p.m. to 6:00 a.m. Green was the only night shift 

custodian over 30 years of age. Co-workers called him 

"Grandpa" and "old man." Green's supervisor once stopped a 

physical assault upon Green by a co-worker during work hours, 

but the supervisor did not reprimand the co-worker. The City 

had previously terminated Green's employment, but reinstated 
him in his custodial position upon investigation of his union 

grievance. 

The record includes a June 9, 1978 letter of City 

Administrator, R. L. Larsen, which reflects reasons why Green 

had work problems: 

II . According to information, both the 

management and union presentations, the Airport has 

had problems with custodial service due to the 

hours, tedious conditions and relatively poor 

supervision in the year 1977. In July of 1977, 

several supervisors were replaced and a great 

number of complaints began to surface as to the 

quality of the custodial work. Mr. Green has 

received the brunt of many of these compla.ints from 

not only the customers within the Airport Complex 

but from co-workers as well . . . 

"From the standpoint of Mr. Green, a very deep 

seated feeling was felt that his co-workers and 

supervisors were 'out to get him.' Supervision 

appeared to be lacking and other factors seemed to 

come into play involving additional custodial 

workers. 

"During the entire period of time Mr. Green was 

employed by the City of Billings Airport, adequate 

job supervision seemed to be lacking. In addition, 

the continual conflict between co-workers appeared 

- to - be evident --- due to the age differences -- of the 

workers themselves . . . Under the type of work 

situation with -- no supervision, and a co-worker 

attitude ~roblem. it amears thatiF Mr. Green 

could be ;einstated to with the City, that it 

should not be at the Airport Complex in any 

capacity." (emphasis added) 

The City Administrator concluded that Mr. Green should be 

reinstated without ba.ck pay in the next available City job 

opening. 

On July 1, 1978, the City offered Green a custodial 

position at the Public Utilities Department. Green refused 

the reinstatement offer because he would lose seniority and 

back pay if he accepted. Green collected unemployment 

compensation until the effective date of the reinstatement 

offer. He went to work for Saga Foods at Eastern Montana 

College in September, 1978. 
The City of Billings presented evidence to the 

Commission's hearing examiner that Green was discharged for 

cause, that he was responsible for the poor relationship 

with co-workers, that he was a hostile employee and that his 

work performance was poor. 

In contradiction to this evidence, Green's current 

employer testified that Green was pleasant, prompt, 

efficient, and got along well with college-age co-workers at 

Eastern Montana College. Green testified that he had been 

offended by being called "old man" and that his supervisor, 

as well as his co-workers, had referred to him derogatorily 

in front of members of the public. Green explained that at 

times he had been unable to perform all of his assigned tasks 

at the airport because co-workers forced him to do their work 

in addition to his own. He testified that co-worker Bob 

McCleve ordered him about and physically assaulted him twice 

during work hours. Supervisor Jim Murray stopped the second 

assault, which gave Green a black eye and broke his glasses. 

McCleve was in his early 20's at the time and Green was 70 

years old. Supervisor Murray reported the incident to 

Building Supervisor Russell Lehmer. Lehmer testified that he 

did not take any disciplinary action against McCleve because 

he was not certain who had started the fight. 

The hearing examiner issued a proposal for decision on 

February 4, 1981. The examiner determined that the City had 

discriminated against Green because of his age. He proposed 

that the Commission order the City to pay Green "$3.55 for an 

8-hour day, 40-hour week from March 27, 1978 until July 1, 

1978," the date on which Green would have been reemployed by 

the City had he "accepted the reinstatement offer under the 

grievance procedure." 
Both parties filed exceptions to the proposed order. 

New counsel was substituted for Green's trial counsel and 

filed exceptions to the proposed restriction of back pay to 

July 1, 1978 without interest. Green's substituted counsel 

requested oral argument before the Commission on the issue of 

damages. She asserted that the period of discrimination 

lasted from the date of the discriminatory act (the unlawful 

discharge on March 27, 1978) until the date the 

discrimination is ended (the proposed order of February 4, 

1981). She petitioned the Commission for permission to 

supplement the record on the issue of damages. 

The issue of damages was argued orally before the 

Commission and briefed by both parties. Following this 

hearing, the Commission ordered the City to (a) reinstate 

Green in the first available custodial position at the 

Billings Airport, (b) pay back wages from the date of 

discharge, March 27, 1978, until February 4, 1981, less 

interim wages and (c) pay interest at the rate of 10% per 

annum. The Commission's back pay award was based in part 

upon evidence submitted at the supplemental hearing on 

damages. 

The City petitioned for judicial review. The District 

Court affirmed the Commission's final order. From this 

judgment, the City appeals. 

Did the Human Rights Commission follow proper procedure 

in conducting a supplemental evidentiary hearing on the issue 

of damages before issuing its final order? 

The City contends that the Commission exceeded its 

authority in admitting new evidence on the question of lost 

wages. The City further asserts that the Commission 

improperly modified the hearing examiner's findings of fact 
and proposed order, in violation of section 2-4-621 (3) , MCA, 

by improperly admitting additional evidence and substituting 

the Commission's decision for that of the hearing examiner. 

Following the hearing on exceptions to the proposal for 

decision, the Commission ordered both parties to further 

brief the issue of damages. Both parties were given 

opportunity to respond to all the evidence. The supplemental 

evidence that the City contends was improperly admitted 

consisted of copies of the City of Billings' Compensation 

Plans, AFSCME, 1976-1379 and the agreement between Teamsters 

Local 190 and the City of Billings 1980-1981. The Commission 

took judicial notice of these documents, which Green supplied 

to the Commission a-nd the City. 

Section 2-15-1706 (3), MCA of the Executive 

Reorganization Act defines the Human Rights Commission as a 

quasi-judicial board. Section 2-15-102 (9), MCA defines the 

functions of a quasi-judicial board as follows: 

"'Quasi-judicial function means an adjudicatory 

function exercised by an agency, involving the 

exercise of judgment and discretion in making 

determinations in controversies. The term includes 

but is not limited to the functions of 

interpreting, applying, and enforcing existing 

rules and laws; . . . determining rights and 

interests of adverse parties; evaluating and 

passing on facts; awarding compensation; adopting 

procedural rules; . . . hold.ing hearings; and any 

other act necessary to the performance of a 

quasi-judicial function." 

The procedure followed by the Commission in this case is 

authorized by the Administrative Rules of Montana. Section 

24.9.245 (5), A.R.M. requires the Commission to give any 

party, who is adversely affected by a hearing examiner's 

proposal for decision, the opportunity for oral argument. 

Sections 24.9.245(5), A.R.M. and 2-4-621(1), MCA specify that 

requests for oral argument shall be filed when exceptions to 

the proposal for decision are filed. Here, both parties 
filed exceptions to the proposed decision, and the full 

Commission hea-rd oral argument on September 29, 1981. 

In objecting to the examiner's proposal for decision, 

Green specifically moved the Commission for oral argument on 

the issue of back pay and redetermination of the back pay 

award. Section 24.9.242(3), A.R.M. states in pertinent part: 

"If the motion requires consideration of facts not 

appearing in the record, the movant shall also 

serve and file copies of all . . . evidence he 

desires to present in support of the motion." 

At the hearing on the exceptions, particul-arly the issue 

of damages, Green's substituted counsel discovered tha.t the 

City's contract and pay plans had not previously been 

submitted for the Commission's consideration. The Commission 

took the matter of damages under advisement and requested 

supplemental briefs. Copies of the City's contract and pay 

plans were attached to Green's supplemental brief. Copies of 

these documents and Green's computation of lost wages were 

served upon the City, which filed its supplemental brief two 

days later. 

The Commission took judicial notice of the contract and 

pay plans. In its order, the Commission explained that: 

"These calculations are based on figures submitted 

in evidence at the hearing, on exceptions submitted 

by the parties, and on computations and briefs of 

the parties on the issue of damages submitted at 

the request of the Human Rights Commission. The 

briefs were served on opposing counsel in addition 

to being submitted to the Human Rights Commission 

and the parties had the opportunity to respond." 

No contention of inaccuracy or lack of opportunity to 

respond is made. The City is arguing for application of a 

technical rule of evidence. 

The Commission has statutory authority to conduct 

supplemental hearings and accept additional evidence. 

Nothing in the Montana Code or the Administrative Rules of 

Montana prohibits the Commission from formulating a final 
order based on all the evidence. In fact, section 

2-4-621 (3), MCA requires the Commission to review the 

complete record before increasing the recommended penalty in 

a proposal for decision. Additional indication of 

legislative intent that the agency's determination be based 

on a review of all material evidence is found in section 

2-4-703, MCA. That section authorizes a court to order 

additional evidence to be presented. to the agency prior to 

judicial review of the agency's determination. It also 

authorizes the agency to modify its decision based on the 

additional material evidence. 

The manner in which the Commission may adopt, reject or 

modify a proposal for decision is set forth in section 

2-4-621 (3), MCA. That subsection imposes the following 

restrictions upon the Commission: 

" (3) The agency may adopt the proposal for 

decision as the agency's final order. The agency 

in its final order may reject or modify the 

conclusions of law and interpretation of 

administrative rules in the proposal for decision 

but may not reject or modify the findings of fact 

unless the agency first determines from a review of 

the complete record and states with particularity 

in the order that the findings of fact were not 

based upon competent substantial evidence or that 

the proceedings on which the findings were based 

did not comply with essential requirements of law. 

The agency may accept or reduce the recommended 

penalty in a proposal for decision but may not 

increase it without a review of the complete 

record. " 

Green's position regarding back pay changed when new 

counsel was substituted after issuance of the proposal for 

decision and prior to the parties' filing of exceptions. The 

matter of interim wages became critical at this point. After 

filing exceptions and a motion for oral argument on the issue 

of back pay, Green's substituted counsel successfully argued 

that computation of lost wages should include wages lost 
between the date of discharge and issuance of the proposed 

decision. 

The examiner's findings of fact 1-9 were adopted in 

full; fin.dings 10 and 11 were incorporated into findings made 

by the Commission after taking notice of additional material 

evidence and reviewing the complete record. 

In effect, the Commission' s order modified a conclusion 

of law, i .e. , the proper termination date of a back pay 

award. The examiner concluded that the termination date was 

the date of the offer of reinstatement without back pay or 

seniority. The Commission disagreed with this conclusion and 

extended the back pay award to the date of determination of 

discrimination. The Commission may reject or modify an 

examiner's conclusions of law. Section 2-4-621 (3) , MCA. 

It is true that the Commission failed to state with 

particularity that findings of fact 10 and 11 were not based 

on substantial credible evidence, as required by the second 

sentence in section 2-4-621 (3) , MCA. However, the 

Commission's findings 10 and 11 are supported by 

uncontradicted evidence submitted to the hearing examiner. 

While there has been a technical failure to comply with the 

code section, there is no reason to consume additional time 

by returning this cause for supplemental statements in the 

final order since the evidence supporting the Commission's 

findings is uncontradicted. 

We hold that the Commission properly conducted a 

supplemental hearing and reviewed the complete record prior 

to its increase of the recommended penalty. 

I1 

Was the decision of the Commission arbitrary, capricious 

a.nd clearly erroneous? 
Appellant argues that all of the evidence militates 

against any suggestion that Green's age played a role in his 

discharge; that Green failed to prove a prima facie case of 

discrimination; and that the hearing examiner and Human 

Rights Commission cannot substitute their judgment for that 

of management regarding the discharge of an employee. 

The hearing examiner found that Emerson Green had 

established a prima facie case of age discrimination. That 

finding was sustained by the Commission and the District 

Court. Martinez v. Yellowstone County Welfare Dept. (Mont. 

1981), 626 P.2d 242, 246, 38 St.Rep. 474, 478, sets forth the 

criteria required to establish a prima fa-cie case of 

disparate treatment in employment. The evidence established 

that (1) Green was 71 years of age and therefore a member of 

a protected class; (2) he was qualified to perform the work 

and had done so for a number of years; (3) he was discharged 

despite his qualifications; (4) he was the only custodian on 

his shift who was more than 30 years of age, and (5) his 

co-workers referred to him derrogatorily as "Grandpa" and 

"old man." 

Additionally, Mr. Green testified about harassment by 

his co-workers and failure of supervisory personnel to 

resolve this problem. This testimony was substantiated by 

that of Airport Manager, Dale Norby. The June 9, 1978 letter 

from the City Administrator further substantiates Green's 

testimony that there was a longstanding conflict between 

Green and his co-workers, "due to the age differences of the 

workers, . . . [a] work situation with no supervision, and a 

co-worker attitude problem." This letter along with the 

testimony of Green and Norby are evidence of age 

discrimination against Green. 
The examiner's finding that Green's problems while 

employed by the City were directly related to his co-workers' 

discriminatory actions was adopted by the Commission. Finding 

of Fact 7. The standard of judicial review of an agency's 

find.ing of fact is whether it is supported by reliable, 

probative and substantial evidence. Section 2-4-704 (2) (e) , 

MCA . "Where factual determinations are warranted by the 

record and have a reasonable basis in law, they are to be 

accepted." In the Matter of the Wage Appeal of Montana State 

Highway Patrol Officers v. Board of Personnel Appeals (Mont. 

1984), 41 St.Rep. 154, 158, quoting Standard Chem. Mfg. Co. 

v. Employment Sec. (1980), 185 Mont. 241, 246, 605 P.2d 610, 

613. 

We conclude that there was reliable, probative and 

substantial evidence in the record to support the 

Commission's determination that Mr. Green's problems while 

employed by the City were directly related to his co-workers' 

discriminary actions, that those actions were based solely on 

Mr. Green's age, and that the employer tolerated 

discri-minatory actions and failed to maintain a work 

environment free of intimidation. 

Did the District Court apply the proper standard of 

review? 

The City contends that the District Court failed to 

consider the City's allegations that the Human Rights 

Commission acted in excess of its statutory authority, made 

its decision upon unlawful procedure or that its decision was 

arbitrary or characterized by abuse of discretion. The City 

argues that the District Court erred in limiting its review 

to a determination of whether the Commission's decision was 

supported by substantial evidence. 
Section 2-4-704, MCA specifies the standards for review 

of administrative decisions: 

"Standards of review. (1) The review shall be 

conducted by-the court without a - jury - and shall be 

confined to the record. In cases of alleged 

irregularities in procedure before the a.gency not 

shown in the record, proof thereof may be taken in 

the court. The court, upon request, shall hear 

oral argument and receive written briefs. 

"(2) The court may not substitute its jud.gment for 

that of the agency as to the weight of the evidence 

on questions of fa.ct. The court may affirm the 

decision of the agency or remand the case for 

further proceedings. The court may reverse or 

modify the decision if substantial rights of the 

appellant have been prejudiced because the 

administrative findings, inferences, con.clusions, 

or decisions are: 

(a) in violation of constitutional or sta.tutory 

provisions; 

(b) in excess of the statutory authority of the 

agency; 

(c) made upon unlawful procedure; 

(d) affected by other error of law; 

(e) clearly erroneous in view of the reliable, 

probative, and substantial evidence on the whole 

record; 

(f) arbitrary or capricious or characterized by 

abuse of discretion or clearly unwarranted exercise 

of discretion; or 

(g) because findings of fact, upon issues 

essential to the decision, were not made although 

requested." 

The District Court concluded that its review of the 

Commission's findings of fact is subject to the substantial 

evidence standard: 

"The Court here is limited to a determination of 

whether the Commission's finding of discrimination 

is supported by substantial evidence, and the 

record reveals that there was substantial evidence 

to support that decision; thus the decision was not 

arbitrary, capricious nor an a.buse of discretion." 

Conclusion of Law 3. 

This conclusion properly reflects the clear legislative 

intent that the reviewing court shall not reweigh the 

evidence. "The court may not substitute its judgment for 

that of the agency as to the weight of the evidence on 

questions of fact. " Section 2-4-704 (2) , MCA. 
Regarding appellant's challenges to the Commission's 

authority to conduct a supplemental hearing and admit 

additional evidence, the District Court concluded: 

"To reverse or modify the decision of the Human 

Rights Commission the Court must find that the 

substantial rights of appellant have been 

prejudiced by the Commission's actions and the 

burden is on the appellant to establish such a 

violation. In this case appellant City of Billings 

failed to show that its substantial rights had been 

prejudiced." Conclusion of Law 2. 

This conclusion is a proper restatement of the standard of 

review where an agency's procedure or authority is 

challenged. 

Subsections 2-4-704 (2) (b) , (c) and (f) , MCA speak 

precisely to the type of alleged errors appellant raised as 

issues for the District Court's review. As noted in State, 

Etc. v. Board of Natural Resources (Mont. 1982), 648 P.2d 

734, 740-41, 39 St.Rep. 1238, 1243, "the mandates of the 

Montana review statute cited above . . . contain a clear 

indication that the legislature intended that a court reverse 

or modify the lower decision where the agency decision is 

clearly erroneous, arbitrary, or capricious, resulting in the 

appellants' rights being substantially prejudiced." The 

evidence here demonstrates that the Commission's decision was 

not arbitrary, capricious, characterized by abuse or 

unwarranted exercise of discretion, or clearly erroneous. 

We conclude that the District Court employed the proper 

standards of review. 

We affirm the decision of the District Court. 
We concur: 

".&4 $k$!A4 

Chief Justice