No. 91-090 IN THE SUPREME COURT OF THE STATE OF MONTANA

, TRUSTEES, BIG HORN COUNTY SCHOOL DISTRICT .-'r i ;i

### lggl NO. 27, and NANCY KEENAN, Superintendent 

### C.,. ,' '. -. of Public Instruction. CLE,:!!~

,. ;:

. .L,~:,2:y~. d

APPEAL FROM: District Court of the First Judicial District, In and for the County of Lewis & Clark, The Honorable Dorothy McCarter, Judge presiding.

COUNSEL OF RECORD: For Appellant: Emilie Lo: ring; 

### Hi For Respondents:

Filed: Loring,Missoula, Mont

James L. Vogel, Attorney at Law, Hardin,Montana Beda Lovitt, Office of Public Instruction,Helena, Montana

Submitted on Briefs: August 1, 1991 Decided: December 10, 1991

### Justice Karla M. Gray delivered the Opinion of the Court. The appellant, Scott T. Medicine Horse (Medicine Horse), appeals from a judgment entered by the District Court of the First Judicial District,Lewis and Clark County, affirming a decisionby State Superintendent of Public Instruction Nancy Keenan. We affirm. The issue before this Court is whether the District Court erred inaffirmingtheState Superintendent of Public Instruction's decision thatMedicine Horsewas an plat will1'employeewho received the process due him upon his discharge from employment. Medicine Horse was employed as a custodianby Big Horn County School District No. 27 

### from 1984 

### to 1988. 

### He worked without a written contract or agreement under Gary Greseth (Greseth), Principal of Non-instructional Affairs of Lodge Grass Public Schools. In August of 1988, 

### Greseth began establishing a written record of Medicine Horse's work-related problems. Greseth determined that Medicine Horse needed additional supervision and instituted weekly meetings between himself and Medicine Horse in order to more closelymonitor Medicine Horse's progress. The appellant's job performance continued to deteriorate and

on November 23, 1988, 

### Greseth suspendedMedicine Horse without pay for three days because of several incidents with a co-worker. Medicine Horse did not appeal this action. Greseth's duties included the schedul workshifts. On either December 16 

### or 19, 1988

### ing of janitors'



## , Greseth posted aChristmas vacation work schedule. This schedule included a shift change for Medicine Horse and others. The shift change was to begin on December 21, 1988. Medicine Horse was on sick leave December 16 and 19. On December 20, Greseth found a note from Medicine Horse on his door stating that Medicine Horse would work his usual 8:00 a.m. until 4:00 p.m. shift instead of the later shift to which Greseth had assigned him. Greseth showed this note to Superintendent Bert Corcoran. Both men determined that the note amounted to insubordination. Greseth claims he spoke to Medicine Horse on December 20 and informed him at that time that he would recommend immediate termination of Medicine Horse at the school district trustees'meeting that night. MedicineHorse claims thathewas at two doctor appointments in Billings all day December 20, 1988, did not speak to Greseth on that day, and had no idea that Greseth intended to recommend his termination. Medicine Horse contends that he arrived for work at his new shift time, 2:00 p.m., on December 21, 1988, to find that he had been terminated 

### by the trustees at their December 20, 1988 meeting. Medicine Horse requested, and was granted, a hearing by the trustees which took place on January 17, 1989. The trustees took

no action following this hearing and his discharge remained in effect. Subsequently, Medicine Horse appealed to the Big Horn County Superintendent of Schools as provided in § 20-3-210, MCA. The County Superintendent affirmed the discharge on the basis that

### Medicine Horsewas an I'atwill1'employee. Following thedirectives of 20-3-107, 

### MCA, Medicine Horse next appealed to the State Superintendent of Public Instruction; sheupheld his dischargeand status as an "at will11employee. Medicine Horse then sought judicial review under the Montana Administrative Procedure Act. The District Court affirmed the State Superintendent of Public Instruction. Thisappeal centerson Medicine Horse's contentionthathewas denied dueprocess of lawbecause he did not have writtennotice of 

### the reasons for his termination or of the termination itself, and

was not provided a preterminationhearing. The appellant contends thathewas a permanent employee and, thus,had a property interest inhis employment. The respondents claim Medicine Horsewas an Itat willt1 employee,had notification of the trustees' consideration of his terminationbefore themeeting at whichhewas terminated, and received thepost-terminationhearing he requestedeven though that hearing was entirely discretionarywith the trustees. We note at the outset that the issues for review at both the District Court and this Court are conclusions of law; all parties agree that the appropriate standard of review is contained in § 2- 4-704, 

### MCA. We have clarified in recent cases that under 

### 5 2-4- 704, 

### MCA, our standard of review relating to conclusions of law, whether the conclusions are made by an agency, workers1 compensation court, or trial court, is whether the tribunal's interpretation of the law is correct. Steer, Inc.v. Department of

### Revenue (1990),245 

### Mont. 470, 474-75, 803 

### P.2d 601, 603; 

### see also GBN, 

### Inc. v. Montana Department of Revenue (Mont. 1991), 815 

### P.2d 595, 596-97, 48 

### St,Rep. 715, 716. AT WILL 

### Respondent Big Horn County School District (School District) argues thatMedicine Horse 

### is an "atwi11lqemployee and is governed by 

### the Montana will1'statute: Termination at will. An 

### employment having no specified term may be terminated at the will of either party on notice to the other. 

# . . 

# . Section 39-2-503, MCA. We 

### have concluded that an Itatwilltg employee 

### is onewhose term of employment has no specific duration. Hobbsv. PacificHide and Fur Depot (l989),236

### Mont. 503, 771 P.2d 125. 

### Medicine Horse has provided no evidence that his employment had any specified term. His employment was not governed by a 

### contract which specified the duration of his 

### employ, nor do the laws and regulations governing his position as 

### an employee of 

### the School District specify any such term. Quoting from 

### a 1984 

### article in the Montana Arbitrators Association Ouarterlv, the appellant contends that the 

### doctrine of "at willM employment 

### is no longer viable in Montana. While 

### that 

### may have appeared to the author tobe 

### the case in 1984,

### we disagree that such 

### is the state of 

### the law in Montana. In Prout v. 

### Sears, Roebuck and Co. (l989), 236

### Mont. 152,772 P.2d 288, we 

### applied the "at willltstatute to 

### persons who have no specific term to their employment. And while Prout was decided on the basis of 

### pre-

### Wrongful Discharge From Employment Act law, neither that Act nor any other action by the Montana legislature or this Court has nullified the "at willn designation or g 

### 39-2-503, MCA. We hold that Medicine Horse 

### is an "atwillv employee who had

no specific duration or term for his employment with the School District. NOTICE The appellant argues that even if he is an "atwill" employee he was still entitled to notice. This Court has interpreted the "at will11 statute to mean that notice prior to termination is not required. Prout v. Sears, Roebuck and Co. (1989), 236 Mont. 152, 772 P.2d 288; Gates v. Life of Montana Insurance Co. (1982), 196 Mont. 178, 638 P.2d 1063. We hold that Medicine Horse was not entitled to prior notice of his termination under the Montana "at willw statute. The appellant next argues that he was entitled to notice of the reasons forhis discharge because the School District'spolicy "did not give the Superintendentauthority to suspend or terminate without giving the employee the reasons for such action. 

# . . . II 

### The policy does not require the superintendent to provide reasons for termination: SUSPENSIONAND DISMISSAL OF NON-CERTIFIED STAFF Non-certified Staff members are employed by the Superintendent subject to review by the Board of Trustees. They may be suspended at any time by the Superintendent. Non-certified employees may be terminated at any time by the Superintendent however employeesmay request theBoard of Trusteesto reviewthe

### process of a 

### pretermination hearing. Procedural due process, which the appellant claims entitled him to a 

### pretesmination hearing, 

### is required only when the rights of 

### liberty and property protected by the Fourteenth

### Amendment have been infringed. Akhtar, 197 

### Mont. at 210, 642 P.2d at 

### 152. In Cleveland Board of Education v. Loudermill (l985), 470 U.S. 

### 532, 105 

### S.Ct. 1487, 84 

### L.Ed.2d 494, 

### the United States Supreme Court held that a public employee is entitled to procedural due process if 

### he or she has a property right 

### in continued employment. Once a 

### property interest is determined to exist, procedural due process mandates a 

### hearing before termination. Loudermill, 470 U.S. at 

### 542, 105 

### S.Ct. at 1493, 84 

### L.Ed.2d at 

### 503-504. 

### A property interest in onetsposition must be 

### created by existing rules or regulations, state laws, 

### or understandings between employee and employer. Board of Regents 

### v. Roth (19721, 408 U.S. 

### 564, 92 

### S-Ct. 2701, 33 

### L.Ed.2d 548. 

### l his Court has adopted the Roth reasoning and prerequisites to a 

### property interest. Akhtar, 197 

### Mont. at 211, 212, 642 P.2d 

### at 153. Medicine Horse presented no written contract, state law, or regulationspecifically statingor otherwise indicating thathehad

a property interest in his position as custodian. The written policy quoted earlier states that a 

### non-certified employee, like Medicine Horse, can be 

### terminated any time and that a 

### hearing

## mav be provided to the employee at thediscretion 

### of the trustees; that policy does not support the appellant's claim of a property

### interest in his position. Nor do any rules or school regulations mandate that a hearing granted by the trusteesmust occur before a discharge; indeed, the referenced policy makes it clear that any such hearing would occur after the termination. Medicine Horset s subjective belief that he had a property interest in his job does not create such a property interest. A 

### subjective expectancy creates no constitutionally protected interest. Perryv. Sindermann (1972),408U.S. 593, 92S.Ct. 2694, 33 

### L.Ed.2d 570. A 

### "mutually explicit understanding" between the parties 

## can lead to a property interest. Perry, 408 U.S. at 601, 92 

### S.Ct. at 2699, 33 

### L.Ed.2d at 580. Here, however, the written School District policy regarding discharge of non-certified employees and the progressive discipline in which Medicine Horse

was involved do not support the existence of such a mutually explicit understanding. Medicine Horse also argues that he had a property interest in hisposition becausehisprobationary periodwas overand heworked for the School District in excess of four years; thus, he asserts that he had a reasonable expectation that his job would continue. Medicine Horse would have this Court equate the tlpermanencylt of employment that comes with passing a probationary period with a property interest in onetsemployment. Both this Court and the United States Supreme Court have rejected this argument. 

### We considered whether length 

### of employment gives rise to a property interest inReiterv. Yellowstone County (1981), 192Mont.

### 194, 627 P.2d 845. There, a custodian with eighteen years of employmentwith the school districtwas not provided with a hearing upon discharge. We held that he had no property interest in his positionby virtue of hisyears of service, absent a contractually specified term of employment. The Reiter holding relied on a United StatesSupreme Court case involving a police officerwho had passed his probationary period and was considered permanent. The Supreme Court held in that case that the police officer had no property interest in his position and that his position was continued at thewill of the city. Bishopv. Wood (1976)

## , 426U.S. 341, 96 S.Ct. 2074, 48 L.Ed.2d 684. 

### The appellant relies heavily on Tolson v. Sheridan School Dist. (E.D. Ark. 1988), 703 

### F.Supp 766. In Tolson, a bus driver sued the school district claiming his due process rights had been violated at the time of his discharge. Tolson had experienced discipline problems with the students on his bus and reported this to thedistrict. On the day hemade his report, Tolson returned to his home after doing errands and found his school bus, previously parked in front of his house, gone. Subsequently,he discovered that the district had sent someone to retrieve it and that he had been fired. The court held that Tolson's due process rights were violated when he was not given adequate notice and an opportunity to be heard. The appellant's reliance on Tolson is misplaced. Tolson had

a contract with thedistrict for a specific term. In addition, theparties in the Tolson case stipulated that Tolson had a property interest in his employment contract within the 

### meaning of the Due Process Clause of the Fourteenth Amendment. Given this stipulation, the issue of whether Tolson did or did not have a property interest 

### in his position was not before the court. In light of our holdings that Medicine Horse was an I1atwillI1 employee who had no property interest in his position, we find no

error by the ~istrict Court. AFFIRMED.

We concur:

Chief JusticeJustice Terry N. Trieweiler dissenting. 

### I dissent from the majority opinion. Scott Medicine Horse testified that he was not at work on December 20, 1988,andwasnot notified of the schoolboard meeting at which his termination was to be discussed. It is undisputed that the agenda for thatmeeting did not includenotice toMedicine Horse or anyone else that his termination would be a subject of discussion. Even after themeeting and his termination,hewas not given reasons for his termination or an opportunity to respond to those specific reasons at the subsequent meeting at which he appeared. Neither the County Superintendent, the State Superintendent, nor theDistrict Courtresolved the factual dispute regarding notice because all arrived at a legal conclusion that Medicine Horse was an employee "at will" and was not entitled to due process prior to his termination. This Court concludes that because the school district had a written regulationproviding for its employees1termination at any time that Medicine Horse had no property interest in his employment. However, 

### if thedetermination ofwho does andwho does not have a property interest in employment is going to be left to employers, then the due process requirement of the Fourteenth Amendment to the United States Constitution is meaningless. 

### I find it incrediblethat through the cumbersome intellectual process knownas legal analysis courts have concluded that a person receiving welfare benefits has a "property interest" in the 12continued receipt of those benefits that is safeguarded by procedural due process. See Goldbergv.Kelly (1970), 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287. However, this man had no "property interest" in the government job he had performed for four and one-half years and which was his sole means of providing food, clothing, and housing for himself and his family. I agreewith the dissent of JusticeMarshall inBoard

### ofRegents v.Roth, 408 U.S. 564, 589, when he states that: Employment is one of the greatest, if not the greatest, benefits that governments offer in modern-day life. When something as valuable as the opportunity to work is at stake, the government may not reward some citizens and not others without demonstrating that its actions are fair and equitable. And it is procedural due process that is our fundamental guarantee of fairness, our protection against arbitrary, capricious, and unreasonable government action. Mr. Justice Douglashas written that: "It is not without significance that most of the provisions of the Bill of Rights are procedural. It is procedure that spells much of the difference between rule by law and rule by whim or caprice. Steadfast adherenceto strict procedural safeguards is our main assurance that there will be equal justice under law. JoiutAnti-FascistRefigee Committeev. McCratl~, snpra, at 179 (concurringopinion). However, 

### it is not necessary to rely on Justice Marshall's dissent in Rotl~,to conclude that Medicine Horse had a "property interest" in his employment. In Peny v. Sindermarm, 408 U.S. 593, 601-02, another employment case decided by the United States Supreme Court on the same date as Roth, the majority stated:A person s interest 

### in abenefit isa ltpropertytt interest for due process purposes if there are such rules or mutually explicit urzderstandings that support his claim af entitlement to the benefit and that he may invoke at a hearing. [Roth, 408 U.S. at 577.1 A written contract with an explicit tenure provision clearly is evidence of a formal understanding that supports a teacher's claim of entitlement to continued employment unless sufficient tficauseM is shown. Yet absenceof suchan explicitcontractualprovisionmay not always foreclose the possibility that a teacher has a "property" interest in re-employment. For example, the law of contracts inmost, if not all, jurisdictions long has employed a process by which agreements, though not formalized in writing, may be 3A. Corbin on Contracts 562-572A (1960). Explicit contractual provisions may be supplemented by other agreements implied from 'Ithe promisor's words and conduct in the light of the surrounding circumstan~es.~ Id., at 5 562. And, l1[tjhe meaning of the [the promisor's] words and acts 

### is foundby relating them to theusage of thepast." [Ruth, 408 U.S. at 577.1 [Emphasisadded.] In this case,Medicine Horsehad been employed by the school district for four and one-half years. He testified that he was a temporary employee for one year, but that after one year he was given permanent status which included sick leave, annual leave, vacation pay, and some expectation of permanency. He testified that he 

### was given that expectation not only by another employee, but by John 

### Pretty On Top, 

### a member of the school board. No one testified to the contrary. The only other witness who testified before the County superintendentabout Medicine Horse's statuswas Gary Greseth. Greseth was the principal of noninstructional affairs who supervised Medicine Horse. He also testified that Medicine Horse was a permanent employee.

### The majority relies on 5 

### 39-2-503, MCA, for its conclusion that Medicine Horse was an employee at will because he had no specified term. However, I

### would conclude that when anemployee is advised that he is permanent, that is a specified term. Furthermore, we have previously held in other circumstances that in spite of the language found in 5 

### 39-2-503,MCA, an employee

can have a reasonable expectation of job security, based on representations by his employer, even though he has no specified term of employment. SeeDare

### v.Montana PetroleumMarketingCo. (

### 1984)

### , 212 

### Mont. 274, 687 

### P.2d 1015. Although the specific cause of action authorizedunderDare 

### has been supersededby theWrongful Discharge From Employment Act found at 39-2-901, MCA, 

### & seq., 

### the principle remains that the effect of the atwill statute is subject to alteration by the conduct of the parties to the employment relationship. Because the employee in this case was led to believe that after ayearof probationary employmenthehad achieved "permanent" status, 

### Iwould conclude that his interest inhis employmentbecame

a lrproperty" interest for due process purposes based upon the "mutually explicit understandingstt between the employee and his employer. Having reached that conclusion, the next question is, "what kind of 'dueprocesstwas he entitled to?" The school district contends that because he was afforded an opportunity to contest his termination after the fact, MedicineHorse received a11 the due process that he was entitled to. However, for obvious reasons, an after the fact hearing does not provide due process. For one thing, the decision that Medicine Horse was undesirable and should be terminated had already been made without his presence 

### or input. Any further consideration of his value as an employeeby the sameboard necessarilyhad to have been taintedby theboard's concern for justifying itsown actions. 

### I am sure that this is one of the considerations the United States Supreme Court had inmind when it decided Clevelar~d Board

### ofEducation v. Loudemzill, 470 U.S. 532. In that case, the court held that only pretermination input from the employee could satisfy the due process clause. The court concluded thatwhere the employee had a property right in his employment, his employer could not dictate the terms of the due process to which he was entitled. Specifically, the court found that a post-termination opportunity to be heard was inadequate, The court stated: An essential principle of due process 

### is that 

### a deprivationof life,liberty,orproperty "bepreceded by notice and opportunity for hearing appropriate to the nature of the case. 

### Mullarzev. 

### CejztralHarzoverBark&Twt

### Co.

### , 339U.S. 306, 313, 94L.Ed. 865, 70 S.Ct. 652 (1950). We have described "the root requirementnof the Due Process Clause as being "that an individual be given an opportunity for a hearing 

### before he is deprived of 

### any significant property interest. 

### Boddie v. 

### Contzecticut, 401 U.S. 371, 379, 28 L.Ed.2d 113, 91 5.Ct. 780 (1971)

(emphasis in original); see 

### Bell v.

### Bursoiz, 402 U.S. 535, 542,29 L.Ed.2d 90,91S.Ct. 1586 (1971). Thisprinciple requires "somekind of a hearing" prior to the discharge of an employee who has 

### a constitutionally protected property interest inhis employment. 

### BoardofRegentsv.

### Rotlz

## ,408U.S. at 569-570, 33 L.Ed.2d 548, 92 S.Ct. 2701;Pey v.Sindemaizn, 408U.S. 593, 599, 33 L.Ed.2d 570, 92 s.ct. 2694 (1972). As we pointed out last Term, this rule has been settled for some time now. Davisv.Sclzerer, 468 U.S. 183, 192 n. 10, 82 L.Ed.2d 139, 104 S.Ct. 3012 (1984); id., at 200-203, 82L.Ed.2d 139, 104 S.Ct. 3012 (BRENNAN, J., concurring in part and dissenting in part)

# . Even decisions finding no constitutional violation in termination procedures have relied on the existence of some pretermination opportunity to respond.

The essential requirements of due process, and all that respondents seek or the Court of Appeals required, are notice and an opportunitytorespond. The opportunity to present reasons, either in person or in writing, why proposed action should not be taken is a fundamental due process requirement. Loudemtill, 470U.S. at 542, 546. For Medicine Horse, his source of livelihoodwas at stake. A job he had performed for four and one-half years was on the line. The possibility of future employment had to have been adversely affected by the circumstances of his discharge. It does not seem like too much to require that before that discharge he be given notice of the reasons and an opportunity to respond. In this case, I conclude that Medicine Horse had a property interest in his employment and that, therefore,he was entitled to notice of the charges againsthim and an opportunity to respond to those charges prior to his termination as an employee. Since the County Superintendent, State Superintendent, and District Court have all denied Medicine Horse's petition based onwhat I concludeto be 

### a misapplication of the Constitution, I would reverse the District Court.

I concur in the foreqc ling dissent of Justice Trieweiler.December 10,1991 CERTIFICATEOFSERVICE Ihereby certifythatthefollowingorderwas sentbyUnitedStatesmail, prepaid, tothe following named:

EmilieLoring Hilley &Loring 500DalyAve. Missoula,MT 59801 JamesL.Vogel ATTORNEYATLAW P.O. Box525 Hardin,

### MT 59034

BedaLovitt ChiefLegalCounsel OfficeofPublicInstruction Helena,MT 59620 EDSMITH CLERKOFTHESUPREME

### COURT STATEOFMONTANA 

### BY: 

# &\.&A