DA 13-0034

IN THE SUPREME COURT OF THE STATE OF MONTANA

2013 MT 367

THURSTON “SONNY” HARRELL,

 Plaintiff and Appellee,

 v.

THE FARMERS EDUCATIONAL

COOPERATIVE UNION OF 

AMERICA, MONTANA DIVISION

and ALAN MERRILL,

 Defendants and Appellants.

APPEAL FROM: District Court of the Eighth Judicial District,

In and For the County of Cascade, Cause No. ADV 11-0212

Honorable Thomas M. McKittrick, Presiding Judge

COUNSEL OF RECORD:

For Appellants:

Antonia P. Marra; Sara R. Sexe; Marra, Sexe, Evenson & Bell, P.C.; 

Great Falls, Montana

For Appellee:

Elizabeth A. Best; Best Law Offices, P.C.; Great Falls, Montana

Lawrence A. Anderson; Attorney at Law, P.C.; Great Falls, Montana

Submitted on Briefs: August 28, 2013

 Decided: December 10, 2013

Filed:

__________________________________________

Clerk

December 10 2013
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Justice Beth Baker delivered the Opinion of the Court. 

¶1 The Farmers Educational Cooperative Union of America, Montana Division, 

commonly known as the Montana Farmers Union (MFU), and Alan Merrill, MFU’s 

president, appeal a jury verdict from the Eighth Judicial District Court, Cascade County, 

against MFU for wage claims and constructive discharge, and against Merrill individually 

for interference with Thurston “Sonny” Harrell’s employment relationship. The jury 

awarded Harrell compensatory and punitive damages.

¶2 We restate the issues as follows:

¶3 1. Whether the District Court erred in denying summary judgment on Harrell’s

wage claims.

¶4 2. Whether the District Court erred in denying judgment as a matter of law on 

Harrell’s claim against Merrill individually.

¶5 3. Whether MFU is entitled to a new trial on Harrell’s constructive discharge 

claim.

¶6 4. Whether punitive damages properly were awarded against MFU.

¶7 We reverse in part, affirm in part, and remand for application of the statutory limit 

to the punitive damages award.

FACTUAL AND PROCEDURAL BACKGROUND

¶8 Harrell spent many years working for MFU, a farm organization that manages 

educational programs, youth camps, and lobbying efforts directed toward benefitting the 

rural farming community. MFU originally hired Harrell as the membership director. He 
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left this position after five years and temporarily moved to Alabama. MFU rehired him 

as the education director when he returned to Montana in October 2006. Merrill became

MFU’s president shortly after Harrell rejoined MFU. 

¶9 MFU initially classified Harrell’s education director position as “exempt,” 

meaning he was unable to claim overtime pay but earned compensatory time instead. 

Beginning in April 2010, when an independent accounting firm began handling its 

payroll, MFU paid Harrell overtime at one and one-half times his hourly pay in any week 

that he worked over 40 hours. Harrell did not discover the alleged error in his original 

classification until December 2010, at which time he began requesting that MFU 

retroactively pay him for all the overtime hours he had worked over the past few years. 

MFU steadfastly refused and later provided Harrell with a new job description, which 

was unchanged except that it reflected that the position was now non-exempt.

¶10 Meanwhile, another dispute arose between MFU and Harrell regarding vacation 

hours. MFU’s employee handbook limits the maximum number of vacation hours that an 

employee can accumulate by permitting employees to accrue only up to “the amount of 

leave they would earn in 18 months at their current rate of accrual.” Instead of using his 

vacation hours to take time off from work, Harrell had allowed his vacation time to 

accumulate, anticipating that he would receive payment for the hours upon his retirement. 

He eventually accrued more hours than permitted by the handbook. On April 30, 2010, 

MFU notified Harrell that it would not pay him for all the hours of his accrued vacation 
4

time since 2007 and subtracted the excess hours from his timesheets. When Harrell 

asked for reinstatement of and payment for the excess vacation, MFU explained that he 

was not allowed to earn more vacation hours than the capped amount stated in the MFU 

handbook. 

¶11 Harrell also claimed he was owed wages for performing “extra duties.” In 2007, 

after MFU’s executive director Tracy Houck resigned, MFU’s management assigned 

Harrell some of the tasks she previously performed. Harrell estimated that these tasks 

required one hour of work per day. Harrell testified that Merrill took over some of 

Houck’s tasks as well, such as serving as the liaison between the staff and the board of 

directors and reviewing budget allocations. As president, Merrill remained in charge of 

the office, or “at the top of the pyramid,” and all staff reported to him. Merrill assumed 

the role of managing MFU’s day-to-day business and its employees. Harrell repeatedly 

requested that MFU pay him for doing tasks outside his job description, but MFU did not 

fill the executive director position or pay Harrell more for assuming the excess workload.

¶12 Merrill wrote a letter to Harrell in February 2011, explaining that MFU’s board 

had determined that Harrell had not performed certain obligations of his position. Shortly 

after, MFU cut Harrell from full-time to part-time and issued him a new job description 

that contained substantially the same duties that he already had been performing. MFU

explained that its decision to make the education director position part-time was based on 
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the board’s understanding that the job duties Harrell actually performed no longer 

required a full-time position. 

¶13 Harrell filed a complaint in the District Court on March 4, 2011. Harrell alleged

that he had been classified incorrectly as exempt and that he was thus entitled to 422

hours of overtime pay and penalties. The complaint also alleged that MFU owed him 

over $4000 for 232.47 vacation hours earned and not paid. Harrell claimed that MFU 

failed to compensate him for the additional duties he took on after the executive director 

left. Harrell claimed that Merrill personally interfered with Harrell’s contractual or 

business relations with MFU by making false statements about him to the Board of 

Directors. Harrell also raised several other claims against Merrill individually based on 

these same allegations, but dismissed them during trial. 

¶14 MFU responded that its decision to make the education director position part-time 

was not retaliatory, but that Harrell’s failure to accomplish tasks assigned to him left him 

with less to do. MFU based its decision on Harrell’s own reports, his letters refusing to 

do what he was asked by the board, and his opposition to assigned tasks or his failure to 

complete them in a timely manner. MFU contended that Harrell’s position as education 

director was intended to be an exempt position because it required substantial discretion, 

such as designing education programs, determining which grants to request, and 

seasonally supervising other staff to complete the education and camp work. MFU 

claimed that the education director position was made a non-exempt position when it was 
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determined that Harrell’s performance of the position had fewer supervisory 

responsibilities, in part because of a diminution in educational programs. MFU argued

that Harrell was not owed any wages, as he worked no overtime for which he had not 

already been paid as a nonexempt employee, and that he was not entitled to overtime for 

the period that he was designated as exempt. With regard to the interference with 

contract claim, MFU argued that the board had the right to ask Merrill about Harrell’s 

work performance and Merrill had the right and duty to inform the board of his opinion. 

MFU further claimed that Harrell was not entitled to additional vacation pay because he 

could not accrue more vacation time than the handbook allowed, and no provision in the 

handbook provided for payment of vacation in lieu of taking the vacation time except 

upon resignation or termination. Finally, MFU argued that all of Harrell’s claims made 

pursuant to Montana’s wage statutes were barred by the applicable statute of limitations. 

¶15 On April 29, 2011, Harrell resigned his employment and amended his complaint to 

allege constructive discharge under the Wrongful Discharge from Employment Act 

(WDEA). Harrell alleged that he was forced to quit because MFU increased hostility 

toward him in the workplace and ostracized him after he asserted his right to be paid for 

vacation, extra duties, and overtime. MFU also denied this additional claim, maintaining 

that it paid all of Harrell’s remaining wages after his voluntary resignation. 

¶16 MFU filed a motion for summary judgment on all claims on July 16, 2012. The 

District Court denied MFU’s motion in a one-sentence order. Before trial, MFU filed a 
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motion in limine seeking to prevent Harrell from introducing evidence concerning a 

previous case brought by a former employee against MFU. That employee, Katie 

Kassmier, had alleged constructive discharge based on alleged sexual harassment; she 

settled her claim in 2007 while represented by the same attorney now representing 

Harrell. 

¶17 During the Kassmier case, Harrell wrote a memo—introduced by MFU during 

Harrell’s trial—to the MFU executive committee outlining his concerns regarding what 

he perceived to be sexually discriminatory policies that could bear adversely upon MFU 

in the Kassmier case. While Harrell’s direct involvement in that case was limited, MFU 

did ask Harrell to draft an affidavit supporting its defense. Harrell’s initial affidavit, 

while helpful to MFU, omitted what he believed to be some essential information. On 

August 13, 2010, Harrell signed a second affidavit that rendered the first affidavit useless 

to MFU. MFU later entered a confidential settlement following mediation with 

Kassmier. Harrell claimed that MFU’s response to this second affidavit further 

contributed to an intolerable work environment.

¶18 The court had reserved ruling on the motion in limine when the trial started. Over 

MFU’s objections, the District Court allowed Harrell’s counsel to discuss the Kassmier

case during her opening statement and to introduce evidence regarding the prior case 

throughout the trial. Despite expressly avowing to the judge that “I don’t want to try to 

get that in,” Harrell’s counsel brought the confidential settlement to the attention of the 
8

jury several times, asking one MFU employee, “[Y]ou wouldn’t have agreed to pay north 

of six figures if you didn’t think there was risk . . . ?” and asking another, “You wouldn’t 

have paid money if it wasn’t meritorious, right?” These references prompted MFU to 

move for a mistrial, which the District Court denied.

¶19 MFU’s counsel also referenced the Kassmier case repeatedly, explaining that they 

believed they had no choice but to defend against the evidence once it was introduced. 

MFU denied the sexual harassment allegations involving Kassmier, told the jury in its 

opening statement that the Human Rights Bureau found no cause to think there was any 

sexual discrimination against Kassmier, and introduced evidence pertaining to the 

Kassmier case during the trial. 

¶20 The jury returned a special verdict form in all respects favorable to Harrell. The 

jury found that MFU failed to pay Harrell for overtime, for vacation, and for his work 

handling the duties formerly assigned to the executive director. The jury found that 

Merrill interfered with Harrell’s employment relationship with MFU and awarded tort 

damages against Merrill in the amount of $85,000 for resulting pain and suffering, harm 

to the ability to enjoy life, and the loss of established course of life. The jury also found 

that MFU constructively discharged Harrell because he refused to violate the law 

regarding payment of wages and overtime. It awarded $90,000 in damages for wrongful 

termination. The total compensatory award was $232,439.40. The jury determined that 
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punitive damages were appropriate and the court scheduled a separate hearing on the 

issue.

¶21 The Kassmier issue reached its apex when Harrell’s counsel mentioned the 

amount of the settlement during her final summation on punitive damages, stating, “Well, 

when it was Katie Kassmier’s turn, [MFU] had $200,000. You heard Mr. Schlepp tell 

you that, two hundred thousand bucks that they had to pay her.” Mr. Schlepp had denied 

remembering the Kassmier settlement amount on the witness stand, and the court had 

overruled MFU’s objection to questions about the settlement. Harrell’s counsel also 

stated, “We know that for them $200,000 is a drop in the bucket.” 

¶22 The jury returned a punitive damages verdict of $300,000. The District Court 

denied MFU’s request to apply the three percent limit to the punitive damages award

imposed by § 27-1-220(3), MCA, ruling that the Defendants waived the right to present 

evidence of net worth by not offering that evidence during the punitive damages phase of 

the trial. Pursuant to the provision for attorney’s fees in the wage claim statutes, § 39-3-

214, MCA, the District Court also assessed attorney’s fees against MFU after the trial. 

Defendants appealed, alleging many issues of substantial error.

STANDARD OF REVIEW

¶23 We review a district court’s decision on a motion for summary judgment de novo. 

Jensen v. State, 2009 MT 246, ¶ 6, 351 Mont. 443, 214 P.3d 1227. A motion for 

summary judgment shall be granted if “the pleadings, the discovery and disclosure 
10

materials on file, and any affidavits show that there is no genuine issue as to any material 

fact and that the movant is entitled to judgment as a matter of law.” M. R. Civ. P. 56(c). 

¶24 This Court reviews a district court’s evidentiary rulings “to determine whether the 

court abused its discretion.” Faulconbridge v. State, 2006 MT 198, ¶ 22, 333 Mont. 186, 

142 P.3d 777. “A district court abuses its discretion only if it acts arbitrarily without 

employment of conscientious judgment or exceeds the bounds of reason.” 

Faulconbridge, ¶ 22. We also review for abuse of discretion a district court’s decision to 

deny a motion for a mistrial. Heidt v. Argani, 2009 MT 267, ¶ 10, 352 Mont. 86, 214 

P.3d 1255. The decision depends on “whether the party has been denied a fair and 

impartial trial.” Heidt, ¶ 10. 

¶25 “We review a district court’s conclusions on questions of law to determine if those 

conclusions are correct.” Ammondson v. Northwestern Corp., 2009 MT 331, ¶ 29, 353 

Mont. 28, 220 P.3d 1. 

DISCUSSION

¶26 1. Whether the District Court erred in denying summary judgment on Harrell’s 

wage claims.

¶27 Harrell set forth three wage claims under the Wage Protection Act, § 39-3-201 et 

seq., MCA. The wage claims involved his overtime pay, vacation hours, and the “extra 

duties” he assumed in the absence of an executive director. We conclude that the District 

Court should have granted summary judgment for MFU on all three claims. 
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a. Limitations Period 

¶28 Section 39-3-207(1), MCA, requires an employee to file a complaint for wages 

and penalties within 180 days of default or delay in the payment in wages. “[A] wage 

claim under § 39-3-207, MCA, accrues when the employer’s duty to pay the employee 

matures and the employer fails to pay the employee.” Jensen, ¶ 11. “[W]here an 

employer continually fails to comport with Montana’s wage laws on a monthly basis, the 

employee’s wage claims accrue on a monthly basis.” Craver v. Waste Mgt. Partners of 

Bozeman, 265 Mont. 37, 45, 874 P.2d 1, 5 (1994), overruled in part on other grounds, In 

re Estate of Lande, 1999 MT 179, ¶ 15, 295 Mont. 277, 983 P.2d 316. Failing to pay 

wages due in past months when the employer has begun paying wages again for each 

current month, however, does not prevent the clock on the statute of limitations from 

starting.

¶29 The claim accrues—and the clock begins to run—on the last date on which the 

employer fails to pay. Jensen, ¶ 11. In Jensen, we applied the rule from Craver where an 

employee’s affidavit stated that the last date on which the employer failed to pay 

overtime was June 20, 2007, when the employee was reclassified as non-exempt and thus 

entitled to overtime. Jensen, ¶ 11. The employer paid overtime from that date until the 

complaint was filed on February 19, 2008. Jensen, ¶ 4. Because the employee did not 

file his wage complaint within 180 days after the last date on which the employer failed 
12

to pay as required by § 39-3-207, MCA, summary judgment was appropriate. Jensen,

¶ 14. 

¶30 Contrary to our holding in Jensen, Harrell argues that Montana has two different 

applicable statutes of limitations, one for wages and one for penalties, and that the longer 

of the two should apply. Harrell relied on numerous cases1to argue that the five-year 

limitation period found in § 27-2-202(2), MCA, would apply to wage claims because 

§ 39-3-207, MCA, only applies to penalties. 

¶31 Section 39-3-207, MCA, was amended in 1999—after every case cited by 

Harrell—to address this concern and the plain language of the amended statute refutes 

Harrell’s claim to a longer period of time in which to file. Prior to 1999, the statute 

provided, “Any employee may recover all such penalties as are provided for the violation 

of 39-3-206 which have accrued to him at any time within 18 months succeeding such 

default or delay in the payment of such wages.” The amended statute is titled, “Period 

within which employee may recover wages and penalties.” Section 39-3-207, MCA

(amended language in italics). It provides the applicable statute of limitations for wage

claims, stating, “An employee may recover all wages and penalties provided for the 

violation of 39-3-206 by filing a complaint within 180 days of default or delay in the 

payment of wages.” Section 39-3-207(1), MCA (emphasis added). It is clear that the 

 

1 Craver, 265 Mont. 37, 874 P.2d 1; State v. Wilson, 189 Mont. 52, 614 P.2d 1066 (1980); 

Delaware v. Kay-Decorators, Inc., 1999 MT 13, 293 Mont. 97, 973 P.2d 818; Pope v. Keefer, 

180 Mont. 454, 591 P.2d 206.
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statute is no longer limited to penalties. There is not a substantial question as to the 

statute of limitations that applies to wage claims: we apply the 180-day limitation to both 

wages and penalties. Jensen, ¶ 14. 

b. Overtime 

¶32 Harrell’s claim to additional overtime pay missed the 180-day statute of 

limitations. The evidence submitted in the summary judgment proceedings did not 

support Harrell’s claim that he was classified improperly as an exempt employee until the 

end of December 2010. Harrell was paid time-and-a-half overtime beginning in April 

2010, around the time when MFU hired an independent firm to handle payroll. Harrell’s 

own time records and the affidavit of the accounting firm’s employee in charge of 

payroll, Melissa Smith, reflect that Harrell was paid overtime at one and one-half times 

the hourly rate whenever he worked more than forty hours per week from April 2010 

forward, including his extra time conducting the camps during the summer of 2010. 

Harrell did not file his complaint until March 2011. Applying the 180-day statute of 

limitations to Harrell’s claim for overtime wages, we conclude that this claim is clearly 

barred.

c. Vacation

¶33 Harrell’s claim for vacation pay also fails to meet the statute of limitations. 

Harrell admits in his First Amended Complaint that MFU notified Harrell of his loss of 

earned vacation hours on April 30, 2010, when the independent accounting firm took 
14

over payroll. At that time, MFU clearly refused to pay Harrell for more vacation time 

than was permitted by the handbook. Exhibits show that accumulated vacation time built

up to over 232 hours, then a handwritten note from the accountant crossed out that 

number and inserted 120 hours on the April 2010 time record. This deduction was 

carried forward on all of Harrell’s subsequent time records. Although Harrell continued 

to fill out his timesheets with the higher balance, there is a handwritten correction on 

every one reflecting the April 2010 deduction. Melissa Smith testified that Harrell 

received a pay stub each month reflecting this deduction from his vacation balance. 

¶34 “[V]acation pay is earned by virtue of an employee’s labor and once it has 

accrued, it has by definition been earned.” Langager v. Crazy Creek Prods., 1998 MT 

44, ¶ 30, 287 Mont. 445, 954 P.2d 1169. Conversely, once it has been erased from the 

books, vacation time has been eliminated. Harrell’s wage claim for vacation pay, 

therefore, accrued when MFU reduced the vacation time Harrell claimed to have been 

owed. MFU’s removal of vacation hours from the balance for which Harrell could 

receive payment, of which he had express notice, started the clock on the statute of 

limitations. The complaint in this case was not filed until nearly a year after the claim

arose. Harrell failed to file his claim within 180 days of April 30, 2010, as required by 

§ 39-3-207, MCA, thus barring his wage claim for his vacation time.
15

d. Estoppel

¶35 Harrell argues that MFU should be estopped from asserting a statute of limitations 

defense to his wage claims, relying on Dagel v. Great Falls, 250 Mont. 224, 819 P.2d 

186 (1991). “Estoppel is not favored and will only be sustained on clear and convincing

evidence.” Dagel, 250 Mont. at 235, 819 P.2d at 193. Harrell asserts that MFU 

intentionally concealed from him whether he was incorrectly classified as exempt, which 

he did not learn until December 2010. Generally, “[l]ack of knowledge of the claim or 

cause of action, or of its accrual, by the party to whom it has accrued does not postpone 

the beginning of the period of limitation.” Section 27-2-102(2), MCA. More 

specifically, the date on which an employee becomes aware that his position has been 

reclassified from exempt to non-exempt “is not a material fact and has no legal effect on 

when [the] wage claim accrued.” Jensen, ¶ 13. 

¶36 The question of “concealment” of facts in a statute of limitations inquiry is 

governed by § 27-2-102(3), MCA, which prevents the period of limitations from 

beginning if “facts constituting the claim are by their nature concealed or 

self-concealing” or “before, during, or after the act causing the injury, the defendant has 

taken action which prevents the injured party from discovering the injury or its cause.” 

Equitable estoppel also may prevent the period of limitations from beginning where facts 

unknown to the party claiming the benefit of the estoppel are knowingly concealed. 

Dagel, 250 Mont. at 234-35, 819 P.2d at 192-93 (applying doctrine of equitable estoppel 
16

to prevent the defendant from asserting that the plaintiff’s WDEA claim was barred by “a 

written collective bargaining agreement at the time of her discharge” where the employer 

had denied the existence of such an agreement). We have not applied these theories to a 

statutory claim for wages and need not decide in this case whether they could apply to 

such a claim.

¶37 The problem with Harrell’s estoppel argument is that the evidence clearly shows 

that he knew that he was being paid as a non-exempt employee and that his claim for 

vacation pay was denied long before December 2010. See Arthur v. Pierre Ltd., 2004 

MT 303, ¶ 34, 323 Mont. 453, 100 P.3d 987 (plaintiff failed to meet the third element of 

equitable estoppel due to personal knowledge of facts giving rise to her claim at the time 

she allegedly acted in reliance thereon). No parts of the alleged injuries or facts relating 

to the alleged injuries were concealed from Harrell. Harrell knew in April 2010 that his 

excess vacation hours were eliminated. With regard to the overtime claim, even if MFU 

determined that Harrell was classified erroneously and withheld its determination from 

him—which it denies—Harrell knew no later than mid-summer of 2010 that MFU began 

paying him overtime. The relevant fact is that MFU informed Harrell that his requests 

for payment were denied, precluding application of equitable estoppel because Harrell 

had personal knowledge of the facts giving rise to his claims at all times pertinent to the 

limitations inquiry. The statute of limitations for overtime and vacation expired and 

MFU is entitled to judgment as a matter of law on those claims.
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e. Extra Duties

¶38 Harrell’s third claim under the wage statutes regarding “extra duties” does not 

meet the definition of a wage claim under the statute. Harrell claims that MFU should 

have increased his salary to account for the duties he assumed in the absence of an 

executive director. The statutes obligate the employer to pay only those wages actually 

earned by the employee. Section 39-3-201(6)(a), MCA, defines “wages” to include “any 

money due an employee from the employer or employers, whether to be paid by the hour, 

day, week, semimonthly, monthly, or yearly . . . .” Section 39-3-204(1), MCA, provides: 

“Except as provided in subsections (2) and (3), every employer of labor in the state of 

Montana shall pay to each employee the wages earned by the employee . . . .” Wage 

statutes do not apply to claims for wages that could have been earned but for breach of 

employment contract or wrongful termination because such wages were not “earned” as 

required by the wage statutes. Myers v. Dept. of Agric., 232 Mont. 286, 291, 756 P.2d 

1144, 1147 (1988). The Montana Wage Protection Act does not govern disputes over the 

rate of pay; it only governs the payment of actual wages due an employee. 

¶39 The rate of compensation for work performed is normally defined by the 

employment contract. McConkey v. Flathead Elec. Coop., 2005 MT 334, ¶ 23, 330 

Mont. 48, 125 P.3d 1121. This Court has followed other courts in recognizing that an

“employer is free to set the terms and conditions of employment and compensation and 

the employee is free to accept or reject those conditions.” Langager, ¶ 25.
18

¶40 The obligation to pay wages only exists to the extent agreed upon between the 

employee and the employer. For example, in McConkey, an employee sought 

compensation under the wage statutes for “personal time,” akin to vacation time, of

which the employer had paid only 95%. The employee argued “that the District Court 

erred in holding that his personal time did not qualify as ‘wages’ pursuant to § 39-3-

201(6)(a), MCA, and holding that he was thus not entitled to be paid for all such time he 

accrued at 100%.” McConkey, ¶ 21. We concluded that “the payment of 95% of [the 

employee’s] personal time was proper[,]” and that “the other 5% did not constitute wages 

that were part of [the employee’s] agreed compensation.” McConkey, ¶ 24. Thus, it is 

the law in Montana that one party cannot unilaterally decide that more wages are owed 

than the amount upon which the employer and employee have agreed. 

¶41 Accordingly, the pivotal question is whether Harrell actually earned payment at a 

higher rate than he was paid. The evidence shows clearly that he did not. Although 

Harrell assumed a number of the previous executive director’s tasks, MFU did not 

appoint him as an interim executive director or agree to pay him any additional 

compensation. Harrell estimated that he spent one hour per day on executive director 

duties and admitted that other employees also assumed some of the unfilled executive 

director position’s duties. Harrell argued at trial that MFU deceived him into working 

“extra duties” by convincing him that he would receive additional pay, but he has not 

introduced any evidence showing that MFU ever actually offered him additional pay. It 
19

appears that instead Harrell made an assumption that he would be paid more, and 

believed that he deserved to be paid more, despite receiving no assurance from MFU that 

he would receive additional compensation. 

¶42 The MFU employee handbook explains, “Job descriptions are not fixed . . . they 

are guidelines only and can be expected to change over time.” MFU paid Harrell for all 

the work he performed as MFU’s education director. Even if he deserved a higher rate of 

pay, wages for the extra duties are not “due and payable” to Harrell. As MFU’s counsel 

pointed out, nothing in the wage claim statutes permits an employee to claim a raise that 

was not given. The fact that Harrell was asked to complete tasks that did not fit within 

the express provisions of his job description, while perhaps adding to his constructive 

discharge theory, does not give rise to a wage claim, and Harrell’s claim for wages for 

extra duties should have been dismissed on summary judgment.

f. Conclusion

¶43 The District Court erroneously allowed the jury to award unpaid wages to Harrell 

because the court incorrectly determined that the 180-day limitation period applied only 

to penalty requests and it should have dismissed the claim for extra duties. We reverse 

the District Court’s denial of the Defendants’ motion for summary judgment on all three 

of Harrell’s wage claims. Because the wage claims are denied, a penalty cannot be 

assessed against MFU. Finally, because Harrell cannot recover on his wage claims, the 

attorney’s fee award also must be vacated. The wage claims were the sole basis for the 
20

fee award, see § 39-3-214, MCA, and MFU’s claims regarding the amount of fees are 

moot.

¶44 2. Whether the District Court erred in denying judgment as a matter of law on 

Harrell’s claim against Merrill individually.

¶45 Prior to and during trial, Merrill moved to dismiss the claims against him, arguing 

that as an employee and officer of MFU he could not be held individually liable for his 

actions under the facts of this case. The general rule is that only a stranger can interfere 

with contractual or business relationships. Bolz v. Myers, 200 Mont. 286, 292-94, 651 

P.2d 606, 609-10 (1982). An agent of an employer is not a stranger to the employer’s 

business contracts or relationships. See Bellanger v. Am. Music Co., 2004 MT 392, ¶ 22, 

325 Mont. 221, 104 P.3d 1075 (“Absent an agency relationship between him and AMC, 

Kelman’s claimed privilege from suit for tortious interference based on agency does not 

apply.”). 

¶46 No one disputes that Merrill is an agent of MFU. “An agency is actual when the 

agent is really employed by the principal.” Bellanger, ¶ 19. Merrill was acting as the 

actual agent of MFU in all of his dealings with Harrell: Merill was paid a salary by MFU

and there was no argument whatsoever that Merrill acted other than in the scope of his 

employment. 

¶47 Harrell asserts, however, that Merrill can be individually liable, even though he is 

an agent of MFU. “Corporate officers or directors are privileged to interfere with or 

induce breach of the corporation’s contracts or business relations with others as long as 
21

their actions are in good faith and for the best interests of the corporation.” Phillips v. 

Mont. Educ. Ass’n, 187 Mont. 419, 425, 610 P.2d 154, 158 (1980). “An agent’s acts, if 

motivated and taken in furtherance of the purposes and interests of its principal, will not 

give rise to a cause of action for tortious interference of a contract between its principal 

and a third party.” Lachenmaier v. First Bank Sys, 246 Mont. 26, 34-35, 803 P.2d 614, 

619 (1990). However, “[w]here an officer or director acts against the best interests of the 

corporation, acts for his own pecuniary benefit, or with the intent to harm the plaintiff, he 

is personally liable.” Phillips, 187 Mont. at 425, 610 P.2d at 158.

¶48 “The personal nature of the agent’s actions forms the narrow exception to the 

general policy that officers and agents of a corporation must be shielded from personal 

liability for acts taken on behalf of the corporation.” Ammondson, ¶ 92 (quoting Crystal 

Springs Trout Co. v. First State Bank of Froid, 225 Mont. 122, 129, 732 P.2d 819, 823 

(1987)). In Ammondson, we affirmed the district court’s decision to submit individual 

tort claims against the corporate defendant’s officers and directors to the jury. Our ruling 

was based on evidence that arguably could support a claim that the individual defendants 

participated in the decision to withhold notice until after the company filed for 

bankruptcy that the plaintiffs’ pension contracts had been terminated; were involved in 

maliciously prosecuting claims against the plaintiffs in subsequent bankruptcy court 

litigation; and made decisions about the plaintiffs’ retirement payments that were not 

based on a cost-benefit analysis for the company but with their own bonuses in mind.
22

Ammondson, ¶ 93. We ultimately held that the district court’s denial of judgment as a 

matter of law for the individual agents was appropriate in light of evidence suggesting 

that the agents personally participated in tortious conduct. Ammondson, ¶ 94. 

¶49 Ammondson is not applicable here. First, the plaintiffs’ claims in that case did not 

arise from their alleged wrongful termination from employment, for which the WDEA 

provides an exclusive remedy. Section 39-2-902, MCA. Second, though Harrell 

portrayed Merrill as incompetent and demeaning to women, he did not introduce 

evidence at trial that, with respect to Harrell, Merrill acted against the best interests of the 

corporation, for his own pecuniary benefit, or with intent to harm Harrell personally. The 

substance of the allegations against Merrill was that, while acting as president of MFU,

he told the board falsely that Harrell was underperforming. Harrell fails to show that by

communicating his opinions to the board while acting in his professional capacity, 

Merrill acted against MFU’s corporate purposes and interests. Negative opinions of 

Harrell’s performance by his boss, on their own, do not rise to the level of tortious 

interference without some indication that Merrill had a private pecuniary motive or a 

personal desire to ruin Harrell. 

¶50 Third, the jury was not instructed on the proper standard of law. “[T]he law 

regarding personal liability of a corporate officer or director [was] set forth by this Court 

in Phillips . . . .” King v. Zimmerman, 266 Mont. 54, 62, 878 P.2d 895, 900 (1994). In 

King, we approved the following jury instruction based on our decision in Phillips:
23

Corporate officers or directors are privileged to interfere with or induce 

breach of the corporation’s contracts or business relations with others as 

long as their actions are in good faith and for the best interests of the 

corporation. Where an officer or director acts against the best interests of 

the corporation, acts for his own pecuniary benefit, or with intent to harm 

the plaintiff, he is personally liable.

King, 266 Mont. at 62, 878 P.2d at 900. Here, the jury was not instructed on this rule 

from Phillips. Rather, Harrell submitted and the District Court gave—over MFU’s 

objection—an instruction based on Bolz, which set forth the standards that apply to a 

third party’s interference with a contract. Bolz, 200 Mont. at 295, 651 P.2d at 611. 

Merrill is not personally liable under the legal standards that govern this case. 

¶51 Finally, while the jury found that MFU acted fraudulently and with malice, no 

such finding was made with regard to Merrill individually. The privilege of limited 

liability applies here, and Merrill is shielded from personal liability.

¶52 3. Whether MFU is entitled to a new trial on Harrell’s constructive discharge 

claim.

¶53 MFU argues that the District Court erred in denying its motions for a mistrial and 

for a directed verdict on the issue of constructive discharge under the WDEA, and 

requests that this Court reverse the jury’s verdict on that claim. MFU points to Harrell’s 

use of deposition excerpts, the court’s curative instruction regarding a proffered piece of 

evidence, and evidence from the Kassmier case to support this argument on appeal. “A

district court possesses broad discretion to determine the admissibility of evidence.” 

Malcolm v. Evenflo Co., 2009 MT 285, ¶ 29, 352 Mont. 325, 217 P.3d 514. The majority
24

of these alleged errors fall within the broad discretion afforded the district court in 

making evidentiary rulings, and—though we do find some error—we conclude that 

cumulatively the alleged errors do not entitle MFU to a new trial on this issue. 

a. Deposition Use

¶54 MFU argues that Harrell’s use of Merrill’s deposition at trial was improper. MFU 

proposes that under M. R. Civ. P. 32(a)(6), the court should have required Harrell to play 

the entire deposition, instead of allowing Harrell to play potentially misleading excerpts. 

M. R. Civ. P. 32(a)(6) allows an adverse party to require the offeror of part of a 

deposition to “introduce other parts that in fairness should be considered with the part 

introduced, and any party may itself introduce any other parts.” Deposition testimony is 

admissible “to contradict or impeach the testimony given by the deponent as a witness, or 

for any other purpose allowed by the Montana Rules of Evidence.” M. R. Civ. P. 

32(a)(2). “The trial court has discretion to exclude parts of the deposition that are 

unnecessarily repetitious in relation to the testimony of the party on the stand . . . .” 

Hart-Albin Co. v. McLees Inc., 264 Mont. 1, 8, 870 P.2d 51, 55 (1994). 

¶55 The District Court ruled that fairness required only that MFU be allowed to 

introduce Merrill’s entire deposition in its own case in chief, which MFU declined to do. 

The court did not abuse its discretion.
25

b. Curative Instruction

¶56 MFU argues that a curative instruction offered to the jury was misleading and 

prejudicial. The curative instruction stated that MFU attempted to elicit testimony 

regarding a document that was “generated [by MFU] in an effort to mislead the jury,” 

“would have misled the jury,” was of “suspect” origin, and was “not credible.” The court

read the document into the record outside the presence of the jury, but the document was

not allowed into evidence.

¶57 The document in question was an unsigned and unsent letter purportedly written to 

Harrell by MFU board member Leonard Stone, MFU Vice President Rollie Schlepp, and 

Merrill. Stone testified that the letter was drafted by Schlepp. MFU failed to produce the 

letter during discovery, even though it was within the scope of Harrell’s discovery 

requests. MFU claimed that it did not discover the letter until after the trial began. MFU 

produced the letter during the first week of trial.

¶58 When MFU called Stone to the witness stand, MFU’s counsel asked about 

Harrell’s repeated grievances and what MFU did to respond. When Stone mentioned that 

the Vice President had “formulated a letter,” Harrell objected and requested a discussion 

without the jury present. Once the jury was excused, Harrell objected to the late 

disclosure of the letter and suggested the possibility that the letter had been drafted during 

the trial. The District Court shared Harrell’s skepticism regarding the letter’s origin, 

remarking that the letter, which appeared to have been drafted by a lawyer, was being 
26

offered during the trial to confuse the jury into believing that MFU had written a response 

to Harrell’s complaints. Throughout the trial, Harrell had presented letters he had written 

to MFU expressing his grievances. Until Stone mentioned this letter, MFU had 

maintained that it had responded to Harrell only verbally. The court commented that by 

presenting the letter, MFU could bolster its argument that it actively responded to 

Harrell’s concerns. MFU maintained that it never intended to introduce the document, 

despite that it was marked with an exhibit sticker. The record does not confirm whether 

or not MFU did in fact fabricate this document during the trial. 

¶59 Harrell’s counsel requested that the court sanction MFU for referring to the 

document and possibly attempting to introduce it into evidence. The court initially 

considered imposing the harshest possible sanction for discovery abuses—judgment on 

liability as a matter of law—noting this Court’s holding in Bulen v. Navajo Ref. Co., 2000 

MT 222, 301 Mont. 195, 9 P.3d 607 (holding that the district court did not abuse its 

discretion when it imposed judgment on liability as a matter of law against the defendants 

for repeatedly failing to comply with the rules of discovery). See also Richardson v. 

State, 2006 MT 43, 331 Mont. 231, 130 P.3d 634. The court eventually decided against 

this sanction. 

¶60 Harrell’s counsel also requested a curative instruction to correct any prejudice that 

could result from forcing her to object in a manner that likely caused the jury to believe 

that Harrell was concealing an important document. The court drafted a curative 
27

instruction that it believed was of sufficient force to cure the problems created by MFU’s

attempts to elicit testimony about a document that it failed to timely disclose.

¶61 “Generally, it is up to the trial court to decide the proper sanction for discovery 

abuse.” Richardson, ¶ 65. “We defer to the trial court because it is in the best position to 

know whether the party in question has disregarded the other’s rights, and is in the best 

position to determine which sanction is most appropriate.” Bulen, ¶ 18. We cannot 

substitute our own discretion for that of the District Court on this evidentiary issue. The 

court reasonably believed that MFU’s mid-trial disclosure of a document helpful to its 

case affected Harrell’s right to fair and timely discovery resulting in prejudice. We 

conclude that the court was within its discretion to give the curative instruction. 

c. The Kassmier Evidence

¶62 References to the Kassmier case by both parties began in opening statements and 

escalated throughout the trial. MFU argues on appeal that the court abused its discretion 

by admitting the evidence.2

¶63 Following the conclusion of the Plaintiff’s opening statement, the District Court 

recessed out of the jury’s presence to consider the parties’ arguments regarding the 

Kassmier evidence. MFU argued that the evidence was inadmissible propensity or 

character evidence barred by M. R. Evid. 404(b). Harrell argued that it was “pattern and 

 

2 MFU also claims that Fandrich v. Capital Ford Lincoln Mercury, 272 Mont. 425, 901 P.2d 112 

(1995), precludes Harrell from claiming that MFU retaliated against him on the basis of the 

Kassmier affidavit. Because Harrell’s constructive discharge claim was not founded on 

Kassmier’s sexual harassment complaint, the Human Rights Act was not Harrell’s exclusive 

remedy and Fandrich does not apply.
28

practice evidence, Rule 404(b),” and admissible to show that MFU had on other 

occasions treated its employees with hostility, created adverse job conditions, and 

retaliated against the objecting employee. The District Court determined that the 

Kassmier evidence was admissible pursuant to M. R. Evid. 406 and that Harrell was on 

“solid ground” if the evidence was being offered to “establish[] common practices within 

the company.” The District Court also considered admissibility of the evidence pursuant 

to Rule 404(b) and cautioned Harrell’s counsel not to “go too far.” The court recognized 

that the evidence was inflammatory and prejudicial to MFU, but refused to allow MFU to

“sanitize” the case by isolating Harrell’s allegations. The District Court assured MFU’s 

counsel that they would be allowed to defend against the Kassmier evidence, but refused

to rule on any specific item of evidence until it was offered. 

¶64 As the District Court ruled the evidence admissible under M. R. Evid. 406, we first 

consider that theory of admissibility. Rule 406 states that “[e]vidence of habit or of 

routine practice, whether corroborated or not, and regardless of the presence of 

eyewitnesses, is relevant to prove that conduct on a particular occasion was in conformity 

with the habit or routine practice.” “Habit” is defined as “a person’s regular response to a 

repeated specific situation” and “routine practice” as “a regular course of conduct of a 

group of persons or an organization.” M. R. Evid. 406. 

¶65 The District Court erred in ruling that the Kassmier evidence, which was the only 

other employment claim against MFU identified by the parties, was allowable under
29

M. R. Evid. 406. More than one dispute is required to show “habit” under M. R. Evid. 

406. See Mydlarz v. Palmer/Duncan Constr. Co., 209 Mont. 325, 342-43, 682 P.2d 695, 

704 (1984) (“In our view one instance of alleged carelessness does not indicate habitual 

carelessness.”). Under the corresponding federal evidentiary rule, courts have held that

“to prove an act was habitual [requires] the proponent to offer evidence of numerous, 

consistent occurrences of the act.” U.S. v. Oldbear, 568 F.3d 814, 822 (10th Cir. 2009)

(“only three instances of the supposed habit [were] certainly not sufficient to demonstrate 

a habitual pattern”); Camfield v. City of Oklahoma City, 248 F.3d 1214, 1232-33 (10th

Cir. 2001) (noting that five acts ordinarily are insufficient to establish a habit under F. R. 

Evid. 406). In the same vein, one prior claim of sexual harassment cannot establish a 

“routine practice,” particularly in a case that was not about sexual harassment.

¶66 Though the evidence was inadmissible under M. R. Evid. 406, the District Court 

also considered its admissibility under M. R. Evid. 404(b). Rule 404(b) places a 

limitation on otherwise relevant evidence when that evidence is of “other crimes, wrongs, 

or acts” offered to prove that a person acted in conformity with his or her character. 

Implicit within the rule is the assumption that evidence of propensity is of slight 

probative value and often prejudicial. Character evidence nevertheless may be 

admissible for an alternative purpose, such as to prove “motive, opportunity, intent, 

preparation, plan, knowledge, identity, or absence of mistake or accident.” M. R. Evid. 

404(b). If the evidence meets one of the alternative purposes, the trial court must 
30

consider its probative value in light of the purpose for which it is offered and balance the 

probative value of the evidence against its potential for prejudice. M. R. Evid. 403. 

¶67 As a general rule, this Court does not allow remote or dissimilar events into 

evidence. See Faulconbridge, ¶ 30. In the context of employment actions, we have held 

that “[e]vidence of other [employees’] disciplinary actions is not relevant to whether the

actions of [the plaintiff employee] justify the termination of his employment.” Wolny v. 

City of Bozeman, 2001 MT 166, ¶ 38, 306 Mont. 137, 30 P.3d 1085. We relied in Wolny

on our prior “review of the pertinent precedent[, which] shows that past conduct or action 

is never admissible as relevant in a case regarding a specific charge.” Wolny, ¶ 38 

(quoting In re Raynes, 215 Mont. 484, 492, 698 P.2d 856, 861 (1985) (affirming the grant 

of a protective order on the basis that “information concerning various disciplinary cases 

that occurred to officers of the Great Falls Police Department over a ten year period” was 

irrelevant)). 

¶68 In this case, however, Harrell maintained that his affidavit in the Kassmier case 

and his memo to the executive board regarding discriminatory policies supported his 

claim that MFU had reasons to retaliate against him and were relevant to proving his

constructive discharge claim. Given the theory of his case, it was within the District 

Court’s discretion to allow the presentation of evidence from the Kassmier case in order 

to demonstrate MFU’s motive or intent in its dealings with Harrell. See Brundridge v. 

Flour Fed. Servs., Inc., 191 P.3d 879, 888 (Wash. 2008) (holding that in the context of 
31

wrongful discharge in violation of public policy, evidence of employer retaliation against 

other employees is relevant to show motive or intent). 

¶69 We conclude that the District Court did not abuse its discretion in permitting some 

evidence of the context for Harrell’s claim to show motive or intent for his harassment or 

discharge. The Kassmier evidence tended to show that MFU had a motive to ostracize 

and constructively discharge Harrell. The deterioration of Harrell’s working conditions

arguably was related, at least in part, to his perceived support for Katie Kassmier. 

Although some of the evidence pushed the limits of Rules 402, 403, and 404, both parties 

had a hand in its introduction and we cannot say that the court abused its discretion in 

holding that the probative value of the evidence was outweighed by the danger of unfair 

prejudice. “We may affirm a district court decision that is correct regardless of the 

district court’s reasoning in reaching its decision.” PacifiCorp v. State, 2011 MT 93, 

¶ 54, 360 Mont. 259, 253 P.3d 847. Harrell properly was allowed to introduce some 

evidence of MFU’s prior acts to show the context of his allegation that MFU had a 

motive to retaliate against him. 

¶70 But while some of the Kassmier evidence was relevant and otherwise admissible 

to show motive or intent, we conclude that the District Court erred when it allowed

Harrell to discuss the settlement from the Kassmier case. To be admissible, evidence 

must be relevant, meaning the evidence has “any tendency to make the existence of any 

fact that is of consequence to the determination of the action more probable or less 
32

probable than it would be without the evidence.” M. R. Evid. 401. The rules of evidence 

prohibit the admission of settlement evidence to prove liability. M. R. Evid. 408; Charles 

Alan Wright & Kenneth W. Graham, Jr., Federal Practice and Procedure vol. 23, § 5301

at 159 (2005) (“While the rule is ordinarily phrased in terms of offers of compromise, it 

is apparent that a similar attitude must be taken with respect to completed compromises 

when offered against a party thereto.”).

¶71 This Court previously reversed a jury verdict where the trial court allowed a party 

to introduce a settlement amount into evidence. Beil v. Mayer, 242 Mont. 204, 789 P.2d

1229 (1990). In Beil, we held that evidence relating to the plaintiff’s settlement from a

previous accident “served to interject immaterial, prejudicial information into the trial”

when it was offered by the defendant on the issue of damages. Beil, 242 Mont. at 207,

789 P.2d at 1232. We explained that a settlement amount “rarely has any relevance to the

determination of damages at issue in the present trial.” Beil, 242 Mont. at 207-08, 789

P.2d at 1232. We also observed that the settlement amount “does not give the jury a true

picture of the reason for the settlement amount” because a party often “will accept a

settlement for reasons which are extraneous to the true issue at hand.” Beil, 242 Mont. at

208, 789 P.2d at 1232. As we stated in Azure v. Billings, 182 Mont. 234, 245, 596 P.2d 

460, 466 (1979), “[t]he amount of the settlement could adversely affect the defendant 

because there is a virtual admission of negligence by the settling party . . . .” There is the 

strong policy concern that allowing evidence from previous settlements, unless absolutely 
33

necessary, will discourage parties from reaching a compromise. DeTienne Assocs. Ltd. 

Partner. v. Mont. Rail Link, 264 Mont. 16, 22, 869 P.2d 258, 262 (1994). 

¶72 We echoed this concern in our recent ruling that Montana law prohibits

introducing evidence from confidential mediations. Kluver v. PPL Mont., LLC, 2012 MT 

321, ¶ 58, 368 Mont. 101, 293 P.3d 817. We emphasized in Kluver that the law 

“expressly prohibits the disclosure of ‘all mediation-related communications, verbal or 

written’ made during mediation absent consent or an express statutory exception.”

Kluver, ¶ 52 (quoting § 26-1-813(3), MCA). In Kluver, although we did not find the 

error reversible because of other evidence sufficient to support the trial court’s ruling in 

that case, we stressed the zero-tolerance policy in the law prohibiting evidence of what 

occurred during mediation. Kluver, ¶¶ 59-60.

¶73 Notwithstanding the factual differences between these cases and the settlement at 

issue here, the rule that the amount of a previous settlement is not generally admissible

nonetheless applies. Harrell’s counsel referenced the confidential settlement several 

times during trial; counsel questioned more than one witness about it and suggested that 

MFU would not have agreed to a settlement “north of six figures” if it had done nothing 

wrong. She then stated a specific dollar amount in the punitive phase of the trial. 

Harrell’s argument that MFU “opened the door” to this evidence falls short because 

Harrell’s counsel started discussing Kassmier in her opening statement. 
34

¶74 Finally, the settlement amount does not fall within Rule 408’s limited exception as 

showing MFU’s bias or prejudice against Harrell in this case. Cf. Tripp v. Jeld-Wen, 

2005 MT 121, 327 Mont. 146, 112 P.3d 1018. In Tripp, we upheld the admission of a 

settlement between the plaintiff homeowners and their contractor over the installation of 

a faulty floor. The evidence was introduced by the floor’s manufacturer, the defendant in 

the case, who had named the contractor as a third-party defendant. We agreed that the 

settlement was relevant to show the contractor’s bias and therefore permissible under 

Rule 408. Tripp, ¶ 20. The contractor, who testified as a witness for the plaintiff, 

obviously had an interest in minimizing his own liability as a third-party defendant in the 

action.

¶75 In contrast, the Kassmier settlement was introduced for the express purpose of 

demonstrating a “pattern and practice” of mistreatment of MFU employees—to prove 

liability for Harrell’s alleged constructive discharge. This is not a proper purpose under 

Rule 408. The settlement of that case has no bearing on any fact of consequence and is 

not relevant to whether Harrell was constructively discharged. Particularly in light of 

numerous references in front of the jury to MFU’s alleged “pattern and practice,” which 

we also have determined was not correct, the settlement amount was improperly admitted 

and served no purpose other than to prejudice the jury against MFU.
35

d. Conclusion

¶76 “Courts will exercise the greatest self-restraint in interfering with the 

constitutionally-mandated process of jury decision.” Cameron v. Mercer, 1998 MT 134, 

¶ 8, 289 Mont. 172, 960 P.2d 302. We will not reverse a jury’s verdict for improperly 

admitted evidence unless “substantial prejudice to the complaining party [is] shown.” 

Green v. Green, 181 Mont. 285, 293, 593 P.2d 446, 451 (1979); M. R. Civ. P. 61 

(requiring this Court to “disregard all errors and defects that do not affect any party’s 

substantial rights”). Put another way, “a reversal cannot be predicated upon an error in 

admission of evidence, where the evidence in question was not of such character to have 

affected the result.” In re A.N., 2000 MT 35, ¶ 55, 298 Mont. 237, 995 P.2d 427; Mason

v. Ditzel, 255 Mont. 364, 371, 842 P.2d 707, 712 (1992); Lauman v. Lee, 192 Mont. 84, 

90, 626 P.2d 830, 834 (1981). Having determined that some of the circumstances of the 

prior sexual harassment lawsuit and Harrell’s role in it properly were allowed, we must 

consider whether the mention of the settlement amount was so significant as to warrant 

reversal of the finding that MFU constructively discharged Harrell. 

¶77 A constructive discharge under the WDEA occurs when the employer creates a 

situation in which “an objective, reasonable person would find [the work environment] so 

intolerable that voluntary termination is the only reasonable alternative.” Section 39-2-

903(1), MCA. “[W]hether a constructive discharge has occurred is usually a question of 

fact determined by the totality of the circumstances.” Bellanger, ¶ 14. The jury was 
36

presented with ample evidence over a nearly two-week trial to support its verdict finding 

constructive discharge. The District Court summarized this evidence:

This is what I’ve heard throughout this case[.] Mr. Harrell was put 

on the stand. Did you file a grievance? Letter, after letter, after letter was 

presented. [MFU] complained about his letters. They thought he was 

being vexatious and troublesome, and a thorn in their side. And what he 

was doing, from the Court’s vantage point, was sticking up for his rights. 

He felt that he wasn’t paid properly salary-wise. He thought that he wasn’t 

being given credit for time and working overtime at the rate of one and a 

half times his salary. He felt that other individuals in the organization were 

given preferential treatment. He didn’t think the organization was running 

properly. And he wanted to contribute to help that organization be the best 

that it could be. And he was rebuffed.

Evidence showed that MFU ostracized and penalized Harrell for standing up to MFU’s 

management. 

¶78 Further, due to the restrictive statutory method for calculating damages under the 

WDEA, the inadmissible evidence was not reasonably of such character as to have 

affected the award of actual damages. The strict damages formula in the WDEA limits 

recovery to “lost wages and fringe benefits for a period not to exceed 4 years from the 

date of discharge together with interest on the lost wages and fringe benefits. Interim 

earnings, including amounts the employee could have earned with reasonable diligence, 

must be deducted from the amount awarded for lost wages.” Section 39-2-905(1), MCA. 

The jury was presented with specific evidence of Harrell’s wage loss and his interim 

earnings, and it correctly applied the deductions in arriving at its damage calculations. 
37

¶79 “When the trial court makes an error, but sufficient facts are otherwise established 

by independent evidence and substantial justice has been done such that the error is 

harmless, the Montana Supreme Court will not disturb the ruling of the lower court.” 

Renner v. Nemitz, 2001 MT 202, ¶ 28, 306 Mont. 292, 33 P.3d 255 (citing M. R. Civ. P. 

61; M. R. App. P. 14). In light of the other substantial evidence presented by Harrell and 

the strict limitations on WDEA damages, we conclude that introduction of the settlement 

amount did not substantially prejudice Harrell or significantly affect the result with 

regard to Harrell’s claim. We uphold the jury’s verdict finding constructive discharge, 

despite our finding of error in the admission of evidence. 

¶80 4. Whether punitive damages properly were awarded against MFU.

¶81 MFU requests that this Court reverse the punitive damage award because “[t]here 

was no evidence that MFU requested Harrell to violate any public policy,” several jury 

instructions and the verdict form were unclear because they did not sufficiently identify 

the liable defendant, and the District Court admitted improper evidence. In the 

alternative, MFU claims that the District Court improperly refused to limit the punitive 

damages award to three percent of MFU’s net worth as required by § 27-1-220(3), MCA.

a. Punitive Damage Award

¶82 To prevail on a claim for punitive damages in an action for constructive discharge 

under the WDEA, an employee must “establish[] by clear and convincing evidence that 

the employer engaged in actual fraud or actual malice in the discharge of the employee in 
38

violation of § 39-2-904(1)(a).” Section 39-1-905(2), MCA. Violation of § 39-2-

904(1)(a), MCA, requires that the wrongful discharge was “in retaliation for the 

employee’s refusal to violate public policy or for reporting a violation of public policy.”

¶83 “A defendant is guilty of actual malice if the defendant has knowledge of facts or 

intentionally disregards facts that create a high probability of injury to the plaintiff and: 

(a) deliberately proceeds to act in conscious or intentional disregard of the high 

probability of injury to the plaintiff; or (b) deliberately proceeds to act with indifference 

to the high probability of injury to the plaintiff.” Section 27-1-221(2), MCA. “A

defendant is guilty of actual fraud if the defendant: (a) makes a representation with 

knowledge of its falsity; or (b) conceals a material fact with the purpose of depriving the 

plaintiff of property or legal rights or otherwise causing injury.” Section 27-1-221(3), 

MCA. 

¶84 Harrell’s claim to punitive damages for violation of the WDEA is predicated on 

his alleged refusal to violate the law requiring payment of wages and overtime. We have 

held that “overtime premiums are for the protection and benefit of the general public” and 

that an attempt to waive the right to overtime is contrary to public policy. Lewis v. B & B 

Pawnbrokers, Inc., 1998 MT 302, ¶ 23, 292 Mont. 82, 968 P.2d 1145. While the wage 

claims are barred by the statute of limitations, the jury still properly could find that 

Harrell’s refusal to violate public policy by asserting his statutory right to wages 

prompted his constructive discharge.
39

¶85 Next, the verdict form clearly shows the jury found that MFU, not Merrill, acted 

with actual fraud and actual malice. Likewise, because the jury instructions were 

organized by issue and the court made clear that punitive damages were only available 

against MFU for the constructive discharge claim, the court did not err in instructing the 

jury. 

¶86 Finally, there was sufficient evidence to submit the punitive damages claim to the 

jury. Introduction of the Kassmier settlement makes this issue a close call. But the 

evidence was sufficient to establish that MFU retaliated against Harrell for a multitude of 

reasons that all implicate public policy: for refusing to waive his right to overtime and 

vacation, for insisting on fair pay for the work that he was performing, and for 

challenging MFU’s practices that he believed were unfair to its female employees. We 

hold that the punitive damages claim properly went to the jury.

b. Statutory Limit

¶87 MFU claims in the alternative that the District Court improperly refused to limit 

the punitive damages award to three percent of MFU’s net worth as required by § 27-1-

220(3), MCA. That section states, “An award for punitive damages may not exceed $10 

million or 3% of a defendant’s net worth, whichever is less.” 

¶88 Following a finding that a defendant is liable for punitive damages, a jury must 

consider evidence of a defendant’s net worth in a separate proceeding to determine the 

amount of the award. Section 27-1-221(7)(a). A defendant who offers no evidence of 
40

net worth waives any claim that the statutory limit should be applied. Blue Ridge Homes, 

Inc. v. Thein, 2008 MT 264, ¶¶ 60-64, 345 Mont. 125, 191 P.3d 374. In Blue Ridge, the 

district court found that the defendants refused to submit any accurate financial statement 

and that the self-prepared document on which they attempted to rely was not reliable 

evidence. In addition, the defendants “refused to respond to requests for production and 

interrogatories on this issue.” Blue Ridge, ¶ 65. The defendants never submitted reliable 

financial information at any point in the proceedings. This Court affirmed the district 

court’s refusal to apply the limitation prescribed by § 27-1-220(3), MCA, holding that the 

defendants failed to meet their burden of demonstrating an accurate calculation of their 

net worth. Blue Ridge, ¶ 70. In so ruling, we explained that a defendant is not permitted 

to “gain an advantage from failing to produce evidence of his net worth.” Blue Ridge, 

¶ 69. 

¶89 During the liability phase of the trial, Harrell introduced an audited 2008-2009 

financial statement that specified MFU’s net worth during the last years of Harrell’s 

employment. Both parties referenced this financial statement during the trial’s punitive 

damages phase. MFU used the exhibit to rebut Harrell’s claim that an award should be 

based on the $10-$12 million value of the larger Farmers Union Enterprises and to argue 

that MFU’s total assets were $2.7 million in 2009. Harrell did not object to MFU’s use 

of the exhibit during the punitive damages phase of the trial. Harrell argued to the jury 

that the financial information was not sufficiently current or credible, but did not offer 
41

any countering evidence of MFU’s current net worth. The jury took the statement into 

the jury room during its deliberation on punitive damages. Properly, the jury was told 

nothing about the statutory limit.

¶90 Immediately following the jury’s punitive damages verdict, MFU filed a motion 

requesting that the court apply the statutory limit to reduce the $300,000 damage award. 

Harrell opposed this motion on the grounds that MFU “offered no evidence of [its] net 

worth.” MFU then filed a renewed motion to cap the punitive damages award, this time 

with an affidavit from MFU’s auditor that attested to the accuracy of the previously 

submitted 2008-2009 financial statement. The auditor also attached MFU’s statement for 

2010-2011, which she stated was the most recent statement available as of September 21, 

2012. 

¶91 In its order affirming the jury’s punitive damages award, the District Court 

expressed concerns that the 2008-2009 financial statement was “stale” and did not 

accurately reflect MFU’s current net worth or follow Generally Accepted Accounting 

Principles (GAAP). The court refused MFU’s request to consider the current financial 

statement because MFU asked the court to consider the statement “weeks after the close 

of trial” and because the statements “should have been presented to the jury before it 

deliberated on the amount of punitive damages.” The District Court thus concluded that 

MFU had failed to present evidence of its net worth and denied MFU’s request to limit 

the award. 
42

¶92 The District Court was within its discretion to find that the statement on which the 

parties had relied was not the best evidence of MFU’s net worth at the time of trial. But 

it is the court, not the jury, that applies the statutory limit to a punitive damages verdict 

under § 27-1-220(3), MCA. See Blue Ridge, ¶ 68. Thus, the question here is not whether 

the evidence came too late for consideration by the jury. Instead, the question is whether 

allowing MFU to submit more current evidence of its net worth after the jury’s punitive 

damages verdict allows MFU to “gain an advantage” by its failing to produce the 

evidence before the jury. Blue Ridge, ¶ 69. 

¶93 On the record before us, we conclude that MFU does not gain any advantage by 

consideration of the updated financial information and that the District Court erred by 

failing to follow the requirements of the statute. Harrell is not prejudiced by 

consideration of the late-filed updated financial statements because the jury did consider 

net worth evidence and its punitive damages verdict exceeds three percent of MFU’s net 

worth regardless of which statement is used. 

¶94 Therefore, after the jury returned its punitive damages verdict and after Harrell 

voiced objection to the 2008-2009 financial statement, the court should have accepted 

MFU’s submission of its current audited financial information and applied the statute’s 

three percent limit to the jury’s award. Harrell benefits from applying the statutory limit 

to the updated financial information instead of to the 2009 net worth, and the 2011 net 

worth should be used to calculate the proper amount of damages. We therefore vacate 
43

the punitive damages award and remand for application of § 27-1-220(3), MCA, to 

MFU’s 2011 net worth.

CONCLUSION

¶95 We hold that MFU was entitled to summary judgment on Harrell’s wage claims 

and that liability cannot be imposed on Merrill individually. We vacate the jury’s

damage awards for wages and penalties under the wage claim statutes, and its award of 

damages against Merrill. We also vacate the District Court’s award of attorney’s fees. 

We affirm the jury’s verdict on Harrell’s claim for constructive discharge and its decision 

to award punitive damages. We vacate the punitive damages award and remand the case

to the District Court for application of the statutory limit.

/S/ BETH BAKER

We concur: 

/S/ MIKE McGRATH

/S/ PATRICIA COTTER

/S/ LAURIE McKINNON

/S/ JIM RICE