No. 53-172 IN THE SUPREMECOURT OF THE STATE OF MONTANA 1983

WILLIAM OWENS, Plaintiff andAppellant,

-vsPARKER DRILLINGCO., Defendant and Respondent.

APPEAL FROM: District Court of the Seventh Judicial District, In and for the County Richland, TheHonorable 

## ,Judgepresiding.

COUNSEL OF RECORD:

ForAppellant: Lucas & Monaghan; ThomasM. Monaghan argued, Miles City,Montana

For Respondent: Habedank,Cumming & Best;JacqueW. Best argued, Sidney,Montana

Submitted: November 3, 1983 Decided: January 12, 1984

Filed: 

### QWf\li;?

## 1984

P

-. 

# &a &,

# c$L2&&-.d ClerkMr. Justice Frank B. Morrison,Jr. delivered the Opinion of theCourt. Plaintiff William Owens (Owens)appeals the order of the District Court, Richland County, granting partial summary judgment on the issue of punitive damages in an action alleging discriminatory firing of Owens by defendant Parker DrillingCompany (Parker)

# . Owens is missing his right arm from three inches below the elbow. He lost that part of his arm when he was six years old. Owens has worked as a "roughneck" and drill. "hand" since 1958 or 1959. Owensworked for Parker fromApril 4, 1978 through April 8, 1978. He was discharged from Parker by Roger Hystad at the direction of his supervisors for the given reason thathe only had onearm. No investigationwasmade to determine the ability of Owens to safely and satisfactorily complete all duties of his employment. The decision to fire was apparently made on the basis that a one-armed worker is unsafeper se on a drilling operation. Parker has a safety manual setting forth minimum physical requirementsforemployees prohibiting employment of persons with "severe disabilities or impairments to arms, hands, fingers,legs, feetand toes." Owens was out of work for approximately three days, and then was hired on by another drilling company. There is considerable evidence that Owens has at all times been an able and safe worker on the drilling rigs both before and after his employmentwith Parker. Owens brought this action seeking compensatory damages for unlawful discharge in violation of sections 49-4-101 and 102, MCA. He also seeks punitive damages for "wrongful,willful, intentional, malicj.ous, and reckless act of Defendant in firingPlaintiff." Parker moved for partial summary judgment on the issue of punitive damages. The District Court granted themotion, ruling that plaintiff had failed to establish a genuine factual issue as to whether the vi-olationof statute was criminal or wanton, or whether the acts of defendant were done with sufficiently culpable mental state to justify award of punitive damages under section 27-1-221,MCA. The following issues are raised on appeal: 1. Isplaintiff entitled to a trial on the question of punitive damages where he has established a genuine factual issue of whether his discharge constituted unlawful discrimination as defined in sections 49-4-101, 102, MCA? 2. Has plaintiff produced sufficient evidence to establish a genuine factual issue ofwhether defendant acted with "oppression, fraud or malice, actual or presumed," entitlinghim to a recovery of punitive damages? Owens argues that breach of the statutory duty imposed by sections 49-4-101, 102, MCA is so culpable, that such a breach necessarily raises a genuine issue of punitive damages. We disagree. The mere fact that the conduct on which the lawsuit is based is unlawful should not in and of itself authorize a recovery of punitive damages. Fahrenberg v. Tengel (Flris

# . 1980), 291 N.W.2d 516; Graham v. Turner (Tex. 1971), 472 S.W.2d 831, 839; Graham v. Clarks Fork National Bank (Mont. 1981), 631 P.2d 718, 721, 38 St.Rep. 1140, 1143-44. Luther

v. Lee (1922), 62 Mont. 174, 179, 204 P. 365, 367. For example, exceeding the 55m.p.h. speed limit is unlawful and may even be intended, but does not rise to the level ofculpability warranting punitive damages unless there is a high degree of probability that serious harm wil.1 result. Section 27-1-221, MCA provides for punitive awards in

cases of "actual" malice and "presumed"malice. Thus,where a statute specifically proscribes conduct which is actually mal.icious such as theft or a.ssault,punitive damages may be sought for violation of such a statute. Violation of other statutes warrants an issue of punitive damages only where malicemay be presumed from theparticular facts. Consideration of recent decisions of this Court will demonstrate when malice may be presumed from violation of statute. InFirst Security Bankv. Goddard (1-979),181Mont. 407, 422, 593 P.2d 1040, 1048-1049,we held thatmalice could be implied,where the defendant insurance company breached its duty to settle as soon as possible with its insured in violation of the insurance code, because the defendant engaged in a course of conduct "knowing it to be harmful and unlawful," and its actions were "unjustifiable." Acc. Ramsbacher v. Hohman (1927)

## , 80 Mont. 480, 487-488, 261 P. 273, 276. Again in Dvorak v. Huntley Project Irrig. Dist. (1981),196Mont. 167, 639P.2d 62,an intentional failure to provide water to the rightful claimant in violation of statute was held to support an award of punitive damages because the conduct of the defendant was "unjustifiable". Another discussion of the concept of malice-in-law is found in Butcher v. Petranek (1979), 181 Blont. 358, 593 P.2d 743. In that casewe approved a "recklessness"standard for presumedmalice. "The jury may also take into account whether the acts complained of are 'of such a character as to indicate a reckless disregard of the rights of the plaintiff' in awarding a 'reasonable amount' ofpunitive damages. Mosback v. Smith Brothers Sheep Co. (1922), 65 Mont. 42, 46-47, 210 P. 910, 912. "Elaborating further on the concept of malice, we stated in 1927 tha.t: 

### " 

# .. .'The term "malice," as applied to torts, does not necessarily mean that which must proceed from a spiteful, malignant or revengeful disposition but a conduct injurious to another, though proceeding from an ill-regulated mind, not sufficiently cautiousbefore it occasions an injury to another.. 

# ..I

### " Ramsbacherv. Hohman (1927)

## , 80 Mont. 480, 487-88, 261 P. 273, 276. 

## Id. at 362.

This recklessness standard is the same punitive damages standard used by this Court in evaluating conduct of defendants which was not specifically proscribed by statute. See e.g. Graham v. Clarks Fork National Rank (Mont. 1981), 631 P.2d 718, 721, 38 St.Rep. 1140, 1144, "recklessness"; Shahrokhfar

### v. StateFarm (Mont. 1981), 634P.2d 653, 657, 38 St.Rep. 1669, 1673, "recklessly"; Derenberger v. Lutey,

(Mont. 1983)

## , P.2d 

## , 40 St.Rep. 902, 907, "willful

or wanton misconduct"; Ferguson v. Town Pump, Inc. (1978), 177 Mont. 122, 132, 580 P.2d 915, 921, "willful disregard of duty"; and Cashin v. Northern Pac. Ry. CO. (1934) I 96Monte 92, 112, 28 P.2d 862, 870, "willful or wanton disregard of the rights of others." The use of words like "unjustifiable" and "reckless" represent attempts of this Court to describe that level of conduct, whether specifically proscribed by statute or not, which is so culpable as to warrant an award of punitive damages. Much confusionhasbeen generated by inconsistentuse of loosely defined terms such as willfulness, wantonness, recklessness, gross negligence, and unjustifiable conduct. To avoid future confusion it is necessary to adopt acarefullydefined standard of conductand prescribe its legal significance. We adopt this standard for presumed malice: When a person knowsor has reason to know of facts which create a high degree of risk of harm to the substantial interestsof another,and either deliberatelyproceeds to act in conscious disregard of or indifference to that risk, or recklessly proceeds in unreasonable disregard of or indifference to that risk,his conductmeets the standard of willful, wanton, and/or reckless to which the 1a.wof this State will allow imposition of punitive damaqes on the basis ofpresumed malice. This standard is more definitive and perhaps more stringentthan those of thepast. Certainly the "unjustified conduct" measure was extremely broad and difficult to apply. We also emphasize that substantial interests must be implicated so that an intentional or reckless disregard of duties that do not protect substamtial interests, does not give rise to punitive damages. The standard, in substance, is supported by Restatement of the Law, Torts 2d. 5500, commenta. The standard is equally 

### applicable to statutory violations and other wrongful conduct. Thus,where a statute is designed to protect the substantial interestsof a person from a high degree of risk, and the statute is violated either intentionally or recklessly, a jury question of punitive damages is raised. Punitive damages may also he awarded under sections 27-1-221,MCA for fraud or oppression. This holding only defines a standard for "presumedmalice.l1 Thepresent case involvesa determination of whether the statute, section 49-4-101, MCA was designed to protect the substantial rights of employees such as Owens from a highrisk of harm, and whether Parker's alleged violation of the statutewas reckless. The Discrimination in Employment Statutes, sections 49-4-101, 102, MCA, are enacted to protect the handicapped person's substantial right to be fairly treated in the employmentrelationship. Section 49-4-101,MCA,provides as follows: "Discrimination prohibited. It is unlawful to discriminate, in hiring or employment, against a person because of the physical handicap of such person. There is no discrimination where the nature or extent of the handicap reasonably precludes the performance of the particular employment or where the particular employment may subject the handicapped or his fellowemployees to physical harm." Section 49-4-102,MCA,provides as follows: "Penalty 

### -- and civil remedy. A personwho practices discrimnation in violation of 49-4-101 commits a misdemeanor and is also liable in a district court action for civil damagesand a-ttorney'sfeesby the person discriminated against. Should the person who allegedly practiced discrimination prevail in the civil action, he shall 

### he entitled to recover reasonable attorney's fees from the person who alleged the discrimnation." These statutes were specifically designed to protect handicapped persons from thedenial of a substantialright to fair treatment in the employment relationship; such denial would result in economic harm to such persons and their fa.milies,as well as damage to their sense of self esteem. Violation of this statute warrants a claim for punitive damages if such violation is shown to be intentional or reckless. Therefore, the final issue is whether sufficient evidence has been produced by way of depositions and interrogatories to establish a genuine issue of reckless conduct creating a presumption ofmalice which would support

a claim forpunitive damages.The following factshave been established prima facieby Owens: 1. Owens hasbeen missing the forearm on his right side sincehewas 6years old. 2. Owens has been able to fully and safely perform all of his dutieswhileworking on drilling rigs. 3. Owens was fired by Roger Hystad on the sole basis that since he only had one arm it would not be safe to keep him on and that itwas company policy to therefore firehim. 4. 

### - No investigation 

### -- was made into the ability of Owens to safely and fully complete the duties of his employment. 5. No specific facts supported the conclusion that Owenswould be unsafe. 6. A written company policy prohibited hiring of workers in Owens' condition; although it was also company policy to qive handicapped persons "every considera.tion. l1 The above facts,ifproven, would supporta finding that the defendant recklesslyproceeded in unreasonable disregard of, and in great risk to, the substantial interests of plaintiff. Failure to give a person a chance in employment is the essence of the wrong proscribed by section 49-4-101, MCA. Failure to even investigateplaintiff's worth could be foundby the jury tobe recklessness. We add that there may be a punitive damage issue on oppression. In Gary & Purcell v. Automatic Gas et al., No. 82-54 (Mont. Dec. 1983)

## , we defined oppression to include acts which constitute an abuse of power. A determination of whether acts of oppression may be involved should await presentation of the evidence. There are those who distrust the lay person's capacity for reasoned and dispassionate judgment. There are thosewhotolerate the juries but feel compelled! to hold tight rein lest the wretched twelve break the bank. This judicial chauvinism will, if not checked, inevitably erode the iury process. We feel that theparties' peers are best able to define and measure justice. In any factual setting, where reasonableminds candisagree,wewillvigilantly protect the peoples' jural function. The District Court is reversed and the matter is remanded for trial.

We concur: 

# Z?4~4,ea/,uwa~\ Chief

### ust tick

Justices

Hon. RobertM. Holter, DistrictJudge, sitting inplace of Mr. JusticeL. C. GulbrandsonMr. JusticeFred J. Weber dissents as follows: I do commend the author of themajority opinion for his attempt to prescribe a standard for presumed malice in punitive damage cases. I agree that our cases have not set forth clear guidelines for future litigation. I dissent because of my belief that the application of the standard in the present case has reached an unjust result. Perhaps that is a result of applying a physical safety standard to a discriminationcase. See Restatement of the Law Second, Torts S500, entitled "Reckless Disregard of Safety. " The record in this case shows that the safety director of Parker Drilling Co. formulated guidelines for hiring and firing personnel and that these guidelines were posted in the "doghouse" on the drilling rig. The physical requirement guidelines for the job of "roughneck" are as follows: "In order to reduce the possibility of injuries on-the-job to an employee or injury to fellow employees caused by an employee's physical impairment, Parker Drilling Companyhas set out the following minimum physical standards for all new employees working in the field operations on the drillingrigs. Minimum Height

## - 5'6" MinimumWeight

## - 130 lbs. !.linimumVision with orwithout corrective glasses

## - 20/30 in each eye. Minimum Hearing

# - 15/20 in ea.chear. Blood Pressure

## -within normal limit forage of the individual. No History ofHeartCondition. No History ofAcute DiabeticCondition. No Congenital Deformity of the Back or Previous Back Surgery. No Hernia or PreviousHernia Surgery. No Severe Disabilities or Impairments to Arms, Hands, Fingers,Legs,Feetand Toes.Plaintiff's application for employment with the defendant company contained the following questions: "Do you have any cronic illnesses or known medical limitations? Yes No If yes, explain:" Plaintiff did not mark the "No"or otherwise mention in his application that his righthand and a portion ofhis armwere missing. The reasons for the discharge of the plaintiff are described in the deposition of the operation's manager of ParkerDrilling. Inpertinent part he stated: "Q. What elsewereyou told by either one of these gentlemen? "A. I was told that he had only one arm, and that they felt thathe was a safety hazard as far as to himself, the other crewmembers. And theywanted my advice as towhether or not they should firehim because of the possibility that he

## - suing us. My answer to thatwas, yes,ourpolicywas thatwe had to lethim go because of our requirements,and that if they felt like he was a safety hazard, by all means let him go.

"Q. What are the other reasons, then,why he was fired? "A. During the conversation on the telephone with either Mr. Carter or Heistad [toolpushers on the rig], they, in addition to him having only one arm and then feeling that he was a safety hazard, as far as to himself and the other crewmembers, that hewas not a good worker andwas notperforminghis dutiesproperly. "Q. And what specifically was he not doing with regard to doinghisduties or doinghis job? "A. They told me that they 

## - he was not checking the engine oil and the water in the radiators, and that he was asked to do. And that the crew that was following him had found that the engines were several gallons low on oil after he was relieved, and that the 

## - therefore he wasn't checking his enginesproperly." The depositions of the operation's ma.nagerand one of the tool pushers (manager on a drilling rig) established that, in a combined 30years of experience working in the oil fields, neither had ever seen anyone with an arm missing working as a roughneck or a drilleron an oil rig.It is also significant to note that plaintiff concludes he is entitled topunitive damages simply because of the fact of his being discharged. He does not contend that therewas any wrongful, willful or intentional contract specifically directed at him. A key element of the majority opinion is the conclusion that failure to investigate into the capacity of the plaintiff could be found to be recklessness. That conclusion is subjectto factual question. In determining whether or not there has been discrimination, all of section 49-4-101, MCA must be considered, including the followingpertinentpart: "Discrimination prohibited. It is unlawful to discriminate, 

# . . . There is no discrimination where the nature or extent of the handicap reasonably precludes the performance of their particular employment or where the particular employment may subject the handicapped or his fellow employees to physical harm." Under the specific provisions of the statute, there is

no discrimination in this case if the nature of- the plaintiff's handicap, that being a missing hand and part of his arm,reasonably precluded the performance of his job as a roughneck in the oil field. In addition, there is no discrimination if that same handicap might subject the handicapped person or his fellow employees to physical harm. The wording of the statute allows the type of physical requirements whichwere adoptedby the defendant employer for the hazardous work upon an oil rig. While the facts do demonstrate that the plaintiff hasworked successfully on an oil rig notwithstanding his handicap, he is quite unique. The record does not indicate others have successfully met that test. Common sense tends to accept the testimony of the two persons, who in more than 30 years experience had never

seen anotherone-armedman working ondrillingrigs. In this instance, the handicap of the plaintiff is such

as to present a real possibility of physical harm to eitherthe plaintiff or his fellow employees. This exception is explicity contemplated by the statute as a basis for concluding therehasbeen no discrimination. As Ireviewed the cases cited in themajority opinion, I concluded that a common denominator of the Montana caseswas some type of intentional conduct or harm on the part of the person charged with conduct justifying punitive damages. This is clearly set forth in Shahrokhfarv. State Farm (Mont. 1981), 634 P.2d 653, 657, 38 St.Rep. 1669, 1673, where the Court stated: "Next, appellant alleges error in submission of punitive damages claiming insufficient evidence of reprehensible conduct on the part of State Farm. This contention is disposed of in Graham v. Clarks Fork Nat. Bank (1981), Mont., 631 P.2d-718, 38 

## -- St.Rep. 1140. In the Graham case we found sufficient evidence to justify the submission of punitive damages from the following facts: (1)The defendant had seized plaintiff's cows, mistakenly thinking they belonged to a bank debtor; and (2) when the plaintiff attempted to recover his cows, the bank adamantly refused to divulge their location and thereafter returned them to the wrong location. We held that such facts raised an issue for the jury's consideration of punitive damages under the 'recklessness' standard enunciated in Klind v. Valley County Bank (1924), 69 Mont. 386, 222 

## P.T~ 439. In this case State Farm sued the wrong person and though advised of its mistake, refused to make a correction. As in Graham, these factsare sufficient for the jury to determine that State Farm acted recklessly and that itbe subject to the sanction ofpunitive damages." In the Graham case, the bank had seized cows and refused to divulge the location or to return them. The cows were branded with the brand of the person claiming ownership, 

### - not the bank's alleged debtor. That is clearly a form of intentional conduct aimed at the plaintiff. In a similar manner in Shahrokhfar, the insurance company sued the wrong person and though advised of itsmistake, refused to make a correction. Again there is intentional conduct specifically aimed at the plaintiff. This does not mean that punitive damages are limited to situations where a tortfeasor intentionally acts to harm a particularplaintiff. However,I would affirm the universally recognized rule that to warrant recovery of punitive damages, the act complained of must not only be unlawful,but must also be characterizedby

some circumstance of aggravation. See Allers v. Willis (Mont.1982), 643P.2d 592, 596, 39 St.Rep. 745, 750. In the present case, plaintiff in substance contends that the adoption of a written policy prohibiting hiring of workers who fail to meet minimum physical requirements, without specifically testing each applicant's individual capacity to perform constitutes recklessness. I do not find the cited

casesgood authority for that conclusion. While it may be contended that the employment regulations of the defendant are subject to some question, the record does not disclose a reckless action and. unreasonable disregard or indifference to a risk of harm to theplaintiff. Under the majority

### 's rationale, each person notmeeting the minimum physical qualifications for the job must be tested individually to determine whether he has unique capabilities. An employer could be liable for punitive damages for not investigating past review of the job application, even if refusal tohire reasonablyprotected the handicapped and his fellow employees from physfcal harm. Respondent's employment standard appears to be specifically sanctioned under section 49-4-401, MCA. I would therefore affirm the District Court in its holding that the Court was precluded from submitting

I join in the above dissent: