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No. 99-114 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

2000 MT 218 

MICHAEL LAUDERT, 

Petitioner and Appellant,

v.

RICHLAND COUNTY SHERIFF'S DEPARTMENT

and the HUMAN RIGHTS COMMISSION OF THE 

STATE OF MONTANA,

Respondents and Respondents.

APPEAL FROM: District Court of the First Judicial District, 

In and for the County of Lewis and Clark,

The Honorable Dorothy McCarter, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Barbara E. Bell, Bell & Marra, pllc, Great Falls, Montana

E. June Lord, Attorney at Law, Great Falls, Montana

For Respondents:

Virginia Bryan, Wright, Tolliver, & Guthals, P.C., Billings, Montana

Mike Weber, Attorney at Law, Sidney, Montana

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(Richland County Sheriff's Deparment)

Patrick A. Trammelle, Montana Department of Labor & Industry,

Helena, Montana

(Montana Human Rights Commission)

For Amicus:

Timothy C. Kelly, Attorney at Law, Emigrant, Montana 

(Montana Trial Lawyers Association)

Submitted on Briefs: October 21, 1999 

Decided: August 11, 2000

Filed:

__________________________________________

Clerk

Justice Jim Regnier delivered the opinion of the Court.

¶1 Michael Laudert appeals from the Decision and Order of the First Judicial District 

Court, Lewis and Clark County, affirming the decision of the Montana Human Rights 

Commission and denying Laudert's request for attorney fees. We affirm in part, reverse in 

part, and remand for proceedings consistent with this opinion.

¶2 This appeal raises the following issues:

¶3 1. Whether the District Court erred in applying the McDonnell Douglas test?

¶4 2. Whether the District Court erred in affirming the hearing examiner's denial of 

Laudert's request for compensatory damages?

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¶ 3. Whether the District Court erred in denying Laudert's claim for attorney fees?

BACKGROUND

¶6 Richland County Sheriff's Department ("RCSD") hired Laudert on September 1, 1985. 

In 1986 Laudert began experiencing gastric bleeds caused by liver dysfunction. This 

bleeding continued for the duration of his employment. In approximately August 1990 

Laudert experienced a massive bleed which required him to be evacuated to a hospital in 

Billings. By September 1990 he had used up all of his accumulated leave and was forced 

to resign. In November 1990 doctors at the University of Minnesota recommended that he 

undergo a transplant operation. Laudert underwent a successful liver transplant in 

September 1991.

¶7 In 1992 Laudert discovered that the person hired by RCSD to replace him would be 

quitting. Laudert spoke with Sheriff Don Tiffany about returning to work at RCSD and 

was informed by Sheriff Tiffany that he would have to apply for the position with the 

other job applicants. Laudert interviewed for the position in February 1992. RCSD 

interviewed seven other applicants. 

¶8 Prior to Laudert's interview, Deputy Russell Glaeske approached Laudert in a 

supermarket and questioned him regarding his transplant. Glaeske expressed concern 

about Laudert's physical ability to handle the job and indicated that he did not believe that 

Laudert could withstand a blow to the stomach. Glaeske made these comments despite the 

fact that Laudert had provided RCSD with a full medical release from his physician 

affirming that he could return to work without restriction. Deputy Glaeske was a member 

of the four-person panel that interviewed the job applicants. During his interview, Laudert 

initiated a discussion regarding Glaeske's concerns about his liver transplant. Laudert 

testified that Glaeske maintained his belief that Laudert could not handle the job because 

of his transplant.

¶9 The four panelists independently rated the applicants. Of the eight applicants, Laudert 

received the lowest interview rating, while J. C. Rankin received the highest rating. RCSD 

hired Rankin for the position.

¶10 Laudert filed a Charge of Discrimination with the Montana Human Rights 

Commission on August 12, 1992, alleging that the RCSD had unlawfully discriminated 

against him in an employment decision on the basis of his age and disability. On July 15, 

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1994, the Commission certified Laudert's complaint for a contested case hearing. A 

contested case hearing was held on July 24-26 and August 19, 1996. 

¶11 Hearing Examiner Terry Spear issued a decision on March 3, 1997. The hearing 

examiner found that RCSD had considered Laudert's disability by questioning him about 

his liver disease and transplant during his interview. Accordingly, the examiner ordered 

RCSD to submit a written policy regarding hiring procedures which included specific 

guidelines regarding future inquiry into applicant disabilities. However, the examiner did 

not award damages to Laudert because the examiner found that RCSD would not have 

hired Laudert even in the absence of any unlawful consideration of his disability.

¶12 Laudert filed exceptions to the hearing examiner's decision with the Montana Human 

Rights Commission contending that the hearing examiner should have awarded him 

damages and that the hearing examiner applied the wrong standard of proof to RCSD's 

affirmative defense that they would not have hired Laudert regardless of his disability. On 

November 20, 1997, the commission issued an order affirming the hearing examiner's 

decision.

¶13 On December 19, 1997, Laudert filed a Petition for Judicial Review and for Attorneys' 

Fees & Costs with the First Judicial District Court, Lewis and Clark County, contending 

that the commission erred in affirming the hearing examiner's decision and seeking 

attorney fees and costs pursuant to § 49-2-505(7), MCA. On February 2, 1999, the District 

Court issued its Decision and Order affirming the final decision of the commission and 

denying Laudert's request for attorney fees and costs. Laudert appeals.

STANDARD OF REVIEW

¶14 A district court reviews an administrative decision in a contested case to determine 

whether the findings of fact are clearly erroneous and whether the agency correctly 

applied the law. See Hearing Aid Inst. v. Rasmussen (1993), 258 Mont. 367, 371-72, 852 

P.2d 628, 631; see also § 2-4-704, MCA. We employ the same standards when reviewing 

a district court order affirming or reversing an administrative decision. See Langager v. 

Crazy Creek Prod., Inc., 1998 MT 44, ¶ 13, 287 Mont. 445, ¶ 13, 954 P.2d 1169, ¶ 13.

ISSUE ONE

¶15 Whether the District Court erred in applying the McDonnell Douglas test?

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¶16 The hearing examiner found that the questions which members of the interview panel 

asked Laudert during his interview were "direct evidence" that RCSD unlawfully 

considered his disability. RCSD contended that it did not hire Laudert because of his 

employment history. On this basis, the hearing examiner concluded that Laudert had 

established a "mixed motive" case. The Montana Human Rights Commission affirmed.

¶17 On review, the District Court concluded that our decision in European Health Spa v. 

Human Rights Commission (1984), 212 Mont. 319, 687 P.2d 1029, precluded it from 

applying the "mixed motive" approach used by the hearing examiner. Instead, the court 

attempted to review the hearing examiner's decision using the approach of McDonnell 

Douglas Corp. v. Green (1973), 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668. In 

applying the McDonnell Douglas approach to uphold the hearing examiner's order, the 

District Court reached some seemingly inconsistent conclusions. The court affirmed the 

hearing examiner's finding that Laudert proved that RCSD had relied, in part, on his 

disability in deciding not to hire him, but the court also concluded the Laudert failed to 

prove that the RCSD's nondiscriminatory reasons for not hiring him were pretextual. 

Clearly, the District Court was struggling to reach the correct result by attempting to fit a 

case of mixed motives into the McDonnell Douglas framework. 

¶18 Laudert claims that because he presented direct evidence of discrimination, the trial 

court erred by not applying the analysis contained in Reeves v. Dairy Queen, Inc., 1998 

MT 13, 287 Mont. 196, 953 P.2d 703. Laudert observes that in Reeves we held that when 

discrimination is proven by direct evidence, the employer must prove by a preponderance 

of the evidence that an unlawful motive played no role in the challenged action or that the 

direct evidence of discrimination is not credible and is unworthy of belief. See Reeves, ¶ 

17. RCSD contends that our holding in Reeves is not applicable to these facts because 

Reeves only pertains to instances in which the parties do not dispute the employer's reason 

for the challenged action. RCSD claims that the hearing examiner properly applied the 

"mixed motive" analysis described by the United States Supreme Court in Price 

Waterhouse v. Hopkins (1989), 490 U.S. 228, 109 S. Ct. 1775, 104 L. Ed. 2d 268. 

¶19 Section 49-2-303(1), MCA, provides that "it is an unlawful discriminatory practice 

for . . . an employer to refuse employment to a person . . . because of . . . physical or 

mental disability." Similarly, § 49-4-101, MCA, provides that "[i]t is unlawful to 

discriminate, in hiring or employment, against a person because of the person's physical 

disability." 

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¶20 Claims of unlawful employment discrimination under the Montana Human Rights Act 

have typically been evaluated using the burden-shifting approach announced in 

McDonnell Douglas. See, e.g., Hafner v. Conoco (1994), 268 Mont. 396, 401, 886 P.2d 

947, 950; see also Rule 24.9.610, ARM. Under this test, a person alleging discrimination 

must first demonstrate a prima facie case of discrimination. If the plaintiff proves a prima 

facie case by a preponderance of the evidence, the burden shifts to the employer to rebut 

the presumption of unlawful discrimination by producing a legitimate, nondiscriminatory 

reason for the action. Upon the employer's articulation of a lawful motive for the action, 

the burden shifts to the plaintiff to prove that the employer's proffered reason is only a 

pretext for unlawful discrimination. See Reeves, ¶ 12. Claims of employment 

discrimination analyzed under the McDonnell Douglas test are claims involving 

"circumstantial evidence" of unlawful discrimination or "pretext." See Reeves, ¶ 15.

¶21 However, in Reeves we held that the McDonnell Douglas burden-shifting approach 

was inappropriate for cases in which "the parties do not dispute the reason for the 

employer's action, but only whether such action is illegal discrimination." Reeves, ¶ 16. 

The plaintiff in Reeves received a reference letter from her former employer which stated 

that she had been fired because of "a combination of having high blood pressure and 

working in a position as a fast order cook working under conditions of pressure, stress and 

heat." Reeves, ¶ 7. We held that Reeves presented a case of "direct evidence" of 

discriminatory intent because the parties did not dispute the fact that Reeves' employer 

fired Reeves because of her high blood pressure. Reeves, ¶37. 

¶22 The facts of the case sub judice do not fit neatly into either the Reeves approach or the 

McDonnell Douglas approach. Like the plaintiff in Reeves, the hearing examiner found 

that Laudert submitted "direct evidence" of RCSD's discriminatory intent. This finding 

makes the burden-shifting approach of McDonnell Douglas "inappropriate and unduly 

confusing." Reeves, ¶ 15. As the Supreme Court has held, the McDonnell Douglas test is 

inapplicable when plaintiffs present direct evidence of discrimination. See Trans World 

Airlines, Inc. v. Thurston (1985), 469 U.S. 111, 121, 105 S. Ct. 613, 621-22, 83 L. Ed. 2d 

523. The Court observed that the shifting burdens of proof set forth in McDonnell Douglas

were designed to assure that plaintiffs have their day in court "despite the unavailability of 

direct evidence." Trans World Airlines, 469 U.S. at 121, 105 S. Ct. at 621-22 (emphasis 

added); see also Martinez v. Yellowstone County Welfare Dep't (1981), 192 Mont. 42, 48, 

626 P.2d 242, 245-46 (observing that one of the purposes of the McDonnell Douglas test 

is to ease the difficulty of bringing a claim of employment discrimination in the absence of 

direct evidence).

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¶23 However, the Reeves approach is inappropriate as well, because unlike Reeves, the 

parties do not agree on the reason for the challenged action. Rather, RCSD's reason for not 

hiring Laudert is the determinative issue of this dispute. We observed in Reeves that 

assuming that the plaintiff is a member of a class protected by the statute, the 

determinative issue in a case in which the parties do agree on the reason for the challenged 

decision will not be the employer's intent, but instead in most cases will be whether the 

employee is "otherwise qualified" with or without reasonable accommodation, a factual 

dispute capable of resolution through traditional methods of proof. Reeves, ¶ 16. 

¶24 In Price Waterhouse the United States Supreme Court addressed, for the first time, an 

employment discrimination claim in which a plaintiff presented direct evidence of 

discriminatory intent, but the parties did not agree on the reason for the challenged 

employment decision. The plaintiff, Ann Hopkins, a senior manager for Price Waterhouse, 

was denied partnership after the partners in her office submitted her name as a partner 

candidate. During the review of her candidacy for partnership, Price Waterhouse partners 

described Hopkins as "macho," suggested she "overcompensated for being a woman," and 

advised her to take "a course in charm school." Price Waterhouse, 490 U.S. at 235, 109 S. 

Ct. at 1782. In explaining to Hopkins what she could do to improve her chances of 

becoming a partner at Price Waterhouse, one partner advised her to "walk more 

femininely, talk more femininely, dress more femininely, wear make-up, have her hair 

styled, and wear jewelry." Price Waterhouse, 490 U.S. at 235, 109 S. Ct. at 1782. Hopkins 

filed a claim of unlawful employment discrimination on the basis of gender. Price 

Waterhouse contended that it denied Hopkins' bid for partnership because of her poor 

"interpersonal skills." 

¶25 A majority of the court concluded that Hopkins had submitted sufficient evidence to 

prove that gender stereotyping was a motivating factor in Price Waterhouse's denial of 

partnership. A plurality of justices observed that "Hopkins proved that Price Waterhouse 

invited partners to submit comments; that some of the comments stemmed from [gender] 

stereotypes; that an important part of the Policy Board's decision on Hopkins was an 

assessment of the submitted comments; and that Price Waterhouse in no way disclaimed 

reliance on the [gender] linked evaluations." Price Waterhouse, 490 U.S. at 251, 109 S. 

Ct. at 1791. The plurality concluded that direct evidence that an unlawful consideration 

played a motivating role in an employment decision is sufficient to support a finding that 

the plaintiff was unlawfully discriminated against. Price Waterhouse, 490 U.S. at 241-42, 

109 S. Ct. at 1786. However, the plurality held that an employer could avoid liability if it 

could prove the "affirmative defense" that it "would have made the same decision" in the 

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absence of the unlawful consideration. Price Waterhouse, 490 U.S. at 245-46, 109 S. Ct. 

at 1788. 

¶26 In a concurring opinion, Justice O'Conner attempted to identify with more precision 

what evidence would constitute "direct evidence" of discrimination by describing what 

was not direct evidence: "stray remarks in the workplace," "statements by 

nondecisionmakers," or "statements by decisionmakers unrelated to the decisional 

process." Price Waterhouse, 490 U.S. at 277, 109 S. Ct. at 1804-05.

¶27 In European Health Spa, we observed that we had adopted the McDonnell Douglas

test for employment discrimination cases which involve disparate treatment because the 

provisions of Title 49, of the Montana Human Rights Act, are closely modeled after Title 

VII of the Federal Civil Rights Act. European Health Spa, 212 Mont. at 325, 687 P.2d at 

1032. For the same reason, we hereby adopt the analysis of Price Waterhouse. 

Accordingly, we will review the hearing examiner's decision to determine whether the 

hearing examiner correctly applied the "mixed motive" analysis contained in Price 

Waterhouse.

¶28 The hearing examiner correctly concluded that the "mixed motive" analysis applied. 

First, the hearing examiner found that Laudert had produced direct evidence that 

consideration of an illegal criterion, his liver condition, played a motivating role in 

RCSD's decision not to hire him. Thus, the McDonnell Douglas approach was 

inapplicable.

¶29 As in Price Waterhouse, the hearing examiner found that Laudert submitted evidence 

of statements made by a decision-maker and related to the decisional process being 

challenged which reflected an unlawful discriminatory attitude. The parties do not contest 

this finding. This finding was supported by the following facts. Deputy Glaeske, one of 

the four panelists who evaluated Laudert's interview, expressed his doubts regarding 

whether Laudert was physically capable of performing the job due to his disability, prior 

to Laudert's interview. Laudert brought up Glaeske's doubts during his interview. Despite 

having provided a full medical release, a discussion of Laudert's physical condition, 

medical history, and medication needs followed. The interviewers asked if Laudert could 

do the job and if Laudert could take a blow to the stomach. Laudert asked if his medical 

releases were in his job application file and provided another copy after the interview. 

Laudert estimated that 10 minutes of the 20- to 30-minute interview were spent discussing 

his physical condition.

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¶30 Second, the parties did not agree on the reason RCSD refused to hire Laudert. Laudert 

claimed that he was not hired because of his disability; RCSD claimed that it did not hire 

Laudert because of his employment history. Thus, the Reeves approach was inapplicable. 

¶31 We conclude that the hearing examiner correctly applied a "mixed motive" analysis. 

The District Court erred in applying the McDonnell Douglas approach to these facts.

ISSUE TWO

¶32 Whether the District Court erred in affirming the hearing examiner's denial of 

Laudert's request for compensatory damages?

¶33 The hearing examiner required RCSD to prove by a preponderance of the evidence 

that unlawful consideration of Laudert's disability played no role in the challenged action 

in order to completely avoid liability. The hearing examiner found that RCSD failed to 

prove that its unlawful consideration of Laudert's disability played no part in the decision 

to hire another candidate. However, the hearing examiner also found that RCSD did prove 

by a preponderance of the evidence that it would not have hired Laudert regardless of his 

disability. As a result, the hearing examiner denied Laudert's request for compensatory 

damages. Both the commission and the District Court affirmed the denial of compensatory 

damages.

¶34 Laudert claims that pursuant to our holding in Reeves and a plain meaning 

interpretation of § 49-4-102, MCA, he should have been awarded compensatory damages 

and attorney fees once the hearing examiner found that RCSD failed to prove that 

unlawful consideration of Laudert's disability played no part in the decision not to hire 

him. In the alternative, Laudert contends that he is entitled to compensatory damages 

because the hearing examiner's finding that RCSD proved it would not have hired him 

even in the absence of his disability is clearly erroneous. RCSD contends that the hearing 

examiner correctly determined that Laudert had presented a mixed motive case and denied 

awarding compensatory damages to Laudert because RCSD proved that it would not have 

hired Laudert regardless of his disability. Neither party challenges the hearing examiner's 

order of equitable relief against RCSD.

¶35 Laudert's contention that he is entitled to compensatory damages pursuant to Reeves is 

without merit. Reeves is expressly limited to cases in which "the parties do not dispute the 

reason for the employer's action, but only whether such action is illegal discrimination." 

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Reeves, ¶ 16. Laudert and RCSD do dispute the reason for the challenged employment 

decision. Laudert claims that RCSD did not hire him because of his disability. RCSD 

contends that they did not hire Laudert because of his employment history.

¶36 Laudert's contention that he is entitled to compensatory damages pursuant to the 

"plain meaning" of § 49-4-102, MCA, is also without merit. Section 49-4-102, MCA, 

applies to civil actions brought in district court and not petitions for judicial review. 

Section 49-4-102, MCA, describes the "civil" remedy available in "a district court action." 

Section 49-4-102, MCA, also provides that "should the person who allegedly practiced 

discrimination prevail in the civil action, he shall be entitled to recover reasonable 

attorney's fees." (Emphasis added.) Laudert did not file an action in a district court for 

civil damages and attorney fees accrued as the result of an act of employment 

discrimination. Rather, he filed a petition for judicial review after his claim of 

employment discrimination was tried before a hearing examiner of the Montana Human 

Rights Commission. The statute which governs damage awards in employment 

discrimination cases heard before the Montana Human Rights Commission is § 49-2-506, 

MCA. See Vainio v. Brookshire (1993), 258 Mont. 273, 280, 852 P.2d 596, 601 ("Section 

49-2-506(1)(b) delineates the forms of relief which the HRC may order if it finds that a 

person has engaged in unlawful discriminatory practices."). 

¶37 Section 49-2-506, MCA, provides, in relevant part:

(1) If the commission or the department, after a hearing, finds that a party against whom a 

complaint was filed engaged in the discriminatory practice alleged in the complaint, the 

commission . . . shall order the party to refrain from engaging in the discriminatory 

conduct. The order may:

(a) prescribe conditions on the accused's future conduct relevant to the type of 

discrimination found;

(b) require any reasonable measure to correct the discriminatory practice and to 

rectify any harm, pecuniary or otherwise, to the person discriminated against;

(c) require a report on the manner of compliance.

(Emphasis added.)

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¶38 Whether the hearing examiner could award damages under this provision first depends 

on whether the examiner found that RCSD "engaged in the discriminatory practice 

alleged." Proof that an unlawful consideration played a motivating role in an adverse 

employment decision is sufficient to prove that an employer engaged in a discriminatory 

practice. See Price Waterhouse, 490 U.S. at 241-42, 109 S. Ct. at 1775. The issue then 

becomes whether, upon a finding of discrimination, the hearing examiner was required to 

award compensatory damages. The use of the word "shall" indicates that the commission 

must order a defendant to refrain from engaging in the discriminatory conduct upon a 

finding that the defendant engaged in the discriminatory practice alleged. Cf. Montco v. 

Simonich (1997), 285 Mont. 280, 287, 947 P.2d 1047, 1051 ("Both 'shall' and 'must' are 

mandatory, rather than permissive."). On the other hand, the commission's authority to 

award compensatory damages is discretionary. The use of the word "may" indicates that 

the commission has the discretion to award compensatory damages upon a finding that the 

defendant engaged in the discriminatory practice alleged. Cf. Matter of Investigative 

Records of City of Columbus Police Dep't (1995), 272 Mont. 486, 488, 901 P.2d 565, 567 

(observing that the word "may" is permissive and therefore grants discretion). 

¶39 The commission observes that it has adopted an administrative rule governing 

remedies in mixed motive cases. Rule 24.9.611, ARM, provides, in relevant part:

When the charging party proves that the respondent engaged in unlawful 

discrimination or illegal retaliation, but the respondent proves the same action 

would have been taken in the absence of the unlawful discrimination or illegal 

retaliation, the case is a mixed motive case. In a mixed motive case . . . the 

commission will not issue an order awarding compensation . . . . 

(Emphasis added.) 

¶40 In sum, the hearing examiner found that RCSD had engaged in a discriminatory 

practice. The commission's authority to award compensatory damages upon a finding of 

discrimination is discretionary under § 49-2-506(1)(b), MCA. The commission has 

exercised its statutory authority to adopt Rule 24.9.611, ARM, limiting its discretion to 

award compensatory damages by precluding such awards in cases of mixed motives. See 

§ 49-2-204, MCA. This limitation is consistent with the commission's statutory authority 

to adopt substantive rules necessary to implement its responsibilities under the Act and 

also comports with federal case law. See Price Waterhouse, 490 U.S. at 244-45, 109 S. Ct. 

1787-88. 

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¶41 Accordingly, whether Laudert was entitled to compensatory damages depends on 

whether RCSD proved by a preponderance of the evidence that it would have made the 

same decision in the absence of Laudert's disability. See Rule 24.9.611, ARM; see also

Price Waterhouse, 490 U.S. at 244-45, 109 S. Ct. 1787-88. The hearing examiner found 

that RCSD proved that Laudert would not have been hired in any event. There is 

substantial evidence to support this finding. As the hearing examiner observed, RCSD 

proved the existence of numerous legitimate reasons for preferring J.C. Rankin, the person 

RCSD hired, over Laudert. For instance, in 1987, while exiting the parking lot of the 

Triangle Nightclub southeast of Sidney, Montana, the vehicle Laudert was driving struck a 

vehicle driven by Kim Thiel. Mr. Thiel testified that he believed Laudert was drunk and he 

filed a complaint with RCSD. Laudert testified that he was issued a ticket for failure to 

yield the right-of-way and was suspended from work for three days. In 1990 Laudert was 

one of the subjects of sexual harassment complaints brought by two RCSD dispatchers. 

Lastly, Laudert indicated on his job application submitted in 1992 that he left the Sidney 

Police Department because he had "[l]ittle chance to use skills and training." Sheriff 

Tiffany of the RCSD testified that upon speaking with the Sidney Police Department, he 

discovered that Laudert was not truthful on his job application and that he had resigned 

from the Sidney Police Department because he was going to be terminated. These 

incidents are all legitimate reasons for deciding not to hire Laudert. The hearing examiner 

found that all four of the interview panelists were aware of at least some of these incidents 

before the hiring decision was made. Lastly, the hearing examiner found that Rankin, the 

person RCSD chose over Laudert, had a "clean" employment history. 

¶42 We affirm the denial of Laudert's request for compensatory damages.

ISSUE THREE

¶43 Whether the District Court erred in denying Laudert's claim for attorney fees?

¶44 Laudert asserts that due to the hearing examiner's finding that his physical disability 

played a role in RCSD's decision not to hire him and the hearing examiner's award of 

affirmative relief against RCSD, he was a "prevailing party" within the meaning of § 49-2-

505(7), MCA. Therefore, Laudert contends that the District Court erred when it denied his 

request for attorney fees. Respondent Montana Human Rights Commission does not 

contest Laudert's claim that he is a prevailing party. The Montana Trial Lawyer's 

Association, who filed a brief as amicus, also agrees with Laudert's claim.

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¶45 RCSD maintains that Laudert is not entitled to attorney fees under § 49-2-505(7), 

MCA, because he did not follow the appropriate procedure. It is RCSD's contention that 

the statute required Laudert to file an action for attorney fees in district court separate 

from his petition for judicial review. RCSD also argues that the District Court did not 

abuse its discretion in determining that Laudert was not a prevailing party.

¶46 As a preliminary matter, we reject RCSD's claim that Laudert is not entitled to 

attorney fees because he did not follow the appropriate procedure. As Laudert correctly 

observes, the issue of whether he followed the appropriate procedure in his action for 

attorney fees was raised below and rejected by the District Court in its Decision and 

Order. The District Court concluded that Laudert's claim for attorney fees under § 49-2-

505(7), MCA, was properly before the court and that requiring Laudert to file a separate 

action for attorney fees would serve no purpose. "Although Rule 14 [M.R.App.P.] 

provides for review of matters by cross-assignment of error, this does not eliminate the 

necessity for cross-appeal by a respondent who seeks review of rulings on matters separate 

and distinct from those sought to be reviewed by the appellant." Johnson v. Tindall (1981), 

195 Mont. 165, 169, 635 P.2d 266, 268; accord Marco and Co., LLC v. Deaconess/

Billings Clinic Health Sys., 1998 MT 26, ¶ 13, 287 Mont. 293, ¶ 13, 954 P.2d 1116, ¶ 13. 

The issue of whether the District Court erred by determining that Laudert was not a 

prevailing party is separate and distinct from the issue of whether the District Court erred 

by determining that Laudert followed the appropriate procedure in maintaining his request 

for attorney fees. Accordingly, we conclude that a cross-appeal is necessary for our review 

of the additional issue presented by RCSD. Because no cross-appeal was filed, we will not 

address this issue.

¶47 In regard to Laudert's claim for attorney fees, the District Court concluded:

Although Laudert prevailed to the extent that the Human Rights Commission held 

that he was discriminated against on the basis of a disability, he did not prevail on 

the ultimate basis for his petition. He was awarded no damages or other relief. To 

that extent, the Sheriff's Department prevailed. For these reasons, the Court declines 

to award attorney fees.

(Emphasis added.) 

¶48 A district court's award of attorney fees to a prevailing party in a contested case 

hearing is governed by § 49-2-505(7), MCA, which provides that "[t]he court in its 

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discretion may allow the prevailing party reasonable attorney fees." We review a district 

court's decision to award or deny attorney fees under § 49-2-505, MCA, to determine 

whether the court abused its discretion. See McCann v. Trustees, Dodson School Dist. 

(1991), 249 Mont. 362, 364, 816 P.2d 435, 436. We review any legal conclusions reached 

in deciding upon a request for a statutory fee award to determine whether they are correct. 

See Ihler v. Chisholm, 2000 MT 37, ¶ 24, 995 P.2d 439, ¶ 24, 57 St.Rep. 163, ¶ 24.

¶49 As we have previously stated, the Montana Human Rights Act is closely modeled 

after Title VII, and reference to pertinent federal case law is both useful and appropriate. 

See McCann, 249 Mont. at 364, 816 P.2d at 437. In Wagner v. Empire Development Corp. 

(1987), 228 Mont 370, 743 P.2d 586, we referred to federal decisions interpreting 42 U.S.

C. § 1988 for assistance in construing § 49-2-505(7), MCA. Under § 1988, a prevailing 

plaintiff should ordinarily recover an attorney's fee "unless special circumstances would 

render such an award unjust." Hensley v. Eckerhart (1983), 461 U.S. 424, 429, 103 S. Ct. 

1933, 1937, 76 L. Ed. 2d 40, 48. However, before attorney fees can be granted, a court 

must determine whether the plaintiff prevailed. See Hensley, 461 U.S. at 434, 103 S. Ct. at 

1939.

¶50 In Texas State Teachers Association v. Garland Independent School District (1989), 

489 U.S. 782, 109 S. Ct. 1486, 103 L. Ed. 2d 866, the Supreme Court resolved a split 

among the Federal Circuit Courts of Appeal concerning the definition of "prevailing" 

plaintiff. Some federal appeals courts had required that a party succeed on the "central 

issue" in the litigation and achieve the "primary relief sought" in order to be eligible for 

fees as a prevailing party, while other courts had applied a less demanding standard, 

requiring only that a party succeed on a "significant issue" and receive "some of the relief 

sought." Garland, 489 U.S. at 784, 109 S. Ct. 1489. The Supreme Court rejected the 

"central issue test," observing that it was not only contrary to congressional intent, but also 

that it would be difficult to administer because answers to the question of the "central 

issue" and the "primary relief sought" in a dispute appeared to depend largely on the 

mental state of the parties in bringing the suit. Garland, 489 U.S. at 791, 109 S. Ct. at 

1493. The Court stated that a prevailing party is one who has succeeded on any significant 

issue in litigation which achieved some of the benefit the party sought in bringing suit. In 

this regard, the Court declared that "the touchstone of the prevailing party inquiry must be 

the material alteration of the legal relationship of the parties in a manner which Congress 

sought to promote in the fee statute." Garland, 489 U.S. at 792-93, 109 S. Ct. at 1494. 

¶51 The District Court erred by concluding that Laudert did not prevail because he did not 

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prevail on the "ultimate basis for his petition." That type of analysis was expressly 

repudiated by the Supreme Court in Garland when it rejected the "central issue" and 

"primary relief sought" tests under § 1988. We believe that requiring that a plaintiff 

prevail on the "ultimate basis" is an inappropriate test for purposes of § 49-2-505(7), 

MCA. This type of analysis distracts trial courts from the primary purposes behind the fee 

shifting provisions of the Montana Human Rights Act, namely, ensuring "effective access 

to the judicial process" and encouraging "meritorious civil rights litigation." Wagner, 228 

Mont. at 372, 743 P.2d at 587 (quoting Hensley, 461 U.S. at 429 n.2, 102 S. Ct. at 1937 

n.2); cf. Garland, 489 U.S. at 791, 109 S. Ct. at 1493. 

¶52 However, the issue of whether Laudert prevailed remains. In Farrar v. Hobby (1992), 

506 U.S. 103, 113 S. Ct. 566, 121 L. Ed. 2d 494, the Court further refined the definition of 

prevailing party for purposes of § 1988. The appellants in Farrar succeeded in securing a 

jury finding that their civil rights had been violated by the defendant, but the jury also 

found that this violation was not the proximate cause of their damages. The plaintiffs 

received an award of nominal damages in the amount of one dollar. The Court concluded 

that, in order to prevail for purposes of § 1988, a plaintiff:

[M]ust obtain an enforceable judgement against the defendant from whom fees are 

sought . . . or comparable relief through a consent decree or settlement. Whatever 

relief the plaintiff secures must directly benefit him at the time of the judgment or 

settlement. Otherwise, the judgment or settlement cannot be said to "affec[t] the 

behavior of the defendant toward the plaintiff." . . . In short, a plaintiff "prevails" 

when actual relief on the merits of [the plaintiff's] claim materially alters the legal 

relationship between the parties by modifying the defendant's behavior in a way that 

directly benefits the plaintiff.

Farrar, 506 U.S. at 111-12, 113 S. Ct. at 573 (citations omitted).(1) The Court held that the plaintiffs 

had prevailed because the award of nominal damages "modifies the defendant's behavior for the 

plaintiff's benefit by forcing the defendant to pay an amount of money he otherwise would not pay." 

Farrar, 506 U.S. at 113, 113 S. Ct. at 574.

¶53 Under Farrar, the determination of whether Laudert prevailed would depend on 

whether the judgment he received materially altered the legal relationship between the 

parties by modifying RCSD's behavior in a way that directly benefited Laudert. The 

hearing examiner required RCSD to submit a written policy regarding hiring procedures 

which included specific guidelines regarding future inquiry into applicant disabilities. This 

order of affirmative injunctive relief clearly modified RCSD's behavior. The remaining 

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issue is whether Laudert directly benefited from this modification.

¶54 The decisions referred to by the parties and amicus to aid us in determining whether 

Laudert prevailed are unavailing. Many of the decisions are factually distinct in that the 

plaintiff clearly prevailed under Farrar because the plaintiff received a direct personal 

benefit from a decision on the merits of the plaintiff's claim, see LeBlanc-Sternberg v. 

Fletcher (2d Cir. 1998), 143 F.3d 748, 758 (plaintiff awarded nominal damages); Brandau 

v. Kansas (10th Cir. 1999), 168 F.3d 1179, 1181 (nominal damages); Hashimoto v. Dalton

(9th Cir. 1997), 118 F.3d 671, 677 (defendant directed to remove negative character 

reference from plaintiff's personnel file); Roe v. Cheyenne Mountain Conference Resort, 

Inc. (10th Cir. 1997), 124 F.3d 1221, 1231 (observing that there was no doubt that the 

plaintiff's suit would affect the behavior of the defendant toward the plaintiff), or the 

plaintiff did not receive an enforceable judgment on the merits, see Baumgartner, 21 F.3d 

at 544, or the attorney fee issue was decided pursuant to a federal statute which does not 

require a court to determine whether a party prevailed before granting attorney fees,(2) see, 

e.g., Gudenkauf v. Stauffer Communications, Inc. (10th Cir. 1998), 158 F.3d 1074, 1080 

(issue of award of attorney fees decided under 42 U.S.C. § 2000e).

¶55 Amicus argues that Laudert directly benefited from the hearing examiner's order 

because he might seek employment with RCSD in the future and, if so, would directly 

benefit from RCSD's court-ordered antidiscrimination policy. This potential benefit is not 

the type of direct personal benefit that would allow a court to conclude that a plaintiff 

"prevailed" under federal law. Under § 1988, "whatever relief the plaintiff secures must 

directly benefit him at the time of the judgment or settlement." Farrar, 506 U.S. at 111, 

113 S. Ct. at 573.

¶56 We found the Supreme Court's analysis in Garland "useful and appropriate" in 

interpreting § 49-2-505(7), MCA, because it furthered the primary purposes behind this 

fee shifting provision. By the same token, we reject the Supreme Court's requirement that 

a plaintiff secure a direct benefit at the time judgment is entered in order to be a prevailing 

party because this requirement would not further the purpose of awarding attorney fees in 

civil rights cases brought under the Montana Human Rights Act. As we stated in Wagner, 

one of the purposes of § 49-2-505(7), MCA, is to encourage the filing of "meritorious civil 

rights litigation." Wagner, 228 Mont. at 372, 743 P.2d at 587 (observing that "without an 

attorney's fee award for successful litigants, meritorious civil rights litigation often would 

not be brought"). Complaints of civil rights abuses which are successful in establishing a 

finding of discrimination and an order of injunctive relief requiring an employer to 

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establish nondiscriminatory hiring guidelines are certainly the type of meritorious civil 

rights litigation that should be encouraged. "Title 49 clearly depicts the intent of the 

legislature . . . [that] [t]here shall be no discrimination in certain areas of the lives of 

Montana citizens, employment being one such area, except under the most limited of 

circumstances." Dolan v. School Dist. #10 (1981), 195 Mont. 340, 347, 636 P.2d 825, 829. 

¶ 57For the same reasons, we also reject RCSD's suggestion that although Laudert may 

have prevailed, he is nonetheless not entitled to an award of fees because his victory was 

purely "technical" or "de minimis." See Farrar, 506 U.S. at 114, 113 S. Ct. at 574. The 

injunctive order requiring RCSD to establish non-discriminatory hiring practices provides 

the public with a measure of protection from future civil rights violations by RCSD. As 

amicus notes, as a result of the enforcement provisions of Montana's Human Rights Act, 

private individuals such as Laudert play a key role in assuring compliance by private and 

public entities with the requirements of the Act. In that role, they serve not only their own 

private interests in seeking recovery for their injuries, but also the broader public interest 

of eliminating "discrimination in certain areas of the lives of Montana citizens." Dolan, 

195 Mont. at 347, 636 P.2d at 829. To conclude that although Laudert prevailed, he is 

nonetheless not entitled to fees because his success was purely "technical" would serve to 

discourage the elimination of unlawful discrimination in employment.

¶58 For the forgoing reasons, we conclude that the District Court's determination that 

Laudert did not prevail because RCSD proved that it would have made the same decision 

despite its consideration of Laudert's disability is in error. We remand to the District Court 

to determine a reasonable fee award pursuant to § 49-2-505(7), MCA. 

¶59 Affirmed in part, reversed in part, and remanded for proceedings consistent with this 

opinion.

/S/ JIM REGNIER 

We Concur:

/S/ J. A. TURNAGE

/S/ WILLIAM E. HUNT, SR.

/S/ JAMES C. NELSON

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Justice Karla M. Gray, concurring in part and dissenting in part.

¶60 I concur in the Court's opinion on issues one and two. I respectfully dissent from that 

opinion on issue three, namely, whether the District Court erred in denying attorney fees 

to Laudert. While I agree that the trial court erred in using the "ultimate basis" test in 

determining whether Laudert is the prevailing party, I would affirm its denial of attorney 

fees under the "right result, wrong reason" approach, relying on the "useful and 

appropriate"--and, I submit, persuasive--federal authorities cited by the Court. 

¶61 We all agree that § 49-2-505(7), MCA, vests discretion in the district courts to award 

reasonable attorney fees to the prevailing party in a discrimination action. Thus, our 

inquiry is whether Laudert is the prevailing party in this action. We also apparently agree 

that federal case law is useful and appropriate in interpreting the Montana Human Rights 

Act (Montana Act) and that, as a logical next step, the United States Supreme Court's 

articulation of the "prevailing party" standard in Garland is the appropriate test. Under 

that test, "the touchstone of the prevailing party inquiry must be the material alteration of 

the legal relationship of the parties . . . ." Garland, 489 U.S. at 792-93, 109 S.Ct. at 1494. 

¶62 It is true, as the Court observes, that the Supreme Court further refined the prevailing 

party test in Farrar. In doing so, however, the Supreme Court left untouched the 

fundamental basis of that test as expressed in Garland. Notwithstanding the addition of the 

"enforceable judgment . . . or comparable relief" language, the focal point of the prevailing 

party test still centers on relief that materially alters the legal relationship between the 

parties. Farrar, 506 U.S. at 111, 113 S.Ct. at 573 (citing Garland, 489 U.S. at 792-93, 109 

S.Ct. at 1494). Indeed, the rationale for adding the "enforceable judgment or comparable 

relief" refinement in Farrar is merely a matter of logic and common sense because, absent 

such judgment or relief, there can be no material alteration in the legal relationship

between the parties.

¶63 In the present case, it is undisputed that the relief granted--that is, required changes in 

the RCSD's policy on hiring procedures--does not affect the legal relationship between 

Laudert and the RCSD in any fashion. On that basis, and because our practice is to use 

federal authority in interpreting the Montana Act, I would conclude that Laudert was not 

the prevailing party for purposes of the District Court's discretionary authority to award 

attorney fees under § 49-2-505(7), MCA. 

¶64 Instead of doing so, the Court abruptly switches horses in midstream by rejecting the 

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Farrar prevailing party standard--which includes the core Garland concept of a material 

alteration in the legal relationship between the parties--and saddling up a new pony which, 

as it candidly admits, is not supported by any federal authority cited by any party or, 

indeed, by the Court. Under this new approach to the Montana Act, civil rights plaintiffs 

become, in essence, private attorneys general who serve the public good by eliminating 

discrimination, even if the one established discriminatory act--here, an act which began as 

a discussion of Laudert's past medical problems initiated by Laudert himself--does not 

produce a result adverse to the plaintiff or any other person. In the abstract, this is 

assuredly a noble and sound result. The problem is that such a result is not supported by 

the language of the Montana Act or any other legal authority. Moreover, the Court's 

decision to depart from our practice of relying on federal authority in interpreting the 

Montana Act and, instead, to pick and choose when and to what extent it will do so, leaves 

legal practitioners and trial courts without any guidance in this important area of the law.

¶65 Nor does the Court address the fact that, once a hearing examiner or the Commission 

finds a discriminatory practice or conduct has occurred, it is required to order the party to 

refrain from engaging in that conduct and prescribe conditions on such future conduct 

which are relevant to the type of discriminatory practice found, without regard to whether 

the plaintiff establishes that the practice or conduct resulted in his or her failure to obtain 

the job at issue. See § 49-2-506, MCA. Under the Court's approach to the prevailing party 

standard, then, every plaintiff who establishes a single discriminatory act necessarily will 

be a prevailing party for purposes of the discretionary award of attorney fees authorized by 

§ 49-2-505(7), MCA. Nothing in the language of the Montana Act supports such a result. 

¶66 The Court cites to our Wagner and Dolan decisions as support for its "public service" 

approach to the prevailing party inquiry. Neither case is relevant here. In Wagner, the 

plaintiff's prevailing party status was undisputed and the issue was whether the trial court 

abused its discretion in denying attorney fees. Wagner, 228 Mont. at 371-72, 743 P.2d at 

587. In that context, we cited to a United States Supreme Court case for the proposition 

that "[t]he purpose of awarding attorney's fees to prevailing parties in civil rights litigation 

is to ensure 'effective access to the judicial process[,]' '' and went on to state that "[g]

enerally, there is agreement that without an attorney's fee award for successful litigants, 

meritorious civil rights litigation often would not be brought." Wagner, 228 Mont. at 372, 

743 P.2d at 587. The Court is simply in error in relying on our statements in Wagner as the 

basis for its prevailing party determination, an issue not addressed there and to which the 

quoted statements bear no relationship. Indeed, the Court's use of those statements--which 

presumed the existence of a prevailing party--to support its prevailing party determination 

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is a matter of the tail wagging the dog. 

¶67 Nor is Dolan applicable here. There, the issue before us was whether Title 49 

impliedly repealed an older statute which permitted a school district to mandatorily retire a 

teacher at age 65. See Dolan, 195 Mont. at 342, 636 P.2d at 826. We held that it did, 

because the earlier statute permitted discrimination in employment based solely on age, 

whereas the subsequently enacted "Title 49 clearly depicts the intent of the legislature[,] 

[that] [t]here shall be no discrimination in certain areas of the lives of Montana citizens, 

employment being one such area, except under the most limited of circumstances." Dolan, 

195 Mont. at 347, 636 P.2d at 829. Unlike the case presently before us, Dolan did not 

involve a prevailing party inquiry and our statements therein have no bearing on that issue 

here.

¶68 As a consequence of the lack of support in the Montana Act, our case law or federal 

authorities for a contrary result, I conclude that Laudert is not the prevailing party for 

purposes of an award of attorney fees under § 49-2-505(7), MCA. On that basis, I would 

affirm the District Court's denial of attorney fees and I respectfully dissent from the 

Court's failure to do so. 

/S/ KARLA M. GRAY

1. Despite the apparently exclusive language in Farrar which seems to indicate that a plaintiff must 

secure an "enforceable judgment" or "comparable relief through a consent decree or settlement," most 

Federal Courts of Appeal have held that a plaintiff can be a prevailing party even if the plaintiff does not 

obtain relief on the merits or through a settlement. See, e.g., Baumgartner v. Harrisburg Housing Auth.

(3d Cir. 1994), 21 F.3d 541. Under this so-called "catalyst" theory, a plaintiff who can prove that the 

existence of the lawsuit accomplished the original objectives of the lawsuit without a formal judgment 

can be a prevailing party. Baumgartner, 21 F.3d at 544. 

2. After the Price Waterhouse decision, Congress enacted the Civil Rights Act of 1991. The Act 

provides that a court "may grant . . . attorney fees" to a plaintiff who proves that an impermissible factor 

was a motivating factor in an employment decision. 42 U.S.C. § 2000e-5(g)(2)(B)(i); see also Tyler v. 

Bethlehem Steel Corp. (2d Cir. 1992), 958 F.2d 1176, 1181-82. Cases decided under § 2000e-5(g)(2)(B)

(i) do not address the prevailing party issue because, unlike fee shifting statutes such as § 1988 which 

provide that a court may only grant fees to a "prevailing" party, this provision does not require that 

threshold determination. The Montana Legislature has not enacted similar provisions governing attorney 

fee awards in mixed motive cases brought under the Montana Human Rights Act. Absent legislative 

direction, we are hesitant to engraft these federal provisions onto Montana civil rights law. Accordingly, 

under Montana law a district court must still determine whether the plaintiff prevailed in the contested 

case hearing before it can award attorney fees. See § 49-2-505(7), MCA. 

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