No. 85-354 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1986 

PAM DUNN, 

Claimant and Respondent, 

CHAMPION INTERNATIONAL CORP . a self-insured employer under 

Plan I, 

Employer/Defendant and Appellant. 

APPEAL FROM: The Workers' Compensation Court, The Honorable 

Timothy Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Garlington, Lohn & Robinson; Bradley J. Luck argued, 

Missoula, Montana 

For Respondent : 

Thomas C. Rulman argued, Missoula, Montana 

Submitted: February 13, 1986 

Decided: June 19, 1986 

Filed: JUN 1 9 1986 
Mr. Justice L. C. Gulbrandson delivered the Opinion of the 

Court. 

Champion International (Champion), the self-insured 

employer, appeals a Workers' Compensation Court order which 

awards to respondent Pam Dunn 200 weeks of permanent partial 

disability benefits at $99 a week. The determinative issue 

on appeal is whether there is substantial, credible evidence 

to support the lower court's findings on respondent's lost 

earning capacity. We hold that there is no such evidence 

and, therefore, we reverse the lower court. 

Since 1974 respondent has worked for Champion at its 

Bonner, Montana plant. Respondent injured her right knee at 

work in May 1980 and Champion, admitting liability for her 

resulting condition, paid her temporary total disability 

benefits. Dr. Westbrook performed knee surgery on respondent 

in July 1980. R.espondent returned to work in September 1980. 

She was found to have a 15% impairment rating of her right 

leg and Champion offered her 45 weeks of permanent partial 

disability benefits. Champion paid two weeks of these 

benefits to respondent at the maximum statutory rate of $99 

per week. 

In June 1981 respondent injured her left knee while 

working for Champion. Champion now accepts liability for the 

left knee injury. Dr. Wooley performed surgery on the left 

knee in October 1983. Respondent returned to work at 

Champion after healing from this operation. In August 1984 

respondent filed a petition for a hearing before the Workers' 

Compensation Court and a trial was held in November 1984. 

Respondent elected to seek disability benefits under 

§ 39-71-703, MCA, for her actual loss of earning capacity 

resulting from her injuries. 

The Five Valley Panel, a group of four doctors, 

extensively examined respondent in October 1984 and issued a 
report on her condition. The Panel found that respondent 

suffered a 15% permanent partial impairment of her right leg 

(6% impairment of the whole woman) and no permanent partial 

impairment of the left knee. The Panel's October 1984 report 

states that her "condition is expected to stabilize and not 

progress . . . Patient may continue to work as she is doing." 

The report indicates the possibility of further deterioration 

of respondent's knees. 

Dr. Jacobson, a member of the Five Valley Panel, 

testified by deposition and agreed with the Panel's 

evaluation of respondent's knees. He stated that the Panel's 

findings were unanimous; that no one could accurately 

forecast respondent's future problems or condition with her 

knees; that there was no reason for respondent to modify her 

present employment if she could physically handle it; that 

twisting and carrying heavy objects probably could aggravate 

respondent's knees but that simply standing probably would 

not affect them too much; that compared to the average person 

with normal knees, respondent stands a greater chance of 

future knee problems; and that he did not see any reason why 

respondent should not try to continue her present employment 

indefinitely if she could physically handle it and if she 

stayed away from bending and twisting. 

Dr. Wooley also treated respondent for the injuries to 

her knees and he testified by deposition. Wooley agreed that 

the Five Valley Panel's report was a "reasonably fair 

assessment" of respondent's condition. He stated that 

respondent, due to her injuries and surgery, was now 

predisposed to arthritis of the knee; that "you would expect 

[her knees] to develop pain, spurring, joint narrowing 

. . . ;" that she would be prone to developing more symptoms 

with degenerative change; and that her right knee will likely 

be a problem in the future. He examined respondent in August 
1984 and, as of that time, he said she did reasonably well at 

work and was not having any significant problems, except with 

one job requiring a lot of twisting and pivoting on her 

knees. He stated that she --- was able to handle --- all of the 

other --- jobs at work and that he believed she could probably 

still serve - a very useful purpose - at Champion. Dr. Wooley 

agreed that no one could accurately forecast what, when or if 

specific problems will occur with respondent's knees. 

Shortly before trial, respondent advanced at the mill 

from a utility millworker to a panel patch operator. After 

her injuries, respondent earned more money at the mill than 

she had before the injury. As a utility millworker, 

respondent was trained for, and filled in at, several other 

mill job positions. She stated that her knees do not feel 

normal and that, depending on what she does at work, she 

suffers pain ranging from an ache to severe pain in her knees 

after work. Respondent stated that her new job causes pain 

ranging from an ache to severe pain from standing for eight 

hours. She stated that she was able, after her injury, to 

handle her present position at the mill and also her prior 

position of utility millworker. As a result of on the job 

training while she was a utility millworker, respondent 

stated that after her injury she could handle other jobs at 

the mill; specifically, the dryer feeder, veneer plugger, 

individual defect router, off bearer and size line feeder. 

She stated that she can sometimes handle the edge scraper 

position. Respondent stated that, "I am versatile enough 

that if they are short of people . . . they will send me 

where they need me." She was earning $10.51 an hour at the 

time of the hearing and had been earning $10.18 an hour in 

her previous position. She stated that "they seem satisfied 

with my work" and conceded that Dr. Westbrooke gave her an 
unconditional work release in 1980 after the surgery on her 

right (worst) knee. 

Norm Johnson, a Job Service counselor with 12% years 

experience with the Job Service, also testified by 

deposition. He had interviewed respondent and he testified 

mainly to establish the actual loss of earning capacity which 

respondent had suffered. Johnson stated that employers tend 

to hire people without prior injuries to cut down absenteeism 

and to lower insurance costs. He felt that respondent's 

injuries were going to cause her problems performing her 

millworker job; i.e., being fast enough to perform her job 

and doing her job in a satisfactory manner. Johnson stated 

that he would not consider respondent for a millworker 

position after 1977 because it would cause a steady 

deterioration in her knees. He conceded that he knew nothing 

of the physical requirements for some of the jobs at the 

mill. He stated that if respondent had been required after 

her injuries to seek employment in another vocational area, 

she could have worked as a clerk (sales, payroll, production, 

accountant clerk, receptionist), a salesperson, secretary and 

a typist. He stated that in 1977, after her injuries, 

respondent's probable earnings would have been $2.50-$3.00 an 

hour (compared to her actual earnings of $6.31/hr.); in 1980, 

$3.50-$4.00/hr. (actual $8.38); in 1981, $3.75-$4.25/hr. 

(actual $9.13) ; in 1982, $4.00-$4.50/hr. (actual $9.83) ; in 

1983, $4.25-$4.75/hr. (actual $9.83). The lower court 

adopted these figures and found that, just after her injury, 

respondent could earn $3.75/hr. (although she has earned at 

least $8-9/hr. for the last four years since her injury). 

On cross-examination Johnson conceded that his was not 

an exhaustive list of all the jobs respondent could handle 

during these periods. He conceded that there were other jobs 

requiring some, but not extensive, training which respondent 
could physically handle. He agreed that the pay differential 

he testified to might be different if these other jobs were 

included. Johnson admitted that he only considered the jobs 

respondent held pre-1974 (before she started work for 

Champion) and added one position, computer clerk, she had had 

vocational training for. He based his wage differentials on 

these jobs. Johnson stated that he did not include 

millworking positions in the list of possible jobs for 

respondent after her injuries because, "I believe that she 

may have been able to obtain these types of work, but I 

believe that she should not have considered those types of 

work." Johnson agreed that there are a number of jobs at the 

Champion Bonner facility that respondent is presently 

qualified for and can handle physically on a full-time basis. 

He thought she might not be able to handle them in the 

future. 

Paul Van Gordon, a labor relations manager for 

Champion, also testified by deposition. He established that 

he had extensive knowledge of the physical and other 

requirements of the job positions at the Bonner plant. He 

testified that respondent could fully perform her job 

position at the Bonner mill, that she was an excellent 

employee, that she had no attendance problem (four to five 

absences a year), and that she had very high seniority in her 

job. He stated that there were seven different job positions 

which respondent can adequately handle and that there were 

similar positions in other mills in the Missoula area. He 

stated that within a 50 mile radius of Missoula there were 

1,500 to 2,000 similar mill positions which respondent could 

handle with her experience and physical condition. He deemed 

respondent very employable. 

The Workers' Compensation Court filed its decision in 

June 1985. The court found that " [i] f claimant should be 
required to seek work in another area secondary to a knee 

deterioration and subsequent disability," she could work at 

the clerical, secretarial and typing positions enumerated by 

Norm Johnson of the Job Service. He found that - if claimant 

had been forced to quit working at Champion in 1980 because 

of her knee disability, she could have earned $3.50-$4.00 an 

hour. The court stated that it relied upon Johnson who "was 

qualified to sta.te what the claimant's earning capacity would 

be should she become unable to continue in her present 

position secondary to a" knee deterioration. (Emphasis 

added.) The court found that respondent had a diminution in 

her hourly earning capacity of $4.63, based on her actual 

earnings of $8.38/hr. (in May 1980 at the time of her injury) 

minus $3.75/hr. (her wage capacity after the injury). After 

the injury, respondent went back to her old job at $8-$9 an 

hour. Based on the diminution computation, the court awarded 

respondent 200 weeks of permanent partial disability benefits 

at the statutory maximum of $99 a week. Champion appeals. 

The only issue is whether there is substantial, 

credible evidence to support the lower court's findings on 

respondent's lost earning capacity. This Court will not 

overturn a decision of the Workers' Compensation Court where 

there is substantial evidence to support the findings of the 

lower court. Keene v. Anaconda Co. (1982), 201 Mont. 102, 

652 P.2d 216; Shupert v. Anaconda Aluminum Co. (Mont. 1985), 

696 P.2d 436, 42 St.Rep. 277. 

The only evidence which supports the disputed finding 

(that respondent suffered a severe loss of earning capacity) 

is the deposition testimony of Norm Johnson, the Job Service 

counselor. As a result, this Court's function on review is 

somewhat different from that in most cases. We have 

repeatedly stated: 
"Ordinarily, this Court will not substitute its 

judgment for that of the Workers' Compensation 

Court in determining the weight and credibility to 

be given testimony. The reason for this is that 

this Court defers to the lower court's assessment 

of the demeanor and credibility of witnesses. Rule 

52 (a), M.R.Civ.P. However, when the critical 

evidence, particularly medical evidence, is entered 

by deposition, we have held that 'this Court, 

although sitting in review, is in as good a 

position as the Workers' Compensation Court to 

judge the weight to be given to such record 

testimony, as distinguished from oral testimony, 

where the trial court actually observes the 

character and demeanor of the witness on the 

stand. "' (Citations omitted) . 

Shupert, 696 P.2d at 439. This rule is applicable to 

Johnson's testimony. 

Montana law allows partially disabled workers to choose 

between two types of permanent partial disability benefits. 

Such a worker can elect benefits under 5 39-71-703, MCA, for 

actual loss of earning capacity - or indemnity benefits under 

S 39-71-705, -708 for possible prospective loss in earning 

capacity. McDanold v. B.N. Transport, Inc. (Mont. 1984), 679 

P.2d 1188, 41 St.Rep. 472. In the case at bar, respondent 

elected to seek benefits based upon her actual loss of 

earning capacity. The test for loss of earning capacity 

"is not whether there has been a loss of earnings 

or income caused by the injury, but rather has 

there been a loss of earning capacity -- a loss of 

ability to earn in the open labor market." 

Fermo v. Superline Products (1978) , 175 Mont. 345, 348, 574 

P. 2d 251, 253; Shaffer v. Midland Empire Packing Co. (1953) , 

127 Mont. 211, 213, 259 P.2d 340, 342. 

As can be seen from the recent case of Hafer v. 

Anaconda Aluminum Co. (Mont. 19841, 684 P.2d 1114, 41 St.Rep. 

1403, it is possible under this test for a worker to earn 

more after his injury and still collect disability benefits 

for loss of earning capacity. In Hafer, the claimant earned 

more after his injury than before and yet we found that he 

had suffered a 40% loss of earning capacity. 
In the instant case, the lower court found that 

respondent had suffered a substantial loss of earning 

capacity. The court found that respondent could earn only 

$3.50-$4.00 per hour in 1980 after her injury. This finding 

corresponds exactly to the wage testimony of Norm Johnson, 

the Job Service counselor. In fact, Johnson's testimony is 

the only evidence which supports the court's finding of lost 

earning capacity. Johnson stated that if respondent had been 

forced to seek employment after her injuries, she could only 

work in clerical, sales and secretarial positions. He later 

added that he considered a computer data entry position for 

respondent when calculating her lost earning capacity. 

Johnson refused to consider respondent for any post-injury 

millworking positions in calculating her lost earning 

capacity. He felt such positions might cause deterioration 

of her knees and that she should not consider those 

positions. Johnson's testimony provides some evidence to 

support the court's finding of lost earning capacity. The 

determinative question here is whether his testimony 

constitutes the substantial, credible evidence required to 

uphold the lower court's finding of a drastic loss of earning 

capacity. We hold that it does not. 

Initially, we note that respondent did testify that she 

had pain in her knees after working. This testimony may 

support a finding of some, slight loss of earning capacity. 

However, in our view her pain does not support the finding of 

a drastic loss of earning capacity, especially given her 

admissions that she could handle a number of millworking 

positions. 

The court's finding of lost earning capacity is based 

upon Johnson's list (hereinafter "post-injury job list") of 

jobs respondent could work at after her injury. However, 

Johnson admitted the list was not meant to be exhaustive. He 
further admitted that he only listed those jobs respondent 

worked at prior to working for Champion, plus one job 

(computer data entry) she had training for. The test for 

lost earning capacity, however, requires an analysis of 

earning ability in the open labor market. Johnson, by so 

limiting his post-injury job list, was not considering the 

open labor market. In this vein, Johnson conceded that he 

did not conduct any vocational testing of respondent. 

Furthermore, Johnson's testimony is not credible 

insofar as he excluded any millworking positions from the 

post-injury job list. He admitted that he did not know the 

specific physical requirements of many millworker positions 

which respondent herself stated she could physically handle. 

And yet Johnson refused to consider respondent for those 

positions after her injuries. Johnson agreed that respondent 

could physically handle many of the millworking positions. 

He also agreed that there were a number of mill positions 

requiring very little physical activity. He conceded that 

there were several other Montana plywood plants with similar 

positions requiring little physical activity. These facts 

support a conclusion that the post-injury job list should 

have included millworking positions. 

Further, Johnson's refusal to consider mill positions 

for the post-injury job list runs contra to - all the other 

evidence admitted. The other witnesses, specifically 

respondent, Dr. Jacobson, Dr. Wooley and Paul Van Gordon, 

were eminently more qualified to testify on respondent's 

ability to handle mill positions after her injury. 

Respondent stated that she could handle seven or eight 

different kinds of jobs at the Champion mill after her injury 

and up until the present time. In fact, she has been working 

at the mill since her injuries and earns more than before her 

accidents. Both doctors that testified agreed that 
respondent could continue working at Champion if she could 

handle the jobs. Dr. Wooley testified that she could handle 

many of the jobs at the mill. Lastly, the Five Valley 

Panel's medical report stated that respondent could continue 

working. 

Van Gordon's testimony bears on respondent's ability to 

earn in an open labor market. He indicated that there are 

many (1,500 - 2,000) mill jobs nea.r Missoula which 

respondent, with her experience, could physically han.dle. 

Both he and respondent agreed that Champion is satisfied with 

her work. Since respondent's first knee injury in 1980, she 

has continued to work at the Champion Bonner plant earning 

from over $8.00 an hour in 1980 to over $10.00 an hour in 

1984. 

Based on the foregoing testimony of respondent, Dr. 

Wooley, Dr. Jacobson, and Paul Van Gordon, we conclude that 

in a post-injury, open labor market respondent would not be 

limited to those low paying jobs detailed by Johnson. The 

lower court should have included millworking positions in 

those jobs used to compute respondent's earning capacity 

after her injury. 

Moreover, it appears that the lower court relied upon 

the wrong grounds in awarding benefits to respondent. 

Respondent elected to seek benefits for her actual loss of 

earning capacity (under § 39-71-703, MCA). Nevertheless, the 

court's language clearly indicates that it awarded benefits 

for possible, future lost earning capacity. The court 

enumerated possible jobs for respondent if she "should be 

required to seek work in another area secondary to a knee 

deterioration and subsequent disability . . . " (Emphasis 

added. ) The court found respondent could have earned 

$3.50 - $4.00 an hour - if she had been forced to quit working 

at Champion due to her injury. Finally, the court relied on 
Johnson's estimate of respondent's earning capacity 

should she become unable to work at Champion secondary to a 

knee deterioration. The court was clearly anticipating 

respondent's possible, future, lost income despite her choice 

of benefits for actual lost earning capacity. 

We hold that substantial, credible evidence does not 

support the findings on lost earning capacity. We reverse 

the award of benefits and remand this case for a hearing on 

respondent's lost earning 

appropriate order. 

We concur: 

Justices 
Mr. Justice Frank B. Morrison, Jr., Mr. Justice John C. 

Sheehy, and Mr. Justice William E. Hunt, Sr., dissenting: 

The majority has substituted its judgment for that of 

the Workers' Compensation Court on a question of fact. We 

feel that the judge who heard the testimony is in a far 

better position than this Court to determine the weight to 

be given evidence offered by the employment expert.