IN THE SUPREME COURT OF THE STATE OF MONTANA 

CITY OF BILLINGS, MONTANA, 

Plaintiff and Respondent, 

VS . BILLINGS FIREFIGHTERS LOCAL NO. 52i, and the 

BOARD OF PERSONNEL APPEALS, 

Defendants and Appellants, 

and 

BUTTE TEAMSTERS UNION LOCAL NO. 2, and 

UNITED FOOD & COMMERCIAL WORKERS INTERNATIONAL UNION, CONSISTING OF LOCAL UNIONS 

NO. 4R, 8, 33, and 1981 (UFCWIU), AFL-CIO, 

Amicus Curiae, 

and 

MONTANA STATE COUNCIL OF PROFESSIONAL 

FIREFIGHTERS, Amicus Curiae. 

Appeal from: District Court of the Thirteenth Judicial District, 

In and for the County of Yeilowstone 

Hon.Robert Wilson, Judqe presiding. 

Counsel of Record: 

For Appellant: 

Boschert and Boschert, Billings, Montana 

Rosemary Boschert argued, Billings, Montana 

James Gardner argued, Bd. Personnel appeals, Helena, Montana 

For Respondent: 

K. D. Peterson argued, Billings, Montana 

For Amicus Curiae: 

Donald C. Robinson, Butte, Montana 

Poore, Roth & Robinson, Butte, Montana 

D. Patrick McKittrick, Great Falls, Montana 

Barry J. Hjort, Helena, Montana 

David V. Gliko, Great E'alis, Montana 

Mae Nan Eliingson, Missoula, Montana 

Submitted: June 28, 1982 

Decided: September 28, 1982 

Filed: SEF) 2 8 
Mr. Justice Frank B. Morrison, Jr., delivered the Opinion 

of the Court. 

The Thirteenth Judicial District Court of Montana 

issued a judgment on August 11, 1981, affirming in part and 

reversing in part a March 26, 1979, order of the Board of 

Personnel Appeals (BPA) establishing the membership of the 

Billings Fire Department's bargaining unit. The BPA and the 

Billings Firefighters, Local #521 appeal the judgment of the 

District Court. We reverse the District Court in part and 

reinstate the March 26, 1979, order of the BPA. 

The Montana Public Employees Collective Bargaining Act 

was enacted in 1973. Pursuant to national labor policy, as 

set forth in the National Labor elations Act, 29 U.S.C. 

section 151 et seq. (1976), the Montana Act specifically 

excludes supervisory and management employees from the 

definition of "public employee." Only public employees are 

allowed to bargain collectively, section 39-31-201, MCA. 

Thus, supervisory and management employees were effectively 

denied membership in collective bargaining units. 

From 1968 until the commencement of this action in 

1977, the City of Billings continuously recognized Billings 

Firefighters Local #521 as the collective bargaining unit 

for all Billings firefighters except the Fire Chief and the 

Assistant Fire Chief. During labor negotiations in 1977, 

the City of Billings attempted to exclude the line battalion 

chiefs, specialty officers and fire captains from the bargaining 

unit. The City contended that those employees were either 

supervisory or management, as defined in the Public Employee 

Collective Bargaining Act, and thus ineligible for membership 

in a collective bargaining unit. 

In response, the Union contended that the Act's grandfather 

clause, section 39-31-109, MCA, by recognizing all established 
collective bargaining agreements, also recognized all existing 

bargaining units. That section provides: 

"39-31-109. Existing collective bargaining 

agreements not affected. Nothing in this 

chapter shall be construed to remove recognition of established collective bargaining 

agreements already recognized or in existence 

prior to the effective date of this act." 

Union argues that the "existing agreement" recognizes Local 

#521 as the bargaining unit and that therefore, the unit's 

composition is not controlled by section 39-31-201, MCA. 

At the request of the City and the Union, the BPA 

conducted an administrative hearing December 15 and 16, 

1977, to clarify the membership of the bargaining unit. On 

February 28, 1978, the hearings officer issued a recommended 

order concluding that "the appropriate bargaining unit in 

the Billings Fire Department is that unit which has been 

recognized by the City of Billings since 1968, i.e., all 

employees of the Billings Fire Department except the Chief 

and the Assistant Chief." She reached this conclusion by 

interpreting the grandfather clause to recognize existing 

bargaining units as well as existing bargaining agreements, 

as advocated by the Union. 

The City appealed the recommended order to the Board of 

Personnel Appeals. On July 28, 1978, the BPA issued an 

order remanding the case to the hearings officer with instructions to apply the facts to the following two-prong test: 

(1) Is the position in question that of a supervisor 

or management official? 

(2) If it is, does the inclusion of that position in 

the bargaining unit create an actual substantial 

conflict which results in the compromising of the 

interests of any party to its detriment? 

This test is the result of a considered effort by the 

BPA to reconcile the grandfather clause, which it interprets 
as recognizing both bargaining units and agreements already 

in existence, with section 39-31-201, MCA, forbidding nonpublic employees from belonging to collective bargaining 

units. The BPA found that where the two sections come into 

conflict, the conflict must be settled in view of the policy 

of the Act. Section 39-31-101, MCA, states the policy: 

"39-31-101. Policy. In order to promote 

public business by removing certain recognized sources of strife and unrest, it is the 

policy of the state of Montana to encourage 

the practice and procedure of collective bargaining to arrive at friendly adjustment of 

all disputes between public employers and 

their employees." 

The test adopted by the BPA allows for grandfathering 

and also prevents conflicts intended to be avoided by the 

exclusion of supervisors and management officials from the 

unit. If the presence of a supervisory or a management 

position within the unit becomes the source of "strife and 

unrest," the position will be removed from the unit. If 

there is no strife or unrest, evidenced by actual substantial 

conflict, the grandfathered unit will be allowed to remain 

"as is." 

The hearings officer issued a thirty-page decision on 

January 19, 1979, again concluding that the bargaining unit 

should remain as it has been since 1968. 

To determine whether or not the positions were those of 

supervisors or management officials, the hearings officer 

applied a multi-question test to each contested position. 

She considered the duties attendant to each position as well 

as the definitions of supervisor and management official 

found in section 39-31-103, MCA. She concluded that the 

line battalion chiefs, the communications officer and the 

fire marshal in the Billings Fire Department are supervisory 

employees. She further concluded that the captains, maintenance 
officer and training officer are not supervisory employees. 

None of the positions were found to be that of a management 

official. 

Next, the hearings officer applied the second part of 

the test to those positions found to be supervisory. She 

determined that the presence of the positions in the unit 

created no actual substantial conflicts resulting in the 

compromising of the interests of any party to its detriment. 

Therefore, she allowed the supervisory positions to remain 

in the unit. 

In reaching that conclusion, the hearings officer 

considered the following: 

(1) Local #521 has never gone on strike. 

(2) Testimony of the fire chief that in his twenty-six 

years on the Department, very few formal qrievances had been 

filed. 

(3) Testimony of an engineer that only one grievance 

had gone to arbitration since 1968. 

(4) Testimony of the fire marshal that his membership 

in the unit had never caused problems at staff meetings with 

the fire chief. 

(5) Testimony of the fire chief, battalion chiefs and 

captains that the current structure of the unit had never 

interfered with the efficient operation of the Department. 

(6) Testimony of a captain that his membership in the 

unit had never interfered with the exercise of his authority. 

(7) Testimony of the union's chief negotiator for the 

1977 contract that the make-up of the unit had caused no 

disharmony and that there were no special interest groups 

within the unit. 

(8) Testimony of engineers and firemen that no internal 
conflict or disharmony existed due to the bargaining unit 

structure. 

(9) A petition signed by 80% of the specialty officers 

and 83% of the lieutenants, engineers and firefighters 

stating: "We the undersigned members of I.A.F.F. Local 521 

are in opposition to any change in our bargaining unit." 

On March 26, 1979, the Board of Personnel Appeals 

adopted the recommended order of the hearings officer as its 

final order. The City of Billings appealed to the District 

Court. Following a hearing, the District Court issued an 

order July 28, 1981, concluding the following: 

"2. Supervisors and management personnel are 

excluded from Firefighters Local #521 Bargaining Unit and former Section 59-1615, R.C.M. 

[the grandfather clause], does not change the 

statutory exclusions. 

"3. The Line Battalion Chiefs are supervisors 

and are excluded from Firefighters Local #521 

Bargaining Unit. 

"4. The Specialty Officers, Communications Officer, Maintenance Officer, Fire Marshal and 

Training Officer are supervisory and excluded 

from Firefighters Local #521 Bargaining Unit. 

"5. The Fire Captains shall remain with Firefighters Local #521 Bargaining Unit. 

"6. The test applied by the Board of Personnel Appeals is not logical and is arbitrary 

and capricious. . ." 

In so holding, the District Court found requiring an 

actual conflict to occur before removing a supervisory or 

management position from the unit to be illogical as their 

presence in the unit is inherently conflicting. In addition, 

it found all officers except fire captains to be supervisory 

personnel and excluded them from the unit. 

In their appeal of the order and judgment of the District 

Court, the BPA and the Union present several issues for our 

consideration: 
(1) Whether the state legislature authorized the BPA 

as the agency to establish the appropriate bargaining units 

for public employees? 

(2) Whether the BPA's interpretation of section 39-31- 

109, MCA, the grandfather clause, was a rational statutory 

construction, or whether it was illogical, arbitrary and 

capricious? 

(3) Whether the BPA's two-prong test reconciling the 

inconsistencies between two sections within the Montana 

Public Employees Collective Bargaining Act was arbitrary and 

capricious? 

(4) Whether the BPA's determination that certain 

employees were supervisory or management officials was 

clearly erroneous? 

(5) Whether the BPA's test, if rational, was correctly 

applied by the BPA to the facts of this case? 

On cross-appeal, the City presents us with one other 

issue: Whether the District Court erred when it failed to 

find the BPA's finding that captains were not supervisory or 

management officials to be clearly erroneous? 

ISSUE ONE 

The Montana legislature clearly authorized the BPA as 

the agency to establish appropriate bargaining units for 

public employees when it enacted section 39-31-202, MCA: 

"39-31-202. Board to determine appropriate 

bargaining unit-factors to be considered. 

In order to assure employees the fullest 

freedom in exercising the rights guaranteed 

by this chapter, the board or an agent of 

the board shall decide the unit appropriate 

for the purpose of collective bargaining. . 

Like all BPA orders, an order determining the membership 

of a bargaining unit is subject to review by the district 

court, section 39-31-409, MCA. Pursuant to section 39-31- 

105, MCA, judicial review of contested agency orders is 
governed by the Montana Administrative Procedure Act (MAPA). 

Section 2-4-704, MCA, sets forth the MAPA standards of 

review to be followed by a district court when reviewing an 

agency decision. The relevant portions of section 2-4-704, 

MCA, state: 

"(2) The court may not substitute its judgment for that of the agency as to the weight 

of the evidence on questions of fact. The 

court may affirm the decision of the agency 

or remand the case for further proceedings. 

The court may reverse or modify the decision 

if substantial rights of the appellant have 

been prejudiced because the administrative 

findings, inferences, conclusions, or decisions 

are: 

"(e) clearly erroneous in view of the reliable, 

probative, and substantial evidence on the 

whole record; 

"(f) arbitrary or capricious or characterized 

by abuse of discretion or clearly unwarranted 

exercise of discretion; 

Pursuant to that statute, findings of fact by an agency 

have been subject to a "clearly erroneous" standard of 

review by the courts. Wheatland County v. Bleeker (1978), 

175 Mont. 478, 575 P.2d 48. Conclusions of law are subject 

to an "abuse of discretion" review. These standards differ 

due to the agency's expertise regarding the facts involved 

and the court's expertise in interpreting and applying the 

law. Davis' 4 Administrative Law Treatise, 529.01 (1958). 

Both statutory and case law have employed the terms 

"clearly erroneous," "abuse of discretion" and "substantial 

credible evidence" in form not entirely clear nor consistent. 

We view this as an appropriate opportunity for clarification. 

Specifically, the factual findings of the BPA will be 

upheld if supported by substantial evidence. Section 39-31- 

409(4), MCA. MAPA allows factual findings to be overturned 
when they are "clearly erroneous in view of the reliable, 

probative and substantial evidence on the whole record." 

Section 2-4-704(2) (e), MCA. We find these tests can be 

harmonized. If there is substantial credible evidence in 

the record, the findings are not "clearly erroneous." Under 

either statute the scope of judicial review is the same. If 

the record contains support for the factual determinations 

made by the agency, the courts may not weigh the evidence. 

They are bound by the findings of the agency. 

In reviewing legal questions, the scope of review is 

broader. Where the intent of statutes is unclear, deference 

will be given to the agency's interpretation. Ford Motor 

Credit Co. v. Milhollin (1980), 444 U.S. 555, 100 S.Ct. 790, 

63 L.Ed.2d 22; FCC v. WNCN Listeners Guild, et al. (1981), 

450 U.S. 582, 101 S.Ct. 1266, 67 L.Ed.2d 521. Where it 

appears that the legislative intent is clearly contrary to 

agency interpretation, the courts will not hesitate to 

reverse on the basis of "abuse of discretion." 

The determination of a bargaining unit involves mixed 

questions of law and fact as is hereafter discussed. In 

reviewing the BPA's findings of fact and conclusions of law, 

we will be bound by the foregoing scope of review. 

ISSUE TWO 

The BPA's interpretation of section 39-31-109, MCA, the 

grandfather clause, is primarily a question of law. Therefore, 

the reviewing court should determine whether that interpretation 

involves "abuse of discretion." The clause recognizes all 

bargaining agreements in existence at the time of the passage 

of the Montana Public Employee Collective Bargaining Act. 

The BPA asserts that existing bargaining units should also 

be recognized. 
The City of Billings has recognized Local #521 since 

1968. The bargaining agreement reflects that in its "recognition clause." Therefore, by recognizing the agreement, the 

City recognizes the Unit. The Unit does not cease to exist 

when the agreement ends. The Unit continues to exist until 

a new Unit is formed and recognized. The BPA's interpretation 

of the grandfather clause is rational, does not involve an 

abuse of discretion and we reinstate it. 

ISSUE THREE 

The BPA's interpretation of the grandfather clause 

previously discussed, recognizes existing bargaining units 

containing supervisory personnel in violation of section 39- 

31-201, MCA. The Board recognized that public policy supports 

elimination of conflict of interest within a bargaining unit 

and therefore, notwithstanding its interpretation of the 

grandfather clause, sought to foster the spirit of the Act 

by adopting a legal test to eliminate actual substantial 

conflict. The validity of such a test is a question of law. 

The District Court found the presence of supervisory or 

management officials in the bargaining unit to be inherently 

conflicting. It therefore held the test to be irrational 

for allowing continued membership until actual substantial 

conflict occurs. We do not agree. 

Testimony that Local #521, a bargaining unit consisting 

of firefighters as well as supervisors, has had a relatively 

peaceful existence since 1968 indicates a lack of any inherent 

conflict. This does not mean that actual substantial conflict 

could not occur. 

The test developed by the BPA is a rational, considered 

effort by the BPA to assure an effective bargaining unit. 

The test considers the policy of the act, i.e., to remove 
strife and unrest from bargaining units, as well as some of 

the factors set forth in section 39-31-202, MCA, for determining 

unit ~~mp~~ition--the "history of collective bargaining" and 

the "desires of the employees." The result accomplished 

preserves the public policy underlying the act. We find the 

Board's approach to be a rational one for determining bargaining unit memberships. 

ISSUE FOUR 

In applying the BPA's test, the hearings officer made 

many findings of fact regarding the supervisory or management 

nature of various department positions. She applied a 

multi-question test to each position and considered the 

definitions of supervisory and management official in making 

her determination. 

The District Court, to reverse these findings of fact, 

had to find the record bare of "substantial credible evidence." 

We find such evidence to exist. 

The District Court supplied no reason for finding the 

position determinations to be unsupported. Rather, it chose 

to substitute its findings for those of the BPA. The governing 

statute provides: "The court may not substitute its judgment 

for that of the agency as to the weight of the evidence on 

questions of fact." Section 2-4-704(2), MCA. There is 

substantial, and as we have herein noted, abundant evidence 

to support those determinations. Therefore, we reinstate 

the findings of the BPA that only the line battalion chiefs, 

the fire marshal and the communications officer are supervisors. 

On cross-appeal, the City asks us to determine whether 

or not the District Court erred when it failed to find the 

BPA'S determination that fire captains are neither supervisory 

nor management officials to be clearly erroneous. The ~istrict 
Court did not err. The hearings officer considered the 

duties of the captains and compared them to the duties of 

the supervisors and management officials set forth in section 

39-31-103(3) and (4), MCA. There was substantial evidence 

to support the BPA's determination. 

ISSUE FIVE 

Finally, the District Court held that because the 

presence of supervisors in a bargaining unit creates inherent 

conflict, the second prong of the BPA's test was not correctly 

applied to the instant facts. We have already stated that 

no inherent conflict exists within Local #521. In addition, 

there was a substantial amount of testimony presented to the 

hearings officer indicating that no actual substantial 

conflict exists. The hearings officer correctly applied the 

test to Local #521. 

The order of the District Court is vacated and the 

March 26, 1979, order of the Board of Personnel Appeals is 

reinstated. 

We Concur: 
Mr. Justice Fred J. Weber, dissenting: 

The majority opinion constitutes a careful and 

thoughtful analysis of the statutes, case law, and the 

underlying problems of collective bargaining in the public 

employee sector. I do not disagree with the analysis of the 

majority opinion and I am therefore led to sign the opinion. 

However, I dissent because the opinion does not address 

a different interpretation of the statutes which I believe 

should be considered. I dissent with the aim of calling 

this matter to the attention of the legislature so that it 

may determine if additional legislation is required. 

As pointed out in the majority opinion, the Montana 

Public Employees Collective Bargaining Act (herein called 

"Act") is in agreement with the national labor policy as set 

forth in the National Labor Relations Act with regard to the 

definition of "public employees." Both the Montana and the 

federal definition of "public employees" excludes both 

supervisory and management employees. The result of the majority 

opinion is to neutralize the statutory exclusion as to both 

supervisory and management employees where they are a part 

of a bargaining unit in existence prior to the 1973 effective 

date of the Act. Such neutralizing of the statutory exclusion 

will continue without limit of years so long as the collective 

bargaining unit remains in existence. I suggest that a 

different interpretation can be given to the statute which 

will not have the effect of repealing the definition of 

public employees for bargaining units in existence prior to 

1973. 

The Act emphasizes that "public employees" shall be 

protected in the exercise of their right of self-organization, 

collective bargaining and other related rights. The next 
step is to determine what employees are to be protected 

under this public employees collective bargaining act. The 

Act itself specifically defines "public employees" in section 

39-31-103, MCA, as follows: 

" (2) (a) 'Public employee' means: 

" (i) except as provided in subsection (2) 

(b) of this section, a person employed by 

a public employer in any capacity; and 

" (b) 'Public employee' does not mean: 

" (i) an elected official; 

"(ii) a person directly appointed by the 

governor; 

"(iii) a supervisory employee, as defined 

in subsection (3) of this section; 

"(iv) a management official, as defined in 

subsection (4) of this section; 

"(v) a confidential employee, as defined 

in subsection (12) of this section; 

"(vi) a member of any state board or commission who serves the state intermittently; 

" (vii) a school district clerk; 

" (viii) a school administrator; 

"(ix) a registered professional nurse performing service for a health care facility; 

" (x) a professional engineer; or 

" (xi) an engineer-in- training. " (Underscoring 

added. ) 

The definition is clear. It totally excludes a number of 

persons, starting with elected officials, including supervisory 

employees and management officials, and ending with engineersin-training. It is critical to note that the statute does 

not base exclusion upon a theory of potential "substantial 

conflict" if such employees are included in a bargaining 

unit. Instead, the legislature by definition states that 

these described persons do not constitute "public employees" 
who are granted the right of collective bargaining. The 

result of the majority opinion is to disregard the very 

specific exclusion, and to add a new idea--the exclusions 

shall be applied only if there is "substantial confict." 

Such an interpretation adds a test not included in the 

statute. 

If a collective bargaining unit were organized after 

the 1973 effective date of the Act, such a unit cannot 

include people other than public employees as defined in the 

Act; so that in such a situation, supervisory employees and 

management officials could not under any circumstance be 

included as a part of the unit, even though proof might be 

submitted that their presence would not create a substantial 

conflict. The result is a direct conflict between the 

persons who are "public employees" in different bargaining 

units. 

The majority opinion bases its conclusions on the 

grandfather clause, which is set forth in section 39-31-109, 

MCA, as follows: 

"Existing collective bargaining agreements 

not affected. Nothing in this chapter shall 

be construed to remove recognition of established collective bargaining agreements already recognized or in existence prior to 

the effective date of this act." 

I have no problem in agreeing that the grandfather clause 

requires recognition of the established collective bargaining 

agreement with Local #521. I also find no problem in recognition of Local #521 as the bargaining unit. I do question 

the conclusion that all persons who were in the bargaining 

unit must continue to be allowed to remain in the bargaining 

unit in future years. 

Without question the collective bargaining agreements 

and the bargaining units in existence prior to the 1973 date 
of the Act must be recognized. However, in contract negotiations 

taking place after the effective date of the Act in 1973, 

the statutes appear to require that the statutory definition 

of "public employees" must be recognized, with the result 

that in such subsequent negotiations, supervisory employees 

and management officials as defined in the Act must be 

excluded from the bargaining unit. The result would be that 

the bargaining unit would continue negotiations as it did 

prior to 1973, but that a unit could no longer retain as a 

part of the members of the unit any of the persons excluded 

from the statutory definition of "public employees." The 

result would be that the legislative determination as to the 

persons who are entitled to bargain collectively under the 

Act would be recognized. The further result would be that 

all bargaining units under the public employees process 

would retain the same categories of employees. 

A number of parties representing different unions have 

appeared in this action. Apparently all of them would 

oppose a construction of the statutory exclusion as above 

suggested. It seems to me that this is an expression of 

disagreement by the unions with the clear definition stated 

by the legislature as to the persons who can and cannot be 

classed as public employees for collective bargaining purposes. 

If the legislature agrees with the interpretation of the 

majority, no legislation is required. On the other hand, if 

the legislature determines that the definition of "public 

employees" set forth in the statute should be carried through, 

then additional legislation is r