Court Opinion

ID: 877622
Source: CourtListenerOpinion
Date Created: 2013-06-04 21:34:47.193001+00
Date Added: 2024-06-11T15:42:40.295085
License: Public Domain

No. 80-119
                 IN THE SUPREME COURT OF THE STATE OF MONTANA
                                     1981

INTERMOUNTAIN DEACONESS HOME
FOR CHILDREN,
                         Plaintiff and Respondent and
                          Cross-Appellant,

STATE OF MONTANA, DEPARTMENT OF
LABOR AND INDUSTRY, LABOR
STANDARDS DIVISION, DAVID FULLER et al.,
                         Defendants and Appellants.

Appeal from:    District Court of the First Judicial District,
                In and for the County of Lewis and Clark.
                Honorable Peter G. Meloy, Judge presiding.
Counsel of Record:
     For Appellant:
          Paul Van Trich argued, Helena, Montana
     For Respondent:
          Luxan and Murfitt, Helena, Montana
          Dale E. Reagor argued and Gary Davis argued, Helena,
           Montana

                                 Submitted:    January 16, 1981
                                   Decided :   E 20
                                               B      1981
Filed:   FEY3 2 8 1981
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.

     The State Department of Labor and Industry, assignor of
the wage claims of Sandra Shreves,and Larry and Sharon
Hadley, appeals from an adverse order of the First Judicial
District Court, Lewis and Clark County.    Plaintiff, Inter-
mountain Deaconess Home for Children, cross-appeals from
the same order.   Plaintiff brought this action in the District
Court after receiving a notice of hearing from the Department
regarding an alleged failure by plaintiff to pay minimum
wages and overtime compensation to Larry and Sharon Hadley,
and Sandra Shreves.    Plaintiff requested the court to restrain
the Department from holding the hearing and further requested
the court to render a declaratory judgment on plaintiff's
defense that the Department had failed to make a timely
claim against plaintiff for the unpaid wages.
     The court issued a temporary restraining order and an
order to show cause.    It set a hearing to determine the
merits of plaintiff's action.   In response to this action,
the Department moved the court to dismiss the action and
quash the restraining order.
     The matter was submitted to the District Court on a
stipulation of facts and issues.   The court held that a
five-year statute of limitations governs actions for collection
of unpaid wages and benefits and that the statute of limit-
ations had not yet been tolled by the Department's administrative
efforts to pursue the wage claimants' alleged unpaid earnings.
     The Department appeals contending that the District
Court erred by holding that the Department's actions have
not tolled the running of the statute of limitations.
Plaintiff cross-appeals the court's conclusion that a five-
year statute of limitations exists for these wage claims.
The Department presents two additional issues for review
concerning the propriety of the restraining order and the
power of the Department to determine the validity of wage
claims.    After considering the argument of both parties, we
reverse the District Court order except for its conclusion
that a five-year limitation period governs these wage claim
actions.
     Plaintiff is a Montana corporation located in Helena,
Montana. During the period ending in June 1975, plaintiff
employed Sharon Hadley and Sharon Shreves as houseparents.
Sandra Shreves was employed by plaintiff from January 1974
to January 1975.    Sharon Hadley was employed by plaintiff
from January 1971 to July 1975.   Larry Hadley claims com-
pensation for alleged unpaid services rendered to plaintiff
from January 1971 to July 1975.
     On July 7, 1975, Sharon Hadley submitted a wage claim
assignment form to the Labor Standards Division, State
Department of Labor and Industry, claiming plaintiff failed
to pay her for overtime work performed.    On the same day, a
Department compliance officer notified plaintiff by letter
of Sharon Hadley's claim.   On April 12, 1976, Sandra Shreves
filed a similar wage claim form, asserting plaintiff failed
to give her overtime pay.   Larry Hadley did not file a wage
claim assignment form with the Department.   The Department
is proceeding on its own to pursue Larry Hadley's claim.
     In 1977, the Department audited the plaintiff's bookkeeping
accounts and sent a letter to plaintiff demanding over
$40,000, for back wages owed to its employees and former
employees.
     In February 1979, the Department served plaintiff with
a notice of opportunity for hearing, scheduled for March 9,
1979, with regard to the Hadley and Shreves wage claims.
The notice provided that "failure   ...    (to appear to
contest the wage claims) will result in an automatic deter-
mination in favor of Sharon Hadley, Sharon Shreves and Larry
Hadley in the amount of $22,997.04.     If necessary, the Labor
Standards Division will enforce (this determination)       . . .
in District Court   .   . ."
     On March 5, 1979, plaintiff petitioned the District
Court for a temporary restraining order and declaratory
judgment.    The plaintiff alleged the wage claims were barred
by the statute of limitations.   The court granted the
plaintiff's petition for a temporary restraining order.       The
court ordered the parties to submit an agreed statement of
facts, proposed findings and conclusions and briefs necessary
to determine plaintiff's statute of limitations question.
     The issues presented by the parties to the District
Court included:
     1.    What statute of limitations applies to these wage
claims?
     2.    What action, if any, taken by any parties, ends or
tolls the running of the statute of limitations?
    With regard to these issues, the District Court held as
follows:
    "Chapter 3 of Title 39, Sections 39-3-101, et seq.,
    M.C.A. authorizes the State Commissioner of Labor to
    conduct investigations of wage claims and violations,
    to take wage assignments and effect compromises or
    to maintain proceedings to enforce claims. The com-
    missioner may hold hearings and make determinations
    and, if a judicial review of the determination is not
    taken, may apply to the District Court for a judgment
    in which case the validity of the commissioner's deter-
    mination is not in issue.
     "The statutes also empower the employee to maintain
     a suit in District Court. As to the maintenance of
     the suit by the employee, the Montana Supreme Court
     in - -v. Keefer, (
        Pope                        .  ,
                              Mont - 591 P.2d 201,)
     36 St.Rep. 366 has held that there exists dual remedies
     available to the employee, i.e., the admini-
     strative procedure through the Commissioner
     of Labor or directly through the court and that the
     employee does not have to exhaust his administrative
     remedy before applying to the court. The Supreme
     Court in the Pope case, supra, held the five year
     statute applicable in a situation similar as it
     presented here.

     "This Court concludes on the basis of the Pope
     authority that the five year statute governs here.
     "The next question before the Court is what
     activity tolls the running of the statute of
     limitations.

    "It is the view of this Court that the statute
    is tolled only, as the statute itself provides,
    when an action is commenced which may result in
    a judgment by a court."
     In addition to these conclusions, the District Court
included the following additional conclusion of law:
    "M.C.A. 1978, Section 39-3-210 gives the Depart-
    ment of Labor and Industry the authority to conduct
    an investigatory hearing only. When this investi-
    gation discloses violations of the statute, M.C.A.
    1978, Section 39-3-209 requires the commissioner to
    institute actions for collection of unpaid wages
    & penalties."

    We find the District Court correctly interpreted our
decision in Pope, supra, holding that the five-year statute
of limitations governs this minimum wage dispute. We affirm
this portion of the court order. The payment of a minimum
wage is an integral part of the employment contract.   Wage
disputes grow out of the contractual relationship of employer
and employee.    Our wage protection statutes are designed to
protect employees who are unable to bargain in the competitive
job market and enter into employment contracts which pay an
adequate wage.    See, section 39-3-401, MCA. Our Pope decision
allows wage claimants action to collect unpaid minimum wages
up to five years on an oral employment contract after the
wages become due and payable.
     The rest of the District Court order is in error and
must be reversed.    The court erred in finding that the
statute of limitations was not tolled by the actions taken
by the Department.   The court further erred in restraining
the Department from proceeding to its hearing and in gra-
tuitously concluding that the Department has only investi-
gatory wage enforcement powers.
     The statute of limitations was tolled in this case when
plaintiff received the Department's demand letter notifying
plaintiff of each claimant's minimum wage claims.     The court
erred by concluding that only court action tolls the running
of this statute of limitations.    The statute of limitations
for wage claims may be tolled by an active, timely admini-
strative pursuit of the unpaid wages that gives notice to
the employer.   We recently decided this issue in State, Dept.
of Labor v. Wilson (1980),        Mont   .   , 614 P.2d 1066,

    "The question remains: (in wage claim enforcement
    cases) Is the statute of limitations tolled by
    the commencement of formal administrative pro-
    ceedings, or must an action be commenced by the
    Department's filing a complaint with the District
    Court?

     "In an administrative setting, where the agency
     acts to enforce the (Minimum Wage) law on its own
     initiative this action is the equivalent of the
     filing of a civil complaint. The Department's
     . ..  (demand letter to the employer) fulfilled
     the purposes of a complaint by giving   ..   .
     notice of the claim being made against them."
     The District Court further erred in granting the
restraining order and in concluding that the Department
possessed only investigatory powers in the enforcement of
the minimum wage statutes. Both errors only complicated the
administrative process of determining the validity of the
claimant's wage claims and the inexpensive processing of
these claims.   Plaintiff requested and received a restraining
order by alleging that the Department's action impaired its
right to be free from the defense of stale wage claims.
This alleged but unproven harm alone does not sufficiently
threaten plaintiff's individual rights to justify court-
ordered restraint of the Department.     The statute of limit-
ations defense could be inexpensively and easily asserted at
the Department's administrative hearing.    See, Jeffries Coal
Co. v. Industrial Accident Board (1952), 126 Mont. 411, 252

     The court's conclusion that the Department holds only
investigatory power impliedly conflicts with our opinion in
Burgess v. Softich (1975), 167 Mont. 70, 535 P.2d 178.    In
Burgess, we held that the Department is required not only to
inquire diligently into the validity of wage claims but to
determine their validity in a hearing.
     The order of the District Court is affirmed in part and
reversed in part.   This cause is remanded to the District
Court, for proceedings in conformance with this opinion.

                                           Justice
We Concur:

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