No. 12932
I N T E SUPREME C U T O THE STATE O M N A A
H OR F F OTN
1975
S Y O R L. STORCH,
EMU
P l a i n t i f f and A p p e l l a n t ,
BOARD OF DIRECTORS OF THE
EASTERN M N A A REGION FIVE
OTN
M N A HEALTH CENTER, e t a 1. ,
ETL
Defendants and Respondent.
Appeal from: D i s t r i c t Court of t h e S i x t e e n t h J u d i c i a l D i s t r i c t ,
A . B. Martin, Judge p r e s i d i n g .
Counsel of Record:
For Appellant:
Robert L. Stephens, Jr. argued, B i l l i n g s , Montana
For Respondent :
Lucas, J a r d i n e & Monaghan, Miles C i t y , Montana
James P. Lucas argued, Miles C i t y , Montana
Habedank, Cumming & Best, Sidney, Montana
Jacque W. Best argued, Sidney, Montana
- -
Submitted: December 11, 1975
Decided : JArj 2 1 7976
Filed: T;c;,iA; . ',
" 1
14r. J u s t i c e Gene B. Daly d e l i v e r e d t h e Opinion of t h e Court.
P l a i n t i f f Seymour L. Storch b r i n g s t h i s a p p e a l from
a judgment of t h e d i s t r i c t c o u r t , Custer County, t h e Hon. A . B .
Martin p r e s i d i n g , d i s m i s s i n g p l a i n t i f f ' s complaint f o r f a i l u r e
t o s t a t e a claim upon which r e l i e f may be g r a n t e d .
The i n d i v i d u a l l y named defendants i n t h i s a c t i o n a r e
members of t h e Board of D i r e c t o r s of t h e E a s t e r n Montana Regional
Mental Health Center, Region 5 . O December 4 , 1972, p l a i n t i f f
n
Storch was employed on a p r o b a t i o n a r y b a s i s by t h e tfental Health
Center a s a drug abuse c o n s u l t a n t . During p l a i n t i f f ' s p r o b a t i o n a r y
p e r i o d , board member E t h e l Eond made a w r i t t e n recommendation t o
Rod L. Newman, Program D i r e c t o r f o r t h e C e n t e r , t h a t torch's
employment be terminated. Upon review o f t h i s recommendation and
o t h e r complaints r e c e i v e d , t h e Eoard of D i r e c t o r s sought t h e
t e r m i n a t i o n of torch's employment w i t h t h e Center f o r t h e s e r e a -
sons :
"I. His p h y s i c a l appearance and body c l e a n l i n e s s
a r e not a c c e p t a b l e f o r a p r o f e s s i o n a l person i n our
community.
"2. While we r e c o g n i z e t h a t h i s p e r s o n a l l i f e i s
a p r i v a t e m a t t e r , t h e Board f e e l s we cannot condone
t h e open i l l i c i t c o h a b i t a t i o n . This does n o t s e t a
good example f o r people w i t h problems o r our young
people.
"3. The medical community has been c o n s u l t e d . The
response by t h e d o c t o r s except one has been t h e y
would n o t r e f e r p a t i e n t s t o t h i s man and f e e l t h e
Center has d e t e r i o r a - t e d s i n c e t h e a d d i t i o n of t h i s
man t o t h e s t a f f .
"4. H i s behavior and a c t i o n s r e f l e c t upon t h e Center
a d v e r s e l y . W r e a l i z e t h a t t h e r e a r e some people who
e
have b e n e f i t e d from h i s s e r v i c e . But f o r t h e good of
t h e Center and t h e continued support from t h e communi-
t i e s , we have asked f o r f4r, torch's r e s i g n a t i o n . f 1
O May 16, 1973, Rod L. Newman, Program D i r e c t o r , asked
n
Storch f o r h i s r e s i g n a t i o n . Upon torch's r e q u e s t f o r an explana-
t i o n , Newman s e n t him a l e t t e r l i s t i n g the r e a s o n s c i t e d by t h e
C e n t e r ' s Board of D i r e c t o r s and a d v i s i n g Storch t h a t a.s a proba-
t i o n a r y employee, he had no r i g h t t o a p p e a l o r hearing. When
S t o r c h r e f u s e d t o r e s i g n , h i s employment was t e r m i n a t e d , e f f e c t i v e
June 1 5 , 1973.
With t h e t e r m i n a t i o n of h i s employment, S t o r c h , through
l e g a l c o u n s e l , f i l e d a complaint i n C u s t e r County d i s t r i c t c o u r t
seeking s p e c i a l damages of $250,000, p u n i t i v e damages of $50,000,
and $50,000 f o r i n j u r y t o p l a i n t i f f ' s r e p u t a t i o n . The t h r e e
counts of t h e complaint went b a s i c a l l y t o t h e c o n t e n t i o n t h a t t h e
r e a s o n s given by t h e Board i n t h e l e t t e r r e q u e s t i n g p l a i n t i f f ' s
r e s i g n a t i o n were l i b e l o u s r e f l e c t i o n s on h i s p r o f e s s i o n a l a b i l i t y
and improper i n v a s i o n s of h i s c o n s t i t u t i o n a l r i g h t t o p r i v a c y .
I n answer t o p l a i n t i f f ' s complaint, defendants f i l e d a
motion t o d i s m i s s f o r f a i l u r e t o s t a t e a c l a i m upon which r e l i e f
may be g r a n t e d . The motion t o d i s m i s s s t a t e d two b a s i c r e a s o n s :
1. That t h e a c t s complained of were discharged by an agency
of s t a t e government a s a governmental f u n c t i o n and were t h e r e f o r e
s u b j e c t t o t h e defense of sovereign immunity.
2. That t h e a c t s complained of were w i t h i n t h e proper
d i s c h a r g e of an o f f i c i a l duty and were t h e r e f o r e s u b j e c t t o t h e
defense of a b s o l u t e p r i v i l e g e .
The complaint b e i n g dismissed w i t h p r e j u d i c e t h e d i s -
t r i c t c o u r t ' s judgment o p e r a t e d a s a f i n a l d e t e r m i n a t i o n upon t h e
m e r i t s and was t h e r e f o r e r e s j u d i c a t a f o r purposes of p l a i n t i f f ' s
cause. T h e r e a f t e r , p l a i n t i f f appealed t o t h i s Court.
The s o l e i s s u e b e f o r e t h i s Court i s whether t h e d i s t r i c t
c o u r t e r r e d i n g r a n t i n g d e f e n d a n t s ' motion t o dismiss.
P l a i n t i f f contends t h a t s e c t i o n 83-701, R.C.I.I. 1947,
t h e s p e c i f i c s t a t u t o r y p r o v i s i o n then i n e f f e c t , waived any sovereign
immunity (1889 C o n s t i t u t i o n i n e f f e c t a t time cause of a c t i o n
accrued) t o t h e e x t e n t t h a t t h e s t a t e o r i t s i n s t r u m e n t a l i t i e s
were i n s u r e d . This c o n t e n t i o n e r r o n e o u s l y presupposes t h a t l i a -
b i l i t y i n s u r a n c e i s t h e only l i m i t a t i o n on waiver of s t a t u t o r y
immunity.
It i s an e s t a b l i s h e d g e n e r a l p r i n c i p l e t h a t any s t a t u t o r y
waiver of a s t a t e ' s immunity from s u i t i s t o be s t r i c t l y construed.
72 Am J u r 2d, S t a t e s , E t c . , $121. This Court recognized t h e
c o n t i n u i n g v a l i d i t y of t h i s p r i n c i p l e i n Kish v. Montana S t a t e
P r i s o n , 161 Hont. 297, 301, 505 P.2d 891, when i t quoted from
Kaldahl v. S t a t e Highway Commission, 158 ?*font. 219, 221, 490 P.2d
"'AS t o l e g a l a c t i o n s a g a i n s t t h e s t a t e , t h e 1959
l e g i s l a t u r e passed Chapter 7, T i t l e 83f1 R.C.M.
1947 - " ~ o r tActions Against t h e S t a t e , and i n
Even s e c t i o n s , s e c t i o n s 83-701 through 83-707,
c a r e f u l l y determined how, why, and when t h e s t a t e
could be sued i n a t o r t a c t i o n . These l e g i s l a t i v e
enactments recognized t o r t l i a b i l i t y and e s t a b l i s h
immunity of t h e s t a t e i n excess of a c o l l e c t i b l e
insurance. Thus, t h e s e s t a t u t o r y p r o v i s i o n s provide
a remedy a g a i n s t t h e s t a t e u n d e r - c e r t a i n circumstances.
The l e g i s l a t u r e has spoken and we a r e bound by i t s
enactments. 1 I 1 (Emphasis s u p p l i e d . )
See a l s o : Valley County v. Thomas, 109 Mont. 345, 97 P.2d 345;
S t a t e ex r e l . LaPoint v. D i s t r i c t Court, 69 Mont. 29, 220 P. 88.
The s t a t u t e , s e c t i o n 83-701, R.C.M. 1947, provided i n
pertinent part:
"The d i s t r i c t c o u r t s of t h e s t a t e of Montana s h a l l
have e x c l u s i v e j u r i s d i c t i o n t o h e a r , determine, and
r e n d e r judgment t o t h e e x t e n t of t h e i n s u r a n c e coverage
c a r r i e d by t h e s t a t e of Montana on any c l a i m a g a i n s t
t h e s t a t e of Montana f o r money o n l y , a c c r u i n g on o r
a f t e r t h e passage and approval of t h i s a c t , on account
of damage t o o r l o s s of p r o p e r t y , o r on account o f
p e r s o n a l i n j u r i e s o r d e a t h caused by t h e n e g l i g e n c e o r
wrongful a c t o r omission of any employee of t h e s t a t e
of Montana. > i>'i" 9:'
The s t a t u t e e x p r e s s l y r e s t r i c t s waiver of t o r t immunity
t o t h e common t o r t a c t i o n s f o r recovery of damages f o r p e r s o n a l
i n j u r y o r d e a t h o r damage t o p r o p e r t y . Applying t h e r u l e of s t r i c t
c o n s t r u c t i o n , t h e p l a i n t i f f ' s two b a s i c claims of l i b e l and inva-
t i o n of p r i v a c y do n o t f i t i n t o t h e t o r t c a t e g o r i e s s p e c i f i e d i n
the statute. I t t h u s becomes unnecessary t o d i s c u s s t h e e f f e c t of
any l i a b i l i t y in'surance because t h e f a i l u r e o f t h e " c e r t a i n c i r c u n -
stances" t e s t of Kaldahl c o n s t i t u t e s an a b s o l u t e b a r t o waiver of
sovereign immunity.
P l a i n t i f f a l s o contends t h a t d e f e n d a n t s ' r e l i a n c e on
t h e p r i v i l e g e d communication defense t o a l i b e l c l a i m i s mis-
placed because Montana law r e q u i r e s t h e absence of malice f o r
such a defense. I n t h i s c a s e , p l a i n t i f f claims t h e a l l e g e d l i b e l o u s
communication involved malice and t h e r e f o r e t h e defense could n o t
stand. W f i n d no m e r i t i n t h i s c o n t e n t i o n .
e
A p r i v i l e g e d communication i s one which, except f o r t h e
circumstances under which i t i s made, may be defamatory and
actionable. Section 64-208, R.C.M. 1947, provides:
What communications a r e p r i v i l e g e d . A p r i v i l e g e d
11
p u b l i c a t i o n i s one made:
"1. I n t h e proper d i s c h a r g e of a.n o f f i c i a l d u t y ;
"2, I n any l e g i s l a t i v e o r j u d i c i a l proceeding, o r
i n any o t h e r o f f i c i a l proceeding a u t h o r i z e d by law;
"3. I n a communication, without m a l i c e , t o a
person i n t e r e s t e d t h e r e i n , by one who i s
a l s o i n t e r e s t e d , o r by one who s t a n d s i n
such r e l a t i o n t o t h e person i n t e r e s t e d a s
t o a f f o r d a r e a s o n a b l e ground f o r supposing
t h e motive f o r t h e communication i n n o c e n t ,
o r who i s r e q u e s t e d by t h e person i n t e r e s t e d
t o give t h e information;
"4. By a f a i r and t r u e r e p o r t , w i t h o u t malice of
a j u d i c i a l , l e g i s l a t i v e , o r other public o f f i c i a l
proceeding, o r of anything s a i d i n t h e c o u r s e
thereof. "
While some of t h e quoted s u b s e c t i o n s do mention malice t h e per-
t i n e n t s u b s e c t i o n 1, says n o t h i n g about q u a l i f i e d p r i v i l e g e .
Rather i t c o n s t i t u t e s an a b s o l u t e p r i v i l e g e w i t h t h e only r e q u i r e -
ment being t h a t t h e i n t r a d e p a r t m e n t communication be one rendered
w h i l e engaged i n an " o f f i c i a l duty". There ca.n be no doubt t h a t
t h e h i r i n g and f i r i n g o f employees i s p a r t of t h e " o f f i c i a l duty"
o f Montana Regional Health Centers. The t i t l e of Chapter 246, Laws
of 1967, r e a d s :
"An Act Expanding Duties and S e r v i c e s of t h e Dit~i.sion
of Mental Hygiene of t h e S t a t e Board of Public I n s t i -
t u t i o n s by E s t a b l i s h i n g and Conducting Mental Health
C l i n i c s and Community Comprehensive Mental Health
Centers; C r e a t i n g Regional Mental Health Boards; Pro-
v i d i n g f o r t h e Organization Thereof 9~ ik 7 2 . " (Emphasis
supplied.)
Thus i t becomes obvious t h e l e g i s l a t i v e i n t e n t was t o make t h e
mental h e a l t h c e n t e r an arm of t h e s t a t e and h i r i n g and f i r i n g a
f u n c t i o n of t h a t agency.
Whether s t a t e m e n t s made by such p u b l i c o f f i c e r s i n
r e l a t i o n t o t h e h i r i n g and f i r i n g of employees nay be s u b j e c t t o
a b s o l u t e p r i v i l e g e has been answered i n t h e a f f i r m a t i v e many t i m e s .
Under f a c t s s i m i l a r t o t h e i n s t a n t c a s e , t h e United S t a t e s Supreme
Court i n B a r r v. >$atteo, 360 U.S. 564, 571, 79 S.Ct. 1335, 3 L ed 2d
1434.,1441, s t a t e d t h a t i n s o f a r a s a p u b l i c o f f i c e r was a c t i n g
w i t h i n t h e scope of h i s a u t h o r i t y h i s communication was a b s o l u t e l y
privileged. See a l s o : Newbury v. Love, 242 F.2d 372; ?.$organ v.
Willingham, 424 F.2d 200; P r e b l e v. Johnson, 275 F.2d 275.
The Court went on t o say why an a b s o l u t e p r i v i l e g e was
e s s e n t i a l i n such a circumstance, q u o t i n g approvingly from Judge
Learned Hand's d e c i s i o n i n Gregoire v: B i d d l e , 177 F.2d 579, 581:
1I 1 ;
9 i t i s impossible t o know whether t h e c l a i m
J
;
:
i s w e l l founded u n t i l t h e c a s e has been t r i e d , and
t h a t t o submit a l l o f f i c i a l s , t h e innocent a s w e l l
a s t h e g u i l t y , t o t h e burden of a t r i a l and t o t h e
i n e v i t a b l e danger of i t s outcome, would dampen t h e
a r d o r of a l l . b u t t h e most r e s o l u t e , o r t h e most i r r e s p o n -
s i b l e , i n t h e u n f l i n c h i n g dbscharge of t h e e i r dutiies .* *
*"'
Since t h e i n t e r n a l communication was it it shin t h e proper
d i s c h a r g e of an o f f i c i a l d u t y , i t enjoyed an a b s o l u t e p r i v i l e g e
and could t h e r e f o r e n o t b e t h e s u b j e c t of l i b e l a c t i o n .
F i n a l l y , t h e f a c t s s t i p u l a t e t h a t p l a i n t i f f wa.s on
probationary s t a t u s . The purpose of such s t a t u s i s t o provide a
b r i e f p e r i o d i n which t o measure t h e employee's a b i l i t y t o perform
h i s job b e f o r e g r a n t i n g him a degree of job s e c u r i t y . I f the
a p p r o p r i a t e s t a t e employer f e e l s t h a t t h e employee i s n o t measuring
up d u r i n g t h i s p r o b a t i o n a r y period i t can dismiss t h a t employee
w i t h o u t procedural due p r o c e s s . M.A.C. 2-3.34 (26)-S34160.
P l a i n t i f f p l a c e s heavy r e l i a n c e on Perry v . Sindermann,
408 U.S. 593, 597, 92 S.Ct. 2694, 33 L ed 2d 570,577, f o r h i s
c l a i m t h a t t h e e x e r c i s e of t h e r i g h t o f p r i v a c y c o n s t i t u t e s sub-
s t a n t i v e due process and a s such i s c o n t r o l l i n g on t h e c o n s t i t u t . i o n a l
i s s u e i n t h i s c a s e , even though h i s employee s t a t u s was proba-
tionary. I n Perry t h e Court s t a t e d :
"* * * even though a person has no ' r i g h t f t o a
v a l u a b l e governmental b e n e f i t and even though t h e
government may deny him t h e b e n e f i t f o r any
number of r e a s o n s , t h e r e a r e some r e a s o n s upon
which t h e government may n o t r e l y . It may n o t deny
a b e n e f i t t o a person on a b a s i s t h a t i n f r i n g e s h i s
constitutionally protected i n t e r e s t s -L. I I* 8,
So t h e i s s u e becomes whether t h e d i s m i s s a l of p l a i n t i f f
i n f r i n g e d upon h i s s u b s t a n t i v e due p r o c e s s r i g h t of privacy.
A t t h e o u t s e t , i t should be remembered t h a t t h e e x e r c i s e of con-
s t i t u t i o n a l r i g h t s i s not absolute. I n Weber v. Highway Commission
of S t a t e of Montana, 333 F.Supp. 561, 564, Judge R u s s e l l E. Smith
said :
"* 9: +:His e x e r c i s e of h i s [employee's] r i g h t s t o
freedom of speech 9 : *
? d i d n o t f u r n i s h him w i t h
;
a form of job insurance. k 9~ " ' 4.
Ye *
t h a t t h e motive f o r t h e f i r i n g was generated
by p l a i n t i f f ' s e x e r c i s e of h i s f i r s t amendment r i g h t s
does n o t i n m opinion prevent
y t h e Highway Department
from d i s m i s s i n g him i f a v a l i d cause f o r d i s m i s s a l i s
shown ik Ji J<"
Thus where an o v e r r i d i n g government i n t e r e s t can be shown, t h e
employee's e x e r c i s e of s u b s t a n t i v e c o n s t i t u t i o n a l r i g h t s i s n o t
c o n t r o l l i n g i n t h e d i s p o s i t i o n of t h e c a s e ,
Here, t h e l e t t e r from t h e Chairman o f t h e Personnel
Committee t o t h e D i r e c t o r of t h e E a s t e r n Montana Regional Mental
Health Board, which forms t h e c o r e of lai in tiff's complaint,
gave s e v e r a l r e a s o n s f o r r e q u e s t i n g p l a i n t i f f ' s d i s m i s s a l b u t t h e
main i n g r e d i e n t was t h e b e l i e f by t h e Board of D i r e c t o r s t h a t t h e
p l a i n t i f f ' s personal l i f e s t y l e was a d v e r s e l y a f f e c t i n g h i s
a b i l i t y t o adequately d i s c h a r g e h i s p r o f e s s i o n a l d u t i e s . Specifi-
c a l l y t h e Board f e l t t h a t because p l a i n t i f f was engaged i n counseling
people w i t h p e r s o n a l problems, h i s own p e r s o n a l p h i l o s o p h i e s became
r e l e v a n t t o h i s job performance. Since t h o s e p e r s o n a l p h i l o s o -
p h i e s c o n f l i c t e d w i t h what t h e Board saw a s t h e g o a l s of t h e Mental
Health Board, i t u t i l i z e d i t s a u t h o r i t y a s o v e r s e e r of employee
performance t o recommend p l a i n t i f f ' s d i s m i s s a l .
That when an employee's conduct a f f e c t s h i s a b i l i t y t o
a d e q u a t e l y perform h i s d u t i e s he can be d i s c h a r g e d i s w e l l
established. I n Bruns v. Pomerleau, 319 F.Supp. 58, 67, i t i s
stated:
"ik * J~IiThathe does i n h i s p r i v a t e l i f e , a s w i t h
o t h e r p u b l i c employees, should n o t be h i s employer's
concern u n l e s s i t c a n be shown t o a f f e c t i n some
d e g r e e h i s e f f i c i e n c y i n t h e performance of h i s
d u t i e s . ;k ? ;k" (Emphasis s u p p l i e d . )
;
See a l s o : P i c k e r i n g v. Board of Education, 391 U.S. 563, 88 S.
C t . 1731, 20 L ed 2d 811; B a t t l e v. Mulholland, 439 F.2d 321;
Pred v . Board of P u b l i c I n s t r u c t i o n , 415 F.2d 851.
Accordingly, t h e judgment o f t h e d i s t r i c t c o u r t i s
affirmed .
Justice
A 7 e Concur: I