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 INTER-
NATIONAL 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
June 28, 1982
Submitted:
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 recogni-
tion 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 instruc-
tions 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 non-
public 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 recogni-
zed sources of strife and unrest, it is the
policy of the state of Montana to encourage
the practice and procedure of collective bar-
gaining 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 8 0 % of the specialty officers
and 8 3 % 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 Bargain-
ing 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 Of-
ficer, Maintenance Officer, Fire Marshal and
Training Officer are supervisory and excluded
from Firefighters Local #521 Bargaining Unit.
"5. The Fire Captains shall remain with Fire-
fighters Local #521 Bargaining Unit.
"6. The test applied by the Board of Person-
nel 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 judg-
ment 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 "recogni-
tion 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 ~ ~ m p ~ ~ i t i o n - -"history of collective bargaining" and
the
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 bargain-
ing 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 # 5 2 1 . 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 com-
mission who serves the state intermittently;
" (vii) a school district clerk;
" (viii) a school administrator;
"(ix) a registered professional nurse per-
forming 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 engineers-
in-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 estab-
lished collective bargaining agreements al-
ready 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 recogni-
tion 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