Roeber v. State, Department of Institutions

No. 89-446

IN THE SUPREME COURT OF THE STATE OF MONTANA
1990

ERNEST ROEBER and THE STATE
INSTITUTIONAL EMPLOYEES FOR
EQUAL HOURS,
Plaintiffs and Respondents,

STATE OF MONTANA, DEPARTMENT OF
INSTITUTIONS AND THE MONTANA
DEVELOPMENTAL CENTER,
Defendants and Appellants.

* . >

APPEAL FROM: District Court of the Fifth Judicial District,
In and for the County of Jefferson,
The Honorable Frank Davis, Judge presiding.

COUNSEL OF RECORD:
For Appellant:
Nick A. Rotering, Esq., Department of Institutions,
Helena, Montana
For Respondent:
Leonard J. Haxby, Esq., Butte, Montana

Submitted on Briefs: March 29, 1990
Decided: July 1 2 , 1990
Filed:
Justice Diane G. Barz delivered the Opinion of the Court.

The State of Montana, Department of Institutions and Montana
Developmental Center appeal fromthe judgment of the District Court
for the Fifth Judicial District, Jefferson County, granting
respondents' petition for declaratory judgment. We reverse and
remand.
Respondents are employees of the Montana Developmental Center
in Boulder. The Developmental Center is operated by the Department
of Institutions. There are both union and non-union employees at
the Developmental Center. Union employees are subject to a
collective bargaining agreement from which respondents, as non-
union employees, are exempt. Respondents were hired from within
the Center, by bid, and from outside the Center, by application.
Each of the respondents received a personnel manual and other
literature describing the general terms of employment.
Prior to June, 1987, all Center personnel who worked an eight
hour shift were paid for their half-hour lunch break. In June,
management notified both union and non-union employees they would
be required to work an eight hour day with an unpaid half-hour
lunch break effective June 8, 1987. The grievance filed by the
union employees was successful and management restored their paid
half-hour lunch break in accordance with the collective bargaining
agreement.
Respondents filed a non-union grievance asserting management
wrongfully terminated their paid half-hour lunch breaks and
increased their working hours. Management denied this grievance.
A three member grievance committee held:
It would seem that additional information, policies and
regulations which may have significant bearing on this
matter were not made available to the committee.
It cannot be determined whether there is or is not, in
fact, a contractural [sic] relationship as a result of
said document; i.e., job announcement. . .
The committee referred the grievance to the Director of
Institutions. The Director found as follows:
It is the decision of the Director to accept the holdings
of the committee which indicated that the grievants
failed to sustain the burden of proof and essentially
affirms management's position.
The Director accepts and upholds the decision of the
committee which essentially supports management's
position in this grievance.
Respondents then filed a petition for judicial review
asserting their right to retroactive pay and reinstatement of the
paid half-hour lunch break. Before the District Court ruled on the
matter, respondents filed a motion for declaratory judgment seeking
relief identical that prayed for the petition for judicial
review. The parties then stipulated to allow respondents to file
an amended petition. Respondents filed an amended petition for
judicial review and motion for declaratory judgment. Contained
within count I were the claims originally asserted in their
petition for judicial review and within count I1 those set forth
in the original motion for declaratory judgment. The District
Court, on stipulation of counsel, converted the hearing on
respondents1 amended petition to a pretrial hearing on the matter.
In its findings of fact and conclusions of law filed following oral
argument, the District Court found that:
 By oral stipulation of counsel, the petition
for judicial review was converted to a
declaratory judgment action pursuant to 5 27-
8-101, MCA, et seq.

[I]t [had] jurisdiction to determine the legal
rights of the. parties under the broad
provisions of the Uniform Declaratory
Judgments Act embraced by the cited statutes,
and that counsel for both parties agree[d]
that the judicial review of the administrative
decision [was] moot.
There is no record of an oral stipulation between the parties aside
from the ~istrictCourt's finding.
The lower court ordered appellants to reinstate the paid lunch
half-hour and to reimburse respondents for their unpaid lunch
breaks since June of 1987. Appellants argue the ~istrictCourt
substituted its judgment for that of the administrative decision
maker by inferring facts not clearly in the record. We note the
paucity of findings upon which the District Court could rely on
review. Lower courts may remand petitions for judicial review for
further proceedings pursuant to 5 2-4-704, MCA.
The dispositive issue on appeal concerns the standard of
review applied by the District Court in reversing the decision of
the Director of Institutions. The lower court's findings of fact,
as set forth above, conform to the spirit of the Uniform
Declaratory Judgments Act codified at 5 27-8-101 et seq., MCA.
Section 27-8-102, MCA, makes evident the purpose and nature of the
Act :
This chapter is declared to be remedial; its
purpose is to settle and to afford relief from
uncertainty and insecurity with respect to
rights, status, and other legal relations; and
 it is to be liberally construed and
administered.
District courts have significantly less latitude upon judicial
review of administrative decisions in contested cases pursuant to
the Montana Administrative Procedure Act (MAPA), Title 2, Section
4, MCA. Section 2-4-704, MCA, provides:
The review shall be conducted by the court
without a jury and shall be confined to the
record.

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:
(a) the administrative findings, inferences,
conclusions, or decisions are:
(i) in violation of constitutional or
statutory provisions;
(ii) in excess of the statutory authority of
the agency;
(iii) made upon unlawful procedure;
(iv) affected by other error of law;
(v) clearly erroneous in view of the reliable,
probative, and substantial evidence on the
whole record;
(vi) arbitrary or capricious or characterized
by abuse of discretion or clearly unwarranted
exercise of discretion; or
(b) findings of fact, upon issues essential
to the decision, were not made although
requested.
Appellants contend the judicial review of the administrative
decision was not moot and therefore review of that decision
pursuant to MAPA was proper. District courts may not overturn
agency decisions unless substantial, credible evidence supporting
a finding of fact is lacking. Hammerquist v. Employment Sec. Div.
of the Montana Deptt. of Labor and Indus. (1988), 230 Mont. 347,
349, 749 P.2d 535, 536. District courts have greater discretion
in reviewing conclusions of law because of an enhanced ability to
interpret and apply the law to the facts. City of Billings v.
Billings Firefighters Local No. 521 (1982), 200 Mont. 421, 430, 651
P.2d 627, 632. Administrative conclusions of law must be upheld
by district courts unless they constitute an abuse of discretion.

Clearly, the District Court the instant case possessed
broader remedial powers by proceeding under the Uniform Declaratory
Judgments Act than had it subjected the agency decision to judicial
review pursuant to MAPA.
We hold the ~istrictCourt improperly proceeded under the
Uniform Declaratory Judgments Act in this case.
The purpose of declaratory relief is to
liquidate uncertainties and controversies
which might result in future litigation and to
adjudicate rights of parties who have not
otherwise been given an opportunity to have
those rights determined. However, it is not
the true purpose of the declaratory judgment
to provide a substitute for other regular
actions.
Other jurisdictions have denied the remedy of
declaratory judgment where appeal by statute
or otherwise from the actions of
administrative bodies exists. (Citations
omitted. )
Matter of Dewar (1976), 169 Mont. 437, 444, 548 P.2d 149, 153-54.
 Pursuant to 5 2-4-506, MCA, plaintiffs may bring a declaratory
action to challenge the validity of a rule. However, § 2-4-

102(10), MCA, sets forth the rules subject to that section:
l1Rulelf
means each agency regulation, standard,
or statement of general applicability that
implements, interprets, or prescribes law or
policy or describes the organization,
procedures, or practice requirements of an
agency. The term includes the amendment or
repeal of a prior rule but does not include:
(a) statements concerning only the internal
management of an agency and not affecting
private rights or procedures available to the
public;

(e) rules implementing the state personnel
classification plan, the state wage and salary
plan, or the statewide budgeting and
accounting system;

The internal personnel policy at issue in the instant case is
conspicuously and specifically excluded from the purview of this
section. In this case, where respondents had a remedy of appeal
fromthe administrative decision, declaratory relief was improperly
granted. We reverse and remand for judicial review pursuant to

The effect of the District Courtfsruling would be to encumber
the Department of Institutions and the Montana Developmental
Center, with a sempiternal [adj.: everlasting; perpetual; eternal,
Websterfs New World Dictionary 1295 (2nd College ed. 1986)l

personnel policy unique to this facility. We note the policy
change brought the affected employees into conformance with the
State classification plan codified at 8 8 2-18-201, et seq., MCA.
Although the union employees are now paid for their lunch breaks
that policy is subject to change during the periodic renegotiation
of their collective bargaining agreement. We will not affirm a
holding which has the effect of prohibiting anv change in this
policy.
Reversed and remanded.

We concur:

Justices
Justice John C. Sheehy, dissenting:

The approach of the majority in this case to the Montana
Administrative Procedure Act (MAPA) is purblind in every sense of
the word [purblind: partly blind; lacking in vision, insight or
understanding. Webstergs New Collegiate Dictionary (1981)l.
The majority see well enough to find a single remedy by appeal
from an administrative decision under 5 2-4-704, MCA. They fail
to see that an equally valid remedy is provided in MAPA for
declaratory judgments under 5 2-4-506, MCA.
That section provides:

2-4-506. Declaratory iudsments on validity or
application of rules. (1) A rule may be declared
invalid or inapplicable in an action for declaratory
judgment if it is found that the rule or its threatened
application interferes with or impairs or threatens to
interfere with or impair the lesal riqhts or privileqes
of the plaintiff.

(2) A rule may also be declared invalid in such action
on the grounds that the rule was adopted with an
arbitrary or capricious disregard for the purpose of the
authorizing statute as evidenced by documented
legislative intent.

(3) A declaratory judgment may be rendered whether or
not the plaintiff has requested the asency to pass upon
the validity or applicability of the rule in question
. . .(Emphasis supplied.)
Thus, under MAPA, a district court has not only review
authority but is given declaratory authority to determine a legal
question as to the validity or applicability of the rules of state
government agencies. The district court has the power to declare
the rule invalid, or that its application, as in this case, is
invalid.
 There are really no fact issues in this case. There is not
any dispute from the State or its agency managers that, prior to
June 1, 1987, the non-union employees here worked an 8-hour shift
which included a half-hour lunch period. On or about June 8, 1987,
the State by letter unilaterally directed that these non-union
employees would lose the paid lunch period and that an additional
half-hour work period would be added to their schedules.
The only issues that remain are legal issues, since the facts
are not in dispute. The employees maintain that they have an
implied contract for the paid lunch period. The position of the
State from the record and from its brief is that § 39-4-107, MCA,
and the policies of the State contained in its management memos and
employee handbook are the rules which govern the issue. It was
most appropriate for the District Court to regard the matter as one
for declaratory judgment and to act under the jurisdiction
specifically given to it by MAPA under 5 2-4-506, MCA, above.
Not only did the ~istrictCourt properly proceed to consider
the legal issue here under its power of declaratory judgment
provided in the Act, but the State recognized this power, and
stipulated in writinq for the court's consideration of the legal
issue under its declaratory jurisdiction:

Come now the parties hereto and hereby stipulate and
agree that the petitioners [employees] shall be allowed
to file an amended petition in order to incorporate
petition for further relief and authorizing the court to
issue an order allowing the filing of said amended
petition.
 Let us review the procedure that occurred in this case. On
September 16, 1987, Ernest F. Roeber filed a grievance on behalf
of himself and all similarly situated non-union employees of the
Montana Development Center at Boulder. His grievance was that he
and his fellow non-union employees had an express or implied
contract with the State under which the work-day comprised an
eight-hour shift which included a paid half-hour lunch period.
Under the grievance procedures established by the Department, a
three-member committee was convened which heard the grievance.
After hearing, the grievance committee rendered the following
decision:

Held: It would seem that additional information,
policies and regulations which may have significant
bearing on this matter were not made available to the
committee.

Held: It cannot be determined whether there is or is
not, in fact, a contractual relationship as a result of
said document; i.e., job announcement, (see exhibit 6a,
6b and 6c).

Recommendation: In the future, non-union job vacancy
announcements should contain a statement which clearly
indicates that the terms and conditions of hiring and
employment are governed by volume I11 of the Montana
Operations Manual.
Thereafter, on January 26, 1988, the director of the
Department of Institutions entered a written decision, in part:

It is the decision of the Director to accept the holdings
of the committee which indicated that the grievants
failed to sustain the burden of proof and essentially
affirms management's position.
 Considering the recommendation made by the committee, it
is well taken, but must be taken under advisement. To
require stipulation of this nature would put a higher
degree of responsibility on non-union job positions at
the Montana Developmental Center then presently is
required in job posting relative to other agencies in
state government and the Department of Institutions.

CONCLUSION : The Director accepts and upholds the
decision of the committee which essentially supports
management's position in this grievance.
Thereafter, Roeber filed his petition for judicial review in
the District Court. While the matter was there pending, Roeber,
through his counsel, filed a motion for a declaratory judgment from
the District Court determining that the non-union employees had an
express or implied contract with the State, which was impaired by
the action of the Department. The District Court, by letter to
all counsel, called attention to the motion and requested of
counsel whether a judicial review proceedings could be converted
into a declaratory judgment action. The parties met and orally
stipulated that this should be done, and eventually the written
stipulation above set forth was executed by counsel for Roeber and
the State.
In its findings of fact and conclusions of law, the District
Court expressed frustration about the grievance procedure at the
administrative level. The court stated:

The hearing at the local grievance level was, as this
Court finds, a "nondecision. The committee concluded
that it had insufficient evidence to make an informed
decision. It passed it on by way of an administrative
appeal to the Director of the Department of Institutions.
 On January 26, 1988, the Department disposed of the
matter by a Director's decision. The Director, despite
the "nonde~ision~~ character of the local committee's
actions, treated it as one, holding that the plaintiff
had failed to sustain their "burden of proofttand that
management had the right to make the change. BY
upholding management s ttdecisionllthere was thus created
two different categories as far as the paid one-half hour
lunch period was concerned--one for the union--a
different one for non-union.
The District Court went on to determine that it had
jurisdiction to determine the legal rights of the parties under the
broad provisions of the Uniform Declaratory Judgments Act,
particularly because counsel for both parties had asreed that
judicial review of the administrative decision was now moot.
Moreover, the District Court found as a fact that there existed an
implied contract between management and plaintiffs establishing a
paid one-half-hour lunch as one of conditions of their employment.
It found a breach by management of the implied contract of
employment, so the court held in favor of the employees.
The majority opinion decides the case as though Roeber and his
associates had elected a grievance form of remedy and could apply
for none other. This flies in the face of 3 2-4-506, MCA, which
provides that a declaratory judgment may be rendered "whether or
not the plaintiff has requested the agency1' to pass upon the
applicability of the rule in question. This Court should be
especially unwilling to be used as a pawn, where the appellant in
this case stipulated in writing to the declaratory procedure
adopted by the District Court, and then on appeal seeks to evade
the results of its stipulation. In this case, the administration
had attempted to impose the same non-paid lunch period upon the
union employees as upon the non-union employees. However, the
collective bargaining agreement and grievance filed by union
employees made the administration back up and reinstate for the
union employees the paid lunch period. The District Court found
that factor important. The district judge noted in his memorandum:

There was, of course, no written contract, except that
made by the department with the collective bargaining
unit. It seems to the Court that by agreeing with the
union as it did on July 1, 1987, management went a long
way toward acknowledging a long-standing agreement with
all of its employees. The evidence was persuasive that
this agreement existed. The agreement may have been
contrary to the eight hour day statute ( 5 39-4-107, MCA) ;
but even that statute has escape clauses in the form of
provisions for collective bargaining agreements as well
as the mutual agreement between management and employees
not covered by union contract.

The court agrees with plaintiff that the long time
conduct created an implied contract which could not be
unilaterally changed as it was . ..
The truth is the only means for redress for the non-union
employees in this case is by means of declaratory judgment. The
grievance procedure is not fitted to handle such questions of law
as the impairment of contracts and the existence of implied
contracts. These are legal questions more properly in the sphere
of judicial action. The legislature considered the possibilities
and provided a double remedy in cases such as this: one if a
grievance procedure would remedy the situation, and the other,
whether or not the grievance procedure sufficed, for a judicial
remedy by declaratory relief.
 One wonders, now that the majority has ordered a further
judicial review, what the District Court will find to review. It
will not be helped by the llnondecision.ll
I dissent and would affirm the judgment of the District Court.

I c o n c u r w i t h b h e f o r e g o i n g d i s s e n t of J u s t i c e S h e e h y .

Justice