NO. 92-504
IN THE SUPREME COURT OF THE STATE OF MONTANA
1993
HEARING AID INSTITUTE,
Petitioner and Appellant,
CAROLYN RASMUSSEN and THE MONTANA
HUMAN RIGHTS COMMISSION,
Respondents and Respondents.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
The Honorable Jeffrey Sherlock, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
James Arthur Spall, Attorney at Law, Helena,
Montana
Robert J. Savage: Habedank, Cumming, Best & Savage
Sidney, Montana
For Respondent:
John F. Lynch, Attorney at Law, Great Falls, Montana
David Rusoff, Montana Human Rights Commission,
Helena, Montana
Submitted on Briefs: March 18, 1993
oecided: May 18, 1993
Filed:
Justice John Conway Harrison delivered the Opinion of the Court.
This is an appeal from an order of the First Judicial District
Court, Lewis and Clark County, the Honorable Jeffrey M. Sherlock
presiding. The District Court affirmed a Montana Human Rights
Commission order that required the appellant, Hearing Aid Institute
of Great Falls, Montana (HAI), to pay respondent Carolyn Rasmussen
(Rasmussen) $11,300 in front and back pay, plus interest. We
affirm.
Rasmussen initiated this action by filing a formal complaint
with respondent Human Rights Commission (the Commission) on June
1 1989. She alleged that HA1 had refused to hire her for a
telemarketing position because she is physically handicapped. The
Commission certified her case for a hearing on April 26, 1990,
based on an alleged violation of the Montana Human Rights Act at §
49-2-303jij jaj, MCA, and appointed a bearing examlner.
After a hearing on July 24, 1990, at which both parties were
represented by counsel and HA1 called several witnesses, the
hearing examiner issued findings of fact, conclusions of law, and
a proposed order. The proposed order required HA1 to pay Rasmussen
$12,400 as front and back pay and $5,000 in damages for emotional
distress; to cease the discriminatory practice of refusing to hire
qualified employees with physical handicaps; and to send a
management-level employee to training on the federal Americans with
Disabilities Act.
In August 1991, HA1 filed exceptions to the hearing examiner's
findings of fact and conclusions of law. The Commission heard oral
2
argument on these exceptions on January 23, 1992, and issued a
final order on March b, 1992. The Commission determined that
Rasmussen did not meet the legal standard for an award of damages
for emotional distress and reduced her award accordingly. It also
deducted Rasmussen's interim earnings of $ 1 , 1 0 0 from the proposed
back pay award. In all other respects the Commission adopted the
proposed order. HA1 petitioned for judicial review on April 3,
1992.
The Commission moved to intervene on May 4, 1992, arguing that
Rasmussen did not adequately represent its interest in eliminating
employment discrimination. The District Court granted the motion
on May 27, making the Commission a party to the action, and on
September 4, 1 9 9 2 , it denied HAI's petition and affirmed the
Commission's order. This appeal followed.
Rasmussen was born with cerebral palsy, which affects the
muscles in her legs. Although she can walk with a cane, she uses
a wheelchair in public. She cannot sit in a standard chair because
she is only four feet eight inches tall.
At the time of the Commission hearing in July 1990, Rasmussen
was twenty-eight years old and married. She was a high school
graduate and had completed a one-year vocational course at Weber
State College in Utah. Her work experience, before she applied to
HA1 in January 1989, included telemarketing for the Bon Marche in
Ogden, Utah, for about a year; working as a receptionist at Hill
Air Force Base in Clearfield, Utah, for a year: telemarketing for
two different firms in Ogden, Utah, including eighteen months with
Omni Hearing Aid in 1984-85; and telemarketing for Marketing
America in Great Falls, Montana, for a few days.
On or about January 2, 1989, Rasmussen applied for a
telemarketing job with HA1 in Great Falls, Montana. The work
involved calling senior citizens and scheduling hearing test
appointments for people with hearing problems. Rasmussen was
interviewed by HAI's telemarketing manager, Brian Thomas. Thomas
testified at the hearing that he did not ask Rasmussen to complete
an employment application, because no copies were available at the
time, and that he did not ask her to provide a writing sample. He
also testified that he did not ask her for the names and addresses
of her previous employers.
At the conclusion of the interview, Thomas said, he decided
but did not tell Rasmussen that "she would not be suitable due to
the fact that her voice carryover when we talk to hearing impaired
people would be inadequate."
Rasmussen testified that Thomas told her she was hired and
would start in about two weeks, after HA1 installed a new telephone
system. She waited two weeks, she said, then called HA1 every
other day trying to determine her starting date. She testified
that she left messages for Thomas, who did not return her calls.
Finally she spoke to Thomas, who told her the new telephones were
not installed yet. Later, she spoke to him again. She testified
that he told her then that HA1 was not hiring anyone, but Thomas
testified that he told Rasmussen "they didn't have anything for her
at this time." Nevertheless, HA1 continued to advertize for
telemarketers throughout the first half of 1990.
The Commission concluded that Rasmussen had established a
prima facie case of employment discrimination. Although UAI
attempted to rebut Rasmussen's prima facie case by articulating a
legitimate, non-discriminatory reason for not hiring her, the
Commission found that this reason--that Rasmussen's voice was too
soft--was merely a pretext for discrimination. The District Court
agreed, and affirmed the Commission's award of damages.
On appeal, HA1 challenges the Commission's conclusion that
Rasmussen was qualified for the telemarketing position and raises
numerous subsidiary issues, which we have compressed and rephrased
as follows:
1. The District Court erred in concluding that Rasmussen was
qualified for telemarketing and therefore erred in concluding that
she had established a prima facie case of employment
discrimination.
2. ,The vistrict Court erred in concluding that an employer
may not justify rejecting an applicant based on evidence obtained
after it decided to reject the applicant.
3 . The District Court erred in concluding that the Commission
applied the correct test for employment discrimination and not the
one used in Price Waterhouse v. Hopkins (1989), 490 U.S. 228, 109
S.Ct. 1775, PO4 L.Ed.2d 268.
4. The District Court erred in concluding that HA1 had not
shown that it would not have hired Rasmussen in the absence of
discrimination.
5. The District Court erred in concluding that Rasmussen was
entitled to front pay.
6. The District Court erred in concluding that evidence of
other claims that Rasmussen pursued contemporaneously was not
admissible as proof of motive and intent or failure to mitigate.
Judicial review of an administrative agency decision in a
contested case is governed by 3 2-4-704, MCA. Section 2-4-704(2)
provides that an agency's decision may not be reversed or modified
unless substantial rights of the appellant have been prejudiced
because the agency exceeded its authority, abused its discretion,
made clearly erroneous findings of fact, or interpreted the law
incorrectly. Although we applied an slabuse discretion" standard
of
to an agency's conclusions of law in two recent Human Rights
Commission cases--Johnson v. Bozeman School Dist. No. 7 (1987), 226
Mont. 134, 734 P.2d 209; P.W. Berry Co., Inc. v. Freese (19891, 239
Mont. 183, 779 P.2d 521--we now apply the standard adopted in
Steer, Inc. v. Dep't of Revenue (lggO), 245 Mont. 470, 474, 803
P.2d 601, 603: "In reviewing conclusions of law, our standard of
review will be merely to determine if the agency's interpretation
of the law is correct, instead of applying the inappropriate abuse
of discretion standard.''
All of the Commission rulings that HA1 challenges on appeal,
as confirmed by the District Court, are essentially conclusions of
law. We review the challenged conclusions of law under the
standard set forth in Steer, Inc.
As the framework for this review, we use the three-stage test
for employment discrimination articulated by the United States
Supreme Court in McDonnell-Douglas Corp. v. Green (1973), 411 U.S.
492, 93 S.Ct 1817, 36 L.Ed.2d 668, and adopted by this Court in
Martinez v. Yellowstone County Welfare Dep't (1981), 192 Mont. 42,
626 P.2d 242. Both the Commission and the District Court applied
this test correctly in reaching their conclusions.
In the first stage of this test, the plaintiff must establish
a prima facie case of discrimination, by proving that she is a
member of a protected class; that she applied for and was qualified
for a position; that she was rejected despite her qualifications;
and that the position had remained open and the employer had
continued to accept applications from persons with comparable
qualifications. Establishing the prima facie case creates a
presumption that the employer unlawfully discriminated against the
plaintiff. Texas Dep'tof Community Affairs v. Burdine (1980), 450
U.S. 248, 254, 101 S.Ct. 1089, 1094, 67 L.Ed.2d 207, 216.
In the second stage of the McDonnell-Douqlas test, if the
plaintiff has established a prima facie case, the burden shifts to
the employer to rebut the presumption of discrimination by
producing a legitimate, non-discriminatory reason for the
employee's rejection. If the employer clearly sets forth non-
discriminatory reasons for rejection, through admissible evidence,
the plaintiff's case is rebutted. Burdine, 450 U.S. at 254-255.
After the employer has produced a legitimate, non-
discriminatory reason for the rejection, the plaintiff has an
opportunity to prove that this reason is only a pretext for
discrimination. Pretext may be proved directly, by persuading the
court that a discriminatory reason more likely motivated the
employer, or indirectly, by showing that the employer's proffered
explanation is unworthy of credence. Burdine, 450 U.S. at 256.
I
Did the District Court err in concluding that Rasmussen was
qualified for telemarketing and therefore that she had established
a prima facie case of employment discrimination?
Under McDonnell-Douqlas, Rasmussen must show that she was
qualified for the job for which she was rejected. On the basis of
her testimony concerning her previous telemarketing experience, the
Commission concluded that she was qualified for the telemarketing
opening at the Hearing Aid Institute, stating that:
The uncontroverted testimony of Rasmussen that she
previously had been employed as a telemarketer on several
occasions establishes that she was "qualified" when she
applied for a similar position with HAI.
The Commission correctly distinguished Johnson, in which the
Bozeman School District defeated an employment discrimination claim
by showing that the claimant was not qualified for a teaching
position. Unlike the school district, HA1 had not established
minimum hiring standards or developed any screening procedures when
Rasmussen applied for the job and therefore cannot show that
KasmUSSen did not meet minimum qualifications.
HA1 argues that Rasmussen's performance in an impromptu
writing exercise during her hearing demonstrates her lack of
qualifications. Rasmussenls lawyer asked her to "do a little
writingw to illustrate what she had done in previous telemarketing
jobs. Rasmussen suggested that she write her name, address and
telephone number, as these were items she was required to write as
a telemarketer, but HAI's lawyer suggested that she write, instead,
"A quick brown fox jumped over the lazy brown dog." Rasmussen
asked to have the sentence repeated several times before she
completed the demonstration. The Commission adopted the hearing
examiner's assessment of this exercise in its findings of fact, as
8
follows:
Her final product omits articles and appropriate verb
tense, but in other respects, is accurate and legible. .
. . Although it took Rasmussen a minute or more to
complete the demonstration, little weight was afforded to
the time lapse or precision of her transcription. Thomas
did not observe Rasmussen's writing ability during her
interview, nor did he ask her to demonstrate how
efficiently she could record information by hand.
Furthermore, the writing exercise was not representative
of the type of information a telemarketer usually
records.
The District Court determined that "when one considers the
tense atmosphere that often times accompanies hearings," the
commission's finding that Rasmussen was qualified as a telemarketer
was not clearly erroneous. We agree. The record contains
substantial credible evidence that Rasmussen was qualified to
schedule hearing test appointments.
Did the District Court err in concluding that an employer may
not justify rejecting an applicant based on evidence obtained after
it decided to reject the applicant?
At the hearing on July 24, 1990, HA1 attempted to introduce,
as evidence that Rasmussen was not qualified for employment as a
telemarketer, testimony by Maria Roberts, who was office manager of
Marketing America when Rasmussen worked there briefly in 1986.
Roberts testified that Rasmussen's supervisor at Marketing America
let her go because "she could not dial the telephone. It took her
quite a long time to dial one number. She also had trouble ...
writing that quickly--the way the customer talked--and writing it
legibly."
When Rasmussen's supervisor terminated her employment, she
went to the owner, who offered to give her another chance. After
another week, Roberts testified, Rasmussen quit because she "could
not handle the position."
Rasmussen herself testified that she found the atmosphere at
Marketing America very stressful: "Nobody would talk to me. ...
They were very rude with me. So I quit." She also said that her
supervisor let her go initially because he had not been authorized
to hire her.
As HA1 had not asked Rasmussen for names and addresses of
previous employers, and had not checked her previous employment
record before deciding not to hire her, the hearing examiner ruled
that Roberts' testimony was admissible only for the purpose of
impeaching Rasmussen's own testimony regarding her qualifications,
and not for the purpose of proving that Rasmussen was not qualified
when HA1 rejected her.
The Commission relied on Mantolete v. Bolger (9th Cir. 1985),
767 F.2d 1416, 1424, to support the statement that "an employer may
not rely upon evidence obtained after its decision to reject an
applicant to justify rejection of the applicant." HA1 argues that
Mantolete allows a defendant to rely on such evidence to rebut the
plaintiff's prima facie case of discrimination, and that in
excluding Roberts' testimony that Rasmussen was not qualified, the
Commission denied HA1 the right to a valid defense.
The relevant holding in Mantolete follows:
Although it is questionable whether the Postal Service
could justify its refusal to hire Mantolete based on
10
evidence obtained after its decision to reject her
application, the admissibility of post-decision evidence
is not necessarily forbidden for all purposes. . . .
Thus, the evidence was admissible to rebut the
appellant's claim that she was qualified for the
position, but was not admissible to enlarge the basis
upon which the employer relied to reject the appellant at
the time that decision was made. Consequently, if the
evidence is admitted to rebut the orima facie showinq of
aualification for the oosition. and such evidence is
determined bv the trier of fact to be insufficient to
rebut this asoect of the plaintiff's prima facie case,
the evidence cannot further be used to justifv the
plaintiff's rejection.
767 F.2d at 1424 (citation omitted; emphasis added).
Roberts' testimony was admitted to impeach Rasmussen's
testimony rather than to rebut her prima facie case, but the
hearing examiner treated it as though it were rebuttal testimony.
She concluded that Roberts' testimony should be "afforded little
weight1' because she was not present when Rasmussen's supervisor
fired her, or when Rasmussen quit later.
In effect, this is a determination that Roberts' testimony was
insufficient to rebut Rasmussen's prima facie case of
discrimination, Having failed to rebut Rasmussen's prima facie
case with Roberts' testimony, HA1 could not use the same testimony
as evidence of a legitimate, non-discriminatory reason for
rejecting Rasmussen. Mantolete, 767 F.2d at 1424.
I11
Did the District Court err in concluding that the Commission
applied the McDonnell-Douqlas test for employment discrimination
and not the one used in Price Waterhouse v. Hookins?
HA1 argues that under Johnson it need not prove that
Rasmussen's lack of qualifications--a legitimate, non-
11
discriminnatoryreason for refusing to hire her--was the actual
reason for rejection, and that the Commission therefore should have
found that Roberts' testimony did rebut Rasmussen's prima facie
case of discrimination.
In Johnson we said:
If the employer is able to demonstrate a leqitimate,
nondiscriminatory reason for not hiring the complainant,
even though that may not have been the actual reason for
the rejection, then the plaintiff's prima facie case of
discrimination is rebutted.
734 P.2d at 212, citing Burdine, 450 U.S. at 254. In a footnote to
its conclusions of law, the Commission described this language as
"misleading in light of the more recent U.S. Supreme Court decision
in Price Waterhouse v. Ho~kins." Price Waterhouse, the Commission
wrote, "illustrates that even in a mixed motive case the asserted
legitimate reason for an employment decision must be present at the
time the decision is made, i.e., the reason given for not hiring
the complainant must have been one of the actual reasons for the
rejection."
HA1 contends that in this footnote the Commission "adoptedw
Price Waterhouse "in derogation of Montana law," Montana law being
the McDonnell-Douqlas test as adopted in Martinez and applied in
Johnson. HA1 is incorrect. As the District Court pointed out, the
Commission in fact applied the McDonnell-Doualas test rigorously,
though not to the issue of Robertst testimony. Instead, the
Commission found that HAI's "legitimate, non-discriminatory reasonw
was Brian Thomast concern with the quality of Rasmussen's voice,
which Thomas offered as the reason for not hiring her.
Because HA1 did meet its burden in the second stage of the
McDonnell-Doualas test by producing a non-discriminatory reason for
rejecting Rasmussen, the Commission moved to the third stage of the
test. At this stage, Rasmussen had to prove by a preponderance of
the evidence that this reason was only a pretext for
discrimination. Johnson, 734 P.2d at 213; Crockett v. City of
Billings (l988), 234 Mont. 87, 95, 761 P.2d 813, 818. Pretext may
be proved indirectly, by showing that the employer's explanation is
unworthy of belief. Burdine, 450 U.S. at 256. The Commission
found that Thomas' alleged concern was not worthy of belief and
concluded that Rasmussen had met her burden of proof at this stage
of the test; that is, it concluded that voice quality was a pretext
for not hiring her. "If Thomas, in fact, believed that Rasmussen's
voice was too soft to be a telemarketer," the Commission wrote, "he
could have told her that and avoided guises such as 'the phones
haven't been installed yet. . . .'" The District Court affirmed
this conclusion, noting that it could not properly re-weigh
evidence given by witnesses.
We hold that substantial credible evidence supports the
Commission's finding that a discriminatory motive was more likely
to have motivated HAI's rejection of Rasmussen, and that its
conclusion that the proferred nondiscriminatory reason was merely
a pretext is not incorrect.
IV
Did the District Court err in concluding that HA1 did not show
that it would not have hired Rasmussen in the absence of
discrimination?
HA1 argues that it would not have hired Rasmussen even in the
absence of discrimination, and that Rasmussen therefore is not
entitled to damages. HA1 relies on Manty v. Barrows Co. (9th Cir.
198l), 660 F.2d 1327, in which the Ninth Circuit held that:
Where a job applicant has proved unlawful discrimination
in the employment process, he must be awarded full
relief, i.e., the position retroactively, unless the
"defendant shows by clear and convincing evidence that
even in the absence of discrimination the rejected
applicant would not have been selected for the open
position."
660 F.2d at 1333, quoting Marotta v. Usury (9th Cir. 1980), 629
The District Court found no evidence in the record to support
HAI's contention that it would not have hired Rasmussen in the
absence of discrimination. The testimony of HAI's telemarketing
manager, Thomas, established that when he interviewed Rasmussen he
made no effort to check her references, evaluate her skills, or
otherwise determine whether she was qualified for the job. In the
absence of any evidence, let alone clear and convincing evidence on
this point, the District Court concluded correctly that Rasmussen
is entitled to full relief, i.e., back pay. HA1 does not dispute
the amount of back pay awarded.
v
Did the District Court err in concluding that Rasmussen was
entitled to front pay?
The Commission awarded Rasmussen one year of "front pay,"
based on its finding that "Rasmussen felt very uncomfortable about
HA1 as a consequence of these proceedings and its demonstrated
treatment, and attitude toward, her" and was "not interested in
reinstatement." Citing Thorne v. City of El Segundo (9th Cir.
1S86j, 802 F.2d 1131, 1137, the Commission stated in its
conclusions of law that "front pay is an appropriate remedy when it
would be inappropriate to order reinstatement of the charging party
due to hostility or antagonism between the parties.*#
HA1 correctly points out that in Thorne the Ninth Circuit
actually held that front pay is appropriate only when "excessive
hostility or antagonismt* exists; it remanded the case to the
district court to make specific findings on whether the plaintiff,
Thorne, would encounter excessive hostility if the City of El
Segundo reinstated her as a police officer in the department where
she had previously worked as a clerk-typist. Here, the Commission
made no specific findings as to whether Rasmussen would encounter
"excessive hostility'' if she became a telemarketer at the Hearing
Aid Institute but it did conclude that one year of front pay was
reasonable 'lconsideringthe antagonism between the parties."
The District Court concluded that substantial credible
evidence supported the Commission's award of front pay and that
"[ulnder these circumstances, it cannot be said that it would be
appropriate for Rasmussen to obtain reinstatement with HAI."
In Fadhl v. City & County of San Francisco (9th Cir. 1984),
741 F.2d 1163, 1167 (cited as authority for the definition of front
pay in Thorne), the Ninth Circuit did not insist on "excessive
hostility" but instead held that "[aln award of front pay is made
in lieu of reinstatement when the antagonism between employer and
employee is so great that reinstatement is not appropriate." The
District Court's finding in the case before us is consistent with
this holding. We conclude that Rasmussen was entitled to front
Pay.
VI
Did the District Court err in concluding that evidence of
other claims that Rasmussen pursued contemporaneously was not
admissible as proof of motive and intent or failure to mitigate?
The hearing officer refused to allow HA1 to show that
Rasmussen had filed other discrimination claims. HA1 argued that
this evidence would go to show motive, intent, or preparation, but
the District Court found that it would be irrelevant to the
question of whether HA1 discriminated against Rasmussen. We agree.
Relevant evidence is "evidence having any tendency to make the
existence of any fact that is of consequence to the determination
of the action more probable or less probable than it would be
without the evidence." Rule 401, M.R.Evid. Evidence that
Rasmussen filed other discrimination claims does not make more or
less probable any material fact concerning HAI's motive for
rejecting her for employment.
The hearing officer also refused to hear testimony by Rich
Pavlonis, owner of Omni Marketing, Inc., which was the object of a
separate discrimination complaint by Rasmussen. As part of the
conciliation process for that complaint, Omni had offered Rasmussen
a job in November 1989. The hearing officer excluded Pavlonisp
testimony on the basis of 24.9.226, ARM, which makes statements
made in the course of a conciliation offer inadmissible in any
hearing concerning the complaint. The District Court concluded
that this rule does not prevent admission of testimony about a
conciliation offer made in a different case. It upheld the
exclusion, however, based on our holding in Tribby v. Northwestern
Bank of Great Falls (1985), 217 Mont. 196, 704 P.2d 409. There, we
held that:
An offer to compromise is not admissible when made in an
attempt to effect a settlement. [The defendant bank]
argues the offer is admissible to show that Tribby failed
to mitigate damages .. . . We are not persuaded by the
contention that refusing an offer to settle is a failure
to mitigate damages . . . . Admitting this evidence
would go against the basic policy of Rule 408, M.R.Evid.,
which is to encourage compromises and settlement of
disputes.
704 P.2d at 417-418 (citation omitted).
Admitting or excluding evidence is within the discretion of
the trial court or, in this case, the Commission. Weber v. State
(1992), 253 Mont. 148, 151, 831 P.2d 1359, 1363. HA1 alleged error
on the part of the hearing officer, but it offered the District
Court no evidence that she abused her discretion, nor did it
present any authority showing that Omni's offer of employment
should be admissible to prove failure to mitigate damages.
Affirmed on all issues
We concur:
May 18, 1993
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:
James Arthur Spall
Attorney at Law
#2 No. Last Chance Gulch
Helena. MT 59624
Robert J. Savage
Habedank, Cumming, Best & Savage
P.O. Box 1250
Sidney, MT 59270
John F. Lynch
Attorney at Law
B.6. Bux ??,
.c
.
.LO.
Great Falls, MT 59403
David Rusoff, Legal Counsel
Montana Human Rights Commission
P.O. Box 1728
Helena, MT 59624
ED SMITH
CLERK OF THE SUPREME COURT
STA'IE OF MONTANA