No. 94-245
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994
RON STANLEY,
Plaintiff & Appellant,
v.
ALLAN G. HOLMS, d/b/a GREAT NORTHERN LEASING
COMPANY and GARDEN CITY RECONDITIONING: and
NEWCO, a corporation, d/b/a GREAT NORTHERN
LEASING COMPANY and GARDEN CITY RECONDITIONING, OCT 2J1994
Defendants & Respondents.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable John S. Henson, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Richard Ranney, Williams & Ranney,
Missoula, Montana
For Respondents:
Milton Datsopoulos and Michael G. Black,
Datsopoulos, MacDonald & Lind,
Missoula, Montana
Submitted on Briefs: September 8, 1994
Decided: October 27, 1994
Filed:
clgrk
Justice Terry N. Trieweiler delivered the opinion of the Court.
Plaintiff Ron Stanley was hired by defendant Allan G. Helms as
manager of two of Helms' businesses, which for simplicity will be
referred to as Great Northern. After Stanley was terminated, he
brought this action in the District Court for the Fourth Judicial
District in Missoula County to recover wages allegedly due, based
on the parties' alleged agreement to share profits. The District
Court granted Great Northern's motion to dismiss for lack of
subject matter jurisdiction because Stanley failed to exhaust
administrative remedies. Stanley appeals the District Court's
order dismissing his complaint. We reverse.
The issue on appeal is:
Can a Montana worker sue a former employer in District Court
to collect unpaid wages, statutory penalties, and attorney fees, or
must the worker first exhaust administrative remedies by filing a
claim with the Commissioner of Labor and Industry?
FACTUAL BACKGROUND
Stanley's complaint alleges that he was hired by Allan G.
Holms, d/b/a Great Northern Leasing Company and Garden City
Reconditioning; and Newco, a corporation, d/b/a Great Northern
Leasing Company and Garden City Reconditioning, as manager of two
of the Great Northern businesses on or about June 1, 1993, and that
Holms agreed to pay Stanley a wage that was to include 20 percent
of the businesses net profits, subject to a minimum of $5000 per
month. Stanley managed the businesses in June, July, August, and
September 1993.
At the end of September, Stanley indicated he was
uncomfortable with Great Northern's business practices and desired
to terminate his employment. Great Northern discharged Stanley,
effective the end of September 1993.
According to Stanley, even though the 20 percent of profits
for June, July, August, and September exceeded $5000, during each
month Great Northern paid Stanley only the $5000 minimum. Stanley
demanded the profit share, but Great Northern would not pay him.
Stanley filed suit in District Court in which he claimed back
wages, a statutory penalty pursuant to § 39-3-206, MCA, and
attorney fees and other costs, pursuant to § 39-3-214, MCA.
On February 9, 1994, Great Northern moved to dismiss pursuant
to Mont. R. Civ. P. 12(b)(l), on the basis that the District Court
lacked subject matter jurisdiction. On March 28, 1994, the
District Court granted Great Northern's motion to dismiss. Stanley
appeals from the District Court's order.
DISCUSSION
Can a Montana worker sue a former employer in District Court
to collect unpaid wages, statutory penalties, and attorney fees, or
must the worker first exhaust administrative remedies by filing a
claim with the Commissioner of Labor and Industry?
Here, the relevant inquiry is whether the complaint states
facts that if true would vest the district court with subject
matter jurisdiction. United States Natl. Bank of Red Lodge v. Montana Dept. of
Revenue (1977), 175 Mont. 205, 209, 573 P.2d 188, 190. This is a
question of law, therefore, we must determine whether the District
Court's interpretation of the law was correct. In re Marriage of Barnard
(1994) (I 264 Mont. 103, 106, 870 P.2d 91, 93 (citing InreMam’ageof
Buti (1993), 258 Mont. 265, 269, 852 P.2d 616, 619).
Great Northern argues that when considering the District
Court's jurisdiction to entertain claims for wages we should
distinguish between wage claims brought pursuant to Title 39,
Chapter 3, Part 2, MCA, and those brought pursuant to Title 39,
Chapter 3, Part 4, MCA. Great Northern claims that the plain
language found in Part 2 establishes administrative remedies with
the Department of Labor, and without exhausting those remedies, an
employee may not file a complaint in district court. In support of
its argument, Great Northern relies on 5 39-3-209, MCA. That
section provides as follows:
It shall be the duty of the commissioner of labor to
inquire diligently for any violations of this part and to
institute actions for the collection of unpaid wages and
for the penalties provided for herein in such cases as he
may deem proper and to enforce generally the provisions
of this part.
Great Northern adds that as a matter of law it is not
necessary for an employee to sue when administrative remedies are
available but not exhausted. Therefore, Stanley is not entitled to
attorney fees or costs, nor are the penalties applicable. Finally,
Great Northern contends that because the statutory scheme was
amended in 1989 to increase rights in administrative proceedings,
the remedy must be exclusive. See 5s 39-3-216 and -217, MCA.
4
In response, Stanley relies on language found in several
sections of Part 2. Section 39-3-206(l), MCA, states:
An employer who fails to pay an employee as provided in
this part or who violates any other provision of this
part is guilty of a misdemeanor. A penalty must also be
assessed against and paid bv the emnloverto the emnlovee
in an amount not to exceed 110% of the wages due and
unpaid.
(Emphasis added.)
Section 39-3-207, MCA, states:
Any emplovee may recover all such penalties as are
provided for the violation of 39-3-206 which have accrued
to him at any time within 18 months succeeding such
default or delay in the payment of such wages.
(Emphasis added.)
Section 39-3-208, MCA, states:
Any contract or agreement made between an employer and an
employee the provisions of which violate, evade, or
circumvent this part is unlawful and void, but the
emolovee may sue to recover the wages earned, together
with the penalty specified in 39-3-206 or separately to
recover the penalty if the wages have been paid.
(Emphasis added.)
Section 39-3-214, MCA, states:
(1) Whenever it is necessarv for the emnlovee to enter
or maintain a suit at law for the recovery or collection
of wages due as provided bv this part, a resulting
judgment must include a reasonable attorney's fee in
favor of the successful party, to be taxed as part of the
costs in the case.
(2) Any judgment for the plaintiff in a proceeding
pursuant to this part must include all costs reasonably
incurred in connection with the proceeding, including
attorneys' fees.
(3) If the oroceedinq is maintained bvthe commissioner,
no court costs or fees are required of him nor is he required
to furnish any bond or other security that might otherwise be
required in connection with any phase of the proceeding.
(Emphasis added.)
5
Stanley contends that §§ 39-3-206 and -208, MCA, clearly allow
an employee to sue directly in district court since the statutes do
not mention the Commissioner of Labor. Also, § 39-3-214, MCA,
indicates that the Commissioner's role is discretionary and
cumulative. Stanley also relies on the history of the wage
enforcement statutes which did not originally provide for
administrative action. We agree with Stanley's statutory
interpretation.
TO determine whether or not Stanley must exhaust
administrative remedies, we look first to the statutory language,
and where that is unclear, to legislative intent. SeeBoegliv. Glacier
MountainCheeseCo. (1989), 238 Mont. 426, 429, 777 P.2d 1303, 1305.
The language in 5 39-3-206(l), MCA, states that a penalty is
to be assessed against and paid by the employer to the employee if
the employer violates statutory provisions; for example by failing
to pay the employee his or her wages. This provision suggests that
an employee may sue the employer in district court. If the
department pursues an administrative proceeding, it collects the
wages and attempts to pay the wages to the entitled claimant. In
administrative proceedings, the employer does not pay the employee
directly. see § 39-3-213, MCA.
In addition, the statutes do not expressly restrict suits to
the administrative process. Rather, § 39-3-209, MCA, provides that
the Commissioner shall inquire diligently for violations of this
part and sue for collection of unpaid wages and penalties "in such
6
cases as he may deem proper and to enforce generally the provisions
of this part." Section 39-3-211, MCA, states that if the
Commissioner determines that employees have wage claims, he shall,
if the employee files a written request, take an assignment of the
claim in trust for the employee and may maintain any proceeding to
enforce the claim. This language indicates that an employee can,
but is not required to, seek redress through the Department of
Labor and I,ndustry, and the Commissioner's duty to file suit is
discretionary.
The legislative history of Part 2 supports these inferences
drawn from the statutory language.
In testimony found in Chapter 40 of the 1967 Session Laws, Mr.
Emmons, then Commissioner of Labor and Industry, requested
statutory amendments to increase the Commissioner's power. At a
committee meeting, he was asked what authority the proposed
amendment gave him, and he responded that it would grant him the
authority to sue the employer. Mr. Emmons stated that he had
numerous complaints from unpaid workers, and mentioned that the law
was clear regarding when wages should be paid, but did not grant
the Commissioner power to enforce the law. He pointed out that,
therefore, many cases were dropped because workers could not afford
an attorney to file a civil suit. The committee minutes indicate
that the remedy was cumulative, i.e., the amendment was designed to
grant the Department authority so it could sue on behalf of
employees who could not afford an attorney. See Minutes,
Legislative Hearing S.B. 27, February 6, 1967, at 1. As a result,
7
under the current statutes, the Commissioner, in cases he "deems
proper, 'I may sue to collect unpaid wages. Section 39-3-209, MCA.
The other statutory provisions and administrative rules that
Great Northern claims require a claimant to exhaust administrative
remedies deal mainly with the Commissioner's powers once the
administrative process is pursued. None of the statutes expressly
state that administrative proceedings are exclusive. Sections
39-3-209, -211, -213, -216, and -217, MCA, set forth the procedures
and powers of the Commissioner to collect and dispose of wages.
Great Northern claims that recent amendments to 99 39-3-216
and -217, MCA, provide additional administrative remedies,
indicating they must be exclusive. However, neither do we find any
language in the statutory amendments or their legislative history
to suggest that the administrative remedies provided by Part 2 are
exclusive.
Great Northern cites numerous decisions for the proposition
that where administrative remedies are expressly provided, a
claimant must exhaust them before seeking judicial review.
Stanley, on the other hand cites several cases in which wage claims
were filed in district court and considered without apparent
exhaustion of administrative remedies. However, neither the
exhaustion cases cited by Great Northern, nor the prior wage claim
cases cited by Stanley, dealt with the precise issue presented
here.
More on point, is our decision in Boegli, 777 P.2d 1303. In
Boegli, the plaintiffs sued the defendant for overtime hours pursuant
to § 39-3-405, MCA. The issue in that case was whether plaintiffs
who were denied overtime compensation must seek relief exclusively
from the Commissioner of Labor under Title 39, Chapter 3. The
defendant moved to dismiss on the basis that the plaintiffs had
failed to exhaust their administrative remedy. The district court
granted the defendant's motion and dismissed the case. We
reversed, and concluded that 5 39-3-408, MCA, was clear and
unambiguous in its designation of cumulative remedies. Boegli , 7 7 7
P.Zd at 1305-06.
III Boegli, we relied on the cumulative language of 5 39-3-408,
MCA, for our conclusion that administrative remedies are not
exclusive. For that reason, Great Northern argues that the
cumulative remedy language has no bearing on this case which is
brought under Part 2.
Although Boegli dealt with Part 4, this Court did not make an
express distinction between Part 2 and Part 4. Nor is any
distinction warranted when the entire statutory scheme in Title 39,
Chapter 3, is considered. For example, § 39-3-408, MCA, which
provides for cumulative remedies, refers to the remedies provided
for in Part 4 at 5 39-3-407, MCA. That section provides that:
Enforcement of this part shall be treated as a wage claim
action and shall be pursued in accordance with part 2 of
this chapter, as amended. This part may also be enforced
in accordance with part 5 of this chapter for the benefit
of certain employees in the mineral and oil industry.
9
The commissioner may enforce this part without the
necessity of a wage assignment.
In other words, the only remedies provided for in Part 4 are
those set forth in 5 39-3-407, MCA, which incorporates those
remedies established in Part 2. Therefore, when 5 39-3-408, MCA,
refers to cumulative remedies, it necessarily refers to the
remedies provided for in Part 2.
Based on the statutory language of Title 39, Chapter 3, its
legislative history, and our decision in Boegli, we conclude that a
wage claimant pursuant to Title 39, Chapter 3, Part 2, may either
seek administrative remedies through the Department of Labor and
Industry or file his or her claim directly in district court.
Therefore, the District Court's order dismissing Staniey's ciaim is
reversed and this case is remanded to the District Court for
further proceedings consistent with this opinion.
We concur:
Chief Justice
October 27, 1994
CERTIFICATE OF SERVICE
I hereby certify that the following certified order was sent by United States mail, prepaid, to the
following named:
Richard Ranney
WILLIAMS & RANNEY, P.C.
P.O. BOX 9440
Missoula, MT 59807-9440
Milton Datsopoulos
DATSOPOULOS, MacDONALD & LIND, P.C.
201 West Main, Suite 201
Missoula, MT 59802
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA