K. Shepherd v. DOC

05/30/2023

DA 22-0562
Case Number: DA 22-0562

IN THE SUPREME COURT OF THE STATE OF MONTANA
2023 MT 99

KILA SHEPHERD.

Plaintiff and Appellant,

v.

STATE OF MONTANA,
DEPARTMENT OF CORRECTIONS,

Defendant and Appellee.

APPEAL FROM: District Court of the First Judicial District,
In and For the County of Lewis and Clark, Cause No. CDV 2020-302
Honorable Kathy Seeley, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

John Doubek, Doubek, Pyfer & Storrar, PC, Helena, Montana

For Appellee:

Patricia Klanke, Drake Law Firm, P.C., Helena, Montana

Submitted on Briefs: April 26, 2023

Decided: May 30, 2023

Filed:

__________________________________________
Clerk
Justice Laurie McKinnon delivered the Opinion of the Court.

¶1 Kila Shepherd (Shepherd) appeals the Summary Judgment Order denying her

wrongful discharge from employment claim issued by the First Judicial District Court,

Lewis and Clark County.

¶2 We affirm and restate the issue as follows:

Were there undisputed facts establishing good cause for Shepherd’s termination?

FACTUAL AND PROCEDURAL BACKGROUND

¶3 The Montana Department of Corrections (DOC) employed Shepherd as the Director

of Human Resources (HR Director) from January 2014 to August 10, 2018. While

employed, Shepherd led the DOC’s Office of Human Resources (HR Office) for DOC’s

1,300 employees. The HR Office was responsible for employee recruitment and selection,

performance appraisal processing, labor relations, employee discipline, and professional

development. Shepherd served on the DOC’s leadership team and reported to the Deputy

Director. Shepherd’s job description required her to “demonstrate discretion, integrity, and

fair-mindedness.” As the HR Director, Shepherd agreed to keep information confidential

and be trustworthy while maintaining personnel issues and participating in DOC

leadership.

¶4 On February 28, 2018, the DOC Director at the time, Reginald Michael (Michael),

Deputy Director Cynthia Wolken (Wolken), and Shepherd met with DOC employee, Cindy

McKenzie (McKenzie), regarding McKenzie’s handling of a sensitive matter that could

have resulted in disciplinary action against McKenzie. Shepherd recorded the meeting

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with McKenzie and a post-meeting discussion between Michael, Wolken and Shepherd

that occurred after McKenzie left the meeting. The post-meeting included a discussion

about McKenzie’s conduct and other personnel issues. Michael, Wolken, and McKenzie

have all stated they were unaware that Shepherd was recording the meeting or the

post-meeting discussion. Shepherd claims Michael and Wolken were aware she was

recording pursuant to DOC “standard operating procedure.”

¶5 After recording the meeting and post-meeting discussion, Shepherd transcribed only

the meeting that McKenzie attended. She saved this transcript on a “personal” drive on

her state computer—only accessible to Shepherd and the State’s Information Technology

department. Shepherd did not provide the transcript to Michael or Wolken, even though

Michael requested it.

¶6 On March 1, 2018, Shepherd responded to an email from Wolken regarding

potential discipline of McKenzie. The following day, Shepherd shared this email with

McKenzie without Michael’s or Wolken’s knowledge. Shepherd informed McKenzie that

Shepherd did not believe discipline was warranted, although she was unaware of any

decision by Michael or Wolken about McKenzie’s potential discipline. Ultimately,

McKenzie was never disciplined.

¶7 During the spring of 2018, the Governor’s Office engaged Patricia MacEwen1

(MacEwen) from the Department of Environmental Quality (DEQ) to conduct an

1
At the time of the investigation, MacEwen was DEQ’s Central Services Division Administrator
who oversaw its HR Department. She has significant knowledge and experience in the HR field.
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“organizational assessment” of the DOC. The assessment was requested because of

concerns about communication and decision-making issues at the DOC. MacEwen and

her team interviewed roughly 20 members of the DOC leadership team. As part of this

assessment, MacEwen interviewed McKenzie who brought up her previous disciplinary

issue. McKenzie told MacEwen that Shepherd had recorded the February 28 meeting with

Michael and Wolken without McKenzie’s knowledge and that Shepherd had forwarded the

March 1 email to McKenzie. MacEwen then interviewed Shepherd who volunteered that

she had recorded the February 28 meeting to protect herself and McKenzie from Michael

and Wolken.2

¶8 MacEwen reported she was troubled by McKenzie’s and Shepherd’s reports about

the recordings and by Shepherd sharing her disciplinary recommendation with McKenzie.

MacEwen did not believe it was appropriate for the HR Director to take such actions and,

accordingly, determined Shepherd had broken trust with her employer which required an

investigation. The Governor’s Office assigned the Department of Administration3 (DOA)

to conduct the investigation. Shepherd was placed on paid administrative leave on May 15,

2018, pending the outcome of the investigation.

2
During Shepherd’s Step III grievance hearing, she contradicted this statement to MacEwen and
testified that she recorded the meeting as part of her official duties.
3
The matter was referred to DOA because Shepherd supervised the HR department which would
normally be tasked with investigating. It would be inappropriate for Shepherd’s subordinates to
investigate their supervisor. It was also determined that Michael and Wolken should not be
involved in deciding the outcome of Shepherd’s employment given they had personal involvement
in the allegations against her.
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¶9 The DOA hired attorney Amy Christensen (Christensen) to investigate the

allegations against Shepherd. Christensen interviewed MacEwen, McKenzie, Shepherd,

Michael, and Wolken. Michael, Wolken, and McKenzie informed Christensen they were

not aware the meetings were being recorded and did not see a recording device during the

meetings. McKenzie told Christensen about the March 1 email, but Shepherd denied

sending McKenzie that email. When Christensen asked Shepherd why she recorded the

post-meeting discussion, Shepherd told Christensen that she had forgotten to turn the audio

recorder off. Shepherd conceded she never provided Michael with a transcript of the

meeting although he had requested it twice. Shepherd told Christensen that she did not

know why she failed to provide Michael with a transcript, but later explained she did not

believe Michael needed the transcript. Shepherd told Christensen she had saved the

February 28 meeting transcripts to her work computer in a “projects” folder or a “director’s

office” folder. However, the DOC’s chief technology officer found the transcripts in a

folder labeled “personal.”

¶10 Based on the investigation, Christensen found “it [was] more likely than not that

Ms. Shepherd intentionally recorded the meeting without the knowledge of the other

participants.” Christensen concluded, “Shepherd acted contrary to the interest of her

employer . . . in sharing her personnel advice with the employee whose conduct was at

issue” and that since “Shepherd occupies a highly sensitive position in the agency, her

conduct has likely impaired her ability to be effective in that role.”

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¶11 On July 13, 2018, DOA sent Shepherd a pre-determination and due process letter

listing two reasons why the State was considering her discharge: (1) recording the

February 28 meeting without the knowledge and consent of the attendees, and

(2) knowingly providing erroneous information to investigators during the investigation.

On July 30, 2018, DOA met with Shepherd to afford her the opportunity to respond to the

allegations against her. Shepherd provided a written response and rebutted the State’s

second reason for considering her discharge: “I repeatedly explained that I didn’t remember

everything and that I had no access to my notes or documents discussed prior to or during

the interview.” Based on Christensen’s report, the due process meeting, and the documents

provided by Shepherd at the meeting, DOA determined Shepherd had violated the core

components of trust and integrity as the HR Director, and she could no longer be successful

in her position.

¶12 Shepherd received a termination letter informing her of her official discharge from

employment on August 10, 2018. The letter explained the same reasons for her discharge

as stated in the pre-determination and due process letter, along with a notice that she could

appeal the decision under the administrative grievance policy. The same day, Shepherd

sent written notice that she intended to pursue a Step III grievance under the policy. A

Hearing Officer was assigned to her grievance, and on January 7, 2019, the Hearing Officer

held a grievance hearing.

¶13 Meanwhile, on August 13, 2018, Shepherd filed a charge of discrimination with the

Montana Human Rights Bureau (MHRB), alleging Michael had engaged in sexual

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harassment and that her discharge was retaliatory. On January 29, 2019, the MHRB

dismissed Shepherd’s retaliation claim, finding “no reasonable cause” and that the

allegations were not supported by a preponderance of the evidence. The MHRB’s

dismissal included explicit, boldfaced language informing Shepherd she had “WITHIN 90

DAYS” to file a claim for sexual harassment retaliation. The U.S. Equal Employment

Opportunity Commission (EEOC) notified Shepherd it had adopted the MHRB’s finding

of “no reasonable cause” on February 14, 2019. Shepherd did not appeal either the MHRB

or EEOC decision. On February 14, 2020, the State issued a Final Administrative Decision

adopting the Hearing Officer’s recommendation that her grievance claims be denied.

¶14 On March 11, 2020, Shepherd filed her Complaint for Wrongful Termination,

Petition for Judicial Review and Demand for Jury Trial. The DOC moved for summary

judgment claiming that Shepherd failed to timely file her Complaint under the Wrongful

Discharge from Employment Act (WDEA). The District Court granted the DOC’s motion

on July 10, 2020. Shepherd appealed to this Court, and we concluded that the District

Court erroneously determined her complaint was untimely and thus erred in granting

summary judgment to the DOC. We remanded for further proceedings. Shepherd v. State

ex rel. Dep’t of Corr., 2021 MT 70, 403 Mont. 425, 483 P.3d 518.

¶15 On remand, Shepherd moved for substitution of the District Court judge and a new

judge assumed jurisdiction. After the close of discovery, the DOC moved for summary

judgment asserting Shepherd’s WDEA claim failed as a matter of law. The District Court

granted the DOC’s Motion, finding that undisputed facts established Shepherd’s discharge

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was for “good cause” and that Shepherd did not establish that the reasons for her discharge

were false, pretextual, or retaliatory. Shepherd appeals.

STANDARD OF REVIEW

¶16 We review de novo a district court’s grant or denial of summary judgment, applying

the same criteria of M. R. Civ. P. 56 as a district court. Pilgeram v. GreenPoint Mortg.

Funding, Inc., 2013 MT 354, ¶ 9, 373 Mont. 1, 313 P.3d 839 (citation omitted). A motion

for summary judgment must be granted when “there is no genuine issue as to any material

fact and . . . the movant is entitled to judgment as a matter of law.” M. R. Civ. P. 56(c)(3).

After the moving party has met its burden, the burden shifts to the non-moving party to

demonstrate that a material issue of fact exists. Knucklehead Land Co. v. Accutitle, Inc.,

2007 MT 301, ¶ 24, 340 Mont. 62, 172 P.3d 116. Mere denial or speculation does not

suffice to defeat summary judgment. Knucklehad, ¶ 24. Disputes over some factual

assertions “do not render summary judgment inappropriate where there are facts not in

dispute that provide ‘good cause’ for discharge from employment.” Davis v. State, 2015

MT 264, ¶ 14, 381 Mont. 59, 357 P.3d 320 (citing Becker v. Rosebud Operating Servs.,

2008 MT 285, 345 Mont. 368, 191 P.3d 435) (emphasis in original). We review a district

court’s conclusions of law to determine whether they are correct and its findings of fact to

determine whether they are clearly erroneous. Pilgeram, ¶ 9 (citation omitted).

DISCUSSION

¶17 The WDEA, in relevant part, provides “[a] discharge is wrongful only if . . . the

discharge was not for good cause.” Section 39-2-904(1)(b), MCA. “Good cause” means

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“reasonable job-related grounds for dismissal based on a failure to satisfactorily perform

job duties, disruption of the employer’s operation, or other legitimate business reason.”

Section 39-2-903(5), MCA. A “legitimate business reason” is a reason “that is not false,

whimsical, arbitrary, or capricious, and one that must have some logical relationship to the

needs of the business.” Davis, ¶ 10; Bird v. Cascade Cnty., 2016 MT 345, ¶ 11, 386 Mont.

69, 386 P.3d 602.

¶18 The employer possesses the initial burden to present evidence of “good cause” in a

WDEA claim. Buckley v. W. Mont. Cmty. Mental Health Ctr., 2021 MT 82, ¶ 16, 403

Mont. 524, 485 P.3d 1211. Courts “must be cautious in second guessing employment

decisions” in cases involving managerial employees. McConkey v. Flathead Elec. Coop.,

2005 MT 334, ¶ 33, 330 Mont. 48, 125 P.3d 1121. An employer has broad discretion “to

terminate a person in an executive position.” Baumgart v. State, 2014 MT 194, ¶ 35, 376

Mont. 1, 332 P.3d 225. An employer can terminate a managerial employee who is

determined to be untrustworthy to run day-to-day operations. Sullivan v. Cont’l Constr. of

Mont., 2013 MT 106, ¶ 25, 370 Mont. 8, 299 P.3d 832. Therefore, an employer’s loss of

confidence and trust in a managerial employee’s ability is a legitimate business reason

sufficient to legally justify discharge under the WDEA. Buckley, ¶ 17 (citing Sullivan,

¶ 25).

¶19 After the employer’s initial showing, the burden shifts to the employee “to show

specific facts upon which to reasonably conclude that the given reason for discharge was:

(1) not a job or business-related reason; (2) false; (3) not the true reason for discharge; or

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(4) arbitrary, capricious, or whimsical.” Buckley, ¶ 16. However, “[m]ere denial,

speculation, or cursory assertion to the contrary is insufficient to satisfy the employee’s

responsive burden.” Buckley, ¶ 16.

¶20 Here, the DOC has met its initial burden of showing good cause for Shepherd’s

discharge from her sensitive managerial position as the HR Director. The undisputed facts

show Shepherd was discharged for knowingly providing erroneous information during the

investigation. While a factual dispute exists over whether Michael directed Shepherd to

record the meeting, there is no genuine issue of material fact that Shepherd provided

Christensen with inconsistent answers throughout the investigation, resulting in the

impairment of Shepherd’s trustworthiness as HR Director. The undisputed facts establish

that Shepherd gave inconsistent accounts of events to different investigators. For example,

she testified during the Step III grievance hearing that Michael asked her to record the

meeting, but previously told MacEwen she recorded the meeting to protect herself and

McKenzie because she did not trust Michael or Wolken. In response to Christensen’s

investigation, she denied sending McKenzie the March 1 email, but admitted during the

administrative hearing that she did provide the email to McKenzie. Shepherd provided

inconsistent accounts of where she saved the transcripts on her computer.4 Based on these

undisputed facts, the record is clear that Shepherd’s inconsistent and contradictory

4
Shepherd responds to the District Court’s determinations that she made “inconsistent statements”
related to “where she saved the meeting transcripts” by saying she had a faulty memory because
she could not access her notes. However, and as the District Court properly concluded, Shepherd’s
inconsistent statements related directly to “core questions” of the investigation rather than minor
details that require reference to notes.
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statements to investigators establish good cause for her discharge, especially given

Shepherd served in a sensitive managerial position requiring confidence and trust.

¶21 Next, the burden shifts to Shepherd to show that the DOC’s reasons for her

discharge were false, arbitrary, capricious, or a mere pretext. Shepherd argues the DOC

wrongfully terminated her based on retaliation because she reported Michael engaged in

discriminatory conduct—in particular, sexual harassment of DOC employees. However,

Shepherd has failed to provide evidence that creates a genuine issue of material fact that

her termination was retaliatory. Shepherd alleged there was a “cabal between Wolken and

Michael whereby they lied” about her recording the meetings. She further claimed that the

timing of her sexual harassment allegations was not merely “a coincidence.” Shepherd’s

assertions constitute speculation, and not a genuine dispute of material fact. She has failed

to offer anything “beyond mere speculation” that the reason for her discharge was false,

arbitrary, capricious, or a mere pretext. See Putnam v. Cent. Mont. Med. Ctr., 2020 MT

65, ¶ 21, 399 Mont. 241, 460 P.3d 419 (“Summary judgment is proper if the employee fails

to provide evidence, beyond mere speculation, that the given reasons for the termination

are a pretext and not the honest reason.”). The assertions offered by Shepherd constitute

speculation and are insufficient to overcome the conclusion that her discharge was for good

cause.

¶22 Shepherd also contends the District Court erred in granting the DOC summary

judgment because it “accepted all factual assertions made by the DOC as true when genuine

issues of material fact exist.” Specifically, Shepherd claims the District Court improperly

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failed to consider the following relevant disputed facts: Shepherd’s assertion that it was

standard practice to record meetings; McKenzie’s affidavit stating that she “knew”

Shepherd “would not do anything surreptitiously”; and Michael’s purported request for

transcripts thus suggesting he knew the meeting was recorded. Regardless of these alleged

disputes of fact, the District Court, here, based its Order on other undisputed facts which

standing alone provided good cause for Shepherd’s termination; in particular, Shepherd’s

inability to provide truthful information in the investigation. The District Court reasoned:

“While there is, ostensibly, a factual dispute over whether Shepherd was directed to record

the meeting, there is no genuine dispute that Shepherd provided inconsistent answers

throughout the investigation, leading to the deterioration and impairment of trust in

Shepherd as HR Director.” We conclude the District Court based its findings on only

undisputed facts which demonstrated Shepherd’s inconsistent statements during an

investigation. Thus, the District Court correctly held Shepherd’s contrary statements she

made during the investigation constituted good cause for her termination.

¶23 Lastly, Shepherd contends that the District Court erred when it relied on sworn

“one-sided” testimony from the Step III grievance hearing, thereby depriving her of her

“right to a jury trial.” Sworn testimony constitutes sufficient evidence on which to base

summary judgment determinations. Putnam, ¶ 12. Shepherd does not present any evidence

that the testimony during the administrative hearing was insufficient. The witnesses during

the hearing testified under oath and were subject to cross-examination by Shepherd’s

counsel. The District Court did not err when it relied on sworn testimony presented at the

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Step III grievance hearing, and Shepherd is not deprived of right to a jury trial. Her

grievance claims were properly brought and adjudicated in an administrative proceeding.

CONCLUSION

¶24 The District Court did not err in granting the DOC summary judgment because it

correctly based its Order on undisputed facts establishing “good cause” for Shepherd’s

termination. Shepherd gave inconsistent statements during the investigation, which

undermined her trustworthiness and integrity to continue in a managerial position. The

District Court properly found Shepherd failed to provide sufficient evidence establishing

that the reasons for her termination were retaliatory. Finally, the District Court could rely

on sworn testimony produced in an administrative hearing to make findings.

¶25 Affirmed.

/S/ LAURIE McKINNON

We Concur:

/S/ MIKE McGRATH
/S/ DIRK M. SANDEFUR
/S/ INGRID GUSTAFSON
/S/ JIM RICE

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