Montana Rail Link v. Byard

N O. 93-103
IN THE SUPREME COURT OF THE STATE OF MONTANA
1993

MONTANA RAIL LINK
Petitioner/Respondent,
-v-

M. JANE BYARD and the MONTANA
HUMAN RIGHTS COMMISSION,
Respondents/Appellants.

APPEAL FROM: District
Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable Edward P. McLean, Judge presiding.

COUNSEL OF RECORD:
For Appellant:
Edward A. Murphy, Datsopoulos, MacDonald & Lind,
Missoula, Montana
For Respondents:
David Rusoff, Human Rights Commission, Helena,
Montana: Joan Jonkel, Missoula, Montana

Submitted on Briefs: July 20, 1993
Decided: September 16, 1993
Filed:
Justice James C. Nelson delivered the Opinion of the Court.

Before the Court is Petitioner's appeal from a Fourth Judicial
District Court, Missoula County, order affirming the Montana Human
Rights Commission determination that Montana Rail Link (MRL)
discriminated against the Respondent M. Jane Byard (Byard) in
violation of the Montana Human Rights Act, based on her sex. We
affirm.
We restate the issues on appeal:
I. Did the hearing examiner err in allowing Byard to amend her
complaint?
II. Did the hearing examiner err in allowing the testimony of
Dr. Hacker?
III. Did the hearing examiner err in prohibiting the testimony
of Ron Dean?
IV. Did the hearing examiner err in concluding that MRL
subjected Byard to discriminatory treatment?
V. Did the hearing examiner err in concluding that MRL's
hiring practices had a disparate impact on women?
BACKGROUND
Byard was hired by Burlington Northern Railroad (BN) in 1977.
She received a promotion in November of 1978 when she became an
engineer. Byard is currently employed as a BN engineer in Havre,
Montana, although she is on a leave of absence. She initially
worked in Missoula, Montana and maintained a residence there.
In July of 1987, BN reached an agreement with MRL to acquire
a portion of the rail line called @'Southline" which ran from
2
Huntley, Montana to Sandpoint, Idaho. William Brodsky was
appointed president of the new line. It was Mr. Brodsky's
responsibility to staff the new line with EN employees presently
working on the Southline, if possible, because of their experience
and familiarity with that section of track.
Mr. Brodsky also stated his intention to work out an agreement
with the local unions who represented the BN employees. The two
unions representing the BN employees were United Transportation
Union (UTU) and the Brotherhood of Locomotive Engineers (BLE). MHL
and the BLE reached an agreement in September of 1987, giving the
Southline employees "preferential hiring in seniority order, as
such seniority is stated on the current applicable Burlington
Northern (BN) - seniority district rosters...." MHL did, however,
reserve the right to seek employees from other sources if it could
not reach the minimum operating requirements through the hiring of
BN employees. In addition, it could reject BN employees who did
not meet MHL's hiring standards.
The MRL management then scheduled a number of meetings across
the Southline for the purpose of introducing potential employees to
MHL, its goals and its philosophies. BN offered its employees the
opportunity to stay with BN, working outside of the Southline track
or apply to MRL to work on the Southline. BN assisted MHL in its
attempt to hire Southline BN employees, even offering engineers who
applied with MHL $25,000 if they accepted positions with MHL. MHL
used town meetings, letters to BN Southline employees and word-of-
mouth advertising to solicit employees.

3
 As a BN Southline employee wishing to remain in the Missoula
area, Byard attended a MRL informational meeting at the University

of Montana in Missoula with her husband, Byron Weber (Weber).

William Brodsky, and Ron Dean, a negotiator with the BLH, spoke at
the meeting in an attempt to persuade EN employees to join MHL.

Brodsky stressed the team approach which would characterize MRL,

unlike traditional railroads. He also stated that BN employees
would be given every opportunity to have their many questions about

MHL answered by management.
After that meeting, EN employees received a letter and
application from MHL. The letter stated that MHL representatives
would be available at various locations at scheduled dates and

times to "answer questions, accept application and conduct
interviews." The letter encouraged the applicants to attend the

meetings and bring their questions. If they could not attend the
meetings, they should mail their applications to MRL.
Byard completed her application and submitted it for an

engineer position, bringing the application to MRL's Missoula

office accompanied by her husband. She assumed, due to Mr.
Brodsky's presentation at the earlier meeting and letters from MRL

representatives following the meeting, that the main purpose of the

interview sessions was to provide prospective employees with the

chance to ask questions about MHL and therefore brought her husband

with her.

Byard met initially with George Harper (Harper), a consultant

to MRL, who was ultimately hired as Assistant Superintendent of

4
Railroads for MRL. Syard had prepared questions about certain
benefits she was interested in, including maternity leave, time-off

and the physical examination clause. Byard asked Harper about
maternity leave and as he searched for an answer, John Grewell

(Grewell), Superintendent of Railroads and former supervisor of

Byard, entered the room.

Grewell assumed control of the interview and when Byard asked
Grewell about maternity leave, he stated, "I think they'd let you

have some time off two weeks before you are supposed to deliver."

No more was said about the maternity leave policy.
Byard asked about the time-off policy, wondering if she could

only expect one l'personal*l day off per month. Grewell stated,
"That's a hell of a lot more than you are getting right now."

Clause 29b of the application form stated that a MRL employee

agrees t'[t]o permit a physical examination of myself at such times

and places and under the supervision of such doctor or doctors as

may be selected by [MRL]." Byard was uncomfortable with this

clause and stated her feeling that it was offensive to women.

Grewell disagreed with her position and informed her that no one

else had taken offense to the clause and everyone had signed the

application up to that point. He stated that the clause concerned

drug testing and physicals. Byard wondered why that was not made

clear on the application. She asserted that under that wording

"she could be subject to a physical examination by a math professor

at Garrison at three o'clock in the morning." Ultimately, she
signed her application but wrote on the application that “1 do not

5
include my signature on 29b as it is presently worded."
Grewell produced another form for "Physical Examination and
Alcohol and Drug Testing Authorization," stating that if she did
not want to sign Clause 29b, then she would not want to sign this
one either. However, this form was quite specific concerning blood
and urine tests for the presence of alcohol and other drugs. Byard
had no qualms about signing this form and signed it later at her
home.
Grewell then took Byard's application and told her to complete
the other forms and drop them off at the office. Weber dropped the
forms off at MRL's Missoula office within a couple days of the
interview. When Byard did not hear from MRL, she called the MRL
office and she was told by a representative that he thought she had
not signed her application. She cleared up that misunderstanding
and was later told by the representative that her application had
been denied, with no reason for the denial given. In April of
1988, Byard filed a complaint with the Human Rights Commission
against MRL, contending that MRL would not hire her because of her
sex.
Byard continued to work for BN as an engineer but had to move
to Whitefish to work on a different line. She became pregnant and
took an early maternity leave in March of 1988 and gave birth to a
son in July of 1988. She returned to work at BN, moving to Havre
in January of 1989, taking her son with her. Byard took a leave of
absence from her position at BN shortly before her hearing before
the Human Rights lCommission (Commission) hearing examiner in April

6
of 1990.
The hearing took place on April 25 through April 27, 1990, and
continued from May 14 through May 16, 1990. The hearing examiner
issued her Findings of Fact, Conclusions of Law and Proposed Order
in April of 1991. She concluded that MRL had unlawfully
discriminated against Byard based on her sex, and awarded Byard
damages. MRL filed exceptions to the proposed order and in
September of 1991, oral argument was held before the Commission.
The Commission filed its Findings of Fact, Conclusions of Law and
Final Order dated October 2, 1991, affirming the hearing examiner's
proposed Findings of Fact, Conclusions of Law and Proposed Order in
substantial part.
MRL appealed the Commission's decision and after reviewing the
briefs, oral argument and a review of the Human Rights Commission
file, the District Court affirmed the Commission in an opinion
dated December 17, 1992. The present appeal followed. Additional
facts will be included as necessary.
STANDARD OF REVIEW
The standard of review for conclusions of law is whether the
agency's interpretation of the law is correct. Steer Inc. v.
Department of Revenue (1990), 245 Mont. 470, 474, 803 P.2d 601,
603. The standard of abuse of discretion is applied to
discretionary rulings, such as trial administration issues, post-
trial motions and similar rulings. Steer, 803 P.2d at 603-604.
I. AMENDMENT OF COMPLAINT
MRL contends that the original charge in Byard's complaint

7
alleged disparate treatment but in her proposed prehearing order,
she alleged a disparate impact theory as well as a disparate

treatment theory.. Byard counters that l'[i]n April of 1990, two

weeks prior to t.he beginning of the hearing, Byard submitted a

PreHearing Memorandum. In her memorandum, Byard contended that MRL

violated the Human Rights Act under two theories, disparate

treatment (intentional discrimination) and disparate impact
(application of a facially neutral practice or policy which has a

disparate impact on members of a protected class). Byard's
PreHearing Memorandum was incorporated into the hearing examiner's

PreHearing Order,. signed by both parties, which expressly stated

that it was intended to supersede the pleadings."
Section 24.9.323(5), ARM, states that "[a] complaint may be

amended by way of a prehearing order which contains the contentions

of the parties and which is substituted for pleadings in the

contested case." Part XIV of the Final PreHearing Memorandum and

Order states that.:

The parties understand and agree that should this
memorandum be accepted by the hearing examiner or
accepted with changes and additions, it shall be deemed
to be in substitution for any pleadings in this matter
and treated as the standard of relevance and case to be
submitted for hearing and decision.

The above memorandum was signed by both parties.

In addition,, Byard argued a disparate impact theory in her

Brief In Support of Objections, filed in May of 1989. MRL's Brief

In Opposition To Byard's Objections, also filed in May of 1989,

also discussed disparate impact. These briefs were filed

approximately one year before the Final PreHearing Memorandum and

8
Order.
Section 24.9.323(6), ARM, states that "[t]o the extent the
amendment of pleadings is not otherwise addressed in this rule,

such amendments shall be governed by the provisions of Rule 15 of

the Montana Rules of Civil Procedure." Rule 15(a) provides in

part: "[oltherwise, a party may amend the party's pleading only by

leave of court or by written consent of the adverse party; and

leave shall be freely given when justice so reguires.lW This Court
has interpreted Rule 15(a) liberally, "allowing amendment of
pleadings as the general rule and denying leave to amend as the
exception." Hobble-Diamond Cattle v. Triangle Irr. (1991), 249

Mont. 322, 325, 815 P.2d 1153, 1155. In addition,
Although leave to amend is properly denied when the
amendment is futile or legally insufficient to support
the requested relief, it is an abuse of discretion to
deny leave to amend where it cannot be said that the
pleader can develop no set of facts under its proposed
amendment that would entitle the pleader to the relief
sought.

Hobble, 815 P.2d at 1155-1156. In this case, a disparate impact

theory had been previously argued and the hearing examiner

concluded that the pleader could develop facts to support the

disparate impact theory.

In conclusion, the pleadings were appropriately amended to

include a disparate impact theory and the hearing examiner did not

abuse her discretion in allowing the amendment.

II. EXPERT TESTIMONY
Byard presented an expert in communications and clinical

psychology, Dr. Hacker, who discussed interpersonal communication,

9
particularly communication styles and how they affect conversations

between men and women in the work setting. She stated her

impressions about: Byard's interview with Harper and Grewell, two

managers of MRL, one of whom is the superintendent of the railroad
and the other an assistant superintendent of railroads of MRL. Dr.

Hacker read a number of materials to prepare for her testimony at

the hearing. MRL states that an expert may base her opinion on
facts or data perceived by or made known to her at the hearing or

beforehand but it contends, however, that with the exception of the

agreed statement of facts and Hacker's session with Byard, the
expert's data and facts do not "measure up" to the standard

provided for in Rule 703, M.R.Evid. Rule 703, M.R.Evid. provides:

The facts or data in a particular case upon which an
expert bases an opinion or inference may be those
perceived by or made known to the expert at or before the
hearing. If a type reasonably relied upon by experts in
a particular field in forming opinions or inferences upon
the subject, the facts or data need not be admissible in
evidence.
The Commission Comments to Rule 703 state that:

This rule is identical to Federal and Uniform Rules
(1974) Rule 702. It is concerned with the sources of
information upon which an expert may rely in forming an
opinion....

The second sentence of Rule 703 provides the third source
of information and allows information which \...consists
of presentation of data to the expert outside of court
and other than by his own perception.' As the rule
indicates, this source of information need not be
admissible evidence if it meets the test of a type of
fact or data reasonably relied on by experts in that
particular field. The Advisory Committee's Note also
indicates that this step was taken 'to broaden the bases
for expert opinion beyond that current in many
jurisdictions and to bring the judicial practice in line

10
 with the practice of the experts themselves when not in
court'. (Citation omitted.)

In the present case, Dr. Hacker reviewed the parties' Agreed

Statement of Facts, the parties' separate contentions, the Human

Rights Investigator's file and briefs from both parties. In

addition, she spoke with Byard regarding her feelings about the

conversation which took place during her interview. She read

materials from both parties regarding their interpretations of the

conversation, as well as a neutral investigator's report. Common
sense tells us that summaries of the conversation at issue, whether

in the form of legal briefs or otherwise, would be used in the

field of interpersonal communications for analysis of a

conversation at issue if the expert was not present at the
interview. Facts provided by both parties, as well as an impartial

observer, would serve as the best available resources in

interpreting the dialogue. Dr. Hacker was well qualified to

discuss communication styles and gathered sufficient material from

which to interpret the interview.
This Court also notes that the hearing examiner stated in her

Findings of Fact, Conclusions of Law and Proposed Order regarding

Dr. Hacker's test.imony that:

[h]ere the opinion assessed how Byard's interview was
affected by differences in male and female communication
styles and perceptions, essentially based on a summary of
each party's version of the facts. As the record
developed, there was little, if any, variance between the
testimony presented during the hearing and the
contentions of fact and factual assertions submitted in
the prehearing process regarding what occurred at Byard's
interview.

MRL also objected to the fact that Dr. Hacker did not speak

11
with either of the men involved in the interview in which MRL
decided not to offer Byard a contract. This precise question was
discussed in Price Waterhouse v. Hopkins (1989), 490 U.S. 228, 109

S.Ct. 1775, 104 L. Ed. 2d 168, wherein the respondent's expert, Dr.
Susan Fiske, a social psychologist, testified "that the partnership

selection process at Price Waterhouse was likely influenced by sex

stereotyping." Price Waterhouse, 490 U.S. at 235.
In Price Waterhouse, the respondent, Ann Hopkins, had been

proposed as a candidate for partnership by partners in her local

office. Her candidacy was held for reconsideration the following

year, and when the local partners did not re-propose her candidacy

the next year, she brought an action under Title VII of the Civil

Rights Act.
Respondent'& expert testified that Hopkins' uniqueness (the

sole woman up :for partnership) and the subjectivity of the

evaluations by the partners "made it likely that sharply critical
remarks such as these were the product of sex stereotyping. . .'I

Price Waterhouse, 490 U.S. at 235-236. Dr. Fiske based her

testimony on a review of the various comments made by partners

during the selection process. She stated that "it was commonly

accepted practice for social psychologists to reach this kind of

conclusion without having met any of the people involved in the
decisionmaking process." Price Waterhouse, 490 U.S. at 236.

In the present case, Dr. Hacker did not personally interview

anyone from MRL. Like Dr. Fiske, however, she reviewed comments

from the conversation using materials similar to those at issue in

12
Price Waterhouse.. She read the parties' interpretations of the
interview and reviewed an agreed statement of facts and a neutral
investigator's account of the interview. Dr. Hacker reviewed many
more materials than those reviewed in Price Waterhouse and found to
be acceptable by the United States Supreme Court. We conclude that
Byard's expert based her testimony on a review of materials
appropriate for such use and the hearing examiner did not abuse her
discretion when she allowed Dr. l-locker's testimony.
III. RON DEAN'S TESTIMONY
MRL argues t.hat Ron Dean's (Dean) testimony should have been
allowed because Ihe had relevant information, Byard was informed
that MRL intended to call him as a witness and his testimony would
not have been a surprise. Byard counters that Dean was correctly
prevented from testifying because MRL violated discovery,
particularly pertaining to Dean's testimony. Also, Dean's
testimony at the hearing would have been in direct contrast to
MRL's position taken in prehearing discovery and thus MRL was
correctly estopped from presenting their theory at trial.
Interrogatories 27, 36 and 37 of Byard's first set of
interrogatories, dated November 3, 1989, and sent to MRL pertained
to possible testimony by Dean but no information was provided about
his testimony in MRL'S answer dated December 13, 1989.

Interrogatories 61, 62 and 78 of Byard's second set of
interrogatories, dated December 27, 1989, and sent to MRL also
pertained to possible testimony by Dean but again, no information
was provided about his testimony in MRL's answer dated February 2,

13
1990. Byard's third set of interrogatories was dated March 28,
1990, and requested supplements to the first and second sets of
interrogatories. MRL's answer was dated April 24, 1990, but no
additional information on Dean's testimony was provided in the
answer. In addition to that request for supplementation to the
first sets of interrogatories, Byard's counsel wrote letters to
MRL's counsel reguesting supplementation of the interrogatories.
The hearing examiner stated in her Findings of Fact,
Conclusions of Law and Proposed Order, that "this examiner was
troubled by the dribbling and spotty nature of MRL's responses to
discovery. Generally speaking, MRL's responses were neither timely
nor complete." She further discussed her concerns over Dean's
proposed testimony at trial, reporting the following:
On the fourth day of hearing, MRL called Ron Dean,
Vice President and International Director of the
Brotherhood of Locomotive Engineers, as a witness. Among
other things he was asked whether he was aware that BN
engineer Byard had not been hired by MRL, at which point
counsel for Byard objected to such testimony on the
ground that MRL failed to disclose Dean's knowledge of
Byard's rejection in answers to interrogatories and
requests for admissions.
MRL contended that it had disclosed Ron Dean as a
witness, and, even though it did not disclose the
particulars of his testimony, Byard had ample opportunity
to investigate his testimony and in fact, had contacted
Dean regarding his testimony prior to hearing.
Following argument and review of the discovery
responses, the objection was sustained. The substance of
Dean's testimony should have been disclosed either in
MRL's responses to interrogatories numbered 29, 37, or 61
or, in its response to request for admission number 15,
but was not.
We agree. Section 24.9.317(4), ARM, empowers a hearing
examiner to limit the prosecution or defense of a contested case to
proof of matters disclosed through discovery when a party does not
14
engage in full and complete discovery. Vainio v. Brookshire

(1993) I 50 St.Rep. 529, 531, _ Mont. -, 852 P.2d 596, 600. In
the instant case, numerous attempts were made by Byard's counsel to

obtain the substance of Dean's testimony with no results. "This

Court has held that the imposition of sanctions for failure to

comply with discovery is regarded with favor." Vainio, 852 P.2d at

600. (Citation omitted.)

When the hearing examiner limited Dean's testimony as to the

failure to hire Byard, she provided KRL's counsel with an

opportunity to make an offer of proof. The testimony Dean would
have provided asserted that he spoke with MRL personnel and
persuaded them to give Jane Byard and another worker, Frank

Bennett, a second chance to interview for the job. Dean would have
further testified that he called Jane Byard to discuss a second

interview and she refused to interview for a second time. Byard

argues that this testimony is contrary to KRL's answer to Admission

15 in Byard's second set of interrogatory requests. Admission 15

provides:

You state in your December 13, 1989 answer to
Interrogatory No. 25 that Frank Bennett was given an
opportunity to meet with Mr. Grewell to reconsider Mr.
Bennett's rejection. Please admit that MRL did not give
Jane Byard an opportunity to meet with John Grewell to
reconsider her rejection. . .

MRL's answer stated:

It is admitted that Montana Rail Link agreed to
reconsider its rejection of Mr. Bennett if Mr. Bennett
would come back and meet with Mr. Grewell and it is
admitted that the same agreement was not made with
respect to Jane Byard. The BLR never approached Montana
Rail Link with the request, and Montana Rail Link will
not speculate as to what its action would have been if

15
 the approach were made.

Dean's testimony at trial would, indeed, be contrary to MRL's

answer to Admission 15. At no time did MRL attempt to modify its

answer or in any way indicate that it was to present contrary
testimony.
"Under well established concepts of law, a party cannot take

one position during pretrial discovery and then change its position
at the time of trial or on appeal." Plouffe v. Burlington Northern

Inc. (1986), 224 Mont. 467, 474, 730 P.2d 1148, 1153. Section 26-

1-601, MCA, declares as a conclusive presumption:

The truth of a declaration, act, or omission of a party,
as against that party in any litigation arising out of
such declaration, act or omission, whenever he has, by
such declaration, act or omission, intentionally led
another to believe a particular thing true and to act
upon such belief.
In the instant case, MRL admitted that Byard did not receive

a second interview from MRL and that admission was never modified.

Therefore, MRL was estopped from presenting contrary testimony at

trial. Plouffe, 730 P.2d at 1153.

In conclusion, the hearing examiner did not abuse her

discretion when she correctly excluded Dean's testimony.

IV. DISPARATE TBBATMBNT

MRL argues that the hearing examiner erred in concluding that

it treated Byard in a discriminatory fashion because it had a

legitimate reason for not hiring her. Byard asserts that there is

substantial evidence for the Commission's conclusion that MBL

subjected Byard to discriminatory treatment.
A three-part analysis is used to determine whether a party has

16
been subjected to discriminatory treatment. First, the complainant
must establish a prima facie case of discrimination. This is
accomplished by showing that:

1) she is a member of a protected group;
2) she applied and had the necessary qualifications for
the job;
3) despite her qualifications, she was rejected:
4) following the rejection, the position remained open
and the employer continued to seek applicants from
persons with complainant's qualifications

McDonnell Douglas Corp. v. Green (1973), 411 U.S. 792, 93 S.Ct.

1817, 36 L. Ed. 2d 668.
Second, if she can establish a prima facie case, the burden
shifts to the employer "to articulate some legitimate, non-
discriminatory reason for the employee's rejection." McDonnell

Douslas, 490 U.S. at 802. We speak here oft the burden Ipf

production, not of persuasion. The burden of persuasion remains
with the complainant throughout the analysis. The employer need

only set forth some legitimate reason for rejecting the employee,

it does not have to prove this reason was the motivation to reject
the complainant. However, if it can set forth a reason, the

complainant's prima facie case is considered rebutted. McDonnell

Douslas, 411 U.S. at 802-803.
The third step in the analysis provides for an opportunity for

the complainant to prove that the legitimate reasons given for the

employer's failure to hire are a pretext for discriminatign. 'IThis

burden now merges with the ultimate burden of persuading.khe court

that [plaintiff] has been the victim of intentional

discrimination." Johnson v. Bozeman Schoot Dist. No. 7 (1987), 226
/:I~

17 1
Mont. 134, 140, 734 P.2d 209, 213, citing Texas Dept. of Community
Affairs v. Burdine (1981), 450 U.S. 248, 256, 101 S.Ct. 1089, 1095,
67 L. Ed. 2d 207, 217.
Byard successfully passed the first step and made out a prima
facie case of discriminatory treatment. She is a member of a
protected class (women) and she certainly qualifies as an engineer
because she worked in that position for BN for 9 years. John
Grewell, himself, admitted she was a good engineer. She was
rejected for the position but MRL continued to search for
candidates at her level of qualifications. Indeed, many of the
engineers selected or trained for the position did not possess her
level of expertise as a railroad engineer.
Once Byard's prima facie case of discrimination was
established, it fell to MRL to rebut the case with a legitimate
reason for it to reject her as an applicant. MRL stated that their
reason for rejecting Byard was a "poor attitude" allegedly evinced
during her brief interview with Grewell and Harper. Since MRL has
merely the burden of production, this answer suffices to rebut
Byard's prima facie case, "raising a genuine issue of fact as to
whether it discriminated against the plaintiff." Johnson, 734 P.2d
at 212, citing Texas Dewt. of Communitv Affairs, 450 U.S. at 254-
255, 101 S.Ct. at 1094, 67 L. Ed. 2d at 216.
Rebutting the presumption of discriminatory treatment brings
the analysis to the third and final step - Byard has the
opportunity to prove that the legitimate reason given for the
failure to hire is a pretext for sex discrimination. In the

18
Commission's Findings of Fact, Conclusions of Law and Final Order,
it states that "MRL was not consistent or forthright regarding its
explanation for rejecting Byard." The Commission recounts the
sequence of events which concluded in MRL giving its reason to
reject Byard as displaying a poor attitude during her interview.
According to the findings of fact, Byard was initially told by a
MRL representative that she was not hired because she did not sign
her application. She attempted to correct that misconception by
informing MRL's representative that she had in fact, signed her
application. (We note that several people were hired by MRL
despite not signing their applications.) After she clarified the
situation, she was not given any reason for her rejection.
Even after she filed her action before the Human Rights
Commission, MRL continued to prove hard to pin down concerning its
reason for rejecting Byard. During the Commission's investigation
of Byard's claim, MRL was asked to "state the specific reason(s)
why [Byard] was not hired and how the person(s) hired were better
qualified...." MRL answered that "[a]pplicants hired met minimum
job qualifications for the position and passed the required pre-
employment physical." The notarization of personnel manager
Prinzing's signature for this information was dated May 10, 1988,
eight months after Byard's hiring was rejected.
In the fact-finding conference on June 30, 1988, MRL presented
a written position statement but no mention is made as to why Byard
was not hired. It was at this conference that MRL's representative
finally orally informed everyone that their reason for not hiring

19
Byard was her "poor attitude." The Commission concluded that
"[t]he credibility of MRL's asserted reason for not hiring Byard is
seriously undermined by the factthatl4RL took almost six months to

articulate the reason, despite two or three earlier specific

requests to do so."

We agree. "Pretext may be proved indirectly, by showing that

the employer's explanation is unworthy of belief." Hearing Aid
Institute v. Rasmussen (1993), 50 St.Rep. 569, 573, _ Mont. -,

052 P.2d 628, 634. It is difficult to believe that "poor attitude"

was the actual reason Byard was not hired when MRL did not explain

its position until the June 30 conference. The inconsistency

belies its assertion that it had a legitimate reason for rejecting

Byard.
The hearing examiner correctly concluded that Byard

successfully established that she was subjected to discriminatory

treatment by WRL.
V. DISPARATE IMPACT

Byard also argued that MRL's hiring practices had a disparate

impact on women in general.

[C]laims that stress 'disparate impact'...involve
employment practices that are facially neutral in their
treatment of different groups but that in fact fall more
harshly on one group than another and cannot be justified
by business necessity. Proof of discriminatory
motive... is not requiredunder a disparate-impact theory.
(Citation omitted.)

Hazen Paper Company, Et. Al., Petitioners v. Walter F. Biggins

(1993) I - U.S. -8 113 S.Ct. 1701, 123 L. Ed. 2d 338.
To establish disparate impact, the respondent here must

20
"demonstrate that it is the application of a specific or particular
employment practice that has created the disparate impact under
attack." Wards Cove Packing Co. v. Atonio (1989), 490 U.S. 642,
109 S.Ct. 2115, 104 L. Ed. 2d 753. A link between the particular
employment practice and its resultant disparate impact establishes
a prima facie case of "disparate impact." If a prima facie case is
proven, the burden of production shifts to the employer, MRL, to
articulate a legitimate business justification for the challenged
practices. Ward's Cove, 490 U.S. at 658.
If the [employer] is able to produce a business justification
for the practice at issue, the respondent must then be given an
opportunity to persuade the factfinder that "other tests or
selection devices, without a similarly undesirable [discriminatory]
effect, would also serve the employer's legitimate [hiring]
interest[s]; by so demonstrating, respondent[s] would prove that
[employers were] using [their] tests merely as a 'pretext' for
discrimination.l' Ward's Cove, 490 U.S. at 660. (Citation
omitted.) Alternatives provided by the respondent "must be equally
effective as [employer's] chosen hiring procedures in achieving
[its] legitimate employment goals." Ward's Cove, 490 U.S. at 661.
In the instant case, the Commission's final order lists the
following five hiring practices by MRL as resulting in a disparate
impact on women:
1) although not stated to the applicants, the impression
of the individuals responsible for making the hiring
decisions toward the applicants was the single most
important factor in the hiring process:
2) the individuals responsible for making hiring
decisions followed "no written instructions pertaining to
21
 the qualifications necessary for [hiring];A
3) the "standards which were determined to be controlling
[were] vague and subjective;*'
4) the applicants were not properly informed, and indeed
may have been misled about "the qualifications necessary
to get jobs" and about the procedures they had to follow
in order to be hired; and
5) "there are no safeguards in the [hiring] procedure
designed to avert discriminatory practices.*'
These practices are quite similar to the transfer/promotion
practices found violative of Title VII, the federal statute for
employment discrimination, in Rowe v. General Motors Corporation
(5th Cir. 1972), 457 F.2d 348. The procedures found to violate
Title VII in Rowe included:
(i) The foreman's recommendation is the indispensable
single most important factor in the promotion process.
(ii) Foremen are given no written instructions pertaining
to the qualifications necessary for promotion.
(iii) Those standards which were determined to be
controlling are vague and subjective.
(iv) Hourly employees are not notified of promotion
opportunities nor are they notified of the qualifications
necessary to get jobs.
(v) There are no safeguards in the procedure designed to
avert discriminatory practices.
Rowe, 457 F.2d at 358-359.
We agree that practices of this type can easily lead to
discrimination. In the instant case, MRL hired Sharon Prinzing,
then of Montana Resources, to conduct a seminar on interviews and
interviewing techniques in Billings, Montana. (We note that not
all of MRL's interviewers were present for the seminar.) Prinzing
provided materials such as interview plans and guides with
suggestions for appropriate questions, opening remarks and other
suggestions for a proper interview. These materials were
distributed and/or placed on a conference table in the meeting room

22
where management involved in the interviewing process could pick up
the materials if they so desired. Ms. Prinzing, however, did not
know whether these materials were collected by the interviewers
because there was no requirement to use the materials. She did not
go over each page individually, but informed them that she used the
materials in her own interviews.
One page of the materials from the seminar included
information from the State of Montana concerning discrimination and
bias in interviews. However, there was no discussion during the
training about bias and stereotyping in the interview process.
Here, MRL admitted that "[t]he provided forms were only filled
out for one or two applicants." The "interviews" for some
applicants were nothing more than "informal chats." and some
applicants hired were not interviewed at all. Additionally, there
were no written job descriptions provided to alert possible
applicants to the qualifications and expectations of a worker.
Although Prinzing stated that MPL did not have written job
descriptions, the implementing agreement between MRL and the BLE
contained job descriptions for some positions, including engineers.
The interview process for each interviewer was left entirely
to his discretion. Maureen Fleming, an industrial psychologist,
had many concerns with the V*informalityl' of the interview process
at MRL.
Fleming, one of Byard's experts, testified that "there was a
great lack of consistency in the selection process as it occurred."
She stated that the use of the interview plan introduced by Sharon

23
Prinzing in her seminar on interviews would have been acceptable
for use in interviewing but from her review of the applications and
the discovery materials, it did not seem to have been used. She
further asserted that there was not sufficient data about the
applicants to make an adequate selection decision. She also stated
that it would be important to have written pre-employment screening
procedures and employment standards. In addition, she stated that
it would be poor policy not to have written notes from the
interviews as well as a written record of who was hired, fired and
other information pertinent to the hiring process. She noted that
it was "critically important 'I to maintain written data concerning
interviews if operating within a short time frame for hiring.
Finally, Dr. Fleming stated that using subjective criteria
without written guidelines and written data could have an adverse
effect on minority groups because "an unstructured interview would
reflect the biases and the prejudices of the interviewers and not
really gather good data, because the structure would not be there
to ask consistent questions of the minority or the women; the
protected classes.VV A particular finding of fact by the Commission
reflects the biases and prejudices of two of the interviewers:
During interviews, at least two of MRL's hiring
officials openly expressed their concerns about the
ability of some women to perform railroad work. Jim
Watkins asked an unmarried female applicant with a baby
what her childcare arrangements were because, in his
words, "railroad work would be tough on a lady in that
position.l' George Harper commented to at least 2 female
applicants, both of whom had several years experience as
brake-and switch-person at BN, that "most~ women can't
handle" railroad work.
We concur with Dr. Fleming's assessment of the interview
24
process, as well as the CommissionVs conclusion that the interview
techniques used were inadequate. The fact that interviewers did

not follow any written or organized interview plan produced

interviews that were infused with stereotyping and the biases of

the interviewers. The Commission concluded that "[slubjective

procedures when combined with statistical evidence showing the

disproportionate number of women selected to fill operating

positions conclusively demonstrates the existence of discriminatory

practices."
Byard was able to obtain some general statistics from MRL but

record keeping at MBL was "spotty". MRL did acknowledge that it

employed 111 females and 958 males, of which 51 women and 9 men

were in the "Office & Clerical" category. The personnel manager
could not provide a breakdown for the number of women hired as

engineers or Utility Operating Employees (UOEs) or relate which

positions fell into which category of workers. The following
footnote was included in the Commission's final order:

In addition to "Office & Clerical" the report includes
categories for NSHome,lV "Officials & Managers,"
8VProfessionals,Vq *VTechnicians,'V "Craftsman (skilled)"
"Operatives (semi-skilled)," and "Laborers (unskilled)."
It is reasonable to infer that the positions of engineer
and utility operating employee are included in "Craftsmen
(skilled),lV considering Grewell testified that he had to
hire 350 employees in the operating department alone at
startup and it was understood that the operating
department included engineers, assistant engineers, lead
utility employees and utility operating employees.
There are 683 employees under the "Craftsmen
(skilled)" category, 35 of which are women. The only
other category with a sizeable number of employees (221)
was unskilled laborers and, according to the report, all
of those employees are male. The record discloses that
MBL has at least one female engineer and at least one
female operating employee, therefore, the positions of

25
 engineer and operating employee must be included under
the heading l'Craftsmen (skilled)" and, whatever the
precise number of women employed by MRL as engineers and
UOEs, the combined total does not exceed 35.
Although employers are required to maintain personnel and
employment records under the Montana Human Rights Act and Title
VII, the only employment records MRL maintained were applications.
In fact, it could not even provide a complete set of applications,
missing at least 22 applications for engineers hired.
However, disparate impact can still be proved even when
statistics, which are generally used to prove disparate impact, are
inadequate.
The Uniform Guidelines on Employee Selection Procedures,
adopted by the Equal Employment Opportunity Commission, the Civil
Service Commission, the Department of Labor, and the Department of
Justice, are guidelines designed to assist employers . . . "to
comply with requirements of Federal law prohibiting employment
practices which discriminate on grounds of race, color, religion,
sex, and national origin." 29 CFR 5 1607.1(B). The guidelines are
based upon court decisions, previous agency guidelines and the
practical experiences of the various agencies and are "intended to
be consistent with existing law." 29 CFR § 1607.1(C).
29 CFR 9 1607.4(D), describes the policy to be followed in the
event that an agency does not maintain data on adverse impact:
Where the user has not maintained data on adverse impact
as required by the documentation section of applicable
guidelines, the Federal enforcement agencies may draw an
inference of adverse impact of the selection process from
the failure of the user to maintain such data, if the
user has an underutilization of a group in the job
category, as compared to the group's representation in
26
 the relevant labor market or, in the case of jobs filled
from within, the applicable work force.
CFR § 1607.4(D).

We find the above regulation instructive and apply its
principle to the instant action. Although the original labor pool

for engineers was RN Southline engineers, as MRL began having

trouble hiring a sufficient number of start-up employees, the labor
pool increased to persons with engineering experience on Class I

railroads and beyond that pool to those persons with s railroad
experience, not necessarily as engineers. According to John
Grewell's testimony, WRL hired many UOEs and trained them to become

engineers. The Commission's finding of fact 153 states that
ll[c]onsidering the fact that some UOEs who were hired had DQ

railroad experience, the pool could be as broad as the general

labor market."

In view of the fact that MRL had hired 119 engineers when it

began operations and only one of those engineers was a female, MRL

underutilized women, a protected group, in its job categorization

for engineers/"craftsmen *I as compared to the number of women in the

labor pool and the Court may infer adverse impact on women. See

Teamsters v. United States (1977), 431 U.S. 324, 340, 97 S.Ct.

1843, 52 L. Ed. 2d 396, n. 20: Dothard v. Rawlinson (1977), 433

U.S. 321, 329-330, 97 S.Ct. 2720, 53 L. Ed. 2d 786.

Additionally, in a case such as this, where an employer cannot
or will not supply records necessary to make a determination of

disparate impact, a case may be established "without elaborate

statistical proof." Wright v. National Archives & Records Service

27
(4th Cir. 1979), 609 F.2d 702, 712. For instance, courts can infer

disparate impact on a protected class from the use of word-of-mouth
advertising.

MRL relied heavily on word-of-mouth advertising to recruit

possible job applicants. The Commission found that inexperienced

males who heard about openings as UOEs were hired while females

with similar employment backgrounds were not hired. It further

found that Grewell did not even see the applications of rejected

female applicants, who had railroad experience.

In concluding that "[wlord-of-mouth recruiting can have the
effect of perpetuating imbalances in the applicant pool, with a

corresponding effect on minority hiring," the Commission cited

E.E.O.C. V. Chicago Miniature Lamp Works (N.D. Ill. 1985), 622 F.
Supp. 1281, 1309, which states that without contradictory evidence,

the assumption is that word-of-mouth recruitment of applicants

maintains the status quo for the composition of the work force.

Here the work force was traditionally composed of males.

However, this case was reversed by the United States Court of

Appeals, Seventh Circuit in E.E.O.C. v. Miniature Lamp Works (7th

Cir. 1991), 947 F.2d 292. The Seventh Circuit stated that although

"reliance on word-of-mouth to obtain aonlicants for jobs does not

insulate an emnlover from a findinq of disvarate treatment of

minorities," it could not consider the word-of-mouth advertising at

issue because it was emvlovee initiated. Miniature, 947 F.2d at

305. Miniature passively relied on employees' word-of-mouth

recruiting to bring applicants to Miniature. "[F]or the purposes

28
of disparate impact, a more affirmative act by the employer must be
shown in order to establish causation." Miniature, 947 F.2d at
305.
In the instant case, MRL was the impetus behind the word-of-
mouth recruiting, even obtaining assistance from the BLE. The
Commission found that "MRL relied upon word-of-mouth recruitment to
seek applicants beyond the pool of Southline BN employees. . . .*I
and "MRL's policy of word-of-mouth recruiting affected female
applicants quite differently than male applicants." Recruitment by
word-of-mouth was initiated and encouraged by an affirmative act of

MRL, which perpetuated the imbalance between males and females
employed by MRL.
The sparse statistics, coupled with evidence which carries
with it an inference of disparate impact, are adequate to validate
Byard's claim of disparate impact. She has also sufficiently
substantiated her assertion that the disparate impact on women was
caused by the subjective hiring practices of MRL. Because Byard
has successfully established a prima facie case of disparate
impact, the analysis moves to the second step.
In the second step of the analysis, the petitioner must
produce a legitimate business justification for its hiring
practices. MRL argued that it had to hire a great number of
employees in a relatively short span of time and therefore, could
not develop a sophisticated format for the interviewing process.
This explanation suffices as MRL's legitimate justification for its
hiring procedures which shifts the burden of production back to

29
Byard to provide alternatives to the hiring procedures utilized by
MFZL.
Byard's expert, Dr. Fleming, testified that even if an
organization is operating under a "short time frame," it can look
at other companies selection procedures and systems and apply them
to its own circumstances. She suggested that if the interview plan
provided by Sharon Prinzing had been used, it would have improved
the selection process. Dr. Fleming also stated that it is critical
for an organization hiring within a short time period to keep
written data of the hiring process. She further stated that job
analyses and job descriptions from another firm would be very
helpful in developing effective hiring procedures and would be
readily available.
These are certainly common sense solutions to the problem of
MRL's short time frame for hiring numerous employees. These
materials were available or easily accessible, particularly because
another railroad, BN, had already proven cooperative in MRL's
attempt to hire employees. In addition, MRL had job descriptions
for some of the railroad craftsmen positions readily available from
its labor agreement with BLE.
We conclude that there is substantial credible evidence to
prove that other selection practices would serve MRL's legitimate
hiring interests and were readily available, proving that MRL used
its hiring practices as a pretext for discriminatory conduct.
Ward's Cove, 490 U.S. at 660. In fact, testimony showed that the
alternative hiring practices suggested by Byard would not only

30
prove as effective, but actually more effective in improving the

quality and equality of the hiring process at MRL. We conclude

that the hearing examiner correctly determined that MRL's hiring

practices had a disparate impact on women.
AFFIRMED.

We note with dismay the deplorable state of the record which

arrived for our review in this case. Incomplete and disorganized

records waste time and energy, which we simply do not have to

spare, and significantly delay the final decision on appeal. In

the future we will not hesitate to return the entire record to the
district court with instructions that it will not be refiled until

it is complete and in proper, organized form.

We Concur:

31