NO, 93-616
IN THE SUPREME COURT OF THE STATE OF MONTANA
1 9 94
KATHARINE S . BOREEN
Plaintiff and Appellant,
GEORGE CHRISTENSEN, a/k/a
GEORGE P. CHRISTENSEN, a/k/a
I!CHRISg1 CHRISTENSEN, and
F. GUY YOUNGBLOOD, acting
individually and in the capacities
of administrative officers af the ZOiY94-
DEPARTMENT OF MILITARY AFFAIRS, <'A d * ,
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:
F o r Appellant:
Peter ~ i c h a e l Meloy, Meloy 6 Morrison, Helena,
Montana
For Respondent:
Hon. Joseph P, Mazurek, Attorney General, James
Scheier, Assistant Attorney General, Helena, Montana
For Amicus:
Stanley T. Kaleczyc, Browning, Kaleczyc, Berry &
Hoven, Helena, Montana (Montana League of cities and
Towns and Montana Association of Counties)
Submitted on Briefs: July 26, 1 9 9 4
Decided: October 20, 1994
Justice James C. Nelson delivered the Opinion of the Court.
his is an appeal from an order of the First Judicial District
Court, Lewis and Clark County, dismissing the complaint of
plaintiff/appellant Katharine S. Boreen (Boreen) alleging
constructive discharge from her employment and violations of 42
U.S.C. 55 1983 (5 1983) and 1988. We reverse and remand.
The sole issue on appeal is whether the District Court erred
in dismissing Boreen's complaint for failure to state a claim on
which relief can be granted because she did not have a property
interest in her employment and, therefore, no due process rights
under the Fourteenth Amendment.
FACTUAL BACKGROUND
Boreen's complaint alleges that she was employed by the
Montana Department of Military Affairs until she was terminated on
April 13, 1990. The complaint states that George Christensen
(Christensen) and F. Guy Youngblood (Youngblood) "render[ed] her
working conditions so intolerable that a reasonable person under
the circumstances would have no other choice but to resign." She
further alleges that, by virtue of the personnel policies of the
State of Montana, she could not be terminated (constructively
discharged) without just cause, and that she had a property
interest in her employment by reason of these policies.
Christensen and Youngblood were administrative officers at the
Montana Department of Military Affairs who, according to Boreen,
"acting as individuals, and acting under color of state law, in
their capacities as administrative officers of the Department of
2
Military Affairsb1 deprived her of her property interest in
employment by c o n s t r u c t i v e l y t e r m i n a t i n g her without due process of
law. She sought an award of compensatory and general damages and
attorney fees.
PROCEDURAL BACKGROUND
Boreen filed her complaint on April 5, 1993. On July 2, 1993,
Youngblood filed a motion to dismiss the complaint and for a
protective order. The District Court heard argument on the motion
to dismiss and protective order and granted leave to file an
amended complaint on July 7, 1993. On July 19, 1993, Youngblood
filed an answer to the amended complaint, stating that the
complaint failed to state a claim upon which relief could be
granted. He also filed a motion to dismiss the amended complaint
as well as a motion for summary judgment. Counsel for both parties
argued the motion to dismiss and for summary judgment on August 26,
1993. On November 16, 1993, the District Court issued its order,
granting the motion to dismiss, concluding that Boreen had no
property interest in her state employment and therefore, had failed
to state a claim under S 1983. This appeal followed.
STANDARD OF REVIEW
Our standard of review of district court rulings on motions to
dismiss under Rule 12 (b)(6), M.R.Civ.P., is set forth in Willson v.
Taylor (1981), 194 Mont. 123, 634 P.2d 1180:
A complaint should not be dismissed for failure to
state a claim unless it appears beyond doubt that the
plaintiff can prove no set of facts in support of his
claim which would entitle him to relief. A motion to
dismiss under Rule 12(b)(6), M.R.Civ.P., has the effect
of admitting all well-pleaded allegations in the
complaint. In considering the motion, the complaint is
construed in the light most favorable to the plaintiff,
and all allegations of fact contained therein are taken
as true.
Willson, 634 P.2d at 1182. (citations omitted.) The District
Court's determination that Boreen's complaint failed to state a
claim is a conclusion of law. Our standard of review of the trial
court's conclusions of law is whether the tribunal's interpretation
of the law is correct. Steer Inc. v. Department of Revenue (1990),
245 Mont. 470, 474-75, 803 P.2d 601, 603.
PROPERTY INTEREST IN EMPLOYMENT
Boreen contends that the personnel policies of the State of
Montana provide her with a property interest in continued
employment of which she cannot be deprived without due process of
law and which is sufficient to trigger the remedial protection of
5 1983. Those personnel policies, found in Title 2, Chapter 21,
sub-chapter 65 of the ~dministrativeRules of Montana (ARM) are set
forth in pertinent part as Appendix A to this opinion.
The State counters that Boreen was an "at willn employee and
that, pursuant to 5 39-2-503, MCA, and applicable case law, she has
no property interest in continued employment. The State further
contends that the "just cause" provisions in its personnel policies
on which Boreen bases her claim do not create a property interest
in employment.
Boreen argues, and we agree, that the United States Supreme
Court's decision in Cleveland Board of Education v. Loudermill
(1985), 470 U.S. 532, 105 S.Ct. 1487, 84 L.Ed.2d 494, and other
pertinent case law, should serve as our guide in deciding this
4
issue of first impression--whether the @'just cause" provisions of
the administrative regulations which comprise the personnel
policies of the State of Montana create a property interest in
employment sufficient to trigger the due process protections
afforded by the Fourteenth Amendment of the united States
constitution and the remedial protections afforded under 5 1983.
LOUDERMI LL
Loudermill involved a security guard's challenge to his
dismissal by the Cleveland Board of Education- On his job
application Loudermill erroneously stated that he had never been
convicted of a felony. Subsequently, on discovering that he had
been convicted of grand larceny, the Board dismissed him for
dishonesty in filling out his job application.
In his suit in federal district court, Loudermill claimed that
his due process rights were violated because he was discharged
without an opportunity to respond to the charges against him and to
challenge his dismissal prior to his removal from his position.
Under 0hio law, Loudermill was a *@classified
civil servant" subject
to termination only for cause and with the right to obtain
administrative review upon discharge from employment. Loudermill
reached the United States Supreme Court with a companion case
presenting the same issue involving Donnelly, a bus mechanic
employed by the Parma Board of Education.
In reviewing the precedential underpinnings for its decision,
the ~oudermillCourt set forth certain basic legal principles that
govern the application of due process protection to employment
termination cases:
Respondents' federal constitutional claim depends on
their having had a property right in continued
employment. Board of Regents v. Roth, 408 U.S. 564, 576-
578 (1972); Reagan v . United States, 182 U.S. 419, 425
(1901). If they did, the State could not deprive them of
this property without due process. See emp phis ~ i g h t , Gas
& Water Div. v. Craft, 436 U.S. 1, 11-12 (1978); Goss v.
Lopez, 419 U.S. 565, 573-574 (1975).
Property interests are not created by the
Constitution, l1theyare created and their dimensions are
defined by existing rules or'understandings that stem
from an independent source such as state law. ... II
Board of Regents v. Roth, supra, 408 U.S. at 577, 92
S.Ct, at 2709. See also Paul v. Davis, 424 U.S. 693, 709
(1976).
Loudermill, 470 U.S. at 538.
Concluding that the Ohio statute at issue created such a
property interest, the court observed that Louderrnill was a
ll\classified
civil service empl~ye[e],~entitled to retain [his]
pasitio[n] 'during good behavior and efficient service,' who could
not be dismissed 'except . . . for . . . misfeasance, malfeasance,
or nonfeasance in office. (citation omitted.) This statute, the
court determined, supported the conclusion that Loudermill had a
property interest in his continued employment by the school
district.
Rejecting outright the position of the plurality in Arnett v.
Kennedy (1974), 416 U . S . 134, 94 S.Ct. 1633, 40 L.Ed.2d 15, that
the employeets property right is defined by, and conditioned on,
the legislature's choice of procedures for its deprivation, the
Loudermill court stated:
. . . the Due Process Clause provides that certain
substantive rights - life, liberty, and property - cannot
be deprived except pursuant to constitutionally adequate
procedures. The categories of substance and procedure
are distinct. Were the rule otherwise, the Clause would
be reduced to a mere tautology. I1PropertyH cannot be
defined by the procedures provided for its deprivation
any more than can life or liberty. The right to due
process "is conferred, not by legislative grace, but by
constitutional guarantee. While the legislature may
elect not to confer a property interest in [public]
employment, it may not constitutionally authorize the
deprivation of such an interest, once conferred, without
appropriate procedural safeguard^.^^
Loudermill, 470 U.S. at 541. (Citation omitted.)
The court then proceeded to delineate what administrative
process was due Loudermill according to the due process guarantees
of the federal constitution and prior case law. The court
concluded that due process simply required oral or written notice
to the employee with an explanation of the employer's evidence and
the opportunity for the employee to respond in "something lessJ1
than a full evidentiary hearing before termination, coupled with a
full post-termination hearing "at a meaningful time." Loudermill,
4 7 0 U.S. 546-47. As stated by the court,
[hlere, the pretermination hearing need not definitively
resolve the propriety of the discharge. It should be an
initial check against mistaken decisions--essentially, a
determination of whether there are reasonable grounds to
believe that the charges against the employee are true
and support the proposed action.
Louderrnill, 470 U.S. at 545-46. (Citation omitted.)
MONTANA CASE LAW
While this Court has dealt with the termination of "at willM
employment in the context of claims alleging violations of due
process, we have not yet addressed the issue presented here--
whether an administrative regulation can create a property interest
in continued employment sufficient to trigger the due process
protections afforded by the Montana Constitution and the Fourteenth
Amendment of the federal constitution, remedial under 5 1983. The
two primary Montana cases cited by both parties which impact this
issue are: Reiter v. Yellowstone Cty. (1981), 192 Mont. 194, 627
P.2d 845, and ~edicineHorse v. Big Horn Cty. Sch. D. (1991), 251
Mont. 65, 823 P.2d 230. Two recent federal court decisions, Stokes
v. Lamma (D. Mont. 1993), CV-93-016-GF, an unpublished decision of
the United States District Court of Montana--Great Falls and
Hollister v. Forsythe (9th Cir. 1994), 22 F.3d 950, are also cited
and argued by the parties, and will be discussed.
In Reiter, an employee who had been a custodian for the
Yellowstone County Courthouse, was discharged without a hearing and
subsequently brought an action in the district court seeking
reinstatement and back pay. Reiter argued that because he had
served in his position for a long time and was a permanent
employee, he had a property interest in continued employment and
was entitled to procedural due process before termination. Relying
on Perry v. Sindermann (l972), 408 U.S. 593, 602, 92 S.Ct. 2694,
2700, 3 3 L.Ed.2d 570, (an employee ''who ha[d] held [a] position for
a number of years, might be able to show from the circumstances of
this service - and from other relevant facts - that he has a
legitimate claim of entitlement to job tenure . . . Reiter
claimed that his longevity of service, supervisory position,
retirement and insurance benefits, and the promise of a hearing
upon discharge were factors which gave him a I1legitimateclaim of
entitlement to continued employment." Reiter, 627 P.2d at 848.
This Court concluded that the Itatwillm statute, 5 39-2-503,
MCA, which stated that "[a]n employment having no specified term
may be terminated at the will of either party on notice to the
other . . . ," was controlling. We held that, "[t]he Montana
statute create[d] no property interest in employment if there [was]
no specified term" and, therefore, Reiter had no property interest
protected by the United States and Montana constitutions. Reiter,
Moreover, in response to Reiter's contention that the implied
covenant of good faith and fair dealing created a property interest
in employment sufficient to trigger the necessity for due process
procedures, we concluded that this argument could not circumvent
the Itat willmt statute which "clearly denies his claim of
entitlement to continued employment." Reiter, 627 P.2d at 849. We
stated:
Even though appellant may have had an implied
contract with the county by virtue of his longevity of
service, it would be a contradiction in terms to s a y that
he had an I1implied specified" period of employment. A
specified term is one which the parties expressed, and
there was no expression here concerning the length of
employment. Section 39-2-503, MCA, operates to fill the
gap left by the parties by defining the relationship as
an 11at-wi1119employment. While the rule may well be
outdated, it is uniquely a province of the legislature to
change it.
Reiter, 627 P.2d at 8 4 9 .
Importantly, Reiter did not raise, nor did we address, the
effect on the "at willu nature of the plaintiff's employment of the
parties conditioning termination on a demonstration of "just causett
under an administrative regulation adopted by the government. In
fact, we specifically pointed out that Reiter's employment "was not
covered by any written contract or collective bargaining agreement
or ordinance." Reiter 627 P.2d at 847.
In Medicine Horse, citing our holding in ~ e i t e r that the
employee !I. . . had no property interest in his position by virtue
of his years of service, absent a contractually specified term of
ernpl~yment,~~ held that, failing to present a written contract,
we
state law or regulation stating or otherwise indicating that he had
a property interest in his position as custodian, Scott Medicine
Horse was an Itat willH employee without a constitutionally
protected property interest in his continued employment. Medicine
Horse
I 823 P.2d at 233.
Medicine Horse, employed by the Big Horn County School
District for four years, was involved in a number of work-related
problems which culminated in his discharge by the Board of Trustees
at a meeting on December 20, 1988. He requested a hearing after
being informed of the termination. The hearing took place on
January 17, 1989, but the trustees did not take action after the
hearing, and the discharge remained in effect.
Medicine Horse appealed the discharge until it reached the
~istrictCourt on a petition for judicial review under the Montana
Administrative Procedure Act. He contended on appeal that he
should have been provided with written notice of the reasons for
his termination and that he should have received a pre-termination
hearing. Medicine Horse asserted that he was a permanent employee
and, thus, had a property interest in continued employment. The
Board maintained that he was an Itat will1I employee, had
notification of the board's consideration of his termination and
was provided with a post-termination hearing even though it was
discretionary with the trustees.
We agreed with the Board and concluded that Medicine Horse was
an "at wi1l1l employee because his term of employment had no
specific duration. We quoted Board of Regents v. Roth (19721, 408
U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548, for the proposition that
"[a] property interest in one's position must be created by
existing rules or regulations, state laws, or understandings
Medicine Horse, 823 P.2d at 233.
between employee and empl~yer.'~
We then concluded that Medicine Horse was not entitled to a pre-
termination hearing because he could present 'I. . . no written
contract, state law, or regulation specifically stating or
otherwise indicating that he had a property interest in his
position as a custodian." Medicine Horse, 823 P.2d at 233.
In so holding, we rejected various arguments presented by
Medicine Horse in support of his position. We disagreed that the
written policy applicable to his position created a property
interest. We concluded that, under the policy, he could be
"terminated at any time and that a hearing may be provided . . . at
the discretion of the trustees ... [and that the] policy does not
support the appellant's claim of a property interest in his
position.f1 Medicine Horse, 823 P.2d at 233. We also rejected
Medicine Horse's contention that he gained a property interest in
his employment by passing his probationary period and that, having
done so, he reasonably expected that his employment would continue.
Medicine Horse, 823 P.2d at 233-34. Finally, we disagreed with
Medicine Horse's contention that ''at willttemployment was not a
viable doctrine in Montana, stating that "neither [the Wrongful
Discharge From Employment Act] nor any other action by the Montana
Legislature or this Court has nullified the 'at will1 designation
or 5 39-2-503, MCA.lY Medicine Horse, 823 P.2d at 232.
Notwithstanding the various arguments which we rejected, a
careful reading of Medicine Horse reveals that, as in Reiter, we
did not rule on the issue presented in the instant case. To the
contrary, our decision in Medicine Horse, specifically left for
future resolution the case where, unlike Medicine Horse, a
plaintiff did present ". . . [a] state law, or regulation
specifically stating or otherwise indicating that he had a property
interest in his position. ... Medicine Horse, 823 P. 2d at 233.
THE INSTANT CASE
We are, here, faced with that case--an employee who does p o i n t
to specific administrative regulations which state that
disciplinary actions, such as termination of employment, must be
conditioned upon "just causetqand that due process procedures,
including notice and an opportunity to respond, must be followed as
a part of the disciplinary action or termination.
In the instant case, the District Court stated that because
Medicine Horse held that an at will employee did not have a
property interest in continued employment and that the WDFEA did
not alter the statutory at will definition, the WDFEA would not
provide Boreen with a property interest in employment. The
District Court stated that the federal d i s t r i c t court's decision i n
Stokes, relying on Medicine Horse, held that the WDFEA did not
c r e a t e a p r o p e r t y interest i n employment by imposing the good cause
requirement on the termination of an at will employee. The
District Court then concluded that if the WDFEA did not create a
property interest in continued employment, administrative
regulations could not create such a p r o p e r t y interest either.
The problem with that reasoning is that, as discussed in some
detail below, Stokes did not correctly interpret our prior case
law, nor have we addressed directly the issue of w h e t h e r the WDFEA
creates a p r o p e r t y i n t e r e s t i n continued employment t h r o u g h t h e
good cause r e q u i r e m e n t of H 39-2-904 ( 2 ) , MCA. That precise issue,
moreover, is not p r e s e n t l y before this C o u r t , and we a r e n o t
d e c i d i n g that question in this case.
What is at issue are administrative regulations of the
Department of M i l i t a r y Affairs-the S t a t e of Montana--which mandate
that disciplinary actian against its employees, including
discharge, be taken only for ' ( j u s t cause, " as defined, and t h e n ,
only in accordance with the procedures set forth in such
regulations. We conclude that the regulations at issue here
support Boreents argument that she had a property interest in her
continued employment. We further conclude that these regulations
do provide Boreen with a specified term of employment. Under the
regulations, Boreen was entitled to remain i n her position of
employment until there was j u s t cause" for her termination. While
Boreen's term of employment may not have been expressed in days,
months or years, it was, nevertheless, expressed in relation to a
definite period of time during which Boreen could reasanably expect
her employment to continue--i.e., until her employer established
one of the defined "just causen reasons why her employment should
end. Here, the administrative regulations of the State confer upon
employees such as Boreen, a specified term of employment and, in
turn, create a property interest in the continuation of that
employment, absent a demonstration by the employer of just cause
why the employment should be terminated. Medicine Horse, 823 P.2d
at 233.
Moreover, our conclusion that the administrative regulations
at issue provide Boreen with a property interest in continued
employment does not nullify the at will statute. We simply
conclude that Boreen is not an at will employee--i.e., one whose
employment has no specified term, or, as we indicated in Scott v .
Eagle Watch Investments Inc. (1991), 251 Mont. 191, 828 P.2d 1346,
one who is subject to discharge " f o r a good reason, bad reason, or
for no reason at all." Scott, 828 P.2d at 1349.
As we stated in Dare v. Montana Petroleum Marketing Co.
( l 9 8 4 ) , 212 Mont. 274, 687 P.2d 2.015, under certain facts, "the
term of employment. .. [may go]. . . beyond the indefinite period
contemplated in the at will employment statute, Section 39-2-503,
MCA, and. . . [be] . . . founded upon some more secure and objective
basis.I1 Dare, 687 P.2d at 1020. Unlike Reiter and Medicine Horse,
who could point to no contract, statute or regulation protecting
their employment, Boreen is covered by regulations that do protect
her employment. While Reiter and Medicine Horse did not have a
specified term of employment and thus, no entitlement to continued
employment, Boreen is entitled to remain in her job until her
employer establishes "just causevtthat she should be terminated.
While Reiter and Medicine Worse were simply employees at will,
Boreen's employment has gone beyond the indefinite period
contemplated in the at will employment statute, and is founded upon
the "more secure and objective basis" of Itjust causet1mandated by
the State's personnel policies. See Dare, 687 P.2d at 1020.
Boreen can only be terminated for "just cause; she may not be
terminated for a bad reason or no reason at all. Scott, 828 P.2d
at 1349. Simply put, Boreen is not an at will employee. Absent
such an interpretation, the requirements of the regulation would be
meaningless and illusory and would afford the employee little, if
any, protection from or remedy for discharge without "just cause.lv
Our decisions in Medicine Horse and Reitex, which interpret 9 39-2-
503, MCA, are not affected by this ruling; a careful reading of
those cases, in fact, suggests our decision here.
In summary, we hold, that where, as here, the government
employer has, by administrative regulation, limited its ability to
impose on its employee the ultimate form of discipline, i.e.,
discharge, absent a showing of Ifjust cause," as defined in the
regulation, then the employer has, by such regulation, abrogated
the '!at will" employment relationship. Rather, the regulation
creates a specified term of employment. Therefore, the employee is
entitled to expect that his employment will continue until the
employer demonstrates I1just causef' why the employee should be
discharged. Moreover, we hold that such a regulatory scheme
creates a property interest in the employee's continued employment
which is protected by the due process provisions of the federal and
Montana Constitutions.
As mentioned above, following Medicine Horse, two federal
courts, interpreting the decisions of this Court, ruled that the
affected Montana employee had not demonstrated a constitutionally
protected property interest in continued employment. Inasmuch as
Stokes is referred to by the District Court in its decision and
both Stokes and Hollister are raised and vigorously argued in the
briefs, we will discuss those two opinions. In so doing, however,
we emphasize at the outset that we are not constrained by the
interpretations placed upon our decisions by the federal judiciary,
and, as indicated by our opinion here, we necessarily do not agree
with the conclusions of the federal courts involved.
In Stokes, an action filed in United States District court for
the District of Montana - Great Falls Division, Medicine Horse was
discussed at length. In that case, Stokes resigned from her
position with the office of the Clerk and Recorder in Pondera
County. In addition to an action under the Wrongful Discharge from
Employment Act, she filed her 5 1983 action alleging intolerable
working conditions and contending that her constructive discharge
deprived her of due process rights under the Fourteenth Amendment.
The court dismissed her complaint, concluding that it failed to
state a claim cognizable under 5 1983, and declined jurisdiction of
the pendent WDFEA claim. Stokes, at 2.
The defendants asserted that Stokes was an ltatwill1'employee
having no definite term of employment, no legitimate entitlement to
public employment, and accordingly, no constitutionally protected
property interest in her job under Montana law. Stokes contended
that the WDFEA "statutorily createEd] a legitimate entitlement to
continued public employment .. .I1 Stokes, at 4.
The court concluded that Stokest position had been rejected by
this Court in Medicine Worse, citing our holding that Medicine
Horse was an "at will1femployee without a property interest because
his employment was without a specified term. The court also cited
our conclusion that "neither [the Wrongful Discharge from
Employment Act] nor any other action by the Montana Legislature or
[the Montana Supreme] Court has nullified the 'at-willt designation
or section 39-2-503.l' Stokes, at 4-5. The federal district judqe
concluded that the Montana Supreme Court made it clear that an "at
will11employee in the State of Montana had no property interest in
her position of employment. citing our Scott decision, the court
reiterated the caveat that although "Montana has implemented
protective devices through both the Legislature and case law that
operate to curb the harsh effects of the rule, . . . these devices
. . . do not obliterate the at-will rule." Stokes, at 6. The
court concluded that because the WDFEA did not nullify the at will
doctrine, Stokes was an "at willv1 employee; that she had no
property interest in her continued employment; that she, therefore,
was not due the protection afforded by 5 1983; and that,
accordingly, her complaint failed to state a claim upon which
relief could be granted.
The State and Boreen take opposite positions on whether the
court correctly applied our holding in Medicine Horse to the
factual situation presented in Stokes. In any event, Stokes is not
authority for deciding the issue raised in this case. Like
Medicine Horse, Stokes did not point to any administrative
regulation under which she could only be discharged for just cause.
That issue was not even raised in Stokes, much less decided.
Moreover, while we stated in Medicine Horse, that the WDFEA
had not nullified the at will statute, we did not address in that
case, nor do we here, the question of whether the "good cause1I
provision of the WDFEA, in and of itself, creates a property
interest in continued employment. Our focus in Medicine Horse was
on the government policy at issue and on the employee's failure to
point to a contract or state law or regulation creating a property
interest in his employment.
Finally, we consider a recent case decided by the Ninth
Circuit which did deal with the issue presented by Boreen.
Hollister involved an appeal from the federal district court's
dismissal of a 5 1983 claim brought by a legal secretary for the
Rosebud County Attorney. Hollister worked as Rosebud County
Attorney's legal secretary for ten years when she was informed on
November 30, 1990, that she would be terminated effective January
4, 1991. No reasons were given for the termination. The Board of
County Commissioners held a grievance hearing without the presence
of Hollister, but refused to reinstate her.
Hollister brought a civil rights action in federal district
court alleging that she had been deprived of a property right, her
public employment, without due process, as well as other claims
including a breach of the covenant of good faith and fair dealing
and wrongful discharge under 1 5 39-2-901, MCA, et. seq. The
district court granted summary judgment in favor of the defendant
county attorney, concluding that under Montana law, Hollister had
no property interest in her employment and therefore, there could
be no violation of the Fourteenth Amendment. The court also
declined to retain supplemental jurisdiction over the state claims.
Hollister appealed to the court of appeals, maintaining that
she was discharged without due process in violation of her
Fourteenth Amendment rights, arguing that the Rosebud County
Personnel Policy provided her with legal entitlement to continued
provision, the requirement
employment because of the "just causegr
that she receive a post-termination hearing upon request if
discharged and the requirement that she participate in the
retirement program. Hollister, 22 F.3d at 951.
The circuit court stated that in Montana, the at will
employment statute governed the creation of a property interest in
continued employment. The court cited this Court's interpretation
of the statute, stating that "absent a specified term of
employment, contained in a rule, regulation, state law, or
understanding between employer and employee, an employee in Montana
is an employee at will and has no property interest in his job."
Hollister, 22 F.3d at 952. (Citation omitted.) The court
concluded that in the instant case, Hollister could point to no
policy that specified a term of employment, nor was there a statute
or written contract specifying a term of employment; therefore, she
was an at will employee.
Citing Scott and Medicine Horse, the court further stated:
The Montana Supreme court I s treatment of Mont. Code
Ann. 39-2-503 in light of the subsequently enacted
Wrongful Discharge From Employment Act, ...is consistent
with this conclusion. The Act provides, inter alia, that
an at-will employee who is discharged without flgood
cause," is entitled to certain remedies, including lost
wages and benefits up to a specified limit. Nonetheless,
the Act does not abrogate the provisions of the at-will
employment statute, and does not create in at-will
employees a property interest in their jobs.
Hollister, 22 F.3d at 953.
The court concluded that this rationale applied with equal
force to the Rosebud County Personnel Policy provisions relied upon
by Hollister. M\[F]or cause1 and similar provisions in employment
contracts, handbooks, or statutes, that fall short of an explicit
agreement as to a term of employment do not give an employee a
property interest in her job." Hollister, 22 F.3d at 953, citing
Reiter, 627 P.2d at 849. Under Montana law, the court continued,
neither a lljust cause1' hearing nor mandatory retirement plan
provisions in the personnel policy can be read as implying a
specified term of employment. "The provisions of the County
Personnel Policy, taken individually or together, do not amount to
an 'expression . . . concerning the length of employment. 'I1
Hollister, 22 F . 3 d at 953.
Without belaboring its reasoning, we simply do not agree with
the court's application of our prior case law to the facts in
Hollister. Simply put, we have not heretofore addressed the issue
raised in Hollister, which issue is now raised in the instant case-
-i.e. , a public employee who can point to a specific administrative
regulation or government policy that conditions disciplinary action
upon "just cause. Notwithstanding the federal court's
interpretations of Reiter and Medicine Horse, we clearly suggested,
in the latter case, a contrary interpretation under the appropriate
facts. "Medicine Horse presented no . . . regulation specifically
stating or otherwise indicating that he had a property interest in
his position . . . The written policy . . . [allowing for
termination at any time and a discretionary hearing] . . . does not
support the appellant's claim of a property interest in his
position." Medicine Horse, 823 P.2d at 233.
By way of summary, in Reiter we rejected a claim that length
of employment, being a supervisor and receiving job-related
financial benefits would give rise to a property interest in
employment. Reiter, 627 P.2d at 849. In Medicine Horse the
employee did not base his claim on a l1justcauseI1 regulation, but
on an ambivalent school district policy and on his length of
tenure. The two cited federal court decisions to the contrary
notwithstanding, a close reading of our prior cases clarifies that
we have not heretofore decided the issue presented in the instant
case; we have never held that an at will employment relationship
cannot be altered by the employer conditioning the employee's
termination on a finding that there is "just causel1 or, as the
State defines that term in the regulations at issue here,
ttreasonable,
job-related grounds for taking a disciplinary action
based on failure to satisfactorily perform job duties or disruption
of agency operations." § 2.21.6507(6), ARM.
Finally, given the concerns expressed by amici, Montana League
of Cities and Towns and Montana Association of Counties, to the
effect that our decision here will have "significant impact upon
local government operationsv1
and will wsubstantially redefine the
nature of the employment relationship between public entity
employers and their at will public employee^,^^ it is, perhaps,
appropriate to emphasize the obvious.
First, our decision in this case pertains only to those
employees who, like Boreen, can point to some written contract,
state law, or regulation which states or otherwise provides a
specified term of employment and, hence, a property interest in
continued employment.
Second, nothing in this decision provides a public employee
protected by the type of regulations or policies at issue here with
1ife-time job tenure and immunity from discharge. Our decision
here confers upon a public employee like Boreen nothing more than
what the regulations applicable to the employment at issue already
provide.
Third, w e have determined that regulations such at those at
issue here create a property right to continued employment, absent
the employer's demonstration of just cause. As a consequence,
Loudermill mandates that due process requires notice to the
employee with an explanation of the employer's evidence and the
opportunity for the employee to respond in "something lesst1than a
full evidentiary hearing before termination. Loudermill, 470 U.S.
at 545-46. Such requirements, the purpose of which are merely to
guard against a mistaken decision, do not impose an intolerable
administrative burden upon the government when balanced against the
catastrophic consequences to the employee of losing his or her job
and very means of support. Loudermill, 470 U.S. at 543-45.
On the basis of the foregoing discussion, we hold that
Boreen's complaint did state a claim upon which relief could be
granted, and, accordingly, we reverse and remand this case to the
District Court for further proceedings consistent with this
opinion.
REVERSED and REMANDED.
We Concur:
Justices
APPENDIX A
2.21.6506 P O L I C Y AND OBJECTIVES (1) It is the policy of
the state of Montana that:
(a) state employees who fail to perform their jobs in a
satisfactory matter or whose behavior otherwise
interferes with or disrupts agency operations be subject
to disciplinary action, up to and including discharge;
(b) disciplinary action be administered for just cause,
as defined in this policy; and
(c) an employee be informed of the cause for disciplinary
action and offered the opportunity to respond.
(Administrative Rules of Montana 6/30/84 2-1493 (page)
2.21.6507 DEFINITIONS
(6) "Just causeu means reasonable, job-related grounds
for taking a disciplinary action based on failure to
satisfactorily perform job duties or disruption of agency
operations. Just cause includes, but is not limited to,
an actual violation of an established agency standard,
legitimate order, policy, or labor agreement, failure to
meet applicable professional standard or a series of
lesser violations, if the employee would reasonably be
expected to have knowledge that the action or omission
may result in a disciplinary action.
(7) '!Due processIt means ensuring an employee:
(a) is informed of the action being taken and the reason
for it; and
(b) has an opportunity to respond to and question the
action and to defend or explain the questioned behavior
or actions.
(11) "Dischargen means, for purposes of this policy, the
termination of an employee's employment for just cause.
2.2 1 . 6 5 0 9 FORMAL DISCIPLINARY ACTIONS (1) When formal
disciplinary action is necessary, just cause, due process
and documentation of facts are required. Formal
disciplinary actions include, but are not limited to,
written warning, suspension without pay, disciplinary
demotion and discharge.
(2) Management shall, when appropriate, use progressive
discipline. However, the appropriateness of using
progressive discipline in each case lies within the
discretion of management. The specific disciplinary
actions taken and the order in which disciplinary actions
are taken depends on the nature and severity of the
performance deficiency or behavior that disrupts agency
operations. Discharge should not be an initial
disciplinary action expect in severe cases of
unsatisfactory performance or behavior that disrupts
agency operations.
(3) Each formal disciplinary action shall include a
written notification to the employee which includes, but
is not limited to, the following:
(a) the just cause for the disciplinary action;
(b) the disciplinary action to be taken, including dates
and duration where applicable;
(c) the improvements or corrections expected, and the
consequences of failure to make the required improvement
or correction, if applicable.
(4) The employee shall be offered the opportunity to
review, sign, and date any notice of a formal
disciplinary action and shall have the opportunity for
verbal and/or written response. The employee's signature
indicates that the employee has had the opportunity for
review, but not necessarily that the employee agrees with
the action. If the employee refuses to sign, a witness
to such refusal, in addition to the supervisor, shall
sign and date the notice.
(5) Where notices cannot be issued in person, they should
be delivered by certified mail.
(6) All formal disciplinary actions must be documented.
Documents will be maintained in accordance with the
employee record keeping policy, ARM 2.21.6601 et. seq.
2.21.6522 C L O S I N G (1) This policy shall be followed
unless it conflicts with negotiated labor contracts or
specific statutes, which shall take precedence to the
extent applicable.
October 20, 1994
CERTIFICATE OF SERVICE
I hereby certify that the following certified order was sent by United States mail, prepaid, to the
following named:
Peter Michael Meloy, Esq.
THE MELOY LAW FIRM
P. 0. Box 1241
Helena, MT 59624
Won. Joseph P. Mazurek, Attorney General
James Scheier, Assistant
Justice Building
Helena, MT 59620-1402
Stanley T. Kaleczyc
Browning, Kaleczyc, Berry & Hoven, P.C.
P+O.Box 1697
Helena, MT 59624
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF ,MONTANA