No. 94-377
IN THE SUPREME COURT OF THE STATE OF MONTANA
1995
DONALD JARVENPAA,
Plaintiff and Appellant,
APPEAL FROM: District Court of the Ninth Judicial District,
In and for the County of Glacier,
The Honorable John Warner, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Robert P. Goff and Jean E. Faure, Church, Harris,
Johnson and Williams, Great Falls, Montana
For Respondent:
Gary R. Christiansen, Warden, Christiansen,
Johnson & Berg, Kalispell, Montana
Submitted on Briefs: December 6, 1994
Decided: July 11, 1995
Filed:
Honorable Dorothy McCarter, District Judge, delivered the Opinion
of the Court.
The plaintiff, Donald Jarvenpaa, brought this action alleging
that he was wrongfully discharged by defendant Glacier Electric
Cooperative, Inc. (Glacier). Glacier moved for summary judgment,
which was granted by the District Court for the Ninth Judicial
District, Glacier County. Jarvenpaa appeals from this order. We
reverse and remand.
Jarvenpaa began working for Glacier in 1962 and was Manager of
Operations at the time of the alleged discharge. On September 29,
1992, Jarvenpaa's supervisor advised him that his employment would
be terminated on December 31, 1992, because of problems with his
job performance. Jarvenpaa was also informed that he could choose
to retire prior to being dismissed and could accept a "Special
Early Retirement Package" (SERP) which was being offered to five
eligible employees. David Chapman, General Manager of the Board of
Trustees, stated in a letter to Jarvenpaa dated November 2, 1992,
l'[Ylou are being offered two options--retire under SERP or be
terminated December 31, 1992. I have not made, and do not herein
make any offer to negotiate further." Jarvenpaa responded on
November 10, 1992, that he did not believe that Glacier had any
basis to terminate his thirty-year employment, but "in view of your
ultimatum that if I do not accept the offer of early retirement I
will be terminated, I obviously have no alternative in this matter.
Accordingly, with reluctance, I accept the offer to retire under
SERP as set forth in your letter of November 2, 1992."
2
Jarvenpaa subsequently filed this suit for wrongful discharge.
The District Court granted Glacier's motion for summary judgment.
Although the court concluded that retirement can be a form of
discharge under § 39-Z-903(2), MCA, it found that, in this case,
retirement was not a discharge because the employee signed an
acknowledgement that his retirement was voluntary, and he accepted
the benefits of the retirement package; he could have waited to be
fired and then file an action for wrongful discharge. The court
also concluded that the "retire or be fired" ultimatum was not a
constructive discharge under § 39-2-903(l), MCA, because the choice
between discharge and retirement cannot be said to be so intolera-
ble that voluntary termination, in this case retirement, is the
only reasonable alternative.
Our standard of review from a grant of summary judgment is the
same as that of the district court under Rule 56(c), M.R.Civ.P.
Summary judgment is proper when there is no genuine issue of
material fact and the moving party is entitled to judgment as a
matter of law. However, summary judgment is not a substitute for
a trial on the merits. Morton v. M-W-M, Inc. (19941, 263 Mont.
245, 249, 868 P.2d 576, 578-79.
All reasonable inferences must be drawn in favor of the party
opposing the motion. In making its determination, the court must
consider the entire record. Smith v. Barrett (1990), 242 Mont. 37,
40, 788 P.2d 324, 326.
3
Summary judgment motions, however, clearly are not favored.
'l[T]he procedure is never to be a substitute for trial if a factual
controversy exists." Reaves v. Reinbold (19801, 189 Mont. 284,
288, 615 P.2d 896, 898. If there is any doubt as to the propriety
of a motion for summary judgment, it should be denied. Rogers v.
Swingley (1983), 206 Mont. 306, 312, 670 P.Zd 1386, 1389; Cheyenne
Western Bank v. Young (1978), 179 Mont. 492, 496, 587 P.2d 401,
404.
The primary issue in this case, simply stated, is whether an
employee, presented with a choice between being fired or accepting
an early retirement package, has been "discharged" for purposes of
bringing an action under Montana's Wrongful Discharge From
Employment Act.
Montana has chosen to protect the rights of a worker to
challenge the validity of an employer's decision to terminate his
or her employment. While Montana law still provides that, absent
provisions to the contrary, employment is "at will," under the
Wrongful Discharge From Employment Act, an employer in most cases
must have good cause to fire an employee. "Good cause" is defined
in the Act as "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 reasons."
Section 39-2-903(5), MCA.
In most cases the situation presented is one where the
employment was actually terminated by the employer. The Wrongful
4
Discharge From Employment Act, however, also allows for those
situations in which the employer has made working conditions so
intolerable that the employee is forced to quit--i.e., a construc-
tive discharge. Under the Act, this type of situation is no less
wrongful than an actual firing. Constructive discharge is defined
in the Act as "the voluntary termination of employment by an
employee because of a situation created by an act or omission of
the employer which an objective, reasonable person would find so
intolerable that voluntary termination is the only reasonable
alternative." Section 39-2-903(l), MCA. This definition is
essentially the same as we defined constructive discharge in our
pre-Act cases. Kestell v. Heritage Health Care Corp. (1993), 259
Mont. 518, 524, 858 P.2d 3, 6-7. We have held that in determining
"whether an employee has been constructively discharged, the fact
finder must decide whether the employer has rendered working
conditions so intolerable that resignation is the only reasonable
alternative." Kestell, 858 P.2d at 7. This determination must be
based on the totality of the circumstances, not on the employee's
subjective judgment that working conditions are intolerable.
In the case before us, the termination was initiated by the
employer when it issued its ultimatum to the employee that he would
be fired if he did not accept the retirement package. The
employer's statements to this effect were clear and unequivocal.
Other courts have held that where an employer tells an employee to
resign or be fired, the resignation can be a constructive dis-
5
charge. Sheets v. Knight (Or. 1989), 779 P.Zd 1000; Cameron v.
Beard (Alaska 19931, 864 P.2d 538. See also Dept. of Air Force v.
- -
Dept. of Emp. Sec. (Utah App. 1990), 786 P.2d 1361, 1365 (where
employee resigned in the face of inevitable discharge, the
termination was initiated by the employer and was not a voluntary
termination)
In Gates v. Life of Montana Ins. Co. (1982), 196 Mont. 178,
638 P.Zd 1063, appeal after remand 205 Mont. 304, 668 P.2d 213
(198X), a pre-Act case, the employer asserted that the employee
voluntarily resigned, but the employee argued that she signed a
letter of resignation under duress when she was given the option of
resigning or being fired. We noted that the threshold factual
issue of whether the employee's termination was voluntary or
involuntary should be submitted to the factfinder. Gates, 6 3 8 P.2d
at 1066. However, we have not yet been presented with a situation
in which an employee, such as Jarvenpaa, is given a "retire or be
fired" choice and chooses the alternative of accepting early
retirement rather than the alternative of being fired.
Discussions of when an offer of early retirement actually
amounts to a discharge occur most frequently in age discrimination
cases. While the elements of an age discrimination claim differ
from those in the case before us, the issues involved in determin-
ing whether this was in fact a forced termination or a voluntary
retirement are substantially the same. Therefore we look to those
cases for guidance.
An offer of early retirement does not by itself constitute
constructive discharge. Early retirement often provides a
beneficial way for older employees to leave the work place
[Mlost courts have found that an offer of early retire-
ment constitutes a constructive discharge only when the
offer is made under terms and conditions where the
employee would be worse off whether or not he or she
accepted the offer. More simply stated, an offer of
early retirement constitutes a constructive discharge
when the choice is essentially either early retirement or
continuing to work under intolerable conditions, like the
threat of termination without benefits.
Smith v. World Ins. Co. (8th Cir. 1994), 38 F.3d 1456, 1461
(citations omitted).
Early retirement is not a discharge if the employee has the
power to choose to keep working.
Absent the right to decline an employer's offer of early
retirement and keep working under lawful conditions, the
"decision" to take the early retirement "option" is no
decision at all. A "choice" between not working with
benefits and not working without benefits amounts to, in
effect, compulsory retirement.
Hebert v. Mohawk Rubber Co. (1st Cir. 1989), 872 F.2d 1104, 1113.
Without this option to choose to keep working, "an employer's offer
of a choice between early retirement with benefits or discharge
without benefits is nothing other than a discharge." Hebert, 872
F.2d at 1113. In reaching this holding, the First Circuit consid-
ered and rejected the reasoning of the Sixth Circuit in Ackerman v.
Diamond Shamrock Corp. (6th Cir. 1982), 670 F.2d 66.
The standard for determining when a constructive discharge has
occurred is virtually the same as that found in the Wrongful
Discharge From Employment Act.
[Tlhe law regards as the functional equivalent of a
discharge those offers of early retirement which, if
refused, will result in work so arduous or unappealing,
or working conditions so intolerable, that a reasonable
person would feel compelled to forsake his job rather
than submit to looming indignities.
Vega v. Kodak Caribbean, Ltd. (1st Cir. 1993), 3 F.3d 476, 480. In
applying this standard to an offer of early retirement,
a plaintiff who has accepted an employer's offer to
retire can be said to have been constructively discharged
when the offer presented was, at rock bottom, "a choice
between early retirement with benefits or discharge
without benefits," or, more starkly still, an "impermis-
sible take-it-or-leave-it choice between retirement or
discharge."
Veqa, 3 F.3d at 480.
In the case before us, the Board of Trustees voted on
September 28, 1992, to offer the SERP to all five eligible employ-
ees. One day later, Jarvenpaa was informed that he would be fired
if he did not accept the retirement package. He was specifically
threatened with loss of health insurance benefits if he waited to
be fired. From these facts, a reasonable jury could conclude that
Jarvenpaa was in fact forced to retire and that his termination was
not voluntary. A statement by an employer that the employee might
be discharged, with a consequent loss of benefits, creates a
contested issue of material fact regarding constructive discharge
even if the employee accepts an early retirement offer; a reason-
able person, faced with a loss of benefits if he waits to be
discharged rather than accept retirement, might well feel compelled
to resign. Downey v. Southern Natural Gas Co. (5th Cir. 1981), 649
F.2d 302, 305.
8
The employer makes much of the fact that Jarvenpaa's lump sum
benefit under the SERP was considerably greater than his entitle-
ment if he were terminated. However, there is no indication in the
record that Jarvenpaa was offered any greater benefits than any of
the other employees eligible for the SERP. Furthermore, these
benefits were substantially less than Jarvenpaa asserts he would
have received if he had been allowed to continue working until his
normal retirement, a choice which he did not have.
The problem with the employer's argument is the same as that
encountered in age discrimination cases; it would permit an
employer to escape the consequences of age discrimination or, in
this case, alleged wrongful discharge, by presenting an employee
with a Hobson's choice of being fired or of taking the retirement
package offered. The employer can thus rid itself of what it
perceives to be a problem employee without having to account for
its action. While the amount of the retirement benefit which he
received is relevant to the amount of damages due to Jarvenpaa if
he succeeds in this lawsuit, it is not determinative of whether his
termination was voluntary or not. "The fact that [the employee],
when confronted with the retire-or-be-fired choice, bargained for
all that he could get in the way of benefits simply does not change
the fact that this was, at bottom, a forced retirement, not a
voluntary one." Hebert, 872 F.2d at 1113.
One point that needs to be kept in mind is that we do not
decide here whether Jarvenpaa will prevail on his wrongful
9
discharge claim. We do not decide whether Glacier's actions to
terminate him were wrongful. That is for the trier of fact to
decide. What we do decide here is that the circumstances in this
case constitute a discharge, rather than a voluntary termination of
employment, and therefore Jarvenpaa's case is sufficient to survive
a motion for summary judgment.
We reverse the District Court's grant of summary judgment and
remand for proceedings consistent with this Opinion.
Ll p-r L&/tL~
Hon. Doroth$ McCarter, District
Judge, sitting in place of
Justice James C. Nelson
We concur:
I Chief Justice
Justices
Hon. Ted L. Mizner, District
Judge, sitting in place of
Retired Justice John C.
Harrison
10
Justice Fred J. Weber dissents as follows:
The opinion states the primary issue in this case as follows:
The primary issue in this case, simply stated, is
whether an employee, presented with a choice between
being fired or accepting an early retirement package, has
been "discharged" for purposes of bringing an action
under Montana's Wrongful Termination Act.
In its summary judgment, the District Court speaking to that same
issue stated:
Choosing to accept the available retirement option
was the same as entering into an employment contract or
settling a lawsuit, which is another form of agreement.
Jarvenpaa agreed that he would retire and accept the
benefits and detriments of doing so. Thus, while he may
have been discharged, such discharge could not be
unlawful.
Prior to discussing the merits of the holding of the opinion in
this case as compared to the District Court, I believe it is
essential to more fully set forth the basis on the part of the
District Court for its decision on summary judgment. Following are
pertinent portions of that Order:
The undisputed facts of this case are as follows:
Sometime prior to October 23, 1992, plaintiff Donald
Jarvenpaa's supervisor told him he, Jarvenpaa, would be
terminated on December 31, 1992. In the alternative,
Glacier offered Jarvenpaa the opportunitv to take earlv
retirement which would provide Jarvenpaa with over
$100,000 in retirement benefits (beyond what he would
receive if discharged) and would allow him to continue to
participate in Glacier's health care plan. Jarvenpaa
chose to retire and took a retirement package of over
$300,000, plus continued coverage under Glacier's health
care plan. This retirement package was available to
other qualified employees of Glacier.
Jarvenpaa clams that his choice to retire was a
"Hobson's choice," no choice at all, and that he was
coerced into resigning.
Glacier claims that Jarvenpaa's choice to accept
early retirement precludes any possibility of a finding
that Jarvenpaa was discharged.
11
The definition of the term "discharge" includes
resignation. § 39-2-903(Z), Mont. Code Ann. (1991). It
does not specifically include retirement. However, as
retirement is a form of termination of employment it
appears to be included in the statutory definition of
discharge.
On January 14, 1993, Jarvenwaa signed an EMPLOYEE'S
ELECTION TO ACCEPT SPECIAL EARLY RETIREMENT WINDOW which
states that Jarvenwaa's choice to accewt the earlv
retirement was "voluntarv and . . made of [Jarvenpaa's]
own free will."
Jarvenwaa accepted the benefits of earlv retirement.
Glacier paid Jarvenwaa over $100,000 for his election to
retire. Also, Jarvenpaa was allowed to continue to
participate in Glacier's employee health care plan (with
premiums paid by Jarvenpaa.)
Jarvenwaa's signed acknowledgement that his
retirement was voluntarv and his acceptance of the
benefits provided under the early retirement aqreement
precludes Jarvenwaa as a matter of law from recoverv
under Title 39, Chapter 2, part 9, Mont. Code Ann.
(Emphasis supplied.)
While not specifically quoted by the District Court in its Order,
it is undisputed that the plaintiff and his wife signed the
Employee's Election to Accept Special Early Retirement Window which
is attached to plaintiff's deposition as Exhibit H and which in
pertinent part states:
The undersigned employee of Glacier Electric
Cooperative, Inc. (the "Cooperative"), and his/her
spouse, acknowledge that they have been presented with a
copy of the Board Resolution that makes available a
Special Early Retirement Window (the "Retirement Window")
for certain employees of the Cooperative, and that they
have had a full explanation of the Retirement Window, and
opportunity to ask all questions concerning it that they
wish to ask.
The undersigned employee and his/her spouse
acknowledge that during the window period of 3 months,
they have had ample time to examine the provisions of the
Retirement Window and consult with anyone they wish. The
undersigned parties understand that the emplovee’s
election under the Retirement Window is voluntary and
state that this election is made of the employee’s own
free will.
The undersigned employee hereby elects to
participate in the Retirement Window. .
12
The undersigned spouse of the undersigned employee
states that he/she agrees with the election of the
employee under the Retirement Window.
I conclude that the following undisputed facts which are
contained in plaintiff's deposition are also relevant on this
issue:
(Questioning by defense counsel)
Q: . ..Now. as I understand it, and we know from the
record that you elected the Special Early Retirement
Program, my understanding is you took the lump sum option
under that program and received money in a lump sum; is
that correct?
A: That's correct.
Q: And if I understand the payments that you received,
you basically got $302,000 as a lump sum under the
special program, you got 15,700 and some dollars for
contributions that you had made into the program, and you
also received 25,000 and almost $900 for accrued vacation
and leave and so forth. Is that accurate?
A: Sounds close.
Q: Can you think of any checks I missed out on?
A: Not offhand, no.
Q: Okay.
A: YOU got, what did you say, 302?
Q: I got 302.
A: Plus 157
Q: Plus 15, plus 25
A: Okay. Pretty close, I guess
An important fact to keep in mind is that, as a part of this Early
Retirement, the plaintiff received something over $340,000 in cash,
and after receipt of that, he then commenced the present lawsuit.
13
It is also important to keep in mind one of the facts which
was considered and referred to by the District Court. The special
retirement accepted by the plaintiff required the expenditure of
over $100,000 additional funds by defendant. Again, this is
demonstrated in plaintiff's deposition where he stated as follows:
Q: All right, now, what I want to ask you is, do you
know how much it cost the co-op to buy you that special
retirement program that you have taken the money from?
A: I have no idea.
Q: Okay. Well, I think that there's some
correspondence in here, maybe the November 2 letter, I'm
not sure, but are you aware the co-op paid about $106,000
to get you eligible for that Special Early Retirement
Program? Does that number mean anything to you?
A: No.
Q: Hundred thousand sound like a ball park figure?
A: Well, are you saying if I was terminated -- I know
if I was terminated, I'd get 200 according to that letter
there, and if I didn't, I would get 300.
Q: So you got really $100,000 more as part of your lump
sum because you took the special retirement; right?
A: Right.
Q: All right. Now, what I don't understand is why are
you saying you were actually discharged when you elected
the special --
A: I only had one option or the other.
Q: I understand that
A: Okay.
Q: Now, if you lose this lawsuit, are you prepared to
pay back to the co-op the hundred and some thousand
dollars 'chat they have paid to give you the special
retirement program that you took?
A: Do you think I should?
14
Q: I'm asking you.
A: No, I wouldn't.
Q: Why not?
A: Well, why would I?
Q: Why not?
A: I don't feel that I should
We emphasize that the extra $100,000 is clearly consideration for
early retirement paid by the defendant Glacier Electric to the
plaintiff.
In its Order the District Court pointed out that plaintiff was
not compelled to retire in the form that he did and was free to
remain employed until discharged when he would receive substantial
benefits, although less than he received by retiring, and seek
compensation for the discharge in a lawsuit. The District Court
stated:
Jarvenpaa was free to remain employed until
discharged and then seek compensation for the discharge
if he believed it to be without good cause. He would
have received all he was entitled to and if he was
successful in his lawsuit he would have received damages.
Instead, Jarvenpaa chose to accept early retirement and
the benefits appurtenant thereto. He did have a choice.
The retirement was available to him, and others, and it
did not entail the risk that he would be unsuccessful in
a lawsuit alleging an unlawful discharge.
This properly emphasizes the distinction between this case and
several of the cases cited in the opinion here. This was not a
case in which a plaintiff was required to resign or he would
receive no benefits.
By accepting early retirement, the plaintiff required that the
defendant spend over $100,000 of additional funds to purchase the
15
retirement benefits which he has now received. The analysis of the
District Court on this aspect was directly on point when the
District Court stated:
Choosing to accept the available retirement option
was the same as entering into an employment contract or
settling a lawsuit, which is another form of agreement.
Jarvenpaa agreed that he would retire and accept the
benefits and detriments of doing so. Thus, while he may
have been discharged, such discharge could not be
unlawful.
This is a key aspect of this case. This is directly
comparable to the settling of a lawsuit by agreement which includes
the payment of substantial monies to the settling plaintiff.
The opinion points out that in most cases the situation
presented is one where the employment was actually terminated by
the employer, which of course does not apply here. The opinion
then points out that the Wrongful Discharge Act covers those
situations where the employer has made working conditions so
intolerable that the employee is forced to quit--a constructive
discharge. I disagree with the analysis because I find no basis to
conclude there was something which could be called a constructive
discharge. I agree with the analysis of the District Court which
stated:
Glacier's notice that if he chose not to retire,
Jarvenpaa would be terminated for what Glacier considered
good cause but Jarvenpaa did not, does not constitute a
constructive discharge.
"'Constructive discharge' means the
voluntary termination of employment by a
employee because of a situation created by an
act or omission of the employer which an
objective, reasonable person would find so
intolerable that voluntary termination is the
16
only reasonable alternative." 5 39-2-903 (1) ,
Mont. Code Ann. (1991).
The choice between discharge and retirement cannot
be said to be "so intolerable that voluntary termination
[or retirement1 is the only reasonable alternative."
The Court concludes that Jarvenpaa voluntarily
retired. Accordingly, his claim for wrongful discharge
must fail.
Certainly the constructive discharge statute does not apply to
this type of a situation as there is an absence of a situation
which was so intolerable that voluntary termination was the only
reasonable alterative. That analysis is just not applicable here.
I agree with the holding of the District Court that plaintiff
Jarvenpaa voluntarily retired and therefore his claim for wrongful
discharge fails.
I have emphasized the facts in this case because such facts do
not warrant the technical legal application or analysis which is
applied in the opinion. The uncontradicted facts as established
primarily through the deposition testimony of plaintiff Jarvenpaa,
establish that there were numerous and clear grounds, as viewed by
the employer, to discharge Jarvenpaa. Those conditions were viewed
by the employer as being so intolerable as to require his
discharge. In its analysis, the employer took into consideration
the approximate 30 years of employment by plaintiff Jarvenpaa and
concluded it was fair to allow him to retire under the Special
Early Retirement package, even though that required an additional
expenditure of over $100,000 on the part of the employer. At a
time when plaintiff was represented by counsel, he executed his
17
Employee's Election to Accept in which he specifically stated as
follows :
The undersigned parties understand that the
employee's election under the Retirement Window is
voluntary and state that this election is made of the
employee's own free will.
This is not a case in which the employee was forced to sign this
without benefit of counsel. All of the exhibits to which reference
has been made were furnished by the defendant Glacier Electric to
plaintiff's counsel and were considered by that counsel who in turn
prepared various of the papers submitted by the plaintiff employee.
I agree with the analysis of the District Court which concluded
that Jarvenpaa agreed (with the advice of his own counsel) that he
would retire and accept the benefits and detriments of doing so.
Under that circumstance it is unjust to allow the present action to
continue.
I would point out that the opinion must be construed by the
employer as setting a precedent which tells the employer that it
made a mistake when it put up an additional $100,000 plus in order
to buy a retirement program and its peace--it should just have said
we have an adequate basis to discharge and then do so--making such
a discharge we will not consider the number of years of employment
or any positive factors in the employee's favor. The opinion has
the effect of inviting extended litigation in connection with the
various early retirement plans which have been recently used
throughout Montana, and even by the State government itself.
18
Chief Justice J.A. Turnage and District Judge Ted L. Mimer
(sitting for Justice W. Willi
dissent.
ef Justice
19