Jarvenpaa v. Glacier Electric Cooperative, Inc.

                            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