Indian Health Board of Billings, Inc. v. Montana Department of Labor & Industry , 341 Mont. 411 ( 2008 )

February 12 2008
DA 06-0491
IN THE SUPREME COURT OF THE STATE OF MONTANA
2008 MT 48INDIAN HEALTH BOARD OF BILLINGS, INC.,
Petitioner and Appellee,
v.
MONTANA DEPARTMENT OF LABOR AND
INDUSTRY, MONTANA HUMAN RIGHTS
COMMISSION, and LITA PEPION,
Respondents and Appellants.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark, Cause No. ADV-2005-838
Honorable Dorothy McCarter, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
Marieke Beck, Special Assistant Attorney General, Helena, Montana
For Appellee:
Thomas M. Malee, Attorney at Law, Billings, Montana
Submitted on Briefs: May 9, 2007
Decided: February 12, 2008
Filed:
__________________________________________
Clerk
Justice Patricia O. Cotter delivered the Opinion of the Court.
¶1 Lita Pepion filed a complaint with the Department of Labor and Industry’s (DOLI
or the Department) Human Rights Bureau challenging her termination from employment
with the Indian Health Board of Billings, Inc. (IHBB). Twelve months after Pepion’s
complaint had been filed, IHBB sought dismissal of the complaint and a “Right to Sue”
letter on the ground that DOLI had failed to hold a timely contested case hearing. The
Bureau’s hearing examiner denied IHBB’s request. The IHBB filed a Petition for
Judicial Review of Agency Order with the First Judicial District Court, Lewis and Clark
County, naming both DOLI and Pepion as Respondents. The District Court reversed and
remanded the administrative order with instructions to dismiss the complaint and issue a
“Right to Sue” letter. Pepion appeals. We affirm the District Court’s Decision and
Order.
ISSUE
¶2 A restatement of the issue presented on appeal is:
¶3 Did the District Court err in reversing DOLI’s Hearings Bureau’s decision
denying IHBB’s request to dismiss Pepion’s complaint?
FACTUAL AND PROCEDURAL BACKGROUND
¶4 Lita Pepion (Pepion) worked for IHBB from November 2003 to September 2004.
In June 2004 IHBB terminated her employment. She appealed her termination and was
reinstated. In September 2004 IHBB terminated her again asserting an absence of
funding for her position. Upon notice of her second termination, Pepion made a formal
allegation of sexual harassment with DOLI.
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¶5 The facts of the underlying case are not in dispute; therefore, Pepion’s
administrative case raised a purely legal question—did the Department lose jurisdiction
of Pepion’s human rights complaint when a contested case hearing on her complaint was
not held within twelve months? The following administrative procedural history
establishes the background for our analysis.
¶6 On November 1, 2004, Pepion filed a complaint for harassment and retaliatory
discharge with DOLI’s Human Rights Bureau (the Bureau). The Bureau investigated the
complaint and on May 3, 2005, issued its report finding that the preponderance of the
evidence did not indicate that the alleged discrimination occurred. The Bureau thereafter
dismissed Pepion’s complaint and issued a “Right to Sue” letter allowing Pepion to take
her claim before the appropriate district court, if desired. Pepion chose instead to
continue pursuing the available administrative remedy and filed an objection to the
Bureau’s decision with DOLI’s Human Rights Commission (the Commission). The
Commission held a hearing on July 19, 2005, to consider the adequacy of the
investigator’s report. On July 26, 2005, the Commission determined that Pepion could
continue pursuing her administrative remedy and remanded the complaint back to the
Bureau for the scheduling of a contested case hearing.
¶7 Upon receipt of the complaint and the Commission’s order of remand, the
Bureau’s hearing examiner issued a “Notice of Hearing” on August 15, 2005 (Notice).
The record indicates that acknowledgment of service of the Notice had been signed by all
parties by August 23, 2005. This Notice notified all parties that the claim had been
transferred to the Hearings Bureau for a contested case hearing. It also indicated that the
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hearing examiner would set the case for hearing within 90 days of the date of service of
the last party served. On August 31, 2005, in accordance with the Notice, the hearing
examiner issued an “Order Setting Contested Case Hearing Date and Prehearing
Schedule.” The Order scheduled a contested case hearing for November 17, 2005.
¶8 On October 3, 2005, counsel for Pepion made a special appearance before the
hearing examiner and requested a continuance of scheduled depositions and a
rescheduling of the contested case hearing. The record before us does not reveal the
grounds for this request, but upon “good cause shown” the hearing examiner granted
Pepion’s request. As a result, on October 4, 2005, the hearing examiner issued an “Order
Continuing 10/4 Depositions and Resetting Contested Case Hearing Date and Prehearing
Schedule.” In this Order, the contested case hearing was reset for January 5, 2006. The
following day the hearing examiner vacated this Order, apparently on the ground that the
January 5 hearing date was not within 90 days of the October 4 Order—it was 93 days.
On October 11, 2005, the hearing examiner reissued its Order, once again setting the
contested case hearing for January 5, 2006.
¶9 As of November 1, 2005, Pepion’s complaint had been before DOLI for one year;
therefore, relying on § 49-2-509, MCA (2005), IHBB requested that the complaint be
dismissed for failure of the Department to hold a contested case hearing within twelve
months of the complaint’s filing. On November 4, 2005, the hearing examiner denied
IHBB’s request based upon his interpretation that the statutory provisions mandating
dismissal after 12 months were not applicable to the case before him. On December 5,
2005, IHBB filed a Petition for Judicial Review of Agency Decision with the First
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Judicial District Court. On May 11, 2006, the District Court agreed with IHBB and
reversed and remanded the case to the Hearing examiner with instructions to dismiss
Pepion’s complaint and issue a “Right to Sue” letter, thus concluding administrative
proceedings.
¶10 Pepion filed a timely appeal.
STANDARD OF REVIEW
¶11 An agency’s conclusions of law are reviewed to determine if they are correct.
This same standard of review is applicable to both the district court’s review of the
administrative decision and our subsequent review of the district court’s decision. Hofer
v. Montana DPHHS (In re Hofer), 2005 MT 302, ¶ 14, 329 Mont. 368, ¶ 14, 124 P.3d
1098, ¶ 14 (citations omitted).
DISCUSSION
¶12 Did the District Court err in reversing DOLI’s Hearings Bureau’s decision
denying IHBB’s request to dismiss Pepion’s complaint?
¶13 We begin our analysis with the observation that the statutes at issue here are both
complex and poorly written, an unfortunate combination of factors that has contributed to
the situation facing the parties, the hearing examiner, the District Court, and this Court.
Moreover, the 2007 legislature amended the subject statutes in some detail, and in fact
repealed § 49-2-509, MCA, upon which much of our analysis here is predicated. (After
revising the language, much of the content of § 49-2-509, MCA (2005), has been codified
in § 49-2-513, MCA (2007).) Because this case arose in 2005, we will analyze it
pursuant to the statutes in effect in 2005.
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¶14 Title 49, Chapter 2 of the Montana Code Annotated governs various illegal
discrimination claims including the type of employment discrimination claim in the case
before us. Part 5 of Title 49, Chapter 2, establishes the enforcement procedures for such
discrimination claims. Sections 49-2-505 and -509, MCA (2005), are critical to our
analysis and are set forth in relevant part below.
¶15 Section 49-2-505, Contested case hearing, provides in pertinent part:
(1) If the informal efforts to eliminate the alleged discrimination are
unsuccessful, the department shall hold a hearing on the complaint. The
department shall serve notice of the hearing and a copy of the complaint on
the parties.
(2) (a) If the parties mutually agree to permit the department to retain
jurisdiction of the case under this chapter for a period of time that exceeds
12 months after the complaint was filed, then the parties shall stipulate to a
schedule for proceedings to be established by the department.
(b) The department shall, not later than 395 days after the complaint was
filed, set a date for an administrative hearing in the case.
(c) The case must be heard no later than 90 days after the date is set by the
department. The department may, in its sole discretion, issue a continuance
of the hearing date only upon a showing of good cause.
...
¶16 Section 49-2-509, MCA, Conclusion of complaint—filing in district court,
provides:
(1) Except as provided in subsection (2), the department shall, at the request
of either party, conclude the administrative proceedings if:
(a) the department has completed its investigation of a complaint filed
pursuant to 49-2-305; or
(b) 12 months have elapsed since the complaint was filed.
(2) The department may not refuse to conclude the administrative
proceedings unless:
(a) the party requesting the conclusion of the administrative proceedings
has waived the right to request filing in the district court;
(b) more than 30 days have elapsed since service of notice of hearing under
49-2-505, unless the department fails to schedule a hearing to be held
within 90 days of service of notice of hearing; or
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(c) the party requesting conclusion of the administrative proceedings has
unsuccessfully attempted through court litigation to prevent the department
from investigating the complaint.
(3) The department shall dismiss a complaint filed under this chapter and
the complainant may file a discrimination action in district court if:
(a) the commission or the department lacks jurisdiction over the complaint;
(b) the complainant fails to cooperate in the investigation of the complaint
or fails to keep the department advised of changes of address;
(c) the department determines that the allegations of the complaint are not
supported by a preponderance of the evidence; or
(d) the department determines that the commission or the department will
not or cannot hold a hearing within 12 months after the filing of the
complaint.
(4) A decision of the department to dismiss a complaint brought under this
chapter or to refuse to permit removal to the district court is final unless a
party seeks review by filing objections within 14 days after the decision is
served on the party. The commission shall review the decision in informal
proceedings under 2-4-604. A party may ask the district court to review a
decision of the commission made under this section. The review must be
de novo.
...
¶17 The parties offer various interpretations of the Notice provisions of the statutes
and also present opposing arguments on the question of whether the “hearing” referenced
in § 49-2-509(3)(d), MCA, is intended to encompass only the contested case hearing. We
decline to address these arguments in any detail, as we conclude that the dispositive
question—i.e., did the Department lose jurisdiction of Pepion’s complaint when a
contested case hearing was not held within twelve months—can in any event be answered
by reference to the statutes as written.
¶18 In the hearing examiner’s November 4 Order denying IHBB’s request for
dismissal, the examiner first analyzed whether either condition in § 49-2-509(1), MCA,
was met. He concluded that while § 49-2-509(1)(a), MCA, was inapplicable to the
employment discrimination claim at bar, § 49-2-509(1)(b), MCA, was met—i.e., 12
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months had elapsed since the complaint was filed. Therefore, in accordance with the
introductory caveat, he turned his attention to § 49-2-509(2), MCA, and attempted to
unravel the baffling multiple negatives found in § 49-2-509(2)(b), MCA1—“The
department may not refuse to conclude the administrative proceedings unless: more than
30 days have elapsed since service of notice of hearing under 49-2-505, unless the
department fails to schedule a hearing to be held within 90 days of service of notice of
hearing.”2 The hearing examiner concluded that because he had issued the Notice on
August 15, service was acknowledged on August 23, and the contested case hearing was
scheduled for November 17 (within 90 days of service acknowledgment), he had the
discretion to refuse to conclude the administrative proceedings under § 49-2-509(2)(b),
MCA. (The hearing examiner did not expressly acknowledge that IHBB’s request for
dismissal was filed more than 30 days after the August 23 service acknowledgment date.)
¶19 Lastly, the hearing examiner concluded that the language and purpose of
§ 49-2-509(4), MCA, supported his decision to refuse to terminate the administrative
proceedings. He explained that Pepion had a right under § 49-2-509(4), MCA, to
challenge the Bureau’s initial dismissal of her claim but that this challenge process
consumed much of the 12-month period following the filing of her complaint; in fact, by
1
It is undisputed that §§ 49-2-509(2)(a) and (c), MCA, are inapplicable to this case.
2
The regulatory version of this statute, Admin. R. M. 24.9.262A(1)(c), is more clearly written
and provides: (1) At the request of any party to a case before the commission . . . the department
shall issue a right to sue letter if the commission has not yet held a contested case hearing and 12
months have elapsed since the complaint was filed, unless: (c) the party requesting the issuance
of the right to sue letter has filed the request more than 30 days after service of the notice of
certification for hearing on that party, and the commission or its hearing examiner has scheduled
a hearing to be held within 90 days of the date of service of the notice of certification for hearing
on the requesting party . . . .
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the time the complaint was returned to the Bureau, the Notice was issued, service was
acknowledged, and the contested case hearing scheduling order was issued, the parties
had a mere 62 days remaining in the 12 months. Concluding dismissal was not
warranted, the examiner scheduled the hearing for November 17, 16 days beyond the 12-
month time period.
¶20 As noted above, the District Court reversed the hearing examiner. The court
determined that under § 49-2-505(2)(a), MCA, the Department lost jurisdiction of the
case after 12 months unless the parties stipulated otherwise—which they did not. (It is
necessary at this point in our analysis to once again reiterate that parties cannot, by
stipulation, confer jurisdiction if jurisdiction does not exist. Jurisdiction involves the
fundamental power and authority of a court to determine and hear an issue. Thompson v.
State, 2007 MT 185, ¶ 28, 338 Mont. 511, ¶ 28, 167 P.3d 867, ¶ 28 (citing Stanley v.
Lemire, 2006 MT 304, ¶ 30, 334 Mont. 489, ¶ 30, 148 P.3d 643, ¶ 30). Accordingly,
subject-matter jurisdiction can never be forfeited or waived. Thompson, ¶ 28 (citing
Stanley, ¶ 32). Additionally, subject-matter jurisdiction cannot be conferred by the
consent of a party. Thompson, ¶ 28 (citing In re Marriage of Miller, 259 Mont. 424, 427,
856 P.2d 1378, 1380 (1993).) In this regard, we observe that the 2007 Legislature
revised the statute to exclude any reference to “retained jurisdiction.” The new statute
now reads, in relevant part:
If the parties mutually agree to extend the time for hearing beyond 12
months after the complaint is filed, then the parties shall stipulate to a
schedule for proceedings to be established by the department.
Section 49-2-505(2), MCA (2007).
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¶21 On appeal, DOLI3 maintains that the District Court incorrectly interpreted and
applied the relevant statutes and that Pepion should be allowed to exhaust her
administrative remedies by pursuing her claim through the contested case hearing. The
Department asserts that § 49-2-509, MCA, not § 49-2-505, MCA, is the controlling
statute to be applied when a party seeks to conclude the administrative process and file in
district court.
¶22 The IHBB urges the Court to hold that the applicable statutes mandate a contested
case hearing within 12 months of the filing of the complaint and that failure to hold such
a hearing results in the Department’s loss of jurisdiction and requires dismissal of the
complaint unless the parties stipulate to extend the proceedings.
¶23 We agree with the hearing examiner’s determination that § 49-2-509(1)(a), MCA,
is inapplicable and that (1)(b) was met. We also agree that the Department scheduled a
hearing to be held within 90 days of the service of notice. As noted in ¶ 7, the “Notice of
Hearing” was issued on August 15, 2005, and the hearing was scheduled to occur on
November 17, within 90 days. However, the problem presented at this point is two-fold:
first, the November 17 hearing date is more than 12 months beyond November 1, 2004,
the date Pepion’s complaint was filed; and second, at Pepion’s request, the hearing was
rescheduled to January 5, 2006, well beyond the 12-month deadline imposed under
§§ 49-2-505 and -509, MCA. This being so, the provisions of § 49-2-505(2)(a), MCA,
requiring the consent of both parties to extend the time for hearing, had to come into play.
3
Pepion did not personally file a brief on appeal; rather, DOLI filed the appellants’ opening and
reply briefs on behalf of both DOLI and Pepion.
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¶24 The Department strongly argues that the terms of § 49-2-505, MCA, are
inapplicable here and that § 49-2-509, MCA, is the only statute to be applied to the
dismissal request in this case. We disagree. Section 49-2-505(2)(a), MCA, specifically
states that if the parties mutually agree to permit the Department to “retain jurisdiction”
of the case under this chapter for a period of time that exceeds 12 months after the
complaint was filed, then the parties must stipulate to such. (Emphasis added.) This
statute cannot be ignored.
¶25 We conclude that while the language of the various statutes before us regarding
notice and continuances is confusing and in some respects inherently contradictory, what
is clear is that the proceedings must be concluded within 12 months of the filing of the
complaint unless the parties mutually agree to extend the time for hearing beyond that
deadline, which did not occur here. Sections 49-2-505(2)(a), 49-2-509(1)(b), and 49-2-
509(3)(d), MCA, when read both individually and together, simply permit no other
conclusion. Therefore, while we do not agree with all aspects of the District Court’s
analysis, we conclude the District Court reached the right result when it determined that
Pepion’s complaint must be dismissed. Therefore, we affirm.
CONCLUSION
¶26 For the foregoing reasons we affirm the Decision and Order of the District Court.
/S/ PATRICIA COTTER
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We Concur:
/S/ KARLA M. GRAY
/S/ BRIAN MORRIS
/S/ JAMES C. NELSON
/S/ JOHN WARNER
/S/ W. WILLIAM LEAPHART
/S/ JIM RICE
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