Wood v. Montana Department of Revenue

Filing 67

ORDER granting in part and denying in part 33 Motion for Summary Judgment; and granting 38 Motion to Strike. Signed by Judge Donald W. Molloy on 9/13/2011. (dle)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
HELENA DIVISION
JASON WOOD,

)
)
Plaintiff,
)
)
vs.
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MONTANA DEPARTMENT OF
)
REVENUE,
)
)
Defendant.
)
______________________________ )

CV 10-13-H-DWM

ORDER

I. Introduction
Plaintiff Jason Wood was the Bureau Chief of the Liquor Licensing Bureau,
part of the Montana Department of Revenue’s Liquor Control Division. On April
23, 2009, he was suspended with pay pending a final decision on the termination
of his employment, which was accomplished by way of a letter dated April 30,
2009.
Wood now seeks legal redress based on five counts against his former
employer, Defendant the Montana Department of Revenue (the “Department”).

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He alleges his termination violated the Americans with Disability Act (the
“ADA”) (Count I), the Family and Medical Leave Act (the “Leave Act”) (Count
II), the Montana Human Rights Act (Count III), Montana’s Governmental Code of
Fair Practices (Count IV), and Montana’s Wrongful Discharge from Employment
Act (the “Wrongful Discharge Act”) (Count V).
Before the Court are two interrelated motions. In the first, the Department
moves for summary judgement on Wood’s claims under the ADA, the Leave Act,
and the Wrongful Discharge Act. Wood concedes that judgment on his ADA
claim in favor of the Department is appropriate, but otherwise contests the motion
for summary judgment. In the second motion, Wood moves to strike the
Department’s affirmative defense that he failed to exhaust administrative remedies
for appeal and review of his termination, a prerequisite to bringing a claim under
the Wrongful Discharge Act. This motion is the converse of the Department’s
argument that it is entitled to summary judgment on that claim.
For the reasons that follow, summary judgment is granted in the
Department’s favor as to Wood’s ADA claim but it is otherwise denied. Wood’s
motion to strike the Department’s affirmative defense that Wood failed to exhaust
administrative remedies is granted.
II. Summary Judgment Standard
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Summary judgment is granted when there is “no genuine issue as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(c). Because a summary judgment terminates a case without a trial,
courts should be cautious in granting them. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255 (1986). This is not to say, however, that summary judgment is
disfavored when the standards are met. Celotex Corp. v. Catrett, 477 U.S. 317,
327 (1986).
A party is entitled to summary judgment where the documentary evidence
produced by the parties permits only one conclusion. Anderson, 477 U.S. at 251.
The Court must determine whether a fair-minded jury could return a verdict for the
nonmoving party. Id. at 252. The party seeking summary judgment bears the
initial burden of informing the Court of the basis for its motion, and identifying
those portions of the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, that demonstrate the
absence of any genuine issue of material fact. Celotex Corp., 477 U.S. at 323.
Where the moving party has met its initial burden with a properly
supported motion, the party opposing the motion “may not rest upon the mere
allegations or denials of his pleading, but . . . must set forth specific facts showing
that there is a genuine issue for trial.” Anderson, 477 U.S. at 248. The nonmoving
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party may do this by use of affidavits (including his own), depositions, answers to
interrogatories, and admissions. Id.
In evaluating the appropriateness of summary judgment it is first necessary
to determine whether a fact is material; and if so, it is necessary to determine
whether there is a genuine issue for the trier of fact, as determined by the material
submitted to the Court. The applicable substantive law will identify which facts
are material. Only disputes over facts that might affect the outcome of the suit
under the governing law properly preclude entry of summary judgment. Factual
disputes that are irrelevant or unnecessary to the outcome are not considered. Id.
III. Analysis
A.

ADA Claim
The parties agree that Wood’s claim that his employer–the State of

Montana–violated the ADA is barred by the Eleventh Amendment. See Bd. of
Trustees of Univ. of Ala. v. Garrett, 531 U.S. 356, 360 (2001) (holding suit by
state employee against employer for the State’s failure to comply with the ADA is
barred by the Eleventh Amendment). The Department is thus entitled to summary
judgment in its favor on this claim.
B.

Wrongful Discharge Claim
An employee must initiate and exhaust his employer’s administrative
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remedies before he can bring a claim under Montana’s Wrongful Discharge Act.
Mont. Code Ann. § 39-2-911(2). “If the employer’s internal grievance procedures
are not completed within 90 days from the date the employee initiates the internal
procedures, the employee may file an action under this part [and] the employer’s
internal procedures [shall be deemed] exhausted.” Id. “Failure to exhaust
administrative procedures is a complete bar to pursuing a claim under [the Act].”
Offerdahl v. State, Dep’t of Natural Res. and Conservation, 43 P.3d 275, 278
(Mont. 2002).
The State of Montana employs a written grievance procedure. Step I calls
for the employee and supervisor to attempt an informal grievance. If that fails,
step II requires the employee to file within fifteen working days of the grievable
event a written formal grievance stating the law violated, when the action occurred
and the remedy desired. Management then has ten working days to respond in
writing. Step III then involves the department head reviewing the matter, and if
the grievance involves a demotion, discharge or suspension without pay for more
than ten working days, management shall order a hearing. Admin. R. Mont.
2.21.8017.
Wood timely initiated the grievance procedure, but no step III hearing has
been held. The Department takes the position that the hearing was not held due to
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Wood subverting the process, and thus the Court should bar his Wrongful
Discharge Act claim. Wood counters that the State stayed the process and in the
interim ninety days have passed, meaning for the purpose of this claim he
exhausted his grievance. Wood has the better argument.
The facts are not in dispute. On April 23, 2009, Wood received a letter
from his supervisor, Shauna Helfert, stating she had recommended he be
terminated. The letter also informed him that a due process meeting was
scheduled to discuss her recommendation and that he was suspended with pay
pending a final decision on the termination of his employment. Due Process
Letter, Apr. 23, 2009 (dkt #34-2). The letter made no mention of Wood’s right to
file a grievance in accordance with the State’s administrative policy. The meeting
occurred on April 27, 2009, with Helfert, Wood and Alan Peura, the Deputy
Director of the Department, in attendance.
On April 29, 2009, Wood sent Peura a letter regarding “Reasonable
Accommodation.” Wood Letter, Apr. 29, 2009 (dkt #34-7). The purpose of the
letter was to elaborate on Wood’s answer at the due process meeting to a question
Peura asked about what “a reasonable accommodation might be.” Id. In the letter,
Wood lists off various accordances that would improve his job performance, such
as being allowed to work a more flexible schedule and working from home when
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ill. The letter concludes by Wood requesting that if his requested accommodations
cannot be met he would like to be transferred to a different position. Wood did
not mention “appeal” or “grievance” in the letter. Nor did he challenge any action
taken by his employer.
The following day Helfert sent a letter that terminated Wood. The letter
told Wood he had “the right to file a grievance in accordance with the state’s
grievance policy.” Termination Letter, Apr. 30, 2009 (dkt #34-9).
Wood did just that. On May 14, 2009, Wood sent a letter regarding
“[g]rievance under 2.21.8010, [Montana’s grievance policy]” to Dan Bucks, the
Department’s Director. Wood did not receive a response within ten days of
submitting his grievance as required. Sherwood Aff., June 13, 2011 (dkt #41).
Instead, Wood received an order from Norman C. Peterson, a hearing examiner for
the State of Montana, setting a telephonic conference for June 9, 2009, to schedule
the step III hearing process. Hearing Order, June 5, 2009 (dkt #41-2). At the start
of the scheduling conference, Wood’s counsel objected that it was inappropriate to
continue with step III because step II had not been completed. Daw Aff., June 8,
2011 (dkt #34-5). The hearing examiner for the State of Montana stayed the step
III hearing “due to [step II] not being complete.” Icenoggle e-mail, June 14, 2010
(dkt #41-3).
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The Department asks the Court to find the step III hearing never occurred
due to Wood subverting the process. It argues Wood’s letter to Peura regarding
“Reasonable Accommodation” was a formal written grievance and his termination
letter was the State’s written response. Under this characterization, the step III
hearing could have occurred but for Wood’s incorrect objection that he never
received a step II response.
The argument suffers two obvious flaws. First, it is based upon the
unsupportable premise that Wood’s letter regarding accommodation and the
Department’s subsequent termination letter satisfied step II of the grievance
procedure. Wood’s letter addressed what accommodations would allow him to
continue his employment with the Department, not why terminating him, which
had not yet occurred, would be wrong. The succeeding termination letter did not
acknowledge or respond to any supposed complaint made by Wood, or otherwise
indicate that the termination letter doubled as the Department’s written response to
Wood’s formal grievance. To the contrary, the termination letter informed Wood
of his rights under the Department’s grievance policy to contest his termination.
Simply put, there is no support for the Department’s contention that step II had
been satisfied by Wood’s letter regarding “reasonable accommodation” and the
subsequent termination letter.
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Regardless, even if step II was satisfied by those letters, the Department’s
argument that the grievance proceeding would have been completed but for Wood
subverting the process is mistaken. The undisputed facts show Wood argued a
step III hearing was premature because the Department had yet to respond in
writing to his grievance. The hearing examiner then stayed the proceeding due to
step II not being completed. Thus what was missing from completing step III was
not Wood’s participation, but a hearing examiner who found it appropriate to
continue with the grievance process. To be clear, this is not a case where the
hearing examiner tried to hold a hearing but the employee obstinately refused to
participate. To the extent the Department felt the hearing examiner was wrong to
stay the matter, that argument should have been taken up with him as part of the
grievance process, not as a premise to preclude Wood’s subsequent claim under
the Wrongful Discharge Act.
The “internal grievance procedures [we]re not completed within 90 days
from the date [Wood] initiate[d] the internal procedures” so the administrative
process was exhausted under Mont. Code Ann. § 39-2-911(2).
C.

Leave Act Claim
The Department also seeks summary judgment on Wood’s Leave Act claim

based on the following facts. In 2007, Wood requested and received eligibility for
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leave under the Act through November 2008 due to a cardiac event. SUF ¶ 13
(dkt #34). Human Resources contacted Wood when most of his leave was being
coded as sick leave rather than leave taken under the Act. Wood informed the
Department that he had “chronic illnesses” in addition to his heart condition and
that he was using sick leave for his absences resulting from these other medical
conditions. Id. at ¶ 14. Essentially, the Department takes the position that because
it never denied Wood leave he requested under the Act and he was fired two years
after he took such leave, it is entitled to summary judgment on this claim. The
argument misses the mark.
The Leave Act entitles qualifying employees to “twelve weeks of leave each
year for their own serious illnesses or to care for family members, and guarantees
them reinstatement after exercising their leave rights.” Bachelder v. Am. W.
Airlines, Inc., 259 F.3d 1112, 1119 (9th Cir. 2001) (citing 29 U.S.C. §§
2612(a)(1), 2614(a)(1)). The Act provides protection for these rights, in part, by
making it “unlawful for any employer to interfere with, restrain, or deny the
exercise or the attempt to exercise” the rights guaranteed under the Act. 29 U.S.C.
§ 2615(a)(2) (emphasis added). As applicable here, an employer interferes with an
employee’s substantive rights by using the employee’s “taking of [Leave Act]

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leave as a negative factor in employment actions . . . .” 29 C.F.R. § 825.220(c).1
To prove the Department interfered with his rights in such a manner, Wood must
prove at trial
by a preponderance of the evidence that [his] taking of [Leave Act]protected leave constituted a negative factor in the decision to terminate
him. [He] can prove this claim, as one might any ordinary statutory claim,
by using either direct or circumstantial evidence, or both.
Bachelder, 259 F.3d at 1125.
There is a genuine issue of fact as to whether the Department used Wood’s
taking of leave as a negative factor in its decision to terminate him. Wood’s
termination letter refers to his attendance over the past two years as a reason for
his discharge. Termination Letter (dkt #34-9) (“I have made several attempts over
the last two years to help you improve your performance and attendance.”). This
period of absences from work includes the time in which Wood qualified for and
took leave in December 2007 pursuant to the Leave Act. The factual issue must
be resolved by a jury which will determine if his doing so was a factor in the
Department’s decision to terminate him.2
1

Some circuits treat discharging an employee for use of the Leave Act as a claim for
retaliation under § 2615(a)(2), but the Ninth Circuit treats it as a form of interference under §
2615(a)(1). See Xin Liu v. Amway Corp., 347 F.3d 1125, 1133 n.7 (9th Cir. 2003).
2

Wood presents other genuine issues of how the Department interfered with his rights
under the Leave Act. Because summary judgment is inappropriate and the Department failed to
respond to the existence of these other issues, the Court need not address Wood’s auxiliary
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IV. Conclusion
Based on the foregoing, Defendant’s Motion for Summary Judgment (dkt
#33) is GRANTED in part and DENIED in part. The motion is granted in
Defendant’s favor as to Count I (Americans with Disabilities Act claim) of
Wood’s Amended Complaint and denied in all other aspects.
Wood’s Motion to Strike Affirmative Defense (dkt #38) is GRANTED and
to strike the Department’s third affirmative defense (Failure to Exhaust
Administrative Remedies) in its Answer to Wood’s Amended Complaint is also
GRANTED.
Dated this 13th day of September, 2011.

genuine issues at this time.
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