Marsden v. Blue Cross & Blue Shield of Montana, Inc. , 368 Mont. 34 ( 2012 )

December 28 2012
DA 12-0341
IN THE SUPREME COURT OF THE STATE OF MONTANA
2012 MT 306SHANNON MARSDEN,
Plaintiff and Appellant,
v.
BLUE CROSS AND BLUE SHIELD
OF MONTANA, INC. (BCBSMT), a
health service corporation,
Defendant and Appellee.
APPEAL FROM: District Court of the First Judicial District,
In and For the County of Lewis and Clark, Cause No. ADV 2012-260
Honorable Dorothy McCarter, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Linda M. Deola; Morrison, Motl & Sherwood, Helena, MT
For Appellee:
Michael F. McMahon; McMahon, Wall & Hubley, PLLC, Helena, MT
Elizabeth A. Kaleva, Kaleva Law Offices, Missoula, MT
Submitted on Briefs: October 24, 2012
Decided: December 28, 2012
Filed:
__________________________________________
Clerk
Justice Brian Morris delivered the Opinion of the Court.
¶1 Shannon Marsden (Marsden) filed this action in which she alleges that Blue Cross
Blue Shield of Montana (BCBSMT) wrongfully discharged her in violation of the Montana
Wrongful Discharge from Employment Act (WDEA), §§ 39-2-901 to 39-2-915, MCA.
BCBSMT sought to compel arbitration pursuant to an employment agreement that required
arbitration of disputes. The District Court enforced the arbitration clause and transferred the
matter to arbitration. Marsden appeals. We affirm.
¶2 Marsden raises the following issue on appeal:
¶3 Whether Marsden must contest the validity of her employment contract through
arbitration in the first instance.
PROCEDURAL AND FACTUAL BACKGROUND
¶4 BCBSMT, a Montana non-profit corporation, signed an employment agreement with
Marsden, a Montana resident, on September 17, 2010. The employment agreement
contained a clause to compel arbitration for any disputes regarding the employment
agreement. The employment agreement provided that Marsden would work from November
8, 2010, to December 31, 2012. Marsden served for approximately one year. BCBSMT
terminated her employment in December 2011.
¶5 BCBSMT alleged that it terminated Marsden because she failed to submit a timely bid
on behalf of BCBSMT in response to the State of Montana’s Request for Proposals.
Marsden claimed that BCBSMT terminated her in retaliation for her reporting of BCBSMT’s
allegedly illegal practice related to the rebating of insurance commissions. BCBSMT paid
Marsden $328,478.10 when it terminated her. This money represented the remaining
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compensation that BCBSMT believed that it owed Marsden for the balance of her two-year
contract.
¶6 Marsden brought this action in which she claims that BCBSMT violated the WDEA.
Marsden concedes that she could bring a WDEA claim only if she did not have a written
contract of employment for a specific term. Section 39-2-912, MCA. Marsden argued,
however, that the inclusion of a provision that allowed BCBSMT to terminate her
employment if termination would be in the best interest of the company nullified the two-
year term in her employment agreement. Marsden claimed therefore that she had been
employed at-will.
¶7 BCBSMT argued that whether Marsden had a term contract remained disputed and
should have been resolved through arbitration. The District Court compelled arbitration to
allow the arbitrator to determine in the first instance whether Marsden had a term
employment contract. Marsden appeals.
STANDARD OF REVIEW
¶8 We review de novo a district court’s order to compel arbitration. Solle v. Western
States Ins. Agency, 2000 MT 96, ¶ 8, 299 Mont. 237, 999 P.2d 328.
DISCUSSION
¶9 Whether Marsden must contest the validity of her employment contract through
arbitration in the first instance.
¶10 Marsden’s employment agreement included two clauses that permitted BCBSMT to
terminate her employment before her two-year term expired. The first clause, 8(d), provided
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that BCBSMT’s president and CEO could terminate Marsden if he believed that it would be
in the best interest of BCBSMT. The second clause, 8(e), provided that Marsden could be
terminated “for cause.” The parties agree that BCBSMT terminated Marsden pursuant to
8(d), the “best interest of BCBSMT” clause.
¶11 Marsden argues that the “best interest of BCBSMT” clause essentially creates a
“without cause” termination provision. Marsden further argues that this clause nullifies the
two-year term contract and renders her an employee-at-will. Marsden argues that as an
employee without a term-contract, she should be permitted to bring her WDEA claim.
¶12 To support her claim that Marsden did not have a term contract, Marsden points to the
recent case Brown v. Yellowstone Club Operations, LLC, 2011 MT 155, 361 Mont. 124, 255
P.3d 205. Brown had an employment contract for a term of three years. The contract also
contained a provision that permitted the Yellowstone Club to terminate Brown “without
cause.” This Court determined that the “without cause” provision “trumped” the definite
employment term. Brown’s contract did not qualify as a “written contract for a specific
term” under WDEA due to the presence of these contradictory provisions. Brown, ¶ 11;
§ 39-2-912, MCA.
¶13 BCBSMT responds that whether Marsden’s employment agreement was “for a
specified term” remains disputed. Unlike the employment contract in Brown, Marsden’s
employment agreement did not have a clause that allowed termination “without cause.”
BCBSMT contends that it terminated Marsden’s employment because she failed to submit a
timely bid on behalf of BCBSMT to the State of Montana. BCBSMT argues that this action
did not constitute termination “without cause.” BCBSMT further argues that pursuant to the
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arbitration clause in the employment agreement, an arbitrator, rather than a court, should
interpret the employment agreement to resolve this dispute.
¶14 We first must determine whether the parties agreed to arbitrate this dispute. State ex
rel. Bullock v. Philip Morris, Inc., 2009 MT 261, ¶ 15, 352 Mont. 30, 217 P.3d 475.
Arbitration involves a matter of contract. Bullock, ¶ 15. A party cannot be forced to
arbitrate a dispute that it has not agreed to submit to arbitration. Bullock, ¶ 15. A court
generally should apply ordinary state-law principles that govern the formation of contracts
when deciding whether the parties agreed to arbitrate a matter. Bullock, ¶ 15; Solle, ¶ 23.
¶15 Marsden’s employment agreement provided that the parties would submit to
arbitration “any disputes” arising out of “any of the terms or provisions of this Agreement.”
The parties dispute whether Marsden had a set-term employment contract or whether she
served as an employee at-will. This dispute implicates the terms or provisions of the
employment agreement. The parties contracted to resolve any disputes over terms or
provisions of the employment agreement through arbitration. We agree with the District
Court that an arbitrator should decide, in the first instance, whether Marsden was an at-will
employee or whether she had a term contract. Bullock, ¶ 15; Solle, ¶¶ 27-29. The
arbitrator’s determination will resolve whether Marsden can pursue her WDEA claim.
¶16 Affirmed.
/S/ BRIAN MORRIS
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We Concur:
/S/ MIKE McGRATH
/S/ BETH BAKER
/S/ MICHAEL E WHEAT
/S/ JIM RICE
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