K. Shepherd v. DOC ( 2023 )

05/30/2023
DA 22-0562
Case Number: DA 22-0562
IN THE SUPREME COURT OF THE STATE OF MONTANA
2023 MT 99KILA SHEPHERD.
Plaintiff and Appellant,
v.
STATE OF MONTANA,
DEPARTMENT OF CORRECTIONS,
Defendant and Appellee.
APPEAL FROM: District Court of the First Judicial District,
In and For the County of Lewis and Clark, Cause No. CDV 2020-302
Honorable Kathy Seeley, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
John Doubek, Doubek, Pyfer & Storrar, PC, Helena, Montana
For Appellee:
Patricia Klanke, Drake Law Firm, P.C., Helena, Montana
Submitted on Briefs: April 26, 2023
Decided: May 30, 2023
Filed:
__________________________________________
Clerk
Justice Laurie McKinnon delivered the Opinion of the Court.
¶1 Kila Shepherd (Shepherd) appeals the Summary Judgment Order denying her
wrongful discharge from employment claim issued by the First Judicial District Court,
Lewis and Clark County.
¶2 We affirm and restate the issue as follows:
Were there undisputed facts establishing good cause for Shepherd’s termination?
FACTUAL AND PROCEDURAL BACKGROUND
¶3 The Montana Department of Corrections (DOC) employed Shepherd as the Director
of Human Resources (HR Director) from January 2014 to August 10, 2018. While
employed, Shepherd led the DOC’s Office of Human Resources (HR Office) for DOC’s
1,300 employees. The HR Office was responsible for employee recruitment and selection,
performance appraisal processing, labor relations, employee discipline, and professional
development. Shepherd served on the DOC’s leadership team and reported to the Deputy
Director. Shepherd’s job description required her to “demonstrate discretion, integrity, and
fair-mindedness.” As the HR Director, Shepherd agreed to keep information confidential
and be trustworthy while maintaining personnel issues and participating in DOC
leadership.
¶4 On February 28, 2018, the DOC Director at the time, Reginald Michael (Michael),
Deputy Director Cynthia Wolken (Wolken), and Shepherd met with DOC employee, Cindy
McKenzie (McKenzie), regarding McKenzie’s handling of a sensitive matter that could
have resulted in disciplinary action against McKenzie. Shepherd recorded the meeting
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with McKenzie and a post-meeting discussion between Michael, Wolken and Shepherd
that occurred after McKenzie left the meeting. The post-meeting included a discussion
about McKenzie’s conduct and other personnel issues. Michael, Wolken, and McKenzie
have all stated they were unaware that Shepherd was recording the meeting or the
post-meeting discussion. Shepherd claims Michael and Wolken were aware she was
recording pursuant to DOC “standard operating procedure.”
¶5 After recording the meeting and post-meeting discussion, Shepherd transcribed only
the meeting that McKenzie attended. She saved this transcript on a “personal” drive on
her state computer—only accessible to Shepherd and the State’s Information Technology
department. Shepherd did not provide the transcript to Michael or Wolken, even though
Michael requested it.
¶6 On March 1, 2018, Shepherd responded to an email from Wolken regarding
potential discipline of McKenzie. The following day, Shepherd shared this email with
McKenzie without Michael’s or Wolken’s knowledge. Shepherd informed McKenzie that
Shepherd did not believe discipline was warranted, although she was unaware of any
decision by Michael or Wolken about McKenzie’s potential discipline. Ultimately,
McKenzie was never disciplined.
¶7 During the spring of 2018, the Governor’s Office engaged Patricia MacEwen1
(MacEwen) from the Department of Environmental Quality (DEQ) to conduct an
1
At the time of the investigation, MacEwen was DEQ’s Central Services Division Administrator
who oversaw its HR Department. She has significant knowledge and experience in the HR field.
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“organizational assessment” of the DOC. The assessment was requested because of
concerns about communication and decision-making issues at the DOC. MacEwen and
her team interviewed roughly 20 members of the DOC leadership team. As part of this
assessment, MacEwen interviewed McKenzie who brought up her previous disciplinary
issue. McKenzie told MacEwen that Shepherd had recorded the February 28 meeting with
Michael and Wolken without McKenzie’s knowledge and that Shepherd had forwarded the
March 1 email to McKenzie. MacEwen then interviewed Shepherd who volunteered that
she had recorded the February 28 meeting to protect herself and McKenzie from Michael
and Wolken.2
¶8 MacEwen reported she was troubled by McKenzie’s and Shepherd’s reports about
the recordings and by Shepherd sharing her disciplinary recommendation with McKenzie.
MacEwen did not believe it was appropriate for the HR Director to take such actions and,
accordingly, determined Shepherd had broken trust with her employer which required an
investigation. The Governor’s Office assigned the Department of Administration3 (DOA)
to conduct the investigation. Shepherd was placed on paid administrative leave on May 15,
2018, pending the outcome of the investigation.
2
During Shepherd’s Step III grievance hearing, she contradicted this statement to MacEwen and
testified that she recorded the meeting as part of her official duties.
3
The matter was referred to DOA because Shepherd supervised the HR department which would
normally be tasked with investigating. It would be inappropriate for Shepherd’s subordinates to
investigate their supervisor. It was also determined that Michael and Wolken should not be
involved in deciding the outcome of Shepherd’s employment given they had personal involvement
in the allegations against her.
4
¶9 The DOA hired attorney Amy Christensen (Christensen) to investigate the
allegations against Shepherd. Christensen interviewed MacEwen, McKenzie, Shepherd,
Michael, and Wolken. Michael, Wolken, and McKenzie informed Christensen they were
not aware the meetings were being recorded and did not see a recording device during the
meetings. McKenzie told Christensen about the March 1 email, but Shepherd denied
sending McKenzie that email. When Christensen asked Shepherd why she recorded the
post-meeting discussion, Shepherd told Christensen that she had forgotten to turn the audio
recorder off. Shepherd conceded she never provided Michael with a transcript of the
meeting although he had requested it twice. Shepherd told Christensen that she did not
know why she failed to provide Michael with a transcript, but later explained she did not
believe Michael needed the transcript. Shepherd told Christensen she had saved the
February 28 meeting transcripts to her work computer in a “projects” folder or a “director’s
office” folder. However, the DOC’s chief technology officer found the transcripts in a
folder labeled “personal.”
¶10 Based on the investigation, Christensen found “it [was] more likely than not that
Ms. Shepherd intentionally recorded the meeting without the knowledge of the other
participants.” Christensen concluded, “Shepherd acted contrary to the interest of her
employer . . . in sharing her personnel advice with the employee whose conduct was at
issue” and that since “Shepherd occupies a highly sensitive position in the agency, her
conduct has likely impaired her ability to be effective in that role.”
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¶11 On July 13, 2018, DOA sent Shepherd a pre-determination and due process letter
listing two reasons why the State was considering her discharge: (1) recording the
February 28 meeting without the knowledge and consent of the attendees, and
(2) knowingly providing erroneous information to investigators during the investigation.
On July 30, 2018, DOA met with Shepherd to afford her the opportunity to respond to the
allegations against her. Shepherd provided a written response and rebutted the State’s
second reason for considering her discharge: “I repeatedly explained that I didn’t remember
everything and that I had no access to my notes or documents discussed prior to or during
the interview.” Based on Christensen’s report, the due process meeting, and the documents
provided by Shepherd at the meeting, DOA determined Shepherd had violated the core
components of trust and integrity as the HR Director, and she could no longer be successful
in her position.
¶12 Shepherd received a termination letter informing her of her official discharge from
employment on August 10, 2018. The letter explained the same reasons for her discharge
as stated in the pre-determination and due process letter, along with a notice that she could
appeal the decision under the administrative grievance policy. The same day, Shepherd
sent written notice that she intended to pursue a Step III grievance under the policy. A
Hearing Officer was assigned to her grievance, and on January 7, 2019, the Hearing Officer
held a grievance hearing.
¶13 Meanwhile, on August 13, 2018, Shepherd filed a charge of discrimination with the
Montana Human Rights Bureau (MHRB), alleging Michael had engaged in sexual
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harassment and that her discharge was retaliatory. On January 29, 2019, the MHRB
dismissed Shepherd’s retaliation claim, finding “no reasonable cause” and that the
allegations were not supported by a preponderance of the evidence. The MHRB’s
dismissal included explicit, boldfaced language informing Shepherd she had “WITHIN 90
DAYS” to file a claim for sexual harassment retaliation. The U.S. Equal Employment
Opportunity Commission (EEOC) notified Shepherd it had adopted the MHRB’s finding
of “no reasonable cause” on February 14, 2019. Shepherd did not appeal either the MHRB
or EEOC decision. On February 14, 2020, the State issued a Final Administrative Decision
adopting the Hearing Officer’s recommendation that her grievance claims be denied.
¶14 On March 11, 2020, Shepherd filed her Complaint for Wrongful Termination,
Petition for Judicial Review and Demand for Jury Trial. The DOC moved for summary
judgment claiming that Shepherd failed to timely file her Complaint under the Wrongful
Discharge from Employment Act (WDEA). The District Court granted the DOC’s motion
on July 10, 2020. Shepherd appealed to this Court, and we concluded that the District
Court erroneously determined her complaint was untimely and thus erred in granting
summary judgment to the DOC. We remanded for further proceedings. Shepherd v. State
ex rel. Dep’t of Corr., 2021 MT 70, 403 Mont. 425, 483 P.3d 518.
¶15 On remand, Shepherd moved for substitution of the District Court judge and a new
judge assumed jurisdiction. After the close of discovery, the DOC moved for summary
judgment asserting Shepherd’s WDEA claim failed as a matter of law. The District Court
granted the DOC’s Motion, finding that undisputed facts established Shepherd’s discharge
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was for “good cause” and that Shepherd did not establish that the reasons for her discharge
were false, pretextual, or retaliatory. Shepherd appeals.
STANDARD OF REVIEW
¶16 We review de novo a district court’s grant or denial of summary judgment, applying
the same criteria of M. R. Civ. P. 56 as a district court. Pilgeram v. GreenPoint Mortg.
Funding, Inc., 2013 MT 354, ¶ 9, 373 Mont. 1, 313 P.3d 839 (citation omitted). A motion
for summary judgment must be granted when “there is no genuine issue as to any material
fact and . . . the movant is entitled to judgment as a matter of law.” M. R. Civ. P. 56(c)(3).
After the moving party has met its burden, the burden shifts to the non-moving party to
demonstrate that a material issue of fact exists. Knucklehead Land Co. v. Accutitle, Inc.,
2007 MT 301, ¶ 24, 340 Mont. 62, 172 P.3d 116. Mere denial or speculation does not
suffice to defeat summary judgment. Knucklehad, ¶ 24. Disputes over some factual
assertions “do not render summary judgment inappropriate where there are facts not in
dispute that provide ‘good cause’ for discharge from employment.” Davis v. State, 2015
MT 264, ¶ 14, 381 Mont. 59, 357 P.3d 320 (citing Becker v. Rosebud Operating Servs.,
2008 MT 285, 345 Mont. 368, 191 P.3d 435) (emphasis in original). We review a district
court’s conclusions of law to determine whether they are correct and its findings of fact to
determine whether they are clearly erroneous. Pilgeram, ¶ 9 (citation omitted).
DISCUSSION
¶17 The WDEA, in relevant part, provides “[a] discharge is wrongful only if . . . the
discharge was not for good cause.” Section 39-2-904(1)(b), MCA. “Good cause” means
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“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 reason.”
Section 39-2-903(5), MCA. A “legitimate business reason” is a reason “that is not false,
whimsical, arbitrary, or capricious, and one that must have some logical relationship to the
needs of the business.” Davis, ¶ 10; Bird v. Cascade Cnty., 2016 MT 345, ¶ 11, 386 Mont.
69, 386 P.3d 602.
¶18 The employer possesses the initial burden to present evidence of “good cause” in a
WDEA claim. Buckley v. W. Mont. Cmty. Mental Health Ctr., 2021 MT 82, ¶ 16, 403
Mont. 524, 485 P.3d 1211. Courts “must be cautious in second guessing employment
decisions” in cases involving managerial employees. McConkey v. Flathead Elec. Coop.,
2005 MT 334, ¶ 33, 330 Mont. 48, 125 P.3d 1121. An employer has broad discretion “to
terminate a person in an executive position.” Baumgart v. State, 2014 MT 194, ¶ 35, 376
Mont. 1, 332 P.3d 225. An employer can terminate a managerial employee who is
determined to be untrustworthy to run day-to-day operations. Sullivan v. Cont’l Constr. of
Mont., 2013 MT 106, ¶ 25, 370 Mont. 8, 299 P.3d 832. Therefore, an employer’s loss of
confidence and trust in a managerial employee’s ability is a legitimate business reason
sufficient to legally justify discharge under the WDEA. Buckley, ¶ 17 (citing Sullivan,
¶ 25).
¶19 After the employer’s initial showing, the burden shifts to the employee “to show
specific facts upon which to reasonably conclude that the given reason for discharge was:
(1) not a job or business-related reason; (2) false; (3) not the true reason for discharge; or
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(4) arbitrary, capricious, or whimsical.” Buckley, ¶ 16. However, “[m]ere denial,
speculation, or cursory assertion to the contrary is insufficient to satisfy the employee’s
responsive burden.” Buckley, ¶ 16.
¶20 Here, the DOC has met its initial burden of showing good cause for Shepherd’s
discharge from her sensitive managerial position as the HR Director. The undisputed facts
show Shepherd was discharged for knowingly providing erroneous information during the
investigation. While a factual dispute exists over whether Michael directed Shepherd to
record the meeting, there is no genuine issue of material fact that Shepherd provided
Christensen with inconsistent answers throughout the investigation, resulting in the
impairment of Shepherd’s trustworthiness as HR Director. The undisputed facts establish
that Shepherd gave inconsistent accounts of events to different investigators. For example,
she testified during the Step III grievance hearing that Michael asked her to record the
meeting, but previously told MacEwen she recorded the meeting to protect herself and
McKenzie because she did not trust Michael or Wolken. In response to Christensen’s
investigation, she denied sending McKenzie the March 1 email, but admitted during the
administrative hearing that she did provide the email to McKenzie. Shepherd provided
inconsistent accounts of where she saved the transcripts on her computer.4 Based on these
undisputed facts, the record is clear that Shepherd’s inconsistent and contradictory
4
Shepherd responds to the District Court’s determinations that she made “inconsistent statements”
related to “where she saved the meeting transcripts” by saying she had a faulty memory because
she could not access her notes. However, and as the District Court properly concluded, Shepherd’s
inconsistent statements related directly to “core questions” of the investigation rather than minor
details that require reference to notes.
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statements to investigators establish good cause for her discharge, especially given
Shepherd served in a sensitive managerial position requiring confidence and trust.
¶21 Next, the burden shifts to Shepherd to show that the DOC’s reasons for her
discharge were false, arbitrary, capricious, or a mere pretext. Shepherd argues the DOC
wrongfully terminated her based on retaliation because she reported Michael engaged in
discriminatory conduct—in particular, sexual harassment of DOC employees. However,
Shepherd has failed to provide evidence that creates a genuine issue of material fact that
her termination was retaliatory. Shepherd alleged there was a “cabal between Wolken and
Michael whereby they lied” about her recording the meetings. She further claimed that the
timing of her sexual harassment allegations was not merely “a coincidence.” Shepherd’s
assertions constitute speculation, and not a genuine dispute of material fact. She has failed
to offer anything “beyond mere speculation” that the reason for her discharge was false,
arbitrary, capricious, or a mere pretext. See Putnam v. Cent. Mont. Med. Ctr., 2020 MT
65, ¶ 21, 399 Mont. 241, 460 P.3d 419 (“Summary judgment is proper if the employee fails
to provide evidence, beyond mere speculation, that the given reasons for the termination
are a pretext and not the honest reason.”). The assertions offered by Shepherd constitute
speculation and are insufficient to overcome the conclusion that her discharge was for good
cause.
¶22 Shepherd also contends the District Court erred in granting the DOC summary
judgment because it “accepted all factual assertions made by the DOC as true when genuine
issues of material fact exist.” Specifically, Shepherd claims the District Court improperly
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failed to consider the following relevant disputed facts: Shepherd’s assertion that it was
standard practice to record meetings; McKenzie’s affidavit stating that she “knew”
Shepherd “would not do anything surreptitiously”; and Michael’s purported request for
transcripts thus suggesting he knew the meeting was recorded. Regardless of these alleged
disputes of fact, the District Court, here, based its Order on other undisputed facts which
standing alone provided good cause for Shepherd’s termination; in particular, Shepherd’s
inability to provide truthful information in the investigation. The District Court reasoned:
“While there is, ostensibly, a factual dispute over whether Shepherd was directed to record
the meeting, there is no genuine dispute that Shepherd provided inconsistent answers
throughout the investigation, leading to the deterioration and impairment of trust in
Shepherd as HR Director.” We conclude the District Court based its findings on only
undisputed facts which demonstrated Shepherd’s inconsistent statements during an
investigation. Thus, the District Court correctly held Shepherd’s contrary statements she
made during the investigation constituted good cause for her termination.
¶23 Lastly, Shepherd contends that the District Court erred when it relied on sworn
“one-sided” testimony from the Step III grievance hearing, thereby depriving her of her
“right to a jury trial.” Sworn testimony constitutes sufficient evidence on which to base
summary judgment determinations. Putnam, ¶ 12. Shepherd does not present any evidence
that the testimony during the administrative hearing was insufficient. The witnesses during
the hearing testified under oath and were subject to cross-examination by Shepherd’s
counsel. The District Court did not err when it relied on sworn testimony presented at the
12
Step III grievance hearing, and Shepherd is not deprived of right to a jury trial. Her
grievance claims were properly brought and adjudicated in an administrative proceeding.
CONCLUSION
¶24 The District Court did not err in granting the DOC summary judgment because it
correctly based its Order on undisputed facts establishing “good cause” for Shepherd’s
termination. Shepherd gave inconsistent statements during the investigation, which
undermined her trustworthiness and integrity to continue in a managerial position. The
District Court properly found Shepherd failed to provide sufficient evidence establishing
that the reasons for her termination were retaliatory. Finally, the District Court could rely
on sworn testimony produced in an administrative hearing to make findings.
¶25 Affirmed.
/S/ LAURIE McKINNON
We Concur:
/S/ MIKE McGRATH
/S/ DIRK M. SANDEFUR
/S/ INGRID GUSTAFSON
/S/ JIM RICE
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