Moody v. Northland Royalty Co.

96-187
No. 96-187
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996
JAMES DEAN MOODY,
Plaintiff and Appellant,
v.
NORTHLAND ROYALTY CO. and
THE DEPARTMENT OF LABOR
& INDUSTRY,
Defendants and Respondents.
APPEAL FROM: District Court of the Ninth Judicial District,
In and for the County of Glacier,
The Honorable Marc G. Buyske, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Jeff R. Lynch, Lynch & Chisholm, Great Falls,
Montana
For Respondent:
Robert J. Emmons, Emmons & Sullivan, Great Falls,
Montana (Northland); Melanie Symons, Department of
Labor & Industry, Helena, Montana
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/96-187%20Opinion.htm (1 of 7)4/11/2007 1:56:39 PM
96-187
Submitted on Briefs: October 31, 1996
Decided: January 3, 1997
Filed:
__________________________________________
Clerk
Justice William E. Hunt, Sr. delivered the Opinion of the Court.
Appellant James Dean Moody (Moody) appeals the order of the
Ninth Judicial District Court, Glacier County, affirming the
decision of the Board of Labor Appeals that Moody be denied
unemployment benefits because his discharge from employment was a
result of his own misconduct.
We reverse.
The sole issue for our review is whether Moody was discharged
for misconduct.
FACTS
In November 1994, Moody was employed by Northland Royalty
Company (Northland) as a gas plant field operator. Moody received
a monthly salary of $2500.
On November 19, 1994, Moody informed his supervisor at
Northland, Bill Sheehan, that one of Northlandþs competitors had
offered Moody a job. Sheehan told Moody that they would discuss
the situation on the following Monday, November 21, 1994.
On Monday morning Moody explained to Sheehan that he would
remain working for Northland if he were given a $100 per month
raise. Moody stated that he needed a decision from Northland by
noon that day. Moody informed Sheehan that if he left Northland he
would take with him Randy Brown, Northlandþs only other field
operator. When Sheehan asked what would happen if Moody did not
get a raise, Moody replied that "they would address that when the
time came and would live with the decision."
Later Monday morning Sheehan approached Randy Brown,
Northlandþs other field operator. Brown informed Sheehan that he,
like Moody, had been offered a job by the competitor. Sheehan then
offered Brown a raise, which Brown accepted.
Next, Sheehan drove to the Four Corners Cafe to make some
phone calls. Sheehan had explained to Moody earlier that he would
need to contact Northlandþs Billings office to discuss the
situation before giving Moody an answer. One of the calls Sheehan
made was to Steve Jackson, who had recently expressed his interest
in working for Northland as a field operator. Jackson had
previously been discharged by the same competitor now offering
employment to Moody. Sheehan offered Jackson Moodyþs field
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/96-187%20Opinion.htm (2 of 7)4/11/2007 1:56:39 PM
96-187
operator position with Northland, which Jackson accepted.
While at the Four Corners Cafe that morning, Sheehan received
a call from Moody, who advised Sheehan that he would not be
quitting Northland and that he had already declined the
competitorþs offer. Sheehan told Moody that they would discuss the
matter when Sheehan got back to the field.
When Sheehan returned to the field shortly after noon, he
asked Moody to join him for a ride in his truck. After they had
driven only a short distance, Moody asked Sheehan what was going
on. Sheehan replied, "Youþre done," and when Moody asked why,
Sheehan informed Moody that it was "about money" and that Jackson
was "cheaper." Moodyþs employment with Northland was terminated.
Moodyþs starting salary with the competitor would have been
$1800 per month. When Moody informed Sheehan about the
competitorþs employment offer, he did not disclose the competitorþs
salary offer.
On November 21, 1994, Moody filed for unemployment benefits.
Initially, the Department of Labor and Industry, Unemployment
Insurance Division, determined that Moody was eligible for
unemployment benefits. After Northland protested this
determination, the Department of Labor and Industry reconsidered
Moodyþs eligibility and issued a redetermination letter which
stated that Moody was not eligible for unemployment benefits. The
benefits examiner concluded that Moody had been the moving party in
the employment separation. The examiner further concluded that
Moodyþs voluntary separation was without good cause attributable
to, or the fault of, Northland, and that therefore Moody was deemed
disqualified to receive unemployment benefits.
After the redetermination, the matter proceeded to two
separate hearings conducted by the Legal Services Division of the
Department of Labor and Industry. At the first hearing, Appeals
Referee James L. Keil determined that the benefits examiner had
erred in concluding that Moody was the moving party responsible for
his separation from employment. Keil concluded that Moody had been
discharged from employment.
At the second hearing, on May 9, 1995, the issue before
Appeals Referee David Frazier was whether Moody was qualified or
disqualified from receiving unemployment insurance benefits.
Specifically, Frazier considered whether or not Moody was
discharged for "misconduct" as that term is defined and interpreted
in the Montana Code Annotated and the Administrative Rules of
Montana. Frazier concluded that Moody had been discharged for
reasons other than "misconduct," and reversed the benefits
examinerþs determination that Moody be disqualified from receiving
unemployment benefits.
Northland appealed Referee Frazierþs decision to the Board of
Labor Appeals. The Board initially affirmed Frazierþs decision on
June 26, 1995, but then issued another statement on September 20,
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/96-187%20Opinion.htm (3 of 7)4/11/2007 1:56:39 PM
96-187
1995, reversing itself and overturning Frazierþs decision.
On October 18, 1995, Moody submitted a petition for judicial
review to the Ninth Judicial District Court, Glacier County,
requesting that the court reverse the decision of the Board of
Labor Appeals. The District Court affirmed the Board of Labor
Appeals on March 12, 1996. This appeal followed.
STANDARD OF REVIEW
Recently, in Hafner v. Montana Department of Labor and
Industry, No. 96-105 (Mont. Dec. 10, 1996), this Court stated that
"the question of whether conduct rises to the level of þmisconductþ
is a question of law which this Court reviews for correctness."
Hafner, No. 96-105, slip op. at 6. This standard we enunciated in
Hafner required us to reverse two previous cases, Connolly v.
Montana Bd. of Labor Appeals (1987), 226 Mont. 201, 734 P.2d 1211and Stine v. Western Federal Savings Bank (1994), 266 Mont. 83, 879
P.2d 53:
Having reviewed this issue [of whether the determination
of "misconduct" is a question of fact or a question of
law] in the present case, we reverse Connolly and Stine
to the extent that they hold that "misconduct" is a
question of fact[.]
Hafner, No. 96-105, slip op. at 6. We explained that
[t]he question of whether an employee has disregarded
standards of behavior, been careless or negligent, or
violated company rules is a question of fact. Whether
those "facts" then constitute "misconduct" involves
interpretation and application of the Administrative
Rules of Montana and is a legal conclusion reviewable by
this Court.
Hafner, No. 96-105, slip op. at 6-7. Therefore, we must determine
whether the District Courtþs conclusion that Moody was discharged
for "misconduct" is correct.
DISCUSSION
Moody concedes that the undisputed facts of this case, stated
in Referee Frazierþs written decision and set forth in the Facts
section of this Opinion, are supported by substantial evidence.
Moody contends, however, that these facts do not constitute
"misconduct" as that term is defined and interpreted in the Montana
Code Annotated and the Administrative Rules of Montana. We agree.
Section 39-51-2303, MCA, provides in relevant part:
An individual shall be disqualified for benefits after
being discharged:
(1) for misconduct connected with the individualþs work
or affecting the individualþs employment ....
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/96-187%20Opinion.htm (4 of 7)4/11/2007 1:56:39 PM
96-187
Section 39-51-2303(1), MCA. The Administrative Rules of Montana
define "misconduct." Section 24.11.460, ARM, states, in pertinent
part:
DISQUALIFICATION FOR MISCONDUCT
(1) Misconduct as used in 39-51-2303, M.C.A., includes,
but is not limited to, the following conduct by a
Claimant:
(a) Willful or wanton disregard of the rights,
title, and interest of a fellow employee or the
employer; . . .
Section 24.11.460(1)(a), ARM. Section 24.11.461, ARM, identifies
a number of specific acts which constitute "misconduct." Relevant
for our purposes here is:
(c) Dishonesty related to employment, including but not
limited to, deliberate falsification of company records,
theft, deliberate deception or lying; ....
Section 24.11.461(1)(c), ARM. The Board of Labor Appeals, in its
September 21, 1995 decision finding Moody ineligible for
unemployment benefits stated:
Testimony and evidence before the Board clearly indicate
that the claimant tried to negotiate a raise by giving
his employer an ultimatum requiring a raise within
several hours and by also threatening to leave taking the
only other employee of the company with him. This
conduct was deliberate and was a disregard of the
interests of the employer. That fact is underscored by
the evidence that the claimant was making $2,500.00 per
month with Northland and had only been offered $1,800.00
per month by the competitor. It is found that claimantþs
actions and statements amounted to deception related to
his employment. It is concluded that such action by the
claimant arose [sic] to the level of misconduct according
to 39-51-2303 MCA, and ARM 24.11.461.
We do not agree that Moodyþs actions "arose to the level of
misconduct according to 39-51-2303 MCA, and ARM 24.11.461."
In the briefs submitted to this Court and in the Boardþs
findings, much was made of Moodyþs failure to disclose to Northland
that his job offer included a monthly salary $700 dollars less than
his existing monthly salary. Both Northland and the Board
characterize this non-disclosure as "dishonesty related to
employment." However, the record reveals that Northland did not
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/96-187%20Opinion.htm (5 of 7)4/11/2007 1:56:39 PM
96-187
know, prior to terminating Moodyþs employment, that Moody had
failed to disclose this salary disparity. Therefore, even if this
failure to disclose can be considered a deceptive or dishonest act
as contemplated by the definition of "misconduct," it logically
could not have been a basis for Moodyþs discharge; Moody could not
possibly have been terminated for dishonesty or deception if
Northland did not know prior to termination that Moody was or had
been dishonest or deceitful.
Both the Board and Northland have characterized Moodyþs
statement that he "had to have a decision by noon that day" as an
"ultimatum," and his statement that he would "take" Randy Brown
with him if he left Northland as a "threat." They argue that the
statements constitute misconduct. There is no indication in the
record that Moody did not need a decision by noon. The record
establishes that Sheehan was operating under the understanding that
Moody did need a decision by noon. The appeals referees and the
Board did not find, and we cannot locate in the record, any facts
showing that Northland believed prior to terminating Moody that his
"ultimatum" was untrue. We fail to see the negative connotation
given by Northland and the Board to Moodyþs statement that he "had
to have a decision by noon that day." This statement did not
constitute misconduct.
Similarly, Northland and the Board have characterized Moodyþs
statement that he would "take" Randy Brown with him if he left
Northland as a "threat." Brown is an adult. There is no evidence
that Moody had any control over Brownþs actions. It is
unreasonable to believe that Moody could have "taken" Brown with
him if Brown himself did not want to leave Northland. Instead, it
is reasonable to believe that Brown could have left Northland of
his own volition; indeed, he had been offered a job by the
competitor, as Sheehan discovered shortly after speaking with
Moody. Further, nothing prevented Northland from taking such steps
as were necessary to counteract Moodyþs "threat" and secure Brownþs
continuing employment, as in fact occurred when Sheehan sought out
Brown and gave him a raise. Moodyþs statement that he would "take"
Brown with him if he left Northland cannot reasonably be considered
a threat to Northlandþs interests, and did not constitute
misconduct.
The parties have characterized Moodyþs conduct differently.
Our review of the undisputed facts establishes that Moody
essentially demanded a raise from his employer, Northland. Moodyþs
particular actions and statements in demanding a raise may well
have been undertaken in order to exert leverage in the bargaining
process. Moody may have been somewhat deceptive. We cannot,
however, conclude that upon the particular facts of this case
Moodyþs conduct fits within the definition of "misconduct"
contemplated by 24.11.460 and 461, ARM, and 39-51-2303, MCA.
Moreover, and more importantly with respect to the issue in this
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/96-187%20Opinion.htm (6 of 7)4/11/2007 1:56:39 PM
96-187
case, we cannot conclude that Northland fired Moody for
"misconduct." When Northland terminated Moodyþs employment, it was
largely unaware of conduct which it only later, after Moody was
terminated, determined was dishonest or deceptive. The court erred
in affirming the incorrect conclusion of the Board of Labor Appeals
that Moody was discharged for misconduct.
Reversed.
/S/ WILLIAM E. HUNT, SR.
We Concur:
/S/ J. A. TURNAGE
/S/ CHARLES E. ERDMANN
/S/ KARLA M. GRAY
/S/ W. WILLIAM LEAPHART
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/96-187%20Opinion.htm (7 of 7)4/11/2007 1:56:39 PM