Art v. Montana Dept. of Labor Ind

No. 01-491
IN TFiE SGPREME COURT OF TI-lE STATE OF MOTTANA
2002 h 'i
:r -77
2-,
I;VE ART,
Petitioner and Appellant,
v.
0f <'
MONrAEA DEPARTMENT OF LABOR ed *sss* ,:i..[
c s c``
-.,A*
AND INDUSTRY, ex rel., PATRICIA MASOX,
cE~*:&;:
-.+-t * *,*:-
f ``7@g*$&$18.:
, , .,
Respondents and Respondents
APPEAL FROM: District Court of rile First Judicial District,
In and fbr the County o f Le~vis Clark,
and
Honorable Jeffrey M. Sherlock, Judge Presiding
COUYSEL OF RECORD:
For Appellant:
Michael J. Sari Souci, Law Office of Michael J. Sail Souci,
Bozeman, Montana
For Respondent:
Julla M Swlugley, Specla1 hssrsta``t Attorney General, Departmerlt
of 1,abor and industry, Helena, biontana
Subm~tted Briefs
on December 13, 2001
Dccidcd I~eccmbet10, 2002
Filed.
Justice Jim iepartme~it).Art denled Llason's entitlcii~ent the bct~efits
to and
wages, asserting that Mason was an independent contractor. The Dcpanrnent suspended a
detcrn~inarion the merits of Vason's claims, arid the case wiis assigiied to rile lndci~cndcnt
on
(hntractor's Central Unit (1CC:iI) for a determination of Mason's employnient status.
'I4 $4 compliiance spccialist with the lCCU issued a determinatic~n Clay 5; 10077,
on that
Mason worked as an e~i~ployce Art. Art appealed the deterinination to the Dcpartn:ent's
of
flearings I)i\-ision. which helda coiitestedcase hearing on I>ecembcr i 1 , 1990. The hearings
officer sttstail-ieci the finding of Mason's status as an employee. Art next appealed to thc
Board ctflkel-sonnci~ p p c a l (thc Boardf, wlrich again aiiirrncd Mason's i:nployee starus cln
s
May 1 . 1998.
75
1 rltri ;tpppcalcd the Board's decision to tl-re Sixth Judicial District Court, Park County,
..
Montana. Thc court remanded the casc on May 25, 1990: due to a procedural flaw vt,ith thc
hearing. bpon remand, the Burcau Chief of the Hearings Division ordcrcd thc inatter
transferred for trial in the Workers' Compensation Court in July 1099. 'Ihc court's findings
and conclusions, issued on June 23, 2000, concluded that Mason was ;in employee who
qualified for Ijncmpioyment insurance benefits. Ho\\tcvcr, the order stated that the Workers'
Cornpcnsation Court lacked ':jurisdiction to decide issues arising with respect to Mason's
overtirnc wage claim."
716 Mason's overtime claim \$-asthe11 assigned to tile Department's Wage and Ciiirir Lnit
h r a determination of whether hlason qualified for overtime pay. 7'hc I)epartmcnt's
compliance specialist issued a finding it] hlason's favor on October 10);2000. A!? rcqucstcct
reconsideration, and a second compliance specialist affirmed the deter~nination November
on
9; 2000. The Department ordered Art to pay ~tlaso11
ovcrtirnc, penalties and interest in the
amount of S12,(166.60.
'7
7 On November 27,2000, Art filed an applictttiitn with thc i)epa~Tmentfor a stay of t i ~ c
administrative appeals process pcnciing judicial rcview by thc District Court. ?he
Department ilcrricd the stay and transferred tltc ovcitiinc ivagc matter to the Clearings
pr-ctccss and. on
1)ivision. Art submitted another application for a stay of tlic ad~ninistrative
f>ecernbcr 13, 2000: tilcd a petition for judicial review and iniunctivc relief with thc First
3
Judicial District C'OLII?. On January 3.200 1, counsel for thc Department sewcil a nolicc of
spccial appearance and filed a motion to dismiss Art's petitiori onjririsdiciionill grounds. i'Ix
t>cpartment also iiicd an answer to Art's petition on January22.2001. On January 20,2ii(i 1.
the Dttpitrtn~ent
filed a "~ioticc
ofissue," maintaining that dilc to Art's lack ofrcspiii~sc the
tii
jurisdictional challenge. judicial proceedings should he halted under Montana i:nifc?rn?
District Court Rule 2ib); \vhich states that failure to respond to a motion is deetned an
admission that tltc inotion is well taken. Art argued that the Department's inotion to dismiss
was mooted when the Departtnent consented to jurisdiction by appearing and answcrii~g,
li8 On April 6 , 2001, the District Court disniissed the action for lack of snhject matter
jurisdicrion. Art filed a timely appeal to this Cout-t.
STANDARD OF KEVIEFZ'
q0
1 When deciding a motion to dismiss based on lack of sub-icct matterjurisdiction, a trial
court rnust determine whether the complaint states facts that, if true, would vest the court
wit11 sul>jectmatter jurisdiction. Cierzevizl C'ci~zstrzrctor.;, V . C % L ~ I L ' ~ L I ~ I ~ TTnc., 200 l b17'
11~;. OC)Y,
54.11 10, 304 blont. 3 19. .li 16, 2 1 P.3d (AMi l 16 (citing Liherij: N o r t i ~ ~ ~rei .s~t.Cii17~. Stcrri,
! l 11.
, ~ ~ ~ t i ~ I098 MT 169, *1 7. 289 Mont, 475,
I , " ( i ~ ~ z / w ~ iIr?.s. F ~ r o zi r~ .
l 5, 902 P.2d 1107, 7). A '
court's determination that it lacks subject niatter juristiiction i s a conclusion oflawl which
we revic.iv to determine whether the court's interpretation of'thi: Iiiw is conect. (;ctrio;il
C,'~titriic.iol-;, 16 (citing 1 7 rc . ~ / / ' L ' ( ; I I I - C ) Y ~ C ~1900 Ml' 192, 7 7>
5 1 , 295 Mont. 357,Ti 7; 1t2d
983
068, j' 7).
I~ISCUSSIIQIV
"j 10 Art pciiiici>i~cd District Court for j~idiciairc.iiew of ~1aso:~'s
rhc ove-timu wage ciiiim
oil the grounds that the Department's "decisions arc arbitrary and capricious. contrary to the
evidence in the record and enoneous as a n ~ r t e rof law.'' O n appcal; Art asscr~s the
- tllilr
adrninistrutive revieu. process violates her right to dric process and prompt :i:!ministration of
justice n~andatedunder iirticle it, Sections 16 and 17 of the tfontanit Corrstitution.
71 1 The Slate contends that Art failed to cxhaust lier admi~iistratii-e
remedies beforc
appealing to the District Court and that the court was correct as a matter of law to dismiss
AI-t's petition for relief on the grourtds that the cout-t lacks subject matter jurisdictioii over
Mason's wage claim until the parties complcte t11c i3cpartnmcnt's aciministrative review
process outliricci by stattlte and regulation.
'12 blasoir filed her over-time wage claim in January 1007; and the provisions of the Wage
Proteetioil Title 30, Chapter 3, Vontana Code Annot:fied (lVj5); eovcrn this t~ction.
. .
I he Depat-tmentof Labor and Industry is authorized to investigate violations ;md enforce the
provisions of the wage and hour statutes. Scction 30-3-20% ?4CA (10951. The
commissioner of the Ikpartment is ernpowered by 9 39-3-202, h.tC':%( 10051. tit issuc, amend
and enforce rules for the purpose of carrying out the w;rge protection provisions.
13 made by the I:epartmcnt
i'lie statutes governing appeals Srom an initial dctcrininatioi~
.(( \
-
on a wage claim providcs for an administratiic Ilearing. Scction 30-3-2 i 0,MC:.4 (i )I>).
sialcs in pc!-linent part:
(,2)Vt'hcn the cicparrrneilt determines that a wage claim is valid, ihc departiirei~i
shall mail the cietermination to the partics at the last-kno\v!r address oi'each
party, If a party appeals the dep:rrtmenr's determination w i f ~ i nI5 days after
the dctcrmiiiation is mailed by the iiepailment, a hearing must bc co~iducteci
according to contested case procedures under I'itle 2. chapter 4, part 6 . . . .
(3) The dccision of the hearings officer is h a l unless iirrilrcr revicw is
initiated pursuant to 30-3-217 within I5 days after the decision is mailed to
each party's last-known address.
elalms ma: be appealed to the Board of Personnel Appeals, pursunntto 4 39-
After a hear~ng,
3-2i7: MCA (1905),' which states, in picrtincnt part:
Appeal to boarci. l f aparty is aggric~yed the decision ofthe hearings
by
officer, the party may appeal the ciecision to the board. . . . When a decision is
rcnclered by the board, the board shall mail copies of the decision to each
interested party ;it the party's last-known address and to the department. The
decision is final unless an aggrieved party reyuests a rehearing or iniiiates
judicial review, pursuant to Title 2. chapter 4, part 7; by filing a petition in
district coilrt within 30 days o f t h e date of mailing of thc board's clccisiun.
Section 2-4-702, VICX (1W5), provides the right to district court jucticial review of
adriiirristrative agency decisions and sets forth the conditions for bringing an action. Section
2-4-702, PICA (1005). states in pertinent part:
Initiating judicial review of contested cases. ( 1 )(a) 1 person who has
%
exhausted all administrative remedies available within the agency ancl who is
aggrieved by the final decision in a contested case is entitled tojudicial review
untier this chapter . . . .
- .
rlx 1999 L,egislaturc rcjicaled 6 30-3-217, MCA. \viiiicii ren?ovcd the Board Troii~ the
atlt?nitiistrativc appeals proccss. Sectioil 26, Cli. 432. 1.. 109'). For clai``is
accruing on or alter
April 23, 10')") an appeal of the decision resulting from a contesrcd case hearirrg ]nay bc taken
dil-ectly lo district court. Section 30, Ch. 442, I.. 1990.
4;I4
SI tVhi!e $3 30-3-216 irud 217, Mi:A (1995), prr?vided ior a ti1:o-tier appearis process
within thc Dcpartmcnt, $ 2-4-702;
MC'A (i995j. provided for jiidicial :i~:ic\v iii- iix
i)epzirtrnci:t'.; ruling after the administratii-e appeals process was coinp:eicd. Section 2-4-
702(l)(aj, MC'A !1995), i s the statutory cnrhodime~itof the maxi~no i "exhaustion of
remedies," a legal pri~iciplcthat reyuircs a person to exhaust the adn~inistrative
remedies
prolrided by law before seeking reliefthrough judicial review. See Gilpitr v. Sfufe1)ep 't cij
firr~ilvServic:es(I99 I), 24Wlont. 37,3") 8 82 P.2d 1265, 8266-67: kimz v. Ruile-.Yiii~et-/2oii:
(lOOO), 234 Mon!. 271, 273, 707 P.2d 224, 226; Kurr~iciiut C70/nnr'r o f l u h o r (znd Irlcfus.
v.
( I %2), 201 tlont. 221, 225, 653 P.2d 498: 5110 ("It is a gcncral principle rllat if an
adrrrii~istrativc retl~edy is provided by statute, that relief must bc sought from the
administrative body and the stati~tot-4-
remedy exhausted before relief can be obtai~iedby
judicial review,"). The principle requires exhaustion of administrative renlcdies in
adjudicating particular issues as well as entire cases. Sec ~VIurOle l.)~,p of f1ei'"lfilntrci
v. 'i
Set~vice,~, kftl7'240, ' 28, 301 Mont. 373,7/ 28, 9 P.3d 61 7, q.1 28 (holding that an
nlitnc``? 2(i(!0
issue that was never squarely raised, argued or adjudicated pursuant to the administrative
process was not ripe for judicial re\:iew).
''15 I n the case before us, Art contested both claims that Mason filed with the Ilcpartment
in January 1907. arguing that Mason qualified for ncithcr i;nemployn~entInsurance benefits
nor ovcrtirnc wages becausc she workcd as an independent contractor rathcr than as an
einploycc. C:onscqucntly, the Ikpartnicnt was first requircc! to rcso!ve the issue of 'l/lason's
status, ~vhieh initially determined by a compliance specialist: then :ippealcd
en~ploymcnt was
7
by Art for a contested case hearing; appealed by .Art to the 13oarii of Personnel Xppeais;
which a f ~ i r ~ ~ ~ e d rcmandcci by the Sixth Judicial Distl-ict Co~lrtfor
thc cariier decisio:``;
rehearing; and transferred to the Workers' C'umpensation iyourt. The \Vorkers'
Coaipensation Court concluded that Mason wet-ked as an crnplgyee 2md; on that basis,
adjudicated licr Unemployment insurance claim. Because the Workers' Cornpensiltion Court
held that it was ~vithoutjurisdiction to resolve Mason's overtime wage claim. the
administrative process had to be rcinitiated. Tlie Department then assigned the wagc claim
to a cornplii~nee
specialist, in accordance with the procedure established by the administrative
rules. riulc 24.10.7519, ARM: and Rule 23.16.751 1, ARM,
4; 10 Cotti7 ruling
The compliance specialist determined that the Workers' Con~pcnsaiion
was dispositive as to Mason's ert~ployment
status for any witge claint under state l i i ? ~ t11at
and
Art owed Vlason certain overtime wages. Art requested a redetcrminzition. pursuarlt to Rule
23.10.7534. ARM. The redetermination affirmed the initial detemniination. As stated above,
930-3-210(2j; b1CA (1905), and Rule24.16.7537, ARhl, direct an aggrievcdparty to request
determination on a -wage claim. If
a formal hearing in order to appeal a Dcpartrne``t
unsatisfied with the hearing results, the party could then appeal to the Board of Personnel
Appeals for relicC Section 30-3-217. MCA (1095), and Rnlc 74.1(1.7547. AKIVI, in this
case, instead of following the administrati\:c appeal process, Art filed a pctition scckirtg
rciiew in the First Judicial District C:ourl.
717 compliance
lye conclude that by hiling to pursue an administrative appeal cti'tl~i:
specialistsi dcterrninatioiis regalding illason's wage claim kvith the Departr``ent's
Fiearings
X
Llivision and then with the Board; in accordance mith statute and c-rsgu!arion, Art i': ? ~ C W10
\ '"-.A
administrative remedies. Scction 2-4-702(1 j(a). h l C h ( ? 995j,
cxhai;:;i i?eravaili~i?!c requires
Art to cxhausi all iidministrative rcrncdies a-vailable before she bccorncs cntirled ro jiidiciai
re\-icw. LVhile Art hllo~ved agency's appeals process ivhcn adjuiiicatiiig
the tk issue of
klvfason's cn~plo>~nent
status, she circumvented the proccss by seeking relicf in districr court
before the wagc claim issuc Lvas ripe for review. Accordingly, tlie court was correct to
conclude that it lacks jurisdiction to act on Art's petition for j``dicial ~ i e w .
rc
'1 8 'This case llas taken a s l o ~ v somewhat circuitous route through the administrative
and
appeals process due to the bifilrcatcd adjudication of Mason's two claims. Some of the
procedural ciuplicatiori rcquircd to resolve tile rnultiplc issues raiscd in this matter has
out
been rcmedied by statute. However. as this case ~.ounds its fifth ?car of
subseqt~ently
proceedings, thc Appellant presents no at~thority or basis for concluding that her
constitutional rights of duc process and prompt administration ofjustice have been abridged.
According to the record, the Departmenr cotlsisteritly actcd without undue delay at each step
of the process. In affirnntin the District Court's order of distnissa! for lack of subject matter
jurisdiction, we note that At-t's unla~vfulstray into thc realrn ofjudicial review has tacked
two years onto the adjutlieation proccss.
'I 9
11 Affirmed.
Ll+c concur: