Art v. Montana Dept. of Labor Ind

2002 MT 327

• Court: Montana Supreme Court
• Decided: December 19, 2002
• Docket: 01-491
• Status: Published

Opinion

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 i

of the Department of i..ahor and industr-y that she oives a dorncsric .~$;orlter unpaid ovcriime

wagcs. The First .ludicial flistrict Court, ILewis and Clark County, Montana, concl~~dcai that

Art first must exhaust available administrative remedies before the district court may assume

jurisdiction over the matter. We affinn.

ti2 ?'he dispositive issue on appeal is \vhetlier tlrc District Court errcci in dismissing :4rtis

pctition for judicial reviem- on the grounds that the co~11-t lacks subject matter jurisdiction.

FAC'I'UAI, AND PROCEDURAL, BACKGROUND

'3 Eve Art hired Patricia Mason in January I996 as a personal care attendant for her

elderly niother, Irene Schmolka. Mas011worked from ti\-o to four 24-hour shifts each week

until Schmolka's death in November 1990. In Jarluai-y 1997, biason filed for i.lnemplojment

Insurance benefits and a wage claim for unpaid overtin~c ~vith Montana Dcpartmcnt of the

I abor and lndustr) (the I>epartme~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: