Denke v. Shoemaker

• Decision Date: 16 December 2008
• Docket Number: No. 04-636.,04-636.
• Citation: 198 P.3d 284,2008 MT 418
• Parties: Mark Alan DENKE, Personal Representative of the Estate of Kathlyn N. Denke, Deceased, Petitioner and Appellant, v. Maurice SHOEMAKER, Councilman for the City of Thompson Falls, City of Thompson Falls, and the Human Rights Commission of the State of Montana, Respondents and Appellees.
• Court: Montana Supreme Court

198 P.3d 284

2008 MT 418

Mark Alan DENKE, Personal Representative of the Estate of Kathlyn N. Denke, Deceased, Petitioner and Appellant, v. Maurice SHOEMAKER, Councilman for the City of Thompson Falls, City of Thompson Falls, and the Human Rights Commission of the State of Montana, Respondents and Appellees.

No. 04-636.

Supreme Court of Montana.

Submitted on Briefs February 16, 2005.

Decided December 16, 2008.

For Appellant: Ann L. Moderie, James A. Manley, Manley Law Firm, Polson, Montana.

For Appellees: Ted Hess-Homeier, Attorney at Law, Missoula, Montana.

Justice JAMES C. NELSON delivered the Opinion of the Court.

¶ 1 Kathy Denke, a former employee of the City of Thompson Falls, Montana, filed two complaints with the Montana Department of Labor and Industry alleging that the City and Maurice Shoemaker, a member of the Thompson Falls City Council, had unlawfully retaliated against her. After a contested case hearing, the hearing examiner awarded judgment against Denke on her claims against the City and partial judgment in favor of Denke on her claims against Shoemaker. The Human Rights Commission affirmed the examiner's decision.

¶ 2 Denke then filed a petition for judicial review in the Twentieth Judicial District Court, Sanders County. In the course of the proceedings, Shoemaker filed a bankruptcy petition in the United States Bankruptcy Court for the District of Montana. As a result, the District Court stayed the proceedings as they relate to Shoemaker. The proceedings continued, however, with respect to the City; and the court ultimately denied Denke's petition on the same grounds relied on by the hearing examiner-namely, that the City is immune from suit and is not liable for Shoemaker's actionable retaliatory conduct.

¶ 3 Denke now appeals.¹ Having considered the issues and arguments presented, we hold that the District Court erred in its conclusions that the City is immune from suit and that the City is not liable for Shoemaker's actionable retaliatory conduct. We therefore reverse the District Court's order denying Denke's petition for judicial review and remand for further proceedings.

BACKGROUND

¶ 4 As noted, the District Court did not rule on Denke's petition for judicial review insofar as it relates to Shoemaker. Thus, Denke's claims against Shoemaker are not at issue in this appeal. At the same time, however, Shoemaker's actions and the hearing examiner's rulings with respect to those actions are intertwined with Denke's claims against the City, and they provide essential context for the issues addressed herein. For that reason, the factual background of this case and the hearing examiner's decision are set forth below in comprehensive detail. But we express no view in this Opinion on the merits of Denke's petition for judicial review vis-à-vis Shoemaker, as that is a matter to be addressed by the District Court in the first instance.

I. The Events Leading up to Denke's Instant Human Rights Complaint

¶ 5 Denke began working for the City of Thompson Falls in the early 1980s. At all times pertinent to this case, her job title was "Town Clerk/Finance Officer." The mayor was her immediate supervisor, and her job duties included acting as city treasurer.

¶ 6 In 1998 and early 1999, the City hired a certified public accountant to examine the City's bookkeeping and records. The CPA identified several problems and recommended procedures to improve the City's financial recordkeeping. A number of City Council members worked with Denke and the CPA to remedy the problems; and by the spring of 1999, the CPA reported that the books were in good order. In addition, the City authorized the CPA to implement the recommended procedural changes, for which the CPA charged $50.00 per hour.

¶ 7 As a member of the City Council, Shoemaker received the CPA's report and participated in the decision to authorize the CPA's work. Yet, despite the explanations provided by the CPA, Shoemaker (who had no accounting expertise) thought that Denke was responsible for causing the City to incur the expense of implementing the new recordkeeping procedures. He also believed that the City Council had tabled too many agenda items, particularly involving reports about ongoing City business, and that Denke was responsible for failing to provide completed reports and sufficient information to address the items the City Council had tabled.

¶ 8 In August 1999, Denke filed a Human Rights complaint with the Department of Labor and Industry alleging sexual harassment and retaliation by the mayor. In October of that year, the City Council met in executive session, which was open to the public, and agreed to settle this complaint and Denke's companion federal complaint filed with the Equal Employment Opportunity Commission. Shoemaker objected to the settlement on several grounds. He questioned the merits of Denke's claim, opining that it was filed in response to criticisms of her job performance rather than legitimately inappropriate treatment. He also expressed disagreement with the laws providing remedies for sexual harassment, and he resented the notion of a state agency investigating the City's conduct and interfering with the City's autonomy in resolving something that, in Shoemaker's view, was purely a local matter. Nevertheless, despite his objections, Shoemaker voted to approve the settlement. The parties then submitted the settlement agreement to the Human Rights Bureau of the Department of Labor and Industry for approval.

¶ 9 As part of the proposed settlement, the parties agreed not to discuss its terms with anyone. In addition, the mayor, the city attorney, and the members of the City Council (including Shoemaker) signed a separate document, which stated:

The undersigned acknowledge, pursuant to Montana Law, that they shall not discriminate against or retaliate against Kathy Denke, Town Clerk for the City of Thompson Falls, as a result of her filing a discrimination complaint against the City and it's [sic] personnel.

¶ 10 In December 1999, Shoemaker received some questions and comments from citizens concerning the settlement of Denke's complaint. In addition, he heard a rumor that the City had paid $15,000.00 to settle the case, though the terms of the settlement agreement he had voted to approve did not include any such payment. Shoemaker felt defensive as a result of the public comments and speculation, and he worried that his constituents might blame him for an excessive settlement. Thus, he decided to respond publicly. To that end, Shoemaker requested that the mayor put him on the agenda for the next City Council meeting. The mayor did not do so.

¶ 11 Shoemaker then wrote a letter (dated January 6, 2000) to the local newspaper, the Sanders County Ledger, in which he purported to tell "the rest of the story." He noted that the mayor had refused his request to be put on the agenda, and he stated that there were "things going on at city hall that the public should know about." He contended that the Ledger's editor and co-owner, Tom Eggensperger, who was also a member of the City Council, never printed any "negative city business," perhaps due to "some kind of conflict of interest." Of particular relevance to the case at hand, Shoemaker also asserted:

The city had an audit in 1998 which shows there was poor bookkeeping at city hall. In fact it was so bad it is now costing the city $50.00 per hour to get it corrected. This money was actually wasted, as the bookkeeping is already paid for. Maybe this is money that could have been used on city streets. This is your tax dollar.

. . .

And now to top everything off the city clerk filed sexual harassment charges against the Mayor and the city. This is why I wanted on the agenda, to talk about this with all parties present. I feel that as I represent the city that I have been accused of something that I had nothing to do with and should have a right to speak out publicly in my defense.

So far I have heard a "He did" but I have not heard a "I did not."

Shoemaker called for the mayor's "immediate resignation" and also suggested that "the Clerk [i.e., Denke] should take a long hard look and also resign." He signed the letter: "Maurice Shoemaker, Council Person Ward # 1."

¶ 12 Eggensperger printed Shoemaker's letter, except for the three paragraphs quoted above, and attributed it to "Maurice Shoemaker, Councilperson Ward 1, Thompson Falls." Eggensperger also printed a response to Shoemaker's conflict-of-interest allegations, as well as the following explanation for not printing Shoemaker's letter in its entirety: "Mr. Shoemaker's letter was edited considerably as we felt he made accusations that were either unfair, unsubstantiated, a misrepresentation of the facts or inappropriate given his position on the council."

¶ 13 Unhappy about the editorial comments and deletions, Shoemaker made copies of his original letter available to citizens. He also read the deleted paragraphs to persons who called him and inquired about the letter and editorial comments. Then, on January 19, 2000, Shoemaker wrote a second letter to the Ledger. He accused Eggensperger again of "biased" reporting and having a conflict of interest. He repeated his complaint about not being put on the agenda and insinuated that the mayor may have "something to hide." He also articulated the following "REASON I WANTED ON THE AGENDA":

The city clerk filed a sexual harassment charge against the MAYOR and the city. At this time has there been a settlement or a pay off? If so whow [sic] and how much? Who got the money, the clerk and the MAYOR or what happened? I do not know as nothing has been told to me. Some one seems to want to sweep this under the carpet and not let the public know about it.

It is for this reason that I believe the MAYOR should resign.

It is for this and various other reasons that I believe that the clerk should also resign.

Shoemaker noted that he was "writing this as a concerned...