Harrell v. Farmers Educ. Coop. Union of Am.

• Decision Date: 10 December 2013
• Docket Number: No. DA 13–0034.,DA 13–0034.
• Citation: 314 P.3d 920,373 Mont. 92
• Parties: Thurston “Sonny” HARRELL, Plaintiff and Appellee, v. The FARMERS EDUCATIONAL COOPERATIVE UNION OF AMERICA, MONTANA DIVISION and Alan Merrill, Defendants and Appellants.
• Court: Montana Supreme Court

373 Mont. 92

314 P.3d 920

Thurston “Sonny” HARRELL, Plaintiff and Appellee,

v.The FARMERS EDUCATIONAL COOPERATIVE UNION OF AMERICA, MONTANA DIVISION and Alan Merrill, Defendants and Appellants.

No. DA 13–0034.

Supreme Court of Montana.

Submitted on Briefs Aug. 28, 2013.

Decided Dec. 10, 2013.

For Appellants: Antonia P. Marra; Sara R. Sexe; Marra, Sexe, Evenson & Bell, P.C.; Great Falls, Montana.

For Appellee: Elizabeth A. Best; Best Law Offices, P.C.; Great Falls, Montana, Lawrence A. Anderson; Attorney at Law, P.C.; Great Falls, Montana.

Justice BETH BAKER delivered the Opinion of the Court.

¶ 1 The Farmers Educational Cooperative Union of America, Montana Division, commonly known as the Montana Farmers Union (MFU), and Alan Merrill, MFU's president, appeal a jury verdict from the Eighth Judicial District Court, Cascade County, against MFU for wage claims and constructive discharge, and against Merrill individually for interference with Thurston “ Sonny” Harrell's employment relationship. The jury awarded Harrell compensatory and punitive damages.

¶ 2 We restate the issues as follows:

¶ 3 1. Whether the District Court erred in denying summary judgment on Harrell's wage claims.

¶ 4 2. Whether the District Court erred in denying judgment as a matter of law on Harrell's claim against Merrill individually.

¶ 5 3. Whether MFU is entitled to a new trial on Harrell's constructive discharge claim.

¶ 6 4. Whether punitive damages properly were awarded against MFU.

¶ 7 We reverse in part, affirm in part, and remand for application of the statutory limit to the punitive damages award.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 8 Harrell spent many years working for MFU, a farm organization that manages educational programs, youth camps, and lobbying efforts directed toward benefitting the rural farming community. MFU originally hired Harrell as the membership director. He left this position after five years and temporarily moved to Alabama. MFU rehired him as the education director when he returned to Montana in October 2006. Merrill became MFU's president shortly after Harrell rejoined MFU.

¶ 9 MFU initially classified Harrell's education director position as “exempt,” meaning he was unable to claim overtime pay but earned compensatory time instead. Beginning in April 2010, when an independent accounting firm began handling its payroll, MFU paid Harrell overtime at one and one-half times his hourly pay in any week that he worked over 40 hours. Harrell did not discover the alleged error in his original classification until December 2010, at which time he began requesting that MFU retroactively pay him for all the overtime hours he had worked over the past few years. MFU steadfastly refused and later provided Harrell with a new job description, which was unchanged except that it reflected that the position was now non-exempt.

¶ 10 Meanwhile, another dispute arose between MFU and Harrell regarding vacation hours. MFU's employee handbook limits the maximum number of vacation hours that an employee can accumulate by permitting employees to accrue only up to “the amount of leave they would earn in 18 months at their current rate of accrual.” Instead of using his vacation hours to take time off from work, Harrell had allowed his vacation time to accumulate, anticipating that he would receive payment for the hours upon his retirement. He eventually accrued more hours than permitted by the handbook. On April 30, 2010, MFU notified Harrell that it would not pay him for all the hours of his accrued vacation time since 2007 and subtracted the excess hours from his timesheets. When Harrell asked for reinstatement of and payment for the excess vacation, MFU explained that he was not allowed to earn more vacation hours than the capped amount stated in the MFU handbook.

¶ 11 Harrell also claimed he was owed wages for performing “extra duties.” In 2007, after MFU's executive director Tracy Houck resigned, MFU's management assigned Harrell some of the tasks she previously performed. Harrell estimated that these tasks required one hour of work per day. Harrell testified that Merrill took over some of Houck's tasks as well, such as serving as the liaison between the staff and the board of directors and reviewing budget allocations. As president, Merrill remained in charge of the office, or “at the top of the pyramid,” and all staff reported to him. Merrill assumed the role of managing MFU's day-to-day business and its employees. Harrell repeatedly requested that MFU pay him for doing tasks outside his job description, but MFU did not fill the executive director position or pay Harrell more for assuming the excess workload.

¶ 12 Merrill wrote a letter to Harrell in February 2011, explaining that MFU's board had determined that Harrell had not performed certain obligations of his position. Shortly after, MFU cut Harrell from full-time to part-time and issued him a new job description that contained substantially the same duties that he already had been performing. MFU explained that its decision to make the education director position part-time was based on the board's understanding that the job duties Harrell actually performed no longer required a full-time position.

¶ 13 Harrell filed a complaint in the District Court on March 4, 2011. Harrell alleged that he had been classified incorrectly as exempt and that he was thus entitled to 422 hours of overtime pay and penalties. The complaint also alleged that MFU owed him over $4000 for 232.47 vacation hours earned and not paid. Harrell claimed that MFU failed to compensate him for the additional duties he took on after the executive director left. Harrell claimed that Merrill personally interfered with Harrell's contractual or business relations with MFU by making false statements about him to the Board of Directors. Harrell also raised several other claims against Merrill individually based on these same allegations, but dismissed them during trial.

¶ 14 MFU responded that its decision to make the education director position part-time was not retaliatory, but that Harrell's failure to accomplish tasks assigned to him left him with less to do. MFU based its decision on Harrell's own reports, his letters refusing to do what he was asked by the board, and his opposition to assigned tasks or his failure to complete them in a timely manner. MFU contended that Harrell's position as education director was intended to be an exempt position because it required substantial discretion, such as designing education programs, determining which grants to request, and seasonally supervising other staff to complete the education and camp work. MFU claimed that the education director position was made a non-exempt position when it was determined that Harrell's performance of the position had fewer supervisory responsibilities, in part because of a diminution in educational programs. MFU argued that Harrell was not owed any wages, as he worked no overtime for which he had not already been paid as a nonexempt employee, and that he was not entitled to overtime for the period that he was designated as exempt. With regard to the interference with contract claim, MFU argued that the board had the right to ask Merrill about Harrell's work performance and Merrill had the right and duty to inform the board of his opinion. MFU further claimed that Harrell was not entitled to additional vacation pay because he could not accrue more vacation time than the handbook allowed, and no provision in the handbook provided for payment of vacation in lieu of taking the vacation time except upon resignation or termination. Finally, MFU argued that all of Harrell's claims made pursuant to Montana's wage statutes were barred by the applicable statute of limitations.

¶ 15 On April 29, 2011, Harrell resigned his employment and amended his complaint to allege constructive discharge under the Wrongful Discharge from Employment Act (WDEA). Harrell alleged that he was forced to quit because MFU increased hostility toward him in the workplace and ostracized him after he asserted his right to be paid for vacation, extra duties, and overtime. MFU also denied this additional claim, maintaining that it paid all of Harrell's remaining wages after his voluntary resignation.

¶ 16 MFU filed a motion for summary judgment on all claims on July 16, 2012. The District Court denied MFU's motion in a one-sentence order. Before trial, MFU filed a motion in limine seeking to prevent Harrell from introducing evidence concerning a previous case brought by a former employee against MFU. That employee, Katie Kassmier, had alleged constructive discharge based on alleged sexual harassment; she settled her claim in 2007 while represented by the same attorney now representing Harrell.

¶ 17 During the Kassmier case, Harrell wrote a memo—introduced by MFU during Harrell's trial—to the MFU executive committee outlining his concerns regarding what he perceived to be sexually discriminatory policies that could bear adversely upon MFU in the Kassmier case. While Harrell's direct involvement in that case was limited, MFU did ask Harrell to draft an affidavit supporting its defense. Harrell's initial affidavit, while helpful to MFU, omitted what he believed to be some essential information. On August 13, 2010, Harrell signed a second affidavit that rendered the first affidavit useless to MFU. MFU later entered a confidential settlement following mediation with Kassmier. Harrell claimed that MFU's response to this second affidavit further contributed to an intolerable work environment.

¶ 18 The court had reserved ruling on the motion in limine when the trial started. Over MFU's objections, the District Court allowed Harrell's counsel to discuss the Kassmier case during her opening statement and to introduce evidence regarding the prior case throughout the trial. Despite expressly avowing to the judge that “I don't want to try to get that in,” Harrell's couns...