Schmidt v. Cook

Decision Date08 March 2005
Docket NumberNo. 03-746.,03-746.
Citation108 P.3d 511,2005 MT 53,326 Mont. 202
PartiesNina SCHMIDT, Petitioner and Appellant, v. Elvin Lou COOK and Robert Cook d/b/a Triple Crown Motor Inn, Defendants and Respondents.
CourtMontana Supreme Court

For Appellant: Randy Lee Tarum, Attorney at Law, Great Falls, Montana.

For Respondents: Robert Cook, pro se, Boise, Idaho.

Justice PATRICIA O. COTTER delivered the Opinion of the Court.

¶ 1 Nina Schmidt ("Schmidt") appeals the District Court's Corrected Order Affirming the Human Rights Commission ("HRC"), whose Order Reversing and Dismissing Final Agency Decision ("Order") resulted in the dismissal of her charge of illegal discrimination against Elvin Lou Cook ("Elvin") and Robert Cook ("Robert"), d/b/a Triple Crown Motor Inn ("the Motel"). The HRC concluded that there was not substantial credible evidence to support a finding of discrimination on the basis of sex, and that because any alleged illegal discrimination did not occur in the employment context, the HRC did not have jurisdiction. The District Court affirmed. We reverse and remand.

ISSUE

¶ 2 We restate the issue as follows: Did the District Court err when it upheld the HRC's reversal of the Final Agency Decision?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 3 Robert purchased the Motel in August 2000. In September 2000, Robert's brother Elvin became the Motel manager. Elvin had previously worked for Robert in a similar capacity in at least two other motels that Robert had owned. Elvin was authorized to operate the Motel and to hire new staff.

¶ 4 Elvin advertised for a "Live In Maid." Schmidt's friend Amber Symington ("Symington") worked and lived at the Motel. On September 28, 2000, Schmidt visited Symington and stayed overnight in Symington's room. Schmidt inquired about working at the Motel and Symington introduced her to Elvin.

¶ 5 On September 29, 2000, Elvin interviewed Schmidt for the Motel maid position. He conducted the interview in his Motel room. When Schmidt first arrived, Elvin stripped his bed and asked Schmidt to remake it to demonstrate that she could make a bed. After she did so, Schmidt testified, Elvin informed her that she was hired for the maid position. Elvin then informed Schmidt that as part of her job, she would be required to have sex with him and with Motel customers. He described in detail a variety of sexual acts that Schmidt would be required to perform. He told her that she might eventually make $20,000 to $40,000 per month.

¶ 6 At the time of the interview, Schmidt was an emancipated sixteen-year-old who was married and separated, and living with her mother, Phyllis Slade ("Slade"). The family lived on Slade's public assistance and Social Security disability payments of $491 per month. Schmidt had an eighth-grade education and had been unable to find work because of her age and lack of work experience. Schmidt considered accepting the Motel job.

¶ 7 After the interview, Schmidt gave Elvin Slade's phone number. Elvin called Slade, and Schmidt got on the phone and told Slade that she had been hired to be a maid at the Motel. Slade then spoke with Elvin, who informed her that Robert owned the Motel and that he, Elvin, was the manager. Elvin knew that Schmidt was sixteen; he assured Slade that he would make sure she was okay in her new job. The telephone call was interrupted by call-waiting, and Elvin agreed to call Slade back in a few minutes.

¶ 8 Elvin gave Schmidt and Symington $50 to buy whatever supplies they might need to stay at the Motel. After they left his motel room, Elvin called Slade again and discussed Schmidt's job in more detail. Elvin explained that Schmidt would have to live at the Motel, and that he would personally train Schmidt. Elvin informed Slade that Schmidt's starting salary at the Motel would be $1500 per week. He also stated that he planned to take Schmidt and a few other females who worked at the Motel to work at a motel in Las Vegas, where Schmidt would be able to earn a great deal more money.

¶ 9 The next day, September 30, Elvin fired Symington and evicted her from the Motel for having a party in her room the night before. Schmidt also left the Motel, but returned later with a friend she had recruited at Elvin's request, to interview as a replacement for Symington. Elvin rejected Schmidt's friend for the job.

¶ 10 On October 1, 2000, Schmidt informed her mother that the job at the Motel included prostitution. Slade called the police. The Great Falls Police Department was already investigating Elvin and the Motel, because another woman had reported that she interviewed with Elvin and received the same job offer as Schmidt. On October 2, Detective Richard Hollis met with Schmidt and verified that Elvin had offered her a maid position, contingent upon her willingness to engage in sexual acts with Elvin and Motel customers. Schmidt agreed, with her mother's permission, to carry a concealed recording device (a "wire") in her purse and return to the Motel for another meeting with Elvin.

¶ 11 Schmidt returned to the Motel on October 2, with the wired purse. She engaged Elvin in conversation and he repeated that she would be required to engage in sexual acts with him and with Motel customers as part of her job. He then pulled down her pants and underpants and hit her on her bottom with a ping pong paddle. Schmidt fled Elvin's motel room.

¶ 12 The Great Falls Police Department obtained a warrant and arrested Elvin for felony aggravated promotion of prostitution and misdemeanor sexual assault. He ultimately pled guilty to misdemeanor promotion of prostitution and misdemeanor sexual assault on Schmidt. At his sentencing, he admitted that he hired women at the Motel to give massages, spank customers, and offer specialized sexual services. He apologized to Schmidt and the other women.

¶ 13 Robert, who resided in Boise, Idaho, found out about Elvin's arrest when a friend sent him a newspaper article about it. Robert had never developed any written policy concerning sexual harassment or quid pro quo supervisory practices at the Motel.

¶ 14 On February 1, 2001, Slade filed complaints on Schmidt's behalf with the Department of Labor and Industry ("Department"). One complaint alleged that Elvin discriminated against Schmidt on the basis of sex by subjecting her to sexual harassment. In the other complaint, she alleged the Motel discriminated against Schmidt on the basis of sex in employment by reason of Elvin's harassment. Amended complaints were filed on March 19, 2001. Upon Schmidt reaching age eighteen, the caption of the case was amended accordingly.

¶ 15 The Department consolidated the cases and appointed a Hearing Examiner on July 16, 2001. On July 18, 2001, Elvin was personally served with process at the Motel, where he was still working as the manager. Robert Cook was added as an individual respondent on October 10, 2001. Elvin failed to appear and defend. The Hearing Examiner entered a default against him on October 15, 2001. Robert appeared personally on November 5, 2001.

¶ 16 On January 29, 2002, although Elvin had not appeared in the case, he suborned false statements from Slade and from Schmidt's brother, promising them $150,000 and college tuition for Schmidt's brother if they would give written statements and testify that Schmidt was a drug user and that she had propositioned Elvin, offering him sex in exchange for a motel room. The Hearing Examiner held a contested case hearing on January 30 and 31, 2002. On the morning of January 31, 2002, Slade and Schmidt's brother provided Robert with written statements. Robert refused to pay for the statements, but told Slade and Schmidt's brother that he would encourage his liability insurer to pay them for the statements and supporting testimony. Slade testified, but Schmidt's brother did not.

¶ 17 Following further briefing by the parties, the Hearing Examiner filed the Final Agency Decision on May 24, 2002. The Hearing Examiner concluded that the Department had jurisdiction over this case, pursuant to § 49-2-509(7), MCA, and that Elvin illegally discriminated against Schmidt because of her sex when he subjected her to quid pro quo sexual harassment as a condition of hiring her as a Motel maid. The Hearing Examiner further concluded that Robert, the owner of the Motel who placed Elvin in the manager position without providing a sexual harassment policy to protect employees and applicants, was jointly and severally liable with Elvin to Schmidt for her resulting emotional distress in the sum of $35,000. The Hearing Examiner further concluded that other affirmative relief against Elvin and Robert was warranted.

¶ 18 Robert appealed the Final Agency Decision to the HRC. The HRC reversed the Final Agency Decision and dismissed Schmidt's complaints. The HRC concluded that the alleged sexual harassment of Schmidt did not occur in an employment context, and thus the Hearing Examiner erred in concluding that the Department had jurisdiction over the case. The HRC further concluded that the Hearing Examiner's finding of discrimination on the basis of sex was not supported by substantial credible evidence. The HRC determined that the parties operated in pari delicto, and that Schmidt was aware of the nature of the employment prior to her interview with Elvin. The HRC further found that the quid pro quo exchange did not occur during a genuine employment interview, but rather occurred while Schmidt was wearing a wire as part of a police investigation.

¶ 19 Schmidt appealed to the District Court. On October 7, 2003, the District Court issued its Order affirming the HRC, from which Schmidt now appeals.

STANDARD OF REVIEW

¶ 20 Actions brought before the HRC are subject to the requirements of the Montana Administrative Procedure Act ("MAPA"). Moran v. Shotgun Willies, Inc. (1995), 270 Mont. 47, 50, 889 P.2d 1185, 1186. The standard of review of an agency decision under MAPA, set forth...

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