Wage Appeal of Montana State Highway Patrol Officers v. Board of Personnel Appeals, 83-17

• Decision Date: 23 February 1984
• Docket Number: No. 83-17,83-17
• Citation: 208 Mont. 33,676 P.2d 194
• Court: Montana Supreme Court
• Parties: , 26 Wage & Hour Cas. (BNA) 1102 In the Matter of the WAGE APPEAL OF MONTANA STATE HIGHWAY PATROL OFFICERS, Montana Public Employees Association, and James Riddle, as a representative member of a class similarly situated, Petitioners and Appellants, v. BOARD OF PERSONNEL APPEALS, a division of the Department of Labor & Industry of the State of Montana, State Personnel Division, a division of the Department of Administration of the State of Montana, and the Department of Justice, State of Montana, Respondents and Respondents.

Page 194

676 P.2d 194

208 Mont. 33, 26 Wage & Hour Cas. (BNA) 1102

In the Matter of the WAGE APPEAL OF MONTANA STATE HIGHWAY PATROL OFFICERS, Montana Public Employees Association, and James Riddle, as a representative member of a class similarly situated, Petitioners and Appellants, v. BOARD OF PERSONNEL APPEALS, a division of the Department of Labor & Industry of the State of Montana, State Personnel Division, a division of the Department of Administration of the State of Montana, and the Department of Justice, State of Montana, Respondents and Respondents.

No. 83-17.

Supreme Court of Montana.

Submitted Oct. 27, 1983.

Decided Jan. 26, 1984.

As Amended Feb. 23, 1984.

Hjort, Lopach & Tippy, Barry Hjort argued, Helena, forpetitioners and appellants.

Patricia Schaeffer argued, Asst. Atty. Gen., Helena, for respondents and respondents.

SHEEHY, Justice.

Certain Montana Highway Patrol officers, through the Montana Public Employees Association, Inc., appeal from an order of the District Court, First Judicial District, Lewis and Clark County, denying them the right to 1 percent yearly increments on their present salaries. The issue came before the District Court pursuant to a petition for judicial review of an administrative order issued by the Board of Personnel Appeals. We affirm the District Court.

In 1973, the Legislature passed a bill directing the Department of Administration to develop a statewide classification and pay plan. According to the bill, the new plan could not result in the decrease of any current employee's salary. Ch. 440, Sec. 8, Laws of Montana (1973). The plan was developed along those guidelines and presented to the 1975 Legislature for its approval. By joint resolution, the Legislature approved the classification and pay plan, set forth the method for implementation, and provided that: "This wage and salary plan is in lieu of any other plan or system of pay increases for classified state employees." House Joint Resolution 37, Laws of Montana (1975).

Prior to the adoption of the plan, the Montana Highway Patrol officers received a base salary determined by rank and an increase of 1 percent per year for each additional year served. Section 31-105, R.C.M.1947. However, in 1975, with the adoption of the plan, the Legislature repealed the provision of section 31-105, R.C.M.1947, which provided for the 1 percent longevity increments. Therefore, effective January 4, 1975, Montana Highway Patrol officers are entitled to receive a base salary, an annual step increase and, in place of the annual 1 percent longevity increases for each year of service, a longevity increase of $10 per month for each five years of service.

During the same year in which the new plan was approved, the Highway Patrol officers below the rank of sergeant organized for collective bargaining and through their representative, the Montana Public Employees Association, Inc. (MPEA), negotiated a collective bargaining agreement. The agreement set grade levels for the officers and adopted in full the provisions of the new classification and pay plan.

Almost three years later, in 1978, the petitioners filed a petition with the Board of Personnel Appeals contending that the adoption and implementation of the pay plan caused a reduction in their longevity pay and that the longevity pay was either a separable part of their salary or a fringe benefit. This contention was rejected by both the hearing examiner and the Board.

The petitioners then filed a complaint and petition for judicial review in the District Court, raising the constitutional issue of impairment of contract. The District Court remanded the cause of action to the Board and directed the Board to obtain additional evidence regarding the Highway Patrol officers' employment contracts with the Department of Justice prior to the effective date of the statewide classification and pay plan.

This was done, and the hearing examiner concluded that the employment contracts were unconstitutionally impaired by the adoption of the pay plan and the repeal of section 31-105, R.C.M.1947. The Board of Personnel Appeals adopted the hearing examiner's findings of fact but declined to adopt his conclusions of law and recommended order. The Board stated that it would instead prefer that the District Court make the necessary legal conclusions.

Upon judicial review, the District Court modified certain findings of the hearing examiner and concluded that because the 1 percent longevity increments did not become a part of the Highway Patrol officers' employment contracts until those increments were earned, the adoption of the statewide classification and pay plan did not unconstitutionally impair any contractual right to the increments.

The following issues are raised on appeal:

1. Whether the District Court abused its discretion by making findings of fact not based on the record and also by making findings of fact specifically contrary to the findings of the Board of Personnel Appeals.

2. Whether the District Court abused its discretion by determining that certain findings of fact made by the Board of Personnel Appeals were "clearly erroneous."

3. Whether the District Court erred in determining that the Highway Patrol officers have no vested contractual right to the continuation of the 1 percent increments and that the legislative repeal of the statute containing the benefit did not constitute an unconstitutional impairment of the obligation of contract.

In regard to the first issue, the petitioners contend that the District Court exceeded its authority under the standard of review set forth by the Montana Administrative Procedure Act, section 2-4-704, MCA. Specifically, they contend that the District Court's findings of fact Nos. 3, 6, 9, and 11 are not supported by evidence in the record and that finding of fact No. 11 is also directly contrary to the specific finding of fact made and approved by the administrative agency.

In findings Nos. 3 and 6, the court added references to the annual step increases provided for by the statewide classification and pay plan. The petitioners contend that no mention of these increases was made in the administrative agency's findings. However, shortly after filing the initial petition in this matter, the parties stipulated that the hearing examiner could take administrative notice of, among other things, House Joint Resolution 37. In House Joint Resolution 37, the Legislature approved the statewide classification and pay plan, including the annual step increases, and set forth the method for implementing the step increases.

In finding No. 9, the court found that, "The MPEA did not re-open negotiations on the subject of the 1% longevity pay after the legislature repealed the portion of Sec. 31-105, R.C.M. (1947), which provided for it." This finding follows logically from the other findings on the issue made by the Board of Personnel Appeals and is specifically supported in the record by the testimony of Tom Schneider, Executive Director of MPEA.

In finding No. 11, the court found that, "The grade and step to which each officer was assigned on conversion to the Pay Plan, was based on total salary i.e. base pay plus longevity." The Board of Personnel Appeals had previously found, in its finding No. 8, that "The grade and step to which each individual Highway Patrol officer was assigned, except five sergeants who were placed at step 2 at grade 14, were not affected by the inclusion of longevity pay in their base pay for conversion purposes to the new pay plan, i.e. placement on the pay matrix was determined by base pay alone; longevity was not included for placement purposes."

At a glance, it would appear that the two findings contradict one another. However, a review of the testimony of Cindy Foster, a Department of Justice accountant who was personally involved in instituting the 1975 pay plan for the Highway Patrol reveals that the findings are not in conflict. Foster testified that she calculated the current gross salary of each officer, using base pay plus their earned 1 percent increments. She then determined the appropriate grade level according to the classification plan and compared the old salary to step one of the appropriate grade. If the old salary was less than or equal to step one, the officer was placed at step one. If the old salary exceeded step one, the officer was placed at the step which most closely matched his salary without reducing it. Foster further testified that five sergeants were placed at grade 14, step 2, because their total salary exceeded step 1. In all other cases, placement at step 1, resulted in increased salaries for the officers.

In response to further questioning by the petitioners' counsel, Foster testified that all of the officers, except the five sergeants, would have been placed at the same level and grade on the pay matrix had the longevity portion of gross salary been excluded from, rather than included in, the officers' salary. Therefore, the 1 percent longevity increments earned to that time were included in the officers' gross salary when the officers were transferred over to the new plan, but the officers' placement on the pay matrix was generally not affected by the inclusion of the longevity increments. This was recognized by the hearing examiner but was not stated clearly in his finding. The District Court merely translated the hearing examiner's finding; it did not substitute its judgment for that of the agency on the weight of the evidence on questions of fact. Therefore, the District Court was within its authority under section 2-4-704, MCA, to make the challenged findings.

We now turn to the next issue on appeal. The District Court determined that the hearing examiner's findings of fact Nos. 6 and 11 were "clearly erroneous" to the extent they implied that the Highway Patrol officers had a contractual right to the 1 percent longevity increments before such increments were...