ART v MONTANA DEPT OF LABOR IND

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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 AND INDUSTRY, ex rel., PATRICIA MASOX, ed cE~*:&;: -.+-t *sss* ,: c s c~~ i..[ ~~7@g*$&$18.: -.,A* * *,*:- f , , ., 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 Dccidcd Filed. December 13, 2001 I~eccmbet10, 2002 Justice Jim i<icc de1ivi:red the iipiirion oftlie Corrrt. $: tI :(I Cvi: appcais the disinissai oflicr pctition for judicial rcviciv of the deier!ninution of the Department of i..ahor and industr-y that she oives a dorncsric .~$;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 1)ivision. Art submitted another application for a stay of tlic ad~ninistrative pr-ctccss and. on 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. I , " ( i ~ ~ z / w ~ iIr?.s. F ~ r o zi r~ . , ~ ~ ~ t i ~ I098 MT 169, *1 7. 289 Mont, 475, 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~andated under 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 i'lie statutes governing appeals Srom an initial dctcrininatioi~ made by the I:epartmcnt on a wage claim providcs for an administratiic Ilearing. Scction 30-3-2 i 0,MC:.4 sialcs in pc!-linent part: .(( \ - (i )I>). (,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. After a hear~ng, elalms ma: be appealed to the Board of Personnel Appeals, pursunntto 4 393-2i7: 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 2-4702(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-4remedy exhausted before relief can be obtai~ied by 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 nlitnc~~? Set~vice,~, kftl7'240, ' 28, 301 Mont. 373,7/ 28, 9 P.3d 61 7, q.1 28 (holding that an 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 en~ploymcnt status, ~vhieh initially determined by a compliance specialist: then :ippealcd 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 thc cariier decisio:~~; rcmandcci by the Sixth Judicial Distl-ict Co~lrtfor 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 The compliance specialist determined that the Workers' Con~pcnsaiion Cotti7 ruling 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 a formal hearing in order to appeal a Dcpartrne~~t determination on a -wage claim. If 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 lye conclude that by hiling to pursue an administrative appeal cti'tl~i: compliance specialistsi dcterrninatioiis regalding illason's wage claim kvith the Departr~~ent's Fiearings X \ '"-.A Llivision and then with the Board; in accordance mith statute and c-rsgu!arion, Art i': ? ~ C W10 cxhai;:;i i?eravaili~i?!c administrative remedies. Scction 2-4-702(1 j(a). h l C h ( ? 995j, 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 rc conclude that it lacks jurisdiction to act on Art's petition for j~~dicial ~ i e w . '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 subseqt~ently been rcmedied by statute. However. as this case ~.ounds its fifth ?car of out 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:

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