Prior to 2019, the City of Great Falls, Montana had collectively bargained workplace drug and alcohol use and testing policies with all its employees. The existing policy prohibited employee use of alcohol or drugs on city premises or while performing city business, and it allowed for temporary investigative suspension based on particularized suspicion. Employees in safety-sensitive positions or those involved in on-the-job vehicle/injury accidents were subject to random drug and alcohol testing.
In 2019, the City unilaterally announced and imposed a revised drug and alcohol policy on all employees. The revised policy expanded the scope of employees subject to random drug and alcohol testing, to include city lifeguards and any city employee who drove a city vehicle, operated certain equipment, or supervised or transported minors. The revised policy also subjected all employees to termination of employment on a first offense, subjected all employees to payroll deduction of testing costs, and required all employees to consent to the policy’s terms by signing “required forms.” The City did not seek the consent of the affected unions or entertain their subsequent demands for collective bargaining regarding the new policy.
Each union then began filing Montana Board of Personnel Appeals (MBPA) unfair labor practice complaints. The essence of their complaints was that the City’s unilateral imposition of the revised policy and its direct communication with individual union members, rather than through their union representatives, constituted unfair labor practices. The City, citing its management prerogatives and self-government charter powers, asserted that it acted lawfully within the scope of its non-negotiable management authority.
The MBPA consolidated and transferred the unfair labor practice complaints for a contested case administrative hearing and adjudication. In October 2020, the agency hearing examiner issued a detailed proposed contested case agency decision, granting summary judgment to the unions and denying the City’s cross-motion. The hearing examiner concluded that the City’s actions constituted unlawful mid-contract alterations of employment terms, violated the City’s duty to collectively bargain, and amounted to unfair labor practices. The hearing examiner also issued a recommended MBPA order compelling the City to cease and desist from imposing the revised policy and from dealing directly with union members.
The City did not file exceptions of fact or law to the proposed decision and order for final MBPA review. Instead, it petitioned the district court for judicial review, arguing that review of the final agency decision would not provide an adequate remedy, claiming it involved a pure question of law. In response, the unions argued that the hearing examiner’s decision became the final agency decision by default operation of law because the City did not file any exceptions. The district court denied and dismissed the City’s petition for failure to exhaust the final agency review remedy.
The Supreme Court of Montana affirmed the district court’s dismissal of the City’s petition. The Court held that the MBPA hearing examiner’s proposed decision and recommended order became a final agency decision and order by default operation of law, because of the City’s conscious choice to forego its administrative remedy to file exceptions and avail itself of final review. The Court further held that, because the decision had become final, it was no longer eligible for judicial review under the Montana Administrative Procedure Act. The Court reasoned that the express contested case exhaustion of administrative remedies requirement, as applicable to the exceptions and final agency review remedy, does not involve a pure question of law, or pure question of constitutional law, jurisprudential exception.
The Court emphasized the significance of the exhaustion of administrative remedies requirement, stating that “the express exhaustion of administrative remedies requirement applies equally to the ultimate case decision, constituent or related issues adjudicated therein or thereby, as well as any other related issue that could have been timely raised and adjudicated by the agency pursuant to the available administrative process. The manifest purpose of the requirement of exhaustion of administrative remedies is to afford the agency involved in a contested case Montana Administrative Procedure Act proceeding an opportunity to correct its own errors before a court interferes in the administrative adjudication process.
“We hold that the District Court correctly concluded that the hearing examiner’s October 2020 proposed agency/MBPA decision and order was not eligible for judicial review. We hold further that the district court also correctly concluded that the resulting October 2020 final agency/MBPA decision and order was not eligible for judicial review due to the City’s failure to exhaust the exceptions and final agency review.”
City of Great Falls v. Int’l Ass’n of Fire Fighters, 560 P.3d 621 (Mont. 2024).