No. 84-550 IN THE SUPREME COURT OF THE STATE OF MONTANA 1985

SCHOOL DISTRICT NO. 1 and A, CASCADE COUNTY, Petitioner and Respondent,

MONTANA DEPARTMENT OF LABOR and INDUSTRY, GAIL HAHN, TERRY THOMPSON, et a1 , . Respondents and Appellants.

APPEAL FROM: District Court of the Eighth Judicial District, In and for the County of Cascade, The Honorable Joel G. Roth, Judge presiding.

COUNSEL OF RECORD:

For Appellants: Hilley & Loring, Great Falls, Nontana James Gardner, Dept. of Labor & Industry, Helena, Montana For Respondent : Waite, Schuster & Larson, Great Falls, Montana

Submitted on Briefs: March 7, 1985 Decided: July 11, 1985

Filed: $A I. f 1985 Mr. Justice L. C. Gulbrandson delivered the Opinion of the Court.

Appellants appeal an order of the District Court of the Eighth Judicial District, Cascade County, denying their motion for summary judgment, granting the School District's motion for summary judgment and finding appellants ineligible for unemployment compensation during the summer of 1981. We affirm. The School District planned a district-wide reduction in its teaching staff in the spring of 1981. It notified the six individual appellants in March, 1981 that their teaching contracts would not be renewed for the 1981-1982 school year. Each of the appellants immediately challenged the non-renewal either through the grievance procedure in their collective bargaining agreement or in a proceeding before the Cascade County Superintendent of Schools using the procedure in section 20-4-204, MCA. Eventually all six appellants were reinstated with back-pay, the right to full advancement on the salary schedule and no loss of seniority, tenure rights or benefits as a result of their challenge. Those who expended funds looking for other teaching positions during the summer, were reimbursed for those costs by the School District if they requested it. The appellants individually applied for unemployment compensation during the summer of 1981. They were eligible for and received benefits at that time pursuant to section 39-51-2108, MCA. This dispute concerns repayment of the benefits received during those months. Gail Hahn was rehired by the School District, on a part-time basis, on August 25, 1981 and three weeks later, became a full-time teacher. She stopped drawing unemployment c o m p e n s a t i o n when rehired. Terry Thompson was rehired on

September 21, 1981 and stopped drawing unemployment

compensation. Howard Hahn was r e h i r e d on a p a r t - t i m e basis

on August 22, 1981, stopped drawing unemployment

compensation, and became full-time t w o weeks later. John

Chase was r e h i r e d by t h e S c h o o l D i s t r i c t i n l a t e J u l y , 1981

on a part-time basis and f i l e d no c l a i m s f o r unemployment

c o m p e n s a t i o n a f t e r J u l y 25, 1981. J a n i s Storm was r e h i r e d i n

February o f 1982. A f t e r h e r r e t u r n an a r b i t r a t o r ruled she

had b e e n t e r m i n a t e d i n v i o l a t i o n o f t h e c o l l e c t i v e b a r g a i n i n g

a g r e e m e n t and o r d e r e d reinstatement and back-pay. She h a s

repaid t o t h e S t a t e t h e unemployment c o m p e n s a t i o n s h e drew

after August 26, 1981, the period f o r which she received

back-pay. Carl Rosenleaf was t h e o n l y o n e o f t h e s i x n o t

r e c a l l e d v o l u n t a r i l y by t h e S c h o o l D i s t r i c t . On March 3 1 ,

1982 an a r b i t r a t o r o r d e r e d h i s r e i n s t a t e m e n t w i t h b a c k pay t o

August 26, 1981. H e h a s r e p a i d t h e S t a t e t h e unemployment

c o m p e n s a t i o n r e c e i v e d s i n c e August 2 6 , 1981, t h e p e r i o d f o r

which h e r e c e i v e d back-pay. When t h e S c h o o l D i s t r i c t r e h i r e d

the five teachers, except Rosenleaf, t h e y w e r e k e p t on t h e

School D i s t r i c t ' s p a y r o l l w i t h t h e i r o r i g i n a l d a t e s o f h i r e .

Rosenleaf, reinstated by the arbitrator, also has his

o r i g i n a l d a t e of h i r e .

I n O c t o b e r 1 9 8 2 , t h e Unemployment I n s u r a n c e D i v i s i o n o f

Montana ' s Department of Labor and Industry notified the

appellants that all unemployment compensation should be

r e p a i d d u e t o t h e i r r e i n s t a t e m e n t s and back-pay awards. All

six appellants challenged the demand. There was also a

q u e s t i o n on w h e t h e r G a i l Hahn and J a n i s Storm t i m e l y filed

t h e i r r e q u e s t f o r review. After that review, the Appeals Referee determined that five of the appellants did not have to repay the summer unemployment compensation. The Referee also ruled that since Janis Storm had not filed a timely appeal, the determination as to her overpaid benefits would stand. The Board of Labor Appeals affirmed the Referee's decision that the five teachers would not have to repay the summer benefits and reversed the decision regarding Janis Storm. The Board concluded that the untimeliness of her appeal was immaterial and excusable under the circumstances and ruled that none of the appellants had to repay the summer unemployment compensation they had received. The School District appealed to the District Court which reversed the decision of the Board of Labor Appeals. Appellants and the School District agreed that there were no facts in dispute and made motions for summary judgment. In a memorandum decision and order filed November 15, 1984, the District Court ruled that, as a matter of law, the six teachers were ineligible for unemployment compensation during the summer of 1981 in accordance with the statutory provisions of section 39-51-2108, MCA. The District Court also noted that this ruling rendered the issue of the timeliness of the appeal of two teachers moot. The issue on appeal is whether the District Court erred in concluding that the six appellants had to repay the unemployment compensation they received during the summer of 1981. Section 39-51-2108, MCA provides that benefits to teachers "may not be paid to an individual for any week of unemployment which begins during the period between two successive academic years . . . if the individual has a contract t o perform s e r v i c e s i n any s u c h c a p a c i t y f o r any

such educational institution for both such academic

years. .. " The a p p e l l a n t s a r g u e t h a t , a t t h e t i m e they received

benefits, t h e y d i d n o t h a v e a renewed t e a c h i n g c o n t r a c t f o r

t h e f o l l o w i n g y e a r and t h u s w e r e e l i g i b l e f o r t h o s e b e n e f i t s .

The School District contends that appellants were fully

r e i n s t a t e d and w e r e i n e x a c t l y t h e same s t a t u s a s i f r e n e w a l

c o n t r a c t s had been offered t o them i n the spring of 1981.

Thus, appellants were ineligible for unemployment

compensation. The School District does not dispute that

appelLants were eligible for the benefits when received

d u r i n g t h e summer o f 1981.

The main considerations in this case concern the

d i f f e r e n c e between " r e h i r e d " and " r e i n s t a t e d " and w h e t h e r t h e

f a c t s a r e viewed o n l y from t h e p o i n t i n t i m e o f t h e s p r i n g o f

1.981 o r a r e viewed from t h e t i m e o f t h e h e a r i n g . Teachers i n

t h e School D i s t r i c t have been r e h i r e d o r v o l u n t a r i l y r e c a l l e d

after termination at o t h e r times and w e r e n o t required to

r e p a y unemployment b e n e f i t s r e c e i v e d d u r i n g t h e t i m e o f t h e i r

unemployment. The a p p e l l a n t s h e r e w e r e r e i n s t a t e d and made

whole w i t h no l o s s o f wages, s e n i o r i t y , t e n u r e r i g h t s o r any

other benefits, u n l i k e t e a c h e r s who w e r e r e h i r e d . The f u l l

r e i n s t a t e m e n t of a p p e l l a n t s p u t them i n t h e same p o s i t i o n a s

i f t h e y had c o n t r a c t s i n March 1 9 8 1 f o r t h e f o l l o w i n g y e a r .

This amounts to more than merely being rehired. The reinstatement relates back, in effect, to time of the

termination and appellants " [have! a contract to perform

services ... for both such academic years." Section

39-51-2108, MCA. Section 39-51-2108, MCA focuses on the teacher's

continuing contract status rather than earnings in

determining whether he or she is eligible for summer

unemployment benefits. Other courts interpreting similar

statutes a l s o recognize that status is controlling. They

hold that if t h e claimant has a reasonable assurance o r a

r e a s o n a b l e e x p e c t a t i o n o f r e t u r n i n g t o work a f t e r t h e b r e a k

between two academic terms, unemployment compensation

b e n e f i t s w i l l be denied. R e c e i p t o f wages d u r i n g t h e b r e a k

is not a factor. See, e.g., Friedlander v. Employment

Division (0r.App. 1 9 8 4 ) , 6 7 6 P.2d 314; P a t r i c k v. Board o f

Review (N.J.App. 1979), 409 A.2d 819; and Davis v.

Commonwealth Unemployment Compensation Board o f Review (Pa.

1978), 394 A.2d 1320. With reinstatement, appellants

regained the continuing contract s t a t u s t h e y had initially

lost. T h e i r s t a t u s i s t h e same a s i f t h e c o n t r a c t s had been

renewed i n t h e s p r i n g o f 1 9 8 1 and t h e y had r e c e i v e d no summer

wages a s a r e s u l t of t h a t s t a t u s . Thus a p p e l l a n t s ' argument

t h a t t h e y s h o u l d n o t have t o r e p a y t h e summer unemployment

b e n e f i t s b e c a u s e no back-pay was a t t r i b u t a b l e t o t h o s e months

must f a i l .

W e recognize t h a t the case a t bar d i f f e r s from t h o s e

cited above. Here, appellants were eligible when they

i n i t i a l l y s o u g h t b e n e f i t s and s u b s e q u e n t e v e n t s a f f e c t e d t h a t

initial eligibility. However, a p p e l l a n t s a r e p r e c l u d e d from

arguing t h a t subsequent e v e n t s never a f f e c t e l i g i b i l i t y f o r

unemployment benefits. Those appellants who received

benefits for part of the fall 1981 academic term were

required t o repay o r v o l u n t a r i l y repaid t h e p o r t i o n of the

benefits received for that term, even though they were

eligible f o r t h o s e b e n e f i t s when r e c e i v e d . The s u b s e q u e n t reinstatement affected their fall eligibility and appellants cannot argue the subsequent reinstatement could not affect their summer eligibility. We therefore hold that the District Court correctly interpreted section 39-51-2108, MCA and correctly required that the six individual appellants must repay unemployment compensation received for the summer of 1981 and affirm the ruling of the District Court.

We concur: 7

Justices M.r. Justice William E. Hunt, Sr, dissenting:

T dissent and would reverse. Section 39-51-2108, MCA, states that benefits may not be paid during the period between successive academic years if the individual has a contract for both years. The important part of this statute that applies here is "if the individual has a contract for both years." The individuals had no contract for both years. They had been advised that their contracts would not be renewed for the following year. Because they had no contract they were properly eligible and properly paid benefits during the period. The majority now holds that these proper payments are "improper" because subsequent reinstatement relates back. The individuals are, therefore, to be placed in the same position as if they had contracts for both years. I disagree. The benefits were properly paid and they cannot now be made to be improper. No contract existed for the required "both years" during the relevant period and it cannot now be made to exist. Whether the individuals here were "re-hired" or "reinstated,'I or whether the contracts were "renewed," it i.s inescapable that no contract existed during the period in which benefits were paid. Absent an existing contract for the requisite "both years," $ 39-51-2108 simply does not apply to prohibit payment of benefits and it cannot be applied to require the individuals to now reimburse for the benefits properly paid.