Mont. high court rules against city in retaliation suit

Tuesday, December 23, 2008

HELENA, Mont. — A woman turbulently employed as the Thompson Falls city clerk and finance officer has prevailed posthumously in a Montana Supreme Court case with implications for cities statewide.

The high court last week unanimously issued a multifaceted decision in an appeal filed on behalf of Kathy Denke, who died last year. Chief among the findings: Cities are not automatically immune from lawsuits stemming from conduct at public meetings.

Denke began working for the city of Thompson Falls in the early 1980s. In 1999 she filed a complaint alleging sexual harassment by then-Mayor Gerald Neal. The Thompson Falls City Council agreed to a confidential settlement, and the mayor and City Council signed a document stating they would not retaliate against Denke for her action.

Councilman Maurice Shoemaker received questions and comments from the public concerning the settlement and got on the agenda for the Thompson Falls City Council meeting of Feb. 14, 2000. The meeting was moved from its usual location to a community center, in anticipation of a large turnout.

The mayor, who had admitted no wrongdoing in the harassment case, resigned and walked out at the start of the meeting. The senior council member who was left to run it “did not know how appropriately to limit the discussion, so she did not,” the Supreme Court wrote in its opinion.

Shoemaker talked about rumors regarding the size of the city’s settlement with Denke, who was present. The meeting included statements from the public that she was a willing participant in what she had called sexual harassment.

Less than a month later, Denke filed human-rights complaints charging unlawful retaliation by Shoemaker and by the city — complaints based partly on statements at the council meeting.

An examiner who heard Denke’s case said it involved “a ‘conflict’ between the right to free speech on one hand and the right to be free from illegal retaliation on the other.” The examiner determined that the comments at the meeting were privileged under state law, that the city could not be held liable for them and that the city was immune from suit over the decision to allow unlimited public discussion. The examiner, however, found that Shoemaker was retaliatory toward Denke, that she suffered severe emotional distress and that she should get $7,500.

The state Human Rights Commission affirmed the findings. Denke filed an appeal in district court, and lost.

The state Supreme Court, ruling Dec. 16 in Denke v. Shoemaker, said the district court relied on a flawed analysis of state law and that the city’s free-speech argument, which drew on the U.S. Supreme Court’s landmark 1964 ruling New York Times v. Sullivan, was “misplaced.”

“We agree with the city that it could not lawfully have regulated the particular viewpoints expressed by speakers related to Denke’s 1999 Human Rights complaint during the Feb. 14 council meeting,” the Supreme Court wrote. “We also conclude that the city may impose reasonable and viewpoint-neutral time, place and manner restrictions on speech for the purpose of conducting its council meetings in an efficient and orderly manner.”

The court also said the city can be held liable for retaliatory conduct by Shoemaker, who circulated letters accusing Denke of poor bookkeeping and wrote that there were “things going on at City Hall that the public should know about.” He also called for her resignation.

Denke lawyer Ann Moderie of Polson said Dec. 18 that widower Mark Denke was “relieved that in the end Kathy was found to be vindicated, but very sad that she couldn’t be here.” Moderie said Denke had medical problems, and the circumstances of her city employment caused her considerable stress. Her death last year was attributed to medications she was taking, Moderie said.

Missoula lawyer Ted Hess-Homeier, who represented the city and Shoemaker, said that because the case will return to district court for reconsideration he would not comment on it.

Alec Hansen, executive director of the Montana League of Cities and Towns, said Dec. 18 that he had not seen the Supreme Court’s opinion.

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