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No. 93-606

IN THE SUPREME COURT OF THE STATE OF MONTANA
1994

S.E.A. TRUCKING
Petitioner and Appellant,
-v-
THE STATE OF MONTANA, bv and throush

the Department of ~abor-and the ~o&d of Labor Appeals, and THE MONTANa DK 221994
DEPARTMENT OF LABOR AND INDUSTRY

3, r d d .I
Sunith
Respondents and Respondents CLERK OF SUPREME COURT
STATE OF MONTANA
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable John W. Larson, Judge presiding.

COUNSEL OF RECORD: For Appellant: Patrick G. Frank and W. Carl Mendenhall, Worden, Thane & Haines, Missoula, Montana
For Respondent:

Daniel B. McGregor, Montana Department of Labor & Industry, Helena, Montana
For Amicus State Compensation Mutual Insurance Fund:

Stephen M. Frankino, Hughes, Kellner, Sullivan & Alke, Helena, Montana
Submitted on Briefs: August 25, 1994
~~~id~d:

December 22, 1994
Filed:

Justice James C. Nelson delivered the Opinion of the Court.

This is an appeal from a Fourth Judicial District Court,
Missoula County, order on a petition for judicial review, affirming
the Board of Labor Appeals' decision that SEA's base of operations
has been in Missoula, Montana, since June of 1988, and hence, SEA
should have been reporting its employees' wages to the State of
Montana for the purpose of unemployment insurance. We affirm.

The sole issue on appeal is whether the District Court
correctly affirmed the Board of Labor Appeals' decision that SEA's
base of operations was in Missoula, Montana, and therefore, the
corporation should have been reporting its employees' wages and
paying unemployment insurance to the State of Montana.

FACTUAL AND PROCEDURAL BACKGROUND

SEA, a motor carrier, was incorporated in July of 1988 in the
State of Wyoming. Robert Evers (Evers), of Casper, Wyoming, owned
51% of the corporation and Stan Spencer (Spencer), of Missoula,
Montana, owned 49% of the corporation. SEA, a =-licensed carrier
leased 20 over-the-road hauling trucks from Allstate, a Minnesota
company, and then re-leased the trucks to Bitterroot International
Systems, Inc. (Bitterroot), a motor carrier solely owned by
Spencer. Bitterroot is a federallv licensed motor carrier with its
headquarters in Missoula, Montana. SEA leased exclusively to
Bitterroot but Bitterroot had lease agreements with other
individual carriers in addition to SEA.

In July and August of 1990, because of a concern that proper

unemployment insurance coverage was not being provided to SEA

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employees, SEA was audited by the Unemployment Insurance Division
of the Department of Labor and Industry (DO11 of the State of
Montana to determine whether drivers and their wages should be
reported to the state of Wyoming, as SEA claims, or the state of
Montana. On September 7, 1990, the Department determined that the
wages of SEA'S drivers should have been reported in Montana under
Bitterroot's account because the DOLI had determined that SEA
drivers were Montana workers employed by Bitterroot. SEA requested
a redetermination of the decision, and on December 10, 1990, the
initial determination was sustained.

SEA appealed this determination to the Department's Hearing Examiner who heard the case on May 21, 1991, and on January 29, 1992, issued his decision reversing the initial determination that SEA'S drivers should have been reported as Bitterroot employees, but he sustained the determination that SEA should have been reporting their driversf wages to Montana, rather than Wyoming.
This decision was appealed to the Department's Board of Labor
Appeals (Board), and on March 30, 1992, the Board adopted the
Hearing Examiner's Findings and Conclusions. SEA sought judicial
review in the Fourth Judicial District Court of the Board's
decision. The District Court affirmed the decision of the Board in
an Opinion and Order on the Petition for Judicial Review on October
22, 1993. In affirming the Board's affirmance of the Hearing
Examiner's Findings of Fact, the District Court particularly
addressed and subsequently modified certain findings which SEA
contended were either irrelevant or not supported by the evidence.

These findings, as amended by the District Court, state:

4.SEA rented a small administrative off ice/sbop facility in Casper, Wyoming where Evers and his secretary worked. The firm also rented space from the Bitterroot International Systems Complex in Missoula ..., All trucks were dispatched ...in Missoula. SEA assigned a manager to the Missoula terminal to supervise ...the drivers .... The Missoula manager was able to conveniently confer with Spencer since their offices were Located in the same building.
5.
The terminal manager advertised job openings,
interviewed and hired the drivers out of Missoula. Due
to the geographical location of the Missoula terminal,
nearly all of the drivers were Montana residents.
According to the 1989 W-2 forms issued by SEA, 146 out of
160 drivers on the payroll were Montana residents with
Montana drivers licenses.


6.
SEA processed its payroll records in its Montana facility.... While business files were kept at the Casper office, most, if not all, such data was a duplication of records compiled and maintained in the Missoula terminal.


SEA now requests that this Court review the decision of the Hearing

Examiner and the subsequent reviews of that decision, including

that of the District Court.

STANDARD OF REVIEW

The correct standard of review in the instant case is set out

in g 39-51-2410(5) and (6), MCA, and provides:
(5)
In any judicial proceeding under 39-51-2406 through 39-51-2410, the findings of the board as to the facts, if supported by evidence and in the absence of fraud, shall be conclusive and the jurisdiction of said court shall be confined to questions of law. . . .

(6)
An appeal may be taken from the decision of the district court to the supreme court of Montana in the same manner, but not inconsistent with the provisions of this chapter, as is provided in civil cases....


We have stated that:

[sl upported by the evidence means supported by
substantial evidence, which is 'something more than a

scintilla of evidence, but may be less than a
preponderance of the evidence.'
Potter v. Dept. of Labor and Industry (1993), 258 Mont. 476, 479,
853 P.2d 1207, 1209. (Citation omitted.) Moreover, in Potter, we
stated that "the District: Court must limit its review of the
Board's findings to a consideration of whether they are supported
by substantial evidence, and the same standard applies to this
Court. With regard to questions of law, however, our task is to
determine whether the agency's interpretation of the law is
correct." Potter, 853 P.2d at 1209. (Citations omitted.)
Further, we have stated that:

"The court is not permitted to balance conflicting evidence in support of and in opposition to the [Board's] findings of fact, nor to determine which is the more substantial evidence, nor to consider where the preponderance of evidence lies; for to do so would be to substitute the Court's view of the evidence for that of the [Board,] and effectively nullify the conclusive character of the [Board's] findings of fact as provided by statute. I'
Thus, the reviewing court must decide whether
substantial evidence supports the Board's decision and
not whether on the same evidence it would have arrived at
the same conclusion.

Ward v. Johnson (1990), 242 Mont. 225, 228, 790 P.2d 483, 485. (Citations omitted. ) DISCUSSION ISSUES OF FACT
SEA argues that substantial evidence does not exist to support
certain of the agency's findings which supported the conclusion
that SEA'S base of operations was in Montana. After a careful
review of the transcript, we conclude that substantial evidence
supports the Hearing Examiner's Findings of Fact as amended by the

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District Court.

There was testimony presented to the effect that SEA had
office space in Missoula, trucks were dispatched out of Missoula,
and all drivers were supervised by the manager of SEA, Jhan
Sorensen, who worked out of the Missoula office. Moreover,
testimony was presented that it was the Missoula manager who
maintained day-to-day contact and communication with the drivers
from his Missoula office; he also prepared payroll in Missoula.
Further, the majority of the SEA workforce were Montana residents.

Testimony also demonstrated that the interview process for the
hiring of drivers was a job shared between Evers in Wyoming and
Sorensen in Montana although the positions were advertised out of
Missoula, and the final hiring of drivers was accomplished in
Montana. All testing of drivers occurred solely in Montana through
Bitterroot by virtue of its Interstate Commerce Commission license.
Finally, there was testimony that 40% of the maintenance on trucks
occurred in Montana, according to Allstate's instructions.
Although SEA argued that many activities were performed in Missoula
because the agencies with which SEA contracts, Bitterroot and
Allstate, required that these activities occur there, that does not
change the fact that these activities did occur in Montana and they
are activities basic to the operation of a trucking company.
Clearly, substantial evidence supports the findings of fact at

issue here. Furthermore, as stated above:
"The court is not permitted to balance conflicting
evidence in support of and in opposition to the [Board's]
findings of fact, nor to determine which is the more
substantial evidence, nor to consider where the

preponderance of evidence lies; for to do so would be to substitute the Court's view of the evidence for that of the [Board,I and effectively nullify the conclusive character of the [Board's] findings of fact as provided by statute. "
Thus, the reviewing court must decide whether
substantial evidence supports the Board's decision and
not whether on the same evidence it would have arrived at
the same conclusion.

Ward, 790 P.2d at 485. (Citations omitted.)
We conclude that substantial evidence supports the Findings of
Fact made by the Hearing Examiner and modified by the District
Court. We hold that the District Court did not err in affirming
the Hearing Examiner's Findings of Fact which were challenged by
the Appellant.

ISSUES OF LAW

The Findings of Fact also support the conclusion that SEA'S
base of operations was in Missoula, Montana, from the inception of
the corporation, and therefore, the employees' wages should have
been reported to the State of Montana's Unemployment Insurance
Division. Both parties agree that the statute to be applied in
determining whether SEA employees' wages should be reported to the

State  of  Montana  is  

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