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HELENA — Former Montana Disaster and Emergency Services employees claim the division's chief of staff traded sex for favoritism with a subordinate, and that those who complained were met with hostility and ultimately forced out of their jobs.

The result was a dysfunctional workplace in which the agency's emergency management mission was overshadowed by the intra-office tumult, and longtime employees were replaced by unqualified ones, according to multiple lawsuits filed over the past year.

The most recent, filed in January by former division spokeswoman and 22-year employee Monique Lay, alleges she and at least one other worker were fired after complaining that Jessica Davies, who was a temporary staffer in 2011, was receiving special treatment because of an affair with Chief of Staff Paul Grimstad.

"Grimstad and (Director Ed) Tinsley made the work environment so difficult, it affected their ability to do the job," Lay's attorney, Palmer Hoovestal, said Friday. "They weren't able to do what they were supposed to do, which is manage crises."

A state hearings officer last year denied a grievance filed by Lay over similar claims that she was fired in retaliation for blowing the whistle on a sex-for-favors scheme. Hearings officer David Scrimm ruled in April 2012 that Lay's employment was terminated as part of a reduction of force, solely for business reasons.

Neither Davies, Grimstad nor Tinsley responded to calls and emails for comment. Grimstad, previously the head of the Montana Highway Patrol, admitted to the affair during an April 25, 2011, hearing in a lawsuit involving him and Davies' ex-boyfriend.

Grimstad said he had sex with Davies that February, but it was just one night.

"We've all been there where you — where feeling — you can't control your feelings in a lot of cases," Grimstad said, according to a transcript. "I mean, you've been there, I know, I'm sure. Everybody in here's been there."

Disaster and Emergency Services is a division of the Department of Military Affairs, whose spokesman said he can't comment on the allegations while the cases are active and that he did not know the department's policy on sexual relationships between a supervisor and a subordinate.

But Maj. Tim Crowe denied the workplace issues have affected the division's mission.

"DES has been able to respond to state emergencies in a timely and effective way," Crowe said. "In no way have the operations of DES been negatively affected."

Lay is one of three former employees who have filed lawsuits claiming they were either wrongfully terminated or harassed into resigning from DES. Another is Julia Fenwick, Lay's former supervisor.

The third lawsuit was filed by former employee Fred Naeher, who claims he was harassed by his DES supervisor until his health deteriorated and he was forced to resign in 2011. Naeher does not specify claims related to the Davies-Grimstad affair but says Tinsley and Grimstad knew of the harassment against him, and that DES has a pattern of forcing out unwanted employees.

Fenwick's and Naeher's lawsuits have been filed in state court, while Lay's was remanded to federal court. Neither the state nor the individually named defendants have responded, and no hearings have been set.

Lay says in her lawsuit that Davies received special treatment that included a flexible work schedule, the ability to pick the projects she wanted, and special access to higher-ups in the department.

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By February, the affair was apparent to everyone, as was the special treatment Davies was receiving, the lawsuit alleges.

"Things were clearly out of hand. Their affair was very disruptive to the other staff members, and people in the office were fed up," the lawsuit says.

DES staff complained to Lay, who said she went to Fenwick, her immediate supervisor. Fenwick said in her lawsuit that she confronted Grimstad, Tinsley and Davies in person, then followed up with an email.

She was placed on leave the following day, March 3, 2011, then received a letter accusing her of mishandling the allegations against Grimstad. The letter also chastised her for reporting grant-funding irregularities by the division, Fenwick's lawsuit says.

She was fired the next month "under the guise of a reduction of force," her lawsuit says.

At about this time, an internal investigation was ordered in which six employees gave statements about the sex-for-favoritism allegations. But Lay said the statement she gave was wiped of the information she provided to the human resources officer in the investigation, and she refused to sign it.

The investigation concluded there was no illicit sexual relationship and there was no favoritism.

Following the investigation, Lay's position was also slated for elimination.

"This was not a strategic business decision made by the defendants. Rather, it was a deliberate and malicious act done in bad faith," Lay said in her lawsuit.

Lay filed a grievance with the state Department of Labor and Industry, saying her firing was in retaliation for her whistleblowing. DES officials said in those proceedings that Lay's position as a public information officer was underutilized and that she was not qualified to take a grants position.

So when federal emergency management officials recommended changing the division's grant structure, division officials decided upon a reorganization that eliminated three positions, including Lay's, DES officials said.

Scrimm, the hearings officer, said Lay had not proven her assertion that her firing was in retaliation for the disclosure of the Grimstad-Davies affair.

The division later hired three new employees, including Davies, who were younger and less qualified, Lay claims.

A 2012 legislative audit of the Department of Military Affairs reviewed the recruitment files for five hires between July 2010 and June 2012 and concluded those three of the five did not meet the minimum qualifications.

Three of the five hires were in the Disaster and Emergency Services, said legislative auditor Tori Hunthausen, but she declined to name them or say whether they met the qualifications.

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