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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Shook v. Alyeska Pipeline Service Co. (7/26/2002) sp-5600

Shook v. Alyeska Pipeline Service Co. (7/26/2002) sp-5600

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,


THOMAS SHOOK, and all other        )
similarly situated employees,      )    Supreme Court No. S-9530
               Appellants,         )
                              )    Superior Court No.
     v.                       )    3AN-95-3874 CI
COMPANY, an Alaska corporation,    )
               Appellee.      )    [No. 5600 - July 26, 2002]

          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Peter A. Michalski, Judge.

          Appearances:  Walter H. Garretson,  Bryan  M.
          Emmal, Anchorage, for Appellants.  Charles P.
          Flynn,  Burr, Pease & Kurtz, Anchorage,  Mark
          H.  Epstein,  Munger,  Tolles  &  Olson,  Los
          Angeles, California, for Appellee.

          Before:    Fabe,  Chief  Justice,   Matthews,
          Eastaugh, Bryner, and Carpeneti, Justices.

          MATTHEWS, Justice.


             Thomas    Shook   appeals   the   superior   court's

decertification of his class action suit brought against  Alyeska

Pipeline  Service  Company under the Alaska Wage  and  Hour  Act.

Because  the  superior court did not specify  any  reasons  under

Civil Rule 23 for decertifying the class, we remand this case  to

the  superior  court for reconsideration of the  decertification.

If  the  superior court chooses on remand to decertify or  narrow

the  class, it must explain its reasoning for so doing under  the

standards set out in Rule 23.


           Thomas  Shook  worked  for  Alyeska  Pipeline  Service

Company  as  a senior business systems analyst from  August  1982

until  March 1995.  He was classified as exempt under the  Alaska

Wage  and  Hour  Act1 ("AWHA") and the Fair Labor  Standards  Act

("FLSA").  His salary was therefore unrelated to "the quality  or

quantity  of  the  work performed," and he was  not  eligible  to

receive overtime pay.2

           During  most of the time that Shook was employed  with

Alyeska,  Alyeska  had a disciplinary policy  that  included  the

possibility  of  suspension without pay.  This  policy  at  least

arguably  applied to all employees, whether classified as  exempt

or  non-exempt.3  The policy was revised in January 1995 to apply

only  to non-exempt employees, but prior to this revision, exempt

employees  were  suspended  without  pay  on  fourteen   separate


           On  May 5, 1995, Alyeska terminated Shook's employment

and the parties entered into an Involuntary Severance Plan, under

which Shook signed a release in return for a severance payment of

$141,496.73.   On  May  11,  1995,  Shook  filed  a  class-action

complaint against Alyeska alleging violations of the Alaska  Wage

and  Hour  Act,  specifically arguing that exempt employees  were

owed overtime pay because they were not actually being paid "on a

salary   basis,"  and  thus  were  not  exempt  from  the  AWHA's

requirement  of  overtime pay.  In January 1996  Shook  moved  to

certify a class action pursuant to Civil Rule 23(b)(3).  In  July

1996  the  superior  court  certified a  class  of  "all  persons

employed by Alyeska Pipeline Service Company between 11 May  1992

and  11  May  1995  who were classified as exempt  from  overtime


           Alyeska immediately moved for summary judgment against

Shook  individually, arguing that Shook's claim had been released

and  was extinguished by a prior severance payment.  The superior

court  denied  the motion, and Alyeska petitioned this  court  to

review  the denial of summary judgment.  We granted the petition.

Meanwhile,  Shook  requested that the superior  court  approve  a

class notice procedure and form.

           In  1997  the United States Supreme Court  issued  its

opinion in Auer v. Robbins,4 narrowing the definition of what "on

a salary basis" means under the Federal Fair Labor Standards Act.5

The  superior  court  requested supplemental  briefing  from  the

parties  in light of that decision.  After receiving supplemental

briefs  from the parties, the superior court heard oral  argument

on  the  significance of Auer.  Shortly thereafter, the  superior

court vacated the class certification "on the question of whether

Alyeska employees subject to suspension without pay were properly

classified  as  exempt . . . ."   Shook moved for reconsideration

of  the  superior  court  order decertifying  the  class  and  in

November 1997 the superior court denied the motion.

           In  April  of  1999 we reversed the  superior  court's

denial  of  Alyeska's motion for summary judgment  against  Shook

individually, and remanded the case for entry of judgment against

Shook.6   In our opinion, we noted that "[t]his result  does  not

require  dismissal  of the class action.  The class  should  have

[an]  opportunity  to  substitute a new  class  representative."7

Shook  moved for entry of final judgment so that he could  appeal

the  order vacating class certification.  On January 4, 2000, the

superior   court   entered  final  judgment  dismissing   Shook's

complaint.  This appeal followed.

           Alyeska  subsequently filed a motion in this court  to

dismiss  this  appeal for lack of standing.   Shook  opposed  the

motion to dismiss and on June 29, 2000, Rocky Garcia submitted  a

motion  to this court seeking to be allowed to intervene  in  the

case.    Alyeska opposed Garcia's motion to intervene.  In August

2000  a  single justice of this court issued an order  dismissing

Shook's  appeal  and  denying Garcia's  motion  to  intervene  as

untimely.  Shook sought reconsideration of the dismissal and  the

full  court  reinstated the appeal.  Alyeska filed a  motion  for

reconsideration of the reinstatement order.  We denied  Alyeska's

motion for reconsideration and the appeal proceeded.


           We  review  a  superior court's  decision  whether  to

certify  a  class  under an abuse of discretion  standard.8   If,

however,  the  superior court's ruling is based on  an  erroneous

legal  premise, we review the issue de novo.9  We resolve "issues

of  standing and mootness using our independent judgment because,

as matters of judicial policy, these are questions of law."10


     A.   Shook  Does Have Standing To Appeal the Decertification

          of the Class.

           Shook asserts that the fact that this court "has twice

voted  to sustain the appeal" means that the issue of whether  he

has  standing  to bring the appeal "seems to have been  decided."

Alyeska  contends that Shook lacks standing to bring this appeal,

as  his individual claims have been dismissed and he is therefore

no  longer  eligible  for  membership in  the  class.   Shook  is

correct.   In our order of October 6, 2000, we ruled  that  Shook

had  standing  to appeal the decertification of  the  class.   As

Shook is no longer eligible to be a member of the class, however,

the  first  priority on remand should be substitution  of  a  new

class representative.

     B.   The  Superior  Court  Erred in Decertifying  the  Class
          without Specifying Its Reasons.
           Shook argues that the superior court erred in vacating

the  class  certification.  He contends that the court improperly

reached   the   merits  and  considered  liability  issues   when

evaluating whether to decertify the class, and that even  if  the

court  were  allowed  to reach the merits, it  was  incorrect  in

decertifying the class.

           Shook  cites Eisen v. Carlisle & Jacquelin11  for  the

proposition that a court should not consider the merits of a case

in  determining whether to certify a class.12   Shook is correct.

In Eisen, the United States Supreme Court wrote:

          We  find  nothing in either the  language  or
          history  of  Rule 23 that gives a  court  any
          authority  to  conduct a preliminary  inquiry
          into  the  merits  of  a  suit  in  order  to
          determine whether it may be maintained  as  a
          class   action.   Indeed,  such  a  procedure
          contravenes  the Rule . . . . "In determining
          the propriety of a class action, the question
          is  not  whether the plaintiff or  plaintiffs
          have stated a cause of action or will prevail
          on   the  merits,  but  rather  whether   the
          requirements of Rule 23 are met."[13]
Therefore,  to  the  extent that the superior court  reached  the

merits in deciding to decertify the class, this would be an abuse

of discretion.

           After the United States Supreme Court decided Auer  v.

Robbins, the superior court ordered supplemental briefing by  the

parties.   After receiving the briefs and hearing oral  argument,

the  superior  court decertified the class.  The  superior  court

cited  to  Auer in its order decertifying the class; however,  it

did  not  state grounds for decertification.   In its  subsequent

order  denying reconsideration, the superior court provided  more

information on why it decertified the class, but did not make any

reference   to   Civil   Rule  23.   The  court's   reasons   for

decertification were that "Auer provides that the mere  existence

of  a  disciplinary  policy (which might be applied  to  salaried

employees  in  a  way  which would demonstrate  the  non-salaried

nature  of their position) does not make salaried employees  non-

salaried"  and that "Auer allows an employer to use a  window  of

correction to reverse limited improper applications of a  general

policy  to positions which are truly salaried.  That has occurred

here."  These reasons go to the merits of the case rather than to

the grounds for maintaining it as a class action.

           Because  the superior court made no mention  of  Civil

Rule  23,  or  any of its requirements, and instead  gave  merit-

related grounds for its order, a remand is necessary.14

          On remand, if the court chooses to decertify the class,

it  should explain its reasons for doing so.  The court may  also

consider  narrowing15 or decertifying the class based on  current

circumstances, including the existence of other lawsuits.


           Because the superior court did not specify any reasons

under  Civil  Rule 23 for decertifying the class, we REMAND  this

case   to   the  superior  court  for  reconsideration   of   the


1AS 23.10.050 et seq. (1962).
229 C.F.R.  541.118(a); AS 23.10.055.
3The written policy was listed as affecting "All Employees."
4519 U.S. 452 (1997).
529 U.S.C.  201 et seq. (1938).
6Alyeska Pipeline Serv. Co. v. Shook, 978 P.2d 86 (Alaska 1999).
7Id. at 91.
8State, Dep't of Rev. v. Andrade, 23 P.3d 58, 65 (Alaska 2001).
9Jenkins v. Daniels, 751 P.2d 19, 21 (Alaska 1988).
10Ulmer v. Alaska Rest. & Beverage Ass'n, 33 P.3d 773, 776 (Alaska
11417 U.S. 156 (1974).
12Although Eisen refers to Federal Civil Rule 23, and not  Alaska
Civil  Rule  23,  we have previously cited United States  Supreme
Court  cases  on  Civil Rule 23 given "the identity  between  our
Civil Rule 23 and the corresponding federal rule."  Nolan v.  Sea
Airmotive, Inc., 627 P.2d 1035, 1041 (Alaska 1981).
13Eisen, 417 U.S. at 177-78 (quoting Miller v. Mackey Int'l,  452
F.2d  424,  427  (5th Cir. 1971)).  Shook also cites  Newberg  on
Class  Actions and Moore's Federal Practice for roughly the  same
proposition.   Newberg on Class Actions  3.29 (3d  ed.)  ("It  is
also  settled  that  the named plaintiff need not  demonstrate  a
probability  of success on the merits . . . ."); Moore's  Federal
Practice   23.61[5] (3d ed.) ("[C]ourts do not have authority  to
conduct a preliminary inquiry into the merits of a case in  order
to determine if it may be conducted as a class action.").
14Bartold v. Glendale Fed. Bank, 97 Cal. Rptr. 2d 226, 234  (Cal.
App. 2000):

                The  appeal  of an order denying  class
          certification  presents an exception  to  the
          general rule that a reviewing court will look
          to   the   trial  court's  result,  not   its
          rationale.   If  the trial  court  failed  to
          follow   the  correct  legal  analysis   when
          deciding  whether to certify a class  action,
          "an appellate court is required to reverse an
          order  denying class certification . .  .  .,
          `even   though   there  may  be   substantial
          evidence to support the court's order.' "  In
          other words, we review only the reasons given
          by  the  trial  court  for  denial  of  class
          certification, and ignore any  other  grounds
          that might support denial.
(Citations omitted.)

15Civil Rule 23(c)(4)(B) provides that "[w]hen appropriate . . . a
class may be divided into subclasses and each subclass treated as
a class."