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,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
THOMAS SHOOK, and all other )
similarly situated employees, ) Supreme Court No. S-9530
)
Appellants, )
) Superior Court No.
v. ) 3AN-95-3874 CI
)
ALYESKA PIPELINE SERVICE ) O P I N I O N
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.
I. INTRODUCTION
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.
II. FACTS AND PROCEEDINGS
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
occasions.
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
compensation."
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.
III. STANDARD OF REVIEW
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
IV. DISCUSSION
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.
V. CONCLUSION
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.
_______________________________
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
2001).
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."
