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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Willard v. Khotol services Corporation (11/09/2007) sp-6190
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
| JAMES WILLARD, | ) |
| ) Supreme Court No. S- 12174 | |
| Appellant, | ) |
| ) Superior Court No. 3AN-03-13762 CI | |
| v. | ) |
| ) | |
| KHOTOL SERVICES | ) O P I N I O N |
| CORPORATION, | ) |
| ) No. 6190 November 9, 2007 | |
| Appellee. | ) |
| ) | |
Appeal from the
Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Mark Rindner,
Judge.
Appearances: Andrew J. Fierro, Law Office of
Andrew J. Fierro, Inc., Anchorage, for
Appellant. Timothy Seaver, Seaver & Wagner,
LLC, Anchorage, for Appellee.
Before: Fabe, Chief Justice, Matthews,
Bryner, and Carpeneti, Justices. [Eastaugh,
Justice, not participating.]
BRYNER, Justice.
I. INTRODUCTION
After being fired for alleged insubordination and
violating workplace rules, James Willard sued his former
employer, Khotol Services Corporation, for wrongful discharge,
breach of employment contract, and breach of the implied covenant
of good faith and fair dealing. The superior court dismissed
Willards original claims for breach of contract and
implied-covenant claims on grounds of preemption by federal labor
law. Willard filed an amended complaint that restated these
claims in an effort to avoid the preemption problem; the amended
complaint also added new claims based on misrepresentation and
false representation. The superior court then granted summary
judgment to Khotol on all of Willards claims. Because Willard
raised issues of material fact in connection with his
implied-covenant claim, we reverse the superior courts dismissal
of that claim. We also conclude that evidence tending to show
that Khotol harbored ill will toward Willard because he became
involved in union organizing activities may be admitted to
support the implied-covenant claim he bases on theories unrelated
to his union activities, so long as the evidence is independently
relevant to the unrelated claim and creates no danger of being
used to prove an essential element of the claim.
II. FACTS AND PROCEEDINGS
A. Facts
Willard worked for Khotol Services Corporation as a
heavy equipment operator for approximately six weeks during the
summer of 2003. He previously held a similar position as a civil
service employee in the Department of Public Works at Fort
Richardson. Willard applied for the job with Khotol after the
Army decided to privatize the maintenance unit in which he worked
and Khotol obtained the contract for that work. Before beginning
work with Khotol, Willard was told that civil service employees
losing their jobs on base had a right of first refusal to jobs
with private contractors.
Willard completed and signed an employment application
on May 21, 2003 that included the following disclaimer:
I understand this application is not a
contract and that acceptance of employment is
not a contract of employment for a specified
period of time. I understand and agree that I
may resign my employment with Gana-AYoo,
Ltd.[1] for any reason and that my employment
may be terminated at the will of Gana-AYoo,
Ltd. at any time and for any reason. I also
understand that any handbooks, manuals,
policies and procedures maintained by Gana-
AYoo, Ltd. are not contractual in nature and
may be amended or abolished at the sole
discretion of Gana-AYoo, Ltd.
Khotol interviewed Willard after receiving his employment
application and offered him a position as a heavy equipment
operator. Willard signed the written employment offer, called a
company official to verbally accept, and then on June 2, 2003
personally returned the letter to the companys office.
On June 12, 2003, Willard attended a pre-hire meeting,
where he was given a copy of Khotols thirty-four-page employee
manual; Willard signed for the manual but did not read it at that
time. The manual included detailed policies and procedures on a
number of topics, including probation, disciplinary procedures,
misconduct, safety, and termination. The Probation section
described a ninety-day probation period beginning on the date of
hire. The manual characterized the probationary period as a try-
out time for both employee and employer. It further stated that
Khotol would evaluate the employees suitability for employment
and warned that, if the employees work habits, attitude,
attendance or performance does not measure up to [Khotols]
standards, [Khotol] may release [the employee].
Under the Disciplinary Procedures section, the manual
described a system of progressive disciplinary measures and added
that, [e]xcept for extremely serious acts (assault, theft,
insubordination, etc.), employees are not discharged for the
first offense. The manual further stated that, [n]o employee will
be dismissed without just cause and all dismissals will be
subject to the grievance procedures.
Finally, under the Separation of Employment section,
the manual stated:
Termination
An employee may be terminated at any time for
lack of job performance, insubordination,
repeated incidents of minor violations of a
similar nature and where there has not been
an effort to improve, excessive absences and
excessive tardiness.
Willard began working for Khotol on June 30, 2003. He
was directly supervised by Rob Bellamy, but Steve Holtery served
as acting supervisor in Bellamys absence. Although hired as a
heavy equipment operator, Willard performed various tasks for
Khotol, including operating a refuse truck, teaching other
employees truck routes, performing road maintenance, and
servicing oil-water separators. According to Willard, Holtery
began verbally harassing him and other former Department of
Public Works employees soon after he began working for Khotol.
For example, Willard alleges that Holtery told him that once
other new employees had been trained, Khotol could get rid of all
the former Department of Public Works employees, which included
Willard. In response to Holterys actions, Willard reviewed
Khotols policy on harassment, and then complained to Bellamy
about Holterys alleged verbal abuse. Although the employee
manual directed employees to make all complaints of harassment in
writing, Willard made only verbal complaints. According to
Willard, this had little effect and the verbal harassment by
Holtery continued even after he approached Bellamy.
During his brief tenure with Khotol, Willard also
participated in an effort to secure union representation for
Khotol employees. On one occasion, he organized and attended a
meeting on union representation. Afterward, he spoke to several
co-workers about joining the union. Willard asserts that both
Bellamy and Holtery knew of the meeting and his interest in
obtaining union representation.
On August 15, 2003, six weeks after his employment
began, Bellamy and Khotol controller Douglas Koprowski confronted
Willard and handed him a letter terminating his employment. The
letter, signed by Bellamy, stated that the principal reason for
Willards termination was: insubordination to the established line
of authority of this company. The letter also stated that
Willard had refus[ed] to adapt to Company policy regarding shop
and operational procedure.
Willard asserts that before his termination he received
no notices, warnings, or counseling regarding his job
performance; nor had he been disciplined for any alleged
misconduct. After receiving the termination letter, Willard
attempted to invoke the grievance process described in Khotols
employee manual, which directs employees to discuss any work-
related problem with their project manager first. But Bellamy
Willards project manager refused to discuss the termination and
directed Willard to leave the premises. Although he was not
represented by a union, Willard attempted to file a written
grievance with the help of a union official. Koprowski refused
to discuss the termination with the union official.
On August 22, 2003, Willard filed a complaint with the
National Labor Relations Board (NLRB), alleging that Khotol
terminated him because of his activities in support of the
International Union of Operating Engineers, Local 302. Because
of this, the complaint said, the dismissal violated Willards
rights under section 7 of the National Labor Relations Act
(NLRA). In response to an inquiry to Khotol from the NLRB,
Bellamy drafted but did not send a letter stating that Willard
was terminated for insubordination and failure to follow
established shop procedures. The letter further stated that
Willard had refused to acknowledge or follow instructions from
two supervisors, failed to follow procedures related to the daily
maintenance and fueling of each operators equipment, and had left
equipment parked in an unsafe manner. Finally, the letter
described a situation in which Willard raised a safety concern
that Bellamy concluded was unfounded. According to Bellamy,
Willards complaint and the investigation it triggered caused the
Company a great deal [of] lost time, backlog of work, and led to
hard feelings with the contractor. Bellamys draft letter
apparently served as the basis for Khotols formal response to the
NLRB, which was sent by Koprowski. Koprowskis letter, dated
September 29, 2003, provided greater detail about Willards
alleged acts of insubordination and flatly denied that his
termination was related to or in retaliation for union-
organizing activities. In October 2003, the NLRB notified Khotol
that Willard had withdrawn his unfair labor practice charge
against the company.
B. Proceedings
In December 2003 Willard sued Khotol in superior court
in Anchorage, asserting three causes of action: wrongful
discharge, breach of the covenant of good faith and fair dealing,
and breach of employment contract. As part of the second and
third claims, Willard alleged that Khotol dismissed him because
of his efforts to secure union representation. Specifically, the
implied-covenant claim asserted that Defendants discharge of
Plaintiff was a pretextual discharge for union organization. And
the breach-of-contract claim stated that the termination . . .
was done in retaliation for Mr. Willards efforts to secure union
representation for his fellow co-workers.
In response, Khotol filed a motion to dismiss, arguing
that all three of Willards claims were preempted by the NLRA. On
April 2, 2004, after briefing and oral arguments by both parties,
the superior court dismissed the second and third claims the
implied-covenant and breach-of-contract claims with leave to
amend. The court ruled that both claims were preempted by
federal law. The superior court left the wrongful discharge
claim intact because, as pled, it did not refer to Willards union-
related actions.
Three weeks later, on April 22, 2004, Willard filed an
amended complaint that omitted the references to Khotols alleged
anti-union bias and reasserted Willards first three claims, while
adding two new claims: misrepresentation and false
misrepresentations to procure employment.
Khotol then filed a motion for summary judgment,
arguing that all of Willards claims were without merit because he
was an at will employee and could be terminated without cause.
On May 9, 2005, following oral arguments and supplemental
briefing, the court granted Willards motion to compel discovery
and gave both parties permission to file supplemental briefing.
Finally, on November 10, 2005, the court granted summary judgment
for Khotol on all claims, followed by a final judgment in Khotols
favor on December 5, 2005.
Willard appeals.
III. DISCUSSION
We review de novo a superior courts order granting
summary judgment.2 We must consider the entire record in the
light most favorable to the non-moving party.3 We will uphold
summary judgment only if the record presents no genuine issues of
material fact and the moving party is entitled to judgment as a
matter of law.4
A. Willards Breach-of-Covenant Claim
Willard argues that the superior court erred in ruling
that he failed to raise a question of material fact as to whether
his discharge violated the covenant of good faith
and fair dealing, which is implied in all employment contracts
in Alaska.5
Breach of the implied covenant may be either subjective
or objective.6 To prove breach on subjective grounds, an
employee must show that the employer acted with a bad-faith
purpose.7 Apart from avoidance of bad faith, the covenant
requires parties to an employment contract to act in a manner
which a reasonable person would regard as fair.8 While the
determination of fairness is inherently fact specific, we have
held that the covenant requires that an employer treat like
employees alike and that failure to do so can give rise to a
claim for breach under the objective test.9 Similarly, proof
that an employers actions violated public policy may qualify as a
breach of the objective prong of the implied covenant.10
Willard asserts four theories in support of his
argument that Khotol breached the implied covenant of good faith
and fair dealing. Specifically, he alleges that Khotol fired him
in retaliation for requesting safety equipment in violation of
public policy; failed to ensure that all employees who violated
health and safety rules received equal treatment; violated its
own rules and regulations in terminating Willard; and fired
Willard because of his supervisors personal animosity toward him.
Willards allegation that Khotol fired him in
retaliation for requesting necessary safety equipment relies
largely on Bellamys draft letter to the NLRB. During his
deposition, Bellamy acknowledged that the letters purpose was to
explain the termination of Jim Willard. The letter states that
Willard was terminated for insubordination and failing to follow
established shop procedures. It gives several examples of
Willards alleged misconduct, and then describes Willards
complaints regarding a task that he believed was unsafe due to
the presence of harmful gases. In dismissing Willards concerns,
Bellamy wrote:
Upon investigation by myself into this matter
I found that the operation as set forth was
completely safe and the level of gases
present would be a matter of personal
discomfort. His position on this matter
caused the Company a great deal [of] lost
time, backlog of work, and led to hard
feelings with the contractor, the Shaw Group.
Khotol Services Corporation emphasizes a
safe, team oriented environment for our
employees. Mr. Willard indicated to me on
more than one occasion that he was not
interested in being a part of this team.
The operation in question involved the cleaning of oil-
water separators installed where motor vehicles are maintained
and repaired. The separators drain oil into waste-oil
reservoirs, while diverting water into the sewage system.
According to Bellamys deposition testimony, the separators
received periodic inspections and maintenance; employees checked
pump operations weekly and drained and pressure washed the
separators tanks and reservoirs quarterly.
While Bellamys deposition testimony indicates that
Willard was asked only to check the equipment rather than clean
it, Willards affidavit states that Bellamy directed [him] to work
on the oil/water separators. The affidavit further claims that
in response to Bellamys request, Willard informed Bellamy that he
(Willard) would need the proper safety equipment in order to
carry out this task. Willard insists that Bellamy never told him
the work on the oil-water separators could be done without the
requested safety equipment; nor did Bellamy tell Willard that his
request would lead to a backlog of work, delays in meeting
deadlines, or hard feelings with Khotols contractor, the Shaw
Group. To the contrary, Willard states, Bellamy eventually
obtained the safety equipment he requested. Bellamy, for his
part, acknowledged during his deposition that despite the
concerns his draft letter to the NLRB expressed about the
negative effects of Bellamys requests for the safety equipment,
Khotol had never actually experienced any economic problems or
delays in the oil-water separator work attributable to his
requests.
This evidence, viewed in the light most favorable to
Willard, supports an inference that Willards request for safety
equipment was reasonable, but that Khotol supervisors viewed it
as an annoyance and used it as a reason to terminate Willard for
insubordination. Willards claim that his request was reasonable
finds further support in the deposition testimony of Steve
Holtery, who, when asked if it was ever his job to acquire safety
equipment for use on the oil-water separators, stated: My job,
no, its not my job, but we ordered the equipment in. We got the
things that they were saying was needed . . . . While Holtery
did not explicitly identify who they referred to, his testimony
in response to other questions suggests he was referring to
employees formerly with the Department of Public Works at Fort
Richardson, who had previously supervised maintenance of the oil-
water separators. Holtery also acknowledged that Khotol
initially purchased the wrong type of air mask or filter. After
learning of the mistake, he said, we went and got the correct
filters.
Yet despite Holterys apparent recognition of the need
for safety equipment in connection with work on the oil-water
separators, his deposition testimony suggests that managers at
Khotol viewed Willards request for safety equipment as a
nettlesome delay or hindrance. Asked about Willards work
assignments, Holtery responded:
A: Well, theres a lot of things that we
wanted everybody to do. We wanted
everybody because it was such a small
work force to be able to cross craft,
and we wanted him to do oil/water
separators, but we had a problem with
that.
Q: What was the problem with . . .
A: He didnt want to do them. I can
understand.
Q: Was he assigned to do oil/water
separation?
A: No. We didnt have time to debate. No, we
. . .
Q: I guess Im confused. Was he ever asked
to do . . .
A: I think he was, but every time it came
up, there was questions about
operational procedures and then wed have
to stop and go check on what safety
equipment was required . . . .
We have previously held that firing an employee in
retaliation for requesting safety equipment gives rise to a cause
of action for breach of the implied duty of good faith and fair
dealing.11 For example, in Reed v. Municipality of Anchorage, we
held that a municipal employee discharged in retaliation for
whistle blowing by filing job safety and health complaints had a
valid common law claim for breach of the implied covenant.12 As
in Reed, Willards case involves a claim of retaliatory discharge
in connection with his request for safety equipment.
Khotol responds by downplaying the significance of
Bellamys draft letter to the NLRB and asserts that other than his
conclusory allegations Mr. Willard presented no evidence to
support this claim. Khotol further asserts that Bellamys
investigation of the oil-separator operation and his conclusion
that it was completely safe, support the companys position that
Willard was fired for insubordination and failure to follow
company procedures and not for requesting safety equipment. As
Khotol sees it, Willards equipment requests provided confirmation
of Willards resistance, both passive and active, to the direction
of his supervisors.
In dismissing Willards retaliatory discharge theory,
the superior court agreed with Khotols position, stating: [A]s
Defendant points out, Plaintiffs conclusory allegations, made for
the first time in his supplemental opposition, do not create a
factual issue whereby a reasonable jury might conclude that
Khotol acted in an objectively unfair manner in terminating
Plaintiff. We disagree. Here, Willard relied on both the
Bellamy letter and his own affidavit in support of his complaint.
In addition, when viewed in the light most favorable to Willard,
Bellamys and Holterys deposition testimony supports Willards
retaliatory-discharge claim. Khotols position, as adopted by the
superior court, fails to reflect a view of the evidence in the
light most favorable to Willard the approach required for ruling
on Khotols motion for summary judgment.
Moreover, the evidence available at summary judgment
fails to support Khotols claim that it made a good faith effort
to confirm that Willards equipment requests were unreasonable and
that its investigation therefore provided confirmation of
Willards resistance, both passive and active, to the direction of
his supervisors. [I]t is possible for an employer to rightfully
terminate an employee but to do so in a way that violates the
covenant of good faith and fair dealing.13 But if the employer
makes a good faith determination that the misconduct occurred,
there is no breach of the implied covenant . . . , even if the
employee could subsequently prove that the factual finding of
misconduct was a mistake.14
In Holland v. Unocal Oil Co. of California, Inc., on
which Khotol relies, we affirmed summary judgment for Unocal.15
There, Holland planned to do an independent project using a
significant amount of company materials and time, but failed to
obtain permission to do the project as required by company
policy.16 Two of Hollands supervisors conducted an investigation;
they determined that Holland had not told them the truth and that
his behavior demonstrated poor judgment, both of which justified
his demotion.17 We concluded that Unocals actions, as a matter of
law, could not reasonably be considered objectively unfair,
because two supervisors had investigated the misconduct charges
against Holland, including interviewing all of the parties
involved.18
In contrast, the record here indicates that Bellamys
investigation of Willards requests consisted of second-hand
information from a Department of Public Works supervisor at Fort
Richardson who told Bellamy that an earlier investigation the
date of which was not stated had shown that there w[ere] no
toxic gas[]es to a level that would harm an individual. The
record provides no further details to support Khotols claim that
it had investigated the reasonableness of Willards request. And
Bellamy acknowledged that his brief conversation with the
Department of Public Works supervisor was the principal basis of
his effort to determine the validity of Willards requests for
safety equipment. This evidence does not provide a reasonable
factual basis to support the conclusory assertion in Bellamys
draft letter to the NLRB that, [u]pon investigation by myself . .
. I found that the operation . . . was completely safe and the
level of gases present would be a matter of personal discomfort.
For these reasons, we conclude that there are
sufficient genuine issues of material fact regarding Willards
retaliatory discharge theory to support his cause of action for
breach of the implied covenant of good faith and fair dealing.19
B. Willards Wrongful Discharge and Breach-of-Contract
Claims
Willards amended complaint asserts that Khotol is
liable for wrongful discharge and breach of his employment
contract. Both claims rely on a theory that Willard could only
be fired for just cause and was entitled to certain job
protections, including an opportunity to dispute his termination
through company grievance procedures. In support of this theory,
Willard relies primarily on our decision in Jones v. Central
Peninsula General Hospital20 and language in Khotols employee
manual to argue that the manual fostered a reasonable expectation
that he could only be legally discharged for cause.
In granting Khotol summary judgment on these claims,
the superior court compared the facts of this case to Jones and
concluded that, unlike the provisions of the manual at issue in
Jones, certain disclaimers in Khotols manual and Khotols
employment application made it clear that, as a matter of law,
Willard remained an at-will employee. The superior court thus
concluded that the manual did not affect Willards at-will status,
so he could be legally discharged with or without just cause. On
appeal, Willard contends that the superior court improperly
distinguished Jones and renews his argument that the manual,
taken as a whole, fostered a reasonable expectation that he could
only be fired for cause and was entitled to certain procedural
job protections.
While Jones recognized that personnel manuals can
sometimes modify at-will employment agreements by creating
expectations of specific job protections, we conclude that Jones
has no bearing on Willards case because uncontroverted evidence
establishes that Willard was still a probationary employee.
Khotols employee manual unambiguously provided that, as such, he
could be fired at any time during his first three months of
employment if his attitude, habits, attendance or job performance
did not measure up to Khotols standards.
Willard was on the job for only six weeks before being
fired. The Khotol manual defines the probation period as
extending for 90 days, commencing on the date of hire, during
which time the employee must demonstrate the ability to perform
the job. The manual further describes probation as a try-out time
for both employee and employer, during which the company may
dismiss the employer for reasons related to work habits,
attitude, attendance or performance. The manuals only guarantee
to probationary employees is that they will receive several
evaluations of their job performance during the ninety-day
period, followed by a final review at the end of probation.
Willard contends that, even though he fell within the
manuals description of a probationary employee, Khotol did not
regard him as having probationary status. He disputes his
probationary status on three specific grounds: he notes that
company officials never told him he was on probation; he asserts
that he never received probationary evaluations; and he points
out that he received holiday pay for July 4, contrary to the
manuals statement that probationary employees are not eligible
for such pay.
Willards arguments are unpersuasive. Nothing in the
manual suggests that new employees must be told that they are on
probationary status before they fall into that category; instead,
the manual classifies all new employees as probationary workers.
Moreover, Khotols alleged failure to give Willard an evaluation
during his six weeks on the job does not support a reasonable
inference that he was not on probation. While the manual
promises several evaluations during the ninety-day probation
period, it does not specify when the evaluations must occur
within the ninety-day period. Likewise Willards unexplained
receipt of holiday pay for July 4th does not support a reasonable
expectation of non-probationary status.
Courts in other jurisdictions have generally recognized
that, absent specific contractual protections, probationary
employees may be dismissed for any non-discriminatory reason or
no reason at all.21 Similarly, we have consistently recognized
that in the absence of statutory or contractual provisions to the
contrary, probationary employees traditionally are accorded
minimal procedural and substantive job protections.22 In sum,
Willards attempt to raise claims under Jones for wrongful
discharge and breach of contract fails as a matter of law because
Khotols employee manual unequivocally made him a probationary
employee and gave him no right or reasonable expectation of a
right to pursue these claims. We thus affirm the superior courts
decision on these claims.
C. Willards Misrepresentation Claim
Willards amended complaint separately asserted a claim
for misrepresentation, alleging that Khotol misrepresented three
conditions or terms of his employment through its employee
manual: (1) the right to progressive discipline, (2) the right to
not be terminated without just cause, and (3) that any dismissal
would be subject to the companys grievance procedure. Willards
complaint does not specify whether the misrepresentation claim is
based on negligent or fraudulent misrepresentation. The superior
court ruled that Willard failed to supply enough evidence to
withstand summary judgment under either theory. The court ruled
that the negligent misrepresentation claim lacked legal merit
because the record established that Willard did not rely on the
employee manual in deciding to accept the job. Similarly, the
court ruled that a fraudulent misrepresentation claim was
destined to fail because of Willards lack of reliance or,
alternatively, because Willard failed to offer any evidence that
Khotol knowingly or intentionally made misrepresentations in its
manual.
Willard now asserts that the superior court erroneously
failed to consider his argument that he reported Holterys alleged
harassment in reliance on statements in the employee manual.
Willard also contends that the court failed to consider his
argument that Khotols characterization of Willard as an at will
employee proves that Khotol never intended to honor the manuals
promise that [n]o employee will be dismissed without just cause
and all dismissals will be subject to the grievance procedures.
Khotol responds that Willard presented no evidence of
reliance. Citing the Restatement (Second) of Torts,23 Khotol
asserts that even if we accept Willards premise that Khotol knew
that the manuals promises about grievance procedures and
discharge only for good cause were false, Willard would not have
been justified in relying on those promises. Khotol argues that
Willards reliance was unjustifiable because the relevant
provisions conflict with other provisions in the manual and the
employment application, which state that all at-will employees
may be terminated at any time and for any reason.
The Restatement (Second) of Torts 552 defines the four
elements required to establish negligent misrepresentation as:
(1) the party accused of misrepresentation must have made the
statement in the course of his business, profession or
employment; (2) the representation must supply false information;
(3) the plaintiff must show justifiable reliance on the false
information; and (4) the accused party must have failed to
exercise reasonable care or competence in obtaining or
communicating the information.24 Fraudulent misrepresentation
requires an additional element: proof that the party making the
misrepresentation knew that it was untrue.25
We agree with Khotol that Willards misrepresentation
claim fails because the record does not include any evidence
supporting the requisite element of justified reliance. As the
superior court noted, the evidence shows that Willard could not
have relied on the statements in the employee manual in accepting
the job with Khotol. Willard stated in his deposition that he
accepted the job on June 2, 2003 by signing a written job offer
and calling a company official to convey his acceptance. Yet he
did not receive the employee manual until June 12 and failed to
read it until sometime after that date. Willard also offered no
support for his assertion that he relied on the employee manual
in deciding to report Holterys alleged harassment. In his reply
brief, Willard points to his own deposition testimony that he
read the employee manuals policy on harassment to find out [h]ow
we were supposed to be treated. Yet the harassment section says
nothing about for-cause employment or grievance procedures.
Moreover, the manual specifically requires reports of alleged
harassment to be in writing and states that they must contain
specific details. Willard failed to comply with either
requirement.
Because Willard has failed to offer evidence supporting
a finding of justified reliance on any alleged
misrepresentation, we affirm the superior courts dismissal of
Willards misrepresentation claim.
D. Effect of Federal Preemption on Evidence of Anti-Union
Bias
After Khotol moved to dismiss Willards original
complaint, the superior court indicated that it was inclined to
dismiss two of Willards claims because they were preempted by the
NLRA.26 The first claim asserted that Khotol breached the implied
covenant of good faith and fair dealing and alleged in part that
Willards termination by Khotol was a pretextual discharge for
union organization. The second claim was for breach of contract;
among other things, it asserted that Khotol breached its
employment contract with Willard in retaliation for [his] efforts
to secure union representation for his fellow co-workers. In
stating its intent to dismiss these claims, the court proposed to
enter the dismissals without prejudice to allow amendment of
Willards complaint. In reply, Willards attorney stated: I think
thats probably appropriate for relief as long as Mr. Willard has
the opportunity to amend his complaint. After the court dismissed
the claims as preempted, Willard amended his complaint to remove
all references to his involvement in efforts at union
organization.
On appeal, Willard challenges the courts order
dismissing his original claims. He argues that, because his
union activities formed only a part of those claims, the claims
were not barred by federal preemption. In Willards view,
[t]he fact that the complaint alleged his
participation in union activities as one of
several reasons for his discharge did not
justify dismissal and the requirement that
the complaint be amended to eliminate
reference to [Khotol]s bad faith
actions. . . . Evidence of [Khotol]s bad
faith in terminating Willard for his union
organizing activities is both proper and
relevant to his claim for breach of the
covenant of good faith and fair dealing, and
therefore he should have been permitted to
allege such facts in his complaint and be
able to present such evidence at a jury
trial.
In response, Khotol contends as a preliminary matter
that Willards attorney waived the right to challenge the superior
courts preemption ruling by expressly telling the superior court
that its proposal to dismiss the original claims was probably
appropriate. But the statement by Willards counsel cannot fairly
be construed as acquiescence to the courts ruling on preemption.
After the superior court proposed to dismiss the two claims as
preempted, it qualified this proposal by suggesting that the
dismissal could be entered without prejudice. The ensuing
response by Willards counsel focused on the suggested remedy of
allowing amendment: I think thats probably appropriate for relief
as long as Mr. Willard has the opportunity to amend his
complaint.
When viewed in context, Willards counsel simply agreed
that if the court followed through with its proposal to dismiss
the two claims, it would be appropriate to allow Willard the
opportunity to amend his complaint. Indeed, the ensuing colloquy
between Willards counsel and the superior court confirms this
interpretation by making it clear that Willards counsel continued
to disagree with the courts ruling of preemption. For instance,
when the court later reiterated that it favored the approach of
dismissal without prejudice, Willards attorney replied, Again, I
think this whole idea [of preemption under federal case law] is
misconstrued because there are no federal issues involved here
aside from the reference to union activities.27 Because we
conclude that Willard did not waive the point, we turn to the
merits of his claim that the superior court misapplied the
doctrine of federal preemption.28
In San Diego Building Trades Council, Millmens Union,
Local 2020, Building Material and Dump Drivers, Local 36 v.
Garmon,29 the United States Supreme Court announced two general
guidelines for courts to follow in assessing the permissible
scope of state regulation of conduct touching on labor-management
relations. First, the Court declared, state jurisdiction must
yield when the activity in question is clearly protected or
prohibited by the NLRA.30 Second, the Court stated, both federal
and state courts must defer to the exclusive competence of the
National Labor Relations Board when an activity is arguably
subject to 731 or 832 of the NLRA.33
But the Court has also warned against applying these
guidelines in a literal, mechanical fashion.34 In Garmon the
Court carved out specific exceptions to preemption for matters
that are of only peripheral concern to the NLRA, or that are so
deeply rooted in local law as to make it unreasonable to assume
that Congress intended to preempt state law from applying.35 The
Court also has stressed the need to weigh the states interest in
adjudicating the type of claim asserted against the possibility
of interference with the NLRBs regulatory jurisdiction.36 Under
this balancing test, when conduct is arguably prohibited by the
NLRA, a critical inquiry is whether the controversy presented to
the state court is identical with that which could be presented
to the [NLRB].37 For example, in Sears, Roebuck & Co. v.
Carpenters, the court held that a state trespass action was not
preempted because the state action focused only on the location
of the picketing, while a complaint to the NLRB would have
focused on the substance and object of the picketing.38
Willard contends on appeal that Garmon preemption did
not apply to his original implied-covenant claim, because it
included theories independent of the allegations of anti-union
bias. In particular, he contends, because his original implied-
covenant claim included allegations that his termination was
based on personal animosity and that it violated public policy
factual allegations falling beyond the range of NLRB jurisdiction
the original claim was not factually identical to his potential
federal claim, and so was not barred by Garmon preemption.
Furthermore, regarding his amended complaint, Willard
argues that because the implied-covenant claim now does not
allege anti-union bias at all resting completely on independent
grounds Garmon preemption does not bar him from introducing
evidence tending to show anti-union bias, so long as it is
relevant to support the independent state-law claims he actually
seeks to prove.
Willard supports this argument with a California Court
of Appeal case, Kelecheva v. MultiVision Cable T.V. Corp.39 In
Kelecheva, a former supervisor alleged that he was subjected to
harassment and discharged for refusing to spy on and write up co-
workers involved in a unionization effort.40 He sued his employer
for wrongful termination, breach of an implied employment
contract, and breach of the covenant of good faith and fair
dealing.41 The California Court of Appeal ultimately held that
the plaintiffs state-law contract claims were not preempted,
because the state litigation would focus on issues distinctly
different from those that could have been raised before the NLRB.42
In particular, the court noted that the contract did not require
a showing of an unlawful motive and that the implied-covenant
claim would likely focus on whether the defendant followed its
own personnel rules or falsified the asserted grounds for
discharge.43 Under these circumstances, the court observed, the
plaintiff would not be required to prove that the employer
discharged him for reasons that violated federal labor law.44
Noting the states substantial interest in providing contract
remedies for employees not covered by collective bargaining
agreements, the court concluded that this interest outweighed any
marginal effect that adjudication of the state-law claims would
have on national labor policy.45 Accordingly, Kelecheva held that
the state claims were not barred, stating:
Although evidence of defendants anti-union
animus may be relevant to plaintiffs claim of
breach of the covenant of good faith and fair
dealing, plaintiff would not be required to
prove that defendant, in fact, discharged him
for reasons that would violate federal or
state labor law.[46]
In response to Willards reliance on Kelecheva, Khotol
insists that the superior court correctly dismissed the claims in
Willards original complaint under Garmon and that Willard cannot
escape preemption merely by characterizing his complaints as
state contract claims. Khotol rests its argument on cases from
other jurisdictions in which courts found state-law contract
claims preempted under Garmon. But those cases namely, Foreman
v. AS Mid-America, Inc.47 and Young v. Caterpillar, Inc.48 are
distinguishable from Willards. Both involved state-law claims
that centered on the ways in which employees were treated or
reinstated to their jobs following the resolution of labor
strikes. And in both cases, the courts specifically found that
the employers strike-related conduct provided the sole basis for
the state claims, and was identical to the conduct that could
have been, or had been, presented to the NLRB.49
In Foreman non-union replacement workers sued their
former employer for breach of contract in connection with
harassment and intimidation perpetrated by union workers
returning to work after a strike.50 The Nebraska Supreme Court
found that the employers failure to provide harassment-free work
as it had promised to do was actually or arguably prohibited by
the NLRA because the inaction amounted to condonation or
protection of misconduct attributed to the union.51 The court
thus concluded that the companys failure to act was not merely a
peripheral concern to federal labor law, but, rather, [was] so
inextricably intertwined with federal labor law that to do other
than preempt appellants alleged breach-of-contract claims would
obfuscate the NLRBs ability to adjudicate controversies under its
purview.52
Similarly, in Young, a group of employees sued their
employer in state court for failing to reinstate them immediately
after a strike concluded.53 While the plaintiffs claimed that the
employer had breached their individual employment contracts by
delaying reinstatement, the court found that the plaintiffs
claims were in essence unfair labor practices claims under
section 8 of the [NLRA].54 The court concluded that [d]espite
attempts to dress the claims as breach of contract, the actual
issues presented to the state court would be identical to those
presented to the [NLRB] in an unfair labor practices claim.55 The
court thus concluded that the claims were preempted.
By contrast, Willards original complaint provided two
potential bases for his breach-of-covenant claim that did not
necessarily hinge on his allegations of anti-union bias that his
termination violated public policy and/or was based on personal
animosity. As amended, his complaint does not allege anti-union
bias. Thus, the issues to be considered by a state court are not
identical to those originally presented to the NLRB. Foreman and
Young are not persuasive authority for preemption here.
Khotol also argues that Willards reliance on Kelecheva
is misplaced, particularly as to whether his anti-union bias is
admissible in support of his implied-covenant of good faith and
fair dealing claim. Khotol contends that if Kelecheva represents
good law consistent with United States Supreme Court precedent,
it cannot be interpreted as permitting evidence of anti-union
bias to be admissible in support of a state claim, even if the
evidence of bias is relevant to that claim. Further, Khotol
insists that Kelechevas reference to the potential relevance of
anti-union animus is merely dicta that indicates the opposite
point that regardless of the relevance of the evidence of anti-
union animus, such evidence would not be required to prove his
claim.
Although Kelechevas meaning is somewhat unclear, we
agree with Willards reading of the case. The implied-covenant
claim in Willards first superior court complaint included an
allegation that he had been fired in retaliation for his efforts
to secure union representation. That allegation was essentially
identical to the one he initially made to the NLRB. Standing
alone, it raised a matter within the ambit of NLRBs
jurisdictional sphere. But Willards claim advanced two other
implied-covenant theories that could stand independently. As
originally raised, and as later elaborated on in Willards amended
complaint, these theories that Willards termination violated
public policy and/or that it was prompted by his supervisors
personal animosity toward him fall outside the ambit of federal
concern, even though the conduct they allege might have been
motivated by hostility resulting from Willards union activity.56
Accordingly, these theories were not preempted.
Moreover, if these independent theories were tried in
the superior court and evidence of anti-union animus became
genuinely relevant to support them, we would see no reason why
the admissibility of the evidence of bias should not be governed
by the Alaska Rules of Evidence. The rules of evidence give
trial courts broad discretion to exclude relevant evidence when
its prejudicial impact or potential for confusion outweighs its
probative value.57 Here, if Willard offered to use evidence of
Khotols anti-union bias not just to impeach Khotols claim that he
was fired for insubordination, but also to suggest that Khotol
breached the implied covenant by firing Willard for engaging in
union-related activities, then the evidence could be excluded
because of its tendency to inject confusing issues into the case
that belong in a federal forum. Given the broad scope of the
trial courts powers to exclude relevant evidence when its
potential for confusion outweighs its probative value, we see no
reason to fear that the superior court would hesitate to exclude
it. On the other hand, though, if the evidence is relevant for
impeachment and poses no risk of being mistaken as evidence
offered to prove an element of Khotols implied-covenant claim,
federal preemption would not bar its admission.58
On remand, then, the superior court should determine
questions concerning the admissibility of such evidence under the
Alaska Rules of Evidence, keeping a careful eye on the purposes
underlying the doctrine of preemption adopted in Garmon.
IV. CONCLUSION
Because Willard presented evidence raising genuine
issues of material fact in connection with his claim that Khotol
violated the implied covenant of good faith and fair dealing, we
REVERSE the superior courts decision on this claim and REMAND for
further proceedings consistent with this opinion. We also
conclude that, on remand, evidence of Khotols alleged anti-union
bias may be admitted to support Willards implied-covenant claim
so long as it is relevant and does not supply, or pose an undue
risk of appearing to supply, an essential element of the claim.
We AFFIRM the superior courts decision in all other respects.
_______________________________
1 Khotol is a subsidiary of Gana-AYoo, Ltd., an Alaska
Native Corporation. See Khotol Services Corporation, Background,
http://www.khotol.com/ksc_backgound
.htm [sic] (last visited Oct. 31, 2007).
2 Nielson v. Benton, 903 P.2d 1049, 1052 (Alaska 1995);
Bishop v. Municipality of Anchorage, 899 P.2d 149, 153 (Alaska
1995).
3 Olson v. Teck Cominco Alaska, Inc., 144 P.3d 459, 463
(Alaska 2006).
4 Nielson, 903 P.2d at 1052; Bishop, 899 P.2d at 153.
5 Mitford v. de Lasala, 666 P.2d 1000, 1006 (Alaska 1983)
(Every contract imposes upon each party a duty of good faith and
fair dealing in its performance or its enforcement.) (quoting
Restatement (Second) of Contracts 205 (1981)); see also Knight
v. American Guard & Alert, Inc., 714 P.2d 788, 792 (Alaska 1986)
(complaint that alleged retaliatory discharge stated an
enforceable cause of action under covenant of good faith and fair
dealing implied in employment contracts).
6 Pitka v. Interior Regl Hous. Auth., 54 P.3d 785, 789
(Alaska 2002).
7 Id. at 789.
8 Id.
9 Jones v. Cent. Peninsula Gen. Hosp., 779 P.2d 783, 789
n.6 (Alaska 1989); see also Rutledge v. Alyeska Pipeline Serv.
Co., 727 P.2d 1050, 1056 (Alaska 1986).
10 Luedtke v. Nabors Alaska Drilling, Inc., 768 P.2d 1123,
1130 (Alaska 1989) (Luedtke I).
11 Reed v. Municipality of Anchorage, 782 P.2d 1155, 1158-
59 (Alaska 1989); see also Kinzel v. Discovery Drilling, Inc., 93
P.3d 427, 438 (Alaska 2004).
12 Reed, 782 P.2d at 1158-59.
13 Alaska Marine Pilots v. Hendsch, 950 P.2d 98, 109
(Alaska 1997).
14 Holland v. Unocal Oil Co. of Calif., Inc., 993 P.2d
1026, 1035 (Alaska 2000).
15 Id.
16 Id.
17 Id.
18 Id.
19 Willard also asserts that Khotol breached the implied
covenant when it failed to treat like employees alike regarding
alleged health and safety rule violations and that this disparate
treatment was objectively unfair. On appeal, Willard argues that
he established triable issues of fact in connection with this
theory and that in dismissing this basis for his breach-of-
covenant claim, the superior court improperly applied a high
evidentiary threshold . . . inconsistent with Alaska case law.
Because we hold below that Willard was a probationary employee,
we conclude that the implied covenant did not entitle Willard to
be treated equally by Khotol when it sanctioned him for violating
health and safety rules. For the same reason, we conclude that
Khotols alleged failure to follow its own policies regarding non-
probationary employees did not result in a breach of the implied
covenant. And because Willards allegations that personal
animosity led to his dismissal meshes with his retaliatory
discharge theory, we see no need to address the animosity theory
separately here.
20 Jones v. Cent. Peninsula Gen. Hosp., 779 P.2d 783, 787
(Alaska 1989) (holding that a personnel manual issued by the
employer had been incorporated into the plaintiffs at-will
employment agreement, so that the plaintiff could only be
terminated for cause).
21 E.g., Pinto v. Wynstra, 250 N.Y.S.2d 1012, 1015 (Sup.
Ct. 1964) (It has heretofore been regarded as well settled that
the appointment of a teacher may be terminated, with or without
cause, at any time during the probationary period, and that a
teacher so situated has no right of review.); Commonwealth, Dept
of Health v. Graham, 427 A.2d 1279, 1281 (Pa. Commw. Ct. 1981)
(holding that as long as state agencys reasons for dismissing a
probationary employee are job-related and not tainted by
discriminatory motive, the court will not substitute its judgment
for the agencys or weigh the sufficiency of the evidence
supporting the agencys decision).
22 See, e.g., Cassel v. State, Dept of Admin., 14 P.3d
278, 283-84 (Alaska 2000); Univ. of Alaska v. Tovsen, 835 P.2d
445, 447 (Alaska 1992); Van Gorder v. Matanuska-Susitna Borough
Sch. Dist., 513 P.2d 1094, 1096 (Alaska 1973).
23 Restatement (Second) of Torts 537 (1977) (The
recipient of a fraudulent misrepresentation can recover against
its maker for pecuniary loss resulting from it if, but only if,
(a) he relies on the misrepresentation in acting or refraining
from action, and (b) his reliance is justifiable.).
24 Id. 552(1); see also Bubbel v. Wien Air Alaska, Inc.,
682 P.2d 374, 380 (Alaska 1984).
25 Bubbel, 682 P.2d at 381 (citing Restatement (Second) of
Torts 530 cmt. b).
26 See 29 U.S.C. 157-158 (2000).
27 Notably, after making this point, Willards attorney
supported it by specifically calling the courts attention to
Mitford v. De LaSala, 666 P.2d 1000 (Alaska 1983) one of the
main cases he currently relies on in challenging the superior
courts preemption decision.
28 On questions of law, this court is not bound by the
lower courts decision; our duty is to adopt the rule of law that
is most persuasive in light of precedent, reason, and policy.
Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).
29 San Diego Bldg. Trades Council, Millmens Union, Local
2020, Bldg. Material & Dump Drivers, Local 36 v. Garmon, 359 U.S.
236 (1959).
30 Id. at 244.
31 Section 7 of the NLRA protects the rights of employees
to self-organization, to form, join, or assist labor
organizations, to bargain collectively through representatives of
their own choosing, and to engage in other concerted activities
for the purpose of collective bargaining or other mutual aid or
protection. 29 U.S.C. 157.
32 Section 8 of the NLRA makes it an unfair labor practice
for an employer to discriminate in regard to hire or tenure of
employment or any term or condition of employment to encourage or
discourage membership in any labor organization. 29 U.S.C.
158(a)(3).
33 Garmon, 359 U.S. at 245.
34 Sears, Roebuck & Co. v. San Diego County Dist. Council
of Carpenters, 436 U.S. 180, 188 (1978); see also Garmon, 359
U.S. at 246-47; Farmer v. Carpenters, 430 U.S. 290, 302 (1977)
(Our cases indicate . . . that inflexible application of the
doctrine is to be avoided . . . .).
35 Garmon, 359 U.S. at 244.
36 Sears, 436 U.S. at 189; Vaca v. Sipes, 386 U.S. 171,
180 (1967); see also Farmer, 430 U.S. at 295-96 ([B]ecause
Congress has refrained from providing specific directions with
respect to the scope of pre-empted state regulation, the Court
has been unwilling to declare pre-empted all local regulation
that touches or concerns in any way the complex
interrelationships between employees, employers, and unions . . .
.) (internal quotations omitted).
37 Belknap v. Hale, 463 U.S. 491, 510 (1983).
38 Sears, 436 U.S. at 198.
39 Kelecheva v. MultiVision Cable T.V. Corp., 22 Cal.
Rptr. 2d 453 (App. 1993).
40 Id. at 454-55.
41 Id. at 455.
42 Id. at 459.
43 Id.
44 Id.
45 Id.
46 Id.
47 Foreman v. AS Mid-America, Inc., 586 N.W.2d 290 (Neb.
1998).
48 Young v. Caterpillar, Inc., 629 N.E.2d 830 (Ill. App.
1994).
49 Foreman, 586 N.W.2d at 301; Young, 629 N.E.2d at 797-
98.
50 Foreman, 586 N.W.2d at 296-97.
51 Id. at 301.
52 Id.
53 Young, 629 N.E.2d at 832.
54 Id. at 833.
55 Id.
56 See Roberts v. Auto. Club of Mich., 360 N.W.2d 224, 228
(Mich. App. 1985) (State court jurisdiction over breach of
implied employment contract claim not preempted where state court
would focus on existence of contract and breach, while NLRB would
focus on whether employer bargained in good faith to a bona fide
impasse before unilaterally imposing changes in terms and
conditions of employment.).
57 See Alaska R. Evid. 403.
58 Our ruling that Willards breach-of-contract claim fails
as a matter of law for reasons unrelated to preemption makes it
unnecessary to consider the issue of preemption in connection
with that claim.
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