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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. State v. Alaska State Employees Association (08/22/2008) sp-6298

State v. Alaska State Employees Association (08/22/2008) sp-6298, 190 P3d 720

     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

STATE OF ALASKA, )
) Supreme Court No. S- 12686
Appellant,)
) Superior Court No. 3AN-06- 9651 CI
v. )
) O P I N I O N
ALASKA STATE EMPLOYEES)
ASSOCIATION, AFSCME, AFL-CIO,) No. 6298 August 22, 2008
)
Appellee.)
)
          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Craig F. Stowers, Judge.

          Appearances:   William  E.  Milks,  Assistant
          Attorney  General, Talis J. Colberg, Attorney
          General,  Juneau, for Appellant.  Bradley  D.
          Owens,  Jermain  Dunnagain  &  Owens,   P.C.,
          Anchorage, for Appellee.

          Before:   Matthews, Eastaugh, Carpeneti,  and
          Winfree, Justices.  [Fabe, Chief Justice, not
          participating.]

          MATTHEWS, Justice.

          The   question  presented  is  whether  the  State   is
protected  by  sovereign  immunity from  payment  of  prejudgment
interest  on  an award made by an arbitrator under  a  collective
bargaining agreement.  The superior court decided that the  State
was  not  so  protected and awarded prejudgment interest  on  the
arbitrators award.  We largely affirm because the enforcement  of
the  arbitrators  award in this case sounds in  contract  and  is
enforceable  in  a proceeding encompassed by the general  statute
applicable  to  contract claims against the State,  which  waives
immunity as to prejudgment interest.
I.   FACTS AND PROCEEDINGS
          Wesley  Thompson was an engineer and facilities manager
for  the State of Alaska and a shop steward for the Alaska  State
Employees Association, AFSCME Local 52, AFL-CIO (ASEA).  On March
9,  2005,  Thompson  served  as  a  union  representative  in  an
investigatory hearing regarding Lawrence Rodriguez, another union
member.    The  States  representatives  were  Harold  Riley,   a
supervisor,  Darice  Walter,  a human  resource  specialist,  and
Lieutenant  Colonel Craig Schreiber, a federal  construction  and
facilities  management  officer.   The  meeting  began  with   an
argument  over  procedures.  When Riley attempted to  interrogate
Rodriguez  using a list of questions that he refused to  disclose
to  Thompson,  Thompson and Riley engaged in a  heated  argument.
After  both  sides  briefly caucused, Riley ordered  Thompson  to
leave  the  premises.  Another argument ensued and  Thompson  and
Riley  began  shouting  at  one another.   During  this  argument
Thompson  directed  a  profane  statement  at  Riley.   With  the
assistance of a third party, the argument subsided.
          The  State  initiated  an  investigation  of  Thompsons
conduct  at  the  meeting.   It interviewed  Thompson.   Then  it
interviewed him again to determine if he was dishonest during the
first  interview.   At the conclusion of its  investigation,  the
State  suspended Thompson without pay for thirty days for  making
profane  and provocative statements to a supervisor.   The  State
also  terminated Thompsons employment for dishonesty  during  the
first   interview.   Thompson,  represented  by  ASEA,  filed   a
grievance and the parties went to arbitration.
          The arbitrator upheld the thirty-day suspension without
pay  but  found  that  the State failed to  show  just  cause  to
terminate  Thompson.   The  arbitrator  ordered  the   State   to
reinstate  Thompson with back pay.  The decision did  not  award,
nor did it discuss, interest on Thompsons back pay.
          ASEA  filed  suit  in superior court  after  the  State
failed  to comply with the arbitrators decision.1  ASEA sought  a
judgment directing the State to comply with the arbitrators award
and  compensating Thompson in accordance with the award.  In  its
answer and counterclaim, the State argued that the superior court
should  vacate  part  of  the arbitrators  decision  because  the
arbitrator considered evidence outside of the record. Both  sides
moved for summary judgment.
          The superior court rejected the States summary judgment
motion,  but granted summary judgment in favor of ASEA.   In  the
final  judgment  that  followed, the court  expressed  as  a  sum
certain  the  arbitrators  award  of  back  pay  damages,   added
$23,806.52  in  prejudgment  interest,  and  provided  for  post-
judgment  interest.   The interest began accruing  on  April  14,
2005,  the date on which Thompsons thirty-day suspension  without
pay  ended.2   The  court  combined  principal  with  prejudgment
interest  for the purpose of calculating ASEAs Alaska Civil  Rule
82 attorneys fees.
          On  appeal,  the State argues that it is  immune  as  a
sovereign from the award of prejudgment interest.3  It also  asks
that  the award of Rule 82 attorneys fees to ASEA be recalculated
to reflect deletion of the interest award.
II.  DISCUSSION
     A.   AS  09.50.250 Applies and Waives Sovereign Immunity for
          Prejudgment Interest.
          
          The   Alaska  Constitution  waives  absolute  sovereign
immunity,  but retains a restricted version of immunity.4   Under
the  latter,  [w]e  have  consistently  stated  that  prejudgment
interest   may   not  be  assessed  against  the   state   unless
specifically  authorized by legislation.5  The  applicability  of
sovereign  immunity presents a question of law that we review  de
novo.6
          The  fundamental disagreement in this case  is  whether
prejudgment interest is specifically authorized for claims of the
type  presented here.  The State argues that this case is a  suit
to  confirm  an  arbitrators award and that it arises  under  the
Public Employment Relations Act (PERA).7  The State contends that
PERA  does not waive sovereign immunity for awards of prejudgment
interest.
          ASEA  argues  that the suit was brought to enforce  the
arbitrators award and that the State had agreed by contract to be
bound by such awards.  ASEA therefore argues that its claim was a
contract  claim  and  as  such fell within  the  general  statute
governing contract claims against the State, AS 09.50.250.
          For  the  reasons  that follow, we  conclude  that  the
current  litigation  is  a  contract claim  cognizable  under  AS
09.50.250.
          1.   The competing statutes
          Alaska Statute 09.50.250 contains a general consent  to
suit  for a variety of contract, quasi-contract, and tort  claims
against  the State.8  Alaska Statute 09.50.280 allows  awards  of
prejudgment  interest against the State for claims brought  under
AS 09.50.250.9
          The  Public  Employment  Relations  Act  grants  public
employees  the  right  to  share in the  decision-making  process
affecting  wages and working conditions by authorizing collective
bargaining.10  As part of the collective bargaining process, PERA
mandates  that  a  collective bargaining  agreement  (CBA)  shall
include   a   grievance  procedure  which  shall   have   binding
arbitration as its final step.11  PERA provides that either party
to  a  CBA  has  a  right of action to enforce the  agreement  by
petition   to   the  labor  relations  agency.12   A   regulation
promulgated  by the Alaska Labor Relations Agency  provides  that
the agency can hear petitions to enforce an arbitrators decision.13
The  parties  do not cite this regulation, nor did  either  party
file  a  petition before the agency seeking to enforce or  vacate
the arbitration award.
          2.   The collective bargaining agreement
          The  CBA  sets forth a four-step process for  resolving
grievances between the union and the State.  Arbitration  is  the
final  step  of  the dispute resolution process.  If  arbitration
occurs,  the  CBA  provides that the decision  or  award  of  the
arbitrator shall be final and binding.
          In this case, ASEA invoked the CBAs grievance procedure
and  took the dispute to arbitration.  The arbitrator upheld  the
          decision to suspend Thompson without pay but reversed the
termination of his employment with back pay.  The State  did  not
abide  by  the award, contrary to the CBAs clause mandating  that
the  arbitration  be  final  and  binding.   The  States  delayed
compliance led to ASEAs suit in superior court.
          3.   ASEAs suit was a contract claim.
               
          The  State  contends that ASEAs suit in superior  court
was merely an extension of the arbitration proceeding.  It argues
that the action arose under PERA and that PERA says nothing about
State  liability  for prejudgment interest.  The State  concludes
therefore  that sovereign immunity bars the award of  prejudgment
interest.
          In  particular, the State argues that this  case  could
not  have been brought under AS 09.50.250  and,  implicitly, that
it  was not brought under that statute.  The State contends  that
[t]his  [c]ourt has recognized that claims that must be litigated
through  administrative procedures cannot  be  brought  under  AS
09.50.250   and  thus  cannot  include  awards  of    prejudgment
interest.   For  this proposition, the State cites  three  cases,
Hawken  Northwest, Inc. v. State, Department of Administration,14
Quality   Asphalt   Paving,   Inc.  v.   State,   Department   of
Transportation & Public Facilities,15 and Samissa Anchorage, Inc.
v.  State,  Department of Health & Social Services.16  The  State
compares   administrative   adjudication   to   arbitration   and
concludes, as in the administrative appeals context  .  .  .  the
parties  must follow a statutorily required alternative procedure
to  resolve collective bargaining agreement disputes, and  cannot
take claims directly to superior court.
          Two  of  the  cases relied on by the State, Hawken  and
Quality  Asphalt, concerned claims that were explicitly  excluded
from  coverage  under  AS  09.50.250.  Both  Hawken  and  Quality
Asphalt  involved claims filed against the State under the  state
procurement  code,  AS  36.30, and the  claims  were  adjudicated
administratively pursuant to the code.  By the express  terms  of
AS  09.50.250, an entity that may bring an action under the state
procurement code may not bring an action under section .250.17
          The Samissa claim, however, unlike the claims in Hawken
and  Quality Asphalt, was not per se excluded from coverage under
AS 09.50.250.  Samissa involved a medicaid rate appeal brought by
a  hospital  under regulations promulgated by the  Department  of
Health   and   Social  Services.   The  appeal   was   prosecuted
successfully  and the department ruled that the  rate  should  be
recalculated   and   the  hospital  should  receive   retroactive
compensation.  But the department denied the hospital prejudgment
interest.   On  appeal to the superior court,  the  court,  after
initially  ruling  to the contrary, denied prejudgment  interest.
The  court  ruled  that the hospital could not  have  brought  an
action  under  AS 09.50.250 because the exclusive  remedy  for  a
challenge  to  medicaid  rates was  the  remedy  defined  in  the
regulations.  On appeal this court affirmed.  We recognized  that
this  case turns on whether [the hospital] brought or could  have
brought  an  action under section .250.18  We held that  such  an
action  could  not  have been brought because the  administrative
          remedy was exclusive and did not permit a separate action under
section .250.19
          For  Samissa  to be persuasive analogous  authority  in
this  case, the State would have to establish that the regulation
providing for labor agency enforcement of an arbitrators decision
is  the exclusive remedy for enforcement of such a decision.  But
the State makes no such argument.  Further, it did not object  to
the superior courts jurisdiction to hear ASEAs case.  Instead  it
invoked the jurisdiction of the court to hear its counterclaim to
vacate the award.  Thus the State has waived any claim that  ASEA
was  required to seek enforcement of the arbitrators award before
the Labor Relations Agency.20
          Samissa,  Hawken, and Quality Asphalt differ from  this
case in another important respect.  In those cases the prescribed
administrative adjudicative procedure was followed.  The superior
court  in each of these cases acted as an appellate court from  a
final decision of an administrative agency.  Review was conducted
under part six of the Alaska Rules of Appellate Procedure.  Here,
by  contrast,  there  was no administrative adjudication  and  no
administrative appeal was possible.
          The  arbitrators decision in this case was not only not
judicially reviewable under the appellate rules, it was  likewise
not  judicially  reviewable  under  any  statute  pertaining   to
arbitration.21   PERA also is silent on the subject  of  judicial
review of arbitration awards.22  Since it is not contested in this
case  that a judicial remedy was available, and since no specific
statute or rule prescribed or defined the remedy, it seems  right
to  conclude that the remedy that was available had its source in
decisional law.
          There  are numerous authorities that hold that  in  the
absence  of statute a suit to confirm an arbitrators award  where
arbitration  has  been contracted for is  a  suit  to  enforce  a
contract.   At  common law, an arbitration  award  is  not  self-
enforcing.   An  action at law such as a contract  action  is  an
appropriate vehicle for enforcing the award.23  ASEAs  action  to
enforce  the  arbitrators  award in this  case  fits  comfortably
within these authorities. 24
          Since  we  conclude  that ASEAs suit  can  properly  be
characterized  as a contract claim recognized at common  law,  we
conclude that it is encompassed by AS 09.50.250 which, as we have
seen,  generally  applies to contract claims against  the  State.
Since  prejudgment interest is authorized for suits brought under
AS  09.50.250,  the States sovereign immunity  argument  must  be
rejected.25
     B.   The Proper Award of Interest and Attorneys Fees
          Under   the  superior  courts  order,  interest   began
accruing the day after Thompsons thirty-day suspension ended.  At
oral  argument, ASEA conceded that the superior court lacked  the
power  to award interest accruing before the arbitrators award.26
In its brief, the State conceded that interest could accrue after
the  superior courts judgment.  Thus the interest award  for  the
time  after the arbitrators award but before the superior  courts
judgment is all that is in contention at this point.
III. CONCLUSION
          Because  we conclude that ASEA stated a contract  claim
encompassed within AS 09.50.250, the waiver of sovereign immunity
for  interest contained in AS 09.50.280 applies and the award  of
interest should accrue from the date of the arbitrators decision.
The award of attorneys fees to ASEA should be modified to reflect
the reduced judgment in favor of ASEA.
          We  REMAND this case for further proceedings consistent
with this opinion.
_______________________________
     1     The  award was made May 11, 2006; suit was  filed  two
months later on July 13.

     2    Thus the interest award covered three time periods: (1)
pre-arbitrator award interest, (2) post-arbitrator award, but pre-
superior  court  judgment interest, and (3)  post-superior  court
judgment  interest.  As discussed in Part II.B, the parties  only
dispute the award of interest for the second time period.

     3    The State does not contest the superior courts award of
post-judgment interest.

     4     Alaska  Const. art. II,  21; see generally  Glover  v.
State,  Dept  of  Transp., Alaska Marine Highway Sys.,  175  P.3d
1240, 1245-52 (Alaska 2008).

     5    Hawken Nw., Inc. v. State, Dept of Admin., 76 P.3d 371,
382 (Alaska 2003) (citation omitted).

     6     See  Runyon  ex  rel. B.R. v. Assn  of  Vill.  Council
Presidents, 84 P.3d 437, 439 (Alaska 2004).

     7    AS 23.40.070-.260.

     8    AS 09.50.250 provides in relevant part:

               A   person   or  corporation  having   a
          contract,   quasi-contract,  or  tort   claim
          against the state may bring an action against
          the   state  in  a  state  court   that   has
          jurisdiction  over the claim.  A  person  who
          may  present the claim under AS 44.77 may not
          bring an action under this section except  as
          set out in AS 44.77.040(c).  A person who may
          bring  an  action under AS 36.30.560.695  may
          not bring an action under this section except
          as set out in AS 36.30.685.
          
     9     AS  09.50.280  provides as follows:   If  judgment  is
rendered  for  the  plaintiff, it shall be for the  legal  amount
found  due  from  the state with interest as  provided  under  AS
09.30.070  and  without punitive damages.   See  also  Stewart  &
Grindle,  Inc.  v.  State,  524 P.2d  1242,  1245  (Alaska  1974)
(section  .280  provides for the payment of prejudgment  interest
but only in cases authorized under section .250).

     10    AS 23.40.070.

     11    AS 23.40.210(a).

     12    Id.

     13     See  8  Alaska  Administrative Code  (AAC)  97.510(a)
(2004).  The regulation provides:

               (a)  A  party to a collective bargaining
          agreement may file a petition with the  labor
          relations  agency to enforce  the  agreement.
          The petition must include
          
               . . . .
          
               (5)  a copy of the grievance arbitrators
          decision,  if the petition is to  enforce  an
          arbitrator's decision . . . .
          
     14    76 P.3d 371 (Alaska 2003).

     15    71 P.3d 865 (Alaska 2003).

     16    57 P.3d 676 (Alaska 2002).

     17     See supra note 8.  There is one exception, but it did
not apply in either Hawken or Quality Asphalt.

     18    Samissa, 57 P.3d at 679.

     19     Id.  at  680.  In Danco Exploration, Inc.  v.  State,
Department of Natural Resources, 924 P.2d 432 (Alaska  1996),  we
reached  a  similar  conclusion, holding that  an  administrative
remedy  for aggrieved oil and gas lease bidders was an  exclusive
remedy.   Id. at 434.  We distinguish Danco for the same  reasons
that we distinguish Samissa.

     20     See, e.g., Gates v. City of Tenakee Springs, 822 P.2d
455, 460-61 (Alaska 1991) (claims that are not raised before  the
superior court or that are inadequately raised before this  court
are  deemed waived).  Given our conclusion concerning  waiver  we
have  no  occasion  to  decide whether the  exclusive  method  of
enforcing  arbitration  awards made under  collective  bargaining
agreements  pursuant  to  PERA is by  a  petition  to  the  Labor
Relations  Agency.   We  note  that  our  jurisprudence  contains
numerous  cases where the validity of such awards  was  litigated
directly  in  court.  E.g., Baseden v. State, 174 P.3d  233,  237
(Alaska  2008)  (considering  a suit challenging  an  arbitration
award);  Univ. of Alaska Classified Employees Assn  v.  Univ.  of
Alaska, 988 P.2d 105, 106-07 (Alaska 1999) (considering a suit to
enforce  an  arbitration award); Fairbanks Police  Dept  Chapter,
Alaska  Pub. Employees Assn v. City of Fairbanks, 920  P.2d  273,
274  (Alaska 1996) (arbitration enforcement).  In none  of  these
cases,  however,  was  an  objection raised  that  exclusive,  or
primary,  jurisdiction  lay in the Labor  Relations  Agency.   In
Carter v. Alaska Public Employees Assn, 663 P.2d 916, 922 (Alaska
1983),   we   recognized  that  PERA  does  not  vest   exclusive
jurisdiction  in  the  Labor Relations Agency  for  questions  of
whether a public employer must release information pertaining  to
employees whom a union sought to organize; but we do not  suggest
that  Carter  would  necessarily control the question  of  agency
jurisdiction to enforce arbitration awards.

     21      Alaskas   two  arbitration  statutes,  the   Uniform
Arbitration  Act  and the Revised Uniform Arbitration  Act,  both
provide  that  they  do not apply to labor management  contracts.
See AS 09.43.010(a) and AS 09.43.300(c).

     22     A  section of PERA, AS 23.40.200(f), states that  the
parties  to a CBA may provide that arbitration is to be conducted
under  the  provisions  of the Uniform  Arbitration  Act  or  the
Revised Uniform Arbitration Act.  In order to so provide the  CBA
must incorporate one of the acts into the agreement by reference.
The CBA in this case does not incorporate either act by reference
and the parties do not argue that either act applies.

     23     4  Am.  Jur.  2d Alternative Dispute Resolution   195
(2007)  (footnotes  omitted); accord 6  C.J.S.  Arbitration   192
(2004); Frank Elkouri & Edna Asper Elkouri, How Arbitration Works
97  (Alan Miles Rubin et al. eds., 6th ed. 2003) (At common  law,
the issuance of an award generally bars any subsequent action  on
the  original claim, but suit may be filed for enforcement of the
award  itself  to the same extent as any contract.); Fairweathers
Practice  and  Procedure  in  Labor  Arbitration  455   (Ray   J.
Schoonhover, et al. eds., 3d ed. 1991) (explaining that prior  to
the   advent   of   arbitration  statutes,   [c]onfirmations   of
arbitration  actions were previously made in state  courts  under
the  common  law  writ of assumpsit).  Other  jurisdictions  have
applied  this rule.  See, e.g., Kentucky River Mills v.  Jackson,
206  F.2d 111, 120 (6th Cir. 1953) (Prior to the enactment of the
United   States  Arbitration  Act,  an  action  at  law  on   the
[arbitrators]  award  was the proper method  of  enforcing  it.);
State  Cent.  Collection Unit v. Gettes, 584 A.2d 689,  696  (Md.
1991)  (Before statutes or court rules provided for  confirmation
.  .  .  . [s]uit could be brought on the award against the party
who  lost  the arbitration . . . .  Basically the action  was  in
assumpsit.); Policemans Benevolent Assn, Local 292 v. Borough  of
N.  Haledon,  730  A.2d  320, 326 (N.J. 1999)  (noting  that  the
statute  of limitations for a common law confirmation action  was
the statute of limitations for a common law contract action).

     24    See Dorothy Dowell, Judicial Enforcement of Arbitration
Awards in Labor Disputes, 3 Rutgers L. Rev. 65, 70-71 (1949) (The
award  having  been  rendered, the parties  are  bound  by  their
contract to abide by it; hence, the award partakes of the  nature
of  a  contract. . . .  The enforcement of awards at common  law,
then  .  .  .  is  governed by common law rules of  contract  and
procedure.).

     25    The State argues that any action for breach of the CBA
was  itself subject to compulsory arbitration per the  CBA.   But
the  State did not make this argument before the superior  court.
Rather,  as  already noted, the State accepted that the  superior
court could hear the case, defended its actions, and argued  that
the  superior  court  should invoke  its  powers  to  vacate  the
arbitrators   award  due  to  perceived  improprieties   in   the
arbitrators  consideration of evidence not presented  during  the
arbitration hearing.  The State cannot now argue that the  proper
procedure for treating ASEAs breach of contract claim was  a  new
round  of  arbitration.  See, e.g., Hartman  v.  State,  Dept  of
Admin.,  Div. of Motor Vehicles, 152 P.3d 1118, 1122 n.8  (Alaska
2007)  (holding an argument waived for failure to raise it before
the superior court).

     26    See Ebasco Constructors, Inc. v. Ahtna, Inc., 932 P.2d
1312,  1317-18  (Alaska  1997)  (holding  that  awards  of   pre-
arbitration  interest  must be made  by  arbitrators).   At  oral
argument,  ASEA  asked that we remand this case to  the  superior
court   with  instructions  to  remand  to  the  arbitrator   for
consideration of an award of pre-arbitration interest.  We do not
follow  ASEAs  proposed  course of action  because  ASEA  had  an
adequate  opportunity to raise this issue before  the  arbitrator
during the arbitration hearing.

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