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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 Public Employees Association (12/19/2008) sp-6330
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- 12752 | |
| Appellant, | ) |
| ) Superior Court No. 1JU-05- 693 CI | |
| v. | ) |
| ) O P I N I O N | |
| ALASKA PUBLIC EMPLOYEES | ) |
| ASSOCIATION, AFT, AFL-CIO; | ) No. 6330 December 19, 2008 |
| STEVE BASEDEN, | ) |
| ) | |
| Appellees. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, First Judicial District, Juneau,
Patricia A. Collins, Judge.
Appearances: William E. Milks, Assistant
Attorney General, Talis J. Colberg, Attorney
General, Juneau, for Appellant. Sarah E.
Josephson, Jermain, Dunnagan & Owens,
Anchorage, for Appellee Alaska Public
Employees Association, AFT, AFL-CIO. Steven
T. Baseden, pro se, Juneau.
Before: Matthews, Eastaugh, Carpeneti, and
Winfree, Justices. [Fabe, Chief Justice, not
participating.]
MATTHEWS, Justice.
Facts and Proceedings1
Steve Baseden was terminated from state employment.
The Alaska Public Employees Association (APEA) filed a grievance
under the collective bargaining agreement (CBA) between APEA and
the State challenging Basedens termination. The grievance was
submitted to binding arbitration. By the time of the hearing,
the State had conceded that Basedens termination was without just
cause and had offered him reinstatement. The arbitrator awarded
back pay from the termination date, April 14, 2000, to the
effective date of the reinstatement offer, October 15, 2001.
Basedens other employment earnings during this period were to be
deducted from the award. Interest was required to be paid on the
net award. The arbitrator assessed costs and fees against the
State.
The State filed a complaint in superior court
challenging, among other things, the arbitrators award of
interest. After briefs were submitted the superior court
confirmed the arbitrators award, including the award of interest.
The State appeals only the superior courts confirmation of the
interest award.
Standard of Review
We review the superior courts decision confirming the
arbitrators award de novo.2 An arbitrators decision is accorded
great deference.3 Both the common law and Alaska statutes evince
a strong public policy in favor of arbitration. 4 To effectuate
this public policy we have followed a policy of minimal court
interference with arbitration.5 This deference extends to both
the arbitrators factual findings and the arbitrators
interpretation and application of the law.6
Where one party alleges that the arbitrator has
exceeded his or her authority, we will affirm the arbitrators
conclusion as to the scope of his or her powers if the
arbitrators conclusion is reasonably possible. 7 The standard of
review of grievance arbitration arising out of labor management
contracts mandated by the Public Employment Relations Act8 (PERA)
that are not subject to either of the Uniform Arbitration Acts9
is gross error.10 Gross error encompasses only mistakes that are
both obvious and significant.11
The Arbitrators Award of Prejudgment Interest Was Not Gross
Error.
This appeal involves an intersection of competing legal
doctrines. In the context of other damages claims, we have held
that prejudgment interest can only be awarded against the state
when the state expressly consents by statute. But we have also
consistently articulated a deferential standard of review for an
arbitrators decision, recognizing that the arbitrator can
determine the scope of issues presented and the availability of
relief.
The State urges a strict application of the express
legislative waiver rule for sovereign immunity that we have
articulated in Hawken Northwest, Inc. v. State, Department of
Administration,12 Quality Asphalt Paving, Inc. v. State,
Department of Transportation & Public Facilities,13 Samissa
Anchorage, Inc. v. Department of Health & Social Services,14 and
Danco Exploration, Inc. v. State, Department of Natural
Resources.15 The rule, as expressed in Hawken Northwest, is that
prejudgment interest may not be assessed against the state unless
specifically authorized by legislation.16
The arbitrator did not address sovereign immunity when
he awarded interest. Interest was first requested in the
arbitration proceeding by APEA in its post-hearing brief. The
State seems never to have mentioned interest, and neither party
mentioned sovereign immunity in the arbitration proceedings.
Arguably, the State waived its right to contest the award of
interest on sovereign immunity grounds on appeal. But because
there is authority that the sovereign immunity defense is not
necessarily waived by failure to raise it in initial proceedings,17
we decide this case on the merits. This makes resolution of the
question of the waivability of sovereign immunity unnecessary.
In deciding the merits, we assume that the arbitrator decided
that sovereign immunity did not bar the award of interest and ask
whether such a decision was gross error.
In support of the arbitrators award of interest, a
number of observations may be made.
Strictly applying the express legislative waiver rule
in cases involving arbitration under PERA could lead to a result
that even the State does not seek. While PERA mandates binding
arbitration, it does not in so many words waive sovereign
immunity as to either damages or interest on damages.18 But it is
clear that the legislature has waived at least some sovereign
immunity by requiring binding arbitration of grievances.19 Thus
it was the arbitrators duty, at least initially, to determine the
scope of the States waiver of immunity.
In making this determination the arbitrator could
reasonably have relied on our decision in Native Village of Eyak
v. GC Contractors.20 In that case an Indian tribe had entered
into a construction contract containing an arbitration clause.21
The tribe contended that the arbitration clause was not an
effective waiver of its sovereign immunity from suit.22 This
court recognized the doctrine that a tribes waiver of sovereign
immunity cannot be implied but must be unequivocally expressed23
and held that the arbitration clause was necessarily an
unequivocal expression of waiver of immunity.24 Although the
arbitration clause itself said nothing about sovereign immunity,
we observed:
[I]t is clear that any dispute arising from a
contract cannot be resolved by arbitration,
as specified in the contract, if one of the
parties intends to assert the defense of
sovereign immunity. To the extent possible,
all provisions in a contract should be found
meaningful. The arbitration clause in Eyaks
contract with GC Contractors would be
meaningless if it did not constitute a waiver
of whatever immunity Eyak possessed.[25]
We therefore concluded that a waiver of sovereign immunity was
effected by the arbitration clause: Accordingly, we hold that
Eyak waived whatever immunity from suit it possessed by entering
into a contract with GC Contractors containing an agreement that
any disputes arising under the contract would be resolved by
arbitration.26
None of the precedents that the State relies on
involved an appeal from an arbitrators award. Hawken Northwest
and Quality Asphalt Paving involved appeals from administrative
resolutions of contract claims under the procurement code.27
Samissa Anchorage involved an administrative challenge to
Medicaid reimbursement rates.28 Danco Exploration involved an
administrative decision to deem an oil and gas lease forfeited.29
The standard of review that we employed in these cases is less
deferential than the gross error standard we use here.30
Further, the rule requiring a legislative waiver of
sovereign immunity that expressly mentions interest has become
something of an anachronism. In 2001 the legislature added a
section to the state procurement code that permits prejudgment
interest awards in claims filed with an agency after the
effective date of the act.31 Although the scope of the new
section is ambiguous,32 it reflects at least to some degree a
legislative concurrence with the proposition that prejudgment
interest should be paid by the State on duly established
compensatory damage claims.33
Finding a waiver of sovereign immunity as in Eyak would
not necessarily resolve the issue of the scope of that waiver.
Here the waiver could reasonably encompass prejudgment interest.
The State has consented explicitly in AS 09.50.280 to prejudgment
interest awards for contract claims that may be brought against
the State in the superior court. If arbitration is to achieve
its promise as a fair, just, and expeditious means of resolving
disputes, the normal prejudgment interest award that would be
available in court should also be available in arbitration.34
Moreover, we recently held that an arbitrators award in
a dispute arising under a collective bargaining agreement
governed by PERA will bear interest between the date of the
arbitral award and the date of the superior courts confirmation
of the award.35 It would seem strange to conclude that the States
waiver of immunity allows a party to be made whole with respect
to prejudgment interest accruing between an award and its
confirmation but not for the pre-award period.
This case presented a close question as to which of two
principles should be applied to determine when and to what extent
sovereign immunity has been waived. One principle requires
express legislative waiver of sovereign immunity to award pre-
judgment interest against the State. The other principle,
potentially derivable from Eyak, is that the States consent to
arbitration amounts to an express waiver of sovereign immunity to
the extent needed to make a claimant whole by awarding
prejudgment interest. Considering the closeness of this
question, the policy favoring effective arbitration, and the
fairness of awarding interest, we are unable to conclude that the
arbitrators decision to award prejudgment interest against the
State was gross error.
Conclusion
The decision of the superior court confirming the
arbitrators award of prejudgment interest is AFFIRMED.
_______________________________
1 A more detailed review of the facts and proceedings in
this case is set out in Baseden v. State, 174 P.3d 233, 235-37
(Alaska 2008).
2 Id. at 237.
3 Alaska State Employees Assn/AFSCME Local 52 v. State,
74 P.3d 881, 882 (Alaska 2003).
4 Baseden, 174 P.3d at 237 (quoting Dept of Pub. Safety
v. Pub. Safety Employees Assn, 732 P.2d 1090, 1093 (Alaska
1987)).
5 Pub. Safety Employees Assn, 732 P.2d at 1093 (quoting
City of Fairbanks Mun. Utils. Sys. v. Lees, 705 P.2d 457, 460
(Alaska 1985)) (quotation marks omitted).
6 OK Lumber Co. v. Alaska R.R. Corp., 123 P.3d 1076, 1078
(Alaska 2005) (citing Ahtna, Inc. v. Ebasco Constructors, Inc.,
894 P.2d 657, 660 (Alaska 1995)).
7 Kinn v. Alaska Sales & Serv., Inc., 144 P.3d 474, 482-
83 (Alaska 2006) (quoting Marathon Oil Co. v. ARCO Alaska, Inc.,
972 P.2d 595, 600 (Alaska 1999)).
8 AS 23.40.070.260.
9 AS 09.43.010.180; AS 09.43.300.595.
10 Pub. Safety Employees Assn, Local 92 v. State (PSEA),
895 P.2d 980, 984 (Alaska 1995). In our first decision in this
case, Baseden, 174 P.3d at 238, we echoed a suggestion made in
two earlier cases, Alaska State Employees Assn/AFSCME Local 52,
74 P.3d at 882-83, and University of Alaska v. Alaska Community
Colleges Federation of Teachers, Local 2404, 64 P.3d 823, 826
(Alaska 2003), to the effect that it was an open question whether
the gross error standard or the arbitrary and capricious
standard, which is said to be more searching that is, less
deferential to an arbitrators decision should be employed.
These cases seem to be based on the view that our statement in
PSEA to the effect that gross error governs grievance arbitration
disputes was dictum. While this view is correct, we take this
opportunity to confirm the dictum in PSEA because it is
consistent with the standard we employ for labor management
grievance arbitration mandated by contracts that are not governed
by PERA, and we see no reason why a different standard should be
used in grievance arbitration governed by PERA. See Nizinski v.
Golden Valley Elec. Assn, 509 P.2d 280, 283 (Alaska 1973).
11 PSEA, 895 P.2d at 984.
12 76 P.3d 371, 382-83 (Alaska 2003).
13 71 P.3d 865, 880 (Alaska 2003).
14 57 P.3d 676, 680-81 (Alaska 2002).
15 924 P.2d 432, 434 (Alaska 1996).
16 Hawken Nw., 76 P.3d at 382.
17 See, e.g., State v. Haley, 687 P.2d 305, 318 n.11
(Alaska 1984) (rejecting the argument the State waived its
legislative immunity argument by not asserting it in the
proceedings below and stating, the failure to raise this defense
at trial does not necessarily constitute a waiver of immunity
(citing Sup. Ct. of Va. v. Consumers Union, 446 U.S. 719, 730 n.9
(1980))).
18 See AS 23.40.210(a). We note that arbitration under
PERA is not generally subject to Alaskas Uniform Arbitration Act
or Alaskas Revised Uniform Arbitration Act unless one of the
uniform acts is expressly incorporated in the CBA. AS
09.43.010(a); AS 09.43.300(c)(d). The CBA does not incorporate
either act by its terms.
19 As APEA notes, the State does not claim sovereign
immunity from all damages awarded.
20 658 P.2d 756 (Alaska 1983).
21 Id. at 757.
22 Id. at 760.
23 Id. (quoting Santa Clara Pueblo v. Martinez, 436 U.S.
49, 58 (1978)).
24 Id. at 760-61.
25 Id. at 760 (citations omitted).
26 Id. at 761.
27 Hawken Nw., Inc. v. State, Dept of Admin., 76 P.3d 371,
376, 382 (Alaska 2003); Quality Asphalt Paving, Inc. v. State,
Dept of Transp. & Pub. Facilities, 71 P.3d 865, 879-80 (Alaska
2003).
28 Samissa Anchorage, Inc. v. Dept of Health & Soc.
Servs., 57 P.3d 676, 679-81 (Alaska 2002).
29 Danco Exploration, Inc. v. State, Dept of Natural Res.,
924 P.2d 432, 433-34 (Alaska 1996).
30 See, e.g., Hawken Nw., 76 P.3d at 376, 382-83 (applying
de novo review because the question of law did not involve agency
expertise); Samissa Anchorage, 57 P.3d at 678 (applying the
substitution of judgment test because no agency expertise was
involved).
31 AS 36.30.623 provides:
The amount ultimately determined to be
due under AS 36.30.62036.30.630 and
36.30.67036.30.685 to a department
contractor, the department, or a contracting
agency to whom the responsibility for
handling the claims is delegated by the
department under AS 36.30.632 accrues
interest at the rate applicable to judgments
under AS 09.30.070(a). Notwithstanding AS
09.30.070(b), the interest accrues from the
date that a complete claim is filed that
meets the requirements of AS 36.30.620(a)
through the date of a decision by the
procurement officer under AS 36.30.620, a
decision by the commissioner of
transportation and public facilities under AS
36.30.680, or a judicial decision under AS
36.30.685, whichever decision is latest. In
this section, department means the Department
of Transportation and Public Facilities.
32 In Hawken Northwest we observed that although the newly
added section defined department to mean the Department of
Transportation and Public Facilities, we assumed for discussion
purposes that the provision would apply to claims filed against
other agencies. 76 P.3d at 383 n.40. The state procurement code
itself broadly applies to the procurement of supplies, services,
and professional services by state agencies and
instrumentalities. See AS 36.30.005.030.
33 The arbitrator in this case relied on a similar
rationale:
In virtually all other forums courts
and administrative agencies a prevailing
party routinely receives interest on delayed
payments. That is a matter of simple
justice; getting a sum a year late does not
make the recipient whole. Interest is the
normal way to compensate the injured party
for delayed payment. Interest awards are
relatively unusual in labor arbitration,
apparently only because parties seldom seek
them.
(Quoting Atl. Se. Airlines, 101 Lab. Arb. 515, 525 (1993) (Nolan,
Arb.).) The arbitrator considered whether to award interest to
be a matter for arbitral discretion.
34 See Gilbert v. Sperbeck, 126 P.3d 1057, 1060 (Alaska
2005) (noting that arbitration proceedings should be fair and
just and that Alaska policy favors arbitration).
35 State v. Alaska State Employees Assn, 190 P.3d 720
(Alaska 2008). In Alaska State Employees Assn we noted that only
an arbitrator can award interest for the pre-arbitration award
time period, but in so noting we did not purport to resolve the
issues presented in this case. Id. at 725 & n.26 (citing Ebasco
Constructors, Inc. v. Ahtna, Inc., 932 P.2d 1312, 1217-18 (Alaska
1997)).
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