Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions


Touch N' Go
, the DeskTop In-and-Out Board makes your office run smoother.

  This site is possible because of the following site sponsors. Please support them with your business.
www.gottsteinLaw.com

You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Schiel v. Union Oil Company of California (11/20/2009) sp-6436

Schiel v. Union Oil Company of California (11/20/2009) sp-6436

     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

JOSEPH SCHIEL, )
) Supreme Court No. S- 13058
Plaintiff, )
) U.S. District Court No.
v. ) 3:07-cv-00030 TMB
)
UNION OIL COMPANY OF ) O P I N I O N
CALIFORNIA, )
) No. 6436 - November 20, 2009
Defendant. )
)
          Certified  Question from  the  United  States
          District  Court for the District  of  Alaska,
          Timothy M. Burgess, Judge.

          Appearances:  Peter R. Ehrhardt,  Kenai,  for
          Plaintiff.  Erin B. Marston, Marston &  Cole,
          P.C.,  Anchorage,  for  Defendant.   John  W.
          Erickson,  Jr.,  Assistant Attorney  General,
          Anchorage,  and  Talis J.  Colberg,  Attorney
          General,  Juneau, for Amicus Curiae State  of
          Alaska.  Gary  M.  Guarino, Assistant  United
          States  Attorney, and Nelson P. Cohen, United
          States  Attorney, Anchorage, and  Gregory  G.
          Katsas,   Assistant  Attorney   General,   C.
          Frederick   Beckner  III,  Deputy   Assistant
          Attorney General, J. Patrick Glynn, Director,
          Torts  Branch,  David S. Fishback,  Assistant
          Director,  Adam  Bain, Senior Trial  Counsel,
          Department of Justice, Washington  D.C.,  for
          Amicus Curiae United States of America.

          Before:    Fabe,  Chief  Justice,   Eastaugh,
          Carpeneti, Winfree, and Christen, Justices.

          CARPENETI, Justice.
I.   INTRODUCTION
          We  accepted  certification in this case  to  determine
whether  the 2004 amendments to AS 23.30.045(a) and AS  23.30.055
violate  the plaintiffs right to equal protection or due  process
under  the  Alaska Constitution.  Applying minimum  scrutiny,  we
hold that they do not.
II.  FACTS AND PROCEEDINGS
          Joseph  Schiel  sued  Union Oil Company  of  California
(UNOCAL  or  the company) for injuries he suffered  when  he  was
working  on  UNOCALs Grayling Drilling Platform.  Schiel  was  an
employee of Peak Oilfield Services at the time of the injury.  He
lost two fingers when he was going down a ladder and put his hand
on a skid rail for balance; a rig jack moved on the skid rail and
crushed  his  hand.  Peak paid workers compensation  benefits  to
Schiel.  Schiel brought a third-party tort action against  UNOCAL
in superior court, and the company removed the case to the United
States  District Court.  After removal to federal  court,  UNOCAL
moved  for  summary  judgment, arguing that  the  Alaska  Workers
Compensation Act1 barred Schiels tort claims because the  company
was  Schiels statutory employer and therefore immune  from  suit.
Schiel  opposed  and filed a cross-motion for  summary  judgment,
contending  that the 2004 amendments to the act,  which  expanded
its  exclusive  liability provisions to include  project  owners,
violated  the  Equal Protection and Due Process  Clauses  of  the
Alaska  Constitution.   At the same time  he  filed  his  summary
judgment  motion, Schiel moved the United States District  Court,
citing  Alaska  Rule of Appellate Procedure 407,2 to  certify  to
this  court  the  question  of  the  constitutionality  of  these
statutory amendments.
          United  States District Court Judge Timothy M.  Burgess
issued  a  certification  order requesting  that  we  answer  two
questions: (1) whether the 2004 amendments to AS 23.30.045(a) and
.055  violate  the  Equal  Protection provisions  of  the  Alaska
Constitution;  and  (2)  whether  the  2004  amendments   to   AS
23.30.045(a) and .055 violate the Due Process provisions  of  the
Alaska  Constitution.   We agreed to accept certification,  heard
oral argument on the matter, and now answer both questions in the
negative.
III. STANDARD OF REVIEW
          A decision by this court to accept a certified question
from   another   court  under  Appellate  Rule  407(a)   involves
determinative  questions of Alaska law  for  which  there  is  no
controlling precedent.3  In deciding a certified question of law,
we  must stand in the shoes of the certifying court, yet exercise
our independent judgment. 4 We exercise our independent judgment,
selecting  the rule of law that is most persuasive  in  light  of
precedent, reason, and policy.5
IV.  DISCUSSION
     A.   Alaska  Statutes  23.30.045(a)  and  23.30.055  Do  Not
          Violate  Schiels  Right to Equal Protection  Under  the
          Alaska Constitution.
          
          In  2004  the  Twenty-Third  Alaska  State  Legislature
          amended the Alaska Workers Compensation Act, extending liability
for workers compensation coverage to project owners and providing
immunity  from  tort  liability to both general  contractors  and
project owners.6  Before enactment of these amendments, a general
contractor  was  liable for workers compensation  benefits  to  a
subcontractors employee when the subcontractor failed  to  secure
workers compensation;7 in addition, an injured worker could sue a
general   contractor  for  negligence  even  though  the  general
contractor  had  paid workers compensation benefits  because  the
general  contractor was not an employer as defined in  former  AS
23.30.055.8
          Alaska Statute 23.30.045(a) now provides:
          An  employer  is liable for and shall  secure
          the  payment  to  employees  of  compensation
          payable   under   AS  23.30.041,   23.30.050,
          23.30.095,    23.30.145,    and     23.30.180
          23.30.215.     If   the   employer    is    a
          subcontractor and fails to secure the payment
          of   compensation  to  its   employees,   the
          contractor is liable for and shall secure the
          payment of compensation to employees  of  the
          subcontractor.    If  the   employer   is   a
          contractor and fails to secure the payment of
          compensation   to   its  employees   or   the
          employees  of  a subcontractor,  the  project
          owner  is  liable  for and shall  secure  the
          payment  of the compensation to employees  of
          the    contractor   and   employees   of    a
          subcontractor, as applicable.[9]
          
The  2004  amendments  expanded the definition  of  employer  for
purposes  of  the exclusive liability provision  of  the  workers
compensation act to include any person who is potentially  liable
for securing payment of compensation.10
          Schiel   argues   that  the  2004  amendments   to   AS
23.30.045(a) and .055 violate his right to equal protection under
the  Alaska  Constitution  because  they  impermissibly  classify
injured  workers into two classes  those who can sue in tort  and
recover  full damages for their injury and those who are  limited
to receiving workers compensation benefits.11  UNOCAL asserts that
the    workers   compensation   statute   already   makes    this
classification, so any equal protection challenge should focus on
the  statutes classification of potential third-party defendants.
We  agree  with  Schiel  that he meets the threshold  showing  of
different  treatment  of  similarly situated  individuals.12   As
Schiel  points  out,  if  a project owner and  subcontractor  are
equally  negligent  in causing a job site accident  that  injures
their  employees,  the project owners employees  can  potentially
recover  both  tort  damages and workers  compensation  benefits,
while   the  subcontractors  employees  are  limited  to  workers
compensation  benefits.  But the question before  us  is  whether
this disparate treatment violates the constitution.
          Article   I,  section  1  of  the  Alaska  Constitution
provides in part that all persons are equal and entitled to equal
          rights, opportunities, and protection under the law.  To
determine whether a statute violates the Equal Protection  Clause
of  the  Alaska  Constitution, we apply a sliding scale  approach
which places a greater or lesser burden on the state to justify a
classification  depending  on the importance  of  the  individual
right involved.13  Equal protection analysis involves a three-step
process  under  the  Alaska  Constitution,  in  which  the  court
determines  the weight of the individual interest at  stake,  the
importance of the governments interest, and the closeness of  the
fit  between  the  statute and the governments objective.14   For
individual interests that are not very important, the state  only
needs  to  show that its objectives are legitimate and  that  the
legislation bears a substantial relationship to its purpose.15  On
the  other  hand,  if the legislation impairs  one  of  the  most
important  individual  interests,  the  statute  must  further  a
compelling  state  interest and be the  least  restrictive  means
available  to accomplish the states purpose.16  Legislation  that
impacts  important  rights must have a close relationship  to  an
important state interest.17
          1.   Schiels interest is economic.
          Schiel  asks  us  to  consider his  interest  important
rather   than  simply  economic,  relying  on  cases  that   have
identified  the ability to engage in a particular  occupation  or
trade as important.  UNOCAL and amicus curiae the State of Alaska
contend  that the interest involved is economic and only entitled
to  minimum  scrutiny,  although they characterize  the  economic
interest  differently.  The state identifies Schiels interest  as
the  right  to receive benefits for a work-related injury,  while
UNOCAL classifies it as the right to seek tort damages.
          We   have   held  both  that  an  interest  in  workers
compensation  benefits  and the right to seek  tort  damages  are
economic interests subject to minimum scrutiny.18  Therefore, the
interest  at stake here is subject only to minimum scrutiny.   We
have  also  held  that there is no fundamental  right  to  sue  a
specific party.19
          The  cases on which Schiel relies in arguing  that  his
interest  is  important are distinguishable.   Malabed  v.  North
Slope Borough20 and State, Departments of Transportation and Labor
v.  Enserch  Alaska Construction, Inc.21 involved  constitutional
challenges  to laws that restricted employment opportunities  for
some  workers.   Malabed involved a challenge to  a  North  Slope
Borough   ordinance  that  created  mandatory  employment-related
preferences for Native Americans in borough government.22  Enserch
Alaska  Construction,  Inc. concerned  a  challenge  to  a  state
statute  that  created certain local-hire preferences  in  public
works projects.23
          Schiel  does  not  show how his inability  to  sue  the
project owner for negligence is tied to employment.  Instead,  he
asserts  that  his loss of earning capacity from the work-related
injury  and his inability to be fully compensated for the  injury
impair  his  ability to sustain himself and therefore  affect  an
important  economic  interest.24  But as  UNOCAL  points  out,  a
damages  award against a third party is not the same as a  source
of  sustaining  income.25  Schiels argument could apply  to  many
          injured workers who have never been able to sue a third-party
tortfeasor  the amount of workers compensation benefits  may  not
fully  compensate an injured worker for his loss and  the  injury
may  prevent  him from returning to work in a specific  industry,
thereby interfering with his ability to sustain himself.  Yet  we
have  held  that  the interest in receiving workers  compensation
benefits is an economic interest that is subject only to  minimum
scrutiny.26  We recognize that the workers compensation system may
yield  inequities in some cases: As we noted in  C.J.  v.  State,
Department  of Corrections, [w]orkers whose wages  are  low,  who
have  been  the  victims of blatantly negligent conduct,  or  who
suffer  exceptional  noneconomic injuries bear  the  brunt  of  a
system  that  may  benefit  their  co-workers  or  employers  but
certainly  does  not  benefit them.27   Schiels  interest  is  no
different  from that of the worker in Glover v. State, Department
of  Transportation, Alaska Marine Highway System:28 the right  to
sue  the  entity  of his choice and potentially  the  ability  to
collect a greater amount of money.29  That interest is economic.30
The  2004  amendments  to  AS 23.30.045 and  .055  are  therefore
subject to minimum scrutiny.
          2.   The states objectives are legitimate.
          The  next  step  of  equal protection  analysis  is  to
identify  the  states objectives to see if they are legitimate.31
We  consider the challenged statutory  provisions in light of the
purposes  of the entire workers compensation act as well  as  the
2004 amendments.32  Based on statements made by legislators during
consideration  of  the 2004 amendments,33 the parties  and  amici
curiae  identify  several legislative objectives:  to  ensure  or
expand  workers  compensation coverage for workers,  to  increase
workplace  safety,  to  prevent double dipping,  and  to  provide
protection  from  tort  liability to those  who  are  potentially
liable for securing workers compensation coverage.  All of  these
purposes are legitimate.
          Schiel  concedes  that  extending workers  compensation
coverage is a legitimate state interest but contends that  absent
some evidence that there was a significant problem with employers
failing to provide coverage, the legislature was simply solving a
nonexistent  problem.   Schiel also  asserted  at  oral  argument
before  us  that  the  amendments  were  unnecessary  because  AS
23.30.165  gave an injured employee the right to file a  lien  on
property related to his job, making a property owner  potentially
liable  for  workers compensation benefits even before  the  2004
amendments.34  Whether legislative action is necessary to solve a
specific problem does not determine whether a legislative goal is
legitimate.   A  legislative goal is legitimate  if  it  properly
falls within the police power of the state.35  We have recognized
that the purpose of the Alaska Workers Compensation Act  ensuring
the   quick,   efficient,  fair,  and  predictable  delivery   of
indemnification  and  medical benefits to injured  workers  at  a
reasonable cost to employers  is a legitimate goal.36   Expanding
or ensuring coverage for workers is also a legitimate goal.
          Schiel   takes   issue  with  two  of  the   identified
objectives:   preventing double dipping and providing  protection
for  entities  that  are  only potentially  liable,  rather  than
          actually liable, for workers compensation benefits.  Schiel
argues  that  double dipping, in the sense of an  injured  worker
getting a double recovery, was legally impossible before the 2004
amendments,  so elimination of that type of double dipping  would
not be a legitimate objective of the legislation.  Our review  of
the legislative history leads us to conclude that the legislature
was  concerned  with  employers having to pay  both  for  workers
compensation benefits and for tort damages.37
          Even   though   an   employer   who   secured   workers
compensation  insurance was immune from  suit  under  the  former
statute,  it  could agree in a contract to indemnify a  potential
third  party  for damages arising from a work-related accident.38
The  master  services contract between UNOCAL  and  Peak  had  an
indemnification provision requiring Peak to indemnify UNOCAL  for
any  damages  related to personal injury at the work  site.   The
legislature  appears  to  have  been  interested  in   protecting
contractors who paid workers compensation benefits from having to
indemnify the project owner for damages:  Senator Ralph  Seekins,
sponsor  of  the legislation, cited an example of a subcontractor
who  had to pay workers compensation benefits but, because of  an
indemnification agreement, also had to defend against a tort suit
the worker filed against the project owner.39
          Several  witnesses  testified  in  favor  of  the  bill
because  it  would  prevent companies from  having  to  pay  both
workers  compensation  benefits and tort damages.   Jack  Miller,
counsel  to the Alaska State Chamber of Commerce, testified  that
the  state,  municipalities, and private  companies  all  imposed
liability  for  both workers compensation and tort remedies  onto
the  subcontractor or contractor, so that these employers  had  a
double  liability under current law.  Eden Larson,  president  of
the   Associated   Builders   and  Contractors,   supported   the
legislation because of concerns about contractors having  to  pay
both   workers  compensation  benefits  and  tort  damages  under
indemnification agreements.
          Prevention  of  double payment  by  an  employer  is  a
legitimate state interest because it protects the basic trade-off
that  underlies the workers compensation system:  workers receive
compensation for work-related injuries regardless of  fault,  and
employers have limited liability.40  Preventing double payment is
also related to the workers compensation acts purpose of ensuring
the quick, efficient, fair, and predictable delivery of indemnity
and  medical benefits to injured workers at a reasonable cost  to
the employers who are subject to the provisions of this chapter.41
Some witnesses questioned whether preventing double payment was a
legitimate  legislative goal because those who were paying  twice
were  contracting away their own rights, but there is no question
that  double  payment  is  an issue appropriate  for  legislative
action,   even  if  it  might  have  been  addressed  differently
elsewhere.42
          Providing protection from tort liability for those  who
are  potentially liable for workers compensation benefits is also
consistent  with the basic trade-off that underlies  the  workers
compensation  system43  and is related to providing  coverage  to
workers  at  a  reasonable  cost to employers.   The  legislature
          extended liability for workers compensation to project owners and
in  exchange  provided  them  with protection  from  tort  suits.
Although  a  project  owner may rarely pay  workers  compensation
benefits,  as  Larsons  treatise notes, a general  contractor  or
project owner is under a continuing potential liability;  it  has
thus  assumed  a burden in exchange for which it  might  well  be
entitled to immunity from damage suits, regardless of whether  on
the facts of a particular case actual liability exists.44  For all
of   the  reasons  we  have  discussed,  we  conclude  that   the
legislatures  objectives in enacting the 2004  amendments  to  AS
23.30.045 and .055 are legitimate.
          3.   The  legislation  bears  a  fair  and  substantial
               relationship to the states objectives.
          The  final  step in equal protection analysis involving
an  economic  interest  is to determine  whether  the  challenged
legislation  bears  a  fair and substantial relationship  to  the
states objectives.45  We hold that the 2004 amendments have a fair
and  substantial  relationship to  the  states  objectives.   The
amendments plainly further the acts goal of ensuring provision of
workers  compensation benefits at a reasonable cost to  employers
by  (1)  preventing double payment by subcontractors because  the
general  contractor and project owner can no longer be  sued  for
tort  damages and (2) shielding those who are potentially  liable
for benefits from negligence claims.
          Schiel  argues that the 2004 amendments do not  have  a
sufficiently close fit to the legislatures goals to withstand  an
equal  protection  challenge, maintaining  that  they  took  away
rights from injured workers without any meaningful quid pro  quo.
He  contends  that  the  legislature  should  have  extended  the
exclusive  remedy provision only to those general contractors  or
project  owners who actually paid workers compensation  benefits,
not  to  all  who  might  be potentially liable  for  payment  of
benefits,  essentially  saying that the legislature  should  have
provided a closer fit between the objectives and the legislation.
          But  we  have  never required a perfect fit  between  a
legislative  classification  and a  goal  when  applying  minimum
scrutiny.46   As  we  noted  in  C.J.  v.  State,  Department  of
Corrections,47 policies reviewed under minimum scrutiny  are  not
unconstitutional simply because a litigant is able to  propose  a
regulation  that would further the legislative  goal  in  a  more
rational  manner.48  Although it may not happen in many cases,  a
contractor  may  not  have  workers compensation  insurance.   By
extending  liability for workers compensation to project  owners,
the  2004 amendments provide workers with more entities that  can
be  held liable for workers compensation.49  In addition,  in  an
instance  where  no  employer has obtained  workers  compensation
insurance,  a general contractor or project owner may  have  more
income or assets available to pay an injured worker, which  could
benefit some injured workers.50  The justification for permitting
the  employee  of  a  project owner to sue  a  subcontractor  for
negligence but not permitting the employee of a subcontractor  to
sue  the  project owner is that the subcontractor would never  be
liable  to  the project owners employee for workers  compensation
benefits  while  a  project owner might  be  liable  for  workers
          compensation benefits to the subcontractors employee.  Even
though  the  change  in  policy adversely  impacts  some  injured
workers, like Schiel, it may benefit others.
          Schiel  also argues that the 2004 amendments  were  not
necessary  because the law already required employers  to  secure
workers compensation insurance and provided remedies in the event
the  employer failed to do so.  But the legislature could  decide
that  the  available remedies, such as a prohibition  on  raising
certain  defenses  in a negligence action and possible  fines  or
stop  work  orders,51  did not adequately address  the  issue  of
uninsured  contractors.   The  legislature  has  the   power   to
substitute   or   add  remedies  to  address   the   problem   of
subcontractors   or  contractors  who  did  not   carry   workers
compensation insurance.
          In  sum,  because the 2004 amendments  to  the  workers
compensation statute deal with an economic interest  and  bear  a
fair and substantial relationship to legitimate state goals, they
do not violate Schiels right to equal protection under the Alaska
Constitution.
     C.   The  2004  Amendments Do Not Violate Schiels Procedural
          Due Process Rights.
          
          Schiel next argues that the 2004 amendments violate his
right  to procedural due process because they deny him access  to
the  courts.   According  to Schiel, AS 23.30.055  restricts  his
access  to the courts by denying him the opportunity to  bring  a
negligence action against the project owner and fails to  provide
an  adequate alternative remedy for him to seek redress.   UNOCAL
and  amici  curiae reply that Schiels alternative remedy  is  the
workers compensation system.  Schiel responds that the state  has
not  provided  a substitute remedy to him but has  simply  erased
[his] right to access the courts.
          We held in Bush v. Reid52 that the Due Process Clause of
the  Alaska  Constitution encompasses a right of  access  to  the
courts.53   Article  I,  section 7  of  the  Alaska  Constitution
provides  that no person shall be deprived of life,  liberty,  or
property  without  due process of law.  To  determine  whether  a
government  action violates due process, we apply the  three-part
test from Mathews v. Eldridge.54  As adopted for Alaska, the  test
balances:
          (1)  the  private  interest affected  by  the
          official action; (2) the risk of an erroneous
          deprivation  of  such  interest  through  the
          procedures  used and the probable  value,  if
          any,  of  additional or substitute procedural
          safeguards; and (3) the governments interest,
          including   the   fiscal  and  administrative
          burdens   that   additional   or   substitute
          procedural requirements would entail.[55]
          
          Here,  Schiel  identifies his private interest  as  his
right  to  bring a tort claim for his injury or  as  a  right  of
access to the courts, which he says is an important right. UNOCAL
asserts  that  Schiels  right of access  to  the  courts  is  not
          implicated by the 2004 amendments, noting that the right of
access  to  the  courts is infringed only when government  action
completely  bars  access  and  provides  no  alternative  remedy.
Amicus  curiae the State of Alaska asserts that Schiel still  has
the  opportunity  to  be  heard at a meaningful  time  and  in  a
meaningful  manner  because he can bring a  workers  compensation
claim.   (And,  in fact, Schiel has done so.) Amicus  curiae  the
United States echoes this assertion, maintaining that Schiels due
process  rights are not violated because the workers compensation
system  provides a substantial and efficient remedy  for  injured
workers.
          We  hold that Schiels right to access the courts is not
infringed by the 2004 amendments to the workers compensation  act
because   he  still  has  a  substantial  and  efficient   remedy
available.    We   previously  examined  whether  the   exclusive
liability  provision  of  the  Alaska  Workers  Compensation  Act
violated  due  process by restricting access  to  the  courts  in
Arctic  Structures, Inc. v. Wedmore.56  There, a  worker  sued  a
number of parties after he fell from scaffolding at work.57   The
workers  employer, a subcontractor, was immune from suit  because
of  the  exclusive liability section of the workers  compensation
statute.58   The  project  management  company  argued  that  the
exclusive  liability  provision of the workers  compensation  act
violated its right of access to the courts because it was  unable
to  raise the defense of the employers contributory negligence.59
We  stated  there that due process require[s] that a  substantial
and  efficient remedy remains available or that one  be  provided
when a preexisting defense is statutorily limited.60
          The  alternative  remedy of workers compensation  is  a
sufficient alternative remedy for Schiel, just as it was for  the
injured  worker  in Glover.61  Schiels case may initially  appear
different  from Glover because Schiel could already  get  workers
compensation benefits from his employer and now has no ability to
recover  negligence  damages from UNOCAL.   In  contrast,  Glover
involved  substituting a workers compensation claim for  a  civil
suit under the Jones Act.62  But Schiel has already received some
compensation for his injury, even though it is limited to workers
compensation benefits.63  The expansion of the exclusive liability
provision does not erect[] a direct and insurmountable barrier in
front  of the courthouse doors64 even if it does limit the amount
of damages Schiel is able to recover for his injury.
          We  rejected an argument similar to Schiels in McCarter
v.  Alaska  National Insurance Co.65  There,  an  injured  worker
argued that his right of access to the courts was violated by  AS
23.30.015(g), which required him to pay all of the proceeds of  a
third-party  claim to his employer to reimburse the employer  for
workers  compensation  benefits.66  The worker  also  argued,  as
Schiel  does here, that the statute deprived him of a  previously
available  right.67  We found no constitutional violation  there,
noting  that  there  is no Constitutional  right  to  retain  the
proceeds  of  a  third party settlement where the amount  of  the
settlement plus the compensation benefits do not grant full legal
redress to the injured worker.68  Because Schiel is still able to
get  compensation for his work-related injury through the workers
          compensation system, the 2004 amendments do not implicate his
right of access to the courts.
     D.   Alaska  Statute  23.30.055  Does  Not  Violate  Schiels
          Substantive Due Process Rights.
          Finally, Schiel argues that as applied to the facts  of
his  case,  AS  23.30.055 violates his right to  substantive  due
process.  He contends that the differential treatment he receives
because he is employed by a subcontractor rather than the project
owner  has  no  rational relationship to legitimate state  goals.
UNOCAL and amici curiae answer that the legislation is rationally
related  to  a legitimate government interest and therefore  does
not violate Schiels substantive due process rights.
          For  a law to violate substantive due process, it  must
have  no  reasonable  relationship to a  legitimate  governmental
purpose.69  Because we have determined that
the 2004 amendments do not violate the equal protection clause of
the  Alaska  Constitution, we hold that  the  amendments  do  not
violate substantive due process.70
          The  2004 amendments have a reasonable relationship  to
the   legitimate   governmental  purpose  of  expanding   workers
compensation  coverage.   Schiel  concedes  that  enhancing   the
certainty   that   an   injured  worker  will   receive   workers
compensation benefits is a legitimate legislative purpose.   Even
a  small  increase  in  the number of workers  receiving  workers
compensation benefits would justify the legislatures action.71  By
expanding  the entities that are potentially liable  for  workers
compensation benefits, the 2004 amendments are reasonably related
to this goal.
          Alaska Statute 23.30.055 is also rationally related  to
preventing payment of both workers compensation benefits and tort
damages  by  one  employer and to shielding an  employer  who  is
potentially liable for workers compensation benefits  from  suit.
As  discussed above, the rationale for treating an employee of  a
subcontractor differently from the employee of the project  owner
is  that the subcontractor is not liable for workers compensation
benefits  to  the  project owners employee.  Although  Schiel  is
almost  certainly  disadvantaged  by  the  2004  amendments,  the
amendments do not violate his substantive due process rights.
V.   CONCLUSION
          We hold that the 2004 amendments to AS 23.30.045(a) and
.055  do not Hviolate Schiels rights to equal protection and  due
process under the Alaska Constitution.
_______________________________
     1    AS 23.30.001-.400.

     2    Rule 407(a) provides:

          The supreme court may answer questions of law
          certified to it by the Supreme Court  of  the
          United  States,  a court of  appeals  of  the
          United   States,  a  United  States  district
          court,  a  United States bankruptcy court  or
          United  States  bankruptcy  appellate  panel,
          when  requested  by the certifying  court  if
          there  are involved in any proceeding  before
          it  questions of law of this state which  may
          be determinative of the cause then pending in
          the  certifying  court and  as  to  which  it
          appears to the certifying court there  is  no
          controlling precedent in the decisions of the
          supreme court of this state.
          
     3    Kallstrom v. United States, 43 P.3d 162, 164-65 (Alaska
2002).

     4     Edenshaw  v. Safeway, Inc., 186 P.3d 568, 569  (Alaska
2008) (quoting Berg v. Popham, 113 P.3d 604, 607 (Alaska 2005)).

     5     Kallstrom,  43  P.3d  at 165 (citing  M.A.  v.  United
States, 951 P.2d 851, 853 (Alaska 1998)).

     6    Ch. 80, SLA 2004.

     7    Former AS 23.30.045.

     8     Miller v. Northside Danzi Constr. Co., 629 P.2d  1389,
1391 (Alaska 1981).

     9     This  type  of statute is referred to as a contractor-
under  or statutory-employer statute.  See 6 Arthur Larson &  Lex
K. Larson, Larsons Workers Compensation Law  111.04[1][a] (2008).

     10    Ch. 80,  4, SLA 2004 (codified at AS 23.30.055).

     11    At oral argument before us, Schiel also argued that the
legislation impermissibly classified employers into two  classes:
those who can seek reimbursement from third-party tortfeasors for
workers  compensation  benefits and those  who  cannot.   Because
Schiel did not raise this argument in his briefing, it is waived.
Kellis  v.  Crites, 20 P.3d 1112, 1114-15 (Alaska  2001)  (citing
Gunderson  v. Univ. of Alaska, Fairbanks, 902 P.2d 323,  327  n.5
(Alaska 1995)).

     12     See  Glover v. State, Dept of Transp., Alaska  Marine
Highway Sys., 175 P.3d 1240, 1257 (Alaska 2008) (citing Matanuska-
Susitna  Borough Sch. Dist. v. State, 931 P.2d 391,  397  (Alaska
1997)  (stating  that litigant must show different  treatment  of
similarly   situated   individuals  to  satisfy   the   threshold
requirement of an equal protection claim)).

     13    C.J. v. State, Dept of Corr., 151 P.3d 373, 378 (Alaska
2006)  (quoting Wilkerson v. State, Dept of Health & Soc. Servs.,
Div. of Family & Youth Servs., 993 P.2d 1018, 1022 (Alaska 1999);
Alaska Pac. Assur. Co. v. Brown, 687 P.2d 264, 269 (Alaska 1984))
(internal quotation marks omitted).

     14    Glover, 175 P.3d at 1256.

     15    Id. at 1257 (quoting C.J., 151 P.3d at 378).

     16    C.J., 151 P.3d at 378 (citing State, Depts of Transp. &
Labor  v.  Enserch  Alaska Constr., Inc., 787  P.2d  624,  631-32
(Alaska 1989)).

     17     Malabed v. N. Slope Borough, 70 P.3d 416, 421 (Alaska
2003) (citing Enserch Alaska Constr., Inc., 787 P.2d at 633).

     18     Williams v. State, Dept of Revenue, 895 P.2d 99,  104
(Alaska 1995)  (holding that workers compensation benefits are an
economic  interest);  C.J.,  151  P.3d  at   379  (holding   that
restrictions on types and amounts of damages that can be  pursued
in court impair economic interests only).

     19    Turner Constr. Co. v. Scales, 752 P.2d 467, 471 (Alaska
1988).

     20    70 P.3d 416 (Alaska 2003).

     21    787 P.2d 624 (Alaska 1989).

     22    Malabed, 70 P.3d at 418-19.

     23    Enserch Alaska Constr., Inc., 787 P.2d at 625-26.

     24     Cf.  Wilkerson v. State, Dept of Health & Soc. Servs.,
Div.  of  Family  & Youth Servs., 993 P.2d 1018, 1023-24  (Alaska
1999)  (noting  that construction work is a source of  sustaining
income while foster care is not).

     25    See C.J. v. State, Dept of Corr., 151 P.3d 373, 379-80
(Alaska 2006) (stating that noneconomic damages are not a  source
of sustaining income).

     26    Gilmore v. Alaska Workers Comp. Bd., 882 P.2d 922, 927
(Alaska  1994),  superceded  by  statute  on  other  grounds   as
recognized  in  Dougan v. Aurora Elec. Inc.,  50  P.3d  789,  797
(Alaska 2002).

     27    C.J., 151 P.3d at 381.

     28    175 P.3d 1240 (Alaska 2008).

     29    Id. at 1258.

     30    Id.

     31     Chiropractors for Justice v. State, 895 P.2d 962, 968
(Alaska  1995) (citing Alaska Pac. Assur. Co. v. Brown, 687  P.2d
264, 269 (Alaska 1984)).

     32    Id. at 969.

     33     Cf.   Interior Cabaret, Hotel, Restaurant & Retailers
Assn  v.  Fairbanks N. Star Borough, 135 P.3d 1000, 1006  (Alaska
2006)  (quoting drafter testimony and sponsor statement  to  show
legislative  intent).   The  2004  amendments  had  no   separate
statement of legislative intent.  See ch. 80, SLA 2004.

     34     Schiels argument that a worker could effectively  get
compensation benefits from a project owner because  of  the  lien
provisions  of  the  act appears to be incorrect.   AS  23.30.165
permits  an  employee or beneficiary entitled to compensation  to
file  a  lien  on  all  of the property in  connection  with  the
construction,  preservation, maintenance, or operation  of  which
the  work of the employee was being performed at the time of  the
injury  or death.  A lien under this section extends only to  the
employers  interest in the property affected  by  the  lien.   AS
23.30.165(c).   Before the 2004 amendments, a project  owner  was
not  an  employer under the workers compensation act.  See former
AS  23.30.055,  .395(13)  (2004).  The  2004  amendments  made  a
project owner an employer only for purposes of AS 23.30.055.

     35    Commercial Fisheries Entry Commn v. Apokedak, 606 P.2d
1255, 1264 (Alaska 1980) (quoting State v. Erickson, 574 P.2d  1,
12 (Alaska 1978)).

     36     Williams v. State, Dept of Revenue, 895 P.2d 99,  104
(Alaska 1995) (quoting ch. 79,  1, SLA 1988).

     37    The parties agree that double dipping was used to mean
different  things  during  the  legislative  hearings  about  the
amendments,  including  prevention  of  double  payment.   Double
dipping  is  defined  as the practice of receiving  compensation,
benefits,  etc.  from two or more sources in a  way  regarded  as
unethical,  as  from  a military pension and  a  government  job.
Websters New World College Dictionary 428  (4th ed. 2004).

     38    See Golden Valley Elec. Assn, Inc. v. City Elec. Serv.,
Inc.,  518  P.2d  65,  67 (Alaska 1974) (holding  that  exclusive
remedy   provision  of  workers  compensation  statute  precluded
contractor  from  seeking indemnification from  subcontractor  in
absence of express contractual agreement).

     39    Aside from indemnification agreements, before the 2004
amendments, a general contractor could be liable for both workers
compensation and tort damages.  Miller v. Northside Danzi Constr.
Co., 629 P.2d 1389, 1391 (Alaska 1981).

     40     See Wright v. Action Vending Co., 544 P.2d 82,  84-85
(Alaska 1975) (quoting Smither & Co. v. Coles, 242 F.2d 220,  222
(U.S.   App.  D.C.  1957))  (noting  that  anything  that  erodes
exclusive liability or recovery strikes at foundation of system).

     41    AS 23.30.001(1).

     42     See Roberts v. Grays Crane & Rigging, Inc., 697  P.2d
985,  989-90 (Or. App. 1985) (discussing legislative  history  of
bill related to prohibiting indemnification agreements).

     43     See  Taylor v. Southeast-Harrison W. Corp., 694  P.2d
1160,  1162 (Alaska 1985) (explaining workers compensation scheme
as  trade-off, wherein employer renders itself absolutely  liable
in  exchange  for employee giving up employees other remedies  at
law).

     44     6  Arthur  Larson  & Lex K. Larson,  Larsons  Workers
Compensation Law  111.04[1][b] (2008).

     45     Chiropractors for Justice v. State, 895 P.2d 962, 972
(Alaska 1995).

     46     See Wilkerson v. State, Dept of Health & Soc. Servs.,
Div.  of Family & Youth Servs., 993 P.2d 1018, 1024 (Alaska 1999)
(citing State v. Anthony, 810 P.2d 155, 161 (Alaska 1991);  State
v.  Ostrosky,  667  P.2d  1184, 1193  (Alaska  1983);  Commercial
Fisheries  Entry Commn v. Apokedak, 606 P.2d 1255,  1267  (Alaska
1980)).

     47    151 P.3d 373 (Alaska 2006).

     48    Id. at 380 (citing Wilson v. Municipality of Anchorage,
669 P.2d 569, 573 (Alaska 1983)).

     49    Ch. 80,  1, SLA 2004.

     50     See  AS  23.30.055 (permitting  employee  to  sue  if
employer fails to secure payment of compensation).

     51    See former AS 23.30.055, .075, .080.

     52    516 P.2d 1215 (Alaska 1973).

     53    Id. at 1217-20.

     54    424 U.S. 319, 335 (1976).

     55     Sands  v.  Green, 156 P.3d 1130, 1134  (Alaska  2007)
(quoting  Varilek v. City of Houston, 104 P.3d 849,  853  (Alaska
2004)) (internal quotation marks omitted).

     56    605 P.2d 426, 436-37 (Alaska 1979).

     57    Id. at 427-28.

     58    Id. at 427, 435-37.

     59    Id. at 436.

     60    Id.

     61    Glover v. State, Dept of Transp., Alaska Marine Highway
Sys., 175 P.3d 1240, 1256 (Alaska 2008).

     62    Id. at 1244.

     63     Schiel  did  not  argue that the  amount  of  workers
compensation  benefits  was  so  low  as  to  deprive  him  of  a
substantial  remedy.  Counsel for UNOCAL agreed at oral  argument
before  us  that  at a certain level, inadequate  benefits  could
violate a workers due process rights.

     64     Sands  v.  Green, 156 P.3d 1130, 1134  (Alaska  2007)
(quoting Varilek v. City of Houston, 104 P.3d 849, 853-55 (Alaska
2004)).

     65    883 P.2d 986 (Alaska 1994).

     66    Id. at 990.

     67    Id. at 991.

     68    Id. at 990-91 (internal quotation marks omitted).

     69    Premera Blue Cross v. State, Dept of Commerce, Comty. &
Econ.  Dev.,  Div.  of Ins., 171 P.3d 1110,  1124  (Alaska  2007)
(quoting  Concerned  Citizens  of S.  Kenai  Peninsula  v.  Kenai
Peninsula Borough, 527 P.2d 447, 452 (Alaska 1974)).

     70     Cf. id. at 1124-25 (stating that a statute that meets
the  higher  equal  protection standard will always  satisfy  the
demands of substantive due process).

     71     Cf.  State v. Niedermeyer, 14 P.3d 264,  267  (Alaska
2000) (noting that even a modest statistical increase in accident
rates  might  give  the legislature a rational basis  for  action
aimed  at discouraging potential underage drivers from possessing
or drinking alcohol).

This site is possible because of the following site sponsors. Please support them with your business.
www.gottsteinLaw.com
Case Law
Statutes, Regs & Rules
Constitutions
Miscellaneous


IT Advice, Support, Data Recovery & Computer Forensics.
(907) 338-8188

Please help us support these and other worthy organizations:
Law Project for Psychiatraic Rights
Soteria-alaska
Choices
AWAIC