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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Grimmett v. University of Alaska (6/28/2013) sp-6791

Grimmett v. University of Alaska (6/28/2013) sp-6791

        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, email  


CALVIN GRIMMETT,                                ) 

                                                )        Supreme Court Nos. S-13944/14093/14083 

                Appellant and                   )        (Consolidated) 

                Cross-Appellee,                 ) 

                                                )         Superior Court No. 3AN-09-08970 CI 

        v.                                      ) 

                                                )         O P I N I O N 

UNIVERSITY OF ALASKA,                           ) 

                                                )         No. 6791 - June 28, 2013 

                Appellee and                    ) 

                Cross-Appellant.                ) 



UNIVERSITY OF ALASKA,                           )         Superior Court No. 4FA-08-02579 CI 


                Petitioner,                     ) 


        v.                                      ) 


YAUNA TAYLOR,                                   ) 


                Respondent.                     ) 


                Appeal in File Nos. S-13944/14093 from the Superior Court 

                of the State of Alaska, Third Judicial District, Anchorage, 

                Jack Smith, Judge. 

                Appeal in File No. S-14083 from the Superior Court of the 

                State of Alaska, Fourth Judicial District, Fairbanks, Michael 

                A. MacDonald, Judge. 

----------------------- Page 2-----------------------

                Appearances:     Kevin T. Fitzgerald, Ingaldson, Maassen & 

                Fitzgerald, P.C., Anchorage, for Appellant/Cross-Appellee 

                Grimmett.       William    B.  Schendel,    Schendel    Law    Office, 

                Fairbanks,     and   Susan    Orlansky,    Feldman      Orlansky    & 

                Sanders, Anchorage, for Appellee/Cross-Appellant/Appellant 

                University   of   Alaska.   No   appearance   by   Yauna   Taylor, 


                Before: Carpeneti, Chief Justice, Fabe and Stowers, Justices. 

                [Winfree, Justice, not participating.] 

                STOWERS, Justice. 


                Yauna Taylor and Calvin Grimmett were employed by the University of 

Alaska.    The University terminated their employment through notices of nonretention. 

The University also and alternatively terminated Grimmett for cause. 

                Superior Court Judge Michael A. MacDonald found that the University 

violated   Taylor's   due   process   rights   when   the   University   nonretained   her   without   a 

hearing rather than terminating her for cause; the court ordered additional briefing on the 

issue   of   Taylor's   backpay.    Superior    Court   Judge    Jack  Smith   upheld    Grimmett's 

nonretention, finding that the University's nonretention policy did not violate Grimmett's 

due process rights.  However, Judge Smith set aside Grimmett's for-cause termination, 

finding that the University had violated the objective prong of the implied covenant of 

good faith and fair dealing. 

                The University petitioned for review in Taylor's case, which we granted. 

Grimmett appealed and the University cross-appealed.   We consolidated these cases for 

oral   argument     and   decision    because    both   involved    the  University's     use  of  its 

nonretention procedure.  We conclude that the University violated Taylor's due process 

rights when it used its nonretention procedure to terminate her employment without a 

                                                 -2-                                           6791

----------------------- Page 3-----------------------

hearing.    We   therefore   affirm   Judge   MacDonald's   decision   and   remand   for   further 

proceedings concerning the scope of Taylor's backpay remedy.  In Grimmett's case, as 

in Taylor's, the University used its nonretention procedure to terminate the employment 

of a for-cause employee without a hearing, in violation of the employee's due process 

rights. We therefore reverse Judge Smith's decision upholding Grimmett's nonretention. 

However, we also reverse Judge Smith's decision setting aside Grimmett's for-cause 

termination and hold that the University did not violate the implied covenant of good 

faith and fair dealing when it terminated Grimmett's employment for cause.  We remand 

for further proceedings to determine if Grimmett is entitled to additional pay in light of 

our decision. 


        A.      Taylor Facts And Proceedings 

                Taylor   worked   as   an   "Administrative   Generalist"   for   the   University   of 

Alaska Fairbanks from May 1, 2005 to May 1, 2008.               The University provided Taylor 

with periodic employment letters detailing the terms of her employment.1               Those letters 

explained "[t]his appointment is for 'regular,' 'continuing' employment with benefits," 

and then provided "General Conditions of Employment," which stated in part: 

                New employees of the University are employed in an at-will 

                probationary status for the first six months of employment. 

                Promoted employees also serve a probationary period with 

                limited rights of retreat. During the probationary period your 

                employment may be terminated for no reason or any reason. 

                Pursuant to University Regulation [04.07.100], the University 

                also   may   elect   to  discontinue   employment   through       non- 

                retention with notice or pay in lieu of notice. 

        1       Taylor's last employment letter was dated June 27, 2007 and provided that 

the   term   of   employment   was   August   5,   2007   through     June   7,   2008,   a   ten-month 

appointment period. 

                                                 -3-                                              6791 

----------------------- Page 4-----------------------

The letters also stated that Taylor's "appointment and other terms of employment are 

governed, in order of priority, by Board of Regents Policy, University Regulations, and 

applicable campus rules and procedures."   Regents Policy 04.01.055(A) states that "At- 

will employment is an employment relationship that either the employee or the university 

may terminate at any time for any reason or no reason."2              Further, "[e]mployment not 

established   as   at-will   entitles   the   employee   to   such   notice   and   appeal   processes   as 

specified     by  regents'    policy   and   university    regulation."3    University      Regulation 

04.01.050 distinguishes between "At-Will Employment" and "For Cause Employment." 

The regulation explains that the University "designates employment not established as 

at-will to be for cause."4     The University concedes that Taylor's employment was for- 

cause employment. 

                In   a   letter   dated   April   3,   2008,   the   University   informed   Taylor   of   its 

"decision to exercise its right of nonretention," citing University Regulation 

        2       UNIV .    OF  ALASKA ,      REGENTS '     POLICY    &   UNIVERSITY      REGULATION 

P04.01.55(A), available at (last visited 

Mar. 27, 2013). 

        3       REGENTS ' POLICY P04.01.55(C). 

        4       UNIVERSITY REGULATION R04.01.050(B). 

        5       University Regulation 04.07.100 reads, in part: 

                If the University elects to discontinue employment through 

                nonretention under Regents' Policy 04.07.100, written notice 

                shall be given as required by this section.        Provisions of this 

                section do not apply to termination of employment pursuant 

                to   other    provisions     of  Regents'     Policy    or  University 

                Regulation,   nor     do  they   apply   to  employees     covered    by 

                collective   bargaining   agreements.       At   the   election   of   the 

                University, the employee may be given pay in lieu of notice. 

                                                  -4-                                             6791

----------------------- Page 5-----------------------

Taylor was placed on paid leave for four weeks, and on May 1, 2008 her employment 

with the University officially ended. 

                Nonretention is described in Regents' Policy 04.07.100: 

                The   university   may   discontinue   or   not   renew   an   existing 

                employment relationship through nonretention. Nonretention 

                does     not  reflect   discredit   on   an  employee.     If  notice   of 

                nonretention is required by university regulation, the notice 

                will be in writing and will comply with university regulation 

                adopted      under   this  section.   The   university    may    not  use 

                nonretention to terminate tenured faculty.[6] 

In a form provided to employees who   receive notice of nonretention, the University 

explained   that   "[w]ithout   a   request"   the   University   "will   not   voluntarily   disclose   to 

[third] parties any performance or conduct related reasons for a nonretention or at-will 

termination, although the University will consider any such reasons with respect to future 

employment with the University." 

                In response to her nonretention, Taylor filed a grievance with the University 

arguing     that  because    she   was   a  for-cause    employee,      she  was   entitled   to  receive 

termination-for-cause   proceedings.          During   the   discovery   process   for   this   grievance 

proceeding Taylor learned the University had concerns about her performance. 

                The University appointed attorney William Cotton as a hearing officer and 

argued that the University was permitted by its employment agreement, policies, and 

regulations to nonretain Taylor. Cotton concluded that "the University [was] correct that 

the   Policies   and   Regulations   allow[ed]   the   non-retention   of   non-tenured   employees 

without a showing of cause."  Cotton then cancelled a previously scheduled evidentiary 

hearing and recommended that the "Chancellor uphold the University's decision to non- 

retain Ms. Taylor." Chancellor Brian Rogers adopted Cotton's recommendation. Taylor 

        6       REGENTS ' POLICY P04.07.100. 

                                                   -5-                                                6791 

----------------------- Page 6-----------------------

then   appealed   to   University   President   Mark   Hamilton,   who   affirmed   the   denial   of 

Taylor's grievance. 

                 Taylor filed an administrative appeal in the superior court in Fairbanks. 

The superior court ruled in Taylor's favor.   The court first noted that "[a]ppellate courts 

review an agency's interpretation of its own regulations under the reasonable and not 

arbitrary   standard.     This   deferential   standard   of   review   properly   recognizes   that   the 

agency is best able to discern its intent in promulgating the regulation at issue."7                 Even 

given   this   deferential   standard   of   review,   the   superior   court   found   the   University's 

decision   that   employees   like   Taylor   "are   subject   to   nonretention   at   will"   to   be   "an 

unreasonable interpretation of the [University's] regulations" because it "renders 'for 

cause' employment rights meaningless."              The superior court explained: 

                 In   short,    performance       or  conduct      related   reasons     for 

                 nonretention   can   be   a   discredit   towards   future   University 

                 employment.       The University is in fact using nonretention 

                 where discredit attaches.       This suggests that nonretention is 

                 being   misapplied.      The   policy   contemplates   nonretention 

                 being used only when it would not reflect discredit on an 

                 employee.  Thus it cannot be applied in circumstances where 

                 discredit attaches. 

                 Additionally,      the  superior    court   found    that  Taylor,    as  a  "for   cause" 

employee, "had an interest in continued employment and was therefore protected by the 

Due Process Clauses of the United States and Alaska Constitutions. . . .                       Those due 

process rights included the right to a hearing before being terminated."                    The superior 

court concluded that because the University wrongfully denied Taylor such a hearing, 

the University violated her due process rights.  The court reversed Taylor's nonretention 

        7        The court cited Regulatory Comm'n of Alaska v. Tesoro Alaska Co. , 178 

P.3d 1159, 1163 (Alaska 2008). 

                                                    -6-                                                 6791 

----------------------- Page 7-----------------------

and   awarded   backpay   of   an   amount   to   be   determined   after   further   briefing.      The 

University petitioned for review and we granted that petition. 

        B.      Grimmett Facts And Proceedings 

                The underlying facts of Grimmett's case are largely undisputed.  Grimmett 

was employed as a police officer with the University of Alaska Anchorage's Police 

Department   until   October   2008.       Although   the   record   does   not   contain   a   copy   of 

Grimmett's employment contract, the University's notice of nonretention to Grimmett 

references Regents' Policy and University Regulation 04.07.100, and Grimmett does not 

contend that he was not subject to this policy   and   regulation under the terms of his 


                After   receiving   an   anonymous   complaint   alleging   that   Grimmett   wrote 

himself parking citations in order to park illegally without consequence, the University 

interviewed Grimmett about his use of "self-ticketing."8           Grimmett admitted that he self- 

ticketed   five   or   six   times   over   the   course   of   about   two   years. Upon   receiving   the 

complaint and Grimmett's admission, the University decided to terminate Grimmett's 

employment        for  cause   and   alternatively    to  nonretain    Grimmett     under   University 

Regulation 04.09.040. 

                Grimmett received notice of the University's decision and subsequently 

notified the University of his intent to contest his for-cause termination.  A few months 

        8       Grimmett's      "self-ticketing"    consisted    of   parking  illegally   and   writing 

himself a ticket which he then placed on his vehicle windshield so that other police or 

traffic enforcement officers would not ticket the vehicle; after Grimmett returned to his 

illegally parked vehicle, he would destroy the ticket and avoid any consequences for 

illegally parking. 

                                                  -7-                                             6791

----------------------- Page 8-----------------------

later, Grimmett notified the University that he also disputed his nonretention.9                       The 

University appointed Cotton as a hearing officer, and both Grimmett and the University 

submitted briefing.   With respect to Grimmett's nonretention, Cotton found Grimmett's 

challenge was not timely and, even if it had been, the nonretention was "substantively 

valid" and should be upheld. Regarding Grimmett's for-cause termination, Cotton found 

"that on balance the University has proven by a preponderance of the evidence that there 

was just cause to justify termination."           University Chancellor Fran Ulmer adopted the 

        9        There     is  a  dispute    between     the   parties   regarding     the  timeliness     of 

Grimmett's   appeal   of   his   nonretention.        The   University      issued   both   the   notice   of 

Grimmett's nonretention and the notice of its intent to terminate his employment for 

cause on the same day.          Grimmett timely requested a hearing to contest the for-cause 

termination, but - as he admitted to the hearing officer -  did not timely challenge the 

nonretention. The hearing officer found that Grimmett's appeal of the nonretention was 

untimely, but nevertheless addressed the substantive validity of the appeal, finding the 

nonretention was valid.        On appeal, the superior court found that Grimmett waived his 

right   to   appeal   his   nonretention,   but   it   nevertheless   also   addressed   the   substantive 

validity of the nonretention, finding that the University's nonretention policy did not 

violate due process. In his appeal before us, Grimmett again challenges the nonretention, 

arguing that it violates due process. Although it is clear that Grimmett's challenge to the 

nonretention was untimely, both the hearing officer and the superior court addressed the 

merits of Grimmett's challenge, and both parties have had a full opportunity to be heard 

on this issue.     We have stated that we are "not inclined to cut off rights of appellate 

review   because   of   some   failure   on   the   part   of   a   litigant   to   comply   with   the   rules." 

Orbeck v. Wheeler Constr. Co., 394 P.2d 781, 782-83 (Alaska 1964).  In Cook v. Aurora 

Motors, Inc. , 503 P.2d 1046, 1049 (Alaska 1972), we set forth the considerations that 

should be balanced in determining whether the rules should be relaxed. They are the 

right   to   appellate   review,   the   willfulness   and   extent   of   the   rules   violation,   and   the 

possible injustice that might result from dismissal. Id.  Given that Grimmett's grievance 

was   not   filed   inordinately   late,   that   such   lateness   may   have   been   due   to   confusion 

engendered by the University's attempt to terminate Grimmett's employment by the 

simultaneous use of two separate procedures, and that both the hearing officer and the 

superior court reached the merits of the nonretention, we will likewise address the merits 


                                                    -8-                                               6791

----------------------- Page 9-----------------------

hearing   officer's   findings   and   conclusions.    Grimmett   appealed   this   decision   to   the 

superior court in Anchorage. 

                The superior court found: (1) the University's nonretention policy did not 

violate Grimmett's procedural or substantive due process rights; (2) Grimmett's for- 

cause termination was justified, as the University terminated him for serious violations 

of departmental policy; but (3) the University's "decision to terminate Grimmett for 

cause was objectively unfair given the culture of disregard for parking rules in [the 

University of Alaska Anchorage Police Department]."  Thus, the court found that "[t]he 

for cause termination of [Grimmett] is set aside," but the "nonretention of [Grimmett] is 

upheld."    Grimmett appeals and the University cross-appeals. 


                "In   administrative     appeals,   we   directly   review    the  agency    action   in 


                We   review     questions   of   fact   under   the   "substantial   evidence"   test.11 

"Substantial evidence is 'such relevant evidence as a reasonable mind might accept as 

adequate to support a conclusion.' "12       "We need only determine whether such evidence 

        10      Fairbanks Fire Fighters Ass'n, Local 1324 v. City of Fairbanks , 48 P.3d 

1165, 1167 (Alaska 2002) (citing N. Alaska Envtl. Ctr. v. State, Dep't of Natural Res. , 

2 P.3d 629, 633 (Alaska 2000)). 

        11      Handley v. State, Dep't of Revenue , 838 P.2d 1231, 1233 (Alaska 1992). 

        12      Id .   (quoting Keiner   v.   City   of   Anchorage ,   378   P.2d   406,   411   (Alaska 


                                                  -9-                                            6791

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exists, and do not choose between competing inferences."13                    "We do not evaluate the 

strength of the evidence, but merely note its presence."14 

                 We review questions of law where no agency expertise is involved under 

the "substitution of judgment" test.15  "The substitution of judgment standard thus applies 

where the agency's expertise provides little guidance to the court or where the case 

concerns statutory interpretation or other analysis of legal relationships about which 

courts have specialized knowledge and expertise."16 

                 Construction of employment contracts, including questions concerning the 

implied covenant of good faith and fair dealing when the material facts are not disputed, 

are reviewed de novo.17 

                 Questions of due process present constitutional issues that we review de 



         13      Id . 

         14      Id . 

         15      Id . 

         16      N.   Alaska   Envtl.   Ctr.   v.   State,   Dep't   of   Natural   Res. ,   2   P.3d   629,   633 

(Alaska 2000) (quoting Kelly v. Zamarello , 486 P.2d 906, 916 (Alaska 1971)) (internal 

quotation marks omitted). 

         17      Luedtke   v.   Nabors   Alaska   Drilling,   Inc. ,   834   P.2d   1220,   1223   (Alaska 

1992) ("Whether Luedtke's suspension breached the covenant of good faith and fair 

dealing is a question for the trier of fact. Normally we review such questions only for 

clear error. However, we may review the application of a legal doctrine to undisputed 

facts without the usual deference to the superior court." (quoting Foss Alaska Line, Inc. 

v. Northland Servs. , 724 P.2d 523, 526 (Alaska 1986))) (internal citations and quotation 

marks omitted). 

         18      James v. State, Dep't of Corr. , 260 P.3d 1046, 1050 (Alaska 2011). 

                                                    -10-                                               6791

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        A.       Dismissing Taylor Without A Hearing Denied Her Due Process. 

                1.       Taylor was a for-cause employee. 

                The University hired Taylor without tenure for a ten-month term.19                The 

University "designates employment not established as at-will to be for cause."20                  The 

University concedes that Taylor's employment was never designated as at-will and that 

her  employment was therefore "For Cause Employment" as described in University 

Regulation R04.01.050(B).         The term "for-cause employment" is often used to denote 

employment that can be terminated only for cause, as opposed to at-will employment, 

which   does   not   include   such   protections.21  Further,   a   public   employee   who   can   be 

terminated only for cause has a legitimate expectation of continued employment that, 

under both federal and Alaska constitutional law, gives rise to a property interest in her 

        19      It is undisputed that the University had no obligation to renew Taylor's 

contract at the end of her employment, and that Taylor would not be entitled to a hearing 

on a declination to renew.  See Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 573 


        20      UNIVERSITY REGULATION R04.01.050(B). 

        21      See, e.g., Era Aviation, Inc. v. Seekins , 973 P.2d 1137, 1139 (Alaska 1999) 

(observing      that  "[o]ur   cases   have    distinguished     between    at-will   and   for-cause 

employment        based   on   the  level   of  cause   needed    to  terminate    the  employment 

relationship");  Ford   v.   Trendwest   Resorts,   Inc. ,   43   P.3d   1223,   1228   (Wash.   2002) 

(stating that "we are unwilling to abandon the long-standing distinction between at-will 

employment and for-cause employment"); Brooks v. Hilton Casinos Inc. , 959 F.2d 757, 

771 (9th Cir. 1992) (describing "for cause employment" as "employment as long as [the 

employees] did their jobs properly"); see also Casey v. City of Fairbanks, 670 P.2d 1133, 

1138 (Alaska 1983) (stating that "persons who are employed other than 'at will'. . .  have 

a sufficient property interest in continuing their employment, absent just cause for their 

removal, to require that they be given notice and an opportunity to be heard under the 

due process clause of the Alaska Constitution (art. I,  7) before their employment is 


                                                 -11-                                           6791

----------------------- Page 12-----------------------

job. 22  Such a property interest is protected by the Due Process Clauses of both the 

United States and Alaska Constitutions.23           An essential principle of due process is that 

a deprivation of life, liberty, or property "be preceded by notice and opportunity for 

hearing appropriate to the nature of the case."24            In employment termination cases in 

particular, due process requires"[a]t a minimum" that the employee "receive oral or 

written notice of the proposed discharge, an explanation of the employer's evidence, and 

an opportunity to present his position."25 

                The University argues that although it identified Taylor's employment as 

"for-cause employment," Taylor was not entitled to due process prior to her termination. 

 It argues that its "nonretention" clause should have put Taylor on notice that despite her 

"for-cause   employment"   status   she,   like   an   at-will   employee,   could   be   terminated 

without due process. 

                We acknowledge that "the use of the words 'for cause' does not magically, 

or always, transform a job into protected property; the focus must remain upon the nature 

of the employee's legitimate expectation of continued entitlement to his or her job."26 

        22       Chijide   v.   Maniilaq   Ass'n   of   Kotzebue,   Alaska,   972   P.2d   167,   171-72 

(Alaska 1999); City of North Pole v. Zabek, 934 P.2d 1292, 1297 (Alaska 1997). 

        23       City of North Pole, 934 P.2d at 1297. 

        24      Id.   (quoting   Cleveland   Bd.   of   Educ.   v.   Loudermill,   470   U.S.   532,   542 

(1985)) (internal quotation marks omitted). 

        25      Id. (quoting  Storrs v. Municipality of Anchorage, 721 P.2d 1146, 1149 

(Alaska 1986)) (internal quotation marks omitted).              In employment termination cases 

"we   have   consistently   held   that   due   process   of   law   .   .   .   requires   a   pre-termination 

hearing."  Id. (quoting Odum v. Univ. of Alaska, Anchorage, 845 P.2d 432, 434 (Alaska 

 1993)) (internal quotation marks omitted). 

        26      Bennett v. City of Boston , 869 F.2d 19, 21 (1st Cir. 1989). 

                                                  -12-                                             6791

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Similarly, although - as noted above - the term "for-cause employment" typically 

denotes employment that can be terminated only for cause, this does not necessarily 

mean that an employer could not use the phrase "for-cause employment" in some other 

way.   But if the employer seeks to use the term "for-cause employment" in an unusual 

and unexpected way, without the protections that are typically associated with "for-cause 

employment," it must make this clear.            As we explain below, Taylor's employment 

contract, including the terms of the University's nonretention clause, did not clearly 

indicate that the University intended Taylor's "for-cause employment" to be subject to 

termination without due process.  In other words, the University's contract with Taylor 

established     a  legitimate    expectation    of  continued     employment      and   required    the 

University to provide Taylor due process before terminating her. 

                2.      Nonretention may not be used for performance-based dismissals. 

                The University's policies and regulations provided that Taylor, as a for- 

cause employee, was subject not only to "for cause termination" but also to termination 

"[i]n the event of layoff, non-retention, or financial exigency."27         Similar provisions are 

often present in for-cause employment contracts, and courts "as a rule" have found "that 

layoffs resulting from a genuine need to reduce the work force or to eliminate certain 

positions should not be treated as violating a contractual obligation to terminate only for 

cause."28   Such procedures may be used for genuine work-force-related needs and may 

not be used as "merely a pretext for termination."29 

        27      UNIVERSITY REGULATION R04.01.050(B)(2). 



        29      Id. 

                                                 -13-                                           6791

----------------------- Page 14-----------------------

                Consistent with these principles, the University's policies and regulations 

provide     detailed   information     about    the  circumstances      under    which    "layoff"    and 

"financial exigency" apply, ensuring that such procedures will be used only when there 

is a genuine need to reduce work force or eliminate certain positions.30              By contrast, the 

policies and regulations provide little explanation of the circumstances under which the 

"nonretention" procedure may be used.              Regents' Policy 04.07.100 states that "[t]he 

university may discontinue or not renew an existing employment relationship through 

nonretention"31      but   does   not   elaborate   further   on   when   nonretention   may   be   used. 

Similarly, the associated regulations merely describe the procedures associated with 

nonretention.32    There is nothing in the policies or regulations to disturb the expectation 

established elsewhere that Taylor was a for-cause employee or to indicate that a for- 

        30      The Regulations specify that layoff may be used when there exists either 

"a lack of or reduction in available work; a lack of sufficient available funds; a good faith 

reorganization;       or   another    reason,    not   reflecting    discredit    upon    the   affected 

employee(s)."       UNIVERSITY       REGULATION        R04.07.110(A).        Similarly,    a  "financial 

exigency" exists "when the board determines that a shortfall in projected revenues for 

general   operations   .   .   .   will   have   a   material   adverse   effect   on   the   operation   of   the 

university generally, or on a major administrative unit or an academic or other unit of a 

major administrative unit."       REGENTS ' POLICY P04.09.020(A). 

        31      The    University's     definition   of  "nonretention"      departs   from    the  usual 

meaning of the term.  In cases both from Alaska and other jurisdictions, "nonretention" 

is frequently found and almost always used to refer only to the power not to renew an 

employee's contract at the end of her term, not the power to "discontinue"  employment 

mid-term.     See, e.g., Shatting v. Dillingham City Sch. Dist., 617 P.2d 9, 10 n.1 (Alaska 

1980)   (observing   that   "Alaska's   statutory   scheme   recognizes   a   distinction   between 

'nonretention' and 'dismissal' " in the context of teacher employment, in which the 

former term means the election by an employer not to reemploy a teacher for the school 

year   or   school   term   immediately     following   the   expiration   of   the   teacher's   current 


        32      UNIVERSITY REGULATION R04.07.100. 

                                                  -14-                                             6791

----------------------- Page 15-----------------------

cause   employee   may   be   terminated   for   any   reason   or   no   reason   at   all   without   due 

process.       On   the   contrary,    the  context    of  the   nonretention     clause    suggests    that 

nonretention functions in a way similar to layoff and financial exigency and that, like 

those   two   procedures,   nonretention   is   limited   to   reductions   in   force   or   similar   non- 

performance-related exigencies. 

                 In particular, we observe that the Regents' Policy governing nonretention 

states that nonretention "does not reflect discredit on an employee."33                  In this respect, 

nonretention is similar to a layoff, which according to University Regulation 04.07.110 

similarly "does not reflect discredit on the employee's performance."  The University's 

regulations ensure that a layoff "does not reflect discredit" on the employee by requiring 

that   layoffs    be  used   only    for  reasons    "not   reflecting   discredit    upon    the  affected 

employee(s)," such as reorganization or lack of funds.34  An employee would reasonably 

expect that the "non-discredit" clause in the nonretention procedure would function in 

a similar way as the "non-discredit" clause in the layoff procedure, and that accordingly 

nonretention could be used only for reasons "not reflecting discredit upon the affected 

employee,"   such   as   reorganization   or   lack   of   funds.      Dismissing   an   employee   via 

nonretention apart from reasons like layoff, reduction in force, and financial exigency, 

especially where the employer is doing so for performance-based concerns, cannot help 

but raise questions in the minds of future potential employers, thus making it difficult if 

not impossible for the former employee to rebut the suspicion of discredit.   In short, by 

the   terms    of  Taylor's    contract    and   the  University's      policies   and   regulations,    the 

        33       REGENTS ' POLICY P04.07.100. 

        34       UNIVERSITY REGULATION R04.07.110. 

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University was permitted to use the nonretention procedure only for  non-performance- 

based reasons.35 

                3.      Conclusion 

                  The   University's   policies   and   regulations   failed   to   make   clear   that   it 

intended Taylor's "for-cause employment" to be devoid of the protections that typically 

define "for-cause employment."  Taylor had a legitimate expectation that her "for-cause 

employment" would continue, and the University was required to provide Taylor due 

process when it sought to terminate her.          Because the University's nonretention policy 

could not be used to achieve a performance-based dismissal, the University was required 

to   provide   Taylor   with   the   due   process   protections   available   to   her   as   a   for-cause 

employee.     Accordingly, the University violated Taylor's right to due process when it 

failed to provide her a pre-termination hearing. 

        B.      Grimmett's Nonretention And For-Cause Termination 

                Grimmett appeals the superior court's decision upholding his nonretention 

termination,     arguing    that  the   University    violated   his  due   process    rights  when     it 

nonretained   him.     The   University   appeals   the   superior   court's   decision   to   set   aside 

Grimmett's for-cause termination, arguing that it did not breach the covenant of good 

faith and fair dealing. 

        35      The rule that nonretention proceedings may not be used for performance- 

based dismissal is consistent with our previous encounters with non-discredit clauses. 

In both Stanfill v. City of Fairbanks,         659 P.2d 579, 582 (Alaska 1983) and Moore v. 

State, Dep't of Transp. and Pub. Facilities, 875 P.2d 765, 770 (Alaska 1994), employers 

were faced with rules that stipulated that layoffs would not "reflect discredit upon the 

service of the employee."        In both cases, those rules provided that an employee could 

only be laid off for "reasons which are outside the employee's control."                 That is, they 

could only be terminated for issues unrelated to performance. 

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               1.	     The University violated Grimmett's due process rights when it 

                       nonretained him. 

               The   University   terminated   Grimmett's      employment   through      the   same 

nonretention procedure discussed above in Taylor's case.            Like Taylor, Grimmett was 

a for-cause employee entitled to due process.  Consequently, the University's use of the 

nonretention procedure without giving Grimmett due process was a violation of his 


               2.	     The    University    did   not   breach    the  objective   prong    of  the 

                       covenant   of   good   faith   and   fair   dealing   when   it   terminated 

                       Grimmett for cause. 

               After a hearing on the University's for-cause termination of Grimmett, the 

hearing officer determined that Grimmett had engaged in the practice of self-ticketing. 

The hearing officer found that other officers had at times self-ticketed as well.  The 

hearing officer found "it blatantly obvious[] that the practice engaged in was wrong, was 

dishonest, and was in violation of . . . four University policies . . . ."   Further, the hearing 

officer found that "the serious impropriety of the practice [was] exacerbated by the fact 

that it was committed by a University police officer charged with the enforcement of the 

law and University rules.      Indeed, the officer used his official powers to commit the 

dishonest acts."   Finally, the hearing officer explained: 

               [I]n   addition   to  being  obviously    objectively   improper,    I 

               conclude      that  the  officers   in  question,   despite   certain 

               statements to the contrary, recognized that their actions were 

               wrong and in violation of University rules.         Specifically, I 

               find    that  Officer  Grimmett,     despite  protestations    to  the 

               contrary at the hearing, recognized that they would at least 

               result in the serious discipline of suspension without pay. 

        36     As we explain below in Part IV.B.3, because Grimmett's nonretention took 

effect immediately, this violation of due process may not have been cured by the later 

for-cause termination proceedings. 

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The hearing officer concluded that the University had just cause to terminate Grimmett. 

The University Chancellor adopted the hearing officer's findings and conclusions, and 

Grimmett appealed that decision to the superior court. 

                 The     superior    court    affirmed     the  hearing     officer's    conclusion     that 

Grimmett's       termination     was   justified   because     Grimmett     had   committed      a  serious 

violation of University policy.  The superior court found that "Grimmett clearly violated 

three    of  the  UPD     Policies    cited  by   the  University:     misuse    of  authority,    conduct 

unbecoming, and conformance with all laws."   However, the court went on to hold that 

"due to the 'culture of disregard for parking rules in UPD,' " the University behaved in 

an objectively unfair manner when it fired Grimmett.   The court explained that because 

Grimmett was not "on notice that his conduct could result in termination," the University 

breached the covenant of good faith and fair dealing when it fired him. 

                 The   University   argues   that   the   superior   court   erred   in   finding   that   the 

University breached the objective prong of the implied covenant of good faith and fair 

dealing   and   in   finding   that   it   treated   Grimmett   in   an   objectively   unfair   manner   by 

terminating his employment for self-ticketing.   Relying primarily on the findings of the 

hearing officer, Grimmett argues that because "UAA PD had created an atmosphere 

which would provide little to no notice that an officer could or would be terminated for 

self ticketing," the University breached the covenant of good faith and fair dealing by 

terminating him for self-ticketing.  Because the underlying facts of Grimmett's case are 

undisputed, we review the application of law to those facts de novo.37 

                 At the administrative hearing, the hearing officer considered evidence and 

testimony that suggested an inconsistent attitude by the University with respect to officer 

        37       Luedtke   v.   Nabors   Alaska   Drilling,   Inc. , 834   P.2d   1220,   1223   (Alaska 


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parking.    The hearing officer found, for example, that the chief occasionally voided 

tickets, that police officers did not write tickets on other police officers' vehicles, and 

that there was no broad investigation into the practice of self-ticketing.            However, the 

hearing officer also found that none of this evidence was relevant, as these practices were 

either officially sanctioned38 or were unknown to the chief.  In contrast, Grimmett's self- 

ticketing was not sanctioned, and the police chief was made aware of Grimmett's actions 

only after a letter of complaint and Grimmett's admission. 

                In Luedtke v. Nabors Alaska Drilling, Inc. , we held that the covenant of 

good faith and fair dealing requires an employer "to act in a manner which a reasonable 

person would regard as fair" and "requires that the employer be objectively fair."39              The 

superior court found that the University violated the Luedtke principle when   it fired 

Grimmett;   the   court   reasoned   that   the   University's   casual   attitude   towards   parking 

violations rendered termination for such a violation objectively unfair by failing to put 

Grimmett on notice that his behavior could result in termination. 

                On    appeal,   the  University    argues   that  the  superior    court  improperly 

extended Luedtke , and additionally that the University gave Grimmett the notice required 

by Luedtke because Grimmett was aware that self-ticketing could result in termination. 

Grimmett counters that even though official regulations and policies forbid self-ticketing, 

        38      For example, the Parking Director once agreed to void parking tickets that 

several individuals received while parked at the University for an on-campus conference, 

but he followed University policies and procedures in doing so. 

        39      834 P.2d at1224-25.       "We have recognized a covenant of good faith and 

fair dealing in all at-will employment contracts."  Id . at 1223.         In Luedtke , we held that 

an employer violated this covenant "as a matter of law" where "[t]he superior court 

found that Luedtke was tested for drug use without prior notice, that no other employee 

was similarly tested, and that Nabors suspended Luedtke immediately upon learning of 

the results of the test."  Id . at 1225-26. 

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the   practice   was   common   and   sanctioned   by   lower-ranking   members   of   the   police 

department; therefore, it was unfair for the University to terminate his employment for 


                Luedtke holds that an employer violates the covenant of good faith and fair 

dealing if the employer fires an employee without notice or for some other reason that 

is objectively unfair.40     Given the deference due to the hearing officer's findings of fact, 

the   University's   argument   that   Grimmett   had   notice   that   his   actions   could   result   in 

termination   and   that   Grimmett   was   not   treated   in   an   objectively      unfair   manner   is 

persuasive.    As explained by the hearing officer: 

                 Grimmett has clearly committed dishonest acts which violate 

                 important University policies.        Further, he both should have 

                 known the nature of these acts and I have found [he] did in 

                 fact know the nature of his actions.  However, his dishonesty 

                 was an attempt to defraud the University of no more than a 

                 few    dollars   of   parking    fees.   He     admitted     his  actions 

                 immediately on questioning by Chief Pittman.                 Further, he 

                 was following a practice which other officers had taken and 

                 had even been told by a superior that the actions were ok 

                 (although I have clearly found that this   did   not justify his 

                 actions).[41]    Arguably,   it   would   have   been   sufficient   for 

                 Chief    Pittman     to  suspend     Grimmett     without     pay   for  a 

                 significant time rather than to terminate him. 

                 However,   I   conclude   that   on     balance   the   University   has 

                proven by a preponderance of the evidence that there was just 

        40      Id . at 1225-26. 

        41       The hearing officer found that Annie Endecott, who was Grimmett's direct 

supervisor from 2001 until early 2008, told Grimmett that self-ticketing was acceptable. 

However, Endecott was terminated/nonretained in early 2008, and Grimmett admitted 

that: (1) he knew self-ticketing was wrong; and (2) he knew he would need to be more 

careful with self-ticketing after Endecott left because he felt that the two other lieutenants 

for whom he worked would not approve of the practice. 

                                                   -20-                                              6791

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                 cause to justify termination because dishonesty and misuse of 

                 a   police    officer's    authority     violate   critically    important 

                 University   policies,   and   indeed   societal   values.   .   .   .  The 

                 University   in   this   case   has   sent   a   strong   message   that   its 

                 Police Department will not tolerate dishonesty and misuse of 


The hearing officer also found that Grimmett knew his actions violated university policy. 

The University's Regents' Policy 04.07.040, entitled "Corrective Action," explains that 

dismissal is a possible corrective action in response to "violation of . . . regents' policy[] 

or university regulation, dishonesty, . . . or other misconduct."42                Given that Grimmett 

had notice through the University's policies that his conduct was wrong and could result 

in termination, and that he actually knew his actions were wrong, we conclude Grimmett 

- a police officer charged with enforcing the law - was not treated in an objectively 

unfair manner when the University terminated him because of his unlawful and dishonest 

conduct.  We reverse the superior court's determination that the University violated the 

covenant   of   good   faith   and   fair   dealing   and   affirm   the   University   hearing   officer's 

decision, which was adopted by the University chancellor, that the University's for-cause 

termination was justified. 

                 3. Remand is required to determine Grimmett's pay. 

                 On   October   13,   2008,   Grimmett   received   a   letter   notifying   him   of   his 

nonretention.      The letter stated that, per the terms of University Regulation 04.07.100, 

the   University   "has   decided   to   provide   you   with   four   weeks   pay   in   lieu   of   notice. 

Therefore,   your   non-retention   will   be   effective   today,   October   13th,   which   will   be 

reflected as your last day of employment.             The four weeks pay in lieu of notice will be 

included in your final paycheck." 

         42       P04.07.100. 

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               On that same day, October 13, Grimmett also received a letter notifying him 

that the University intended to terminate his employment for cause.             The letter stated 

that, per the terms of University Regulation 04.08.80, Grimmett had five working days 

to request a hearing and that a hearing would take place "no sooner than three working 

days after receipt of your request."   Grimmett's attorney provided timely response to the 

letter and requested that the hearing "be scheduled for sometime in February/March 

2009." Grimmett's hearing occurred on March 24 and 25, 2009.  Hearing Officer Cotton 

issued his recommended decision on June 10, 2009. The chancellor adopted the decision 

on   June   24,  2009.    According     to  University    Regulation    04.08.80(B),    governing 

"Termination      of  Pay"   under   for-cause   termination    proceedings,    "Employees     will 

normally remain in pay status until the decision of the chancellor . . .        is made unless a 

prior proceeding affording minimum due process has been made available." 

               Grimmett was paid for a period ending approximately November 13, 2008, 

in accordance with his nonretention.   We have determined the nonretention violated his 

due process rights.  Under University Regulation 04.08.80(B), Grimmett arguably was 

entitled to remain in pay status until June 24, 2009, the date the chancellor issued the 

termination-for-cause order. Because no findings were made with respect to Grimmett's 

pay, including whether a "prior proceeding affording minimum due process" was "made 

available" to Grimmett prior to the chancellor's decision, and because the parties have 

not   addressed    this  issue  on  appeal,  we   remand    to  the  superior  court   for  further 



               For the foregoing reasons, we AFFIRM the superior court's ruling that the 

University violated Taylor's due process rights and REMAND for further proceedings 

concerning the scope of Taylor's backpay remedy.   We REVERSE the superior court's 

upholding of Grimmett's nonretention. We also REVERSE its ruling that the University 

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violated   the   covenant   of   good   faith   and   fair   dealing   in   its   for-cause   termination   of 

Grimmett,      and   we   AFFIRM       the   University    chancellor's     decision    upholding     the 

University's for-cause termination.  We REMAND for further proceedings concerning 

Grimmett's pay. 

                                                   -23-                                           6791

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