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Veco v. Rosebrock (2/19/99), 970 P 2d 906
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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.
THE SUPREME COURT OF THE STATE OF ALASKA
VECO, INC., )
) Supreme Court Nos. S-7080/7120
Appellant and )
Cross-Appellee, ) Superior Court No.
) 3AN-92-10614 CI
v. )
) O P I N I O N
CONSTANCE I. ROSEBROCK, )
) [No. 5084 - February 19, 1999]
Appellee and )
Cross-Appellant. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Joan M. Woodward, Judge.
Appearances: Donna C. Willard, Law Offices of
Donna C. Willard, Anchorage, for Appellant and
Cross-Appellee. Robert P. Owens, Copeland,
Landye, Bennett and Wolf, Anchorage, and
Timothy D. Dooley, Anchorage, for Appellee and
Cross-Appellant.
Before: Rabinowitz, Matthews, Eastaugh, and
Fabe, Justices. [Compton, Chief Justice, not
participating.]
MATTHEWS, Justice.
I. INTRODUCTION
Many issues are presented in this sexual harassment and
wrongful termination case. The two most important are:
(1) Can an employer be liable for acts of a
supervisor which create a hostile work environment even
though the supervisor is acting outside the scope of his
employment?
(2) Can punitive damages be imposed for a
supervisor's acts outside the scope of his employment?
We answer "yes"to the first question because the
supervisor is enabled by his position with the employer to impose
unwelcome sexual conduct on the employee. We answer "no"to the
second question because it is unfair to punish an employer for acts
committed by employees who are in no sense pursuing objectives of
the employer.
II. FACTS AND PROCEEDINGS
Constance Rosebrock began working for VECO in Anchorage
in April 1991. In September she transferred to Arctic Rentals, a
VECO subsidiary located on the North Slope. 1 Rosebrock worked for
Arctic Rentals on the North Slope for approximately six weeks, from
September 11 until September 26, and from October 3 until October
26. On October 30 or 31 she was notified that she had been laid
off.
Rosebrock claims that during her employment with VECO on
the North Slope, Rick Rorick, the supervisor in charge of Arctic
Rentals, subjected her to hostile environment sexual harassment.
In addition, she claims that she was sexually assaulted by a VECO
employee toward the end of her second tour of duty. She claims
that VECO wrongfully terminated her when she complained about the
assault.
In December 1991 Rosebrock filed a complaint with the
Alaska Human Rights Commission. She also filed suit in superior
court against VECO and Bill Dropps, the employee who allegedly
sexually assaulted her. After settlement negotiations in which
Rosebrock agreed to dismiss Dropps as a party, Rosebrock's claims
of hostile environment sexual harassment and wrongful termination
proceeded to a jury trial. 2
At trial, Rosebrock testified that Rorick had sexually
propositioned her on several occasions. She also testified that
Rorick made several explicit comments about the size of her
breasts. Furthermore, Rosebrock testified that she, Bobby Clark,
and Bill Dropps gathered in Dropps's room on October 23 to watch
the World Series game. 3 She testified that when Clark left the
room, Dropps grabbed her by her arms and legs and threw her onto
the bed. They struggled, and he hit her in the ribs. After more
struggling, however, he released her and begged her to not tell
anyone.
Rosebrock also testified that early the next morning she
reported the assault to Clark, who was her supervisor on duty at
that time. She also claimed that she showed her bruises to a co-
worker, Peggy Gerhardson, who assured her that she and Clark would
take care of the problem.
Rosebrock went on leave two or three days later. She
testified that before she left, the administrator, Norm Denison,
approved her work schedule for the next five months. On October 30
or 31, however, Denison called her at home to tell her that she had
been "laid off." Rosebrock testified that she then called Denison
several times to see what VECO was doing about her complaints of
sexual assault. Rosebrock claimed that Denison told her VECO had
taken care of the problem. Rosebrock stated that when she asked
him what had been done, he told her, "you're gone."
The jury found VECO liable for Rosebrock's hostile
environment sexual harassment claim and her wrongful termination
claim. It awarded her $27,500 for emotional distress damages,
$75,000 for lost wages, and $1,500,000 for punitive damages. VECO
then moved for a judgment notwithstanding the verdict, for a new
trial, and for a remittitur. The superior court granted a partial
remittitur, reducing the award for lost wages to $4,000. It denied
VECO's other motions.
VECO appeals this judgment. 4 Rosebrock cross-appeals on
discovery sanction issues, in the event this court remands for a
new trial.
III. DISCUSSION
We discuss the following issues in this case:
A. Sexual Harassment
1. Did the superior court properly instruct the
jury as to whether VECO could be held liable
for hostile environment sexual harassment
committed by a supervisor acting outside the
scope of his employment?
2. Did the superior court err in denying VECO's
motions for JNOV and for a new trial on
Rosebrock's hostile environment sexual
harassment claim?
a. Was the evidence sufficient to support a
finding that the harassment was severe or
pervasive?
b. Was the harassment committed by a
supervisor whose actions can be imputed
to VECO?
3. Are damages for emotional distress caused by
sexual harassment barred by the exclusive
remedy provision of the Alaska Workers'
Compensation Act?
B. Wrongful Termination
1. Did the superior court err by permitting
Rosebrock to amend her complaint after the
trial had concluded?
2. Did the superior court properly instruct the
jury as to whether VECO could be held liable
for the alleged wrongful termination of
Rosebrock?
3. Did the superior court properly instruct the
jury on mixed motives?
4. Did the superior court err in denying VECO's
motions for JNOV and for a new trial on
Rosebrock's wrongful termination claim?
C. Punitive Damages
1. Are punitive damages authorized under AS
18.80.220 and AS 22.10.020(i)?
2. Did the jury instructions err in permitting
the jury to award punitive damages against
VECO for acts of a supervisor beyond the scope
of the supervisor's employment?
3. Did VECO properly object to the punitive
damage instruction?
The parties have also briefed additional issues which do not
require discussion for reasons set out in footnote 38, page 45.
A. Sexual Harassment
A section of Alaska's anti-discrimination statute makes
it unlawful for an employer "to discriminate against a person in
compensation or in a term, condition, or privilege of employment
because of the person's . . . sex . . . when the reasonable demands
of the position do not require distinction on the basis of . . .
sex . . . ." AS 18.80.220(a)(1). In French v. Jadon, Inc., 911
P.2d 20 (Alaska 1996), we held that this section prohibited sexual
harassment. Further, we accepted the customary division of sexual
harassment claims into those involving a quid pro quo and those
which merely involve a hostile work environment.
Concerning the former, we noted that "[q]uid pro quo
gender harassment occurs when an employer conditions employment
benefits on sexual favors. It arises when an employer relies upon
his or her authority 'to extort sexual consideration from an
employee.'" Id. at 26 (citation omitted) (quoting Canada v. Boyd
Group, Inc., 809 F. Supp. 771, 777 (D. Nev. 1992). With respect to
the latter we noted that in
hostile work environment cases, "employees
work in offensive or abusive environments.
Conduct which unreasonably interferes with
work performance can alter a condition of
employment and create an abusive working
environment.". . .
. . . [D]iscriminatory behavior suffici-
ently severe or pervasive to alter the
conditions of the victim's employment and to
create a discriminatory hostile work
environment violates AS 18.80.220.
Id. at 28 (citations and footnote omitted) (quoting Ellison v.
Brady, 924 F.2d 872, 875, 877 (9th Cir. 1991)).
Quid pro quo harassment requires proof that "a tangible
employment action resulted from a refusal to submit to a
supervisor's sexual demand."5 "Unfulfilled threats"or "offensive
conduct in general"may fall within the hostile work environment
classification. 6
Often a hostile work environment is created by co-
employees or supervisors acting beyond the scope of their
employment. They are acting for personal reasons and not, even in
part, to serve their employer. 7 However, in the case of
supervisors, harassment, though beyond the scope of their
employment, may be facilitated by their position with the employer.
An employer is generally vicariously liable only for acts
of employees acting within the scope of their employment. However,
vicarious liability may also be imposed based on apparent authority
or where an employee is aided in accomplishing a tort by the
employee's position with the employer. 8 But an employer's
vicarious liability for punitive damages is limited by the
Restatement (Second) of Agency to acts of (1) managerial employees
(2) while acting within the scope of their employment. 9 Alaska
case law has eliminated the requirement that the employees be
managerial, 10 but not the requirement that their acts be within the
scope of their employment.
These principles are dispositive of the present case.
1. Did the superior court properly instruct the jury as
to whether VECO could be held liable for hostile
environment sexual harassment committed by a
supervisor acting outside the scope of his
employment? 11
VECO claims that the superior court's instructions on
liability were erroneous because they allowed the jury to impose
"strict liability"on it if a low-level supervisor subjected
Rosebrock to hostile environment sexual harassment, or if a low-
level supervisor knew about the harassment, but failed to take
remedial action. It argues that it should only be liable for a
supervisor's hostile environment sexual harassment if a management-
level employee knew or should have known about the harassment and
failed to take proper and effective remedial action. 12 Rosebrock,
however, argues that an employer should always be liable for
hostile environment sexual harassment if it is committed by its
supervisors or if its supervisors had knowledge and failed to take
remedial action.
The superior court instructed the jury on liability as
follows in Instruction No. 16:
If you find that VECO employees subjected
Rosebrock to a sexually hostile working
environment as previously defined, you must
decide whether VECO itself is liable for its
employees' conduct.
You must first consider the role of VECO
supervisory employees. You shall find VECO
liable for the conduct of its supervisory
employees if you find that it is more likely
than not that:
1. One or more of VECO's supervisory
employees encouraged, caused, permitted,
ratified, or participated in the conduct; or
2. One or more of VECO's supervisory
employees, knowing of the conduct, excused it
or failed to take remedial action reasonably
calculated to end the harassment. Such
remedial action must be immediate and must
remedy the conduct without adversely affecting
the terms or conditions of the complaining
party's employment.
You shall find VECO liable for the
conduct of its non-supervisory employees if
you find that it is more likely than not that
such employees were acting within the scope of
their employment, and if VECO knew or should
have known of the harassment and failed to
take remedial action as discussed above.
The first paragraph of the instruction directs the jury
to proceed if "VECO employees,"supervisors or otherwise, subjected
Rosebrock to a hostile work environment. The second paragraph
defines when VECO will be liable for the acts or omissions of its
"supervisory employees." The subparagraph numbered one allowed the
jury to impose liability on VECO if its supervisory employees
"encouraged, caused, permitted, ratified, or participated"in the
harassment. It did not require the jury to find that those
supervisors had acted within the scope of their employment or used
their delegated authority to carry out the harassment. In
addition, it did not require the jury to find that a management-
level employee knew or should have known about the harassment.
Thus this subparagraph allowed the jury to impose liability on VECO
for the sexual harassment by a low-level supervisor, acting outside
the scope of his employment, even if VECO management-level
employees did not know or have constructive knowledge of the
harassment.
Subparagraph number two allowed the jury to impose
liability on VECO if a supervisor knew about the harassment, but
did not take proper remedial action. It did not limit VECO's
liability to an omission by a management-level employee, but
allowed the jury to impose liability on VECO for a low-level
supervisor's failure to take proper remedial action. 13
Instruction 17 defined "supervisor"as follows:
A supervisor is one who serves in a
supervisory position and has corporate
authority to affect the terms and conditions
of the employees he supervises. In other
words a person is a supervisor if he has the
authority to hire, fire, promote, discipline,
or in any other manner affect the terms or
conditions of an employee's employment.
Taken together these instructions allowed the jury to impose
liability on VECO for the acts or omissions of Rosebrock's
immediate supervisors, regardless of whether they were acting
within the scope of their employment, and regardless of whether
management-level employees knew or should have known about the
harassment.
The scope of an employer's liability for its employees'
hostile environment sexual harassment is an issue of first
impression in Alaska. In interpreting Alaska's anti-discrimination
laws, we have looked to federal Title VII cases for guidance. 14
See French, 911 P.2d at 28 n.8. We have observed, however, that
AS 18.80.220 "is intended to be more broadly interpreted than
federal law to further the goal of eradication of discrimination."
Wondzell v. Alaska Wood Prods., Inc., 601 P.2d 584, 585 (Alaska
1979).
The United States Supreme Court addressed the issue of
employer liability in Meritor Savings Bank v. Vinson, 477 U.S. 57
(1986). 15 Because the factual record had not been fully developed
in the trial court, the majority opinion refused to "issue a
definitive rule on employer liability,"but stated that
we do agree with the EEOC that Congress wanted
courts to look to agency principles for
guidance in this area. While such common-law
principles may not be transferable in all
their particulars to Title VII, Congress'
decision to define "employer"to include any
"agent"of an employer, 42 U.S.C. § 2000e(b),
surely evinces an intent to place some limits
on the acts of employees for which employers
under Title VII are to be held responsible.
For this reason, we hold that the Court of
Appeals erred in concluding that employers are
always automatically liable for sexual
harassment by their supervisors. See
generally Restatement (Second) of Agency §§
219-237 (1958). For the same reason, absence
of notice to an employer does not necessarily
insulate that employer from liability.
Id. at 72. The Court stated that the court of appeals was "wrong
to entirely disregard agency principles and impose absolute
liability on employers for the acts of their supervisors,
regardless of the circumstances of a particular case."16 Id. at 73.
Justice Marshall, concurring with three other justices in
Meritor, reached the issue of employer liability, and stated that
employers should be held liable for a supervisor's hostile
environment sexual harassment of an employee under his supervision,
regardless of notice. See 477 U.S. at 74, 76-77 (Marshall, J.,
concurring). He stated:
[I]t is the authority vested in the supervisor
by the employer that enables him to commit the
wrong: it is precisely because the supervisor
is understood to be clothed with the
employer's authority that he is able to impose
unwelcome sexual conduct on subordinates.
There is therefore no justification for a
special rule, to be applied only in "hostile
environment"cases, that sexual harassment
does not create employer liability until the
employee suffering the discrimination notifies
other supervisors. No such requirement
appears in the statute, and no such
requirement can coherently be drawn from the
law of agency.
Id. at 76-77 (first and third emphasis added). He emphasized that
a supervisor's authority is not limited to changing employees'
status by hiring, firing, or disciplining them; instead, a
supervisor also has the responsibility to supervise the daily work
environment and to ensure a safe, productive work environment. See
id. at 76. 17
We agree with Justice Marshall's view. Harassment by
supervisors is facilitated, made more serious, and is less apt to
be reported because supervisors are "understood to be clothed with
the employer's authority." Id. at 77. The Restatement (Second) of
Agency § 219(2)(d) supports imposing vicarious liability in such
circumstances. It provides:
(2) A master is not subject to liability for
the torts of his servants acting outside the
scope of their employment, unless:
. . . .
(d) the servant purported to act or to
speak on behalf of the principal and there was
reliance upon apparent authority, or he was
aided in accomplishing the tort by the
existence of the agency relation.
(Emphasis added.)
The Massachusetts Supreme Court has employed this theory
to hold employers vicariously liable for hostile environment sexual
harassment by their supervisors:
[H]arassment by a supervisor carries an
implied threat that the supervisor will punish
resistance through exercising supervisory
powers, which may range from discharge to
assignment of work, particularly exacting
scrutiny, or refusal to protect the employee
from coworker harassment. Quid pro quo
harassment may be easier to identify as an
abuse of the authority vested in a supervisor
because of the effect on tangible job
conditions, but it does not define the limit
of a supervisor's authority. Although
coworkers or even outsiders may also be
capable of creating a sexually harassing work
environment, it is the authority conferred
upon a supervisor by the employer that makes
the supervisor particularly able to force
subordinates to submit to sexual harassment.
College-Town v. Massachusetts Comm'n Against Discrimination, 508
N.E.2d 587, 593 (Mass. 1987) (emphasis added) (citation omitted).
Even where the employer has issued a policy prohibiting
sexual harassment, and where the employer has established
procedures for the receipt of employee complaints, the employer
will still have aided the supervisor in committing the harassment.
See Meritor, 477 U.S. at 76-77 (Marshall, J., concurring).
Therefore, we hold that an employer is vicariously liable for the
hostile work environment created by its supervisors regardless of
whether management-level employees knew or should have known about
the harassment, and regardless of whether the supervisors were
acting within the scope of their employment. 18
Agency principles also provide an important limitation on
employer liability, however. An employer will only be vicariously
liable for the acts of the complainant's supervisor, because only
then will the supervisor be using his position with the employer to
alter the conditions of the complainant's employment. See French,
911 P.2d at 28 (defining hostile work environment as
"discriminatory behavior sufficiently severe or pervasive to alter
the conditions of the victim's employment"). As Justice Marshall
stated, a supervisor who does not oversee the complainant should be
treated as a co-worker. See Meritor, 477 U.S. at 77 (Marshall, J.,
concurring). In that situation, the supervisor does not have
authority over the complainant and may not be aided by his position
in the workplace. Furthermore, when a co-worker or supervisor with
no control over the complainant creates a hostile environment, the
complainant should be less hesitant to report the situation, since
the harasser could not retaliate by changing the conditions of the
complainant's employment. Thus, employers are only vicariously
liable for hostile environment sexual harassment committed by the
complainant's supervisor. 19
These same principles apply to determine the scope of an
employer's liability when its supervisors know about sexual
harassment by a co-worker or by a supervisor who does not have
authority over the complainant, but fail to take appropriate
remedial action. There is no basis for distinguishing between
supervisors' acts of harassment and their failure to remedy known
harassment. Supervisors who allow other employees to sexually
harass employees they supervise have used their delegated authority
to allow the harassment to continue.
For the above reasons we conclude that the trial court
correctly instructed the jury on VECO's liability for hostile
environment sexual harassment by a supervisor acting outside the
scope of his employment.
2. Did the superior court err in denying VECO's motions
for JNOV and for a new trial on Rosebrock's hostile
environment sexual harassment claim? 20
VECO filed motions for judgment notwithstanding the
verdict (JNOV) and for a new trial, alleging that the evidence was
insufficient to support a finding of liability for hostile
environment sexual harassment. VECO claims that the evidence did
not support the jury's implied findings that the alleged harassment
was severe or pervasive or that the alleged harassers were
supervisors whose actions could be imputed to VECO.
1. Was the evidence sufficient to support a
finding that the harassment was severe or
pervasive? 21
In French, we held that "discriminatory behavior
sufficiently severe or pervasive to alter the conditions of the
victim's employment and to create a discriminatory hostile work
environment violates AS 18.80.220." 911 P.2d at 28. VECO argues
that the evidence at trial does not support the jury's verdict,
because the evidence consisted of name-calling and insults, which
was not severe or pervasive harassment. Viewing all the evidence
in the light most favorable to Rosebrock, we disagree.
The evidence of sexual harassment, in part, is as
follows. Rosebrock testified that on her first tour of duty, when
she was introduced to her supervisor, Rick Rorick, he stated,
"Let's get down to business. Are you married, and do you fool
around?" Rosebrock also testified that Rorick told her that
strange things happened to women in the middle of the night. In
addition, Rorick would say to her, on occasion, "You're in a good
mood. Who are you doing?" He would ask her if her back ached, or
why she did not fall over, apparently referring to the size of her
breasts.
Rosebrock also testified that when she approached Rorick
to complain about not receiving a room assignment, he asked her to
come to his room later that night. She stated that when she did go
to talk with him, for the purpose of receiving a room assignment,
he said, "I knew you from [another job on] rig 9. You were the
redhead with the big tits." He also said that she could stay with
him in his room, so long as no one saw her leave in the morning.
Also, Rosebrock testified that soon after she started her
second tour of duty, Rorick pointed to her in public and shouted,
"Boone and Crocket." Rosebrock discovered that the comment
referred to her breasts. She claimed that it became common for
people at VECO to call her by that name, and that to avoid hearing
it, she would refrain from entering the dining hall for two meals
every day and would go there late for dinner.
Viewing all of the evidence in the light most favorable
to Rosebrock, reasonable jurors could have concluded that Rorick's
behavior was severe or pervasive enough to alter the conditions of
Rosebrock's employment and create a hostile work environment. The
sexualized name-calling, in particular, was recurrent. While any
single incident of name-calling might not have been severe, taken
together, these incidents constitute a pattern of harassment which
might reasonably be regarded as severe or pervasive. See, e.g.,
Ellison v. Brady, 924 F.2d 872, 876-81 (9th Cir. 1991) (indicating
that the required showing of severity varies inversely with the
pervasiveness of the conduct).
b. Was the harassment committed by a supervisor
whose actions can be imputed to VECO?
VECO claims that the alleged harassment was not committed
by a supervisor whose actions can be imputed to VECO. We have held
that VECO may be vicariously liable if Rosebrock's supervisors
subjected her to hostile environment sexual harassment. VECO
offered the jury instruction which defined supervisor as follows:
A supervisor is one who serves in a
supervisory position and has corporate
authority to affect the terms and conditions
of the employees he supervises. In other
words a person is a supervisor if he has the
authority to hire, fire, promote, discipline,
or in any other manner affect the terms or
conditions of an employee's employment.
Therefore, the only question is whether the evidence, taken in the
light most favorable to Rosebrock, could lead reasonable jurors to
infer that the harasser, Rorick, was Rosebrock's supervisor. The
evidence supports such a conclusion.
First, and most persuasive, Rorick admitted that he had
the authority to fire Rosebrock, and that he had the power to
discipline and sanction employees. Rorick also testified that he
would expect Rosebrock to complain to him about room assignments.
We thus hold that the evidence was sufficient to support
the jury's verdict that VECO was liable for hostile environment
sexual harassment, because Rosebrock's supervisor subjected her to
severe or pervasive sexual harassment. The superior court did not
err in denying VECO's motions for a new trial or JNOV on
Rosebrock's hostile environment sexual harassment claim.
3. Are damages for emotional distress caused by sexual
harassment barred by the exclusive remedy provision
of the Alaska Workers' Compensation Act? 22
VECO argues that Rosebrock should not have been able to
obtain emotional distress damages. It contends that these were
barred by the exclusive remedy provision of the Workers'
Compensation Act. 23
Alaska Statute 22.10.020(i) authorizes a court finding a
violation of any of the provisions of AS 18.80 to award "any other
relief including the payment of money, that is appropriate." We
have held that this includes an award of compensatory damages. See
Loomis Elec. Protection, Inc. v. Schaefer, 549 P.2d 1341, 1343
(Alaska 1976).
In Loomis we observed that the objective of the anti-
discrimination law was to afford complete relief to parties injured
by discrimination.
The language of the statute is clearly
intended to provide a litigant complete relief
in an appropriate case. In view of the strong
statement of purpose in enacting AS 18.80, and
its avowed determination to protect the civil
rights of all Alaska citizens, we believe that
the legislature intended to put as many
"teeth"into this law as possible. We fail to
see how, consistent with that purpose and
intent, the legislature could have
contemplated a statutory scheme that would not
have included the right to recover damages.
Otherwise, there would be many cases in which
no meaningful relief would be available to the
injured party, the one whose civil rights have
been violated and whom the law seeks to
protect.
Id. at 1343 (footnotes omitted).
The Alaska Workers' Compensation Act does not provide
compensation for emotional distress which does not result in
permanent or partial disability. It would be inconsistent with the
legislative purpose of affording complete relief to those injured
by discrimination to hold that nonduplicative damages are barred by
the exclusive remedy provision of the Workers' Compensation Act.
In declining to so hold we join the courts of many other
states which have held that the exclusive remedy provisions of
their workers' compensation laws do not bar intangible injury
claims resulting from sexual harassment. See Hart v. National
Mortgage & Land Co., 235 Cal. Rptr. 68, 75 (Cal. App. 1987); Cox v.
Brazo, 303 S.E.2d 71, 73 (Ga. App. 1983); O'Connell v. Chasdi, 511
N.E.2d 349, 351-52 (Mass. 1987); Hogan v. Forsyth Country Club Co.,
340 S.E.2d 116, 120-21 (N.C. App. 1986); Palmer v. Bi-Mart Co., 758
P.2d 888, 891 (Or. App. 1988).
B. Wrongful Termination
1. Did the superior court err by permitting Rosebrock
to amend her complaint after the trial had
concluded? 24
Rosebrock's pleadings did not explicitly allege that her
wrongful termination claim was brought pursuant to AS
18.80.220(a)(4). 25 Rather, the complaint stated:
20. Plaintiff's termination was wrongful
in that she was discharged for asserting her
right as an employee to be free from sexual
assault and harassment, a right that is of
important public interest as reflected in both
federal and state statutes and case law.
. . . .
22. Defendant VECO's action in
discharging plaintiff for this reason was
willful, wanton and malicious and beyond the
bounds of socially tolerable conduct,
warranting the assessment of punitive damages
against defendant VECO.
In response to VECO's summary judgment motion, the
superior court ruled that Rosebrock's wrongful termination claim
could proceed to trial. It stated that if she prevailed, Rosebrock
would be entitled to "damages for emotional distress and punitive
damages, since wrongful termination in violation of public policy
constitutes a tort." Thus, the superior court permitted the
wrongful termination claim to proceed as a public policy tort. At
trial, however, the claim was presented to the jury as a
retaliation claim in conformance with the elements that would be
necessary for a wrongful termination claim under AS 18.80.220.
Then, after the trial concluded, the superior court permitted a
retroactive amendment of Rosebrock's complaint to include a
wrongful termination claim under AS 18.80.220. VECO argues that it
was unfairly prejudiced by the retroactive amendment of Rosebrock's
complaint.
We believe that Rosebrock's pleadings sufficiently placed
VECO on notice that it was being sued for wrongful termination, and
that punitive damages would be sought. 26 While the superior court
did state, in ruling on a summary judgment motion, that the
wrongful termination claim would proceed as a public policy tort,
the trial, in fact, conformed to a retaliation claim under AS
18.80.220. Additionally, VECO has not established that it was
prejudiced by the retroactive amended pleading -- that is, it did
not suggest how it might have tried the case differently if it had
known throughout the lawsuit that Rosebrock would prosecute her
wrongful termination claim under AS 18.80.220. 27 Therefore, we hold
that the superior court did not abuse its discretion by allowing
the post-trial amendment of Rosebrock's complaint. 28
2. Did the superior court properly instruct the jury as
to whether VECO could be held liable for the
alleged wrongful termination of Rosebrock?
Quoting only a portion of Jury Instruction Number 21,
VECO claims that it is erroneous because it allowed the jury to
rule in favor of Rosebrock on her wrongful termination claim by
finding only that Rosebrock demonstrated that VECO's stated reason
for her termination was pretextual. VECO argues that the jury was
not required to find that its reason for terminating Rosebrock was
retaliatory.
In determining whether an employer has violated AS
18.80.220 when there is no direct evidence of discriminatory
intent, we have adopted the three-part framework used in Title VII
cases. See Haroldsen v. Omni Enterprises, Inc., 901 P.2d 426, 430
(Alaska 1995) (citing McDonnell Douglas Corp. v. Green, 411 U.S.
792, 802 (1973)). This test also governs actions for retaliatory
discharge. See Miller v. Fairchild Industries, Inc., 797 F.2d 727,
730-31 (9th Cir. 1986).
The Miller court stated:
To establish a prima facie case of
discriminatory retaliation, a plaintiff must
show that: (1) she engaged in an activity
protected under Title VII; (2) her employer
subjected her to adverse employment action;
(3) there was a causal link between the
protected activity and the employer's action.
Causation sufficient to establish a prima
facie case of unlawful retaliation may be
inferred from the proximity in time between
the protected action and the allegedly
retaliatory discharge. . . .
Once a plaintiff establishes a prima
facie case, the burden of production shifts to
the employer to articulate a legitimate, non-
retaliatory explanation for the action. . . .
To satisfy this burden, the employer "need
only produce admissible evidence which would
allow the trier of fact rationally to conclude
that the employment decision had not been
motivated by discriminatory animus."
If the employer successfully rebuts the
inference of retaliation that arises from
establishment of a prima facie case, then the
burden shifts once again to the plaintiff to
show that the defendant's proffered
explanation is merely a pretext for
discrimination.
Id. at 731 (citations and footnote omitted) (quoting Texas, Dep't
of Community Affairs v. Burdine, 450 U.S. 248, 257 (1981)).
Instruction Number 21, read in its entirety, properly
instructed the jury on Rosebrock's wrongful termination claim. 29
The jury was instructed that Rosebrock first had to prove facts
that gave rise to an inference of wrongful termination -- that "she
complained to VECO supervisory or management employees about sexual
harassment and/or sexual assault,"and that "after she complained
of sexual harassment and/or assault, she was terminated." Next,
the instruction informed the jury that VECO had alleged a
legitimate, non-discriminatory reason for terminating Rosebrock.
Finally, the instruction placed the burden of persuasion on
Rosebrock to prove that "it is more likely than not that VECO's
real reason for terminating her was the fact that she complained of
sexual harassment and/or sexual assault."
Contrary to VECO's claim, the instruction did not allow
the jury to impose liability based solely on its disbelief of
VECO's stated reason for terminating Rosebrock. We therefore hold
that when the text of Instruction Number 21 is considered in its
entirety, the instruction is not erroneous.
3. Did the superior court properly instruct the jury on
mixed motives?
VECO claims that Jury Instruction Number 21, as it
relates to mixed-motive sexual harassment, is incorrect. Specifi-
cally, VECO claims that mixed-motive causation does not apply to
cases of retaliation, and also claims that Rosebrock had to choose
either a pretext claim or a mixed-motive claim, but could not
pursue both simultaneously.
VECO cites no authority for the proposition that
consideration of mixed motives is impermissible in wrongful
termination retaliation cases. Authority does support the opposite
proposition, however. See, e.g., Ostrowski v. Atlantic Mut. Ins.
Cos., 968 F.2d 171, 185 (2d Cir. 1992) ("We reject the district
court's view that a claim of retaliation necessarily presents only
a pretext case and cannot be a mixed-motives case."); see also
Haroldsen, 901 P.2d at 432 n.12 (noting that our anti-
discrimination laws condemn employment decisions based on a mixture
of legitimate and illegitimate considerations).
The question of whether a mixed-motive theory applies to
wrongful termination depends on the interpretation of the term
"because"in AS 18.20.220. 30 In interpreting Title VII, the United
States Supreme Court, in Price Waterhouse v. Hopkins, 490 U.S. 228,
240 (1989), held that the words "because of . . . sex"mean that
"gender must be irrelevant to employment decisions." It emphasized
that the words "because of"do not mean "solely because of,"and
held that Title VII prohibited decisions "based on a mixture of
legitimate and illegitimate considerations." Id. at 241. The
Court then held that if the plaintiff shows that gender was a
"motivating part in an employment decision, the defendant may avoid
a finding of liability only by proving that it would have made the
same decision even if it had not allowed gender to play such a
role." Id. at 244-45 (footnote omitted).
The analysis that the Supreme Court applied to Title VII
sexual discrimination is equally applicable to a wrongful
termination claim pursuant to AS 18.20.220(a)(4). In both
situations, the employer is prohibited from making an employment
decision where an illegitimate consideration is a motivating factor
in the decision. Requiring plaintiffs in wrongful termination
cases to prove that their termination was caused solely by their
protected actions would unnecessarily restrict the term "because,"
and would hinder achieving the purpose of AS 18.80.220, eradicating
discrimination. We therefore hold that a wrongful termination
claim pursuant to AS 18.20.220(a)(4) can be based on mixed-motive
causation.
We also reject VECO's argument that the plaintiff must
choose between pursuing a mixed-motive theory and a pretext theory.
The Supreme Court in Price Waterhouse held that a plaintiff can
assert a mixed-motive claim when the employer considered both
legitimate and illegitimate reasons in making its employment
decision. See 490 U.S. at 241. However, "[i]f the plaintiff fails
to satisfy the factfinder that it is more likely than not that a
forbidden characteristic played a part in the employment decision,
then she may prevail only if she proves . . . that the employer's
stated reason for its decision is pretextual." Id. at 247 n.12.
Thus, Price Waterhouse does explicitly contemplate that
a plaintiff can pursue a mixed-motive claim and a pretext claim
simultaneously. There is no reason to make the plaintiff elect
which theory to present to the jury. If the jury finds that there
is direct evidence that the employer considered a forbidden
characteristic in terminating the plaintiff, it will apply the
mixed-motive framework. However, if the jury does not find direct
evidence, the plaintiff can still prevail by using the pretextual
framework. We thus hold that a plaintiff can present both mixed-
motive and pretext claims to the jury, and reject VECO's argument
that Rosebrock had a forbidden "second bite at the apple."
4. Did the superior court err in denying VECO's motions
for JNOV and for a new trial on Rosebrock's
wrongful termination claim?
VECO claims that Rosebrock failed to offer evidence which
would prove the elements of her wrongful termination claim.
Specifically, VECO argues that Rosebrock failed to establish a
prima facie case of retaliation because she failed to show: (1)
that she engaged in a protected activity; (2) that an adverse
employment decision was made; and (3) that there was a causal
connection between the two.
First, Rosebrock testified that she complained to a
supervisor, Bobby Clark, that she was sexually assaulted by another
VECO employee. 31 VECO offers no support for the proposition that
VECO would have been justified for terminating her for complaining
about such an assault. Nor does VECO claim or offer any support
for the proposition that such a report was not a protected
activity. Therefore, Rosebrock offered sufficient evidence to
demonstrate that she engaged in a protected activity.
Second, VECO claims that it did not take adverse
employment action against Rosebrock. However, Rosebrock was laid
off. Therefore, there is no real dispute that VECO made an adverse
employment decision against Rosebrock.
Finally, VECO claims that there was no causal connection
between Rosebrock's complaint and her termination, and that
Rosebrock was laid off as part of a general reduction in force
because she was a junior office worker. However, Rosebrock
testified that, following her termination, she spoke to a VECO
employee who told her that VECO had "taken care of the problem"
because "you're gone." Also, Rosebrock was laid off about six days
after she complained, which in context of Rosebrock's "you're gone"
testimony, is inferential evidence of a causal connection. See
Miller, 797 F.2d at 731 (stating that causation can be proved by
inference from a close proximity in time between the protected
activity and the allegedly retaliatory discharge); see also Mack A.
Player, Employment Discrimination Law § 5.48, at 404 n.284 (1988).
Reviewing this evidence in the light most favorable to
Rosebrock, we find that the jury could reasonably have found that
Rosebrock's complaint about the sexual assault was a cause of her
termination. We thus affirm the superior court's denial of VECO's
motions for JNOV and a new trial as to Rosebrock's wrongful
termination claim.
C. Punitive Damages
1. Are punitive damages authorized under AS 18.80.220
and AS 22.10.020(i)? 32
VECO claims that Rosebrock cannot recover punitive
damages under Alaska's anti-discrimination statute, AS 18.80.220.
However, in Loomis Electronic Protection, Inc. v. Schaefer, 549
P.2d 1341, 1343 (Alaska 1976), this court stated that plaintiffs
may recover punitive damages under AS 18.80. We stated that
the broad language of AS 22.10.020(c)
indicates a legislative intent to authorize an
award of compensatory and punitive damages for
violations of AS 18.80, in addition to the
equitable remedies such as enjoining illegal
employment activities and ordering back pay as
a form of restitution. 33
Id.; see also Johnson v. Alaska State Dept. of Fish & Game, 836
P.2d 896, 906 (Alaska 1991) (citing Loomis for the proposition that
AS 22.10.020(c) authorizes punitive damages for violations of AS
18.80, but holding that the statute did not specifically allow
punitive damages against the state).
Nevertheless, VECO claims that this court's statements in
Loomis and Johnson were merely dicta, and that we should
reconsider the question of punitive damages. Specifically, VECO
claims that the issue in Loomis concerned whether a prospective
employee was entitled to a jury trial, and that the language
regarding punitive damages is therefore superfluous. It also
argues that in Johnson, we simply assumed that punitive damages
were recoverable, but never decided the propriety of such damages.
While VECO accurately summarizes the question presented
in Loomis, we think that VECO is incorrect in claiming that the
punitive damage reference is mere dicta. Dicta is defined as
"[o]pinions of a judge which do not embody the resolution or
determination of the specific case before the court. Expressions
in court's opinion which go beyond the facts before court and
therefore are individual views of author of opinion and not binding
in subsequent cases as legal precedent." Black's Law Dictionary
454 (6th ed. 1990). In Loomis, this court's discussion of the
relief afforded by Alaska's civil rights statute was necessary for
our holding that the prospective employee was entitled to a jury
trial. See 549 P.2d at 1343. The language was not superfluous to
the "specific case before the court,"and did not "go beyond the
facts." Similarly, in Johnson, we necessarily accepted the holding
in Loomis that punitive damages were recoverable pursuant to AS
18.80 before reaching the issue of whether punitive damages could
be assessed against the state. See 836 P.2d at 906.
The plain language of AS 22.10.020(i) authorizes the
superior court to award "any other relief, including the payment of
money." Further, in a consistent line of decisions, this court has
held that punitive damages are recoverable in discrimination cases.
See Loomis, 549 P.2d at 1343; Johnson, 836 P.2d at 906; cf.
McDaniel v. Cory, 631 P.2d 82, 87 (Alaska 1981) (affirming holding
in Loomis that punitive damages are available in civil action, but
distinguishing administrative action where punitive damages are not
available). Moreover, under the common law, Alaska's superior
courts possess the authority to award punitive damages for
outrageous conduct. See Bridges v. Alaska Hous. Auth., 375 P.2d
696, 702 (Alaska 1962). Allowing punitive damages under AS
18.80.220 does not reach beyond settled expectations. We therefore
follow our prior holdings that punitive damages are authorized
under AS 18.80.220 and AS 22.10.020(i).
2. Did the jury instructions err in permitting the jury
to award punitive damages against VECO for acts of
a supervisor beyond the scope of the supervisor's
employment?
VECO claims that the superior court's instruction on
punitive damages was erroneous because it allowed the jury to award
punitive damages based on vicarious liability. Citing Restatement
(Second) of Agency § 217C (1958), it argues that this court should
apply agency principles to limit the award of punitive damages to
instances where the employer has committed a wrong.
The jury instructions allowed the jury to award punitive
damages against VECO based on four different theories of employer
liability: (1) wrongfully terminating Rosebrock; (2) sexual harass-
ment by an employee acting within the scope of his employment if
VECO knew about the harassment and failed to take corrective
action; (3) sexual harassment by a co-worker or supervisor who did
not have authority over Rosebrock, if Rosebrock's supervisor knew
about the harassment and failed to take corrective action; and (4)
vicarious liability for sexual harassment by Rosebrock's
supervisor, unlimited by the scope of the supervisor's employment.
The jury found that VECO was liable for both wrongful
termination and sexual harassment and awarded punitive damages. No
special verdict answer specified whether punitive damages were
awarded for the wrongful termination or the sexual harassment
claims, or for both. Thus, it is possible that the jury's award of
punitive damages could have been based solely on VECO's vicarious
liability for actions of Rorick outside the scope of his
employment.
We must now determine whether an employer can be liable
for punitive damages based solely on vicarious liability for its
employees' actions outside the scope of their employment. 34
Restatement (Second) of Agency § 217C provides:
Punitive damages can properly be awarded
against a master or other principal because of
an act by an agent if, but only if:
(a) the principal authorized the doing
and the manner of the act, or
(b) the agent was unfit and the principal
was reckless in employing him, or
(c) the agent was employed in a
managerial capacity and was acting in the
scope of employment, or
(d) the principal or a managerial agent
of the principal ratified or approved the act.
The comments to section 909 of the Restatement (Second)
of Torts, which is identical to section 217C of the Restatement
(Second) of Agency, provide:
The rule stated in this Section results
from the reasons for awarding punitive
damages, which make it improper ordinarily to
award punitive damages against one who himself
is personally innocent and therefore liable
only vicariously. It is, however, within the
general spirit of the rule to make liable an
employer who has recklessly employed or
retained a servant or employee . . . . Nor is
it unjust that a person on whose account
another has acted should be responsible for an
outrageous act for which he otherwise would
not be if, with full knowledge of the act and
the way in which it was done, he ratifies it,
or, in cases in which he would be liable for
the act but not subject to punitive damages,
he expresses approval of it. In these cases,
punitive damages are granted primarily because
of the principal's own wrongful conduct.
Although there has been no fault on the
part of a corporation or other employer, if a
person acting in a managerial capacity either
does an outrageous act or approves of the act
by a subordinate, the imposition of punitive
damages upon the employer serves as a
deterrent to the employment of unfit persons
for important positions.
Restatement (Second) of Torts § 909 cmt. b (1979) (emphasis added)
(illustrations omitted).
We generally agree with VECO that the Restatement
properly balances the interests in imposing vicarious liability
while precluding punitive damages when the employer has not acted
wrongfully. Other courts which have used agency principles to
impose vicarious liability on an employer for its supervisor's
hostile environment sexual harassment have also limited the
employer's punitive damage liability based on the agency principles
enunciated in § 217C of the Restatement (Second) of Agency. See,
e.g., Kelly-Zurian v. Wohl Shoe Co., 27 Cal. Rptr. 2d 457, 468-69
(Cal. App. 1994) (holding that employer is not liable for punitive
damages based on supervisor's sexual harassment unless the employer
acted wrongfully, as defined by Restatement (Second) of Torts §
909); Lehmann v. Toys 'R' Us, Inc., 626 A.2d 445, 464 (N.J. 1993)
(applying agency principles to hold employer vicariously liable for
supervisor's hostile environment sexual harassment, but limiting
liability for punitive damages to situations of actual
participation by upper management or willful indifference).
We have indicated that liability for punitive damages
might be imposed in one situation where the Restatement would not
impose them -- where an employee who is not necessarily employed in
a managerial capacity acts within the scope of his employment. See
Alaskan Village, Inc. v. Smalley, 720 P.2d 945, 948-49 (Alaska
1986); cf. Murray v. Feight, 741 P.2d 1148, 1158-59 (Alaska 1987).
We decline, however, to extend this exception and allow vicarious
liability for punitive damages when the employee is acting outside
the scope of his employment. 35
If an employee is acting outside the scope of his
employment, he is not acting in any way to further the goals of the
employer. See Restatement (Second) of Agency § 228(1)(c) (provid-
ing that employee is not acting within the scope of his employment
unless his actions are "actuated, at least in part, by a purpose to
serve the master"). 36 The interest of preventing sexual harassment
is served by holding an employer vicariously liable for its
supervisors' sexual harassment, regardless of whether they are
acting within the scope of their employment, because the employer
may be deterred from delegating authority to untrained or
incompetent supervisors. However, this does not mean that an
innocent employer should be punished by an award of punitive
damages when its supervisors are acting outside the scope of their
employment. Punitive damages are disfavored and are allowed only
within narrow limits. See Chizmar v. Mackie, 896 P.2d 196, 210
(Alaska 1995). The instructions given in this case went beyond
those limits in permitting punitive damages to be awarded based on
vicarious liability for acts of employees outside the scope of
their employment.
When a jury award may be based on any one of several
theories, one of which has been erroneously submitted to the jury,
a new trial is required. See Matomco Oil Co. v. Arctic Mechanical,
Inc., 796 P.2d 1336, 1343-44 (Alaska 1990). This rule applies
here, for there is no means for determining whether the punitive
damage award was based on the direct liability theories which would
support the award or on the vicarious liability theory which would
not support the award.
3. Did VECO properly object to the punitive damage
instruction?
Civil Rule 51(a) provides that "[n]o party may assign as
error the giving or the failure to give an instruction unless the
party objects thereto . . . stating distinctly the matter to which
the party objects and the grounds of the objection." We now
address whether VECO satisfied this rule with respect to punitive
damages for vicarious liability.
The superior court gave a substantially similar instruc-
tion on punitive damages as that submitted by VECO. 37 This
instruction did not inform the jury that it could not impose
punitive damages based on vicarious liability for acts of
supervisors beyond the scope of their employment. However, VECO
objected to the instruction which stated that it could be held
vicariously liable for the acts of its supervisors. VECO's counsel
referred to its "running objection", referring to its prior
arguments on this point.
VECO clearly asserted its position that it could not be
vicariously liable for sexual harassment. But it did not state
that this objection applied to punitive damages. In our view, such
a statement was not necessary in order to preserve its appellate
rights. VECO's objection to vicarious liability was inclusive of
all forms of damages. Liability for punitive damages was subsumed
within its objection.
IV. CONCLUSION
The judgment of the superior court is AFFIRMED as to
compensatory damages, REVERSED as to punitive damages, and REMANDED
for a new trial where the issues will be whether punitive damages
should be assessed against VECO and, if so, the amount of such
damages. 38
Footnotes
1 VECO admits that Arctic Rentals is merely a division of
VECO, and does not argue that it is a separate corporate entity.
2 While Rosebrock originally alleged both quid pro quo and
hostile environment sexual harassment claims, the jury only decided
the hostile environment sexual harassment claim.
3 Rosebrock testified that Clark was her supervisor when
Rorick was not on the slope. Dropps was also a supervisor, but he
was not Rosebrock's supervisor and did not have any authority over
her.
4 Counsel for VECO on appeal did not serve as its trial
counsel.
5 Burlington Industries, Inc. v. Ellerth, 118 S. Ct. 2257
(1998).
6 Id.
7 Restatement (Second) of Agency § 228 defines scope of
employment as follows:
(1) Conduct of a servant is within the scope
of employment if, but only if:
(a) it is of the kind he is employed to
perform;
(b) it occurs substantially within the
authorized time and space limits;
(c) it is actuated, at least in part, by
a purpose to serve the master, and
(d) if force is intentionally used by the
servant against another, the use of force is
not unexpectable by the master.
(2) Conduct of a servant is not within the
scope of employment if it is different in kind
from that authorized, far beyond the
authorized time or space limits, or too little
actuated by a purpose to serve the master.
8 Section 219 of the Restatement (Second) of Agency
provides in relevant part:
(1) A master is subject to liability for the
torts of his servants committed while acting
in the scope of their employment.
(2) A master is not subject to liability for
the torts of his servants acting outside the
scope of their employment, unless:
. . . .
(d) the servant purported to act or to
speak on behalf of the principal and there was
reliance upon apparent authority, or he was
aided in accomplishing the tort by the
existence of the agency relation.
9 Section 217C of the Restatement (Second) of Agency
provides:
Punitive damages can properly be awarded
against a master or other principal because of
an act by an agent if, but only if:
(a) the principal authorized the doing
and the manner of the act, or
(b) the agent was unfit and the principal
was reckless in employing him, or
(c) the agent was employed in a
managerial capacity and was acting in the
scope of employment, or
(d) the principal or a managerial agent
of the principal ratified or approved the act.
10 See Alaskan Village, Inc. v. Smalley, 720 P.2d 945, 948-
49 (Alaska 1986).
11 Jury instructions involve questions of law, which this
court reviews using its independent judgment. See Aviation
Assocs., Ltd. v. Temsco Helicopters, Inc., 881 P.2d 1127, 1130 n.4
(Alaska 1994). An erroneous statement of law in jury instructions
will not be reversed unless prejudice is shown. Id.
12 A management-level employee has been defined as one who
has the "stature and authority of the agent to exercise control,
discretion and independent judgment over a certain area of a
business with some power to set policy for the company."
Fitzgerald v. Mountain States Tel. & Tel. Co., 68 F.3d 1257, 1263
(10th Cir. 1995); see also Albuquerque Concrete Coring Co. v. Pan
Am World Servs., Inc., 879 P.2d 772, 777 (N.M. 1994) (defining
managerial employee "as one who 'formulates, determines and
effectuates his employer's policies, one with discretion or
authority to make ultimate determinations independent of company
consideration and approval of whether a policy should be
adopted.'") (quoting Kemner v. Monsanto Co., 576 N.E.2d 1146, 1157
(Ill. App. 1991)).
13 Paragraph three imposes liability on VECO for hostile
environment sexual harassment by non-supervisors who acted within
the scope of their employment, as long as VECO knew or should have
known about the harassment. VECO does not challenge this part of
the instruction.
14 Title VII of the Civil Rights Act of 1964 makes it "an
unlawful employment practice for an employer . . . to discriminate
against any individual with respect to his compensation, terms,
conditions, or privileges of employment, because of such
individual's race, color, religion, sex, or national origin." 42
U.S.C. § 2000e-2(a)(1). In Meritor Savings Bank v. Vinson, 477
U.S. 57, 66-67 (1986), the United States Supreme Court held that
Title VII prohibits hostile environment sexual harassment.
15 In Meritor, a female bank employee alleged that her
supervisor, who was a bank vice-president and branch manager, had
sexually harassed her. 477 U.S. at 59-60. In dicta, the district
court held that the bank could not be held liable because it did
not have any knowledge of the alleged harassment. Id. at 61-62.
The Court of Appeals for the District of Columbia reversed,
holding that the bank was liable for sexual harassment by its
supervisory personnel, regardless of whether or not it knew or
should have known about the conduct. Vinson v. Taylor, 753 F.2d
141, 150 (D.C. Cir. 1985). It held that a supervisor is an agent
of his employer and, even if he lacks authority to hire, fire, or
promote, "the mere existence -- or even the appearance -- of a
significant degree of influence in vital job decisions gives any
supervisor the opportunity to impose on employees." Id. (footnote
omitted).
16 Meritor does not prohibit courts from imposing vicarious
liability on employers for hostile environment sexual harassment
committed by their supervisors. Rather, it only prohibits federal
courts from "concluding that employers are always automatically
liable for sexual harassment by their supervisors." 477 U.S. at 72
(emphasis added). Thus, Meritor allows federal courts to impose
vicarious liability in some instances.
17 In response to Meritor, lower federal courts fashioned
confusing and even contradictory rules for when employers can be
held vicariously liable for sexual harassment committed by their
supervisors. See Frederick J. Lewis & Thomas L. Henderson,
Employer Liability for "Hostile Work Environment"Sexual Harassment
Created by Supervisors: The Search for an Appropriate Standard, 25
U. Mem. L. Rev. 667 (1995) (providing a survey of the standards
which the various federal circuits have employed).
18 In Burlington Industries v. Ellerth, 118 S. Ct. 2257
(1998), and Faragher v. City of Boca Raton, 118 S. Ct. 2275 (1998),
both decided after this case was briefed and argued, the United
States Supreme Court revisited the subject of hostile work
environment sexual harassment cases and made a number of
observations relevant to this case. The Court noted that for
sexual harassment to be actionable it must be "severe or
pervasive,"that the non-statutory terms "quid pro quo"and
"hostile work environment"illustrate the distinction between cases
which involve a threat which is carried out and generally offensive
conduct, but are not in themselves controlling as to the imposition
of vicarious liability, and that generally "sexual harassment by a
supervisor is not conduct within the scope of employment."
Burlington at 2265, 2267. The Court endorsed the application of
the "aided in agency"theory expressed in the Restatement (Second)
of Agency § 219(2)(d). However, where no tangible employment
action has been taken, the Court devised an affirmative defense for
the employer. The defense consists of two elements:
(a) that the employer exercised reasonable
care to prevent and correct promptly any
sexually harassing behavior, and (b) that the
plaintiff employee unreasonably failed to take
advantage of any preventive or corrective
opportunities provided by the employer or to
avoid harm otherwise. While proof that an
employer had promulgated an anti-harassment
policy with complaint procedure is not
necessary in every instance as a matter of
law, the need for a stated policy suitable to
the employment circumstances may appropriately
be addressed in any case when litigating the
first element of the defense. And while proof
that an employee failed to fulfill the
corresponding obligation of reasonable care to
avoid harm is not limited to showing an
unreasonable failure to use any complaint
procedure provided by the employer, a
demonstration of such failure will normally
suffice to satisfy the employer's burden under
the second element of the defense.
Burlington at 2270, Faragher at 2293. While these recent cases are
thus in several respects supportive of the views we express herein
as to the liability of an employer for the harassive acts of a
supervisor, we have no occasion to consider whether the affirmative
defense which they announce should be adopted as a feature of
Alaska anti-discrimination law. Understandably, the issue of the
adoption of such a defense was not raised below or on appeal.
19 The parties have used the term "strict liability"to
describe holding the employer liable for the acts of its
supervisors. Since our analysis is based on agency principles, the
liability is more accurately defined as "vicarious liability."
20 As stated in Diamond v. Wagstaff, 873 P.2d 1286, 1290
(Alaska 1994):
When reviewing a motion for a judgment
n.o.v., we determine whether evidence, when
viewed in the light most favorable to the non-
movant, is such that reasonable persons could
not differ in their judgment. We neither
weigh the evidence nor judge the credibility
of witnesses. Rather, we employ an objective
test: If there is room for diversity of
opinion among reasonable people, then a jury
question exists.
We review the superior court's denial of
a motion for a new trial for an abuse of
discretion. An abuse of discretion occurs
only if the evidence supporting the jury's
verdict was either completely lacking or
slight and unconvincing, so that the verdict
was manifestly unreasonable and unjust.
Again, we draw all inferences from the facts
in the light most favorable to the non-movant.
When reviewing a jury verdict under these
standards, this court necessarily considers
hypothetical explanations for the jury's
determination. Otherwise, we would not be
able to review verdicts at all.
(Citations omitted.)
21 The trial in this case was held before we decided French.
However, the superior court used the same standard called for in
French, and VECO does not challenge the superior court's employment
of the severe or pervasive standard. The superior court also
instructed the jury that, in evaluating whether the behavior
complained of was severe or pervasive, "You should consider this
question from the perspective of a reasonable woman: would a
reasonable woman consider the conduct sufficiently severe or
pervasive to alter the conditions of employment and create an
abusive working environment?" In French, we specifically declined
to decide whether to adopt the "reasonable woman"standard.
French, 911 P.2d at 28 n.10. VECO does not appeal this
instruction, so we have no occasion to review it.
22 Statutory interpretation is a question of law which this
court reviews using its independent judgment. See Huf v. Arctic
Alaska Drilling Co., 890 P.2d 579, 580 n.2 (Alaska 1995).
23 AS 23.30.055.
24 The superior court is accorded wide discretion in ruling
on motions to amend pleadings. See Rodriguez v. Rodriguez, 908
P.2d 1007, 1011 (Alaska 1995).
25 AS 18.80.220(a)(4) provides that it is an unlawful
employment practice for "an employer, labor organization, or
employment agency to discharge, expel, or otherwise discriminate
against a person because the person has opposed any practices
forbidden under AS 18.80.200-18.80.280 or because the person has
filed a complaint, testified, or assisted in a proceeding under
this chapter . . . ."
26 See Knight v. American Guard & Alert, Inc., 714 P.2d 788,
791 (Alaska 1986) (stating that pleadings should be construed
liberally).
27 VECO does claim that it would have pursued a different
tactic. However, we are unable to distinguish between the trial
tactic that VECO actually used and the tactic that it claims it
would have used.
28 VECO also argues that it was prejudiced if this court
rules that AS 18.80.220 does not support punitive damages, since
Alaska does not recognize a public policy tort that would serve as
an alternative grounds for imposing punitive damages. Since we
hold that this statute does authorize awards of punitive damages,
see infra III.C.1., VECO was not prejudiced. We do not reach the
issue of whether a public policy tort should be recognized in the
circumstances of this case or whether such a claim would support an
award of punitive damages.
29 The superior court's instructions in their entirety as
they pertain to Rosebrock's wrongful termination claim provide:
Rosebrock's second claim is for wrongful
termination. Rosebrock claims that she was
terminated in retaliation for complaining of
sexual harassment and/or sexual assault. In
order to find that Rosebrock was wrongfully
terminated, you must find that it is more
likely than not that:
1) Rosebrock complained about sexual
harassment and/or sexual assault;
2) VECO terminated Rosebrock; and
3) There was a causal connection between
Rosebrock's complaints and the termination.
There are two ways that Rosebrock can
show that there was a causal connection
between her complaints and her lay-off. She
may show, first, that VECO's only reason for
terminating her was retaliatory. In such
case, she must demonstrate that any reason
stated by VECO for its actions was merely
pretextual, and not true. This is called a
"pretext"claim. Second, she may show that
even if VECO had a legitimate motive for
terminating her, retaliation was also a causal
factor in the lay-off. This is called a
"mixed motive"claim.
To prevail on either of these claims,
Rosebrock must first prove two things. First,
she must prove that she complained to VECO
supervisory or management employees about
sexual harassment and/or sexual assault.
Second, Rosebrock must prove that after
she complained of sexual harassment and/or
assault, she was terminated.
To prevail on her pretext claim,
Rosebrock must next establish that it is more
likely than not that VECO's real reason for
terminating her was the fact that she
complained of sexual harassment and/or sexual
assault. VECO claims that it laid Rosebrock
off as part of company-wide cost-cutting
reductions in force. In managing its affairs,
a business is entitled to exercise managerial
discretion. This means that even though you
think a particular decision is wrong and you
would have acted differently had it been up to
you, as long as complaints of sexual
harassment or sexual assault were not a causal
factor in the decision, it is lawful.
You must decide whether VECO's stated
reason for Rosebrock's lay-off was
"pretextual,"or not the true reason for
Rosebrock's termination. If you decide that
it is more likely than not that VECO's stated
reason was pretextual, you must find that
Rosebrock has established her claim for
wrongful termination.
To prevail on her mixed motive claim,
Rosebrock need not establish that her
complaints constituted the sole motivation or
even the primary motivation for VECO's action.
Plaintiff must prove that it is more likely
than not that her complaints were a causal
factor in her termination, even though VECO
may also have been motivated by other factors.
If you find that Rosebrock has proved
that her sexual harassment and/or sexual
assault complaint was/were motivating
factor(s) in her termination, then you must
find for Rosebrock on her mixed motive
wrongful termination claim, unless you also
find that VECO has proved that it is more
likely than not that it would have made the
same decision, if Rosebrock had not complained
of sexual harassment and/or sexual assault.
If you find that VECO would have made the same
employment decision if Rosebrock had not made
her complaint, then you must find for VECO on
the mixed motive wrongful termination claim.
The fact that Rosebrock was an "at will"
employee who could be terminated without cause
does not mean that VECO could terminate
Rosebrock because she complained of sexual
harassment or sexual assault.
30 AS 18.80.220(a)(4) provides that it is unlawful for an
employer to "discharge, expel, or otherwise discriminate against a
person because the person has opposed any practices forbidden under
AS 18.80.200-18.80.280 or because the person has filed a complaint,
testified, or assisted in a proceeding under this chapter . . . ."
(Emphasis added.)
31 Bobby Clark served as the alternate equipment manager
when Rick Rorick was away from the North Slope.
32 Statutory interpretation is a question of law which this
court reviews using its independent judgment. See Huf v. Arctic
Alaska Drilling Co., 890 P.2d 579, 580 n.2 (Alaska 1995).
33 AS 22.10.020(c) was subsequently codified as AS
22.10.020(i). It provides in relevant part:
The [superior] court may enjoin any act,
practice, or policy which is illegal under AS
18.80. and may order any other relief,
including the payment of money, that is
appropriate.
34 We have indicated that an employer is vicariously liable
for punitive damages for acts of employees within the scope of
their employment. See Alaskan Village, Inc. v. Smalley, 720 P.2d
945, 948-49 (Alaska 1986) (holding owner of mobile home park liable
for punitive damages for acts of managers within the scope of their
employment) (citing Stroud v. Denny's Restaurant, 532 P.2d 790, 793
(Or. 1975)); cf. Murray v. Feight, 741 P.2d 1148, 1158-59 (Alaska
1987) (holding defendant liable for punitive damages for act of
partner in the ordinary course of partnership business). Our
holding today concerns vicarious liability for acts of employees
outside of the scope of their employment.
35 In Smalley we adopted the majority rule for an employer's
vicarious liability for punitive damages, relying on Stroud v.
Denny's Restaurant, Inc., 532 P.2d 790, 793 (Oregon 1975). The
rule as expressed in Stroud requires that the employee be acting
within the scope of his employment:
[W]hen an employee commits a wrongful act
which would subject him personally to punitive
damages, the essential inquiry must be whether
the act was committed while the employee was
acting within the scope of his employment
. . . . If the employee was acting within the
scope of his employment, the corporation will
be liable for punitive damages regardless of
whether that employee may be classified as
"menial."
36 In Doe v. Samaritan Counseling Center, 791 P.2d 344, 348
(Alaska 1990), we stated the "motivation to serve"test would be
satisfied "where tortious conduct arises out of and is reasonably
incidental to the employee's legitimate work activities". To the
extent that this language suggests that the employee's act need not
be motivated in fact at least to some degree to serve the master's
business we disapprove of it. Doe was a patient whose counselor
had consensual sex with her. The question was whether the employer
of the counselor could be vicariously liable for the abuse of the
patient-counselor relationship. We held that there was a question
of fact as to whether the counselor had acted within the scope of
his employment. We did not mention the possibility of vicarious
liability under an aided in agency theory like that contained in
section 219(2)(d) of the Restatement (Second) of Agency which would
be applicable regardless of scope of employment considerations. On
reflection, vicarious liability under such a theory would seem to
be justified. And imposing vicarious liability under a scope of
employment theory absent at least a partial purpose on the part of
the employee to serve the employer seems unjustified.
37 Instruction No. 31 states:
Rosebrock has requested that you award a
separate amount of money in order to punish
VECO and to deter VECO and others from
repeating similar acts. You may award such an
amount of money only if you have decided that
VECO is liable on one or more of Rosebrock's
claims, and if you decide that VECO's conduct
which forms the basis of your verdict was
outrageous. VECO's conduct was outrageous if
it was the result of maliciousness, bad
motive, or was undertaken with a reckless
indifference to Rosebrock's interests and
rights.
Rosebrock must prove the outrageousness
of VECO's conduct by clear and convincing
evidence. An alleged fact is established by
clear and convincing evidence if the evidence
induces belief in your minds that the alleged
fact is highly probable. It is not necessary
that the alleged fact be certainly true or
true beyond a reasonable doubt or conclusively
true. However, it is not enough to show that
the alleged fact is more likely than not true.
38 VECO has raised numerous evidentiary objections. We have
reviewed each of them and find that the rulings complained of were
either correct or, if erroneous, harmless in that they did not
affect VECO's substantial rights. VECO also claims that Rose-
brock's attorney violated professional standards in his closing
argument. However, as no objection was made to this conduct, we
regard it as waived. We have reviewed the conduct under a plain
error standard and find that plain error does not exist. Finally,
VECO claims that it was entitled to exercise a peremptory challenge
to the trial judge under Civil Rule 42(c) after a co-defendant had
already made a Rule 42(c) challenge. VECO argues that its
interests were hostile to those of the co-defendant, but it did not
make this argument below. We therefore consider the point to be
waived.
Rosebrock's cross-appeal was based on a discovery
sanction issue which was relevant only to proving liability for
wrongful termination. Since we affirm the judgment of liability,
we do not reach the cross-appeal.
In the Supreme Court of the State of Alaska
VECO, Inc., )
) Supreme Court No. S-07080/S-07120
Appellant, )
v. ) Order
)
Constance I. Rosebrock, )
)
Appellee. ) Date of Order: 2/19/99
)
Trial Court Case # 3AN-92-10614CI
Before: Matthews, Chief Justice, Eastaugh and Fabe, Justices, and Rabinowitz, Justice
pro tem. [Bryner and Carpeneti, Justices, not participating.]
On consideration of appellant counsel's request, dated January 21, 1999, for a
modification of the opinion to reflect that she was not appellant's trial court counsel,
IT IS ORDERED:
Opinion No. 5057, issued December 18, 1998, is WITHDRAWN and Opinion No.
5084 is issued in its place today. A new footnote 4 has been added on page 4 and the subsequent
footnotes renumbered. Minor typographical corrections have also been made.
Entered at the direction of the court.
Clerk of the Appellate Courts
Deputy Clerk
Distribution:
Donna C. Willard
Law Office of Donna C. Willard
124 East 7th Avenue
Anchorage AK 99501
Robert P. Owens
Copeland, Landye, et. al.
701 West 8th Ave, Suite 1200
Anchorage AK 995013553
-48- 5084
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