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Kenneth Haroldsen v. Omni Enterprises Inc., dba Swanson's (9/1/95), 901 P 2d 426
NOTICE: This opinion is subject to formal 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 99501-2084 or call (907) 264-0607.
THE SUPREME COURT OF THE STATE OF ALASKA
KENNETH HAROLDSEN, )
) Supreme Court No. S-6454
Appellant, )
) Superior Court No.
v. ) 4BE-93-282 Civil
)
OMNI ENTERPRISES, INC., ) O P I N I O N
d/b/a SWANSON'S, )
)
Appellee. ) [No. 4246 - September 1,
1995]
________________________________)
Appeal from the Superior Court of the State
of Alaska, Fourth Judicial District, Bethel,
Mark I. Wood, Judge, pro tem.
Appearances: James J. Davis, Jr. and Deborah
Reichard, Alaska Legal Services Corporation,
Bethel, Carol H. Daniel and Joseph D.
Johnson, Alaska Legal Services Corporation,
Anchorage, for Appellant. Scott Jay Sidell,
Law Office of Chris Provost, Bethel, for
Appellee.
Before: Moore, Chief Justice, Rabinowitz,
Matthews, Compton and Eastaugh, Justices.
RABINOWITZ, Justice.
This case requires us to determine whether the superior
court properly granted summary judgment against Kenneth Haroldsen
in his wrongful termination action against his former employer,
Swanson's.1
I. FACTS & PROCEEDINGS
Haroldsen is a Yup'ik man, who, until he was fired, was
an employee in the maintenance department of Swanson's in Bethel.
He was initially hired by Swanson's in 1991 to work in the
furniture department, and was later promoted to manager of that
department. In December 1992, Haroldsen was transferred to the
maintenance department for which he received a pay raise from
$11.00 to $12.50 per hour.2
When Haroldsen took this position there was only one
other employee in the maintenance department, the department's
manager, Jim Panko. Sometime later, Chris Taveres was rehired by
the department. Taveres had worked on and off for Swanson's, and
particularly for the maintenance department, for many years.
Both Taveres and Panko are Caucasian.
In February 1993, George Myran took over as Swanson's
sole general manager. He had previously been co-general manager
with Don Tubbs, Haroldsen's father-in-law. Several weeks later,
Myran terminated Haroldsen's employment. In an affidavit, Myran
described his reasons for doing so:
[W]hen I took over responsibility for the
maintenance department, there were three
people in the department. . . . It was
immediately obvious to me that there was no
need for three maintenance workers. I made
the decision to execute a reduction in work
force by layoff. It made no difference to me
what race the individual was; there were
labor dollars being spent that did not need
to be spent. Ken Haroldsen was by far the
least skilled and experienced of the three
and had the least time in the department.
The maintenance supervisor, Jim Panko, was
very skilled and experienced. His assistant
Chris Taveres, though not always reliable,
was the most skilled and experienced of the
three. Mr. Taveres had been with Swanson's
for many years and knew the physical plant as
well as anyone, including his supervisor, Jim
Panko. In contrast, Mr. Haroldsen had to my
knowledge no previous experience as a
maintenance worker and had done little in the
position since his transfer. Jim Panko had
mentioned to me on more than one occasion
that Mr. Haroldsen was "useless" to him.
Myran attributed Haroldsen's advance in the company and certain
privileges he had previously received as a worker to the "blatant
nepotism exhibited by Don Tubbs." Myran affied that the special
privileges which Haroldsen had received were resented by the
other employees and created a morale problem.
Swanson's did not rely solely on the reduction in force
to justify its decision to terminate Haroldsen. To this effect,
Myran further stated in his affidavit as follows:
I would have laid off anyone in the job with
as little experience as Mr. Haroldsen. I
must admit, however, that I did not think
that Swanson's was losing a valuable worker
when Mr. Haroldsen was discharged. To the
contrary, there were at least three other
reasons why, in my opinion, Mr. Haroldsen
could and should have been fired for cause
long before . . . .
He then detailed these reasons including a history of absenteeism
and tardiness, Haroldsen's poor work performance, and alleged
thefts from the store. However, Swanson's presented no evidence
that Haroldsen had ever been previously reprimanded for his
actions, nor had any prior notice been given that he would be
terminated unless his performance improved. Finally, Haroldsen
was never denied a raise which he requested.
Haroldsen attributes the firing decision to Myran's
racial animus and argues that Swanson's stated reasons were
pretextual. He provided the superior court with affidavits of
several former employees of Swanson's who claim to have heard
Myran make racially derogatory remarks about other Native
employees. He also provided affidavits, primarily by himself and
his father-in-law, Tubbs, in an effort to rebut the other
justifications Myran gave for firing him.
Shortly after Haroldsen was fired both Panko and
Taveres quit. Swanson's did not extend an offer to Haroldsen to
return.3 Two Caucasians were hired to fill the vacant positions.
In July 1993, Haroldsen filed suit in the superior
court in Bethel alleging that he had been wrongfully terminated.
Specifically, he alleged that Swanson's had violated Alaska's
Civil Rights Statute by engaging in racial discrimination. AS
18.80.220. He also claimed that Swanson's had violated the
implied covenant of good faith and fair dealing which is a part
of every employment contract in Alaska.
Before trial, Swanson's moved for, and the superior
court granted, summary judgment on both of Haroldsen's claims.
In its written decision, the court concluded that Haroldsen had
raised genuine issues of material fact with respect to the work
performance, tardiness and absenteeism, and theft justifications
offered by Swanson's. Additionally, it concluded that with
respect to employee morale, Swanson's had failed to provide
evidence of any formal company policy which was violated, and
further that morale could have been improved by other less
drastic measures such as removing the privileges. However, the
court held that Swanson's had demonstrated that it had reduced
the number of employees in its maintenance department from three
to two. Because Haroldsen failed to show that he was more
experienced and skilled than either of the retained employees, he
did not demonstrate that this reason was pretextual.4 Finally,
the superior court held that the factual basis for Haroldsen's
claim regarding the implied covenant of good faith was the racial
discrimination which he had alleged violated Alaska's Civil
Rights Statute. Thus, his failure to raise a genuine issue of
material fact on his statutory claim meant that summary judgment
was granted on the contract claim as well. Haroldsen now
appeals.
II. DISCUSSION5
A. The Statute and Analytic Framework
Alaska Statute 18.80.220(a)(1) states, "It is unlawful
for an employer to refuse employment to a person, or to bar a
person from employment, or to discriminate against a person in
compensation or in a term, condition, or privilege of employment
because of the person's race, religion, color, or national origin
. . . ." In applying AS 18.80.220(a)(1), this court has
expressly adopted the three-part analytic framework used by
federal courts in Title VII cases. Alaska State Comm'n for Human
Rights v. Yellow Cab, 611 P.2d 487, 488 n.1, 490 (Alaska 1980).
First, the employee "carr[ies] the initial burden under the
statute of establishing a prima facie case of racial
discrimination." McDonnell Douglas Corp. v. Green, 411 U.S. 792,
802 (1973). The burden then shifts to the employer "to
articulate some legitimate, nondiscriminatory reason" why the
employee was discharged. Id. Finally, the burden shifts back to
the employee "to show that [the employer's] stated reason for
[discharging the employee] was in fact pretext." Id. at 804.
B. The Prima Facie Case
The superior court stated that in a work-force
reduction situation, a prima facie case is established when the
employee produces evidence to show "(1) that he is within the
protected class, (2) that he was qualified for the job and
performing according to the legitimate expectations of the
employer, (3) that he was adversely affected by an employment
decision, (4) and that others, who are not within the protected
class, were treated more favorably."6 The superior court
concluded that Haroldsen had met this burden.
Swanson's argues that this formulation of the prima
facie case is incorrect. Relying on Barnes v. GenCorp Inc., 896
F.2d 1457, 1465 (6th Cir. 1990), Swanson's contends that an
inference of discrimination is raised only where the discharged
employee demonstrates that he is more qualified than a retained
employee who is not within the protected class. Because
Haroldsen's evidence at best showed "[Taveres] was more skilled
in certain areas and [Haroldsen] was more skilled than [Taveres]
in other areas," he failed to demonstrate a prima facie case.7
We reject the Barnes formulation because it
misconstrues the purpose of the prima facie case. The U.S.
Supreme Court has stated in the context of a hiring
discrimination case that the prima facie case is meant to require
the alleged discriminatee [to] demonstrate at
least that his rejection did not result from
the two most common legitimate reasons on
which an employer might rely to reject a job
applicant: an absolute or relative lack of
qualifications or the absence of a vacancy in
the job sought.
International Brotherhood of Teamsters v. United States, 431 U.S.
324, 358 n.44 (1977). In Barnes, the court reasoned that this
rationale is inapplicable in work force reduction cases because
the employer had a legitimate reason: the elimination of excess
employees which necessarily reduces costs. 896 F.2d at 1464-65.
However, this still leaves unexplained why the employer chose one
employee rather than another, and it is here that the potential
discrimination lies.8 The employer is required at the second
step of the analysis to rebut the presumption by stating the
permissible, objective criteria which led to the decision to
terminate the plaintiff rather than another employee. By cutting
the analysis off before such an inquiry, the court never gets to
determine whether such criteria exist.
Additionally, although the U.S. Supreme Court
recognized in McDonnell Douglas Corp. that the prima facie case
will vary with the factual circumstances of the particular case,
411 U.S. at 802 n.13, the formulation used by the superior court
is closer to the test adopted by this court in other cases under
Alaska's Civil Rights Statute. For example, in Yellow Cab, a
case involving hiring discrimination, this court held that a
prima facie case was demonstrated if after the plaintiff's
rejection "the position remained open and the employer continued
to seek applications from persons of complainant's
qualifications." 611 P.2d at 490 (quoting McDonnell Douglas
Corp., 411 U.S. at 802) (emphasis added).
C. Swanson's Stated Rationale
Swanson's gave five business justifications for
terminating Haroldsen rather than Taveres: (1) poor work
performance; (2) damage to employee morale resulting from Tubbs'
favoritism; (3) a reduction in force (RIF); (4) absenteeism and
tardiness; and (5) theft. These reasons were all amply supported
by affidavits provided by Swanson's.
D. Pretext
The U.S. Supreme Court adopted the three-part analysis
for Title VII cases because it is usually impossible for an
employee to directly prove that the employer acted with a
discriminatory intent.9 Instead, the employee is allowed to
prove such animus inferentially by challenging the employer's
stated justifications for taking the adverse action. Thus, once
the employee has established a prima facie case, the proper
inquiry for the trial court at summary judgment is not "Has the
employer stated a justifiable reason for terminating the
employee?" Rather, it is "Has the employee raised sufficient
doubts regarding the employer's stated justifications to permit a
reasonable jury to infer that the reasons given are pretextual?"10
1. Reduction in Force
The superior court determined that Haroldsen failed to
provide sufficient evidence to create a genuine issue of material
fact that Swanson's alleged RIF was a pretext for unlawful
discrimination. Thus, even though he had provided affidavits to
raise a genuine issue of material fact with respect to the other
reasons, Haroldsen had failed to meet his burden to avoid summary
judgment.11
The problem with the superior court's reasoning is that
the decision of who to terminate, Haroldsen or Taveres, was
inextricably bound to the other justifications for which the
superior court found that Haroldsen had demonstrated there was a
material factual dispute. In his affidavit, Myran justified the
decision to terminate Haroldsen rather than Taveres not only by
making factual allegations distinguishing between their relative
abilities, but also by discussing Haroldsen's alleged tardiness,
poor work performance, and thievery. If, as the superior court
held, a jury could find that these reasons were pretextual, then
even if Taveres was more qualified, the jury would be free to
conclude that Myran was motivated by racial animus in making the
decision to terminate him rather than Taveres.12
The other evidence before the court also supports this
conclusion. Haroldsen submitted affidavits from two other ex-
employees of Swanson's regarding alleged racist remarks made by
Myran.13 Swanson's failed to provide any evidence that Haroldsen
was at any time warned or reprimanded prior to his firing, even
after Myran took over as sole general manager. The fact that
Tavares was rehired shortly before Haroldsen was laid off and
that both Tavares and Panko left Swanson's shortly thereafter
raises a question as to whether a reduction in force even
occurred. Finally, Haroldsen provided evidence that his
performance was satisfactory.14 Viewing this evidence in the
light most favorable to Haroldsen, a reasonable jury could
conclude that Swanson's stated reasons were pretextual. We
therefore conclude that summary judgment on this issue was
improper.
2. The Other Reasons Alleged by Swanson's
Finally, we briefly address Swanson's arguments that
summary judgment should be upheld because the trial court erred
in finding Haroldsen had raised a material issue of fact with
respect to its other justifications for firing him. This
discussion will also serve to clarify the parties' respective
burdens of proof at trial.
First, with respect to Haroldsen's work performance,
Swanson's argues that the relevant issue is not the actual
quality of the employee's performance, but rather whether the
employer is sincere in stating that performance is the reason for
the termination.15 Thus, because the only evidence Haroldsen
provided was his personal opinion of his own performance, he
failed to demonstrate that Swanson's reason was pretextual.
This argument is in part correct. The ultimate issue
in any employment discrimination case is whether racial animus
motivated the employer in making its employment decision. Thus,
if an employer can show that it subjectively believed it had a
legal justification, and that it was acting solely on this
belief, an employee's racial discrimination claim must fail.
However, this does not mean that objective evidence regarding the
justification is irrelevant, or even secondary. An individual's
testimony regarding their intent or motivation is not always
reliable, especially where the individual is a party to the
litigation. One of the primary means for the fact-finder to
verify a party's testimony regarding their intent is to examine
the objective evidence that supports that party's conclusion.
This is especially true on summary judgment where there is no
opportunity to observe the witness testifying. If the objective
evidence is such that it does not support the stated
justification, a reasonable jury could conclude that the party's
intent was other than they have testified, and summary judgment
would therefore be improper.
Swanson's also argues that Haroldsen's self-interested
assessment of his own qualifications is irrelevant. It is true
that an employee should not be permitted to create their own job
description in such a manner as to show they are qualified.
However, where as here, there is no pre-existing job description
against which to objectively measure an employee's
qualifications, the scope of relevant evidence must necessarily
be broader.16 Thus, we conclude that in such a case an employee
can avoid summary judgment with his own affidavit if he avers
specific facts which would tend to show that he was qualified to
do the work which he was assigned to do.17
After reviewing the evidence, we conclude that the
superior court properly found that Haroldsen had raised genuine
issues of material fact with respect to the other justifications.18
III. CONCLUSION
We conclude that summary judgment was improper because
Kenneth Haroldsen raised an issue of material fact as to whether
Swanson's stated reasons for terminating his employment were
pretextual. We therefore REVERSE the superior court's entry of
summary judgment in favor of Swanson's and REMAND for further
proceedings.19 Because Swanson's is no longer the prevailing
party, the award of attorney's fees is VACATED.
_______________________________
1 Swanson's is owned and operated by defendant OMNI
Enterprises, Inc.
2 The circumstances surrounding his transfer are in
dispute. Swanson's contends that Haroldsen was transferred by
his father-in-law, Don Tubbs, who at the time was co-manager of
the store. Haroldsen contends that Jim Panko, head of the
maintenance department, requested that Haroldsen be transferred,
and that he was then offered the job.
3 Myran states that Swanson's did not rehire Haroldsen
because of the other problems which it alleged justified its
firing of Haroldsen.
4 The superior court also dismissed Haroldsen's evidence
regarding racial remarks which Myran allegedly made because
Haroldsen had failed to link these comments to the disputed
personnel decision.
5 This court reviews a grant of summary judgment using
its independent judgment. The "court must determine whether any
genuine issue of material fact exists and whether the moving
party is entitled to judgment on the law applicable to the
established facts. All reasonable inferences of fact from
proffered materials must be drawn against the moving party and in
favor of the non-moving party." Wright v. State, 824 P.2d 718,
720 (Alaska 1992) (citation omitted).
6 The superior court cited Williams v. Williams
Electronics, Inc., 856 F.2d 920, 922-23 (7th Cir. 1988), and
Thornbrough v. Columbus and Greenville R.R., 760 F.2d 633, 641-45
(5th Cir. 1985).
7 We note that Swanson's unnecessarily limits the concept
of "qualification" to job skill. The trial court may consider
any factor an employer would consider in evaluating the job
performance of its employees. Thus, where, as here, there are
serious questions regarding the reliability of the retained
employee, and the same concerns do not exist with regard to the
terminated employee, the question is raised: "Why did the
employer choose to retain this employee rather than the employee
in the protected class?" This is precisely the question which
the prima facie case is meant to raise.
8 See, e.g., Thornbrough, 760 F.2d at 644 ("If we focus
not on why employees, in general, were discharged, . . . but
instead on why the plaintiff rather than another employee was
discharged, the discharge of an older employee rather than a
younger one is initially unexplained. Under these circumstances,
requiring the employer to articulate reasons for his decision to
fire the plaintiff is appropriate. It serves the primary
function of the prima facie case doctrine: `to sharpen the
inquiry into the elusive factual question of intentional
discrimination.'").
9 See United States Postal Service Bd. of Governors v.
Aikens, 460 U.S. 711, 716 (1983) ("There will seldom be
`eyewitness' testimony as to the employer's mental processes.").
10 See Hairston v. Gainesville Sun Publishing Co., 9 F.3d
913, 921 (11th Cir. 1993) ("plaintiff's burden at summary
judgment is met by introducing evidence that could form the basis
for a finding of facts, which when taken in the light most
favorable to the non-moving party, could allow a jury to find by
a preponderance of the evidence that the plaintiff has
established pretext").
11 Haroldsen argues first that as a general rule, summary
judgment is an inappropriate means to resolve issues of intent.
Because racial discrimination cases go directly to the question
of intent, summary judgment should not have been granted in the
present case.
We have previously stated that even where intent is an
issue summary judgment may be proper in certain cases. See
Turnbull v. LaRose, 702 P.2d 1331, 1335 (Alaska 1985).
Therefore, we choose not to adopt a per se rule barring summary
judgment in all employment discrimination cases. However, we
have also noted that summary judgment should only be granted in
clear cases because, generally, "the fact finder should be given
the opportunity to observe the demeanor of the witnesses whose
states of mind are at issue." Id.; see also Jones v. Central
Peninsula Gen. Hosp., 779 P.2d 783, 789 (Alaska 1989). Other
courts addressing this issue in the context of employment
discrimination have also noted that summary judgment is often
inappropriate to resolve issues of the existence of
discriminatory intent. See, e.g., Yartzoff v. Thomas, 809 F.2d
1371, 1377 (9th Cir. 1987) ("a grant of summary judgment, though
appropriate when evidence of discriminatory intent is totally
lacking is generally unsuitable in Title VII cases in which the
plaintiff has established a prima facie case because of the
`elusive factual question' of intentional discrimination");
E.E.O.C. v. Southwest Texas Methodist Hosp., 606 F.2d 63, 65 (5th
Cir. 1979).
12 Our statute bars employment decisions based on both
racial animus and other legitimate considerations. See Price
Waterhouse v. Hopkins, 490 U.S. 228, 241 (1989) ("Title VII meant
to condemn even those decisions based on a mixture of legitimate
and illegitimate considerations.").
13 Swanson's argues that these statements are not
sufficient evidence on their own to survive summary judgment
because they are not directly related to the employment decision
at issue. See Cariddi v. Kansas City Chiefs Football Club, Inc.,
568 F.2d 87, 88 (8th Cir. 1977); Crader v. Concordia College, 724
F. Supp. 558, 564 (N.D. Ill. 1989). However, precedent on this
issue is mixed and we need not resolve this issue. At the very
least, this was competent and relevant evidence which a jury
would be entitled to evaluate in determining the likelihood that
the reasons given by Swanson's were pretextual. See E.E.O.C. v.
Beverage Canners, Inc., 897 F.2d 1067, 1071 n.9 (11th Cir. 1990).
14 Swanson's admitted in its answer to Haroldsen's
complaint that he had never been denied a raise which he had
requested. Additionally, Don Tubbs, the former general manager,
affied that while Haroldsen managed the furniture department,
gross profits increased and that the operations manager of
Swanson's parent company had told him that he was impressed with
Haroldsen's job performance. Finally, with respect to his work
in the maintenance department, Tubbs affied that Haroldsen
successfully fixed a heating system which Panko had been unable
to fix, and that Haroldsen was often left alone in the department
when Panko's job forced him to travel to other stores. While
Tubbs' relationship with Haroldsen suggests that he might have a
motive to lie or to exaggerate, such credibility determinations
are for the trier of fact.
15 See Branson v. Price River Coal Co., 853 F.2d 768, 772
(10th Cir. 1988).
16 Otherwise, Swanson's own arguments with regard to
Haroldsen would apply equally to them. That is, Swanson's would
be free to make up a job description which Haroldsen did not
meet, and then on summary judgment simply state he was not
qualified.
17 For example, with respect to work performance,
Haroldsen provided the following evidence: (1) that he was often
called upon to work alone in the department for long periods; (2)
that an OMNI executive had complimented his work as furniture
department manager; (3) that he was able to repair the heating
system at one of Swanson's other properties; and (4) that Tubbs
stated that all of the jobs which he saw Haroldsen do were done
well.
18 Based on his complaint, Haroldsen's claim with respect
to the implied covenant of good faith and fair dealing is
premised on the same basic factual allegations as his racial
discrimination claim. Because we reverse summary judgment on the
statutory claim, we also conclude that reversal is appropriate on
the contract claim to allow Haroldsen to more clearly articulate
the contours of his breach of contract claim.
19 Our disposition of the summary judgment issue in favor
of Haroldsen makes it unnecessary for us to consider the other
issues he raises on appeal. The question of whether the superior
court improperly struck the additional evidence offered with
Haroldsen's motion for rehearing is moot.