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Alaska Housing Finance Corp. v. Salvucci (12/19/97), 950 P 2d 1116
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
ALASKA HOUSING FINANCE )
CORPORATION, ) Supreme Court No. S-7220
Appellant, ) Superior Court No.
) 3AN-94-204 CI
) O P I N I O N
PAT SALVUCCI, )
) [No. 4917 - December 19, 1997]
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Milton M. Souter, Judge.
Appearances: Thomas P. Owens, Jr., and Scott
J. Nordstrand, Owens & Turner, P.C., Anchorage, for Appellant.
Jeffrey A. Friedman and Richard H. Friedman, Friedman, Rubin &
White, for Appellee.
Before: Compton, Chief Justice, Rabinowitz,
Matthews, Eastaugh, and Fabe, Justices.
COMPTON, Chief Justice, with whom RABINOWITZ,
Justice, joins, concurring.
This is an appeal by the Alaska Housing Finance
Corporation (AHFC) from certain rulings of the superior court in
favor of former AHFC employee Pat Salvucci. The superior court
directed a verdict for Salvucci on his breach of contract claim,
ruled that AHFC's termination of Salvucci gave rise to a claim
under the Alaska Whistleblower Act, and held that AHFC was not
immune from punitive damages under the Act. The jury found AHFC in
violation of the Whistleblower Act and awarded Salvucci
compensatory and punitive damages. Salvucci also was granted
prejudgment interest on lost past and future wages and benefits as
well as on punitive damages. We remand the award of prejudgment
interest on lost past and future wages and benefits, reverse the
award of punitive damages, and affirm in all other respects.
II. FACTS AND PROCEEDINGS
In 1989 Salvucci was hired by AHFC as its Internal
Auditor. At the time of his hire, Salvucci signed a letter stating
that his "employment [at AHFC] is at all times subject to AHFC
Personnel Rules and any future amendments to those rules." The
Personnel Rules divided employees into two groups, the "Regular"
and "Executive"Service. Personnel Rule, Section 2.01.0. While
the former could be terminated only for cause and only following a
disciplinary procedure, the latter could be terminated at will by
the Executive Director. All Regular Service employees received
contractual employment protection, set forth in Rules 4, 11 and 13;
[Fn. 1] only Executive Service employees did not receive the pro-
tection afforded by these rules.
The Executive Service became a part of AHFC Personnel
Rules in August 1989 when AHFC's Board of Directors adopted
Personnel Rule 2, Section 2.03.03. One of the positions designated
Executive Service by Section 2.03.03 was the Internal Auditor
position. [Fn. 2] Regular Service was defined as "positions within
the Corporation that are not in the executive service."
The AHFC's Audit Charter, authored by Salvucci and
adopted in June 1990, defined the duties and role of the Internal
Auditor. The Charter set forth the reporting procedure, specific-
ally that the Internal Auditor reported administratively to the
chief executive officer and functionally to the Audit Committee of
the Board of Directors. Further, it mandated that the Internal
Auditor's removal required the concurrence of the Audit Committee.
In 1992 AHFC Personnel Rule 2.03.03 was amended. The
amended rule shortened the list of Executive Service positions and
omitted the Internal Auditor position from the list of positions in
the Executive Service. [Fn. 3] The definition of Regular Service
was not changed.
In July 1993 Will Gay became AHFC's Executive Director.
In November Gay placed Salvucci on administrative leave, subject to
an approval vote by the Audit Committee. In December the Audit
Committee concurred in Gay's decision and Salvucci's employment was
terminated. Salvucci was not given any reason for his termination
and was not afforded a prior disciplinary process, as required for
the termination of Regular Service employees. [Fn. 4]
Salvucci filed a grievance, pursuant to Personnel Rule
13. AHFC refused to consider his grievance and also declined to
consider his appeal of the grievance refusal, both instances on the
ground that the Personnel Rules were inapplicable to the position
of Internal Auditor.
After the denial of his internal remedies, Salvucci filed
a complaint in superior court alleging breach of contract, breach
of the implied covenant of good faith and fair dealing, due process
violations, and violation of the Whistleblower Act.
The superior court denied AHFC's motions for summary
judgment on Salvucci's claim for punitive damages and on his
Whistleblower claim. The court granted a directed verdict for
Salvucci on his breach of contract claim, [Fn. 5] finding that the
1992 amendment removed the Internal Auditor position from the
Executive Service, placing the Internal Auditor within the Regular
Service, with its accompanying contractual protections.
The jury found that AHFC violated the Whistleblower Act.
It awarded Salvucci $43,200 in lost past wages and benefits,
$144,234 in lost future wages and benefits, and $500,000 in
punitive damages. The superior court awarded Salvucci prejudgment
interest on his wage and benefit award and on his punitive damage
award, for a total of $62,493.30 in prejudgment interest. The
court did not specify what amount of prejudgment interest was
awarded for wages and benefits, and what amount of prejudgment
interest was awarded for punitive damages.
III. STANDARD OF REVIEW
Interpretation of a contract is a question of law on
which this court substitutes its own judgment. Aviation
Associates, Ltd. v. Temsco Helicopters, Inc., 881 P.2d 1127, 1130
n.4 (Alaska 1994); Alaska Energy Auth. v. Fairmont Ins. Co., 845
P.2d 420, 421 (Alaska 1993). The court reviews the superior
court's decision to grant a directed verdict in the light most
favorable to the non-moving party, and affirms only if a reasonable
fact finder could not reach a different conclusion. Barber v.
National Bank of Alaska, 815 P.2d 857, 860 (Alaska 1991).
The remaining issues in this case are matters of
statutory interpretation. This court applies its independent
judgment to questions of statutory interpretation. Sauve v.
Winfree, 907 P.2d 7, 9 (Alaska 1995).
A. The Breach of Contract Claim
Contract interpretation generally is the purview of the
trial court; the jury interprets the contract only in those cases
where the court determines that the contract language is ambiguous
as to the parties' intent. Keffer v. Keffer, 852 P.2d 394, 397
(Alaska 1993); Day v. A & G Constr. Co., 528 P.2d 440, 443 (Alaska
1974). In determining whether the contract language is ambiguous,
the court takes into account circumstances existing at the time the
contract was made. Stepanov v. Homer Elec. Ass'n, 814 P.2d 731,
734 (Alaska 1991).
AHFC contends that the superior court improperly granted
a directed verdict for Salvucci on the breach of contract claim.
AHFC argues that evidence presented at trial allowed a reasonable
jury to conclude either that the Internal Auditor position was
never removed from the Executive Service or that the Internal
Auditor position enjoyed a unique classification falling outside
either the Regular or Executive Service. AHFC argues that the
Internal Auditor was a "corporation director"within the meaning of
amended Rule 2, Section 2.03.03. It argues in the alternative
that, by requiring the Audit Committee to concur in the removal of
the Internal Auditor, the Audit Charter created a unique category
of employment for the Internal Auditor; it was neither Executive
Service (permitting removal by the Executive Director at will) nor
Regular Service (permitting removal only for cause and after a
series of contractual protections for the employee is implemented).
At the time the Audit Charter was passed, the Internal
Auditor was an Executive Service position. The Charter did not
refer to or alter the Service categorization of the Internal
Auditor; rather it created a distinct process of reporting and
removal for the Internal Auditor. Pursuant to the Charter, the
Executive Director did not have sole discretion to appoint or
remove the auditor; any such action required the concurrence of the
Board of Director's Audit Committee.
In 1991 Barry Hulin, then Executive Director, proposed
amending the Personnel Rules to narrow the categories of positions
in the Executive Service. The proposal removed the Internal
Auditor from the Executive Service. In presenting the proposal to
the Board of Directors, Hulin specifically stated that the
amendment took the Internal Auditor out of the Executive Service.
Hulin also specifically informed the Board that those persons not
in the Executive Service are subject to termination only for a
"performance-related cause"and cannot be terminated before
receiving "progressive discipline"in accordance with contractual
employment protections. In 1992 the amendment was adopted.
All parties agree that the terms of Salvucci's employment
contract are governed by his employment letter, the Audit Charter
and the Personnel Rules. The text of Section 2.03.03 before and
after the amendment makes evident that the Internal Auditor
position was included in the Executive Service before the amendment
and excluded once the section was amended. Hulin's testimony
confirms that one intention of the amendment was to remove the
Internal Auditor from the Executive Service, and further confirms
that the Board was informed of this intent before it approved the
amendment. The record shows that AHFC's Deputy Executive Director
and AHFC's Personnel Director were also aware that one purpose of
the amendment was to remove the Internal Auditor from the Executive
We have held that when the provisions of a personnel
manual create reasonable expectations that employees have been
granted certain rights, the employer is bound by the represent-
ations contained in those provisions. Parker v. Mat-Su Council on
Prevention of Alcoholism and Drug Abuse, 813 P.2d 665, 666 (Alaska
1991). Similar reasoning applies in this case. AHFC created a
reasonable expectation that Salvucci was granted the rights of
Regular Service employees after the 1992 amendment.
The employment letter required Salvucci to sign a
statement that the Personnel Rules and any subsequent amendments to
those rules governed the terms and conditions of his employment.
When the Personnel Rules were amended in 1992 to delete the
Internal Auditor from the list of Executive Service, Salvucci was
bound to accept the amendment and the accompanying obligations or
rights imposed by the Personnel Rules. Hulin informed Salvucci
that the rules had been changed to remove him from the Executive
Service. Salvucci read the transcript of the Board meeting at
which the Board was told it was being asked to remove the Internal
Auditor from the Executive Service.
As Salvucci reasonably believed that he was a Regular
Service employee after the amendment, and as the superior court's
analysis of the contract turns largely on his reasonable
expectation, testimony at trial by Gay and DeSpain that they
believed that Salvucci did not have the protections of a Regular
Service employee is immaterial.
Based on the binding nature of the employment letter, the
clear text of Section 2.03.03 before and after amendment, the
absence of any language in the Audit Charter creating a category
other than Executive or Regular Service for the Internal Auditor,
Hulin's statements of intent to remove the Internal Auditor from
the Executive Service to the Board before its passage of the
amendment, and Salvucci's reasonable expectations, we hold that in
1993, at the time Salvucci was terminated, the Internal Auditor
position was in the Regular Service.
It is undisputed that in November 1993 Gay informed Sal-
vucci that Salvucci would be placed on administrative leave and,
subject to approval by the Audit Committee, would be terminated.
It is further undisputed that Salvucci was not given any reason by
Gay or the Audit Committee for his termination, and that he was not
afforded the protection of progressive disciplinary procedures.
Given AHFC's failure to afford Salvucci the contractual protections
due Regular Service employees, we hold that the superior court
correctly directed a verdict in favor of Salvucci on his breach of
B. The Whistleblower Act
The Alaska Whistleblower Act (the Act), AS 39.90.100-
.150, protects public employees who report to public bodies on
matters of public concern from retaliation by their employers.
AHFC contends that the superior court improperly denied AHFC's
summary judgment motion seeking dismissal of the Whistleblower
claim because AHFC is not a "public body"within the meaning of the
Act. AHFC also argues that the superior court improperly denied
AHFC's summary judgment motion on punitive damages. AHFC argues
that the Alaska Whistleblower Act does not provide statutory
authority for punitive damages against the State. [Fn. 6]
In interpreting any statute, "our primary guide is the
language used, construed in light of the purpose of the enactment."
Commercial Fisheries Entry Comm'n v. Apokedak, 680 P.2d 486, 489-90
(Alaska 1984). "[U]nless words have acquired a peculiar meaning,
by virtue of statutory definition or judicial construction, they
are to be construed in accordance with their common usage." Tesoro
Alaska Petroleum Co. v. Kenai Pipe Line Co., 746 P.2d 896, 905
This court applies a "sliding scale approach"toward
statutory interpretation. Peninsula Marketing Ass'n v. State, 817
P.2d 917, 922 (Alaska 1991). "Under the sliding scale approach,
the plainer the language of the statute, the more convincing
contrary legislative history must be." Marlow v. Municipality of
Anchorage, 889 P.2d 599, 602 (Alaska 1995).
1. The protection of internal memoranda
The Alaska Whistleblower Act provides in part:
(a) A public employer may not discharge,
threaten, or otherwise discriminate against an employee regarding
the employee's compensation, terms, conditions, location, or privi-
leges of employment because
(1) the employee, or a person acting on
behalf of the employee, reports to a public body or is about to
report to a public body a matter of public concern.
AHFC concedes for the purposes of this appeal that
Salvucci meets all elements required to bring a claim under the
Alaska Whistleblower Act except the requirement to report to a
"public body."[Fn. 7] Although AHFC states that "[o]n its face,
the statutory definition of 'public body' includes AHFC,"AHFC
argues that the Alaska Legislature, in passing the Alaska
Whistleblower Act, did not intend for the reporting of a matter of
public concern to one's own employer to give rise to protection
under the Act.
We agree that, on its face, the statutory definition of
"public body"includes AHFC. We now turn to AHFC's arguments that
the legislative history and a coexisting statute, AS 39.90.110(c),
show that the Legislature did not intend for "public body"to
include the reporting person's employer. Alaska Statute
As part of its written personnel policy, a
public employer may require that, before an employee initiates a
report on a matter of public concern under AS 39.90.100, the
employee shall submit a written report concerning the matter to the
AHFC maintains that this statute establishes that a written report
to an employer and a report protected under the Alaska
Whistleblower Act are two distinct reports, with distinct legal
In support of its position, AHFC cites testimony from
David Otto, Director of the State Division of Personnel, before the
House State Affairs Committee regarding House Bill 91, the
legislation that became the Alaska Whistleblower Act. Specific-
ally, Otto noted that the department's primary concern was the lack
of equal rights for employers in HB 91, including his belief that
management would want a chance to correct any adverse situation
noted by an employee before the situation was brought to the
public's attention. In response to this concern, the Legislature
amended HB 91 to include language that was the precursor to AS
Nothing in AS 39.90.110(c) or its legislative history
indicates that a written report to a State employer is not a report
to a public body within the meaning of the Act. AHFC presented no
evidence that the Legislature intended a report under AS
39.90.110(c) to go unprotected. The legislative history indicates
only that the purpose of AS 39.90.110(c) was to give the employer
an opportunity to correct any problems identified by the employee.
It serves the public interest to allow the employer a first
opportunity to take remedial action because the employer is the
body most likely to be in a position to address or cure
AHFC's view would leave any State employee reporting
impermissible conduct to the State (such as the Attorney General's
Office, the Legislature or the Human Rights Commission) without
protection from retaliation. A failure to protect such reporting
is likely to result in fewer complaints regarding impermissible
activity by the State. This result could pose a distinct threat to
the public good.
In Appeal of Bio Energy Corporation, 607 A.2d 606 (N.H.
1992), the New Hampshire Supreme Court found, after employer Bio
Energy presented an argument similar to that argued by AHFC, that
the New Hampshire Whistleblower Act covered internal reports by
State employees to their employer. New Hampshire's Whistleblower
Act is comparable to Alaska's Whistleblower Act in substance; it
protects employees who report violations of the law and includes a
provision, Paragraph II of RSA 275-E:2, requiring that the employee
make an internal report of the alleged violation. Id. at 608. The
Bio Energy court stated:
We cannot accept Bio Energy's argument
that the legislature intended that paragraph II of the Act
[comparable to AS 39.90.110(c)] require a further report to a third
party. Under Bio Energy's interpretation of the Act, employers
would be able to retain the benefit of notification, while avoiding
the burdens imposed if the employee were discharged because of his
or her notification to the employer. Such an interpretation would
thwart the Act's primary purpose of encouraging employees to report
their employers' violations of law.
. . . .
. . . The interpretation argued by Bio
Energy undermines the deterrent effect of the Act; a reading of the
statute that required a second report would leave employees . . .
unprotected, despite the statute's clear intent to protect such
employees from wrongful discharge.
Id. at 608-09.
We agree with the Bio Energy court's reasoning. Alaska's
Whistleblower Act protects reports made to State employers. SeePogue v. United States Dep't of Labor, 940 F.2d 1287, 1290 n.2 (9th
Cir. 1991) (finding that an internal complaint constitutes
whistleblowing under federal anti-retaliation law). The purpose of
the Act is undermined by an interpretation that allows an employer
to mandate that an employee report first to the employer, but
provides the employee no protection for such reporting. We
therefore hold that the superior court properly denied AHFC's
summary judgment as to Salvucci's claim under the Whistleblower
2. Punitive damages against the State
AHFC argues that the Whistleblower Act does not authorize
an award of punitive damages against the State or its
instrumentalities. AHFC claims that the language in AS
39.90.120(a), "including punitive damages,"does not create a
statutory exception to the State's immunity from punitive damage
awards. We agree.
We reach our conclusion on the basis of two reasons.
First, a presumption exists based on sound public policy which
disfavors punitive damage awards against the State. Under the
presumption, punitive damages against the State may not be awarded
unless there is express and specific statutory authorization. The
Whistleblower Act does not expressly and specifically authorize a
punitive damage award against the State and therefore punitive
damages may not be awarded. Second, the legislative history of the
Whistleblower Act clearly shows that punitive damages were written
into the Act to ensure that punitive damage awards would be
available against individual, not governmental, defendants.
a. The presumption disfavoring punitive damages
governs this case.
Alaska is among the "overwhelming majority of jurisdic-
tions"which endorses the rule that punitive damages may not be
awarded against governmental entities in the absence of explicit
statutory authorization. See Benjamin W. Baldwin, Jackson v.
Housing Authority: The Availability of Punitive Damages in Wrongful
Death Actions Against Municipal Corporations, 65 N.C. L. Rev. 1441,
1447 n.55 (1987). No decision of this court has ever authorized an
award of punitive damages against a public entity. [Fn. 8]
Alaska's general tort claims act specifically excludes awards of
punitive damages against the State. AS 09.50.280. Further,
Salvucci acknowledges that except for the Whistleblower Act,
"public entities [are] not liable for punitive damages in any type
of lawsuit"in the state of Alaska.
The policy reasons underlying the presumption disfavoring
punitive awards against public entities, and the fact that such
awards have not been permitted, are clear. We referred to these
reasons in Hazen v. Municipality of Anchorage, 718 P.2d 456, 465-66
(Alaska 1986), and they were explained in greater detail by the
United States Supreme Court in City of Newport v. Fact Concerts,
Inc., 453 U.S. 247 (1981). We summarize them here.
First, punitive damages are not intended to compensate
the victim of a wrongful act. They are over and above full
compensation and thus are, from the plaintiff's standpoint, a
windfall. Lundquist v. Lundquist, 923 P.2d 42, 50 (Alaska 1996).
Punitive damages are therefore not awarded because of the wronged
victim's needs. Instead, punitive damages are imposed to punish
malicious wrongdoers and to deter future malicious wrongs. Hazen,
718 P.2d at 465-66; Fact Concerts, 453 U.S. at 266-67.
As we observed in Hazen, punishing government punishes
the governed, not the malicious official:
An award of punitive damages against a
[government entity] will only "punish"the innocent taxpayers, the
group which is supposed to benefit from the public example set by
a punitive damages award. Further, since a [government entity] can
have no malice independent of the malice of its officials, damages
awarded in order to punish are not sensibly assessed against the
[government entity] itself.
Id. at 465 (citations omitted). Likewise, the deterrence rationale
is not well served by an award of punitive damages against a
government entity. If a government official who has acted
maliciously is to be deterred by a punitive damage award, an award
against the official, rather than against the government, will
better serve that end. As the court observed in Fact Concerts:
[T]here is available a more effective means of
deterrence. By allowing juries and courts to assess punitive
damages in appropriate circumstances against the offending
official, based on his personal financial resources, the statute
directly advances the public's interest in preventing repeated
constitutional deprivations. In our view, this provides sufficient
protection against the prospect that a public official may commit
recurrent constitutional violations by reason of his office. The
Court previously has found, with respect to such violations, that
a damage remedy recoverable against individuals is more effective
as a deterrent than the threat of damages against a government
Id. at 269-70 (footnote omitted). Finally, as we observed in
Hazen, the responsiveness of our democratic institutions makes
punitive damage awards against governments unnecessary:
[P]rotection against future misconduct [on the
part of a governmental official] can be obtained without resorting
to punitive damage awards which the public will have to foot:
It is assumed that public officials
will do their duty, and if discipline of a wrongdoing municipal
employee is indicated, appropriate measures are available through
the electorate, or by superior officials responsible to the
Id. at 465-66 (quoting Ranells v. City of Cleveland, 321 N.E.2d
885, 888 (Ohio 1975)).
In short, there are a combination of reasons why punitive
damage awards against governments are disfavored: punitive damages
are not needed to compensate victims; the punishment rationale does
not make sense when applied to government; and deterrence of future
misconduct is better accomplished by other means, including
personal awards of punitive damages against individual wrongdoers.
Still, the presumption disfavoring awards of punitive
damages against governmental entities can be overridden by "express
and specific statutory authority." Johnson v. Alaska State Dep't
of Fish & Game, 836 P.2d 896, 906 (Alaska 1991). Thus, the
question here is whether the Whistleblower Act expressly and spec-
ifically authorizes an award of punitive damages against a public
The structure of the Whistleblower Act is as follows.
Alaska Statute 39.90.100(a) expresses the substantive command:
A public employer may not discharge,
threaten, or otherwise discriminate against an employee regarding
the employee's compensation, terms, conditions, location, or privi-
leges of employment because . . . [e.g., the employee has disclosed
matters of public concern].
Alaska Statute 39.90.120 sets out the remedies for violations. It
(a) A person who alleges a violation of
AS 39.90.100 may bring a civil action and the court may grant
appropriate relief, including punitive damages.
(b) A person who violates or attempts to
violate AS 39.90.100 is also liable for a civil fine of not more
than $10,000. The attorney general may enforce this subsection.
(c) A person who attempts to prevent
another person from making a report or participating in a matter
under AS 39.90.100(a) with intent to impede or prevent a public
inquiry on the matter is liable for a civil fine of not more than
Subsection .120(a) authorizes a person who alleges a
violation of section .100 to bring a civil action, and it
authorizes the court in which the action is brought to "grant
appropriate relief, including punitive damages." Subsection (a)
does not, however, specify the defendants against whom the civil
action may be brought. It is logical to suppose that any person or
entity which is capable of violating or attempting to violate
section .100 may be a defendant under subsection (a) of section
.120. Subsection .120(b) recognizes that individuals -- that is,
individual government employees -- are capable of violating or
attempting to violate section .100. [Fn. 9] It follows that the
defendants who may be sued under subsection .120(a) include
individuals as well as public employers. Further, this conclusion
is implied by the text of subsection .120(b), which states that "a
person who violates . . . [section .100] is also liable for a civil
fine . . . ." The word "also"implies that the person described is
also liable under subsection .120(a).
With this in mind the question whether the statute
expressly and specifically authorizes punitive damage awards
against public employers comes into perspective. The statute
authorizes actions against public employers and individuals. It
says that appropriate relief may be granted, including punitive
damages. It does not say that punitive damages are "appropriate"
in actions against public employers. Does it then expressly and
specifically authorize punitive damage awards against public
The answer is "no." Instead of being express and
specific as to whether punitive damages can be awarded against
public employers, the statute is noncommittal and ambiguous on this
point. Given that the statute is neither express nor specific, the
inquiry can end. The presumption disfavoring punitive damage
awards against public entities governs, dictating the conclusion
that no award of punitive damages is available against public
entities under the Act.
b. Legislative history shows that reference to
punitive damages was added to the Act because of concern that such
damages would not be available in actions against private
AHFC also relies on legislative history to support its
argument that the punitive damage language was added only to
guarantee that private individuals could be liable for punitive
damages under the Act. As initially drafted, the bill which became
the Whistleblower Act contained no mention of punitive damages.
There was a period after the phrase "may grant appropriate relief"
in AS 39.90.120(a). See Committee Substitute for House Bill
(C.S.H.B.) 91, 16th Leg., 1st Sess. (1989); House Bill (H.B.) 91,
16 Leg., 1st Sess. (1989). If the Act had been enacted in that
form, it would have been clear that punitive damage awards against
public employers would not be available. The bill was amended and
authority to award punitive damages was added. However, the legis-
lative history shows that this amendment was made not to authorize
punitive damage awards against public employers, but to ensure that
individual defendants would not be immune from punitive damages
because of the civil fine provisions of subsections (b) and (c).
The deliberations of the legislative committee which
considered the bill are tape recorded. The tapes of the
deliberations make clear the intent of the sponsor of the amendment
which added the reference to punitive damages. [Fn. 10] The
concern of the sponsor was that the provision for civil fines
against individual defendants in subsections .120(b) and (c) might
be construed to exclude awards of punitive damages. In order to
foreclose such an argument, the phrase "including punitive damages"
was added to subsection .120(a). [Fn. 11] Since civil fines are
only available against individual defendants, reference to punitive
damages was added to subsection (a) for a reason unique to actions
against individual defendants. The legislative history on the
amendment is comprehensive and shows no other purpose for the
amendment. [Fn. 12] It therefore seems incontestable that the
amendment was not added to authorize punitive damage awards against
In conclusion, AS 39.90.120(a) does not expressly and
specifically authorize awards of punitive damages against govern-
ment entities. The text of the statute is ambiguous as to whether
such damages were meant to be authorized against such defendants.
The presumption disfavoring punitive damage awards against govern-
ment entities therefore applies and the statute will not be
construed as authorizing such awards. Moreover, the legislative
history of the amendment which added reference to punitive damages
to the statute shows that the amendment was added not to make
government entities liable for punitive damages, but to ensure that
individual defendants would not be immunized from punitive damages.
That purpose is consistent with the reasons underlying the
presumption disfavoring punitive damage awards against government
For these reasons we hold that AHFC may not be held
liable for punitive damages under the Whistleblower Act.
C. Prejudgment Interest
The superior court awarded Salvucci prejudgment interest
in the amount of $62,493.30. It is unclear precisely how much
prejudgment interest it based on the award for lost past and future
wages as well as benefits, and how much it based on the award for
punitive damages. AHFC argues that the jury was improperly in-
structed as to the appropriate date to begin calculation of the
damage award to its present value.
Alaska law presumes that prejudgment interest will be
awarded on verdicts for damages. AS 09.30.070(b). [Fn. 13] The
rate is set at 10.5 percent interest. AS 09.30.070(a). The 10.5
percent interest rate on judgments is increased by five percent per
year if final judgment is entered for an amount greater than a
valid offer of judgment made by the plaintiff at least ten days
prior to trial. AS 09.30.065. [Fn. 14]
Prejudgment interest, for the time between when a
complaint is served and judgment rendered, is awarded on damages
for lost future earnings if the future loss is reduced to present
value as of the date the complaint was served. Navistar Int'l
Transp. Corp. v. Pleasant, 887 P.2d 951, 959-60 (Alaska 1994). If
future damages are reduced to present value as of the date of
trial, no prejudgment interest should be awarded because the award
encompasses the period prior to trial. Id.
At trial Salvucci's economist presented damage
calculations that reduced the future loss to its present value as
of the date of the service of the complaint. AHFC's economist
presented calculations reducing the same damages to present value
as of the date of the first day of trial. The jury did not specify
which calculation it used in reaching its damage award for lost
past and future wages and benefits.
AHFC did not object at trial to the instructions given
for calculating the lost future wage and benefit award, nor did it
request its own instructions. Failure to object to the instruc-
tions at that time waived its right to raise the issue on appeal.
Alaska R. Civ. P. 51(a). "[G]enerally, in the absence of a proper
objection, we will not review a jury instruction unless the giving
of the challenged instructions was plain error. Plain error will
only be found when an obvious mistake exists such that the jury
will follow an erroneous theory resulting in a miscarriage of
justice." Landers v. Municipality of Anchorage, 915 P.2d 614, 617
(Alaska 1996) (citation omitted).
The jury was presented evidence from both economists.
The jury is not required to compute damages with mathematical
precision; the jury simply needs a reasonable basis on which to
base their calculations. City of Whittier v. Whittier Fuel &
Marine Corp., 577 P.2d 216, 224 (Alaska 1978). AHFC concedes that,
under Navistar, Salvucci is entitled to prejudgment interest on the
$144,234 if the calculations of Salvucci's economist are used. As
the figures awarded by the jury reasonably appear to be based on
those presented by Salvucci's economist, we hold that the superior
court's instructions regarding reduction of the damage award to its
present value did not constitute plain error.
The superior court did not segregate the amount of
prejudgment interest awarded on lost past and future wages as well
as benefits and the amount awarded on punitive damages. [Fn. 15]
Since we hold today that the award of punitive damages was
improper, prejudgment interest cannot be awarded on this basis.
[Fn. 16] For this reason, we remand to the superior court to
determine, consistent with this opinion, the precise amount of
prejudgment interest due Salvucci on his lost past and future wage
and benefit award.
The superior court properly granted Salvucci's directed
verdict on his breach of contract claim, and properly allowed
Salvucci's Whistleblower claim to be submitted to the jury. We
AFFIRM the superior court on these issues. The superior court
erred by holding that AHFC was not immune from punitive damages.
Thus, we REVERSE the award of punitive damages against AHFC. We
REMAND the prejudgment interest award on lost past and future wages
and benefits to the superior court for determination of the proper
amount to be awarded.
COMPTON, Chief Justice, with whom RABINOWITZ, Justice,
In my view, the court's analysis of whether punitive
damages are recoverable under the Whistleblower Act, Op. at section
IV.B.2.a., reaches the correct result: the express language of
AS 39.90.120(a) does not overcome the presumption against awarding
punitive damages against the government. While the legislative
history of AS 39.90.120(a), Op. at section IV.B.2.b., is
interesting, it is ambiguous and, in any event, unnecessary to
resolve the issue. I do not concur in section IV.B.2.b.'s
conclusion that the legislative history of the amendment in
question shows that "the amendment was added not to make government
entities liable for punitive damages, but to ensure that individual
defendants would not be immunized from punitive damages." Op. at
24. In all other respects, I agree with the opinion of the court.
These rules set forth procedures for employee probationary
periods, separation and demotion, and grievances and hearings.
Section 2.03.03 listed the following as Executive Service
Chief Operating Officer, Finance Director,
Servicing Operations Director, Investor Mar-
keting Director, Chief Administrative Officer,
Information Systems Director, Information Systems Director,
Mortgage Operations Officer, Corporate Communications Officer,
Senior Planner, Controller, Internal Auditor, Consumer Relations
Officer, Personnel Officer, Claims/Servicing Officer, Property
Disposition Officer, and Executive Secretary.
Amended Section 2.03.01 listed the following as Executive
Deputy Executive Director, Division Directors,
Deputy Division Directors, all Corporation Directors, Controller,
Executive Secretary, Corporate Communications Officer, and Staff
Salvucci wrote audits and investigative reports regarding
internal problems; specifically, alleged racial slurs, fire safety
violations, misuse of corporate vehicles and alleged political
hires. Salvucci was fired prior to the final version of the
personnel audit which included his report concerning the political
hires. After his termination, the personnel audit was altered to
delete any references to the political hires or the improper hiring
practices. Salvucci presented this evidence as proof that he was
terminated for "whistleblowing."
Salvucci moved for summary judgment on the breach of contract
claim. The superior court denied the motion, stating that an issue
of fact existed regarding whether the Audit Charter placed Salvucci
in a special classification. After evidence was presented at
trial, the court granted a directed verdict for Salvucci, finding
that "the evidence is just indisputably clear that the internal
auditor here, the plaintiff's position, was taken out of the
AHFC alternatively argues that Salvucci may not recover
punitive damages under the Act because the jury failed to find the
prerequisite compensatory damages under the Act. Our review of
AHFC's first two contentions is dispositive and we need not address
A public employee is defined as a person who performs a
service for wages for a public employer. AS 39.90.140(1). A
public employer is defined to include "a public or quasi-public
corporation or authority established by state law." AS
39.90.140(2). "Matters of public concern"include "a violation of
a state, federal, or municipal law, regulation or ordinance [and]
. . . a clear abuse of authority." AS 39.90.140(3)(A) & (C). A
"public body"is defined as including an officer or agency of the
state or a political subdivision of the state. AS 39.90.140(4)(B)
See, e.g., Johnson v. Alaska State Dep't of Fish & Game, 836
P.2d 896, 906 (Alaska 1991) (punitive damages not available against
State for violation of Alaska Human Rights Act); Hazen v.
Municipality of Anchorage, 718 P.2d 456, 465-66 (Alaska 1986)
(policy reasons disfavoring punitive damages apply even in cases of
gross or intentional misconduct); Richardson v. Fairbanks North
Star Borough, 705 P.2d 454, 456 n.1 (Alaska 1985) ("We agree with
the majority of jurisdictions that hold that punitive damages
cannot be awarded against a municipality without statutory
authorization."); University of Alaska v. Hendrickson, 552 P.2d
148, 149 (Alaska 1976) (punitive damages cannot be awarded against
University of Alaska).
To conclude otherwise, one would have to read subsection (b)
as authorizing the attorney general of the state to sue the state
for a civil fine which would be paid by the state to the state.
Such a reading would be an absurdity.
"[I]t is the sponsors that we look to when the meaning of
statutory words is in doubt." Alaska Pub. Employees Ass'n v.
State, 525 P.2d 12, 16 (Alaska 1974) (quoting Schwegmann Bros. v.
Calvert Distillers Corp., 341 U.S. 384, 394-95 (1951)).
The sponsor of the amendment adding the reference to punitive
damages was Representative Gruenberg. At the meeting of the House
Judiciary Committee of March 7, 1989, Representative Gruenberg
spoke in favor of the amendment as follows:
I'm going to talk about this generally and
offer a motion on the amendment. Generally it clears up an
ambiguity in making it very specific that you can obtain punitive
damages under the Act. The reason we made th -- this amendment
would be helpful is because lawyers in the A.G.'s office have
informed Mark Handley that there is a possible interpretation that
punitive damages in a private lawsuit would not be awardable
because we have subsection (b) and (c) on line 26 of page 2 and
line 29 of page 2 and a judge might say that if you have a punitive
situation, you can't get personal punitive damages, all you can get
is a civil fine which inures to the state and only the A.G. can
enforce that. The problem is that the A.G. may never enforce
subsection (b) because he'd be enforcing it -- he or she would be
enforcing it against the administration and there'd be a conflict
of interest and there's no funding for this. So as a practical
matter, subsection (b) may not be very helpful. Same with
subsection (c), and having punitive damages may be the only
effective form of relief you have.
House Judiciary Committee Standing Committee, Mar. 7, 1989. Thus
Representative Gruenberg offered the amendment adding punitive
damages to the Act out of concern "that punitive damages in a
private lawsuit would not be awardable"because of the civil fine
remedies in subsection (b) and (c) of section .120.
The remarks of counsel Mark Handley express the same purpose:
[T]he reason I am recommending the amendment
is . . . talking to Jan Strandberg in the court system who had
apparently, who has been representing the plaintiff in some
wrongful termination suits against the state and various municipal
bodies and after talking to the Attorney General's office, I
thought it might be a good idea, there seems to be an issue as to
whether, under section (b) when we are proposing that there is a
civil fine of not more than $10,000, we might be opening this law
up to the interpretation that we're foreclosing the possibility of
punitive damages in this case, that that is sort of a substitute
liquidated punitive section, and we just want to make it clear with
this language that the plaintiff in this action is still able to
get any punitive damage that they would be able to get under
House Judiciary Committee Standing Committee, Feb. 23, 1989
(emphasis added). The emphasized language suggests no intention to
allow punitive damage awards not previously authorized. Since no
punitive damages could be awarded against the State previously,
Handley's desire to preserve what already existed cannot be read to
expand available remedies.
AS 09.30.070(b) provides in part:
Except when the court finds that the
parties have agreed otherwise, prejudgment interest accrues from
the day process is served on the defendant or the day the defendant
received written notification that an injury has occurred and that
a claim may be brought against the defendant for that injury,
whichever is earlier.
In this case, the final judgment entered against AHFC on
Salvucci's claim exceeded his $400,000 offer of judgment that was
made pursuant to AS 09.30.065. Salvucci was awarded $187,434 in
lost past and future wages and benefits, $500,000 in punitive
damages, and $62,493.30 in prejudgment interest. The trial court
applied a 15.5 percent prejudgment interest rate. However, since
we hold today that it was error to award punitive damages,
Salvucci's final judgment no longer exceeds his offer of judgment,
and increased interest is no longer appropriate.
AHFC calculates that the amount of prejudgment interest on
lost future wages and benefits awarded by the superior court is
$25,847.52, but does not set forth how it reached this amount.
Salvucci does not address the amount of prejudgment interest that
he believes should be appropriately awarded on the lost future
wages and benefits. We have no record of the superior court's
calculation on this award. Moreover, as noted earlier, the
superior court should now apply a 10.5 percent interest rate to the
wage and benefit award.
Since we hold it was error to award punitive damages, we
express no opinion regarding the propriety of awarding prejudgment
interest on punitive damages under AS 09.30.065.