You can
search the entire site.
or go to the recent opinions, or the chronological or subject indices.
ERA Aviation v. Seekins (2/26/99), 973 P 2d 1137
<![CDATA[
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
ERA AVIATION, INC., )
) Supreme Court No. S-8129
Petitioner, )
) Superior Court No.
v. ) 3KN-96-443 CI
)
JERILUE SEEKINS, ) O P I N I O N
)
Respondent. ) [No. 5086 - February 26, 1999]
______________________________)
Petition for Review from the Superior Court of
the State of Alaska, Third Judicial District,
Kenai,
Harold M. Brown, Judge.
Appearances: Thomas M. Daniel and Helena L.
Hall, Perkins Coie, Anchorage, for Petitioner.
Howard A. Lazar and Elise M. Hsieh, Delaney,
Wiles, Hayes, Gerety, Ellis & Young, Inc.,
Anchorage, for Respondent.
Before: Matthews, Chief Justice, Compton, and
Bryner, Justices. [Eastaugh and Fabe,
Justices, not participating.]
BRYNER, Justice.
I. INTRODUCTION
Era Aviation, Inc., fired Jerilue Seekins. Seekins sued
Era for breach of the covenant of good faith and fair dealing,
alleging that, despite the "at-will"termination clause in her
employment contract, the covenant allowed Era to fire her only for
good cause. After the superior court denied Era's motion for
summary judgment, we granted its petition for review. Because we
conclude that the record fails to support Seekins's breach of
covenant claim, we conclude that Era is entitled to judgment as a
matter of law.
II. FACTS AND PROCEEDINGS
In the spring of 1993, Jerilue Seekins approached Dianne
Smith, the Kenai station manager for Era Aviation, Inc., about the
possibility of obtaining a job with Era. Seekins was living in
Seattle, but was interested in relocating so that she and Michael
Hopley, a friend who ran a fishing guide business based in
Soldotna, could be together. In Seattle, Seekins was employed by
Alaska Airlines; she had worked for the airline since 1992 and
wanted to continue working in this field. At their initial
meeting, Smith told Seekins that Era had openings only for
temporary summer jobs, in which Seekins was not interested. Smith
told Seekins to remain in touch regarding employment with Era.
In the spring of 1994, after Seekins had spoken with
Smith several more times, Smith offered Seekins a job with Era as
a customer service ticket agent in Kenai. Seekins accepted the job
and moved to Kenai. Before Seekins started working for Era, she
signed a pre-printed form, entitled "Company Policies,"indicating
that she understood that "employment at Era Aviation, Inc.[,] is
'at will', which means that either I or the Company can terminate
the employment relationship at any time, with or without prior
notice, and for any reason not prohibited by law."
Seekins began working for Era on June 13, 1994. In early
August 1994, Mona Sim, Seekins's supervisor, met with Seekins and
criticized her job performance: Sim claimed that Seekins had a
challenging attitude, was too slow checking in customers, had
improperly solicited clients for Hopley's fishing guide business,
and had requested too much time off. On August 18, Sim and Smith
met with Seekins. After informing Seekins that her job performance
had not improved, Smith offered Seekins a choice between resigning
and being fired. Seekins chose to be fired.
Seekins later sued Era, alleging that she had performed
her job appropriately and was fired merely "as the result of a
personality conflict." Seekins claimed that Era violated the
covenant of good faith and fair dealing by discharging her without
good cause.
Era moved for summary judgment. The superior court
denied its motion, concluding that Seekins's breach of covenant
claim raised triable issues of fact under ARCO Alaska, Inc. v.
Akers. 1 Soon after the trial court denied Era's summary judgment
motion, this court decided Ramsey v. City of Sand Point, 2 affirming
an award of summary judgment against an at-will employee who
claimed that a discharge without cause violated the implied
covenant. 3 Era moved for reconsideration based on Ramsey; again,
the court denied its motion. Era petitioned for review. We
granted the petition.
III. DISCUSSION
1. Standard of Review
We review a denial of summary judgment de novo. 4 We draw
all reasonable inferences in favor of the nonmoving party, and
affirm a denial of summary judgment if there is a genuine issue of
material fact or if it is clear that the moving party is not
entitled to judgment as a matter of law. 5
2. Evidence that Era Terminated Seekins's At-Will Employment
Without Good Cause Does Not Raise Triable Issues on
Seekins's Breach of Covenant Claim.
1. This court's implied covenant cases
Our cases have distinguished between at-will and for-
cause employment based on the level of cause needed to terminate
the employment relationship:
Employees hired on an at-will basis can be
fired for any reason that does not violate the
implied covenant of good faith and fair
dealing. However, employees hired for a
specific term may not be discharged before the
expiration of the term except for good
cause.[6]
This court has also recognized that every contract is
subject to an implied covenant of good faith and fair dealing. 7 In
the employment contract context, the covenant operates as a check
on employers' traditional freedom to terminate at-will employment
for any reason; we have held that an employer may not terminate an
at-will employee for reasons antithetical to the implied covenant. 8
We first applied the covenant to an at-will employment
contract in Mitford v. de Lasala. 9 There, Mitford alleged that
de Lasala had fired him to prevent him from receiving his share of
business profits; we found that to be a viable claim for breach of
the covenant of good faith and fair dealing. 10 We observed that the
covenant "would prohibit firing Mitford for the purpose of
preventing him from sharing in future profits . . . . The
circumstances surrounding Mitford's termination give rise to an
inference that he was fired for that reason."11 Mitford thus stands
for the proposition that the covenant prohibits an employer from
exercising at-will powers of discharge to unfairly deprive an
employee of a benefit contemplated by the employment contract. 12
In Luedtke I, this court recognized that the covenant can
be breached when the firing of an employee occurs in violation of
a specific public policy. 13 We found that unwarranted intrusions
into employee privacy violate public policy, 14 and so concluded that
the covenant could be violated by terminating an employee for
resisting an improperly noticed drug test. 15
In Luedtke II, an appeal after remand in Luedtke I, we
further explained that a breach of the covenant can be either
subjective or objective 16 -- that an employer can violate the
covenant either by acting with a subjectively improper motive or by
failing to "act in a manner which a reasonable person would regard
as fair."17 As examples of subjective breaches, we cited cases like
Mitford. 18 As examples of objective breaches, we cited cases
involving disparate employee treatment, terminations on grounds
that were found unconstitutional, and firings that violated public
policy. 19 We clarified that Luedtke I involved an act of objective
unfairness. 20
Recently, in elaborating on the covenant's facets in
Ramsey v. City of Sand Point, we reiterated that "[t]he covenant
has both subjective and objective elements"; 21 we again cited
Mitford to illustrate a subjective bad faith breach 22 and cited
Luedtke II to illustrate the covenant's objective aspect. 23
2. The parties' positions
Era contends that, in firing Seekins, it merely exercised
its express contractual right to terminate her at will. It argues
that our cases establish that we will invoke the implied covenant
of good faith and fair dealing to preclude an employer from
terminating an at-will employee only when the employer has acted to
unfairly deprive the employee of the economic benefits of a
contract -- as occurred in Mitford -- or when the employer has
acted in violation of public policy -- as happened in Luedtke I and
Luedtke II. Era argues that Seekins's claim, which alleges a
personality-based discharge, falls into neither category.
Seekins responds that the covenant is not limited to the
two circumstances that Era identifies, but instead imposes a
general requirement upon employers to act reasonably and fairly.
She does not directly contend that the at-will clause in her
employment contract was invalid; nor does she assert that she was
a for-cause employee. Rather, tacitly conceding that she was an
at-will employee, Seekins claims that the circumstances surrounding
her at-will employment led her to form a reasonable expectation
that, despite the at-will clause in her contract, Era would
actually discharge her only for poor job performance. Seekins
contends that, because she subjectively held this expectation, and
because the expectation itself was objectively reasonable, both the
objective and subjective requirements of the covenant are met, and
Era should be barred from firing her without good cause.
Pointing to evidence that could be construed as showing
that she was discharged as a result of a personality conflict
rather than for poor job performance, Seekins insists that she has
made a prima facie showing that Era breached the covenant. Seekins
summarizes her position as follows:
The covenant of good faith and fair
dealing means what it says: employers must
act in good faith and deal fairly with
employees. Era did not act in good faith
towards Ms. Seekins and Era did not deal
fairly in terminating her based upon a
disgruntled supervisor's unsupported
complaints and misrepresentations. The facts
clearly illustrate Era's breach, and thus the
Superior Court was justified in denying Era's
assertions that they need not treat an at-will
employee fairly and their attendant request
for summary judgment.
3. Applying our case law to Seekins's claim
We disagree with the broad view of the implied covenant
that Seekins proposes, and we conclude that even when viewed in the
light most favorable to Seekins, the record fails to support her
breach of covenant claim. According to Seekins, Era knew that she
left full-time employment with Alaska Airlines in Washington to
take a job with Era in Alaska; Era also knew that she would not
have done so had Era not offered her a position in Kenai comparable
to the one she left in Seattle. Although she entered into an at-
will contract, Seekins remained under the impression that her
employment would continue unless she failed to perform her job
adequately. Once hired, Seekins received little training or
guidance. She soon had a personality conflict with her supervisor,
Mona Sim; Sim met with Seekins once and complained without
justification about her job performance. About two weeks later,
Seekins's supervisor, Smith, met with Sim and Seekins. Smith
informed Seekins -- again without basis -- that her job performance
had not improved. Smith offered Seekins the option of resigning or
being fired. Seekins decided not to resign, and Smith fired her
with no further opportunity to improve her job performance.
Although the stated reason for the firing was inadequate job
performance, the true reason, alleges Seekins, was Sim's
personality clash with her.
Even if proved, these facts would be legally insufficient
to warrant a finding that Era breached the implied covenant of good
faith and fair dealing. Reduced to its essence, Seekins's theory
is that -- despite her awareness of a valid at-will clause in her
contract of employment -- the covenant converted her at-will job
into a good-cause contract because she reasonably expected that Era
would fire her only in the event of poor job performance.
This theory is flawed with respect to both the objective
and subjective aspects of the covenant. It is flawed as to the
objective facet of the covenant, because -- as we recently held in
Ramsey -- the covenant is implied to effectuate, not to alter, the
reasonable expectations of the parties; hence, "[it] cannot be
interpreted to prohibit what is expressly permitted by [the]
contract . . . ."24 Because recognizing and enforcing Seekins's
unilateral expectation of a good-cause employment relationship
would alter the basic character of her at-will employment agreement
by "prohibit[ing] what is expressly permitted,"25 the expectation
is unreasonable as a matter of law.
Seekins's theory is also flawed as to the subjective
aspect of the implied covenant. The subjective element focuses not
-- as Seekins implicitly posits -- on the employee's personal
feelings of unfairness, but rather on the employer's motives,
requiring proof that the employer's decision to fire was actually
made in bad faith. 26 To be subjectively unfair, the employer's
conduct must actually be motivated by an improper or impermissible
objective: "An employer engages in subjective bad faith when it
discharges an employee for the purpose of depriving him or her of
one of the benefits of the contract."27 Hence, in the at-will
employment context, it is insufficient to show that an employee was
discharged for reasons unrelated to job performance; instead, the
employee must show a purpose that is, in itself, improper or
impermissible. 28
Given the at-will nature of Era's employment contract
with Seekins, we cannot say that the company's alleged desire to
avoid a personality conflict between two of its employees would, if
proved, amount to an impermissible motive for firing Seekins. 29 The
trial court thus construed ARCO Alaska, Inc. v. Akers 30 too broadly.
Despite language in Akers generally suggesting that a discharge
based on a non-work-related "personality conflict"could amount to
a breach of the good faith covenant, 31 a close reading of our
opinion indicates that the case is inapposite here.
Although Akers was initially hired as an at-will
employee, he was issued an ARCO personnel handbook that entitled
him to progressive discipline prior to termination and to written
notice of ARCO's reasons for terminating him. 32 ARCO acknowledged,
moreover, that it violated its own personnel policies in
discharging Akers. 33 Given these facts, we proceeded on the
assumption that ARCO was required to have good cause for
termination. And, twice, relying on the procedural posture of the
case, we specifically avoided examining the validity of this
assumption. 34
In summary, the evidence offered by Seekins, viewed in
the light most favorable to her, would prove neither an objective
nor subjective violation of the implied covenant of good faith and
fair dealing. Because "[Seekins's] employment contract authorized
[Era] to terminate [her] for any reason whatsoever,"35 we hold here,
as we did in Ramsey, that, "[a]s a matter of law, a jury could not
find [that Era's] termination . . . violated the implied
covenant."36
IV. CONCLUSION
Because we conclude that there are no genuine issues of
material fact as to whether Era breached the covenant, and that Era
was entitled to judgment as a matter of law, we REVERSE the
superior court's order denying Era's motion for summary judgment.
Footnotes
1 753 P.2d 1150 (Alaska 1988).
2 936 P.2d 126 (Alaska 1997).
3 Id. at 133.
4 See Western Pioneer, Inc. v. Harbor Enters., Inc., 818
P.2d 654, 656 n.3 (Alaska 1991).
5 See id.
6 Luedtke v. Nabors Alaska Drilling, Inc. (Luedtke I), 768
P.2d 1123, 1130-31 (Alaska 1989) (footnote omitted). See also
Eales v. Tanana Valley Medical-Surgical Group, Inc., 663 P.2d 958,
959 (Alaska 1983).
7 See Guin v. Ha, 591 P.2d 1281, 1291 (Alaska 1979).
8 See French v. Jadon, Inc., 911 P.2d 20, 24 (Alaska 1996).
9 666 P.2d 1000 (Alaska 1983).
10 Id. at 1007.
11 Id.
12 See id.
13 Luedtke I, 768 P.2d at 1130.
14 See id.
15 See id.; see also Luedtke v. Nabors Alaska Drilling, Inc.
(Luedtke II), 834 P.2d 1220, 1224-25 (Alaska 1992).
16 Luedtke II, 834 P.2d at 1224-25.
17 Id. at 1224.
18 See id. (also citing Jones v. Central Peninsula Gen.
Hosp., 779 P.2d 783 (Alaska 1989), and Hagens, Brown & Gibbs v.
First Nat'l Bank of Anchorage, 783 P.2d 1164 (Alaska 1989)).
19 See Luedtke II, 834 P.2d at 1224 (citing Jones; Rutledge
v. Alyeska Pipeline Serv. Co., 727 P.2d 1050 (Alaska 1986); State
v. Haley, 687 P.2d 305 (Alaska 1984); Luedtke I).
20 See Luedtke II, 834 P.2d at 1224-25.
21 Ramsey v. City of Sand Point, 936 P.2d 126, 133 (Alaska
1997).
22 See id.
23 See id.
24 Id.
25 Id.
26 Id.; see also Luedtke II, 834 P.2d at 1224.
27 Ramsey v. City of Sand Point, 936 P.2d 126, 133 (Alaska
1997).
28 See, e.g., Mitford v. de Lasala, 666 P.2d 1000, 1007
(Alaska 1983).
29 Cf. E.I. DuPont de Nemours & Co. v. Pressman, 679 A.2d
436, 444 (Del. 1996) (holding that, because "[e]mployees and their
supervisors work closely together and personality clashes have the
potential to interfere seriously with the achievement of an
organization's mission[,] [d]islike, hatred or ill will, alone,
cannot be the basis for a cause of action for termination of an at-
will employment").
30 753 P.2d 1150 (Alaska 1988).
31 Id. at 1155.
32 Id. at 1151, 1155.
33 Id. at 1155.
34 See id. (finding that, given Akers's prima facie showing
that his termination was without good cause, it was unnecessary to
determine whether ARCO bore the burden of proof on this issue), and
id. at 1157 (finding, in the absence of a timely objection by ARCO,
no plain error in a jury instruction that failed to differentiate
between, and therefore implicitly equated, good faith for purposes
of the implied covenant and good cause for purposes of
termination).
35 Id.
36 Ramsey v. City of Sand Point, 936 P.2d 126, 133 (Alaska
1997).
-3- 5086
]]>
