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Lincoln v Interior Regional Housing Authority (09/14/2001) sp-5467
Lincoln v Interior Regional Housing Authority (09/14/2001) sp-5467
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
GIDGET LINCOLN, )
) Supreme Court No. S-9274
Petitioner, )
) Superior Court No.
v. ) 4FA-97-483 CI
)
INTERIOR REGIONAL HOUSING ) O P I N I O N
AUTHORITY, )
)
Respondent. ) [No. 5467 - September 14, 2001]
______________________________)
Petition for Review from the Superior Court of
the State of Alaska, Fourth Judicial District, Fairbanks, Ralph R.
Beistline, Judge.
Appearances: Christian Bataille, Fairbanks,
for Petitioner. Tracey L. Knutson, Sisson & Knutson, P.C.,
Anchorage, for Respondent.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
MATTHEWS, Justice.
I. INTRODUCTION
Gidget Lincoln petitioned this court for review of the
superior court's grant of summary judgment, dismissing her claims
against her former employer, Interior Regional Housing Authority,
for violation of the Alaska Whistleblower Act, breach of the
implied covenant of good faith and fair dealing, and intentional
infliction of emotional distress. Because questions of fact were
present as to whether Lincoln was discharged for impermissible
retaliatory reasons and whether the Authority's explanation for her
discharge was pretextual, we reverse the award of summary judgment
to the Authority.
II. FACTS AND PROCEEDINGS
A. Facts
The Interior Regional Housing Authority (Authority) is an
association established under state and federal law to address
housing shortages in interior Alaska. The United States Department
of Housing and Urban Development (HUD) provides financial
assistance to the Authority. [Fn. 1]
Gidget Lincoln was hired by the Authority in March 1992
as a collection officer. A portion of the Authority's funding
comes through payments by individuals buying or renting homes
constructed by the Authority. Lincoln's primary responsibility was
to collect delinquent payments.
HUD was notified on January 20, 1995, of "'gross'
mismanagement practices which have occurred at [the Authority] for
some period and resulted in cost overruns of $2,700,000,
unaccounted materials inventory, questionable procurement
practices, and neglect of [the Authority's] fiduciary
responsibility with its homebuyers' equity accounts estimated at
$500,000." HUD scheduled an on-site review of the Authority three
days later, on January 23, 1995; part of the haste stemmed from
HUD's concern over reports that Authority staff had altered,
destroyed, or tampered with records, and falsely certified
statements.
Velma Carroll was the acting executive director of the
Authority at the time of the investigation. According to Lincoln,
Carroll informed her and other employees that they should not
cooperate with the HUD investigation of the Authority, and that if
they did, they would be subject to disciplinary action, including
termination. Lincoln asserts that Authority employees Laura
Henderson and Ray Kent made similar threats. Lincoln and three
other employees wrote a letter to HUD prior to the investigation
expressing their fear of retaliation should they divulge
information regarding the Authority's practices. Lincoln
cooperated with HUD investigators. Lincoln was laid off by the
Authority on February 23, 1995. The letter notifying Lincoln of
her layoff explained that the action was required for fiscal
reasons. The letter promised that she would "be recalled as soon
as fiscally possible." The Authority was in a financial crisis in
early 1995. The other three employees who had been concerned about
retaliation were also dismissed for various stated reasons, and
some other employees were also dismissed.
The HUD investigation of the Authority resulted in the
issuance of a corrective action order by HUD on March 3, 1995. HUD
substantiated most of the allegations made against the Authority in
January, and suspended all of the Authority's procurement,
contracting, development, and architectural activities.
Lincoln informed the Authority that she wished to be
considered for her position as collections officer as soon as it
was reopened. She moved to Seattle later that spring, but informed
the Authority that she still wanted her old job. According to the
Authority's personnel policy, the Authority was required to recall
Lincoln to her position or to a position for which she was
qualified and for which there were no more senior applicants. In
July 1995 the Authority advertised for an "Accounts
Receivable/Billing Collection Clerk." Lincoln was not recalled to
this position.
In August 1995 Joe Wilson, the new executive director of
the Authority, wrote a letter to Lincoln, offering her the
opportunity to apply for a position with the Authority as a housing
counselor. Lincoln responded by writing Wilson and asking whether
relocation costs were included, and whether she would be required
to undergo a probationary period; she also requested written
assurance that she would not be subject to retaliation, and
explained that she would not disclose her current employer due to
her fear of retaliation. Wilson wrote Lincoln back, informing her
that no moving expenses were included in the position, that she
would be subject to a probationary period, that she could expect to
be treated like other employees, and that her failure to disclose
her current employer's identity made it difficult to process her
application. Lincoln was not hired for the position.
B. Proceedings
Lincoln filed suit against the Authority alleging breach
of contract, including breach of the implied covenant of good faith
and fair dealing, violation of the Alaska Whistleblower Act,
negligent hiring and retention (of Velma Carroll and Laura
Henderson), violation of her due process rights under the Alaska
Constitution, and intentional and negligent infliction of emotional
distress. The Authority moved for summary judgment against Lincoln
on all of her claims. Lincoln cross-moved for summary judgment,
asking the superior court to find that the Authority had breached
its own personnel policy by failing to recall her.
The superior court issued three orders concerning the
parties' summary judgment motions. The first, entered February
1999, granted summary judgment to the Authority on Lincoln's claims
relating to punitive damages, breach of contract and due process.
This order also denied the Authority's motion for summary judgment
on Lincoln's "claim for emotional distress,"and granted Lincoln's
motion with regard to her claim that the Authority failed to comply
with its personnel policy. The order noted that "Plaintiff will be
granted broad latitude to seek specific damages and general damages
beyond merely the loss of income she may have experienced . . . ."
On July 29, 1999, a second order was entered. This
reiterated the earlier grant of summary judgment in favor of the
Authority on Lincoln's breach of contract claim, including breach
of the implied covenant of good faith and fair dealing, and her due
process and punitive damages claims. The order also granted
summary judgment in favor of the Authority on Lincoln's
Whistleblower, negligent hiring and retention, and intentional
infliction of emotional distress claims and reiterated that summary
judgment in favor of Lincoln had been granted on her claim that the
Authority failed to recall her in violation of its personnel
policy.
On July 30 a third order was entered reiterating the July
29 order, and explaining the court's reasons. In this order the
court stated that Lincoln's layoff was "in response to a legitimate
budget crisis and was not pre-textual." The court also stated that
"even if [the Authority] was angry with Ms. Lincoln for her
comments to HUD investigators, she would have been laid off
anyway. . . . Other than Ms. Lincoln's allegations, there is no
evidence to support her claim that she was targeted for lay-off for
an inappropriate reason." Concerning Lincoln's claim on which
summary judgment had been granted in her favor, the July 30 order
stated: "This leaves for resolution the issue of damages arising
from [the Authority's] failure to timely offer Ms. Lincoln a job
once rehiring began. Plaintiff may present evidence regarding lost
wages, reasonable relocation expenses, and emotional distress as a
result . . . ."
We granted Lincoln's petition for review and limited
review to the dismissal of her claims alleging violation of the
Whistleblower Act, the covenant of good faith and fair dealing, and
for intentional infliction of emotional distress.
III. STANDARD OF REVIEW
This court reviews a trial court's grant of summary
judgment de novo. [Fn. 2] Summary judgment is appropriate "only if
the record presents no genuine issues of material fact and the
moving party was entitled to judgment on the law applicable to the
established facts."[Fn. 3] Where the parties dispute the facts,
all reasonable factual inferences must be drawn in favor of the
non-movant. [Fn. 4] The movant bears the burden of proving the
absence of material facts. [Fn. 5]
If the movant makes a prima facie showing that it is
entitled to judgment as a matter of law on the established facts,
the non-moving party must demonstrate that a genuine issue of fact
exists. [Fn. 6] The non-movant must present or point to admissible
evidence in order to meet her burden of showing a material issue of
fact. [Fn. 7] The non-movant is "required, in order to prevent
entry of summary judgment, to set forth specific facts showing that
[s]he could produce admissible evidence reasonably tending to
dispute or contradict the movant's evidence, and thus demonstrate
that a material issue of fact exists."[Fn. 8]
IV. DISCUSSION
A. Summary Judgment Should Not Have Been Granted on
Lincoln's Whistleblower and Covenant of Good Faith and Fair Dealing
Claims.
The Alaska Whistleblower Act [Fn. 9] "protects public
employees who report to public bodies on matters of public concern
from retaliation by their employers."[Fn. 10] A prima facie case
under the Act consists of two elements: an employee must show that
(1) she has engaged in protected activity and (2) the activity was
a "substantial"or "motivating factor"in her termination. [Fn. 11]
An employer may rebut a prima facie case by demonstrating that the
employee would have been discharged even had she not engaged in the
protected activity. [Fn. 12]
Retaliatory discharge can create a claim for breach of
the covenant of good faith and fair dealing implied in at-will
employment contracts. [Fn. 13] The elements of retaliatory
discharge are similar to a Whistleblower Act violation, and this
court has adopted the three-part test used in federal Title VII
employment discrimination cases to define those elements. [Fn. 14]
A plaintiff must demonstrate that (1) she engaged in protected
activity, (2) her employer subjected her to adverse employment
action, and (3) there is a causal connection between her protected
activity and the employer's action. [Fn. 15] This court has also
held that once a plaintiff has established a prima facie case, an
employer may rebut the inference of retaliation by demonstrating a
legitimate, non-retaliatory explanation for the adverse employment
action. If the employer rebuts the employee's prima facie case,
the burden of proof shifts back to the employee to show that the
employer's explanation is a pretext for retaliation. [Fn. 16] If
the employee fails, the employer is entitled to judgment. [Fn. 17]
How do these rules apply in a summary judgment context
when the employer is the movant? If the employer claims that no
prima facie case can be made, it must offer evidence showing that
the employee had not engaged in protected activity, or that the
activity was not a motivating factor in her termination, or that
she would in any case have been terminated for other reasons. If
the employer claims that the employee's discharge was not motivated
by her protected conduct or that, assuming that it was so
motivated, she would have been discharged in any event for other
reasons, the employer must present admissible evidence establishing
either or both of these claims. The employer must show there is no
real dispute as to any of the critical issues. If the employer
satisfies these obligations, it is entitled to summary judgment
unless the employee presents or points to evidence that shows that
one or more critical issues of fact are reasonably disputed. [Fn.
18]
In the present case the Authority's brief concedes for
purposes of this petition that Lincoln has established a prima
facie case of retaliatory discharge:
[The Authority] has assumed arguendo, for
purposes of summary judgment, that Lincoln has established a prima
facie case of retaliatory discharge: (1) Lincoln cooperated with
[HUD] during its on-site review and investigation of [the
Authority's] financial status; (2) Lincoln was laid off from
employment; and (3) in light of the temporal proximity between the
protected activity and the lay-off, the "causal link"element is,
arguendo, met.
But it claims that it has rebutted Lincoln's prima facie case by
showing that she was laid off for legitimate non-retaliatory
reasons. Our inquiry therefore must be (1) whether the Authority
has presented evidence that Lincoln was discharged for reasons
other than her cooperation with HUD, and (2) whether that evidence
is reasonably disputed. [Fn. 19]
The Authority has presented evidence indicating that
Lincoln was laid off for reasons independent of the fact that she
had engaged in protected activity. It points to evidence of four
circumstances justifying that conclusion. First, the Authority was
in a financial crisis at the time Lincoln was laid off to the
extent that it was unable to meet its entire payroll. Second, it
was not acting executive director Carroll who decided to lay off
Lincoln, but rather a management team that made this decision.
Third, the collection officer position held by Lincoln was
eliminated and after a delay of several months collections
responsibility was consolidated with a bookkeeping position.
Fourth, Lincoln was given the opportunity to apply for a position
in the Authority five months after her layoff, thus indicating that
no personal animus motivated her layoff.
While these circumstances are evidence that Lincoln was
laid off for reasons independent of her Whistleblowing activity,
Lincoln has highlighted other evidence that reasonably tends to
dispute this conclusion. She points to evidence that (1) manage-
ment threatened her with retaliation if she cooperated with HUD's
investigation; [Fn. 20] (2) despite the threats she cooperated with
the investigators; and (3) there was only a short period of time
between her cooperation and her dismissal. We agree that the
evidence of these circumstances raise a permissible inference that
Lincoln was terminated for cooperating with the investigation and
that therefore the reasons offered by the Authority are pretextual.
[Fn. 21]
Lincoln also points to evidence contradicting the
Authority's position that a management team rather than acting
executive director Carroll decided to lay off Lincoln. She refers
to a deposition of management team member Michael Mahlen, who
indicated that the team did not discuss the merits of laying off
Lincoln. [Fn. 22]
The fact that Lincoln's collection position was first
eliminated and then consolidated with a bookkeeping position does
not necessarily mean that Lincoln's layoff was not pretextual.
There is evidence in the record justifying an inference that the
short-term elimination of the collections position was irrational
because the revenues produced by collections activities were as a
consequence much reduced. Only after HUD officials pressed the
Authority to hire a collections officer in June of 1995 did the
Authority advertise for and hire a new employee with collections
responsibility. But the new position required three years
experience in bookkeeping, experience that Lincoln is said to have
lacked. Nothing about this chain of events dispositively dispels
the inference that Lincoln was laid off because of her protected
activity. It is consistent with her theory that she was laid off
for cooperating with the HUD investigation during a period of
management irrationality. The fact that the collections position
was redefined when it was again filled may be explained by an
awareness on the part of the new management of the Authority of its
duty to recall Lincoln and a belief that by changing the
requirements of the position this duty might be avoided.
Likewise, the fact that the Authority eventually invited
Lincoln to apply for a new position does not conclusively negate
the inference that she was laid off for impermissible reasons. The
invitation is also consistent with an initial pretextual layoff and
a desire by new management to either eliminate future litigation as
to whether Lincoln's layoff was wrongful or to strengthen the
Authority's position in such litigation.
In summary, Lincoln has identified evidence that raises
an inference that the reasons offered by the Authority for laying
her off were pretextual. Thus there are genuine issues of material
fact on this point that must be resolved by the trier of fact.
B. Summary Judgment Should Not Have Been Granted on
Lincoln's Claim for Intentional Infliction of Emotional Distress.
The elements of a claim for IIED are: "(1) the conduct
is extreme and outrageous, (2) the conduct is intentional or
reckless, (3) the conduct causes emotional distress, and (4) the
distress is severe."[Fn. 23] In claims involving IIED the trial
court is required to make a "threshold determination whether the
severity of the emotional distress and the conduct of the offending
party warrant a claim."[Fn. 24] The court's threshold
determination is subject to review under the "abuse of discretion"
standard. [Fn. 25] In the context of this sort of evidentiary
sufficiency ruling, "abuse of discretion"means that the court's
decision will not be disturbed unless it is "plainly unreasonable."
[Fn. 26]
How the threshold determination requirement applies at a
summary judgment stage is unclear from our case law. The threshold
determination requirement was first mentioned in connection with
IIED claims in Richardson v. Fairbanks North Star Borough. [Fn. 27]
There the threshold determination was made at trial following an
offer of proof concerning the severity of the plaintiff's emotional
suffering. Conceivably such an offer could be made and ruled on in
a summary judgment context as well. [Fn. 28] In resolving such a
question the trial court should accept as true those facts most
favorable to the plaintiff. Having thus afforded favorable
inferences to the plaintiff's case, the court should decide whether
the severity of the emotional distress and the conduct of the
offending party warrant submission of the claim to the jury.
In the present case, the superior court dismissed on
summary judgment Lincoln's claim for intentional infliction of
emotional distress relating to her wrongful discharge claims.
Nonetheless, the court stated that it would permit an emotional
distress claim to be submitted in connection with her wrongful
failure to rehire claim. This seems to indicate that the court
dismissed Lincoln's IIED claims relating to her wrongful
termination not because there were no fact issues concerning
whether her distress was sufficient to satisfy the threshold
requirement for such claims, but because the court had concluded
that her wrongful termination claims were without merit in the
sense that they presented no fact issues requiring further
adjudication. This conclusion, as we have indicated, was
erroneous. Further, our case law establishes that in some
circumstances a wrongful discharge may give rise to an IIED claim.
[Fn. 29]
The trial court has apparently not made a discretionary
threshold decision concerning Lincoln's IIED claim based on whether
the Authority's conduct was sufficiently outrageous to support the
claim. On remand such a determination must be made. It is also
somewhat unclear as to whether the court has made a discretionary
threshold determination as to whether the emotional distress
Lincoln suffered was sufficiently severe. The court should also
address this subject on remand. Whether the trial court decides to
make these determinations in subsequent summary judgment
proceedings or after receiving pretrial offers of proof is a
decision committed to the discretion of the trial court.
V. CONCLUSION
REVERSED and REMANDED for further proceedings consistent
with this opinion.
FOOTNOTES
Footnote 1:
See 42 U.S.C. sec. 3371 (1994); 24 C.F.R. sec. 100.10; AS
18.55.996.
Footnote 2:
See Lane v. City of Kotzebue, 982 P.2d 1270, 1276 (Alaska
1999).
Footnote 3:
Bishop v. Municipality of Anchorage, 899 P.2d 149, 153 (Alaska
1995) (citations omitted).
Footnote 4:
See id.
Footnote 5:
See Wassink v. Hawkins, 763 P.2d 971, 973 (Alaska 1988).
Footnote 6:
See French v. Jadon, Inc., 911 P.2d 20, 23 (Alaska 1996).
Footnote 7:
See id.
Footnote 8:
McGlothlin v. Municipality of Anchorage, 991 P.2d 1273, 1277
(Alaska 1999).
Footnote 9:
AS 39.90.100 provides that:
(a) A public employer may not discharge,
threaten, or otherwise discriminate against an employee regarding
the employee's compensation, terms, conditions, location, or
privileges 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; or
(2) the employee participates in a court
action, an investigation, a hearing or an inquiry held by a public
body on a matter of public concern.
Footnote 10:
Alaska Housing Finance Corp. v. Salvucci, 950 P.2d 1116, 1121
(Alaska 1997).
Footnote 11:
See Methvin v. Bartholomew, 971 P.2d 151, 154 (Alaska 1998).
Footnote 12:
See id.; Bishop, 899 P.2d at 154-55.
Footnote 13:
See Norcon, Inc. v. Kotowski, 971 P.2d 158, 167 (Alaska 1999).
Footnote 14:
See Veco, Inc. v. Rosebrock, 970 P.2d 906, 918 (Alaska 1999).
Footnote 15:
See id. at 919 (citing Miller v. Fairchild Indus., Inc., 797
F.2d 727, 730-31 (9th Cir. 1986)).
Footnote 16:
See id.
Footnote 17:
See id.
Footnote 18:
See Haroldsen v. Omni Enters., Inc., 901 P.2d 426, 431-32
(Alaska 1995) ("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?") (quoting Hairston v.
Gainesville Sun Publ'g Co., 9 F.3d 913, 921 (11th Cir. 1993)).
Another similar formulation in Haroldsen defining how a plaintiff
in an employment discrimination case may successfully oppose a
motion for summary judgment was expressed as follows:
[P]laintiff'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.
Id. at 432 (quoting Hairston, 9 F.3d at 921).
Footnote 19:
The Authority does not argue, at least directly, that even if
Lincoln was laid off for impermissible reasons, she would have been
laid off for other reasons. But the trial court relied on this
ground as an alternative basis for its decision. Under the
circumstances of this case, the same facts which create an
inference that the grounds for laying off Lincoln presented by the
Authority are pretextual also inferentially place in doubt the
conclusion that Lincoln would have been laid off for independent
reasons even if her actual layoff was impermissibly motivated.
Footnote 20:
The fact that threats were made is not controverted. Acting
executive director Carroll's notes of a management team meeting of
February 13, 1995, are reflective of one such threat, as well as of
the general management tone demonstrated by many of the documents
in the record:
I will not tolerate any form of
insubordination from any staff member. We are to be working as a
team and if anyone feels they cannot trust members of the team or
work together they need to resign.
HUD will have their reports on Friday and
I do hope no other information was sent from here. And nobody is
to contact any funding agency without my prior approval and if any
one does it would be grounds for disciplinary actions and or
termination.
Footnote 21:
See Veco, 970 P.2d at 920 ("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.") (quoting Miller, 797 F.2d at 730-31);
Knight v. American Guard & Alert, Inc., 714 P.2d 788, 792 (Alaska
1986) (holding that where employee was warned not to disclose that
other employees were abusing drugs on the job, and employee was
terminated following disclosure, reasonable jurors could conclude
that employee was terminated in retaliation for informing on other
employees).
Footnote 22:
Mahlen testified:
The other girls in the other office [other
than Mahlen's secretary], even though I was supposedly over them,
I never got a say in whether they got laid off or not. And
certainly one of them might have been a good candidate to be laid
off rather than Gidget Lincoln. Gidget was one of our greater
assets in the office. I don't know of anyone who honestly could
disagree with that.
Footnote 23:
Chizmar v. Mackie, 896 P.2d 196, 208 (Alaska 1995) (quoting
Teamsters Local 959 v. Wells, 749 P.2d 349, 357 (Alaska 1988)).
Footnote 24:
Beard v. Baum, 796 P.2d 1344, 1350 (Alaska 1990) (quoting
Richardson v. Fairbanks North Star Borough, 705 P.2d 454, 456
(Alaska 1985)).
Footnote 25:
See Richardson, 705 P.2d at 456.
Footnote 26:
See L.G. v. State, Dep't of Health and Soc. Servs., 14 P.3d
946, 950 (Alaska 2000).
Footnote 27:
705 P.2d 454 (Alaska 1985).
Footnote 28:
See Beard, 796 P.2d at 1350 (reversing dismissal of IIED claim
and remanding to superior court for threshold determination of
severity of plaintiff's emotional distress).
Footnote 29:
See Norcon, Inc. v. Kotowski, 971 P.2d 158, 173 (Alaska 1999);
Cameron v. Beard, 864 P.2d 538, 549 (Alaska 1993).
