You can
search the entire site.
or go to the recent opinions, or the chronological or subject indices.
Dan Reust v. Alaska Petroleum Contractors (10/28/2005) sp-5951
Dan Reust v. Alaska Petroleum Contractors (10/28/2005) sp-5951
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,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| DAN K. REUST,
| ) |
|
| ) Supreme Court Nos. S-
10910/10919 |
|
Appellant/Cross-Appellee, | ) |
|
| ) Superior Court No.
3KN-99-132 CI |
|
v. | ) |
|
| ) O P I N I O
N |
|
ALASKA PETROLEUM | ) |
|
CONTRACTORS, INC., | ) [No. 5951 - October
28, 2005] |
|
| ) |
|
Appellee/Cross-Appellant, | ) |
|
| ) |
|
and | ) |
|
| ) |
|
STATE OF ALASKA, | ) |
|
| ) |
|
Intervenor. | ) |
|
| ) |
|
|
|
|
Appeal from the Superior Court of the State
of Alaska, Third Judicial District, Kenai,
Jonathan H. Link, Judge.
Appearances: Arthur S. Robinson and Eric
Derleth, Robinson & Associates, Soldotna, for
Appellant/Cross-Appellee. Douglas S. Parker,
Preston Gates & Ellis, LLP, for
Appellee/Cross-Appellant. Jason T. Mogel,
Assistant Attorney General, Anchorage, and
Gregg D. Renkes, Attorney General, Juneau,
for Intervenor State of Alaska.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, Fabe, and Carpeneti, Justices.
EASTAUGH, Justice.
BRYNER, Chief Justice, with whom CARPENETI,
Justice, joins, dissenting in part.
I. INTRODUCTION
A jury awarded Dan Reust compensatory and punitive
damages after finding that Alaska Petroleum Contractors (APC)
wrongfully terminated him in retaliation for testifying in
previous litigation between APC and another former APC employee.
APC and Reust both appeal.
As to the jury instructions to which APC preserved its
objections, we discern no reversible error. We also hold that
witness retaliation is against the public policy of this state,
that APC failed to preserve its arguments against the emotional
distress award, and that sufficient evidence supported an award
of punitive damages. But because no reasonable jury could have
found that the likely duration of Reusts employment would exceed
three years, we remand for reduction of the lost wages awards.
We reject Reusts challenges to the constitutionality of the
statutes capping punitive damages awards and allocating half of
such awards to the state and hold that the superior court did not
err in allowing the State of Alaska to intervene, or in the
timing of entry of judgment. But because the court applied the
wrong punitive damages cap, we also remand for application of the
correct cap.
II. FACTS AND PROCEEDINGS
Dan Reust sued Alaska Petroleum Contractors for
wrongful termination, claiming his discharge violated the public
policy of protecting witnesses. APC contends on appeal that Reust
was never actually hired. We view the evidence in the light most
favorable to Reust as the party who prevailed at trial.1
In April 1998 APC invited Dan Reust to interview for a
project manager position. It had intermittently employed Reust
in the past. Reust testified at trial that at the conclusion of
the interview with APC manager Todd Pizzuto he was offered the
job and was given a hire packet to complete. Reust returned the
completed packet the next day, and Pizzuto asked him to report to
the field the following morning. Reust testified that he
believed he had been hired when he returned the hire packet.
Pizzuto, however, testified that he never offered Reust a job,
did not hire him (and did not have the authority to do so), and
did not give him a hire packet.
The evening before Reust was to report to the field he
received a telephone message from Pizzuto that instructed him to
instead meet with Pizzuto the next day. Reust testified that at
that meeting he was informed that he was, in his words, being let
go due to his participation in previous litigation between APC
and another former employee. Reust had testified adversely to
APC in a 1997 deposition in litigation brought by Richard Jantz.
Pizzuto testified that he did not recall whether he
told Reust that the Jantz lawsuit was the basis for APCs
decision. According to the testimony of Michael Bailey, Pizzutos
superior, it was Bailey who made the adverse decision regarding
Reust, and Baileys decision was based on a conversation Bailey
had had with Gary Buchanan in which Buchanan (according to
Bailey) stated that Reust was badmouthing APC. At trial,
however, Buchanan denied making this statement and asserted that
he did not even know Reust.
The trial jury found for Reust, finding that he had
been hired by APC and that it subsequently terminated him
unlawfully. The jury awarded Reust damages of $132,200 for past
wage loss, $156,800 for future wage loss, and $100,000 for non-
economic losses for [e]motional [d]istress, [m]ental [a]nguish
and [a]nxiety. It also found that Reust was entitled to recover
punitive damages.
Following the second phase of the trial, the jury
awarded Reust punitive damages of $4.3 million. After Superior
Court Judge Jonathan H. Link permitted the State of Alaska to
intervene, Reust moved to have parts of the Alaska tort reform
legislation2 declared unconstitutional. Judge Link denied Reusts
motion, reduced the punitive damages award to $500,000 per AS
09.17.020(h), and directed that fifty percent of the award be
allocated to the state under AS 09.17.020(j).
APC and Reust appeal.
III. DISCUSSION
A. Contract Formation Issues
1. There was no reversible error in the failure to
explicitly instruct the jury that consideration is
an element of contract formation.
The superior court gave the jury the following
instruction concerning contract formation:
In order to find that an employment contract
existed between Dan Reust and APC in April of
1998 you must find that each of the following
propositions is more likely true than not
true: (1) that APC made an offer of
employment encompassing the essential terms
of employment, (2) that Dan Reust agreed to
the essential terms of employment offered by
APC and accepted APCs offer of employment,
and (3) that both parties intended to be
bound by the offer and acceptance.
APC argues that the instruction failed to include the
necessary element of consideration.3 It apparently urges us to
reverse the jurys contract formation findings, contending that
the jury could not have found that Reust accepted the offer and
supplied return consideration because he did not actually
commence work. APCs view is dependent on its conception of at-
will employment as a form of unilateral contract. Reust responds
that by returning the completed hire packet and thereby promising
to work for APC, he accepted the offer and provided sufficient
consideration; the jury instruction was therefore correct.4
We do not need to resolve this instructional dispute
because any possible error was harmless. Even if the
instructions failure to explicitly list the element of
consideration tainted the jurys finding that APC hired Reust, it
would not have affected the jurys preliminary finding that APC
had offered Reust a position. Similarly, it would not have
affected the jurys finding that APCs decision to terminate (or
per APCs view, not to hire) was motivated by Reusts participation
in the Jantz litigation. For reasons we discuss in Part III.B.1,
such retaliatory conduct violates public policy in Alaska.
Therefore, any possible instructional error regarding contract
formation would not have affected the finding that APC made Reust
an employment offer and then withdrew it for an illegal reason.
In effect, APC is relying on the fact Reust never actually
started work, a circumstance caused by APCs illegal conduct in
preventing him from commencing work.
APC conceded at oral argument on appeal that, under its
view, a wrongfully terminated employee fired after one minute on
the job would have a claim but the same employee would have no
recourse if termination occurred one minute before work was to
begin. We fail to see any value in this distinction and note
that at least one other court has ruled that public policy
violations can sustain an at-will employees cause of action even
if work was never actually commenced.5 Moreover, the contract
law principle of prevention supports our conclusion.6 APC was
free to withdraw its at-will employment offer for a legitimate
reason but cannot now rely on Reusts lack of performance caused
by APCs own illegal conduct as a shield against liability.
Accordingly, APC would still be liable even if it were
necessary for Reust to have actually commenced work in order to
accept the offer and supply consideration. We therefore perceive
no reversible error because APC has not demonstrated that the
failure to instruct on the consideration element was prejudicial.
B. Reusts Claim of Public Policy Violation
APC contends that [i]f a public policy against witness
retaliation is to be adopted in Alaska as a basis for a wrongful
discharge tort, it should not extend to those instances where an
individual has testified falsely or with a reckless disregard for
whether his testimony is true or false. Before turning to APCs
truthfulness argument, we first address whether the State of
Alaska has an explicit public policy against witness retaliation.
1. Witness retaliation is against the public policy
of Alaska.
In Kinzel v. Discovery Drilling, Inc., we recognized
that a retaliatory discharge in violation of an explicit public
policy gives rise to a tort as well as a contract claim.7 We
concluded that the State of Alaska has explicit public policies
that protect employees who make workers compensation claims and
who serve as whistleblowers.8
Several Alaska statutes demonstrate that the state also
has an explicit policy of protecting witnesses from retaliation.
This protective policy is most clearly stated in AS 11.56.510,
which makes it a crime to retaliate against a witness by using
force, damaging property, or making threats.9 Other statutes
contain witness protection provisions, including the Alaska
Occupational Safety and Health Act,10 the Alaska Human Rights Law,11
and the Alaska Assisted Living Homes Act.12 Through these laws,
the state has clearly stated a public policy of protecting
witnesses from retaliation. Even though APCs alleged conduct
probably does not violate the letter of any of these laws,13 its
actions are contrary to the policy reflected in the statutes.
Thus, we hold that there is an actionable public policy tort in
Alaska for retaliation against witnesses in legal proceedings.
In reaching this conclusion, we are persuaded by cases
from other jurisdictions that have held various forms of witness
retaliation to be contrary to public policy.14 For example, in
Page v. Columbia Natural Resources, Inc., the West Virginia
Supreme Court held that it is against substantial public policy
of West Virginia to discharge an at-will employee because such
employee has given or may be called to give truthful testimony in
a legal action.15 The court found support for this policy in
state laws prohibiting wilful perjury and false swearing[] or
procuring another to do so and prohibiting intimidating or
impeding any witness[] or attempting to obstruct or impede the
administration of justice in any court.16
Allowing a tort remedy under these circumstances also
furthers the states interest in maintaining an effective method
of judicial dispute resolution. Subjecting employers to tort
liability for retaliating against employees who testify in legal
proceedings dissuades retaliatory conduct. It also reduces the
temptation for employees, fearing adverse responses from their
employers, to provide false testimony or disobey a subpoena.17
2. A truthfulness instruction was not required under
these facts, and it is unlikely APC preserved the
issue for appeal.
APC argues that if witness retaliation is contrary to
Alaskas public policy, the jury should have been instructed that
only truthful testimony can be protected.18 It therefore asserts
that the failure to instruct the jury on this requirement is
reversible error because it deprived APC of a critical defense.
But, as Reust points out, APC never asserted that it terminated
Reust because he testified falsely. In Page, the West Virginia
Supreme Court addressed this same argument:
Appellants argue additionally that Plaintiffs
Instruction No. 3 failed to require that the
testimony be truthful. While the failure to
testify truthfully may present an occasion
for further instruction in such cases, we
find that appellants were not prejudiced by
this omission, since there is no allegation
that [the plaintiff] was terminated because
her testimony was not truthful.[19]
We agree with this reasoning. Because APC did not offer evidence
at trial that Reusts alleged lack of truthfulness when he
testified in the Jantz matter was the reason for his termination,
APC was not entitled to such an instruction.
We also observe that it is unlikely APC preserved this
issue.20 APC claims that the truthfulness requirement was
discussed with the superior court during an unrecorded session
that dealt with instructions; it points to circumstances
supporting that contention, but it fails to establish where it
raised the truthfulness issue on the record.21 As a result, it is
impossible for us to decide whether APC adequately brought the
issue to the superior courts attention. Such problems must be
avoided by conducting all jury instruction sessions on the
record. Our disapproval of off-the-record instructional
discussions is long-standing.22 The lack of a record prevents or
discourages adequate appellate review. It may prevent an
appellant from establishing that a meritorious objection was
made. And it may also prevent us from understanding precisely
what objection was made and the reasoning of the lower court.
Because the objections actually made at trial often differ in
subtle but material ways from the objections appellants argue on
appeal, the lack of a record may also hamper our ability to
affirm a judgment. Likewise, the lack of a record of the trial
courts reasoning might deny us an opportunity to be persuaded by
the courts own words or the circumstances the court relied on in
ruling.
C. Mixed-Motive Instruction
1. The jury instruction on APCs motivation was not
reversible error.
The jury was instructed that
[i]n order to prove his claim for wrongful
discharge Dan Reust must prove it more likely
true than not true that . . . there was a
causal connection between Dan Reust having
testified, or the fact that he might testify
in the future, and the actions APC took. A
causal connection is established if the
testimony Dan Reust gave was a noteworthy or
motivating factor in the decision APC made.
It need not have been the only factor or
reason.
At trial, APC unsuccessfully requested that the following phrase
be added to the last sentence of the instruction: but the
decision would not have occurred without that factor or reason.
On appeal, APC argues that it was error not to include the
requested phrase. We conclude that APC did not adequately
preserve the issue it argues on appeal and that there was no
reversible error.
Under Alaska law, retaliatory discharge claims can
follow different analytical frameworks depending on the type of
evidence presented. When there is no direct evidence of
retaliation, a pretext framework is used.23 Under this analysis,
the employee must first establish a prima facie case.24 If the
employee clears this hurdle, the burden of production shifts to
the employer to articulate a legitimate nonretaliatory
explanation for the discharge.25 If the employer does so
successfully, the burden reverts to the employee, who must prove
that the explanation was a pretext for retaliation.26
But [i]n cases where there is direct evidence of
discrimination, we instead apply a mixed-motive analysis . . . .27
Here the plaintiff need only show that a prohibited reason was a
motivating factor.28 Then [t]he employer must show that it would
have made the same decision even absent considerations of [the
impermissible factor].29 Accordingly, if the plaintiff employee
presents direct evidence of discrimination or retaliation
sufficient to permit an inference that such factors were
motivating factors, the jury should be instructed that if it does
draw that inference the plaintiff is entitled to recover unless
the employer has established by a preponderance of the evidence
that the employer would have taken the same action without
consideration of the impermissible factor.30
The jury instruction in this case can best be described
as a partial mixed-motive instruction. It correctly stated that
Reust was required to show that an impermissible factor (i.e.,
his act of testifying in Jantz) was a motivating factor for APCs
conduct; however, the instruction failed to inform the jury that
Reust should not prevail if APC established that it would have
made the same decision without consideration of the impermissible
factor. APC recognized that something was missing from the
instruction, but its requested language (but that decision would
not have occurred without that factor or reason) would have
misapplied the burden. It would have required Reust to prove
that his participation as a witness in Jantz was a determinative
factor. As we noted above, an employee who has presented direct
evidence of retaliation does not have this burden under the mixed-
motive framework. There was direct evidence of an improper
motive here. Reust testified that Pizzuto, an APC manager,
informed him that APCs decision was due to Reusts involvement in
the Jantz lawsuit.
At trial APC argued that Reust was not entitled to a
mixed-motive instruction because he had not pleaded such a theory
and because he maintained that APCs decision was based solely on
his involvement in the Jantz lawsuit. Thus, according to APC,
Reust was not entitled to a mixed-motive instruction because he
had not argued in the alternative that his prior testimony was
merely a motivating factor. But the mixed-motive framework
applies if the evidence is sufficient to allow a trier to find
both forbidden and permissible motives;31 this threshold is
satisfied if the plaintiff introduces direct evidence of an
impermissible factor. It does not require the plaintiff to plead
that the defendants conduct was based on a combination of factors
instead of a single impermissible factor.32
APC might have asserted that there was insufficient
direct evidence to warrant a mixed-motive instruction. Had that
argument not succeeded, APC should have asked that the
instruction include additional language that would also have made
it clear that APC had the burden of showing that it would have
made the same decision based on legitimate reasons standing
alone. But APC did not request such language, and the language
it proposed would have erroneously shifted the burden back to
Reust. Given Reusts repeated and correct observations that it
was APCs burden to show that a legitimate reason alone would have
produced the same decision, APC was on notice that the
instructional change it sought contained a grave flaw.
A party arguing instructional error must demonstrate
that the grounds were properly raised.33 To the extent APC
objected to giving a mixed-motive instruction instead of a
pretext instruction, we conclude that no error occurred. To the
extent APC objected to the incompleteness of the mixed-motive
instruction, we conclude that APC did not distinctly raise this
issue at trial. Its failure to offer proposed language that
would have correctly allocated the burden of proof means that APC
did not provide the superior court with an identifiable
opportunity to rule on the issue it now raises.34 We therefore
review the instruction only for plain error which occurs if a
correct instruction would have likely altered the result.35
Although it is conceivable the jury might have reached
a different result had a complete mixed-motive instruction been
given, we cannot conclude that a different result would have been
likely. For instance, if we assume that the jury disbelieved the
testimony of Gary Buchanan and accepted APCs badmouthing
rationale, had a proper instruction been given, the jury might
have found that the badmouthing would have produced the same
decision even absent Reusts participation in the Jantz lawsuit.
But this scenario requires too much speculation about the jurys
findings for us to conclude that a correct instruction would
likely have altered the result.
D. Lost Wages Awards
1. The likely period of employment could not
reasonably have exceeded three years.
The jury awarded past wage loss for nearly three years
from the date APC wrongfully terminated Reust in April 1998 to
the beginning of the trial on January 2, 2001. The jury also
found that the length of Dan Reusts future wage loss was seven
years. The jury thus awarded Reust lost wages for a total of
about ten years. APC argues that a wage-loss award for a ten-
year period was excessive, speculative, and not supported by the
record.
Viewed, as it must be, in the light most favorable to
Reust,36 the trial evidence nonetheless does not support a
conclusion that Reust would have worked for APC continuously for
ten years. APC manager Mike Bailey testified that APC project
managers typically work one to three years. There was evidence
that employment tenure in the construction industry is uncertain;
a witness, when asked how long he would have been in a certain
job, testified that there was no telling with construction work.
Moreover, Reusts own employment history, including previous
stints with APC, undermines the likelihood of a ten-year tenure.
Reust testified that he worked for APC on several different
occasions and his resume indicates that APC employed him at
Prudhoe Bay from 1992 to 1995 and at Milne Point from 1995 to
1996.
Reust points to the testimony of Todd Pizzuto, another
APC manager, who testified that Reusts position was not project-
specific. This suggests that Reust could have been assigned to
other projects once his initial assignment was finished. But
Pizzuto also testified that that Reusts position could be
terminated due to a reduction of force.37 Reusts counsel
suggested in closing argument that Reust would have worked for
APC until retirement in 2014. This amounted to a request for
about sixteen years of lost wages. But the jurys award of lost
wages for ten years implicitly rejected that claim.
We have stated that [t]he normal rule is that a
wrongfully discharged employee is entitled to the total amount of
the agreed upon salary for the unexpired term of his employment
[contract] . . . .38 For example, in Central Bering Sea
Fishermens Assn v. Anderson (Anderson I) we held that a
wrongfully discharged employees lost earnings should be measured
by the amount and duration of the contract that [he or] she
expected to have with [the employer], which in that case was one
year.39 In comparison, Reust had an at-will relationship of no
specified term. We declined in Kinzel to rule on what the
appropriate measure of damages for lost wages would be for the
tortious discharge of a whistleblower because the issue was not
fully briefed.40 We now hold that when an at-will employee is
wrongfully discharged, damages are appropriately measured by the
likely duration of employment had the wrongful discharge not
occurred.41
The evidence in this case cannot support a finding of
ten years as the likely duration of employment. The record
reveals that Reust would have been employed for one to three
years had APCs tortious conduct not intervened. Viewing the
evidence in the light most favorable to Reust, no reasonable jury
could find that the likely duration of employment would have
exceeded three years. Therefore, we vacate the jurys lost wages
awards and remand for entry of a revised judgment awarding lost
wages for a period of three years.
2. The superior court did not abuse its discretion by
excluding evidence that Reusts position had been
eliminated.
APC contends that the superior court abused its
discretion by excluding evidence that Reusts position had been
eliminated in a corporate reorganization.42 APC manager Mike
Bailey testified at trial on direct examination by APC that he
had been advised the very morning he took the witness stand that
the position has been eliminated. After Reust raised a hearsay
objection, the superior court conducted a lengthy conference out
of the jurys presence. Bailey proffered additional testimony
during this session that he had been told by APCs president, in a
telephone call that morning, that Reusts position had been
eliminated.
APC, asserting here that the superior court excluded
the testimony as a sanction for failure to disclose and not
because it was hearsay, argues that the superior court was first
required to ascertain whether a continuance would have provided a
reasonable alternative to exclusion. We do not need to address
this argument because APCs starting premise that the superior
court excluded the disputed testimony to remedy a discovery
violation is incomplete. The superior court ruled the testimony
was inadmissible hearsay, stating: Were going to start with the
proposition that thats hearsay, and Im going to instruct the jury
that that testimony is stricken. APC does not challenge this
ruling on appeal, nor do we see any indication that such a
challenge would have been successful.43 As a result, we conclude
that it was not an abuse of discretion to exclude Baileys
testimony that Reusts position had been eliminated.44
3. APC has waived any argument that Reusts lost wages
should be reduced due to after-acquired evidence.
APC argues in a footnote in its reply brief that it
learned for the first time at trial that Reust had provided
reckless testimony in the Jantz lawsuit. APC suggests that this
after-acquired evidence would have caused APC to terminate Reust
for legitimate reasons and therefore that his damages arguably
should be limited to the date of the trial.45 APC has waived this
argument by first presenting it in its reply brief.46
E. Emotional Distress Damages
1. APC did not preserve its challenge to the
emotional distress damages award.
The jury awarded Reust $100,000 in emotional distress
damages. On appeal APC argues that this award was improper
because Reust did not demonstrate that he suffered severe
emotional distress. APC waived this argument by failing to
assert it below:47 As a general rule, this court will not consider
arguments attacking a judgment for the first time on appeal.48
2. Emotional distress damages were not preempted by
the exclusive remedy provision of the Alaska
Workers Compensation Act.
APC argues that Reusts claim for emotional distress
damages was preempted by the Alaska Workers Compensation Act.
This contention is without merit.49 Alaska Statute 23.30.05550
establishes that an employers workers compensation liability,
which the employer must pay irrespective of fault, is the
exclusive remedy for an employee injured during the course of
employment. 51 But we have held that the socially beneficial
purpose of the work[ers] compensation law would not be furthered
by allowing a person who commits an intentional tort to use the
compensation law as a shield against liability.52 Likewise, it
would be nonsensical to allow an employer to rely on the
exclusive remedy section, AS 23.30.055, to preclude damages
stemming from a public policy violation.53 APC has directed us to
no statutory text or legislative history suggesting that the
Alaska Workers Compensation Act was intended to provide a remedy
for a discharge motivated by a violation of public policy.
F. Punitive Damages
1. The superior court did not err in denying APCs
motion for directed verdict on the issue of
punitive damages.
APC contends that punitive damages should not have been
awarded because APCs conduct was not shown by clear and
convincing evidence to have been outrageous or reckless . . . .54
It argues that Reusts claim that he has been the victim of
witness retaliation is very thinly supported at best and any
proof by him of this does not rise to the level of clear and
convincing evidence. And even if Reust proved that APC reacted
to his deposition testimony, APC asserts that its conduct was not
malicious or reckless because [a] companys conduct in not wanting
in its management an individual who falsely accused another of
its managers of lying cannot be said to be outside limits of
reasonable business conduct.
We have stated that although a plaintiff may have
enough evidence to support the underlying cause of action by a
preponderance of the evidence, the plaintiff is required to
further establish outrageous conduct on the part of the defendant
by clear and convincing evidence before punitive damages are
justified.55 Thus, it does not matter that Reust might have
failed to prove witness retaliation by clear and convincing
evidence, because that standard of proof applies to proving the
outrageousness of APCs conduct, not to proving the underlying
tort. APCs second contention that any witness retaliation was
reasonable because Reust allegedly provided untruthful testimony
in his Jantz deposition has no theoretical relevance here: APC
produced no evidence at trial to support a claim that it
terminated Reust because he had testified falsely. APC has not
convinced us that we must intervene to prevent a miscarriage of
justice,56 and we therefore affirm the superior courts denial of
APCs motion for a directed verdict on the issue of punitive
damages.
2. The punitive damages cap and allocation statutes
are constitutional.
Reust challenges AS 09.17.020(f) and (j) on various
constitutional grounds.57 Subsection .020(f) is one of the
punitive damages caps and subsection .020(j) is the allocation
provision of the 1997 Alaska tort reform legislation.58
a. Due process
Reust contends that applying the tort reform
legislation to his case violated the due process clauses of the
state and federal constitutions. He asserts that the tort reform
legislation applies only to tort causes of action and that,
because his claim is for breach of contract, applying the
punitive damages cap to his award was arbitrary and irrational.
APC responds, correctly, that a plain reading of AS 09.17.020
indicates that it applies to all actions in which punitive
damages are awarded.59 And, as APC notes, Alaska law does not
permit punitive damages for breach of contract, except when the
conduct constituting the breach is also a tort for which punitive
damages are recoverable.60 This means that Reusts punitive
damages award lies in tort, which would place it within the ambit
of the tort reform legislation even if the legislation did not
apply to punitive damages stemming from breach of contract
claims.61 We are therefore unconvinced by Reusts arbitrariness
and irrationality argument.
Reust also claims that the statutes capping punitive
damages awards and requiring payment of fifty percent of such
awards to the state violate due process because they infringe on
fundamental rights without a compelling or legitimate purpose.
He points out that the United States Supreme Court has treated
punitive damages as quasi-criminal.62 According to Reust,
retribution is a legitimate justification for awarding punitive
damages between private parties, but it is not a legitimate
purpose for Alaskas penal administration. The award here, Reust
claims, contains inseparable components for retribution and
deterrence. Because the state has no interest in retribution,
Reust concludes that it cannot have an interest in his punitive
damages award.
In Evans ex rel. Kutch v. State we concluded that
because interests in unlimited [punitive] damages are merely
economic, the States objectives need only be legitimate not
compelling to justify the States action.63 We then concluded
that the states objectives in establishing the punitive damages
caps were legitimate.64 Those objectives are independent of any
quasi-criminal nature of punitive damages,65 and Reust does not
challenge the objectives as illegitimate. Accordingly, Reusts
claim that the punitive damages caps lack a compelling or
legitimate purpose fails.
This court was evenly divided in Anderson v. State ex
rel. Central Bering Sea Fishermens Assn (Anderson II)66 regarding
the constitutionality of AS 09.17.020(j), the statute that
allocates fifty percent of punitive damages awards to the state.
The courts dispositional opinion discusses the reasons why we now
hold that AS 09.17.020(j) does not violate substantive due
process:
[A]llocating half of all punitive damage
awards to the state will reduce the incentive
for plaintiffs to pursue punitive damages
claims. The statute will also encourage
plaintiffs to settle their cases since the
state only shares in punitive damages when an
award is made. These incentives could reduce
both the overall number of punitive damage
claims as well as the number of punitive
damage claims that actually go to trial.
This effect could reasonably be expected to
have a moderating influence on liability
insurance premiums. Further, the incentive
to settle punitive damage claims could reduce
the length and complexity of litigation,
thereby reducing the overall cost of
litigation. The states expectation that AS
09.17.020(j) will help to fulfill these
purposes is at least minimally rational.[67]
The dispositional opinion in Anderson II also concluded
that [i]ncreasing state revenues by allocating a portion of
punitive damages awards to the state based on the analogy between
such awards and civil and criminal fines is a legitimate public
policy choice.68 Dissenting in part, Justice Bryner, joined by
Justice Carpeneti, argued that the allocation statute was not
minimally rational because the only way that subsection (j)
discourages punitive damages claims is by punishing any claimant
who files a meritorious claim, successfully pursues it to
completion, and receives a factually accurate and lawfully
authorized judgment.69 We do not share this view. It is rational
to expect that fewer punitive damages claims will be filed and
that more will be settled if the potential payoff is capped or
reduced by allocating half of any punitive damages awards to the
state. Justice Bryners partial dissent also argued that [j]ust
as cost savings alone do not sustain otherwise arbitrary state
action, so revenue earning is not, in itself, a legitimate
legislative purpose.70 But in our view, the state action is not
arbitrary here because the objectives of punitive damages are
analogous to the objectives of civil and criminal fines. The
decision to increase state revenues by allocating a portion of
punitive damages awards to the state is therefore legitimate. We
hold that AS 09.17.020(j) does not violate substantive due
process for the reasons expressed in the dispositional opinion in
Anderson II.
b. Equal protection
Reust argues that the punitive damages caps violate the
equal protection clauses of the Alaska and United States
Constitutions. He claims that the tort reform legislation
discriminates between two classes of litigants those who receive
full recovery and those whose recovery is capped. This exact
argument was presented and rejected in Evans.71
c. Right to jury trial
Reust argues that the punitive damages cap violates the
right to a jury trial provided by the Alaska Constitution.72 This
argument was rejected in Evans, where a majority of this court
agreed that [t]he decision to place a cap on [punitive] damages
awarded is a policy choice and not a re-examination of the
factual question of damages determined by the jury.73 Reust urges
a reconsideration of this conclusion, arguing that [a]
constitutional protection cannot be bypassed by allowing it to
exist in form but not letting it have an effect in function. We
see no compelling reason to revisit Evanss holding on this issue.
d. Takings
Reust claims that the allocation requirement in AS
09.17.020(j) is a taking because it deprives him of a property
right in his punitive damages claim.74 We addressed this issue
most recently in Anderson II.75 The dispositional opinion
concluded that AS 09.17.020(j) does not violate the takings
clauses of the Alaska Constitution or the Federal Constitution.76
The opinion gave two reasons. First, it determined that
Andersons claim for punitive damages was only protected property
insofar as permitted by AS 09.17.020(j).77 Andersons unlitigated
claim only became property when it accrued, and a claim cannot
accrue before the events that give rise to it occur.78 Because
Andersons claim accrued after the August 7, 1997 effective date
of AS 09.17.020(j), the scope of her claim was defined by
existing state law.79 Thus, AS 09.10.020(j) limited her claim
and therefore her property right to one-half of any punitive
damages award.80
Second, the dispositional opinion pointed to Andersons
reasonable expectations when her claim accrued.81 It stated that
because Andersons reasonable expectations were controlled by the
law in effect when her claim accrued and subsection .020(j) was
then in effect, she could not reasonably expect to recover more
than half of her punitive damages award.82 We are persuaded by
these arguments and apply them to Reust, whose claim accrued in
April 1998, after AS 09.17.020(j) became effective.
Reusts brief cites the Colorado Supreme Courts decision
in Kirk v. Denver Publishing Co. in support of his argument that
AS 09.17.020(j) effects an unconstitutional taking.83 The court
held in Kirk that a Colorado punitive damages allocation statute
was a taking because it applied after a final judgment was
entered in the plaintiffs case and after the judgment was
collected from the defendant.84 The property interest in the
punitive damages award therefore vested before a portion was
taken by the state.85 The dispositional opinion in Evans
distinguished Kirk on the ground that the Colorado statute,
unlike AS 09.17.020(j), applied after a final judgment was
entered in the plaintiffs case.86 In Anderson II, the
dispositional opinion also disagreed with the implicit
conclusion in Kirk that a plaintiff has a greater property
interest in a judgment upon a tort claim than the interest
recognized by law when the claim accrued. 87 Most other state
supreme courts have upheld against takings challenges statutes
that allocate some part of punitive damages awards to
governmental entities.88
In his partial dissent in Anderson II, Justice Bryner,
joined by Justice Carpeneti, argued that AS 09.17.020(j) neither
redefines nor regulates the permissible scope of unlitigated
punitive damages claims; instead, subsection .020(j) attempts to
alter the plaintiffs property rights only after the plaintiffs
claim accrues and is fully litigated, after the claim proves
successful, and after the plaintiff receives an award. 89 Justice
Bryner pointed to statutory language that specifies the source of
forfeiture as the award that a person receives and that is
available for deposit into the general fund of the state.90 But
the intent of the legislature was clearly to allocate a portion
of punitive damages awards to the state.91 Insofar as the
Anderson II dispositional opinions construction of the statutory
language avoids a constitutional violation by redefining the
permissible scope of unlitigated punitive damages claims, we now
adopt that construction.92 We therefore hold that AS 09.17.020(j)
does not result in an unconstitutional taking.
3. The superior court applied the incorrect statutory
cap.
Reust argues that if a punitive damages cap applies,
the superior court should have applied AS 09.17.020(f), rather
than AS 09.17.020(h). He is correct.
The superior court reduced the punitive damages award
to $500,000 per AS 09.17.020(h), which lists increasing cap
levels that depend on the employers number of employees.93 That
subsection applies to an action against an employer to recover
damages for an unlawful employment practice prohibited by AS
18.80.220, which proscribes various forms of employment
discrimination. Reust argues that his action does not fall under
AS 18.80.220; rather, it is a claim for retaliatory wrongful
discharge. Therefore, if any punitive damages cap were
applicable, Reust claims it should have been the cap imposed by
AS 09.17.020(f). That subsection states that, [e]xcept as
provided in (g) and (h) of this section, an award of punitive
damages may not exceed the greater of (1) three times the amount
of compensatory damages awarded to the plaintiff in the action;
or (2) the sum of $500,000.
APC argues that because Alaska did not recognize a
wrongful discharge tort when the tort reform legislation was
enacted, the trial court correctly applied AS 09.17.020(h).
According to APC, AS 18.80.220 provided the only known cause of
action for awarding punitive damages in the context of employment
termination, so the legislature could well have concluded that it
had adequately described the cap for termination torts by the
manner in which the subsection (h) cap was drafted.
Alaska Statute 09.17.020(h) limits punitive damages
recoveries in AS 18.80.220 discrimination cases, but does not
purport to limit awards for all types of torts arising from an
improper termination. For example, APC concedes that AS
09.17.020(h) does not address torts such as intentional
infliction of emotional distress or defamation that may arise
from a non-discriminatory termination. APC cites no legislative
history suggesting that the legislature intended AS 09.17.020(h)
to have a broader application beyond awards in discrimination
cases arising under AS 18.80.220. Because we conclude that AS
09.17.020(h) does not apply here, we remand for application of AS
09.17.020(f).
Once the correct punitive damages award has been
determined under the statutory cap, it will also be necessary for
the superior court to ensure that the award is not excessive per
the statutory factors listed in AS 09.17.020(c)94 and the three
guideposts outlined by the United States Supreme Court.95
G. The Superior Court Did Not Abuse Its Discretion in
Allowing the State of Alaska To Intervene.
Reust argues that the superior court should not have
allowed the State of Alaska to intervene either as a matter of
right or permissively.96 The state responds that intervention was
appropriate for both reasons and, even if it were not, it was
entitled to intervene under Alaska Rule of Civil Procedure 24(c)
because Reust challenged the constitutionality of a state
statute.97 We agree that Rule 24(c) justifies the states
intervention.98
In addition, it appears that the state should always be
permitted to intervene when there is any dispute about how a
punitive damages award is to be allocated. Other recent cases
have presented equivalent disputes, such as whether pro rata
attorneys fees and costs should be deducted from the states
allocation.99 Indeed, we have a difficult time imagining how the
state could be denied intervention in such cases.
H. The Timing of the Entry of Judgment Was Appropriate.
Reust argues that the superior court unfairly delayed
entry of judgment, causing a lower interest rate to apply to his
award. The jury returned its first verdict on January 11, 2001
and then awarded punitive damages by supplemental verdict of
April 24, 2001. But the superior court did not sign the interim
final judgment until June 11, 2002.
APC correctly points out that disputed post-verdict
motions were pending before the superior court until the interim
final judgment was entered on June 11, 2002. For example, on
March 1, 2002 Reust submitted a motion asking the court to
declare unconstitutional the tort reform statute. In addition,
some of the delay was due to Reusts own request to hold matters
in abeyance pending mediation between the parties. The superior
court was therefore justified in delaying entry of judgment.
IV. CONCLUSION
For these reasons, we REMAND for reduction of the lost
wages awards in accordance with this opinion, for application of
the punitive damages cap set out in AS 09.17.020(f), and for
review of the recalculated punitive damages award for
excessiveness. We AFFIRM the remainder of the superior courts
rulings variously challenged by APC or Reust.
BRYNER, Chief Justice, with whom CARPENETI, Justice, joins,
dissenting, in part.
I disagree with the courts decision to uphold Alaskas
punitive damages forfeiture statute. For the most part, I rely
on the reasons set out in my dissenting opinions in Anderson II1
and Evans v. State;2 but I add one comment below to address a
point regarding punitive damages forfeiture that is newly raised
in todays opinion.
The opinion suggests that the punitive damages
forfeiture law can be sustained as minimally rational because it
is similar to a fine: the objectives of punitive damages, the
court declares, are analogous to the objectives of civil and
criminal fines.3 Of course, fines and punitive damages
undoubtedly do have the same general purpose. But beyond its
reliance on this truism, the courts proposed analogy between
fines and forfeiture breaks down and becomes unconvincing: After
all, unlike the punitive damages forfeiture provision, our
justice system does not require the victim to prosecute the
offender; nor does it force the prosecutor to pay the fine. So
while the punitive damages forfeiture statute nominally serves
the same purpose as a fine, it hardly advances this purpose in a
rational manner.
_______________________________
1 See, e.g., Riddell v. Edwards, 32 P.3d 4, 8 (Alaska
2001).
2 Ch. 26, SLA 1997.
3 See, e.g., Childs v. Kalgin Island Lodge, 779 P.2d 310,
314 (Alaska 1989) (The formation of an express contract requires
an offer encompassing its essential terms, an unequivocal
acceptance of the terms by the offeree, consideration and an
intent to be bound.); see also Magill v. Nelbro Packing Co., 43
P.3d 140, 142 (Alaska 2001).
Whether a jury instruction is erroneous is a question
of law to which we apply our independent judgment. Era Aviation,
Inc. v. Lindfors, 17 P.3d 40, 43 n.2 (Alaska 2000).
4 See Restatement (Second) of Contracts 71 (1981) (To
constitute consideration, a performance or a return promise must
be bargained for . . . . A performance or return promise is
bargained for if it is sought by the promisor in exchange for his
promise and is given by the promisee in exchange for that
promise.).
5 In Hackett v. Foodmaker, Inc., 245 N.W.2d 140, 140-41
(Mich. App. 1976), the plaintiff agreed to move from California
to Michigan to become a restaurant manager. The restaurant was
not yet open when the plaintiff arrived in Michigan, so he filled
in for absent managers in other locations until his restaurant
was ready. Id. at 141. In the meantime plaintiff became
involved in an anti-trust suit against defendant and was then
informed that anyone involved in such a lawsuit would not be
considered for a restaurant manager position. Id. Another
person was later selected to fill the plaintiffs expected
position. Id.
The Hackett court ruled that these circumstances
amounted to a distinguishing feature and an exception to the
proposition that contracts for personal services for permanent
employment or for life are considered indefinite hirings,
terminable at the will of either party. Id. The court allowed
the claim to proceed because the plaintiff was never afforded an
opportunity to perform under the contract due to defendants total
repudiation thereof in that defendant never allowed plaintiff an
opportunity to manage [the restaurant]. Id.
Later Michigan decisions addressing Hackett have
advanced conflicting views over what factors the Hackett court
found dispositive, but none has criticized its conclusion that a
public policy violation can permit a cause of action before
performance has commenced. See Cunningham v. 4-D Tool Co., 451
N.W.2d 514, 515-516 (Mich. App. 1989); Filcek v. Norris-Schmid,
Inc., 401 N.W.2d 318, 319-20 (Mich. App. 1986); Milligan v. Union
Corp., 274 N.W.2d 10, 12 n.3 (Mich. App. 1978).
6 See, e.g., Indus. Uranium Co. v. United States, 376
F.2d 868, 872 (Ct. Cl. 1967) (The defendant [who] prevented
performance of the alleged condition[] cannot now stand on it as
a bar to recovery.); Motel Serv., Inc. v. Cent. Maine Power Co.,
394 A.2d 786, 788 (Me. 1978) (Where the offeree of a unilateral
contract is prevented from completing performance by the actions
of the offeror, such failure will not be a defense to an action
by the offeree on the contract.); Cahoon v. Cahoon, 641 P.2d 140,
144 (Utah 1982) (One party cannot by willful act or omission make
it impossible or difficult for the other to perform and then
invoke the others nonperformance as a defense.); Richard A.
Lord, Williston on Contracts 39:3, at 519 (4th ed. 2000).
7 Kinzel v. Discovery Drilling, Inc., 93 P.3d 427, 432
(Alaska 2004).
8 Id. at 438.
9 AS 11.56.510 provides, in part:
(a) A person commits the crime of
interference with official proceedings if the
person (1) uses force on anyone, damages the
property of anyone, or threatens anyone with
intent to (A) improperly influence a witness
or otherwise influence the testimony of a
witness; (B) influence a jurors vote,
opinion, decision, or other action as a
juror; (C) retaliate against a witness or
juror because of participation by the witness
or juror in an official proceeding; or (D)
otherwise affect the outcome of an official
proceeding . . . . (Emphasis added.)
10 AS 18.60.089(a) provides: A person may not discharge or
discriminate against an employee because the employee has . . .
testified or is expected to testify in a proceeding relating to
occupational safety and health . . . .
11 AS 18.80.220(a) provides: [I]t is unlawful for . . .
(4) an employer . . . to discharge, expel, or otherwise
discriminate against a person because the person has . . . filed
a complaint, testified, or assisted in a proceeding under this
chapter . . . .
12 AS 47.33.350(a) provides: An assisted living home may
not take retaliatory action against a resident of that home if
the resident or the residents representative . . . (2) appears as
a witness, or refuses to appear as a witness, in an adjudicatory
proceeding regarding the home . . . .
13 If, for instance, Reust had been fired for testifying
in a proceeding under the Alaska Human Rights Act (AHRA), we
would be reluctant to recognize a cause of action in this case.
The AHRA provides its own cause of action, AS 22.10.020(i), and
we have typically declined to recognize independent torts based
on contravention of public policy where there are adequate legal
alternatives. See, e.g., Walt v. State, 751 P.2d 1345, 1353 n.16
(Alaska 1988) (refusing to recognize independent tort for
violation of public policy where statutes and collective
bargaining agreement provided comprehensive scheme for employee
rights and remedies).
14 See, e.g., Bishop v. Fed. Intermediate Credit Bank of
Wichita, 908 F.2d 658, 662 (10th Cir. 1990) (Recognition of the
[witness retaliation] exception supports our tradition of free,
direct and truthful testimony at legislative hearings, a policy
Oklahoma has implicitly recognized.); Freeman v. McKellar, 795 F.
Supp. 733, 742 (E.D. Pa. 1992) (holding that Pennsylvania law
reflect[s] a sufficiently clear and significant public policy
against witness retaliation); Fitzgerald v. Salsbury Chem., Inc.,
613 N.W.2d 275, 286 (Iowa 2000) ([W]e find ample statutory
support for a public policy in Iowa in favor of refusing to
commit perjury . . . . [T]his public policy is not simply
confined to the refusal to commit perjury but clearly embraces a
broader public policy to provide truthful testimony in legal
proceedings.) (internal citation omitted); Ressler v. Humane Socy
of Grand Forks, 480 N.W.2d 429, 432 (N.D. 1992) ([T]he public
policy of North Dakota prohibits an employer from discharging an
employee for honoring a subpoena and for testifying truthfully.);
Sabo v. Schott, 639 N.E.2d 783 (Ohio 1994) (Plaintiffs allegation
that he was fired as a result of having testified truthfully,
albeit unfavorably to the defendants, if proven to be true, would
constitute conduct on the part of the defendants which violates
the public policy of this state.).
15 Page v. Columbia Natural Res., Inc., 480 S.E.2d 817,
826 (W. Va. 1996).
16 Id. at 825.
17 See AS 11.56.200 (crime of perjury); AS 09.20.120 (A
witness who disobeys a subpoena served on the witness shall also
forfeit to the party requiring the attendance of the witness the
sum of $50 and all damages which that party may sustain by the
failure of the witness to attend.); Alaska R. Civ. P. 45(f)
(Failure by any person without adequate excuse to obey a subpoena
served upon that person may be deemed a contempt of the court
from which the subpoena issued.).
18 Jury Instruction No. 26 stated in part: It is unlawful
to fire an employee for giving testimony, including a deposition,
in a legal proceeding, or for the possibility that he may have
been a witness in the future in the same lawsuit, because this is
a violation of a substantial public policy.
19 Page, 480 S.E.2d at 826 n.8.
20 Alaska Rule of Civil Procedure 51(a) provides in part:
No party may assign as error the giving or the failure to give an
instruction unless the party objects thereto before the jury
retires to consider its verdict, stating distinctly the matter to
which the party objects and the grounds of the objection.
21 See Alaska R. App. P. 212(c)(8)(B) (Appellants brief
shall indicate the pages of the record where each point on appeal
was raised in the trial court.); Pope v. State, 480 P.2d 697, 698
(Alaska 1971) ([B]asic fairness to all parties to an appeal
requires that we limit our review to matters appearing in the
record.).
22 See City of Nome v. Ailak, 570 P.2d 162, 166 n.4
(Alaska 1977) (We disapprove of off-the-record discussions
between court and counsel concerning jury instructions. Such a
practice makes our job needlessly more difficult.); State v.
Abraham, 566 P.2d 267, 269 (Alaska 1977) (noting that extensive
unrecorded in-chambers conferences . . . could have had
potentially serious repercussions); State v. Buckalew, 561 P.2d
289, 292 (Alaska 1977) (The absence of a record presents grave
problems when it becomes necessary . . . to reconstruct the
events that occurred in the court below.); Ervin v. State, 761
P.2d 124, 126 n.2 (Alaska App. 1988) (quoting Ailak, 570 P.2d at
166 n.4). We also note that Alaska Administrative Rule 21
provides: So far as practicable, all judicial business involving
the trial of causes and conferences with members of the Bar or
litigants shall be on the record and transacted in open court.
State v. Laraby, 842 P.2d 1275 (Alaska App. 1992),
provides a poignant example of the unnecessary confusion that can
result from unrecorded jury instruction sessions. Laraby
concerned ineffective assistance of counsel; specifically,
whether the defense attorney had withdrawn a proposed instruction
for tactical reasons. Id. at 1279. In a post-conviction
evidentiary hearing, the trial judge testified as a witness
regarding an off-the-record jury instruction session but could
not recall whether defense counsel had withdrawn any proposed
instructions and could not explain why the [instruction in
question] had not been given. Id. at 1277.
23 VECO, Inc. v. Rosebrock, 970 P.2d 906, 918-19 (Alaska
1999). Direct evidence is evidence of conduct or statements by
persons involved in the decisionmaking process that may be viewed
as directly reflecting the alleged discriminatory attitude . . .
sufficient to permit a factfinder to infer that that attitude was
more likely than not a motivating factor in the employers
decision . . . . Kinzel v. Discovery Drilling, Inc., 93 P.3d
427, 435 (Alaska 2004) (quoting Ostrowski v. Atlantic Mut. Ins.
Cos., 968 F.2d 171, 182-83 (2d Cir. 1992)).
24 To establish a prima facie case of retaliatory
discharge, a plaintiff must show: (1) that [the employee] was
engaged in a protected activity; (2) that an adverse employment
decision was made; and (3) that there was a causal connection
between the two. Kinzel, 93 P.3d at 433 (quoting VECO, 970 P.2d
at 921).
25 Kinzel, 93 P.3d at 433.
26 Id.
27 Era Aviation, Inc. v. Lindfors, 17 P.3d 40, 44 (Alaska
2000) (emphasis added).
28 Kinzel, 93 P.3d at 434.
29 Lindfors, 17 P.3d at 44 (citing VECO, 970 P.2d at 920).
30 Kinzel, 93 P.3d at 435 (quoting Ostrowski, 968 F.2d at
182-83) (emphasis added).
31 Ostrowski, 968 F.2d at 181.
32 See, e.g., VECO, 970 P.2d at 920 (rejecting defendants
argument that the plaintiff must choose between pursuing a mixed-
motive theory and a pretext theory).
33 See Alaska R. Civ. P. 51(a), quoted in supra note 20.
34 Manes v. Coats, 941 P.2d 120, 125 n.4 (Alaska 1997)
(quoting Conam Alaska v. Bell Lavalin, 842 P.2d 148, 153 (Alaska
1992)).
35 Id. at 125 (quoting Conam Alaska, 842 P.2d at 153)
(internal quotation marks omitted).
36 The adequacy of evidence supporting a jurys award is a
mixed question of law and fact. Cent. Bering Sea Fishermens Assn
v. Anderson (Anderson I), 54 P.3d 271, 277 (Alaska 2002). As
such, we review the evidence presented in the light most
favorable to [the prevailing party] and evaluate de novo the
legal question of whether that evidence is specific enough to
support the jurys economic damages award. Id.
37 Pizzuto testified as follows:
Q. Now, isnt it true, Mr. Pizzuto, that the
person who was going to get to fill Mr.
Peikerts position whoever that person would
have been would have had that job as long as
you did a good job for the company, subject
to reduction in force, a transfer, in
quitting, or whatever that person wanted to
do?
A. Yeah, when provided we have the work to
justify all the positions.
Q. Right. Subject to reduction in force.
A. Yeah.
Q. But otherwise, they would have that job
as long as they do a good job for the
company, right?
A. As far as I know.
Q. And that particularly work for the
project manager isnt a job isnt
project-specific, is it?
A. No.
Q. Okay. In other words, for that
particular job, there was no particular
project that needed to be completed, and then
after its completed, the person who had
gotten the project managers job, that job
would be over and done with, right?
A. No.
38 Anderson I, 54 P.3d at 278 (quoting Skagway City Sch.
Bd. v. Davis, 543 P.2d 218, 225 (Alaska 1975)).
39 Anderson I, 54 P.3d at 278.
40 Kinzel v. Discovery Drilling, Inc., 93 P.3d 427, 438
(Alaska 2004).
41 See, e.g., Tadsen v. Praegitzer Indus., Inc., 902 P.2d
586, 590 (Or. App. 1995) (the period that the plaintiff would
likely have been employed by the defendant but for the
discrimination . . . . is [] the proper ultimate question in
claims by at will employees . . . .) (affirmed by Tadsen v.
Praegitzer Indus., Inc., 928 P.2d 980 (Or. 1996)).
42 We review evidentiary rulings for abuse of discretion.
Zaverl v. Hanley, 64 P.3d 809, 817 n. 16 (Alaska 2003).
43 Hearsay is a statement, other than one made by the
declarant while testifying at the trial or hearing, offered in
evidence to prove the truth of the matter asserted. Alaska R.
Evid. 801(c). The testimony in question appears to fit this
definition, and none of the exclusions or exceptions addressed in
Alaska Evidence Rules 801(d), 803, or 804 seems to apply.
44 The superior court did exclude, as an apparent
sanction, other parts of Baileys testimony. But the position-
elimination testimony is the only passage that APC argues on
appeal was erroneously excluded; even if the court intended the
sanction of exclusion to include the position-elimination
testimony, the superior courts hearsay ruling was an alternative,
independent, and unchallenged basis for exclusion. We may
affirm a trial courts exclusion of evidence even though the
affirmance is based on a ground not relied upon by the trial
court. Korean Air Lines Co., Ltd. v. State, 779 P.2d 333, 339-
40 (Alaska 1989) (quoting Sloan v. Atlantic Richfield Co., 541
P.2d 717, 722 n.6 (Alaska 1975)).
45 APC cites Brogdon v. City of Klawock, 930 P.2d 989, 992
(Alaska 1997), which states that
[i]f an employer discovers grave misconduct
on the part of a terminated employee which
the employee might have been able to conceal
had the employee not been terminated, the
employer should nonetheless not be required
to reinstate the employee or to pay
prospective damages for the employees
termination . . . .
46 See Crittell v. Bingo, 83 P.3d 532, 536 n.19 (Alaska
2004) (stating that reply brief may raise no contentions not
previously raised in either the appellants or appellees briefs )
(quoting Alaska R. App. P. 212(c)(3)).
47 APCs briefs fail to specify where in the record this
point was raised below. See Alaska R. App. P. 212(c)(8)(B). Our
review of the record reveals that at trial APC objected to Reusts
emotional distress damages claim on the ground it violated the
Civil Rule 26 disclosure rule. During a discussion on jury
instructions, APC stated, we still believe that . . . emotional
distress is improper, but specified no grounds for its objection.
APC did not raise the issue of severity in its directed verdict
motion. There is no indication APC brought to the trial courts
attention any asserted deficiency in Reusts proof of the severity
of his distress.
48 See Koller v. Reft, 71 P.3d 800, 804 n.6 (Alaska 2003)
(quoting Mapco Express, Inc. v. Faulk, 24 P.3d 531, 540 n.29
(Alaska 2001)) (quotation marks omitted).
49 We review questions of law using our independent
judgment. Indus. Commercial Elec., Inc. v. McLees, 101 P.3d 593,
597 (Alaska 2004). An Alaska statute is interpreted according to
reason, practicality, and common sense, taking into account the
plain meaning and purpose of the law as well as the intent of the
drafters. Native Vill. of Elim v. State, 990 P.2d 1, 5 (Alaska
1999); see also Fyffe v. Wright, 93 P.3d 444, 457 n.39 (Alaska
2004).
50 AS 23.30.055 provides in part:
The liability of an employer prescribed in AS
23.30.045 is exclusive and in place of all
other liability of the employer and any
fellow employee to the employee, the
employees legal representative, husband or
wife, parents, dependents, next of kin, and
anyone otherwise entitled to recover damages
from the employer or fellow employee at law
or in admiralty on account of the injury or
death . . . .
51 Gunter v. Kathy-O-Estates, 87 P.3d 65, 70 (Alaska 2004)
(quoting Fenner v. Municipality of Anchorage, 53 P.3d 573, 575
(Alaska 2002)).
52 Fenner, 53 P.3d at 575 (quoting Elliott v. Brown, 569
P.2d 1323, 1327 (Alaska 1977)) (internal quotation marks
omitted).
53 See, e.g., Accardi v. Superior Court, 21 Cal. Rptr. 2d
292, 298 (Cal. App. 1993) (stating that a claim for emotional and
psychological damage, arising out of employment, is not barred
[by an exclusive remedy provision] where the distress is
engendered by an employers illegal discriminatory practices).
54 AS 09.17.020(b) provides: The fact finder may make an
award of punitive damages only if the plaintiff proves by clear
and convincing evidence that the defendants conduct (1) was
outrageous, including acts done with malice or bad motives; or
(2) evidenced reckless indifference to the interest of another
person. See also Robles v. Shoreside Petroleum, Inc., 29 P.3d
838, 846 (Alaska 2001) (quoting Chizmar v. Mackie, 896 P.29 196,
210 (Alaska 1995)).
55 Nelson v. Progressive Corp., 976 P.2d 859, 864-65
(Alaska 1999).
56 Great Divide Ins. Co. v. Carpenter ex rel. Reed, 79
P.3d 599, 615 (Alaska 2003) (Matthews, J., concurring) (stating
that [w]e will reverse a punitive damages award only if we have a
firm conviction based on the record as a whole that the trial
court erred and we must intervene to prevent a miscarriage of
justice) (internal quotation marks omitted) (quoting State Farm
Mut. Auto. Ins. Co. v. Weiford, 831 P.2d 1264, 1266 (Alaska
1992)); see also Alaskan Vill., Inc. v. Smalley, 720 P.2d 945,
948 (Alaska 1986).
57 Constitutional issues are issues of law and subject to
de novo review. State v. Alaska Civil Liberties Union, 978 P.2d
597, 603 (Alaska 1999).
58 Ch. 26, SLA 1997. AS 09.17.020(f)-(h) imposes various
caps on punitive damages awards. We discuss the cap applicable
to this case in Part III.F.3. AS 09.17.020(j) requires that
fifty percent of a punitive damages award be deposited in the
states general fund. Reust describes this as a forfeiture
provision.
59 The tort reform legislation applies to an action in
which a claim of punitive damages is presented to the fact finder
. . . . AS 09.17.020(a) (emphasis added).
60 McKibben v. Mohawk Oil Co., Ltd., 667 P.2d 1223, 1232
(Alaska 1983) (citing Restatement (Second) of Contracts 355
(1981)).
61 See ARCO Alaska, Inc. v. Akers, 753 P.2d 1150, 1154
(Alaska 1988) (stating that [w]here a partys conduct in breaching
a contract rises to the level of a traditionally recognized tort,
such as intentional infliction of emotional distress, an action
in tort would lie).
62 See Cooper Indus., Inc. v. Leatherman Tool, Inc., 532
U.S. 424, 432 (2001).
63 Evans ex rel. Kutch v. State, 56 P.3d 1046, 1053
(Alaska 2002) (citing Reid v. Williams, 964 P.2d 453, 458 (Alaska
1998)). Chief Justice Fabe, joined by Justice Eastaugh, wrote
the courts dispositional opinion. Justices Bryner and Carpeneti
dissented in part. The four justices participating in Evans were
evenly divided on two issues: the constitutionality of the Tort
Reform acts cap on noneconomic damages and its requirement that
half of punitive damages awards be paid to the State . . . . Id.
at 1070 n.140. On these two issues, the Evans dispositional
opinion affirmed the superior courts ruling but did not create
precedent. See Hammond v. State, Dept of Transp. & Pub.
Facilities, 107 P.3d 871, 883 n.7 (Alaska 2005) (A decision by an
evenly divided court results in an affirmance. The opinion
agreeing with the result reached by the superior court is
referred to as the dispositional opinion, but it does not have
the precedential effect of an opinion of the court.). On all
other issues present in Evans at least three justices agree[d];
therefore, the courts decision on these issues does have
precedential value and is binding on future cases. Evans, 56
P.3d at 1070 n.140.
64 Evans, 56 P.3d at 1053.
65 The objectives include (1) discourag[ing] frivolous
litigation and decreas[ing] the costs of litigation; (2)
stop[ping] excessive punitive damages awards in order to foster a
positive business environment; (3) control[ling] the increase of
liability insurance rates; (4) encourag[ing] self-reliance and
independence by underscoring the need for personal
responsibility; and (5) reduc[ing] the cost of malpractice
insurance for professionals. Evans, 56 P.3d at 1053 (citing ch.
26, 1(1-5), SLA 1997) (citations and internal quotation marks
omitted).
66 Anderson v. State ex rel. Cent. Bering Sea Fishermens
Assn (Anderson II), 78 P.3d 710 (Alaska 2003). Justice Matthews,
joined by Justice Eastaugh, authored the dispositional opinion
regarding the constitutionality of AS 09.17.020(j); Justices
Bryner and Carpeneti dissented in part.
67 Id. at 717 (internal footnote omitted).
68 Id. at 718.
69 Id. at 724 (Bryner, J., dissenting in part).
70 Anderson II, 78 P.3d at 724 (Bryner, J., dissenting in
part).
71 The dispositional opinion rejected the argument that
the punitive damages caps violate equal protection. Evans, 56
P.3d at 1051-55.
72 Alaska Const. art. I, 16.
73 Evans, 56 P.3d at 1051.
74 Reust also asserts that subsection .020(j) is void on
its face because it requires attorneys to perform services
without just compensation. There is no need to address this
argument because we have previously held that AS 09.60.080
requires that the superior court deduct pro rata the contingent
fee from the states portion of the punitive damages award.
Anderson II, 78 P.3d at 720-22.
75 Anderson II, 78 P.3d at 714-16. We previously
addressed the issue in Evans, 56 P.3d at 1058. The dispositional
opinion in Evans concluded that the statute does not effect a
taking because the statute limits a plaintiffs property interest
in punitive damages before it vests. Id. The dispositional
opinion noted that [t]his construction of AS 09.17.020(j) is
consistent with the legislatures power to limit or abolish
punitive damages . . . . Id.
76 Anderson II, 78 P.3d at 714-15.
77 Id.
78 Id. at 714.
79 Id. at 714-15.
80 Id. at 715.
81 Id. (citing State, Dept of Natural Res. v. Arctic Slope
Regl Corp., 834 P.2d 134 (Alaska 1991) (recognizing importance of
reasonable expectations in constitutional takings claims); Beluga
Mining Co. v. State, Dept of Natural Res., 973 P.2d 570, 576
(Alaska 1999) (same)).
82 Anderson II, 78 P.3d at 715.
83 Kirk v. Denver Publg Co., 818 P.2d 262 (Colo. 1991).
84 Id. at 272-73.
85 Id. at 268.
86 Evans, 56 P.3d at 1058 n.74.
87 Anderson II, 78 P.3d at 716 n.30 (quoting DeMendoza v.
Huffman, 51 P.3d 1232, 1234 (Or. 2002) (quoting Fust v. Attorney
Gen., 947 S.W.2d 424, 431 (Mo. 1997))).
88 See, e.g., Gordon v. State, 608 So. 2d 800, 801-02
(Fla. 1992); Mack Trucks, Inc. v. Conkle, 436 S.E.2d 635, 639
(Ga. 1993); Cheatam v. Pohle, 789 N.E.2d 467, 472-75 (Ind. 2003);
Shepherd Components, Inc. v. Brice Petrides-Donohue & Assocs.,
Inc., 473 N.W.2d 612, 619 (Iowa 1991); Fust v. Attorney Gen., 947
S.W.2d 424, 431 (Mo. 1997); Rhyne v. K-Mart Corp., 594 S.E.2d 1,
14-15 (N.C. 2004); DeMendoza, 51 P.3d at 1245-47.
89 Anderson II, 78 P.3d at 723 (Bryner, J., dissenting in
part) (original emphasis) (quoting AS 09.17.020(j)).
90 Id. at 723 n.4 (Bryner, J., dissenting in part)
(quoting Evans, 56 P.3d at 1077).
91 Id. at 717-18.
92 See Chenega Corp. v. Exxon Corp., 991 P.2d 769, 785
(Alaska 1999) (construing statute so as to avoid constitutional
problems where reasonable to do so); see also Bonjour v.
Bonjour, 592 P.2d 1233, 1237 (Alaska 1979); Larson v. State, 564
P.2d 365, 372 (Alaska 1977); Hoffman v. State, 404 P.2d 644, 646
(Alaska 1965).
93 AS 09.17.020(h) states:
Notwithstanding any other provision of law,
in an action against an employer to recover
damages for an unlawful employment practice
prohibited by AS 18.80.220, the amount of
punitive damages awarded by the court or jury
may not exceed (1) $200,000 if the employer
has less than 100 employees in this state;
(2) $300,000 if the employer has 100 or more
but less than 200 employees in this state;
(3) $400,000 if the employer has 200 or more
but less than 500 employees in this state;
and (4) $500,000 if the employer has 500 or
more employees in this state.
94 See Cent. Bering Sea Fishermens Assn v. Anderson
(Anderson I), 54 P.3d 271, 282 (Alaska 2002).
95 BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574-75
(1996); see also State Farm Mut. Auto. Ins. Co. v. Campbell, 538
U.S. 408, 418-21 (2003) (applying Gore factors); Anderson I, 54
P.3d at 284 (same).
96 A lower courts decision on a motion to intervene is
reviewed for an abuse of discretion. Mundt v. Northwest
Explorations, Inc., 947 P.2d 827, 829 (Alaska 1997).
Intervention as a matter of right is
appropriate
when the applicant claims an interest
relating to the property or transaction which
is the subject of the action and the
applicant is so situated that the disposition
of the action may as a practical matter
impair or impede the applicants ability to
protect that interest, unless the applicants
interest is adequately represented by
existing parties.
Alaska R. Civ. P. 24(a).
Permissive intervention is appropriate when an
applicants claim or defense and the main action have a question
of law or fact in common and
[w]hen a party to an action relies for ground
of claim or defense upon any statute or
executive order administered by a federal or
state governmental officer or agency or upon
any regulation, order, requirement, or
agreement issued or made pursuant to the
statute or executive order, the officer or
agency upon timely application may be
permitted to intervene in the action.
Alaska R. Civ. P. 24(b).
97 Alaska Civil Rule 24(c) states, in part:
When the constitutionality of a state statute
affecting the public interest is drawn in
question in any action to which the state or
an officer, agency, or employee thereof is
not a party, the court shall notify the
Attorney General of Alaska of such fact, and
the state shall be permitted to intervene in
the action.
98 Although Reust filed his motion challenging the
constitutionality of AS 09.17.020 after the superior court
granted the states motion to intervene, Reusts challenge had the
effect of rendering any possible error by the superior court
harmless. The constitutional challenge would have permitted
intervention even if the superior court had denied it previously.
99 See, e.g., Anderson v. State ex rel. Cent. Bering Sea
Fishermens Assn (Anderson II), 78 P.3d 710, 720-22 (Alaska 2003).
1 Anderson v. State ex rel. Central Bering Sea Fishermens
Assn, 78 P.3d 710, 723-24 (Alaska 2003) (Anderson II).
2 Evans ex rel. Kutch v. State, 56 P.3d 1046, 1075-76
(Alaska 2002).
3 Slip Op. at 30.
