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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Hoendermis v. Advanced Physical Therapy, Inc. (4/29/2011) sp-6558
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
PATRICIA K. HOENDERMIS, )
)
Appellant/Cross-Appellee, )
)
Supreme Court No. S-13462/13481 )
)
v. )
) Superior Court No.
ADVANCED PHYSICAL THERAPY, INC., ) 3AN-06-07728 CI
d/b/a ADVANCED PHYSICAL THERAPY )
OF ALASKA; ADVANCED PAIN )
THERAPEUTICS OF ALASKA, LLC, ) O P I N I O N
d/b/a ADVANCED PHYSICAL THERAPY )
OF ALASKA; and VALERIE PHELPS, ) No. 6558 - April 29, 2011
)
Appellees/Cross-Appellants. )
_____________________________________)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, John Suddock, Judge.
Appearances: Kenneth W. Legacki, Anchorage, for
Appellant. John S. Hedland, Hedland, Brennan and
Heideman, Anchorage, for Appellees.
Before: Carpeneti, Chief Justice, Fabe, Winfree, Christen,
and Stowers, Justices.
STOWERS, Justice.
I. INTRODUCTION
Advanced Physical Therapy (APT) terminated the employment of Patricia
Hoendermis ("Patti"), the clinic's practice administrator, for an inability to communicate
with her co-workers and supervisor. Hoendermis sued APT for wrongful termination and
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failure to provide overtime compensation. The superior court granted APT summary
judgment on both claims. Hoendermis appeals. We reverse the grants of summary
judgment because there are genuine issues of material fact regarding both claims.
II. FACTS AND PROCEEDINGS
A. Hoendermis's Job Responsibilities
Patti Hoendermis became an APT employee in October 2000. Hoendermis's
initial job title was "practice manager." It was changed to "practice administrator" in an
internal restructuring in November 2005.
Valerie Phelps has been the president of APT since Hoendermis was hired.
Phelps asserted in an affidavit that Hoendermis acted as an administrative or executive
employee throughout her tenure at APT, spending at least 80 percent of her time
managing the clinic. Phelps stated that Hoendermis's job responsibilities included
creating a policy and procedure manual, securing bank loans and lines of credit, putting
together APT's insurance package and pension fund, working with APT's lawyer on
contracts, working with APT's accountant on taxes, and researching and leasing office
space and equipment. Phelps stated that she started taking away Hoendermis's
responsibilities with respect to the clinic's finances and budget in November 2005
because Hoendermis made so many mistakes in those areas.
Phelps also asserted that Hoendermis, at least until November 2005,
managed APT's administrative employees. In a deposition, Phelps testified that by
November 2005 Hoendermis no longer supervised other employees but did act as a "go-
to person" for questions. However, in an affidavit, Phelps asserted that Hoendermis
"regularly directed the work of the clinic's nonprofessional (administrative) staff" and
did not state that these responsibilities ended in November 2005.
Hoendermis disputed Phelps's description of her job responsibilities. She
asserted in her affidavit that she performed "bookkeeping and secretarial duties" and at
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least 50 percent of her time was spent "doing clerical kinds of things" like note-taking,
bookkeeping, ordering supplies, and unplugging the toilet. She stated that she lacked any
managerial or decision-making power and did not supervise any staff.
B. The Policy And Procedure Manual
All employees at APT were subject to APT's Policy and Procedure Manual.
The manual specified that all APT employees were employed at will, and that "the
company may end the employment relationship at any time, with or without cause, with
or without advance notice." It also provided that "[e]mployees terminated for
misconduct may be discharged immediately, without advanced notice."
The manual described a progressive disciplinary action plan that included
verbal counseling, a first written warning, a second written warning, and discharge.
Before describing the steps for progressive discipline, the manual specified that APT
"reserves the right to determine in its sole and unlimited discretion when and if
progressive discipline will be used and always reserves the right to discharge employees
without cause and/or previous notice." After describing the progressive discipline steps,
the manual provided that "[w]hether and to what degree progressive discipline will be
used is always subject to the unlimited discretion of [APT] management. For example,
there may be extraordinary circumstances (malicious destruction of property, theft,
dishonesty, etc.) that would warrant immediate discharge without prior suspension or
prior verbal or written warning."
C. Hoendermis's Termination
APT terminated Hoendermis's employment on January 10, 2006 as a result
of Phelps's perception that Hoendermis wasunable "to work effectively with or get along
with other individuals employed in the clinic" and that Hoendermis had failed "to take
the necessary steps to resolve the problem."
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The immediate precipitating event was an argument about invoices that
occurred the week before between Hoendermis and Lynn Crockett, APT's part-time
bookkeeper. After the argument Hoendermis left the office for approximately two hours.
Phelps asserted that when she asked Hoendermis to discuss the incident with her,
Hoendermis refused to speak with Phelps when Phelps was available. Hoendermis
asserted that she did not refuse to speak with Phelps.
Phelps described other problems that Hoendermis had working with others.
She stated that Hoendermis would get upset with other employees and "continually go
after" them, complaining about them to other employees at the expense of her work.
Hoendermis complained frequently to Phelps about her problems with other employees.
Phelps asserted that she discussed these problems with Hoendermis several times over
a matter of years.
After her termination Hoendermis filed for unemployment insurance
benefits with the Alaska Department of Labor and Workforce Development, but was
denied. She appealed the denial to the department's appeal tribunal. In March 2006 the
appeal tribunal affirmed the denial of benefits, concluding that Hoendermis was
discharged for misconduct because she continued to get into arguments with co-workers
after Phelps asked her to stop.
D. Procedural History
In May 2006 Hoendermis filed a complaint in the superior court alleging
that she had been wrongfully terminated in violation of APT's policy manual, which she
asserted was a contract, and in violation of the covenant of good faith and fair dealing.
She also alleged that APT had failed to pay her overtime compensation in violation of
state and federal law.
On June 23 APT moved for summaryjudgment. It argued that Hoendermis
was not eligible for overtime compensation because she was an executive or
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administrative employee. It also argued that Hoendermis was an at-will employee and
that the policy manual expressly allowed APT to dismiss employees with or without
cause. APT argued that Hoendermis was collaterally estopped from claiming wrongful
termination because the Department of Labor and Workforce Development found that
she had been dismissed for misconduct. It also argued that Hoendermis did not present
any evidence showing that APT violated the covenant of good faith and fair dealing.
Hoendermis filed an opposition to the motion for summary judgment and
a cross-motion for summary judgment. She alleged that APT did not afford her
progressive discipline as required in the policy manual. She also alleged that she was
disparately treated in violation of the covenant of good faith and fair dealing because
other employees committed more serious infractions than she did, including assault and
inappropriate intimate interactions with patients, but they were not terminated. She
further alleged that she was not an administrative or executive employee and was thus
eligible for overtime compensation.
At a hearing on August 18, 2008, the superior court granted complete
summary judgment to APT. The court foundthat Hoendermis had not raised any genuine
issue of material fact suggesting that she was not an administrative or executive
employee and therefore entitled to overtime compensation. It also found that (1) APT
had not wrongfully terminated Hoendermis because she was an at-will employee,
(2) APT was not required to offer Hoendermis progressive discipline, and
(3) Hoendermis had not presented evidence of disparate treatment that should have been
presented to a jury.
On August 20 APT filed a motion for attorney's fees pursuant to Civil Rule
68(b)(1) based upon a one dollar offer of judgment that APT made on June 16, 2006,
shortly after Hoendermis filed her original complaint. APT alternatively requested fees
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pursuant to Civil Rule 82(b)(2). The superior court denied APT's request for Rule 68
fees, but granted its request for Rule 82 fees.
The court entered a final judgment in favor of APT.
Hoendermis appeals, asserting that the superior court erred in granting
summary judgment because there were material factual disputes for both her overtime
compensation claim and wrongful termination claim.
APT cross-appeals, asserting that the superior court erred in failing to award
it Rule 68 attorney's fees.
III. DISCUSSION
A. Standard Of Review
We review a superior court's grant of summary judgment de novo.1 In our
review, we must determine "whether any genuine issue of material fact exists and
whether on the established facts the moving party is entitled to judgment as a matter of
law."2 We draw all factual inferences in favor of, and view the facts in the light most
favorable to, the party against whom summary judgment was granted.3
1 Nielson v. Benton, 903 P.2d 1049, 1052 (Alaska 1995) (citing Tongass
Sport Fishing Ass'n v. State, 866 P.2d 1314, 1317 (Alaska 1994)).
2 Id. (citing Wright v. State, 824 P.2d 718, 720 (Alaska 1992)).
3 Rockstad v. Erikson, 113 P.3d 1215, 1219 (Alaska 2005) (citingEllis v. City
of Valdez, 686 P.2d 700, 702 (Alaska 1984)).
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B. It Was Error To Grant APT Summary Judgment On The Overtime
Compensation Claim.
The Alaska Wage and Hour Act (AWHA) governs the payment of
overtime.4 AWHA does not apply to bona fide executive or administrative employees.5
An administrative employee is one
(A) whose primary duty consists of work directly related to
management policies or supervising the general business
operations of the employer;
(B) who customarily and regularly exercises discretion and
independent judgment;
(C) who performs work only under general supervision;
(D) who is paid on a salary or fee basis;
(E) who regularly and directly assists a proprietor or an
exempt executive employee of the employer; and
(F) who performs work along specialized or technical lines
requiring special training, experience or knowledge and does
not devote more than 20 percent . . . of the employee's
weekly hours to activities that are not described in this
[ ]
paragraph or (7) or (11) of this section. 6
An executive employee is one
4 AS 23.10.050-.150.
5 AS 23.10.055(a)(9)(A).
6 Former 8 Alaska Administrative Code (AAC) 15.910(a)(1) (repealed 2008,
Reg. 185). Paragraph (7) defines "executive employee," and paragraph (11) defines
"professional employee."
It does not appear that a replacement regulation has been adopted, so we
may discuss 8 AAC 15.910(a)(1) (as well as 8 AAC 15.910(a)(7), see infra note 7) as if
it remains in effect. See Laidlaw Transit, Inc. v. Anchorage Sch. Dist., 118 P.3d 1018,
1023 n.8 (Alaska 2005).
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(A) whose primary duty consists of the management of the
enterprise in which the employee is employed or of a
customarily recognized branch, department, or subdivision of
the enterprise;
(B) who customarily and regularly directs the work of two or
more other employees;
(C) who has the authority to hire or fire or effect any other
change of status of other employees or whose suggestions or
recommendations regarding these kinds of changes are given
particular weight;
(D) who customarily and regularly exercises discretionary
authority;
(E) who does not devote more than 20 percent . . . of the
employee's weekly hours to activities that are not directly and
closely related to the work described in this paragraph or (1)
or (11) of this section; and
[ ]
(F) who is compensated on a salary basis. 7
Hoendermis argues that the superior court failed to consider the evidence
she set forth supporting her claim that she was not an administrative or executive
employee.
We must decide if there is a genuine issue of material fact whether
Hoendermis was an administrative or executive employee and consequently not entitled
to overtime compensation under AWHA. We must construe the evidence in the light
most favorable to Hoendermis because the superior court granted summary judgment
against her.8 An employee must meet all of the requirements established in the
definitions of administrative or executive employees in order to be exempt from AWHA;
7 Former 8 AAC 15.910(a)(7) (repealed 2008, Reg. 185).
8 See Am. Rest. Grp. v. Clark, 889 P.2d 595, 597 (Alaska 1995).
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an issue of material fact as to only one of the requirements is sufficient to defeat
summary judgment on the overtime compensation claim.9
In its summary judgment motion, APT has the burden of making a prima
facie showing that there are no genuine issues of material fact and that it is entitled to
judgment as a matter of law.10 Upon this initial showing, the burden shifts to
Hoendermis, who then must "set forth specific facts showing genuine issues and cannot
rest on mere allegations."11 The parties can submit affidavits supporting or opposing a
motion for summary judgment provided they are "based upon personal knowledge."12
APT established a prima facie case that Hoendermis was an administrative
or executive employee by presenting sworn factual assertions regarding each
requirement. These, along with Hoendermis's disputing sworn factual assertions, are
discussed below.
In her affidavit supporting APT's motion for summary judgment, Phelps
asserted that Hoendermis's responsibilities were primarily managerial,13 including
directing administrative staff and overseeing "all aspects of clinic operation."
Hoendermis presented conflicting material facts. She asserted in her affidavit supporting
her opposition to APT's motion for summary judgment that by November 2005 her
"primary duties were no longer related to management policies" because Phelps had
9 See Whitesides v. U-Haul Co. of Alaska, 16 P.3d 729, 735 (Alaska 2001).
10 See Charles v. Interior Reg'l Hous. Auth., 55 P.3d 57, 59 (Alaska 2002).
11 Witt v. State, Dep't of Corr., 75 P.3d 1030, 1033 (Alaska 2003) (quoting
Braun v. Alaska Commercial Fishing & Agric. Bank, 816 P.2d 140, 144 (Alaska 1991)).
12 Broderick v. King's Way Assembly of God Church, 808 P.2d 1211, 1215
(Alaska 1991).
13 See former 8 AAC 15.910(a)(1)(A); former 8 AAC 15.910(a)(7)(A).
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gradually removed her from management. She stated that she did not supervise any
employees and did not advise Phelps on financial or other aspects of the business. APT,
in its reply to Hoendermis's opposition to summary judgment, pointed out that
Hoendermis referred to herself as a practice manager or administrator in business letters
sent after the November 2005 reorganization. APT also referred to Hoendermis's post-
APT resume, in which she referred to her position at APT as "practice manager" and
described her managerial experience. Hoendermis's use of the "practice manager" job
title is not determinative. Federal labor regulations provide that "[a] job title alone is
insufficient to establish the exempt status of an employee," which "must be determined
on the basis of whether the employee's salary and duties meet the requirements" for
exempt status.14 Hoendermis's description of managerial experience on her resume is
also not determinative because it could have referred to her work before November 2005.
Hoendermis raised a genuine issue of material fact on the issue whether her job
responsibilities were primarily managerial.
Phelps asserted in her affidavit that Hoendermis exercised discretion and
independent judgment,15 "regularly direct[ing] the work of the clinic's nonprofessional
(administrative) staff . . . , monitoring and making reports regarding financial issues of
the clinic and had general oversight of all aspects of clinic operation." Hoendermis
presented a genuine issue of material fact, asserting in her affidavit that she did not
14 See 29 C.F.R. § 541.2 (2005). These federal regulations are not binding in
Alaska, but may be adopted here. See AS 23.10.095 ("The commissioner [of the
Department of Labor and Workforce Development] may adopt regulations and
interpretations that are made by the administrator of the Wage and Hour Division of the
federal Department of Labor and that are not inconsistent with AS 23.10.050 -
23.10.150.").
15 For the definition of an administrative employee, see former 8 AAC
15.910(a)(1)(B); former 8 AAC 15.910(a)(7)(D).
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exercise discretion or independent judgment. She stated that she did not make financial
decisions, had no authority to change leases, and could not discipline, hire, or fire
employees.
Phelps asserted in her affidavit that Hoendermis was paid on a salary.16
Hoendermis asserted in her opposition to summary judgment that the fact that she had
to keep track of her time on a time card was "inconsistent with exempt status." We have
held that an employee was treated as an hourly rather than a salaried employee when he
was subjected to "a rigid hourly schedule" and the employer "strictly enforc[ed] that
schedule with severe disciplinary sanctions."17 This is not the case here. Hoendermis
did keep track of which days she worked on a time sheet, but she did not maintain that
she was held to a rigid schedule, and Phelps stated in her deposition that her employees
were self-managed. Hoendermis's time sheets did not establish an issue of material fact
on the issue of salary.
Phelps asserted in her affidavit that if Hoendermis "devoted any of her work
time to matters other than administrative or executive functions, it was less than 20%."18
Phelps also asserted in her affidavit that Hoendermis's work "required special experience
and knowledge in areas of business management, bookkeeping and accounting, and legal
areas." Hoendermis asserted in her affidavit that at least 50 percent of her day was spent
doing clerical work. We have held that similar conflicting factual assertions as to
managerial/non-managerial time allocation created a genuine issue of material fact.19
16 See former 8 AAC 15.910(a)(1)(D); former 8 AAC 15.910(a)(7)(F).
17 Whitesides, 16 P.3d at 734.
18 See former 8 AAC 15.910(a)(1)(F); former 8 AAC 15.910(a)(7)(E).
19 See Am. Rest. Grp., 889 P.2d at 597 (finding genuine issue of material fact
as to percentage of work week spent performing non-executive duties when parties
(continued...)
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Hoendermis's assertion created an issue of material fact concerning the allocation of her
time.
Phelps asserted in her affidavit that Hoendermis regularly directed the work
of the clinic's nonprofessional staff.20 Hoendermis presented an issue of material fact,
stating in her affidavit that she did not supervise the administrative employees and
pointing to Phelps's assertions in her deposition that Hoendermis did not supervise
anyone beginning two months before her termination.
Phelps stated in her affidavit that Hoendermis "had responsibility for hiring
and firing administrative staff and made recommendations to [Phelps] concerning
raises."21 Hoendermis countered, asserting in her affidavit that Phelps "evaluated all of
the administrative staff's work, decided on raises, and made all decisions on the hiring
and firing of those employees." APT, to refute Hoendermis's assertion, pointed to
e-mails in which Hoendermis communicated with potential employees, scheduling
interviews and making offers. The most recent e-mail was dated June 17, 2005, however,
well before November 2005 when Phelps removed Hoendermis from many of her
responsibilities and well before Hoendermis's termination in January 2006. The e-mails
do not preclude Hoendermis from establishing a genuine issue of material fact regarding
her nonexempt status for up to six months prior to her termination. Hoendermis
presented an issue of material fact regarding her hiring and firing responsibilities.
19 (...continued)
claimed differing percentages).
20 See former 8 AAC 15.910(a)(7)(B).
21 See former 8 AAC 15.910(a)(7)(C).
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Phelps asserted in her affidavit that Hoendermis only worked under
Phelps's general supervision.22 Hoendermis did not contest this.
Phelps asserted in her affidavit that Hoendermis regularly and directly
assisted her.23 Hoendermis did not contest this.
From the affidavits and other evidence submitted by both parties, there are
several genuine issues of material fact that preclude summary judgment. Deciding
whether Hoendermis is entitled to overtime compensation will depend on weighing the
credibility and persuasive strength of the parties' witnesses and evidence: this is the
responsibility of the fact finder.24 We reverse the grant of summary judgment on the
overtime compensation claim.25
C. It Was Error To Grant APT Summary Judgment On The Wrongful
Termination Claim.
1. The Department of Labor decision does not preclude
Hoendermis's claim.
APT argues that Hoendermis is collaterally estopped from asserting that she
was wrongfully terminated because the Department of Labor and Workforce
Development found that she was terminated for misconduct. Hoendermis argues that the
department's decision does not have a collateral estoppel effect on her case because the
22 See former 8 AAC 15.910(a)(1)(C).
23 See former 8 AAC 15.910(a)(1)(E).
24 See Whitesides v. State, Dep't of Pub. Safety, Div. Of Motor Vehicles, 20
P.3d 1130, 1136-37 (Alaska 2001).
25 Because we are reversing the grant of summary judgment on the overtime
claim, we do not need to decide whether APT's Rule 68 offer of judgment was valid.
The superior court, however, correctly foresaw our decision in Beal v. McGuire, 216 P.3d
1154 (Alaska 2009), and properly applied the factors described therein for evaluating
Rule 68 offers.
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department did not address all of the issues involved in the current case, and also that
collateral estoppel should not apply to decisions from her unemployment compensation
proceedings because those proceedings did not provide enough incentive to fully litigate
the issues.
We may consider collateral estoppel as a basis for summary judgment even
though the superior court did not base its summary judgment decision on those grounds.26
The decisions of administrative agencies can collaterally estop, or preclude,
issues from relitigation in a judicial setting if the issue to be precluded is identical to the
issue decided by the administrative agency.27 However, collateral estoppel analysis
"would not apply if the amount at stake in the present case differ[s] substantially from
that in the [earlier] proceeding."28 This is because the stakes in an unemployment
compensation proceeding may be substantially less than those involved in a wrongful
termination lawsuit, and this difference may be sufficient to render collateral estoppel
from such agency determinations inappropriate. But we do not decide that question here.
26 See Sopko v. Dowell Schlumberger, Inc., 21 P.3d 1265, 1269 (Alaska 2001)
("We are not bound by the reasoning articulated by the lower court, and we can affirm
a grant of summary judgment on alternative grounds, including grounds not advanced by
the lower court or the parties.") (internal citations omitted).
27 See Johnson v. Alaska State Dep't of Fish & Game, 836 P.2d 896, 906
(Alaska 1991) (internal citations omitted). We have also emphasized, however, that
although the decision to apply collateral estoppel is discretionary, "this discretion must
be tempered by principles of fairness in light of the circumstances in each particular
case." Misyura v. Misyura, 242 P.3d 1037, 1040 (Alaska 2010) (quoting Borg-Warner
Corp. v. Avco Corp. (Lycoming Div.), 850 P.2d 628, 638 (Alaska 1993)).
28 Sengupta v. Univ. of Alaska, 21 P.3d 1240, 1250 n.29 (Alaska 2001).
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We have held that the issue of employee misconduct considered by the
Department of Labor is different than the issue of wrongful discharge.29 The department
only determines whether an employee is eligible for benefits; it does not examine the
employer's culpability.30 In the case at hand, the department determined that Hoendermis
was not eligible for full benefits due to misconduct. Hoendermis contends here that
"[e]ven assuming that . . . [she] was at fault and committed misconduct at work," APT
breached the covenant of good faith and fair dealing. The department did not address this
issue in its adjudication. The department's decision that Hoendermis committed
misconduct therefore does not preclude a court from examining Hoendermis's breach of
covenant of good faith and fair dealing claim.
2. The policy manual did not guarantee progressive discipline.
Hoendermis argues that she was wrongfully terminated as a matter of law
because APT failed to provide her with progressive discipline in violation of the
procedure laid out in its policy manual. She asserts that APT is bound by Alaska law to
follow the manual's requirements when an employee has a reasonable expectation that
the procedures will be followed, and she had that expectation.
APT responds that the manual expressly provided that all APT employees
were employed at will and could be discharged for any reason, and that the use of
progressive discipline was within APT's unfettered discretion.
We have held that "employee policy manuals may modify at-will
employment agreements, and that whether a given manual has modified an at-will
29 See Manning v. Alaska R.R. Corp., 853 P.2d 1120, 1124 (Alaska 1993);
Luedtke v. Nabors Alaska Drilling, Inc. (Luedtke I), 768 P.2d 1123, 1131 n.5 (Alaska
1989).
30 Manning, 853 P.2d at 1125.
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employment agreement must be determined on the particular facts of each case."31 The
employer is bound by the representations in the manual when the manual's provisions
"create the reasonable expectation that employees have been granted certain rights."32
In general, we have held that policy manuals modify at-will employment contracts and
create rights for the employee when the manuals specifically state that the employee can
only be terminated for cause.33
In Holland v. Union Oil Co. of California, we examined an employer's
policy memorandum that described a system of progressive discipline but left the
employer with the discretion to skip any disciplinary steps.34 The memorandum provided
a non-exclusive list of non-permitted activity and contained hedging terms such as "can
result" and "steps in the progressive discipline system may be bypassed."35 We
concluded that the language did not bind the employer to any disciplinary procedure, and
that "as a matter of law, the memo could not create a reasonable expectation that
employees have been granted certain rights."36
In its motion for summary judgment, APT established a prima facie case
that its policy manual did not guarantee Hoendermis progressive discipline. As evidence,
31 Holland v. Union Oil Co. of Cal., 993 P.2d 1026, 1030 (Alaska 1999)
(quoting Jones v. Cent. Peninsula Gen. Hosp., 779 P.2d 783, 787 (Alaska 1989)).
32 Parker v. Mat-Su Council on Prevention of Alcoholism and Drug Abuse,
813 P.2d 665, 666 (Alaska 1991).
33 See, e.g., Jones, 779 P.2d at 785, 787; Parker, 813 P.2d at 666-67.
34 Holland, 993 P.2d at 1032.
35 Id.
36 Id. (quoting Parker, 813 P.2d at 666) (internal quotation marks omitted).
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it pointed to the language within the policy manual describing the discretionary nature
of progressive discipline.
Hoendermis argued in her opposition to summary judgment that APT was
bound by the manual to provide progressive discipline because she had a reasonable
expectation that she would receive it. Citing Phelps's deposition testimony that
Hoendermis wrote the policy manual, Hoendermis argued that as the employee most
familiar with the manual, she was in the best position to interpret it. Hoendermis asserted
that she reasonably expected progressive discipline because others had received it and
because APT's attorney told her that progressive discipline was mandatory.
Hoendermis's arguments fail to establish a reasonable expectation of
progressive discipline. Her assertion that she was very familiar with the manual informs
us that she was familiar with the entire manual: not only the progressive discipline steps,
but also the statements directly preceding and following the steps which clearly stated
that APT retained unlimited discretion in deciding whether to provide progressive
discipline. Hoendermis's expectations arising from her observations of others and her
alleged conversation with APT's attorney37 do not change the fact that the manual itself
did not create a reasonable expectation of a right to progressive discipline.
This case is very similar to Holland, and we hold, as we did in Holland,38
that as a matter of law APT's policy manual did not create a reasonable expectation that
Hoendermis was guaranteed progressive discipline.
37 The attorney denied in his affidavit telling Hoendermis that progressive
discipline was required.
38 993 P.2d at 1032.
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3. There are genuine issues of material fact whether APT violated
the covenant of good faith and fair dealing.
Hoendermis argues that her termination violated the covenant of good faith
and fair dealing because "other employees who had committed much more egregious
actions were not disciplined." APT argues that it did not violate the covenant of good
faith and fair dealing because Hoendermis was not similarly situated with the other
employees who were not disciplined. We must determine whether the superior court
properly found that there were no genuine issues of material fact precluding summary
judgment on Hoendermis's claim for violation of the covenant of good faith and fair
dealing.
All at-will employment contracts are subject to the covenant of good faith
and fair dealing.39 "[T]he covenant operates as a check on employers' traditional
freedom to terminate at-will employment for any reason; . . . an employer may not
terminate an at-will employee for reasons antithetical to the implied covenant."40
The covenant contains both objective and subjective components.41 An
employer can breach either component.42 The objective component of the covenant
requires employers to "act in a manner that a reasonable person would regard as fair."43
This includes not unfairly treating similarly situated employees disparately; in other
39 Era Aviation, Inc. v. Seekins, 973 P.2d 1137, 1139 (Alaska 1999) (citing
Guin v. Ha, 591 P.2d 1281, 1291 (Alaska 1979)).
40 Id.
41 Charles v. Interior Reg'l Hous. Auth., 55 P.3d 57, 62 (Alaska 2002).
42 Id.
43 Id.
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words, employers must treat like employees alike.44 An employer breaches the subjective
component of the covenant when it "discharges an employee for the purpose of depriving
him or her of one of the benefits of the contract."45
APT presented a prima facie case supporting summary judgment.
Hoendermis's original complaint asserted that APT breached the covenant of good faith
and fair dealing, but did not allege specifically that APT did not treat like employees
alike. Phelps stated in her affidavit in support of APT's motion for summary judgment
that APT terminated Hoendermis because she was unable to work with others and refused
to communicate with Phelps, her immediate superior. We have held that a party has
presented a prima facie case supporting summary judgment on a breach of covenant of
good faith and fair dealing claim when a manager has stated in an affidavit that the
employer terminated the employee for being unreliable.46 Similarly here, Phelps's
assertion that Hoendermis was terminated for an acceptable reason is enough to establish
a prime facie case.
We must next determine whether Hoendermis raised a genuine issue of
material fact whether she was treated differently from similarly situated employees. In
the context of the covenant of good faith and fair dealing, similarly situated employees
are those who are members of the same class, as defined by job position and the nature
of the alleged misconduct.47 Hoendermis was terminated for allegedly failing to get
along with other employees. In Hoendermis's affidavit supporting her opposition to
summary judgment, she described several other APT employees and their alleged
44 Id.
45 Id. (internal quotations omitted).
46 See French v. Jadon, Inc., 911 P.2d 20, 24-25 (Alaska 1996).
47 Mitchell v. Teck Cominco Alaska, Inc., 193 P.3d 751, 761 (Alaska 2008).
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misconduct: one massage therapist had a romantic relationship with a patient; an
exercise therapist assaulted another employee at work; a physical therapist had an
inappropriate social relationship with a patient; a clinical director may have violated
Medicaid rules; and two receptionists exhibited "unacceptable behavior" at work - one
of whom required anger management counseling. In terms of job position, whether
Hoendermis was similarly situated to any of these other employees is a question of fact,
and the trier of fact will make that determination. At this stage, however, sufficient
evidence exists in the record to successfully raise a genuine issue of material fact as to
whether Hoendermis was similarly situated with other employees.
Hoendermis must also raise a genuine issue of material fact whether she
was treated differently from similarly situated employees in an unfair manner. In her
affidavit, Hoendermis alleged that none of the employees discussed above were
terminated. She asserted that "Ms. Phelps did follow the disciplinary process with other
employees" at APT. Hoendermis's statement that she was terminated when others were
not for similar or more severe offenses raises a genuine issue of material fact whether she
was disparately treated in an unfair manner - a violation of the covenant of good faith
and fair dealing.
Because Hoendermis raised a genuine issue of material fact that she was
similarly situated to other APT employees and that she was unfairly treated in a different
manner than those employees, we reverse the grant of summary judgment on the claim
of breach of the covenant of good faith and fair dealing.
IV. CONCLUSION
We REVERSE the grant of summary judgment on the overtime
compensation claim because Hoendermis raised genuine issues of material fact whether
she was an administrative or executive employee. We REVERSE the grant of summary
judgment on the wrongful termination claim because Hoendermis raised a genuine issue
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of material fact whether APT violated the covenant of good faith and fair dealing. We
REMAND for further proceedings.
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