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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Ace Delivery & Moving, Inc. v. Alaska State Commission for Human Rights (5/15/2015) sp-7007

Ace Delivery & Moving, Inc. v. Alaska State Commission for Human Rights (5/15/2015) sp-7007

          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, email  




 ACE DELIVERY & MOVING,                                  )  

 INC.,                                                   )        Supreme Court No. S-15594  


                             Appellant,                  )        Superior Court No. 3AN-14-04688 CI  


                    v.                                   )        O P I N I O N  


 STATE OF ALASKA, ALASKA                                 )        No. 7007 - May 15, 2015  

 STATE COMMISSION FOR                                    )  

 HUMAN RIGHTS, PAULA M.                                  )  

 HALEY, EXECUTIVE DIRECTOR,                              )  

 ex rel. Janet Wass,                                     )  


                             Appellees.                  )  


                    Appeal from the Superior Court of the State of Alaska, Third  


                    Judicial District, Anchorage, Frank A. Pfiffner, Judge.  

                    Appearances:  LeRoy E. DeVeaux, DeVeaux and Associates,  


                    APC, Anchorage, for Appellant.  William E. Milks, Assistant  


                    Attorney   General,   and   Michael   C.   Geraghty,   Attorney  

                    General, Juneau, for Appellees.  

                    Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and  


                    Bolger, Justices.   

                    MAASSEN, Justice.  


                   The executive director of the Alaska State Commission for Human Rights  


brought an action on behalf of an employee who alleged that her employer's racist and  


----------------------- Page 2-----------------------


insensitive remarks created a hostile work  environment.  The Commission ultimately  

found that the employee did not suffer a hostile work environment, but it denied the  


employer's request for attorney's fees.  The employer now appeals on the single issue of  


attorney's fees, arguing that it was entitled to fees as the prevailing party and because it  

raised affirmative defenses under the Alaska and United States Constitutions.  We affirm  

the Commission's denial of attorney's fees.  



                   Ace Delivery & Moving, Inc. (Ace) hired Janet Wass on a temporary basis  


to perform data entry.  Wass resigned on her third day and later filed a complaint with the  


Alaska State Commission for Human Rights, alleging that Ace's owner, Hank Schaub,  

made disparaging comments in her presence about various racial, ethnic, and religious  

groups.    The  executive  director  of  the  Commission  issued  a  single-count  accusation  


alleging that Ace "created a hostile working environment based on the owner's severe and  

pervasive derogatory comments and postings regarding race, national origin, and religion"  

-      directed       at    Jews,      Arabs,       Muslims,        and      Mexicans         -      in    violation       of  

                             1  The accusation sought various forms of injunctive relief, including  

AS 18.80.220(a)(1).                                                                   

that Ace be required to adopt a nondiscrimination policy and that its "owner, manager,  


and supervisors" receive training in Alaska human rights law.  

                   Ace  asserted  affirmative  defenses  in  response,  including  that  Schaub's  

comments were protected by the free speech guarantees of article I, section 5 of the  

           1        AS 18.80.220(a)(1) provides, in relevant part, that "it is unlawful for . . . an              

 employer . . . to discriminate against a person . . . in a term, condition, or privilege of   

 employment because of the person's race, religion, color, or national origin."  We have  

 recognized "that discriminatory behavior sufficiently severe or pervasive to alter the  

 conditions  of  the  victim's  employment  and  to  create  a  discriminatory  hostile  work  

 environment violates AS 18.80.220."  French v. Jadon, Inc., 911 P.2d 20, 28 (Alaska  


                                                             - 2 -                                                     7007

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                              2                                                                                             3  


Alaska Constitution  and the First Amendment to the United States Constitution.   Ace  

also argued that because the accusation violated Schaub's constitutional right to free  

speech, Ace was entitled to attorney's fees under federal law.   


                    The matter was assigned to an administrative law judge with the Office of  


Administrative  Hearings.                   In  an  order  denying  summary  judgment  to  Ace,  the  

administrative           law     judge       rejected      Ace's       argument         that     Schaub's         speech       was  

constitutionally protected.  Citing federal cases, the administrative law judge observed  


that "[s]peech in the work place that creates a hostile work environment is not protected  



                    An evidentiary hearing followed, after which the administrative law judge  


found that Ace had not subjected Wass to a hostile work environment.  The administrative  


law judge noted that Wass did not belong to any of the groups Schaub had allegedly  


disparaged (though her daughter and ex-husband were both Jewish) and the evidence did  

           2          Article I, section 5 of the Alaska Constitution provides:                          "Every person may  

 freely speak, write, and publish on all subjects, being responsible for the abuse of that  




                      The  First  Amendment  to  the  United  States  Constitution  provides,  in  

 relevant part:  "Congress shall make no law . . . abridging the freedom of speech."   

           4          The administrative law judge cited Robinson v. Jacksonville Shipyards,  


 Inc. , 760 F. Supp. 1486, 1535-36 (M.D. Fla. 1991), which held that "the pictures and  

 verbal harassment" at issue in that case were "not protected speech because they act as  

 discriminatory  conduct  in  the  form  of  a  hostile  work  environment,"  and  that  "the  

 regulation of discriminatory speech in the workplace" was constitutionally permissible  


 as "nothing more than a time, place, and manner regulation of speech."  See also Roberts  

 v.  U.  S.  Jaycees,  468  U.S.  609,  628  (1984)  ("[P]otentially  expressive  activities  that  

 produce special harms distinct from their communicative impact . . . are entitled to no  

 constitutional protection.").  

                                                                - 3 -                                                        7007

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not establish that Ace took any action against Wass based on her own religion or national  

origin.  The Commission adopted the administrative law judge's decision.   



                    Ace moved for an award of nearly $60,000 in attorney's fees and costs. 


The administrative law judge denied Ace's motion.  He relied on AS 18.80.130(e), which  

allows an award of attorney's fees in the Commission's discretion, and on a regulation  

adopted under that statute, 6 Alaska Administrative Code (AAC) 30.492 (2014).6                                                 The  


administrative law judge reasoned that by adopting the regulation the Commission had  

exercised its statutory grant of discretion to limit attorney's fees awards in Commission  


proceedings to certain categories of cases, and that Ace's case  did  not qualify.   The  

                                                                                                            7                       8 


administrative law judge rejected Ace's reliance on 42 U.S.C.  1988,  AS 09.60.010, 

           5          In the agency proceeding, Ace appears to have sought an award of fees  

 against both the Commission and Wass.  In the superior court and in this appeal, Ace  


 modifies its demand to "full reasonable attorney's fees against the Commission and [its]  


 Executive Director."  This difference is not important to our analysis of the issues.   

            6         The regulation provides, in pertinent part:   


                      An award of attorney's fees and costs will be made against a  


                      complainant upon a showing that he or she pursued an action  

                      not authorized by the executive director that was frivolous,  

                      unreasonable, or groundless, or that an action authorized by  


                      the executive director was based upon information furnished  

                      in bad faith by complainant.  

 6 AAC 30.492(b).  



                      42 U.S.C.  1988(b) (2012) provides in relevant part that "[i]n any action  


 or proceeding to enforce a provision of [certain federal civil rights laws], the court, in its  


 discretion, may allow the prevailing party, other than the United States, a reasonable  

 attorney's fee as part of the costs."  



                      AS 09.60.010(c) allows a court to award "full reasonable attorney fees and  


 costs" to a claimant who prevails in asserting a constitutional right "[i]n a civil action or  


                                                                - 4 -                                                        7007

----------------------- Page 5-----------------------



and Alaska Civil Rule 68  on grounds that they apply only to proceedings in court.  This  

order was adopted by the Commission as the final agency order on attorney's fees.  

                    Ace appealed the attorney's fees order to the superior court, which affirmed  


the order.  The superior court held that Ace had not prevailed on a constitutional claim  


and had not alleged any civil rights claim under 42 U.S.C.  1983 that could implicate  

federal attorney's fees provisions.  Ace now appeals to this court.  


                    "When  the  superior  court  acts  as  an  intermediate  court  of  appeal  in  an  

administrative matter, we independently review and directly scrutinize the merits of the  



[administrative]  decision."                   "We  apply  the  reasonable  basis  standard  of  review  to  

questions of law involving agency expertise, and the substitution of judgment standard  


to questions outside the agency's expertise."                         Because AS 18.80.130(e) contains a broad  


grant of discretion to the Commission for determining when a grant of attorney's fees "is  


appropriate," we review the Commission's exercise of discretion under the statute to  


 appeal concerning the establishment, protection, or enforcement of a right under the  


 United States Constitution or the Constitution of the State of Alaska."  

           9         Alaska Civil Rule 68 governs an award of attorney's fees made on the basis  


 of an offer of judgment more favorable to the offeree than "the judgment finally rendered  


 by the court."  



                     Patrick  v.  Municipality  of  Anchorage,  Anchorage  Transp.  Comm'n ,  


 305 P.3d 292, 297 (Alaska 2013) (alteration in original) (quoting Kingik v. State, Dep't  


 of Admin., Div. of Ret. & Benefits, 239 P.3d 1243, 1247-48 (Alaska 2010)) (internal  

 quotation marks omitted).  



                     Pyramid Printing Co. v. Alaska State Comm'n for Human Rights , 153 P.3d  

 994, 998 (Alaska 2007).  

                                                                - 5 -                                                       7007

----------------------- Page 6-----------------------


determine whether it had a reasonable basis.                           As for whether an award of attorney's fees  


to  Ace  was  required  by  any  of  the  statutes  on  which  Ace  relies,  we  substitute  our  

judgment for that of the Commission. 13  


          A.	        Alaska Statute 18.80.130(e) Governs Fee Awards In Proceedings Before  

                     The Alaska State Commission For Human Rights.  

                     Awards  of  attorney's  fees  in  Commission  proceedings  are  governed  by  

AS  18.80.130(e),  which  provides  that  "[t]he  commission  may  order  payment  of  


reasonable expenses, including reasonable attorney fees[,] to any private party before the  

commission  when  the  commission,  in  its  discretion,  determines  the  allowance  is  

appropriate."  The Commission has circumscribed its discretionary authority through a  


regulation that allows fee awards against complainants in two categories of actions:  "an  

action  not  authorized  by  the  executive  director  that  was  frivolous,  unreasonable,  or  


groundless,  or  .  .  .  an  action  authorized  by  the  executive  director  .  .  .  based  upon  

            12        Romann v. State, Dep't of Transp. & Pub. Facilities                           , 991 P.2d 186, 192-93   

  (Alaska  1999)  ("Alaska  law  provides  DOT  with  broad  discretion  to  conduct  public  

  auctions  of  airport  property.    We  thus  review  DOT's  actions  under  the  deferential  

  'reasonable basis' standard." (footnote omitted)).  

            13        Grimmett  v.  Univ.  of  Alaska,  303  P.3d  482,  487  (Alaska  2013)  ("The  

  substitution of judgment standard . . . applies where the agency's expertise provides little  


  guidance to the court or where the case concerns statutory interpretation or other analysis  


  of legal relationships about which courts have specialized knowledge and expertise."  

  (quoting N. Alaska Envtl. Ctr. v. State, Dep't of Natural Res. , 2 P.3d 629, 633 (Alaska  


  2000)) (internal quotation marks omitted)).  

                                                                 - 6 -	                                                       7007

----------------------- Page 7-----------------------

information furnished in bad faith."14  There is no regulatory provision for awards against  


the Commission.   


                    The action in this case was brought by the executive director, and Ace did  


not allege that the information on which it was based was furnished in bad faith.  Ace did  


deny  that  Schaub  said  the  derogatory  statements  Wass  attributed  to  him,  but,  by  


recommending dismissal of the case on other grounds, the administrative law judge did  

not  have  to  decide  whether  the  statements  had  been  made.    Absent  any  finding  of  


"improper conduct" on Wass's part, the administrative law judge determined there was  

no basis in 6 AAC 30.492, the governing regulation, for an award of attorney's fees.  


                    Ace appears to argue that the regulation unduly hampers the broad exercise  

of discretion contemplated by AS 18.80.130(e), which ostensibly grants the Commission  


the broad authority to order the payment of attorney's fees to any private party.  But the  


statute does not prohibit the Commission from exercising its discretion by adopting rules  

that  limit  fee  awards  to  certain  types  of  cases.    The  only  limit  we  have  previously  

recognized on this discretion is the statutory directive "in plain English. . . . that the  


Commission has the discretionary authority to award costs and attorney's fees only after  



a hearing, and not at the investigative stage of a proceeding which precedes a hearing." 

Given the Commission's otherwise broad discretion and the absence of any finding that  

           14        6 AAC 30.492(b);              see also  6 AAC 30.490 (noting that "[t]he executive  

 director will determine what hearing expenses shall be paid by the commission," and that  

 "[c]omplainant and respondent, at their own expense, may incur additional costs and  


 apply for reimbursement under 6 AAC 30.492").  

           15        Hotel & Rest. Union Local 878 v. Alaska State Comm'n for Human Rights ,  


 595 P.2d 653, 656 (Alaska 1979).  

                                                               - 7 -                                                        7007

----------------------- Page 8-----------------------


Wass  acted  improperly  in  filing  her  complaint,  there  was  a  reasonable  basis  for  the  



Commission's conclusion that AS 18.80.130(e) did not require an award of fees to Ace. 


            B.	         Alaska Statute 09.60.010(c), Governing Fee Awards For Constitutional  

                        Claims Litigated In Court, Does Not Apply.  


                        Ace also argues that it was entitled to attorney's fees under AS 09.60.010(c),  

which provides that "[i]n a civil action . . . concerning the establishment, protection, or  

enforcement of a right under the United States Constitution or the Constitution of the  


State of Alaska, the court . . . shall award . . . full reasonable attorney fees and costs to a  

claimant, who . . . has prevailed in asserting the right."  Ace contends that because it  


raised constitutional free-speech defenses to the hostile workplace claim, and because it  


ultimately prevailed in the administrative proceedings, AS 09.60.010(c) required that it  

be awarded full reasonable attorney's fees.  


                        But the statute, by its plain language, applies only to civil actions in the state  



courts.          This case involves an administrative hearing before an agency.  Moreover, Ace  

did  not  prevail  on  its  constitutional  defenses,  which  the  administrative  law  judge  


specifically  rejected  as  untenable  under  well-established  principles  of  law.                                                               Ace  

ultimately  prevailed  not  because  Schaub's  speech  was  constitutionally  protected  but  

             16          Ace has not briefed a direct challenge to 6 AAC 30.492 or argued that the             

  regulation is inconsistent with its authorizing statute.   Ace appears to argue only that the                        

  various attorney's fees statutes on which it relies cabined the Commission's exercise of   

  discretion in this case.   

             17          AS  09.60.010(c)  ("In  a  civil  action  .  .  .  concerning  the  establishment,  


 protection,   or   enforcement   of   a   right   under   the   United   States   Constitution   or  


  the Constitution of the State of Alaska, the court . . . shall award full reasonable attorney  

  fees . . . ." (emphasis added)).  



                         See State v. Jacob, 214 P.3d 353, 360-61 (Alaska 2009) (holding that the  

 prevailing party in a suit was not entitled to attorney's fees under AS 09.60.010(c) when  

  the court did not reach the due process argument the party had raised).  

                                                                           - 8 -	                                                                 7007

----------------------- Page 9-----------------------

because Wass was not a member of any of the groups Schaub allegedly disparaged.19  


There was no basis in AS 09.60.010(c) for an award of attorney's fees to Ace, and again  



there was no error in the Commission's decision on this issue.  

          C.        Ace Was Not Entitled To Fees Under 42 U.S.C.  1988.  

                    Ace  also  argues  that  its  constitutional  defense  to  the  Commission's  


enforcement  action  entitled  it  to  attorney's  fees  under  a  federal  civil  rights  statute,  


42 U.S.C.  1988.  The statute provides that "[i]n any action or proceeding to enforce a  


provision of [42 U.S.C.  1983] . . . the court, in its discretion, may allow the prevailing  


                                                                                                 Section 1983, in turn,  

party, other than the United States, a reasonable attorney's fee." 

imposes liability for "the deprivation of any rights, privileges, or immunities secured by  


the Constitution . . . in an action at law, suit in equity, or other proper proceeding for  




                    The  enforcement  action  at  issue  here,  brought  by  the  Commission's  

executive  director  for  alleged  violations  of  AS  18.80.220,  was  not  an  "action  or  

proceeding to enforce a provision of section[] . . . 1983" as required before 42 U.S.C.  

 1988(b) could apply.  Ace's affirmative defense did not turn it into one.  And even if  


Ace's defensive reliance on the constitution could be charitably viewed as an attempt to  


enforce the federal civil rights laws, Ace did not prevail on its defense; the administrative  


law judge expressly rejected it, deciding the case on other grounds. Finally, since section  

                                                                                               21 - and, as discussed  

1988 grants the court discretion whether to award attorney's fees 

above,  the  Commission  has  exercised  its  discretion  to  limit  fee  awards  to  certain  

           19        This ruling is not challenged on appeal.   

           20        42 U.S.C.  1988(b) (2012).  

           21        Id.  ("[T]he court, in its discretion, may allow the prevailing  party, other  

 than the United States, a reasonable attorney's fee.") (emphasis added).  

                                                              - 9 -                                                      7007

----------------------- Page 10-----------------------


 categories of cases not including this one - Ace would not be entitled to an award of fees  

 under section 1988 even if the statute otherwise applied.  

            D.        Ace Was Not Entitled To Fees Under 42 U.S.C.  2000e-5(k).  

                      Finally, Ace asserts that it was entitled to attorney's fees as the prevailing  


 party  under  42  U.S.C.    2000e-5(k),  which  provides  for  the  discretionary  award  of  

 attorney's fees to the prevailing party in an action brought by the Equal Employment  

 Opportunity  Commission  (EEOC)  to  enforce  the  prohibition  against  employment  


                                                                                                        Ace never mentioned  

 discrimination found in Title VII of the Civil Rights Act of 1964. 

 this statute as the basis for an award until its brief on this appeal, and "[a]s a general rule,  


 this  court  will  not  consider  an  issue  raised  for  the  first  time  on  appeal."                                   We  may  

 nonetheless consider the issue if it is not dependent on any new or controverted facts,  

 closely related to the appellant's trial court arguments, and could have been gleaned from  


 the pleadings, or constitutes "plain error."                         Ace's reliance on this EEOC statute could  

 not  have  been  gleaned  from  the  pleadings.    We  therefore  consider  only  whether  the  

 administrative law judge committed plain error by failing to apply the statute to this case.  


                     We see no plain error.  Section 2000e-5(k) governs only the jurisdiction of  



the EEOC,           and the enforcement action in this case was  brought by the Alaska State  

             22        42 U.S.C.  2000e-5(k) (2012) ("In any action or proceeding . . . the court,     

   in its discretion, may allow the prevailing party. . . a reasonable attorney's fee.");                                        id.   

   2000e-2  (defining  unlawful  employment  practices  for  an    employer);  id.    2000e-4  

   (creating the EEOC and providing it with authority to enforce the Title VII prohibition  


   against employment discrimination).  



                       State v. Nw. Constr., Inc., 741 P.2d 235, 239 (Alaska 1987); Miller v. Sears ,  

   636 P.2d 1183, 1189 (Alaska 1981).  

             24        Zeman v. Lufthansa German Airlines, 699 P.2d 1274, 1280 (Alaska 1985).  

             25        See   42  U.S.C.    2000e-5(a)  ("The  Commission  is  empowered,  as  


                                                                 -  10 -                                                        7007

----------------------- Page 11-----------------------


Commission for Human Rights pursuant to AS 18.80.220. As explained above, fee awards  


in  such  actions  are  governed  by  state  statute,  AS  18.80.130.                                   Furthermore,  like  


42  U.S.C.    1988,  42  U.S.C.    2000e-5(k)  commits  fee  awards  to  "the  court,  in  its  


discretion."    Even  assuming  this  statute  applied  to  it,  the  Commission  exercised  its  


discretion to limit awards of fees to categories of cases that do not include this one.  And  


finally, although federal civil rights law encourages attorney's fees awards to prevailing  


plaintiffs,       cases in which fees may be assessed against them are limited to those in which  

the "claim was frivolous, unreasonable, or groundless, or . . . the plaintiff continued to  


   hereinafter provided, to prevent any person from engaging in any unlawful employment  

  practice as set forth in section 2000e-2 or 2000e-3 of this title."); see also Oscar Mayer  


   & Co. v. Evans,  441 U.S. 750, 755 (1979) (noting that Congress intended to screen from  


   the federal courts those civil rights problems "that could be settled to the satisfaction of  


   the grievant in a 'voluntary and localized manner' "; the section gives state agencies "a  


   limited opportunity to resolve problems of employment discrimination and thereby to  

   make unnecessary[] resort to federal relief").  



                      Ace contends that the United States Supreme Court, in New York Gaslight  

   Club, Inc. v. Carey, 447 U.S. 54, 61-71 (1980), interpreted 42 U.S.C.  2000e-5(k) as  

   requiring  awards  of  attorney's  fees  to  prevailing  parties  in  state   administrative  

  proceedings  involving  civil  rights  claims.    But  New  York  Gaslight  only  addressed  

   whether federal courts were required to include such fees in their awards to prevailing  


  plaintiffs who had gone through state processes before achieving relief.  Since Ace was  


   not a prevailing plaintiff, New York Gaslight is irrelevant.      

            27        See,  e.g.,  Christiansburg  Garment  Co.  v.  Equal  Opportunity  Emp't  

   Comm'n, 434 U.S. 412, 422 (1978) (discussing policy reasons for encouraging fees  

   awards to prevailing plaintiffs while limiting awards to prevailing respondents); Newman  

   v. Piggie Park Enters., Inc. , 390 U.S. 400, 402 (1968) ("If successful plaintiffs were  

   routinely forced to bear their own attorneys' fees, few aggrieved parties would be in a  


  position to advance the public interest by invoking the injunctive powers of the federal  


                                                               -  11 -                                                      7007

----------------------- Page 12-----------------------


litigate after it clearly became so."             Ace's failure to raise 42 U.S.C.  2000e-5(k) in the  


agency proceeding necessarily means that the administrative law judge made no findings  

that would support such a characterization of the Commission's position.  


                  We  AFFIRM  the  superior  court's  decision  affirming  the  attorney's  fees  

decision of the Commission.  

           28       Christiansburg Garment Co              ., 434 U.S. at 422; see also Indep. Fed'n of  

  Flight Attendants v. Zipes , 491 U.S. 754, 761 (1989) ("[D]istrict courts should [] award  

  Title VII attorney's fees against losing intervenors only where the intervenors' action  


  was frivolous, unreasonable, or without foundation.").  

                                                         -  12 -                                                7007

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