CROWLEY v. STATE, S-12551 (Alaska 12-24-2008)


Supreme Court No. S-12551.Supreme Court of Alaska.
December 24, 2008.

Memorandum decisions of this court do not create legal precedent. See Alaska Appellate Rule 214(d). Accordingly, this memorandum decision may not be cited for any proposition of law or as an example of the proper resolution of any issue.

Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, William F. Morse, Judge, Superior Court No. 3AN-04-13315CI.

Appearances: Joe P. Josephson, Josephson Associates, P.C., Anchorage, for Appellant. Joan M. Wilkerson, Assistant Attorney General, Juneau, and Talis J. Colberg, Attorney General, Juneau, for Appellee.

Before: Fabe, Chief Justice, Matthews, Eastaugh, Carpeneti and Winfree, Justices.

MEMORANDUM OPINION AND JUDGMENT[fn*][fn*] Entered pursuant to Appellate Rule 214.

The State of Alaska, Department of Health Social Services, Office of Children’s Services (OCS) terminated an employee. The employee brought suit in superior court, alleging breach of the implied covenant of good faith and fair dealing,Page 2
wrongful retaliation, and discrimination based on age and race. The superior court entered summary judgment in favor of OCS, dismissing the contract claims for failure to exhaust union grievance procedures provided for in the applicable collective bargaining agreement and dismissing the statutory claims on their merits. Because the employee did exhaust union grievance procedures, we reverse the grant of summary judgment on the contract claims and remand for further proceedings on those claims; because there were no genuine issues of fact and OCS was entitled to judgment as a matter of law, we affirm the grant of summary judgment on the statutory discrimination claims.

Karen Crowley is an African-American woman born in 1952. In September 2000 Crowley applied for a Social Worker III position with OCS, representing in an on-line job application, an applicant profile, and two interviews that she met the prerequisites for the position. Crowley represented that she had a bachelor’s degree in social work (BSW), a working knowledge of the Indian Child Welfare Act (ICWA), and experience equivalent to two years as an OCS Social Worker II. In later interviews, Crowley also represented that she had worked as a Social Worker II for seven months in a different department and had rehire rights.

OCS hired Crowley in November 2000 in a non-permanent position. In June 2001 OCS appointed Crowley to a full-time Social Worker III position; following a six-month probationary period her employment became permanent. During this period, Crowley’s position title changed to Social Worker II due to an OCS job re-classification.

Deborah Allen, an African-American woman born in 1954, was Crowley’s supervisor. About the time Crowley’s probationary period ended, Allen began receiving an increasing number of complaints about Crowley’s job performance. Allen and Crowley’s relationship deteriorated. Allen and Crowley met on May 30, 2002, to discussPage 3
Crowley’s disregard for Allen’s directions in a specific case, and the next day Allen followed up with a “Letter of Expectations” concerning Crowley’s job performance.

On June 1 Allen requested that Crowley be transferred to another supervisor, alleging that Crowley disregarded Allen’s directions, blamed others for her own bad decisions, exhibited questionable judgment, and failed to follow through on investigations, case work, and home visits. However, an OCS policy did not allow transfers of employees with performance issues to other supervisors. Later that month Crowley asked for a transfer as well, but she withdrew the request shortly thereafter. In July 2002 Allen completed a performance evaluation based on Crowley’s work from June 2001 to January 2002, rating Crowley “low acceptable” to “acceptable” in most areas and noting “some unfavorable feedback.”

In August OCS Staff Manager Ed Sheridan undertook an investigation of Crowley’s job performance. Sheridan directed Allen to examine Crowley’s caseload for quality assurance, and Allen identified eight cases where Crowley’s “case management practices had reached an unacceptable level.” Sheridan also considered whether Crowley had misrepresented some of her qualifications during the hiring process.

Crowley belonged to a union and a collective bargaining agreement applied to her OCS employment. Sheridan met with Crowley and her union representative. On September 24 Sheridan notified Crowley that he believed she “may have engaged in misconduct by lying and misrepresenting certain facts on several of [her] cases.” He stated that her “decision making abilities and judgment appear to be so impaired as to have placed children at risk for abuse or neglect.” Sheridan suspended Crowley from all work on case files pending completion of his investigation.

Sheridan continued to meet with Crowley and her union representative. He prepared a report dated December 15, 2002, concluding that “the evidence supports poor judgment, ineffective and misleading communications, incompetence andPage 4
insubordination on the part of Ms. Crowley.” Sheridan also determined that Crowley had, among other things, misrepresented her qualifications in the hiring process. Although Crowley represented that she worked for seven months as a Social Worker II in another department and had rehire rights, she actually had been non-retained after less than four months of her probationary period and did not have rehire rights. Moreover, she did not meet substitute experience requirements, despite her representations to the contrary.

Sheridan summarized his conclusion succinctly: “Ms. Crowley is incompetent. . . . To continue her employment . . . would place Alaska’s children at risk and compromise the Division’s mission.” Crowley refused an opportunity to resign in lieu of dismissal. OCS Acting Director Tom Cherian formally notified Crowley of her immediate dismissal in a letter dated December 20, 2002. OCS later hired a thirty-nine year old African-American woman to fill the vacant position.

In January 2003 Crowley’s union filed a Step II grievance on her behalf, alleging that Crowley had been terminated without just cause. OCS denied the grievance. In May union representative Sue Ernisse notified Crowley that she had interviewed witnesses and for the most part had received negative feedback very similar to Sheridan’s report. Ernisse informed Crowley that the union would not proceed to arbitration and that Crowley had a right to appeal this decision to the union’s grievance review committee within ten days. The next day the union filed a Step III grievance on Crowley’s behalf. Ernisse sent Crowley a letter explaining that the grievance was filed only to keep the process alive and give Crowley time to appeal the union’s decision not to proceed to Step IV arbitration.

The union’s grievance review committee heard Crowley’s appeal on June 30, 2003, decided the grievance should not proceed to Step IV arbitration, and authorized closure of the case. The written decision expressly stated that it was “final,Page 5
and no further appeals are available.” OCS denied the Step III grievance in August. Despite the grievance review committee’s earlier decision, the union made a timely request for Step IV arbitration and sent Crowley a copy of the request letter. But in January 2004 Ernisse informed OCS that the union was withdrawing the Crowley case from arbitration, thus agreeing to closure of the case as authorized by the grievance review committee.

Crowley filed suit against OCS in December 2004, alleging that her termination was: (1) a breach of the implied covenant of good faith and fair dealing; (2) wrongful retaliation for requesting assignment to a different supervisor; and (3) a violation of her statutory rights to be free from discrimination based on race and age. OCS sought summary judgment on all of Crowley’s claims.

Prior to oral argument on the summary judgment motion, the superior court issued a tentative denial and raised specific issues for discussion during oral argument. OCS moved for reconsideration of the tentative order and outlined what it intended to present at oral argument. Following oral argument, the court granted summary judgment in favor of OCS on all counts. The court expressly adopted the reasoning set forth in OCS’s memorandum replying to Crowley’s opposition to summary judgment, in which OCS had argued that: (1) Crowley’s good faith and fair dealing and retaliation claims were contract claims subject to union grievance procedures, and Crowley had not exhausted those procedures before filing suit; and (2) Crowley had not only failed to make a prima facie case for her statutory discrimination claims, but had also failed to show that OCS’s legitimate non-discriminatory reasons for her dismissal were pretextual.

Crowley appeals.Page 6

We review a superior court’s grant of summary judgment de novo, [fn1]
viewing all reasonable inferences in the light most favorable to the party against whom judgment is entered[fn2] and considering affidavits, depositions, admissions, answers to interrogatories, and similar material to determine whether there are any triable genuine issues of material fact.[fn3] We will uphold summary judgment only if the record presents no genuine issues of material fact and the successful party is entitled to judgment as a matter of law.[fn4]

Exhaustion of remedies decisions involve three separate questions: “(1) is exhaustion of remedies required; (2) did the complainant exhaust those remedies; and (3) is the failure to exhaust remedies excused?”[fn5] The first two questions are raised here. The first prong of exhaustion analysis — “whether the doctrine of exhaustion of administrative remedies applies to a particular action” — is a question of law reviewed de novo.[fn6] The second prong — a determination whether the complainant actuallyPage 7
exhausted remedies — is reviewed for abuse of discretion.[fn7]

IV. DISCUSSION A. The Superior Court’s Summary Dismissal of Crowley’s Contract Claimsfor Failure To Exhaust Union Grievance Procedures Must Be Reversed.

An asserted violation of the implied covenant of good faith and fair dealing is a breach of contract claim.[fn8] A claim for retaliatory discharge not predicated on some protected activity is a species of a good faith and fair dealing claim.[fn9] Good faith and fair dealing claims, like other contract claims, are subject to grievance procedures of aPage 8
collective bargaining agreement.[fn10] Those grievance procedures generally must be exhausted before an employee brings suit against his or her employer in court.[fn11]

Crowley argues, but cites no authority, that requesting a transfer to a different supervisor was a protected activity, and asserts she was terminated because she made that request. Although AS 18.80.220(a)(4) makes it unlawful for an employer to discharge a person “because the person has opposed any practices forbidden under AS 18.80.200-18.80.280,” Crowley’s transfer request was not an opposition to discrimination.[fn12]
Under these circumstances, Crowley’s request for transfer was not protected activity. Even if Crowley subjectively believed that Allen was discriminating against her, requesting transfer to a different supervisor alone does not constitute opposition to discrimination. The superior court correctly characterized Crowley’s retaliatory discharge claim as a contract claim.

OCS urged the superior court to summarily dismiss Crowley’s contract claims for failure to exhaust union grievance procedures on the theory that Crowley failed to appeal the union’s decision to withdraw her claim from Step IV arbitration. OCS’s evidence in support of summary judgment was an affidavit from a personnel officer stating that “according to information provided by the [union], Ms. Crowley didPage 9
not object to or appeal Ms. Ernisse’s recommendation [to not proceed to arbitration], and consequently Ms. Ernisse notified [OCS] on January 23, 2004, that, `The Union is withdrawing the Crowley case.'” This statement was incorrect. At oral argument on the summary judgment motion Crowley presented the court with a copy of the grievance review committee’s written decision rejecting Crowley’s appeal of the recommendation to not proceed to arbitration.

At oral argument before us, OCS conceded that Crowley had unsuccessfully appealed the recommendation to not proceed to arbitration on her claim. OCS nonetheless argued that because Ernisse actually demanded arbitration after Crowley’s appeal was denied, when Ernisse withdrew the demand a few months later Crowley should have filed another appeal with the grievance review committee. We disagree. The grievance review committee’s decision specifically stated that Crowley’s claims should not proceed to arbitration, that the union representative was authorized to close the case, and that “no further appeals are available.” Because Crowley had no further right within the union to force the union to represent her in her grievance against OCS, we conclude that Crowley exhausted her union grievance procedures. The superior court erred in concluding otherwise.

OCS asks us to affirm the superior court’s grant of summary judgment on Crowley’s contract claims on alternative grounds, specifically that (1) Crowley’s employment contract was void because she misrepresented her qualifications during the hiring process, and (2) there were no genuine issues of material fact barring judgment in favor of OCS on the merits of the contract claims. We decline to do so on this record; the superior court may consider these issues on remand.Page 10
B. The Superior Court’s Summary Dismissal of Crowley’s StatutoryDiscrimination Claims Is Affirmed.

Alaska Statute 18.80.220(a)(1)[fn13] prohibits employers from terminating employment because of race, national origin, or age.[fn14]
The three-part burden-shifting test originally described by the United States Supreme Court in McDonnell Douglas Corp. v. Green[fn15] guides our courts’ application of AS 18.80.220(a)(1).[fn16] Under the McDonnellDouglas test, the complaining party bears the initial burden of establishing a prima facie case of discrimination.[fn17] If the complainant establishes a prima facie case of discrimination, the burden shifts to the employer to advance a legitimate nondiscriminatory reason for the employment action.[fn18] Then, if the employer succeeds in meeting its burden, the burden shifts back to the complainant to show that the employer’s offered explanations were pretextual.[fn19]Page 11

The elements of a prima facie showing of discrimination in this context are that: (1) the complainant belongs to a protected class; (2) the complainant was qualified for her job and performing according to the legitimate expectations of her employer; (3) the complainant was terminated despite her qualifications and performance; and (4) the employer filled the disputed position by hiring someone who was not within the same protected class as the complainant.[fn20]

Assuming the complainant makes a prima facie case of employment discrimination, the employer must then demonstrate legitimate nondiscriminatory reasons for its decisions.[fn21] To do so, the employer “need only produce admissible evidence which would allow the trier of fact rationally to conclude that the employment decision had not been motivated by discriminatory animus.”[fn22] The employer must identify “legitimate business reasons existing at the time the employment decision was made.”[fn23]

Once the employer articulates a legitimate nondiscriminatory reason for its employment decision, the burden shifts back to the complainant to demonstrate that the employer was more likely motivated by discriminatory reasons, usually accomplished by showing that the proffered explanation was a pretext for discrimination.[fn24] “[A] complainant may demonstrate pretext `either directly by persuading the court that aPage 12
discriminatory reason more likely motivated the employer or indirectly by showing that the employer’s proffered explanation is unworthy of credence.’ “[fn25] Summary judgment is appropriate if the complainant’s only evidence consists of her own subjective belief that the employer’s asserted grounds for its decision are a pretext.[fn26]

Expressly relying on OCS’s reply memorandum, the superior court concluded that Crowley had not met her burden to present either a prima facie case of discrimination or a showing of pretext in response to OCS’s legitimate non-discriminatory reasons for her termination. Crowley only appealed, briefed, and argued the superior court’s conclusion that she had failed to present a prima facie case of discrimination.

But assuming that Crowley presented sufficient admissible evidence to establish a prima facie case of discrimination and avoid summary judgment on that ground, Crowley failed to present sufficient admissible evidence to create a genuine issue of fact on pretext.

At oral argument before us, Crowley conceded she had no evidence of discriminatory animus on the part of Ed Sheridan, no evidence Deborah Allen had somehow tainted Sheridan’s investigation or his conclusion that Crowley’s employment should be terminated, and no evidence Sheridan’s investigation and recommendation were not in good faith. Crowley’s only evidence of pretext was: (1) a stray comment by Allen (a then forty-eight year old African-American woman), that perhaps Crowley (aPage 13
then fifty year old African-American woman), was suffering from “hot flashes”;[fn27] (2) Allen’s request that in light of their ages, Crowley not call her “ma’am”; (3) the fact that Crowley was replaced by a younger (then thirty-nine year old) African-American woman; and (4) that she received some favorable feedback from co-workers during her employment. Crowley submitted an affidavit affirming her belief she was terminated because of her age, but her subjective belief does not create an issue of fact.

Under the circumstances of this case, the evidence Crowley relies on does not support a reasonable inference of pretext that would allow either her race or age discrimination claim to go to trial. The superior court properly granted summary judgment in favor of OCS on Crowley’s statutory discrimination claims.

We REVERSE the grant of summary judgment in favor of OCS on Crowley’s contract claims, VACATE the final judgment entered in favor of OCS, and REMAND for further proceedings on those claims. We AFFIRM the entry of summary judgment in favor of OCS on Crowley’s statutory discrimination claims.

[fn1] Nielson v. Benton, 903 P.2d 1049, 1052 (Alaska 1995).

[fn2] R.E. v. State, 878 P.2d 1341, 1345 (Alaska 1994).

[fn3] French v. Jadon, Inc., 911 P.2d 20, 23-24 (Alaska 1996).

[fn4] Nielson, 903 P.2d at 1051-52.

[fn5] State, Dep’t of Transp. and Pub. Facilities v. Fairbanks N. StarBorough, 936 P.2d 1259, 1261 (Alaska 1997) (quoting Eufemio v. KodiakIsland Hosp., 837 P.2d 95, 98-99 (Alaska 1992)).

[fn6] Fairbanks N. Star Borough, 936 P.2d at 1260 n. 3; see also Bruns v.Municipality of Anchorage, Anchorage Water Wastewater Util.,32 P.3d 362, 367-68 (Alaska 2001) (“The issue of whether an employee is required to exhaust administrative remedies is a question of law that we review de novo.”)

[fn7] Bruns, 32 P.3d at 366 (citing State v. Beard, 960 P.2d 1, 5
(Alaska 1998)).

[fn8] Grant v. Anchorage Police Dep’t, 20 P.3d 553, 557 n. 16 (Alaska 2001) (citing Knight v. Am. Guard Alert, Inc., 714 P.2d 788, 791-92
(Alaska 1986)). We recently described the covenant of good faith and fair dealing: The covenant does not have a precise definition but generally requires employers to treat like employees alike and act in a manner that a reasonable person would regard as fair. The covenant has both a subjective and an objective component: the subjective component “prohibits an employer from terminating an employee for the purpose of depriving the employee of the contract’s benefits,” and the objective component “prohibits the employer from dealing with the employee in a manner that a reasonable person would regard as unfair.” Mitchell v.Teck Cominco Alaska Inc., 193 P.3d 751, 761-62 (Alaska 2008) (internal citations omitted).

[fn9] Cf. Mahan v. Arctic Catering, Inc., 133 P.3d 655, 660 (Alaska 2006) (prima facie case for statutorily-based claim of retaliatory discharge is: (1) the employee engaged in a protected activity; (2) the employer subjected the employee to adverse employment action; and (3) there was a causal link between the protected activity and the employer’s action); AS18.80.220(a)(4) (prohibiting discharge in retaliation for opposition to discrimination).

[fn10] Grant, 20 P.3d at 557 n. 16.

[fn11] Id. at 555 (holding a union member “was precluded from making contract-based claims” where he did not exhaust union grievance procedures under that contract). See also Casey v. City of Fairbanks,670 P.2d 1133, 1135-36 (Alaska 1983).

[fn12] See, e.g., Equal Employment Opportunity Comm’n v. Crown ZellerbachCorp., 720 F.2d 1008, 1013 (9th Cir. 1983) (“The employee’s statement cannot be `opposed to an unlawful employment practice’ unless it refers to some practice by the employer that is allegedly unlawful.”) (emphasis in original); see also Learned v. City of Bellevue, 860 F.2d 928, 932
(9th Cir. 1988).

[fn13] A.S. 18.80.220(a)(1) states:

[I]t is unlawful for an employer to refuse employment to a person, or to bar a person from employment, or to discriminate against a person in compensation or in a term, condition, or privilege of employment because of the person’s race, religion, color, or national origin, or because of the person’s age. . . .

[fn14] Haroldsen v. Omni Enters., Inc., 901 P.2d 426, 430 (Alaska 1995).

[fn15] 411 U.S. 792, 802-04 (1973).

[fn16] Haroldsen, 901 P.2d at 430; see also Raad v. Alaska State Comm’nfor Human Rights, 86 P.3d 899, 904 (Alaska 2004).

[fn17] Raad, 86 P.3d at 904; Haroldsen, 901 P.2d at 430.

[fn18] Raad, 86 P.3d at 904; Haroldsen, 901 P.2d at 430.

[fn19] Raad, 86 P.3d at 904; Haroldsen, 901 P.2d at 430.

[fn20] Haroldsen, 901 P.2d at 430.

[fn21] Raad, 86 P.3d at 905; Perkins v. Doyon Universal Servs., LLC,151 P.3d 413, 416 (Alaska 2006).

[fn22] Raad, 86 P.3d at 905 (quoting Veco, Inc. v. Rosebrock, 970 P.2d 906,919 (Alaska 1999)).

[fn23] Id. (quoting Thomas v. Anchorage Tel. Util., 741 P.2d 618, 624
(Alaska 1987)) (emphasis omitted).

[fn24] Id.

[fn25] (1981)).

[fn26] Id. (quoting Texas Dep’t of Com’ty Affairs v. Burdine, 450 U.S. 248,256 Perkins, 151 P.3d at 416.

[fn27] Cf. Kinzel v. Discovery Drilling, Inc., 93 P.3d 427, 434-35
(Alaska 2004) (stray workplace remarks by persons not involved in the decision-making process not sufficient evidence of discriminatory animus by decision-makers).