Opinion ID: 2637325
Heading Depth: 3
Heading Rank: 1

Heading: Willard's Breach-of-Covenant Claim

Text: Willard argues that the superior court erred in ruling that he failed to raise a question of material fact as to whether his discharge violated the covenant of good faith and fair dealing, which is implied in all employment contracts in Alaska. [5] Breach of the implied covenant may be either subjective or objective. [6] To prove breach on subjective grounds, an employee must show that the employer acted with a bad-faith purpose. [7] Apart from avoidance of bad faith, the covenant requires parties to an employment contract to act in a manner which a reasonable person would regard as fair. [8] While the determination of fairness is inherently fact specific, we have held that the covenant requires that an employer treat like employees alike  and that failure to do so can give rise to a claim for breach under the objective test. [9] Similarly, proof that an employer's actions violated public policy may qualify as a breach of the objective prong of the implied covenant. [10] Willard asserts four theories in support of his argument that Khotol breached the implied covenant of good faith and fair dealing. Specifically, he alleges that Khotol fired him in retaliation for requesting safety equipment in violation of public policy; failed to ensure that all employees who violated health and safety rules received equal treatment; violated its own rules and regulations in terminating Willard; and fired Willard because of his supervisor's personal animosity toward him. Willard's allegation that Khotol fired him in retaliation for requesting necessary safety equipment relies largely on Bellamy's draft letter to the NLRB. During his deposition, Bellamy acknowledged that the letter's purpose was to explain the termination of Jim Willard. The letter states that Willard was terminated for insubordination and failing to follow established shop procedures. It gives several examples of Willard's alleged misconduct, and then describes Willard's complaints regarding a task that he believed was unsafe due to the presence of harmful gases. In dismissing Willard's concerns, Bellamy wrote: Upon investigation by myself into this matter I found that the operation as set forth was completely safe and the level of gases present would be a matter of personal discomfort. His position on this matter caused the Company a great deal [of] lost time, backlog of work, and led to hard feelings with the contractor, the Shaw Group. Khotol Services Corporation emphasizes a safe, team oriented environment for our employees. Mr. Willard indicated to me on more than one occasion that he was not interested in being a part of this team. The operation in question involved the cleaning of oil-water separators installed where motor vehicles are maintained and repaired. The separators drain oil into waste-oil reservoirs, while diverting water into the sewage system. According to Bellamy's deposition testimony, the separators received periodic inspections and maintenance; employees checked pump operations weekly and drained and pressure washed the separators' tanks and reservoirs quarterly. While Bellamy's deposition testimony indicates that Willard was asked only to check the equipment rather than clean it, Willard's affidavit states that Bellamy directed [him] to work on the oil/water separators. The affidavit further claims that in response to Bellamy's request, Willard informed Bellamy that he (Willard) would need the proper safety equipment in order to carry out this task. Willard insists that Bellamy never told him the work on the oil-water separators could be done without the requested safety equipment; nor did Bellamy tell Willard that his request would lead to a backlog of work, delays in meeting deadlines, or hard feelings with Khotol's contractor, the Shaw Group. To the contrary, Willard states, Bellamy eventually obtained the safety equipment he requested. Bellamy, for his part, acknowledged during his deposition that despite the concerns his draft letter to the NLRB expressed about the negative effects of Bellamy's requests for the safety equipment, Khotol had never actually experienced any economic problems or delays in the oil-water separator work attributable to his requests. This evidence, viewed in the light most favorable to Willard, supports an inference that Willard's request for safety equipment was reasonable, but that Khotol supervisors viewed it as an annoyance and used it as a reason to terminate Willard for insubordination. Willard's claim that his request was reasonable finds further support in the deposition testimony of Steve Holtery, who, when asked if it was ever his job to acquire safety equipment for use on the oil-water separators, stated: My job, no, it's not my job, but we ordered the equipment in. We got the things that they were saying was needed. . . . While Holtery did not explicitly identify who they referred to, his testimony in response to other questions suggests he was referring to employees formerly with the Department of Public Works at Fort Richardson, who had previously supervised maintenance of the oil-water separators. Holtery also acknowledged that Khotol initially purchased the wrong type of air mask or filter. After learning of the mistake, he said, we went and got the correct filters. Yet despite Holtery's apparent recognition of the need for safety equipment in connection with work on the oil-water separators, his deposition testimony suggests that managers at Khotol viewed Willard's request for safety equipment as a nettlesome delay or hindrance. Asked about Willard's work assignments, Holtery responded: A: Well, there's a lot of things that we wanted everybody to do. We wanted everybody because it was such a small work force to be able to cross craft, and we wanted him to do oil/water separators, but we had a problem with that. Q: What was the problem with . . . A: He didn't want to do them. I can understand. Q: Was he assigned to do oil/water separation? A: No. We didn't have time to debate. No, we . . . Q: I guess I'm confused. Was he ever asked to do . . . A: I think he was, but every time it came up, there was questions about operational procedures and then we'd have to stop and go check on what safety equipment was required. . . . We have previously held that firing an employee in retaliation for requesting safety equipment gives rise to a cause of action for breach of the implied duty of good faith and fair dealing. [11] For example, in Reed v. Municipality of Anchorage , we held that a municipal employee discharged in retaliation for whistle blowing by filing job safety and health complaints had a valid common law claim for breach of the implied covenant. [12] As in Reed, Willard's case involves a claim of retaliatory discharge in connection with his request for safety equipment. Khotol responds by downplaying the significance of Bellamy's draft letter to the NLRB and asserts that other than his conclusory allegations Mr. Willard presented no evidence to support this claim. Khotol further asserts that Bellamy's investigation of the oil-separator operation and his conclusion that it was completely safe, support the company's position that Willard was fired for insubordination and failure to follow company procedures  and not for requesting safety equipment. As Khotol sees it, Willard's equipment requests provided confirmation of Willard's resistance, both passive and active, to the direction of his supervisors. In dismissing Willard's retaliatory discharge theory, the superior court agreed with Khotol's position, stating: [A]s Defendant points out, Plaintiff's conclusory allegations, made for the first time in his supplemental opposition, do not create a factual issue whereby a reasonable jury might conclude that Khotol acted in an objectively unfair manner in terminating Plaintiff. We disagree. Here, Willard relied on both the Bellamy letter and his own affidavit in support of his complaint. In addition, when viewed in the light most favorable to Willard, Bellamy's and Holtery's deposition testimony supports Willard's retaliatory-discharge claim. Khotol's position, as adopted by the superior court, fails to reflect a view of the evidence in the light most favorable to Willard  the approach required for ruling on Khotol's motion for summary judgment. Moreover, the evidence available at summary judgment fails to support Khotol's claim that it made a good faith effort to confirm that Willard's equipment requests were unreasonable and that its investigation therefore provided confirmation of Willard's resistance, both passive and active, to the direction of his supervisors. [I]t is possible for an employer to rightfully terminate an employee but to do so in a way that violates the covenant of good faith and fair dealing. [13] But if the employer makes a good faith determination that the misconduct occurred, there is no breach of the implied covenant . . ., even if the employee could subsequently prove that the factual finding of misconduct was a mistake. [14] In Holland v. Union Oil Co. of California, Inc., on which Khotol relies, we affirmed summary judgment for Unocal. [15] There, Holland planned to do an independent project using a significant amount of company materials and time, but failed to obtain permission to do the project as required by company policy. [16] Two of Holland's supervisors conducted an investigation; they determined that Holland had not told them the truth and that his behavior demonstrated poor judgment, both of which justified his demotion. [17] We concluded that Unocal's actions, as a matter of law, could not reasonably be considered objectively unfair, because two supervisors had investigated the misconduct charges against Holland, including interviewing all of the parties involved. [18] In contrast, the record here indicates that Bellamy's investigation of Willard's requests consisted of second-hand information from a Department of Public Works supervisor at Fort Richardson who told Bellamy that an earlier investigation  the date of which was not stated  had shown that there w[ere] no toxic gas[]es to a level that would harm an individual. The record provides no further details to support Khotol's claim that it had investigated the reasonableness of Willard's request. And Bellamy acknowledged that his brief conversation with the Department of Public Works supervisor was the principal basis of his effort to determine the validity of Willard's requests for safety equipment. This evidence does not provide a reasonable factual basis to support the conclusory assertion in Bellamy's draft letter to the NLRB that, [u]pon investigation by myself . . . I found that the operation . . . was completely safe and the level of gases present would be a matter of personal discomfort. For these reasons, we conclude that there are sufficient genuine issues of material fact regarding Willard's retaliatory discharge theory to support his cause of action for breach of the implied covenant of good faith and fair dealing. [19]