Opinion ID: 2464470
Heading Depth: 3
Heading Rank: 3

Heading: It Was Error To Grant APT Summary Judgment On The Wrongful Termination Claim.

Text: 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 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. 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.
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 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, 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 attorney [37] 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.
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 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 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.