Court Opinion

ID: 9535422
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:49:21.91505+00
Date Added: 2024-06-11T13:33:14.817802
License: Public Domain

BRYNER, Justice,
with whom FABE, Justice,
joins, dissenting.
Although I agree that Alyeska may be entitled to offset some, or conceivably even all, of Shook’s severance payment, I do not agree that the entire amount of his severance should be automatically available for offset. In my view, the question of any potential offset contains unresolved factual issues.
The severance agreement required Shook to release Alyeska “from any and all claims, ... liabilities, and demands and causes of action, known or unknown, ... arising from [Shook’s] employment or as a result of this separation of employment.” As the court recognizes, McKeown v. Kinney Shoe Corp.1 makes it clear that the agreement’s inclusion of one type of potential claim — an AWHA claim — is impermissible. The narrow question presented is what portion of Alyeska’s severance payment can be ascribed to this impermissible purpose.
Absent proof that Shook had any other potentially viable claims against Alyeska, the court holds that his entire severance payment may be presumed to cover his AWHA claim. But this holding takes an unrealistic *92view of what Alyeska paid for. The court fails to recognize that Alyeska’s severance plan did not prepay future damages to its employees for their existing valid claims. Rather, the plan bought Alyeska protection against uncertainty — insurance against the risk of many different kinds of future claims that were “known or unknown” to its employees at the time of severance.
That only one of these claims eventually materialized in Shook’s case, and that this claim is no longer within the terms covered by the severance package, hardly justify Alyeska in recharacterizing its entire severance payment as an advance deposit on Shook’s AWHA claim. With respect to other “known or unknown” potential claims against which Alyeska sought protection, it got precisely what it paid for when it made the payment- — security against the possibility of a claim by Shook. That these other risks have not actually materialized and may no longer be of concern to Alyeska cannot justify the company’s claim that its payment to insure against these risks was, in retrospect, unnecessary and should therefore now be credited against Shook’s potential AWHA recovery.
In my view, a more realistic approach in circumstances like these — where one narrow aspect of a global settlement and release is found invalid as against public policy — would be to hold that a right of offset arises as to the prorated amount of the total settlement payment that is attributable to the specific provision that is declared invalid and unenforceable. Applying this approach to Shook’s case would determine the portion of the total severance payment for which Alyeska could fairly be said to have received nothing, and for which it accordingly should be entitled to reimbursement or offset.
Shook’s right to pursue his AWHA claim should not depend on his ability to prove the non-existence of an offset. Rather, because Alyeska has the burden of proving both the existence of an offset right and the value of the offset, it should have to establish the portion of Shook’s overall settlement that was, at the time of payment, fairly allocable to the risk of a potential AWHA claim. If the manner in which Alyeska calculated the amount to be offered in its severance package precludes the company from prorating specific portions of the total settlement payments to particular categories of potential claims, then, in my view, the result would be a failure of proof, and Alyeska would be entitled to no offset at all. Only if Alyeska established that its severance package was actually designed to protect against nothing but the risk of AWHA claims should the entire settlement payment become available to offset a future AWHA claim.
Because the record in this case does not establish what portion, if any, of Shook’s total settlement should be available to offset any future AWHA recovery, I would hold that summary judgment based on a potential offset is not justified.
In any event, even accepting the court’s holding that the entire settlement is available to offset any AWHA recovery, I do not agree with the conclusion that Shook’s right to sue should be commensurate with his ability to prove the potential for a net overtime damage award. It is undisputed that Shook’s agreement with Alyeska is unenforceable to the extent that it includes an unapproved settlement of potential AWHA claims. The strong public interest in vindicating AWHA’s policy against unapproved settlements,2 coupled with the corresponding risk that a strict rule of dismissal might discourage actions by potential claimants, strongly favors allowing Shook to prosecute his cause of action, even without proof of a potential net recovery.
Particularly in the context of a class action that will continue regardless of Shook’s participation, the trial court could reasonably conclude that Shook’s dismissal as a class representative was unjustified. Alaska Civil Rule 23(c) gives trial courts broad discretion to define the membership of classes and subclasses, to segregate particular factual and legal issues for case-by-case determination, *93and to establish the order in which various questions should be considered and determined. Shook’s forced dismissal on summary judgment will do little more than complicate this class action procedurally and cause remaining class members to sustain added expenses. It may also encourage the assertion of additional case-by-case offset motions as a tactical strategy to delay or defeat progress in the class action. Since the trial court can address offset issues in individual cases after the merits of the AWHA class action are determined, I would find no error.
Accordingly, I dissent.

. 820 P.2d 1068, 1069 (Alaska 1991) (holding that "employer and employee may [not] privately settle claims for liquidated damages arising under the Alaska Wage and Hour Act”).

. See id. at 1070 (“If the employer entices the private actor — the unpaid employee — to settle a legitimate claim, a violating employer may then escape without an adjudication of liability and without punitive sanction. An interpretation of the AWHA that would permit such escape countermands the very purpose of the liquidated damages provision.”).