Court Opinion

ID: 2743099
Source: CourtListenerOpinion
Date Created: 2014-10-16 17:02:11.911628+00
Date Added: 2024-06-11T10:05:31.573703
License: Public Domain

Notice: This opinion is subject to correction before publication in the P ACIFIC R EPORTER .
      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
      corrections@appellate.courts.state.ak.us.

               THE SUPREME COURT OF THE STATE OF ALASKA

FRED BECKER V,                                 )
                                               )        Supreme Court No. S-15314
                      Appellant,               )
                                               )        Superior Court No. 3AN-12-05517 CI
      v.                                       )
                                               )        OPINION
FRED MEYER STORES, INC.,                       )
                                               )        No. 6962 – October 16, 2014
                      Appellee.                )
                                               )

              Appeal from the Superior Court of the State of Alaska, Third
              Judicial District, Anchorage, Erin Marston, Judge.

              Appearances: Kevin T. Fitzgerald, Ingaldson Fitzgerald,
              P.C., Anchorage, for Appellant. Daniel W. Hickey,
              Gruenstein & Hickey, Anchorage, and Susan K. Stahlfeld,
              Miller Nash LLP, Seattle, Washington, for Appellee.

              Before: Fabe, Chief Justice, Winfree, Stowers, and Bolger,
              Justices. [Maassen, Justice, not participating.]

              BOLGER, Justice.

I.    INTRODUCTION
              Fred Becker V, a loss prevention manager employed by Fred Meyer Stores,
Inc., was terminated in January 2012. He sued his former employer, alleging breach of
contract, breach of the implied covenant of good faith and fair dealing, and wrongful
termination. The superior court granted summary judgment in favor of Fred Meyer,
concluding (1) that Fred Meyer’s loss prevention policy manual did not create a contract
between Becker and Fred Meyer and Becker’s employment was terminable at will and
(2) that Becker had presented no evidence that he was treated differently from similarly
situated employees with respect to the good faith and fair dealing claim. But because the
record presents genuine issues of material fact regarding both claims, we reverse the
superior court’s summary judgment ruling.
II.   FACTS AND PROCEEDINGS
      A.     Facts
             Becker was employed by Fred Meyer as a loss prevention manager for 17
years. From July 2011 until January 13, 2012, Becker was assigned to the Northern
Lights Fred Meyer store in Anchorage.
             On January 3, 2012, Becker was on duty when he observed a man enter the
store. Becker watched him enter the photoelectronics department. Becker then went to
the loss prevention office and continued to observe the man through a security camera.
When Becker saw him remove a stereo system from the shelf, Becker returned to the
sales floor and went to the photoelectronics department. There Becker watched the man
carry the stereo system to the back aisle and remove its security wrap. The man then
picked up the stereo system, left the department, and proceeded toward the store exit.
As the man passed the last point of sale and the electronic security devices, Becker
identified himself as a loss prevention employee and told the man to stop. The man
dropped the stereo system1 and fled. Becker pursued him even though he no longer had
the stolen merchandise.
             While the man was running, he tripped and fell in the Fred Meyer parking
lot, dropping his cell phone. Becker, thinking he could use the phone for identification

      1
             The parties dispute whether the stereo system was dropped inside or outside
the door.

                                           -2-                                     6962
purposes, picked it up. The man got up and “came at” Becker, demanding that he return
the phone. Becker then turned and threw the phone onto the roof of the Fred Meyer
building. He later testified that he threw the phone “instinctively,” out of fear of the man.
              His phone now out of reach, the man ran into the parking lot and got into
his car. Becker stepped off the sidewalk and followed him, noting the vehicle’s license
plate number as the man drove away.
              Becker called the police, telling them about the theft and attempted arrest
and providing descriptions of the man and his vehicle. Becker then went up to the
store’s roof, recovered the phone, and found photographs of the man on the phone. An
Anchorage Police Department officer later arrived and made a report of the incident.
The man was charged in connection with the theft later that month.
              On January 13 Becker met with his supervisor, Devin Lilly, to discuss the
January 3 incident. Lilly told Becker that he “should have handed the phone back to [the
man]” rather than throwing it on the roof. He also claimed Becker had violated company
policy by using a security camera to observe the man, by running on the sales floor, and
by stepping off the sidewalk to pursue him. Lilly explained that, because of these
violations and other past policy violations Becker had committed, Becker’s employment
was terminated effective immediately. According to Becker, he never received a verbal
or written warning concerning any policy violation before he was terminated.
              Becker appealed the termination decision to Scott Bringhurst, Fred Meyer’s
Director of Loss Prevention. Bringhurst considered Becker’s appeal but concluded that
“[t]he incident as a whole demonstrated extremely poor judgment on [Becker’s] part”
and “termination was . . . appropriate given the totality of the circumstances.”

                                            -3-                                        6962

      B.     Proceedings
             Becker filed a complaint in the Anchorage superior court, claiming breach
of contract, breach of the implied covenant of good faith and fair dealing, and wrongful
termination.2 He claimed that Fred Meyer’s loss prevention policies and procedures
were part of his employment contract and that Fred Meyer breached those contractual
provisions when it terminated his employment without notice. Becker also alleged that
Fred Meyer had treated him more harshly than other employees who committed policy
violations similar to his own.
             Fred Meyer moved for summary judgment. The company argued that its
loss prevention policy manual was not a binding contract and that, even if it were, Fred
Meyer’s actions did not violate company policy. As to Becker’s claim based on the
covenant of good faith, Fred Meyer argued that Becker “cannot point to a single
employee who . . . committed so many policy violations in a single stop, who was not
immediately terminated.”
             The superior court agreed that Fred Meyer’s policy manual was not a
contract, and that Becker’s employment was, therefore, terminable at will. The court also
concluded that Becker had failed to “raise a genuine issue of material fact whether he
was treated in a disparate manner than other similarly situated employees,” and,
therefore, could not maintain a claim under the implied covenant of good faith and fair
dealing. Accordingly, the court granted the motion for summary judgment and dismissed
Becker’s claims. Becker now appeals from this ruling.

      2
             Becker also originally claimed that Lilly made “false and defamatory”
statements about him, but he later voluntarily dismissed his defamation claim.

                                           -4-                                     6962
III.   STANDARD OF REVIEW
              We review a grant of summary judgment de novo.3 “In our review, we
must determine whether any genuine issue of material fact exists and whether on the
established facts the moving party is entitled to judgment as a matter of law.”4 “Whether
the evidence presented a genuine issue of material fact is a question of law,”5 and “[w]e
draw all factual inferences in favor of, and view the facts in the light most favorable to,
the party against whom summary judgment was granted.”6
IV.    DISCUSSION
       A.     Breach Of Contract
              “[E]mployee     policy   manuals    may     modify    at-will   employment
agreements . . . .”7 “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.”8 “Because it is generally . . . a question of fact whether the

       3
            Hoendermis v. Advanced Physical Therapy, Inc., 251 P.3d 346, 351
(Alaska 2011).
       4
              Id. (quoting Nielson v. Benton, 903 P.2d 1049, 1052 (Alaska 1995))
(internal quotation marks omitted).
       5
            Lockwood v. Geico Gen. Ins. Co., 323 P.3d 691, 696 (Alaska 2014)
(quoting Kalenka v. Jadon, Inc., 305 P.3d 346, 349 (Alaska 2013)) (internal quotation
marks omitted).
       6
              Hoendermis, 251 P.3d at 351.
       7
            Id. at 355 (quoting Holland v. Union Oil Co. of Cal., 993 P.2d 1026, 1030
(Alaska 1999)) (internal quotation marks omitted).
       8
            Id. (quoting Parker v. Mat-Su Council on Prevention of Alcoholism & Drug
Abuse, 813 P.2d 665, 666 (Alaska 1991)) (internal quotation marks omitted); see also
Jones v. Cent. Peninsula Gen. Hosp., 779 P.2d 783, 788 (Alaska 1989) (“Employers
                                                                        (continued...)

                                           -5-                                       6962

manual did modify the employment agreement,”9 we will answer this question as a
matter of law “[o]nly if reasonable minds could not differ in resolving this issue.”10
              Becker argues that the Fred Meyer loss prevention manual altered his at-
will employment relationship. In particular, he argues that a reasonable person would
believe that a loss prevention employee could be terminated without notice only for
engaging in one of the six types of misconduct listed in the manual as a cause for
immediate termination. Fred Meyer responds that because the manual contains hedging
language suggesting that the listed grounds for termination without notice are non-
exclusive, the manual does not create any expectation that an employee will be
terminated only for the reasons listed in the manual.
              Section 201 of the loss prevention manual provides, in relevant part:
              Every member of the Fred Meyer Loss Prevention
              department has duties and responsibilities that require
              absolute professionalism, maturity and tact. Many Loss
              Prevention functions require a degree of flexibility and access
              to controlled areas that necessitate a strict compliance to
              policy. Every moment on duty you represent the department
              and company. In fairness to all concerned, you need to know
              and understand what is expected, what is not permitted and
              the disciplinary action resulting from not complying with
              these directives. The following responsibilities are in

       8
       (...continued)
should not be allowed to instill . . . reasonable expectations of job security in employees,
and then withdraw the basis for those expectations when the employee’s performance is
no longer desired.” (alteration in original) (quoting Leikvold v. Valley View Cmty. Hosp.,
688 P.2d 170 (Ariz. 1984)) (internal quotation marks omitted)).
       9
              Holland, 993 P.2d at 1031 (alteration in original) (internal quotation marks
omitted).
       10
              Id. at 1031 n.28 (internal quotation marks omitted).

                                            -6-                                       6962

             addition to the “Fred Meyer Employee Responsibilities”
             form, which applies to all employees of the company.
             CAUSES FOR IMMEDIATE TERMINATION WITHOUT
             PRIOR WARNING
             1.	    Discussing investigations or other confidential matters
                    with anyone not required to be involved or authorized
                    to receive the information.
             2. 	   Carrying or using any weapon on Fred Meyer property
                    on or off duty. . . .
             3.	    Use of excessive force (physical or verbal) when
                    making an arrest or while conducting an interview.
             4.	    Knowingly falsifying, omitting or misrepresenting any
                    known facts (verbal or written) concerning an
                    incident, audit, or crime with which you are directly or
                    indirectly involved.
             5.	    Failure to report . . . and document a non-arrest or
                    non-policy stop . . . .
             6.	    Continued pursuit of a suspect when they have either
                    displayed a lethal weapon, entered a vehicle or have
                    left Fred Meyer property.
Section 201 also lists 11 “causes for disciplinary action resulting in either suspension
without pay, or termination.” (Emphasis omitted.)
             The manual also includes “Disciplinary Guidelines” for “Non-Arrest and
Non-Policy Stops.” These guidelines define two categories of stops that do not comply
with Fred Meyer policy: “non-arrest apprehensions” and “non-policy stops.” A non-
arrest apprehension occurs when a customer is stopped but the customer does not have
stolen merchandise. The manual distinguishes between non-arrest apprehensions that
occur because of a failure to follow department procedures (“errors in judgment”) and
apprehensions that occur “due to circumstances that [the employee was] not aware of at
the time of the apprehension” (“errors in fact”), and sets out a different progressive

                                          -7-	                                    6962

disciplinary procedure for each type of non-arrest apprehension. For example, an
employee’s first non-arrest apprehension resulting from an error in judgment will result
in a “[w]ritten warning including suspension of employment without pay”; a second
violation within 24 months will result in discipline “[u]p to and including termination of
employment.”
             A non-policy stop occurs when a stop does lead to an arrest and the
recovery of stolen merchandise, but the loss prevention employee making the stop did
not follow all applicable loss prevention apprehension procedures. In particular, the
manual requires the loss prevention employee to ensure that five criteria are met before
apprehending a suspect:
             a.     You must observe the suspect enter the section.
             b.     You must observe the suspect remove the merchandise
                    from the display and know exactly what that item is.
             c.     If the item is concealed, you must observe that
                    concealment and know exactly where it is.
             d.     You must maintain continuous observation of the
                    suspect and merchandise, from the display until he/she
                    exits the store. Once concealed, observation of the
                    concealment area, (where the item is on the person),
                    must be continuously observed.
             e.     You must, for purposes of safety, have another
                    employee follow you out of th e store to act as a
                    witness and to provide assistance, if necessary.
                    (Emphasis omitted.)
Non-policy stops are, according to the manual, less serious than either type of non-arrest
apprehension. Accordingly, a non-policy stop “will be reviewed by the District Loss
Prevention Manager . . . and will result in a verbal or written warning.” However, all
“[n]on-policy apprehensions must be verbally reported to [the] District Loss Prevention

                                           -8-                                      6962

Manager immediately after the arrest[;] failure to report can and will result in
termination.”
                The disciplinary guidelines further provide that:
                [A]ny of the following actions will result in immediate
                termination of employment:
                A.	   The [f]ailure to report any non-arrest apprehension
                      within 1 hour of its occurrence.
                B.	   Any non-arrest apprehension made before the Loss
                      Prevention person has been released from Phase 2
                      training.
                C.	   Any arrest made by a member of Loss Prevention who
                      has not been released from Phase two where another
                      qualified member of Loss Prevention was not
                      physically present.
                D.	   Any gross disregard of Policy and or any grave lack of
                      judgment that causes a non-arrest apprehension.
                E.	   Any continued or uncorrected lack of judgment / lack
                      of fact which persists after re-training and education
                      have been documented from previous incident.
                      (Emphasis omitted.)
                Fred Meyer argues that, notwithstanding the detailed procedures described
above, “no employee could believe that they would always be entitled to progressive
discipline” because the manual contains “hedging terms.” For example, the manual
provides that “termination of employment is always an option when the judgment of the
individuals involved and their actions are so grievous and severe, that it places Fred
Meyer at increased risk [of] civil liability.” The manual also provides that the listed
grounds for termination are “in addition to [those listed in] the ‘Fred Meyer Employee
Responsibilities’ form.” Fred Meyer argues that this language makes it clear that the
company retains discretion to terminate employment without cause.

                                             -9-	                                   6962

                In Hoendermis v. Advanced Physical Therapy, Inc., we concluded that a
policy manual did not give an employee a right to progressive discipline where the
manual explicitly provided that the employer retained discretion not to follow the
manual’s discipline procedures.11 That manual also “expressly provided that all . . .
employees were employed at will and could be discharged for any reason.”12 Similarly,
we concluded in Holland v. Union Oil Co. of California that a one-page memorandum,
which included a non-exclusive list of prohibited conduct and provided that progressive
discipline would be provided “[i]n most instances,” did not create a right to progressive
discipline.13
                In contrast, we held in Jones v. Central Peninsula General Hospital that a
policy manual setting out “fifteen non-exclusive categories of acts or omissions that may
result in termination for cause” was, as a matter of law, incorporated into an employment
contract.14 Despite a one-sentence disclaimer stating that the manual “is not a contract
of employment nor is it incorporated in any contract of employment,”15 the manual
“create[d] the impression . . . that employees are to be provided with certain job
protections.”16 And in Parker v. Mat-Su Council on Prevention of Alcoholism and Drug
Abuse, we concluded that an employer’s “personnel manual which outline[d] various

       11
                251 P.3d at 355-56.

       12
                Id. at 355.

       13

                993 P.2d at 1032.
       14
                779 P.2d 783, 788-89 (Alaska 1989).
       15
                Id. at 787.
       16
                Id. at 788.

                                            -10-                                    6962

disciplinary polices and procedures and provide[d] that involuntary termination will
occur only for cause” modified an employment agreement.14
             This case falls somewhere between these precedents. Fred Meyer’s policy
manual does not include language indicating that it may decline to follow its disciplinary
procedures as it pleases. Although it is true that the manual provides that “termination
of employment is always an option when the judgment of the individuals involved and
their actions are so grievous and severe, that it places Fred Meyer at increased risk [of]
civil liability,” that language merely creates an exception to progressive discipline in
cases where an employee’s actions have exposed Fred Meyer to a risk of liability; it does
not render the disciplinary procedures discretionary in all instances. And given the sheer
level of detail contained in the manual, any language suggesting that Fred Meyer policy
is not legally binding would need to be very prominent to be effective.15
             It is also true, as Fred Meyer points out, that the list of “causes for
immediate termination without prior warning” is “in addition to the ‘Fred Meyer
Employee Responsibilities’ form.” (Emphasis omitted.) But that language does not
suggest that Fred Meyer may terminate employment without notice for any reason.16 It
merely emphasizes that another Fred Meyer policy form, which also applies to loss
prevention employees, lists other reasons for termination without warning.

      14
             813 P.2d 665, 666-67 (Alaska 1991).
      15
             See Jones, 779 P.2d at 788 (“[A] one-sentence disclaimer, followed by 85
pages of detailed text covering policies, rules, regulations, and definitions, does not
unambiguously and conspicuously inform the employee that the manual is not part of the
employee’s contract of employment.”).
      16
             Cf. Holland, 993 P.2d at 1032 (explaining that a one-page memorandum,
which included a non-exclusive list of prohibited conduct and provided that progressive
discipline would be provided “[i]n most instances,” did not create a right to progressive
discipline).

                                          -11-                                      6962

             Therefore, there is a triable question of fact whether a reasonable person
would believe that the provisions of the loss prevention policy manual are binding.
             Fred Meyer argues that, even if the policy manual does give Becker
enforceable contract rights, its decision to terminate Becker’s employment without notice
was justified by Becker’s alleged misconduct. But the superior court did not reach this
question in its order granting summary judgment.17 We conclude that this issue should
first be addressed by the superior court.
      B.     Implied Covenant Of Good Faith And Fair Dealing
             All employment contracts — even those terminable at will — are subject
to an implied covenant of good faith and fair dealing.18 “The covenant contains both
objective and subjective components.”19 The objective component “requires employers
to act in a manner that a reasonable person would regard as fair.”20 For example, an
employer may not treat similarly situated employees differently.21 An employer breaches

      17
              The superior court wrote: “Because the Court finds that the Manual did not
constitute a contract altering Becker’s at-will employment relationship, the Court does
not need to address the issue of whether [Fred Meyer] complied with its disciplinary
procedures.”
      18
            Hoendermis v. Advanced Physical Therapy, Inc., 251 P.3d 346, 356
(Alaska 2011).
      19
             Id.
      20
             Id. (quoting Charles v. Interior Reg’l Hous. Auth., 55 P.3d 57, 62 (Alaska
2002)) (internal quotation marks omitted).
      21
             Id. Employees are similarly situated if they are “members of the same class,
as defined by job position and the nature of the alleged misconduct.” Id. at 357.

                                            -12-                                   6962

the subjective component, on the other hand, if it acts with a bad-faith purpose.22
“[G]enerally whether the covenant has been breached is a question for the trier of fact.”23
              Becker argues that Fred Meyer violated the objective component of the
covenant. He alleges that several employees who committed similar or more serious
violations of the loss prevention manual were not terminated without notice but received
less severe discipline. Fred Meyer responds that Becker presented “no evidence of any
employee . . . who did anything remotely like what Becker did on January 3.”
              To support his allegation that Fred Meyer treated him differently from
other, similarly situated employees, Becker notes that during discovery he identified 29
Fred Meyer employees who committed similar violations but were not terminated. He
also notes that he testified about some of those employees during his deposition and that
Devin Lilly maintained in an affidavit that “on numerous occasions there have been Loss
Prevention employees committing non-apprehension arrests, which are considered far
more egregious than non-policy stops, who were not terminated without prior notice.”
              The superior court concluded that this evidence was not sufficient to defeat
summary judgment. Although the court acknowledged that Becker had identified other
employees who, he alleged, were similarly situated, “he did not describe in any detail
how these other employees’ conduct correlated to his own alleged conduct or that there
was any disparate treatment between Fred Meyer’s disciplinary action against him and
these other employees.”

       22
              Willard v. Khotol Servs. Corp., 171 P.3d 108, 113-14 (Alaska 2007).
       23
            Mills v. Hankla, 297 P.3d 158, 167 (Alaska 2013) (alteration in original)
(quoting Okpik v. City of Barrow, 230 P.3d 672, 681 (Alaska 2010)) (internal quotation
marks omitted).

                                           -13-                                      6962
             In Hoendermis, an employee “was terminated for allegedly failing to get
along with other employees.”24 We concluded that Hoendermis’s affidavit, which
alleged that several other employees had engaged in various forms of misconduct
without their employment being terminated, was sufficient to raise an issue of material
fact whether she was treated differently from similarly situated employees.25
             The superior court concluded that Becker’s case was distinguishable from
Hoendermis because Becker did not describe in detail the misconduct committed by the
other employees or identify an employee who “committed a non-policy stop approaching
the sheer number of violations that he is alleged to have committed.” But in Hoendermis,
we did not suggest that a certain level of detail about other employees’ misconduct was
required to defeat summary judgment.26
             Moreover, Becker did describe in detail misconduct committed by two
other loss prevention employees, and the discipline to which each of them was subjected.
Becker alleged that one employee was not terminated after a non-arrest apprehension,
which, according to the policy manual, is more serious than a non-policy stop. And
Becker alleged that a second employee was not terminated after committing a non-arrest
apprehension; rather, the employee was suspended and transferred out of the loss
prevention department. Therefore, the record reflects that Becker did provide evidence
about the specific circumstances of some of the other employees he identified.
              Nor does Hoendermis require, as Fred Meyer suggests, that an employee
claiming disparate treatment show that another employee with exactly the same job

      24
             251 P.3d at 357.
      25
             Id.
      26
             See id.

                                         -14­                                     6962
description was treated differently after committing exactly the same misconduct.27 To
the contrary, the evidence in Hoendermis indicated that employees in varying positions
had committed a wide range of misconduct, from engaging in a romantic relationship
with a patient to assaulting another employee at work.28 We found that Hoendermis, who
was discharged for failing to “get along with other individuals employed in the clinic,”26
had been treated differently and that this was sufficient to prevent summary judgment.27
We concluded that “whether Hoendermis was similarly situated to any of these other
employees is a question of fact” to be determined at trial.28 Therefore, Becker was not
required to identify an employee who committed precisely the same misconduct as he
did in order to withstand summary judgment.
             And while it is true that Fred Meyer presented evidence indicating that
some employees were terminated for committing policy violations, that evidence merely
points to the existence of a factual dispute; it does not establish that summary judgment
was warranted.
             For these reasons, we conclude that Becker has raised a material question
of fact whether Fred Meyer breached the objective component of the implied covenant
of good faith and fair dealing.29

      27
             Id. at 356-57.

      28
             Id. at 357.

      26
             Id. at 350.

      27
             Id. at 357.

      28
             Id.

      29

             Becker also argues that the court should not have dismissed his wrongful
termination claim. The superior court dismissed the claim as “premised on his first two
                                                                        (continued...)

                                          -15-                                      6962

V.    CONCLUSION
             The judgment of the superior court is REVERSED and REMANDED for
further proceedings consistent with this opinion.

      29
        (...continued)
causes of action: breach of contract and breach of the covenant of good faith and fair
dealing.” Because a genuine issue of material fact exists for both of these underlying
claims, however, Becker’s wrongful termination claim remains unresolved.

                                         -16-                                    6962