Court Opinion

ID: 2801152
Source: CourtListenerOpinion
Date Created: 2015-05-15 17:02:52.660817+00
Date Added: 2024-06-11T09:58:42.180786
License: Public Domain

Notice: This opinion is subject to correction before publication in the P ACIFIC R EPORTER .
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                THE SUPREME COURT OF THE STATE OF ALASKA

 ACE DELIVERY & MOVING,         )
 INC.,                          )                        Supreme Court No. S-15594
                                )
                     Appellant, )                        Superior Court No. 3AN-14-04688 CI
                                )
               v.               )                        OPINION
                                )
 STATE OF ALASKA, ALASKA        )                        No. 7007 – May 15, 2015
 STATE COMMISSION FOR           )
 HUMAN RIGHTS, PAULA M.         )
 HALEY, EXECUTIVE DIRECTOR, )
 ex rel. Janet Wass,            )
                                )
                     Appellees. )
                                )

               Appeal from the Superior Court of the State of Alaska, Third
               Judicial District, Anchorage, Frank A. Pfiffner, Judge.

               Appearances: LeRoy E. DeVeaux, DeVeaux and Associates,
               APC, Anchorage, for Appellant. William E. Milks, Assistant
               Attorney General, and Michael C. Geraghty, Attorney
               General, Juneau, for Appellees.

               Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and
               Bolger, Justices.

               MAASSEN, Justice.

I.    INTRODUCTION
              The executive director of the Alaska State Commission for Human Rights
brought an action on behalf of an employee who alleged that her employer’s racist and
insensitive remarks created a hostile work environment. The Commission ultimately
found that the employee did not suffer a hostile work environment, but it denied the
employer’s request for attorney’s fees. The employer now appeals on the single issue of
attorney’s fees, arguing that it was entitled to fees as the prevailing party and because it
raised affirmative defenses under the Alaska and United States Constitutions. We affirm
the Commission’s denial of attorney’s fees.
II.    FACTS AND PROCEEDINGS
              Ace Delivery & Moving, Inc. (Ace) hired Janet Wass on a temporary basis
to perform data entry. Wass resigned on her third day and later filed a complaint with the
Alaska State Commission for Human Rights, alleging that Ace’s owner, Hank Schaub,
made disparaging comments in her presence about various racial, ethnic, and religious
groups. The executive director of the Commission issued a single-count accusation
alleging that Ace “created a hostile working environment based on the owner’s severe and
pervasive derogatory comments and postings regarding race, national origin, and religion”
— directed at Jews, Arabs, Muslims, and Mexicans — in violation of
AS 18.80.220(a)(1).1 The accusation sought various forms of injunctive relief, including
that Ace be required to adopt a nondiscrimination policy and that its “owner, manager,
and supervisors” receive training in Alaska human rights law.
              Ace asserted affirmative defenses in response, including that Schaub’s
comments were protected by the free speech guarantees of article I, section 5 of the

       1
              AS 18.80.220(a)(1) provides, in relevant part, that “it is unlawful for . . . an
employer . . . to discriminate against a person . . . in a term, condition, or privilege of
employment because of the person’s race, religion, color, or national origin.” We have
recognized “that discriminatory behavior sufficiently severe or pervasive to alter the
conditions of the victim’s employment and to create a discriminatory hostile work
environment violates AS 18.80.220.” French v. Jadon, Inc., 911 P.2d 20, 28 (Alaska
1996).

                                            -2-                                         7007

Alaska Constitution2 and the First Amendment to the United States Constitution.3 Ace
also argued that because the accusation violated Schaub’s constitutional right to free
speech, Ace was entitled to attorney’s fees under federal law.
             The matter was assigned to an administrative law judge with the Office of
Administrative Hearings.     In an order denying summary judgment to Ace, the
administrative law judge rejected Ace’s argument that Schaub’s speech was
constitutionally protected. Citing federal cases, the administrative law judge observed
that “[s]peech in the work place that creates a hostile work environment is not protected
speech.”4
             An evidentiary hearing followed, after which the administrative law judge
found that Ace had not subjected Wass to a hostile work environment. The administrative
law judge noted that Wass did not belong to any of the groups Schaub had allegedly
disparaged (though her daughter and ex-husband were both Jewish) and the evidence did

       2
              Article I, section 5 of the Alaska Constitution provides: “Every person may
freely speak, write, and publish on all subjects, being responsible for the abuse of that
right.”
       3
              The First Amendment to the United States Constitution provides, in
relevant part: “Congress shall make no law . . . abridging the freedom of speech.”
       4
              The administrative law judge cited Robinson v. Jacksonville Shipyards,
Inc., 760 F. Supp. 1486, 1535-36 (M.D. Fla. 1991), which held that “the pictures and
verbal harassment” at issue in that case were “not protected speech because they act as
discriminatory conduct in the form of a hostile work environment,” and that “the
regulation of discriminatory speech in the workplace” was constitutionally permissible
as “nothing more than a time, place, and manner regulation of speech.” See also Roberts
v. U. S. Jaycees, 468 U.S. 609, 628 (1984) (“[P]otentially expressive activities that
produce special harms distinct from their communicative impact . . . are entitled to no
constitutional protection.”).

                                          -3-                                      7007

not establish that Ace took any action against Wass based on her own religion or national
origin. The Commission adopted the administrative law judge’s decision.
             Ace moved for an award of nearly $60,000 in attorney’s fees and costs.5
The administrative law judge denied Ace’s motion. He relied on AS 18.80.130(e), which
allows an award of attorney’s fees in the Commission’s discretion, and on a regulation
adopted under that statute, 6 Alaska Administrative Code (AAC) 30.492 (2014).6 The
administrative law judge reasoned that by adopting the regulation the Commission had
exercised its statutory grant of discretion to limit attorney’s fees awards in Commission
proceedings to certain categories of cases, and that Ace’s case did not qualify. The
administrative law judge rejected Ace’s reliance on 42 U.S.C. § 1988,7 AS 09.60.010,8

       5
              In the agency proceeding, Ace appears to have sought an award of fees
against both the Commission and Wass. In the superior court and in this appeal, Ace
modifies its demand to “full reasonable attorney’s fees against the Commission and [its]
Executive Director.” This difference is not important to our analysis of the issues.
       6
              The regulation provides, in pertinent part:
              An award of attorney’s fees and costs will be made against a
              complainant upon a showing that he or she pursued an action
              not authorized by the executive director that was frivolous,
              unreasonable, or groundless, or that an action authorized by
              the executive director was based upon information furnished
              in bad faith by complainant.
6 AAC 30.492(b).
       7
              42 U.S.C. § 1988(b) (2012) provides in relevant part that “[i]n any action
or proceeding to enforce a provision of [certain federal civil rights laws], the court, in its
discretion, may allow the prevailing party, other than the United States, a reasonable
attorney’s fee as part of the costs.”
       8
               AS 09.60.010(c) allows a court to award “full reasonable attorney fees and
costs” to a claimant who prevails in asserting a constitutional right “[i]n a civil action or
                                                                              (continued...)

                                            -4-                                         7007

and Alaska Civil Rule 689 on grounds that they apply only to proceedings in court. This
order was adopted by the Commission as the final agency order on attorney’s fees.
                Ace appealed the attorney’s fees order to the superior court, which affirmed
the order. The superior court held that Ace had not prevailed on a constitutional claim
and had not alleged any civil rights claim under 42 U.S.C. § 1983 that could implicate
federal attorney’s fees provisions. Ace now appeals to this court.
III.   STANDARDS OF REVIEW
                “When the superior court acts as an intermediate court of appeal in an
administrative matter, we independently review and directly scrutinize the merits of the
[administrative] decision.”10 “We apply the reasonable basis standard of review to
questions of law involving agency expertise, and the substitution of judgment standard
to questions outside the agency’s expertise.”11 Because AS 18.80.130(e) contains a broad
grant of discretion to the Commission for determining when a grant of attorney’s fees “is
appropriate,” we review the Commission’s exercise of discretion under the statute to

       8
      (...continued)
appeal concerning the establishment, protection, or enforcement of a right under the
United States Constitution or the Constitution of the State of Alaska.”
           9
               Alaska Civil Rule 68 governs an award of attorney’s fees made on the basis
of an offer of judgment more favorable to the offeree than “the judgment finally rendered
by the court.”
           10
            Patrick v. Municipality of Anchorage, Anchorage Transp. Comm’n,
305 P.3d 292, 297 (Alaska 2013) (alteration in original) (quoting Kingik v. State, Dep’t
of Admin., Div. of Ret. & Benefits, 239 P.3d 1243, 1247-48 (Alaska 2010)) (internal
quotation marks omitted).
           11
            Pyramid Printing Co. v. Alaska State Comm’n for Human Rights, 153 P.3d
994, 998 (Alaska 2007).

                                             -5-                                      7007

determine whether it had a reasonable basis.12 As for whether an award of attorney’s fees
to Ace was required by any of the statutes on which Ace relies, we substitute our
judgment for that of the Commission.13
IV.	   DISCUSSION
       A.	   Alaska Statute 18.80.130(e) Governs Fee Awards In Proceedings Before
             The Alaska State Commission For Human Rights.
             Awards of attorney’s fees in Commission proceedings are governed by
AS 18.80.130(e), which provides that “[t]he commission may order payment of
reasonable expenses, including reasonable attorney fees[,] to any private party before the
commission when the commission, in its discretion, determines the allowance is
appropriate.” The Commission has circumscribed its discretionary authority through a
regulation that allows fee awards against complainants in two categories of actions: “an
action not authorized by the executive director that was frivolous, unreasonable, or
groundless, or . . . an action authorized by the executive director . . . based upon

       12
             Romann v. State, Dep’t of Transp. & Pub. Facilities, 991 P.2d 186, 192-93
(Alaska 1999) (“Alaska law provides DOT with broad discretion to conduct public
auctions of airport property. We thus review DOT’s actions under the deferential
‘reasonable basis’ standard.” (footnote omitted)).
       13
               Grimmett v. Univ. of Alaska, 303 P.3d 482, 487 (Alaska 2013) (“The
substitution of judgment standard . . . applies where the agency’s expertise provides little
guidance to the court or where the case concerns statutory interpretation or other analysis
of legal relationships about which courts have specialized knowledge and expertise.”
(quoting N. Alaska Envtl. Ctr. v. State, Dep’t of Natural Res., 2 P.3d 629, 633 (Alaska
2000)) (internal quotation marks omitted)).

                                           - 6 -	                                     7007

information furnished in bad faith.”14 There is no regulatory provision for awards against
the Commission.
             The action in this case was brought by the executive director, and Ace did
not allege that the information on which it was based was furnished in bad faith. Ace did
deny that Schaub said the derogatory statements Wass attributed to him, but, by
recommending dismissal of the case on other grounds, the administrative law judge did
not have to decide whether the statements had been made. Absent any finding of
“improper conduct” on Wass’s part, the administrative law judge determined there was
no basis in 6 AAC 30.492, the governing regulation, for an award of attorney’s fees.
             Ace appears to argue that the regulation unduly hampers the broad exercise
of discretion contemplated by AS 18.80.130(e), which ostensibly grants the Commission
the broad authority to order the payment of attorney’s fees to any private party. But the
statute does not prohibit the Commission from exercising its discretion by adopting rules
that limit fee awards to certain types of cases. The only limit we have previously
recognized on this discretion is the statutory directive “in plain English. . . . that the
Commission has the discretionary authority to award costs and attorney’s fees only after
a hearing, and not at the investigative stage of a proceeding which precedes a hearing.”15
Given the Commission’s otherwise broad discretion and the absence of any finding that

       14
               6 AAC 30.492(b); see also 6 AAC 30.490 (noting that “[t]he executive
director will determine what hearing expenses shall be paid by the commission,” and that
“[c]omplainant and respondent, at their own expense, may incur additional costs and
apply for reimbursement under 6 AAC 30.492”).
       15
            Hotel & Rest. Union Local 878 v. Alaska State Comm’n for Human Rights,
595 P.2d 653, 656 (Alaska 1979).

                                           -7-                                      7007

Wass acted improperly in filing her complaint, there was a reasonable basis for the
Commission’s conclusion that AS 18.80.130(e) did not require an award of fees to Ace.16
       B.	    Alaska Statute 09.60.010(c), Governing Fee Awards For Constitutional
              Claims Litigated In Court, Does Not Apply.
              Ace also argues that it was entitled to attorney’s fees under AS 09.60.010(c),
which provides that “[i]n a civil action . . . concerning the establishment, protection, or
enforcement of a right under the United States Constitution or the Constitution of the
State of Alaska, the court . . . shall award . . . full reasonable attorney fees and costs to a
claimant, who . . . has prevailed in asserting the right.” Ace contends that because it
raised constitutional free-speech defenses to the hostile workplace claim, and because it
ultimately prevailed in the administrative proceedings, AS 09.60.010(c) required that it
be awarded full reasonable attorney’s fees.
              But the statute, by its plain language, applies only to civil actions in the state
courts.17 This case involves an administrative hearing before an agency. Moreover, Ace
did not prevail on its constitutional defenses, which the administrative law judge
specifically rejected as untenable under well-established principles of law.18             Ace
ultimately prevailed not because Schaub’s speech was constitutionally protected but

        16
               Ace has not briefed a direct challenge to 6 AAC 30.492 or argued that the
regulation is inconsistent with its authorizing statute. Ace appears to argue only that the
various attorney’s fees statutes on which it relies cabined the Commission’s exercise of
discretion in this case.
        17
                AS 09.60.010(c) (“In a civil action . . . concerning the establishment,
protection, or enforcement of a right under the United States Constitution or
the Constitution of the State of Alaska, the court . . . shall award full reasonable attorney
fees . . . .” (emphasis added)).
        18
              See State v. Jacob, 214 P.3d 353, 360-61 (Alaska 2009) (holding that the
prevailing party in a suit was not entitled to attorney’s fees under AS 09.60.010(c) when
the court did not reach the due process argument the party had raised).

                                             - 8 -	                                       7007

because Wass was not a member of any of the groups Schaub allegedly disparaged.19
There was no basis in AS 09.60.010(c) for an award of attorney’s fees to Ace, and again
there was no error in the Commission’s decision on this issue.
       C.     Ace Was Not Entitled To Fees Under 42 U.S.C. § 1988.
              Ace also argues that its constitutional defense to the Commission’s
enforcement action entitled it to attorney’s fees under a federal civil rights statute,
42 U.S.C. § 1988. The statute provides that “[i]n any action or proceeding to enforce a
provision of [42 U.S.C. § 1983] . . . the court, in its discretion, may allow the prevailing
party, other than the United States, a reasonable attorney’s fee.”20 Section 1983, in turn,
imposes liability for “the deprivation of any rights, privileges, or immunities secured by
the Constitution . . . in an action at law, suit in equity, or other proper proceeding for
redress.”
              The enforcement action at issue here, brought by the Commission’s
executive director for alleged violations of AS 18.80.220, was not an “action or
proceeding to enforce a provision of section[] . . . 1983” as required before 42 U.S.C.
§ 1988(b) could apply. Ace’s affirmative defense did not turn it into one. And even if
Ace’s defensive reliance on the constitution could be charitably viewed as an attempt to
enforce the federal civil rights laws, Ace did not prevail on its defense; the administrative
law judge expressly rejected it, deciding the case on other grounds. Finally, since section
1988 grants the court discretion whether to award attorney’s fees21 — and, as discussed
above, the Commission has exercised its discretion to limit fee awards to certain

       19
               This ruling is not challenged on appeal.
       20
               42 U.S.C. § 1988(b) (2012).
       21
             Id. (“[T]he court, in its discretion, may allow the prevailing party, other
than the United States, a reasonable attorney’s fee.”) (emphasis added).

                                            -9-                                        7007

categories of cases not including this one — Ace would not be entitled to an award of fees
under section 1988 even if the statute otherwise applied.
       D.     Ace Was Not Entitled To Fees Under 42 U.S.C. § 2000e-5(k).
              Finally, Ace asserts that it was entitled to attorney’s fees as the prevailing
party under 42 U.S.C. § 2000e-5(k), which provides for the discretionary award of
attorney’s fees to the prevailing party in an action brought by the Equal Employment
Opportunity Commission (EEOC) to enforce the prohibition against employment
discrimination found in Title VII of the Civil Rights Act of 1964.22 Ace never mentioned
this statute as the basis for an award until its brief on this appeal, and “[a]s a general rule,
this court will not consider an issue raised for the first time on appeal.”23 We may
nonetheless consider the issue if it is not dependent on any new or controverted facts,
closely related to the appellant’s trial court arguments, and could have been gleaned from
the pleadings, or constitutes “plain error.”24 Ace’s reliance on this EEOC statute could
not have been gleaned from the pleadings. We therefore consider only whether the
administrative law judge committed plain error by failing to apply the statute to this case.
             We see no plain error. Section 2000e-5(k) governs only the jurisdiction of
the EEOC,25 and the enforcement action in this case was brought by the Alaska State

        22
                42 U.S.C. § 2000e-5(k) (2012) (“In any action or proceeding . . . the court,
 in its discretion, may allow the prevailing party. . . a reasonable attorney’s fee.”); id. §
 2000e-2 (defining unlawful employment practices for an employer); id. § 2000e-4
 (creating the EEOC and providing it with authority to enforce the Title VII prohibition
 against employment discrimination).
        23
             State v. Nw. Constr., Inc., 741 P.2d 235, 239 (Alaska 1987); Miller v. Sears,
 636 P.2d 1183, 1189 (Alaska 1981).
        24
               Zeman v. Lufthansa German Airlines, 699 P.2d 1274, 1280 (Alaska 1985).
        25
               See 42 U.S.C. § 2000e-5(a) (“The Commission is empowered, as
                                                                (continued...)

                                             - 10 -                                       7007

Commission for Human Rights pursuant to AS 18.80.220. As explained above, fee awards
in such actions are governed by state statute, AS 18.80.130.26           Furthermore, like
42 U.S.C. § 1988, 42 U.S.C. § 2000e-5(k) commits fee awards to “the court, in its
discretion.” Even assuming this statute applied to it, the Commission exercised its
discretion to limit awards of fees to categories of cases that do not include this one. And
finally, although federal civil rights law encourages attorney’s fees awards to prevailing
plaintiffs,27 cases in which fees may be assessed against them are limited to those in which
the “claim was frivolous, unreasonable, or groundless, or . . . the plaintiff continued to

      25
        (...continued)
 hereinafter provided, to prevent any person from engaging in any unlawful employment
 practice as set forth in section 2000e-2 or 2000e-3 of this title.”); see also Oscar Mayer
 & Co. v. Evans, 441 U.S. 750, 755 (1979) (noting that Congress intended to screen from
 the federal courts those civil rights problems “that could be settled to the satisfaction of
 the grievant in a ‘voluntary and localized manner’ ”; the section gives state agencies “a
 limited opportunity to resolve problems of employment discrimination and thereby to
 make unnecessary[] resort to federal relief”).
           26
               Ace contends that the United States Supreme Court, in New York Gaslight
 Club, Inc. v. Carey, 447 U.S. 54, 61-71 (1980), interpreted 42 U.S.C. § 2000e-5(k) as
 requiring awards of attorney’s fees to prevailing parties in state administrative
 proceedings involving civil rights claims. But New York Gaslight only addressed
 whether federal courts were required to include such fees in their awards to prevailing
 plaintiffs who had gone through state processes before achieving relief. Since Ace was
 not a prevailing plaintiff, New York Gaslight is irrelevant.
           27
               See, e.g., Christiansburg Garment Co. v. Equal Opportunity Emp’t
 Comm’n, 434 U.S. 412, 422 (1978) (discussing policy reasons for encouraging fees
 awards to prevailing plaintiffs while limiting awards to prevailing respondents); Newman
 v. Piggie Park Enters., Inc., 390 U.S. 400, 402 (1968) (“If successful plaintiffs were
 routinely forced to bear their own attorneys’ fees, few aggrieved parties would be in a
 position to advance the public interest by invoking the injunctive powers of the federal
 courts.”).

                                            - 11 -                                     7007

litigate after it clearly became so.”28 Ace’s failure to raise 42 U.S.C. § 2000e-5(k) in the
agency proceeding necessarily means that the administrative law judge made no findings
that would support such a characterization of the Commission’s position.
V.    CONCLUSION
             We AFFIRM the superior court’s decision affirming the attorney’s fees
decision of the Commission.

        28
               Christiansburg Garment Co., 434 U.S. at 422; see also Indep. Fed’n of
 Flight Attendants v. Zipes, 491 U.S. 754, 761 (1989) (“[D]istrict courts should [] award
 Title VII attorney’s fees against losing intervenors only where the intervenors’ action
 was frivolous, unreasonable, or without foundation.”).

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