Rehearing Denied May 15, 2009.
Arthur S. Robinson, Robinson & Associates, Soldotna, for Appellant.
Ruth Botstein, Assistant Attorney General, Talis J. Colberg, Attorney General, Anchorage, for Appellee/Intervenor State of Alaska.
Before : FABE, Chief Justice, MATTHEWS, EASTAUGH, CARPENETI, and WINFREE, Justices.
This case is here for the second time. After a jury awarded Dan Reust compensatory damages of $389,000 and punitive damages of $4.3 million in a retaliatory discharge suit against his employer, Alaska Petroleum Contractors (APC), the State was permitted to intervene to protect its interest in the punitive damages award. The superior court reduced the punitive award to $500,000 using the " cap" provisions of AS 09.17.020(h) and required that half of the net award of punitive damages be paid to the State.  Reust and APC appealed. We held on appeal that (1) the provisions of AS 09.17.020 awarding fifty percent of punitive damages to the State and capping punitive damages are constitutional; (2) the State was properly permitted to intervene; (3) Reust's award of lost wages should be limited to three years after termination, rather than ten as the jury determined; and (4) the cap provisions of subsection .020(f) rather than (h) should have been used.  We remanded the case to the superior court with instructions to reduce the lost wages award to three years, to apply the punitive damages cap expressed in subsection .020(f), and to consider whether the recalculated punitive award would be excessive.
After our opinion was published, Reust and APC entered into a settlement agreement. Under the agreement APC paid Reust $1 million  in exchange for a release of all claims. Reust agreed to defend and indemnify APC from any claims by the State for punitive damages, and agreed to place $200,000 of the settlement proceeds in the court registry so those proceeds would be available should the State assert any claim it might have for punitive damages. Reust and APC then filed a stipulation for dismissal in the superior court. The State objected to dismissal, noting that it was a party to the action, that it had not agreed to the stipulation
or the settlement, and that it had not received its share of punitive damages.
The superior court refused to dismiss the case. In making this ruling the superior court summarized Reust's position that the State should receive nothing as follows: " he argues that the case is in the same posture as it would have been if the parties settled Before the jury delivered its verdict." The court rejected this argument, stating that
[a]llowing plaintiffs to avoid dividing punitive awards with the State by negotiating a post-verdict settlement would frustrate the purpose of AS 09.17.020(j). The State gained an interest when the verdict awarding punitive damages was published. The Supreme Court's remand to determine the amount of punitive damages does not eliminate the interest.
After additional briefing, the superior court calculated punitive damages under the subsection .020(f)(1) cap to be $716,525.52, determined that this amount would not be excessive, and ordered that half of this amount be paid to the State after adjustments for a pro rata portion of Reust's counsel's fees expended in obtaining the award. Subsequently, the court entered a final judgment granting the State $207,792.40 as its net share of punitive damages to be ...