Appeal in File Nos. S-13944/14093 from the Superior Court No. 3AN-09-08970 CI of the State of Alaska, Third Judicial District, Anchorage, Jack Smith, Judge.
Appeal in File No. S-14083 from the Superior Court No. 4FA-08-02579 CI of the State of Alaska, Fourth Judicial District, Fairbanks, Michael A. MacDonald, Judge.
Kevin T. Fitzgerald, Ingaldson, Maassen & Fitzgerald, P.C., Anchorage, for Appellant/Cross-Appellee Grimmett.
William B. Schendel, Schendel Law Office, Fairbanks, and Susan Orlansky, Feldman Orlansky & Sanders, Anchorage, for Appellee/Cross-Appellant/Appellant University of Alaska. No appearance by Yauna Taylor, Respondent.
Before: Carpeneti, Chief Justice, Fabe and Stowers, Justices. [Winfree, Justice, not participating.]
Yauna Taylor and Calvin Grimmett were employed by the University of Alaska. The University terminated their employment through notices of nonretention. The University also and alternatively terminated Grimmett for cause.
Superior Court Judge Michael A. MacDonald found that the University violated Taylor's due process rights when the University nonretained her without a hearing rather than terminating her for cause; the court ordered additional briefing on the issue of Taylor's backpay. Superior Court Judge Jack Smith upheld Grimmett's nonretention, finding that the University's nonretention policy did not violate Grimmett's due process rights. However, Judge Smith set aside Grimmett's for-cause termination, finding that the University had violated the objective prong of the implied covenant of good faith and fair dealing.
The University petitioned for review in Taylor's case, which we granted. Grimmett appealed and the University cross-appealed. We consolidated these cases for oral argument and decision because both involved the University's use of its nonretention procedure. We conclude that the University violated Taylor's due process rights when it used its nonretention procedure to terminate her employment without a hearing. We therefore affirm Judge MacDonald's decision and remand for further proceedings concerning the scope of Taylor's backpay remedy. In Grimmett's case, as in Taylor's, the University used its nonretention procedure to terminate the employment of a for-cause employee without a hearing, in violation of the employee's due process rights. We therefore reverse Judge Smith's decision upholding Grimmett's nonretention. However, we also reverse Judge Smith's decision setting aside Grimmett's for-cause termination and hold that the University did not violate the implied covenant of good faith and fair dealing when it terminated Grimmett's employment for cause. We remand for further proceedings to determine if Grimmett is entitled to additional pay in light of our decision.
II. FACTS AND PROCEEDINGS
A. Taylor Facts And Proceedings
Taylor worked as an "Administrative Generalist" for the University of Alaska Fairbanks from May 1, 2005 to May 1, 2008. The University provided Taylor with periodic employment letters detailing the terms of her employment. Those letters explained "[t]his appointment is for 'regular, ' 'continuing' employment with benefits, " and then provided "General Conditions of Employment, " which stated in part:
New employees of the University are employed in an at-will probationary status for the first six months of employment. Promoted employees also serve a probationary period with limited rights of retreat. During the probationary period your employment may be terminated for no reason or any reason. Pursuant to University Regulation [04.07.100], the University also may elect to discontinue employment through non-retention with notice or pay in lieu of notice.
The letters also stated that Taylor's "appointment and other terms of employment are governed, in order of priority, by Board of Regents Policy, University Regulations, and applicable campus rules and procedures." Regents Policy 04.01.055(A) states that "At-w ill employment is an employment relationship that either the employee or the university may terminate at any time for any reason or no reason." Further, "[e]mployment not established as at-will entitles the employee to such notice and appeal processes as specified by regents' policy and university regulation." University Regulation 04.01.050 distinguishes betw een "At-W ill Employment" and "For Cause Employment." The regulation explains that the University "designates employment not established as at-will to be for cause." The University concedes that Taylor's employment was for-cause employment.
In a letter dated April 3, 2008, the University informed Taylor of its "decision to exercise its right of nonretention, " citing University Regulation 04.07.100. Taylor was placed on paid leave for four weeks, and on May 1, 2008 her employment with the University officially ended.
Nonretention is described in Regents' Policy 04.07.100:
The university may discontinue or not renew an existing employment relationship through nonretention. Nonretention does not reflect discredit on an employee. If notice of nonretention is required by university regulation, the notice will be in writing and will comply with university regulation adopted under this section. The university may not use nonretention to terminate tenured faculty.
In a form provided to employees who receive notice of nonretention, the University explained that "[w]ithout a request" the University "will not voluntarily disclose to [third] parties any performance or conduct related reasons for a nonretention or at-will termination, although the University will consider any such reasons with respect to future employment with the University."
In response to her nonretention, Taylor filed a grievance with the University arguing that because she was a for-cause employee, she was entitled to receive termination-for-cause proceedings. During the discovery process for this grievance proceeding ...