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Lingley v. Alaska Airlines, Inc.

Supreme Court of Alaska

May 13, 2016

HELEN A. LINGLEY, Appellant,

          Appeal from the Superior Court of the State of Alaska, First Judicial District, Petersburg, William B. Carey, Judge. Superior Court No. 1PE-12-00047 CI.

         Frederick W. Triem, Petersburg, for Appellant.

         Gregory S. Fisher and Elizabeth P. Hodes, Davis Wright Tremaine LLP, Anchorage, for Appellees.

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


         BOLGER, Justice.


         A former airline employee sued her former employer for wrongful termination without first attempting to arbitrate her claims under the provisions of a collective bargaining agreement subject to the federal Railway Labor Act. The superior court denied the employee leave to amend her complaint, concluding that her claims and proposed claims were precluded by failure to exhaust contractual remedies and were preempted by the Railway Labor Act. But the collective bargaining agreement does not clearly and unmistakably waive the employee's right to litigate her claims, a prerequisite to finding her claims precluded. And a number of her proposed claims may have an independent state law basis that does not depend on an interpretation of the collective bargaining agreement; such claims would not be preempted by the Railway Labor Act. Accordingly we reverse the superior court order denying leave to amend.


         In February 2012 Alaska Airlines terminated Helen Lingley, a longtime employee, for violating company rules and polices after she allegedly took earbuds from a left-on-boardbox,[1] made contradictory statements during the ensuing investigation, and made discourteous comments about her coworkers. The terms and conditions of Lingley's employment were governed by a collective bargaining agreement negotiated by Lingley's union, the International Association of Machinists and Aerospace Workers, pursuant to the federal Railway Labor Act (RLA).[2] This agreement broadly incorporated Alaska Airlines' rules and policies and gave the company the right to change those rules and policies at any time. Employees were required to be familiar with any changes.

         The agreement set forth a three-step process for grieving decisions that resulted in the loss of pay, namely discharge and suspension. The first two steps consisted of an " initial hearing" and a " secondary hearing," each presided over by a representative of Alaska Airlines; an employee could be represented by " the Local Shop Steward and/or the Union General Chair or his/her designee." The third step was an appeal before the System Board of Adjustment, a three-member arbitration panel consisting of " a Company member, a Union member[,] and a neutral referee." During this final step, employees could be represented by " such person or persons as they may choose and designate, in conformance with the constitution of the Union."

         After receiving the discharge notice, Lingley initiated the grievance process through her union. Over the next few months Alaska Airlines held two hearings in which a union representative represented Lingley's interests. Before each hearing, Alaska Airlines offered Lingley a last-chance agreement which would have allowed Lingley to remain employed if she admitted just cause existed for her discharge. Lingley declined both offers.

         Following the initial and secondary hearings, the presiding company officer issued written decisions denying Lingley's grievance. The union then appealed the grievance to the System Board of Adjustment for arbitration. But about three months later, the union informed Lingley that " no appeal will be made and the case is now closed in [its] files." That same day the union sent a letter to the System Board of Adjustment asking it to remove the matter from its docket. Nothing in the record suggests that Lingley attempted to pursue arbitration on her own.

         About four months later, in December 2012, Lingley filed a complaint in the superior court alleging wrongful termination and breach of the implied covenant of good faith and fair dealing. The complaint named Alaska Airlines and Dan Kane, the manager who signed her discharge notice, as defendants (collectively, " Alaska Airlines" ). That complaint apparently was not served. In April 2013, Lingley filed an amended complaint again broadly alleging wrongful termination and breach of the implied covenant of good faith and fair dealing.

         In response, Alaska Airlines moved to dismiss under Alaska Civil Rule 12(b)(1) for lack of subject matter jurisdiction. It argued that (1) the RLA preempted Lingley's claims and (2) the complaint was precluded by her failure to exhaust the remedies available under the collective bargaining agreement. To support the motion, Alaska Airlines attached several exhibits including the collective bargaining agreement, various company rules and policies, Lingley's grievance submission form, and correspondence between the union and Alaska Airlines about the grievance.

         Lingley then moved for a stay pending discovery, arguing that she needed information within Alaska Airlines' exclusive control. As examples she cited the exhibits attached to the motion to dismiss, internal memos and emails, her personnel file, and information that would be obtained via Alaska Civil Rule 26(a) disclosures. Alaska Airlines opposed, asserting that the jurisdictional facts that served as the basis for its motion to dismiss were established and undisputed.

         Lingley then requested leave to file a second amended complaint. The proposed amended complaint alleged five new claims: age discrimination, economic discrimination, retaliation, whistleblowing, and retribution. Alaska Airlines opposed, arguing that the claims were futile based on the same preemption and preclusion grounds that applied to the first amended complaint.[3] The superior court agreed and accordingly denied leave to amend. The court also determined that, as Alaska Airlines had contended, Lingley's economic discrimination claim was legally deficient and thus futile because economic status is not a protected class.[4]

         The superior court also denied Lingley's motion for a discovery continuance and dismissed Lingley's first amended complaint under Civil Rule 12(b)(1), concluding that the claims were preempted by the RLA.[5] With respect to Lingley's discovery motion, the court determined that the jurisdictional facts were established and undisputed; as such the court could consider the facts alleged in Alaska Airlines' motion, the affidavits, and the attached documentary evidence. The court further noted that Lingley had access to all relevant facts and thus delaying the proceedings likely would be of little benefit to Lingley and would risk prejudice to Alaska Airlines.

         Based on these decisions, Alaska Airlines moved for final judgment. Lingley opposed, contending that the case was ongoing. She argued that the court had yet to address several of her state law claims including those for defamation, intentional infliction of emotional distress, prima facie tort, and spoliation of evidence. In response the superior court issued an order clarifying that it had already disposed of all claims and accordingly the litigation had concluded. It explained that the unresolved claims Lingley cited had not been explicitly pled nor could they be inferred from her complaints.

         Alaska Airlines then filed a second motion to enter final judgment. Lingley opposed, again citing the unresolved state law claims; three days later she moved for the court to reconsider its clarifying order. The superior court denied Lingley's motion for reconsideration and entered final judgment for Alaska Airlines. Lingley appeals.


         The superior court denied Lingley leave to amend her complaint. We generally " review the denial of a motion to amend a pleading for abuse of discretion." [6] A superior court abuses its discretion " when the decision on review is manifestly unreasonable." [7] " It is within a trial court's discretion," however, " to deny such a motion where amendment would be futile because it advances a claim or defense that is legally insufficient on its face." [8] We use our independent judgment to determine whether such an amendment would be legally insufficient.[9] We may affirm the superior court on independent grounds, but only when those grounds are established by the record.[10]

         The superior court also dismissed Lingley's action for lack of subject matter jurisdiction under Civil Rule 12(b)(1). " We review de novo a superior court's decision to dismiss a complaint for lack of subject matter jurisdiction." [11] In reviewing de novo we exercise our independent judgment, adopting the rule of law most persuasive in light of precedent, reason, and policy.[12]

         This appeal also requires us to interpret a collective bargaining agreement. " Contract interpretation presents a question of law that we review de novo." [13] Our " goal is to 'give effect to the reasonable expectations of the parties.'" [14] We discern the parties' intent by looking " to the written contract as well as extrinsic evidence . . . at the time the contract was made." [15] If there is conflicting extrinsic evidence, we, not a jury, must " decide the question of meaning except where the written language, read in context, is reasonably susceptible to both asserted meanings." [16]

         Finally this appeal requires statutory interpretation, which is a question of law.[17] We decide questions of law using our independent judgment, adopting the " most persuasive rule of law in light of precedent, reason, and policy." [18] When interpreting a statute we consider its text, legislative history, and purpose.[19]


         A. The Superior Court Abused Its Discretion When It Denied Lingley's Motion To Amend Her Complaint.

         The superior court denied Lingley's motion to amend her complaint, concluding that the claims in the proposed amended complaint were futile because Lingley did not exhaust her contractual remedies and because the RLA preempted many of Lingley's claims.

          Leave to amend " shall be freely given when justice so requires." [20] But we have recognized that denial of leave to amend might be justified given " undue delay, bad faith or dilatory motive . . . [by] the movant, repeated failure to cure deficiencies by amendments . . ., undue prejudice to the opposing party . . ., [or] futility of the amendment, etc." [21] As noted above, we use our independent judgment in determining whether an amendment would be legally insufficient.[22]

         1. Lingley's motion to amend was timely and granting leave would not cause apparent prejudice to Alaska Airlines.

         Alaska Airlines argues that allowing Lingley to litigate her claims would cause the airline prejudice because it has a right to resolve the dispute " in the forum mandated by Congress and selected by the parties' collective bargaining agreement" ; this alternative forum, it contends, shields it from the time and expense of litigation. Lingley argues that Alaska Airlines points only to " run-of-the-mill tasks of defending a . . . lawsuit," grounds that do not support finding undue prejudice. We agree.

          A superior court may deny leave to amend when allowing the amendment would cause undue prejudice to the other party.[23] But time and additional expense alone do not support such a finding.[24] " If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, [the plaintiff] ought to be afforded an opportunity to test [the] claim on the merits." [25]

         Lingley moved to file a second amended complaint about two months after she filed her first amended complaint. This motion was timely and nothing in the record suggests that granting it would have caused Alaska Airlines undue prejudice. The court had yet to set a trial date, and the discovery process had yet to begin. At this early stage, the hardship caused by denying Lingley the opportunity to test the merits of her claims outweighs any prejudice to Alaska Airlines.

         2. Because the collective bargaining agreement did not clearly and unmistakably waive Lingley's right to litigate, the claims were not subject to mandatory arbitration.

         The superior court ruled that Lingley's proposed claims were precluded by her failure to exhaust administrative remedies. Though an employee may have the right to pursue a claim in state court -- because the claim is not preempted by the RLA -- an employee may waive the right to litigate the claim through her employment contract.[26] Lingley contends that her employment contract (the collective bargaining agreement) does not waive her right to pursue claims in state court.

         In Bernard v. Alaska Airlines, Inc. we recently considered a collective bargaining agreement that is substantively the same as the one now before us.[27] We held that the agreement does not preclude litigation of an employee's claims in state court because the agreement does not clearly and unmistakably waive the employee's right to do so.[28] That analysis, which we summarize below, applies equally here.

          A waiver must be " clear and unmistakable." [29] " We will not infer from a general contractual provision that the parties intended to waive a statutorily protected right unless the undertaking is 'explicitly stated.'" [30] To determine whether a waiver is " clear and unmistakable," we apply a two-part test: The contract must either (1) have an arbitration clause with a provision through which " employees specifically agree to submit all . . . causes of action arising out of their employment to arbitration" or (2) explicitly incorporate the " statutory . . . requirements in addition to a broad and general arbitration clause." [31]

         The collective bargaining agreement, as we explained in Bernard,[32] does not satisfy either prong of this test. First, though the agreement appears to grant the System Board of Adjustment broad jurisdiction over disputes between covered employees and the company -- authorizing the board to hear disputes " growing out of grievances or out of interpretation or application of any of the terms of this [a]greement" -- the agreement also appears to limit the board's authority. (Emphasis added.) By its terms, the agreement only authorizes the board to hear " properly submitted" disputes. To proceed to arbitration, the agreement narrowly defines " proper submission" : " [ T ] he General Chair may appeal to arbitration within thirty . . . calendar days." (Emphasis added.) The agreement also narrowly defines the System Board of Adjustment's duties: " The Board shall consider any dispute properly submitted to it by the General Chair of the Union or his/her designee, or by the Representative of the Company" ; " [ n ] o matter shall be considered by the Board which has not first been fully processed in accordance with the grievance and appeal provisions of this [a]greement." (Emphases added.) The plain language of the agreement does not give an employee, like Lingley, the right to independently submit her claims to arbitration; the agreement recognizes only those appeals brought by the union or its representatives or by Alaska Airlines.[33] Because of this apparent foreclosure, the agreement fails the first prong of the test for finding clear and unmistakable waiver of the right to pursue claims in state court.[34]

         The collective bargaining agreement also fails the second prong of the test because it did not explicitly incorporate Alaska Airlines' protections against discrimination, retaliation, and whistleblowing.[35] The agreement broadly incorporates Alaska Airlines' rules and policies. These policies include those that protect employees from retaliation for airing good faith concerns about ethical or compliance issues, harassment, and discrimination. The anti-discrimination provision provides:

The Company is an equal opportunity employer. This means the Company is committed to providing equal consideration in all employment decisions (including, for example, recruiting, hiring, training, promotions, pay practices, benefits, disciplinary actions and terminations) without regard to age, race, color, gender, national origin, religion, marital status, sexual orientation, disability, veteran status or any other classification protected by federal, state, or local laws . . . .
Acts of discrimination and harassment not only violate our Company values and policies, but may also violate federal, state, and local laws and are strictly prohibited.

(Emphasis added.) The anti-retaliation clause provides:

The Company does not tolerate retaliation of any kind for raising concerns or making a report in good faith about an ethical or compliance issue. To be made in " good faith" does not mean you have to be right, however, it does mean you have to provide complete and accurate information and you have to have a reasonable belief that it may be true.

         Like Bernard, none of the incorporated provisions to which Alaska Airlines directs us expressly cites Alaska law.[36] And, most importantly, the collective bargaining agreement grants Alaska Airlines the power to unilaterally modify its rules and polices " during the term of the [a]greement." Under such circumstances, it cannot be said that an employee clearly and unmistakably waives her right to pursue state law claims in state court because to do so an employee must know what rights she is waiving.[37] We thus would reach the same conclusion even if the incorporated company rules and policies explicitly cited Alaska law.[38]

         The superior court's conclusion that Lingley's proposed claims were barred by her failure to exhaust contractual remedies was mistaken because the collective bargaining agreement does not clearly and unmistakably waive her right to litigate those claims.

         3. The RLA does not preempt claims that have an independent state law basis and do not turn on the collective bargaining agreement.

         The superior court ruled that many of Lingley's claims were preempted by the RLA and therefore were futile. The RLA provides a " mandatory arbitral mechanism for 'the prompt and orderly settlement' of two classes of disputes" [39]: major disputes, which relate to " the formation of collective [bargaining] agreements or efforts to secure them" ; [40] and minor disputes, which include " controversies over the meaning of an existing collective bargaining agreement in a particular fact situation." [41] Claims that fall into either category are preempted.[42]

         Alaska Airlines contends, as the superior court concluded, that many of Lingley's proposed claims are minor disputes that must be resolved through the mechanisms provided by the RLA, including the collective bargaining agreement's three step grievance process. But we conclude that Lingley's claims may have an independent state law basis and that, as so constructed, do not require us to interpret the collective bargaining agreement. Such claims would not be preempted: The RLA " does not pre-empt causes of action to enforce rights that are independent of the [collective bargaining agreement]." [43] " Pre-emption of employment standards' within the traditional police power of the [s]tate' 'should not be lightly inferred.'" [44]

         a. The age discrimination claim is not preempted because it could be based on state statute.

         Alaska Airlines does not dispute the superior court's conclusion that the RLA does not preempt Lingley's age discrimination claim. In the wrongful termination context, a state law claim may be " pre-empted, not because the RLA broadly pre-empts state-law claims based on discharge or discipline, but because the employee's claim was firmly rooted in a breach of the [collective bargaining agreement] itself." [45] By contrast, when an employee's right against wrongful termination derives from state law and does not depend on an analysis or interpretation of the collective bargaining agreement, the state law cause of action is not preempted.[46] Such claims may turn on, for example, the state law duty not to fire an employee for retaliatory reasons or in violation of other state public policy.[47]

         Lingley's age discrimination claim has an independent state law basis under AS 18.80.220, which prohibits an employer from discriminating against an employee " because of the [employee's] age." [48] This statute also prohibits discriminating against an employee because of his or her sex,[49] and we have held that the RLA does not preempt a wrongful termination claim arising under this statute when the claim alleges retaliation for reporting sexual harassment.[50] The same is true with respect to Lingley's age discrimination claim. Like a claim for pretextual firing based on sexual discrimination, Lingley's age discrimination claim does not turn on an interpretation of the collective bargaining agreement; it has an independent state law basis in AS 18.80.220 and therefore is not preempted.

         b. The retaliation, whistleblower, and retribution claims are not preempted if they are construed as tort claims for discharge in violation of public policy.

         The superior court concluded, and Alaska Airlines concedes, that the RLA does not preempt Lingley's retaliation claim if it " is construed as a tort claim for wrongful discharge in violation of public policy." But the superior court, like Alaska Airlines, reached the opposite conclusion with respect to Lingley's whistleblower and retribution claims: Those claims, unlike the retaliation claim, arose from the collective bargaining agreement and could not be considered independent of it.

         The RLA, as noted, does not preempt a wrongful termination claim when the claim is rooted in state law rather than a collective bargaining agreement.[51] This category of claims may include those alleging violations of state law protections for whistleblowers.[52] Under Alaska law, a claim alleging wrongful termination for whistleblowing may be actionable as an independent state law tort even when the alleged misconduct " does not violate the letter of any . . . [statutory] law[]." [53]

         Lingley claims that Alaska Airlines retaliated against her for criticizing management's failure to follow company policies and for reporting company misconduct and violations of federal law. These claims may be rooted in Alaska's public policy that protects employees who serve as whistleblowers from retaliation. So construed, Lingley's retaliation, whistleblower, and retribution claims would turn on state law rather than the collective bargaining agreement.[54] Further, though we have explained that wrongful termination claims based on whistleblowing may " express[] a breach of contract theory" [55] and though Alaska Airlines' polices (incorporated into the collective bargaining agreement) explicitly protect employees who report misconduct in good faith, this nexus with the agreement does not mean Lingley's whistleblower and retribution claims turn on an interpretation of that agreement. Rather we recognize, for the purpose of RLA preemption, that a collective bargaining agreement cannot " alter[], circumscribe[], or define[]" state law protections even when the agreement appears to offer protections similar to ...

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