297 P.3d 158 (Alaska 2013), S-14041, Mills v. Hankla

Docket Nº:S-14041.
Citation:297 P.3d 158
Opinion Judge:WINFREE, Justice.
Party Name:William MILLS, Karen Mills, Annette McLaughlin, and Carole Welsh, Appellants, v. Jefferson HANKLA and the City of Hoonah, Appellees.
Attorney:Douglas K. Mertz and William F. Cummings, Mertz Law Offices, Juneau, for Appellants. Leslie Longenbaugh, Margot Knuth, and Janice Gregg Levy, Longenbaugh Law Firm, Juneau, for Appellee City of Hoonah. Vance A. Sanders, Law Office of Vance A. Sanders, LLC, Douglas, for Appellee Jefferson Hankla.
Judge Panel:Before: CARPENETI, Chief Justice, WINFREE and STOWERS, Justices. FABE, Justice, not participating.
Case Date:March 22, 2013
Court:Supreme Court of Alaska
 
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297 P.3d 158 (Alaska 2013)

William MILLS, Karen Mills, Annette McLaughlin, and Carole Welsh, Appellants,

v.

Jefferson HANKLA and the City of Hoonah, Appellees.

No. S-14041.

Supreme Court of Alaska.

March 22, 2013

Page 159

[Copyrighted Material Omitted]

Page 160

Douglas K. Mertz and William F. Cummings, Mertz Law Offices, Juneau, for Appellants.

Leslie Longenbaugh, Margot Knuth, and Janice Gregg Levy, Longenbaugh Law Firm, Juneau, for Appellee City of Hoonah.

Vance A. Sanders, Law Office of Vance A. Sanders, LLC, Douglas, for Appellee Jefferson Hankla.

Before: CARPENETI, Chief Justice, WINFREE and STOWERS, Justices.

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OPINION

WINFREE, Justice.

I. INTRODUCTION

In 2008 a city promoted a police officer to police chief. The city's hiring determination and the officer's subsequent conduct led four police department employees to sue the police chief and the city. The employees asserted several claims including wrongful termination, sexual harassment, and negligent hiring. The superior court entered summary judgment in favor of the police chief and the city on all claims.

The employees appeal several of the superior court's summary judgment rulings, its denial of sanctions for evidence spoliation, and an attorney's fees award in the city's favor. Because there are no genuine issues of material fact barring judgment, we affirm the superior court's dismissal of both the employees' hostile work environment sexual harassment claims against the police chief and the employees' negligent hiring claim against the city. Because the superior court did not abuse its discretion in denying discovery sanctions, we affirm that ruling as well. But because genuine issues of material fact preclude summary judgment as to the employees' claims against the city for wrongful termination and sexual harassment, we reverse those rulings, vacate the attorney's fees award, and remand for further proceedings.

II. FACTS AND PROCEEDINGS

A. Facts

1. Chief Hankla

In 2006 the City of Hoonah (the City) hired Jefferson Hankla as a patrol officer with the Hoonah Police Department. In early 2008 Hankla applied for an open position as police chief. The city council appointed Hankla as police chief in February, but later was informed by Hankla's colleague, Lieutenant William Mills, that Hankla did not meet the eligibility requirements for the position, making the appointment a violation of city code. The mayor rescinded the appointment; the city council then amended the city code to allow Hankla to qualify and re-opened the position. Lt. Mills had not applied for the position when it was first advertised, but he applied when the position re-opened. In April, the city council again appointed Hankla as police chief.

2. Chief Hankla and Lt. Mills

Following Chief Hankla's second appointment, relations between Chief Hankla and Lt. Mills broke down. According to the employees, tension developed within the police department between those who supported Chief Hankla and those who did not. Lt. Mills and Chief Hankla avoided each other at work. Lt. Mills claimed Chief Hankla filed false reports concerning Lt. Mills's work and foreshadowed a termination by talking about "an opening" in the department. When the police department hired a new officer, Chief Hankla trained the new employee even though Lt. Mills was the department's training officer. Lt. Mills claimed Chief Hankla favored others within the department in various ways, including having personal driveways plowed by the city, allowing an employee to come to work drunk, allotting more overtime work, and arranging rent-free city housing. Lt. Mills claimed those disfavored by Chief Hankla "were subjected to humiliation and high-handedness, intended to drive [them] away."

In late April, three weeks after Chief Hankla's appointment, someone contacted Lt. Mills about an opening with the Craig Police Department. Lt. Mills applied, was offered the position, and accepted the next day. Lt. Mills gave three weeks notice of his resignation and left Hoonah in late May.

3. Chief Hankla and dispatcher Welsh

Carole Welsh was hired as the Hoonah Police Department's dispatcher in 2006. Welsh claimed that throughout her employment before Chief Hankla's appointment, then-patrol-officer Hankla repeatedly asked to see her breasts, and that she always refused. She claimed that these requests were only made when the two were alone, and that she never told anyone. Shortly after Chief Hankla's appointment, Welsh's husband accepted a job in Washington and the family relocated. On her final day of work, "as

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[her] shift ended," she entered Chief Hankla's office to have him sign her time card. Welsh claimed that during this encounter, Chief Hankla requested one final time to see her breasts. Again, Welsh refused.

4. Chief Hankla and dispatchers Mills and McLaughlin

Karen Mills and Annette McLaughlin were dispatchers with the Hoonah Police Department while Chief Hankla was in charge. Both Mills and McLaughlin claimed they observed Chief Hankla behave inappropriately or make sexual comments. They claimed Chief Hankla reduced their hours and altered their time cards to deny them overtime pay. They also claimed Chief Hankla sent sexually inappropriate emails to members of the police department.

McLaughlin claimed that while she was working, Chief Hankla once saw her accidentally open an email containing pictures of topless women. She claimed Chief Hankla told her "if [she] wanted to [she] could take some pictures of [her]self topless and send them to his email." McLaughlin also described arriving late for a party at Chief Hankla's house and explaining that she came directly from the shower—she claimed that he replied, "If you're naked, come on in." McLaughlin further claimed Chief Hankla commented on the clothes she wore to work and she was aware of crude comments Chief Hankla made to other employees.

Mills described several instances that she claimed "show a pattern of sexual harassment." Mills claimed after Chief Hankla returned to the police station following a fire call near another female dispatcher's home, Chief Hankla told the dispatcher, in Mills's presence, that "he had looked over to [the dispatcher's] house, hoping to see her standing in her front window wearing something ‘small and see-through.’ " She claimed she heard Chief Hankla joke that he was going to purchase new dispatcher uniforms from Victoria's Secret. She also described one occasion when Chief Hankla approached her from behind to get a stapler and put his hand on her back.

B. Proceedings

1. The employees' suit

Lt. Mills and dispatchers Mills, McLaughlin, and Welsh sued Chief Hankla and the City on several theories. The scope of the employees' amended complaint caused some contention between the parties, with confusion about the actual claims pleaded. The following claims are specifically enumerated in the employees' amended complaint and are the subject of this appeal.

Lt. Mills claimed that Chief Hankla, and therefore the City, constructively discharged Lt. Mills through "harassment and unprofessional treatment," thereby breaching the covenant of good faith and fair dealing. Lt. Mills claimed that the City improperly refused to consider other candidates and hired Chief Hankla in violation of the city code, and further that Chief Hankla and the City violated public policy by retaliating against Lt. Mills for competing with Chief Hankla for the police chief position. The three dispatchers claimed Chief Hankla and the City maintained a hostile work environment through sexual harassment and discrimination in violation of AS 18.80.220(a).1 Mills and McLaughlin also claimed Chief Hankla and the City violated wage and overtime laws by altering time cards and denying overtime pay. Lt. Mills and the three dispatchers further claimed the City was negligent in hiring, training, and retaining Chief Hankla.

2. The employees' motion for sanctions

The employees moved for sanctions against Chief Hankla and the City for spoliation of evidence. The employees alleged Chief Hankla and the City failed to turn over two pieces of evidence: Chief Hankla's police department personnel file and former Hoonah Mayor Alf Skaflestad's citizen complaints file. The employees pointed to testimony from the previous police chief describing Chief Hankla's personnel file, including performance

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and psychological evaluations, medical file, and discipline record. The employees claimed that they did not receive the personnel file and that it was reasonable to conclude Chief Hankla had destroyed it. The employees also pointed to testimony from Skaflestad describing a file of complaints against Chief Hankla "several inches" thick and kept in a "secret" drawer in Skaflestad's desk. Claiming they did not receive the complete file, the employees argued it must have been destroyed. The employees requested sanctions, including exclusion of evidence and shifting the burden of proof. Chief Hankla and the City asserted they had produced both files and argued the allegedly destroyed or withheld evidence was irrelevant. The court denied the motion for sanctions, finding no evidence of destruction or failure to produce evidence.

3. Chief Hankla and the City's motion to exclude expert testimony and allegedly new claims

Chief Hankla and the City moved to exclude Welsh's and Lt. Mills's expert testimony and reports on economic damages and to exclude evidence relating to claims not pleaded, including Welsh's wrongful termination and retaliation claims. Chief Hankla and the City argued that the expert testimony and reports were prejudicially late and that the...

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