Sanders v. Parker Drilling Co.

• Decision Date: 26 September 1990
• Docket Number: 88-3748,Nos. 87-4352,s. 87-4352
• Parties: 116 Lab.Cas. P 56,350, 5 Indiv.Empl.Rts.Cas. 1009, 5 Indiv.Empl.Rts.Cas. 1376 Bowen SANDERS, Barbara Sanders; George Howard; Rhodney Cantu; Joline Cantu, Plaintiffs-Appellees, v. PARKER DRILLING COMPANY, an Alaskan Corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 191

911 F.2d 191

116 Lab.Cas. P 56,350, 5 Indiv.Empl.Rts.Cas. 1009,

5 Indiv.Empl.Rts.Cas. 1376

Bowen SANDERS, Barbara Sanders; George Howard; Rhodney

Cantu; Joline Cantu, Plaintiffs-Appellees, v. PARKER DRILLING COMPANY, an Alaskan Corporation, Defendant-Appellant.

Nos. 87-4352, 88-3748.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 7, 1989.

Decided Aug. 7, 1990.

As Amended Sept. 26, 1990.

Thomas M. Daniel, David T. Jones, Perkins Coie, Anchorage, Alaska, for defendant-appellant.

Lee Holen, Elizabeth Johnson, Johnson & Holen, Anchorage, Alaska, for plaintiffs-appellees.

Appeal from the United States District Court for the District of Alaska.

Before REINHARDT, KOZINSKI and TROTT, Circuit Judges.

TROTT, Circuit Judge:

SUMMARY

This case arises out of a wrongful termination dispute between Parker Drilling Company ("Parker") and Bowen Sanders, Rhodney Cantu, and George Howard ("plaintiffs"). Parker terminated plaintiffs upon concluding they smoked marijuana while working on Parker's oil rigs in violation of Parker's drug policy. After a vigorously Parker argues that the district court erred in calling on the jury to decide whether plaintiffs actually smoked marijuana on the rigs. Parker's theory is that the jury should only have been asked to determine whether Parker's decision to terminate was based on a good faith belief that plaintiffs smoked marijuana on the oil rigs, not whether the allegation was actually true. Parker asserts that if it was acting in good faith, it is insulated from liability.

                contested trial in federal district court, the jury found on a contractual claim that Parker did not have "just cause" to terminate plaintiffs. 1   Parker sought a judgment notwithstanding the verdict or, in the alternative, a new trial.  Both motions were denied by the district court, and this appeal followed
                

We hold that under the law of Alaska, the jury in deciding the contractual issue of just cause was entitled to review the evidence underlying the termination in order to determine whether plaintiffs actually smoked marijuana on Parker's oil rigs. So holding, we find sufficient evidence in the record to support the jury's conclusion that Parker did not have just cause to terminate plaintiffs, and we affirm the district court.

FACTS

Plaintiffs worked as floor hands on Rig 191, one of several oil drilling rigs owned by Parker on Alaska's North Slope. As floor hands, plaintiffs' job was to connect ninety-foot segments of steel pipe, each weighing 1500 pounds, and place them in the drilling hole in the floor of the rig. This is demanding work. The drilling hole is often overflowing with mud, making the rig floor slick and treacherous. The work is performed at temperatures of thirty degrees below zero, using heavy tools, the lightest of which weighs 400 pounds. It is hazardous. Injuries are frequent, ranging from severed fingers and arms to death.

Parker, in the interests of safety, enforces strict discipline aboard the rigs. This includes a laudable ban on the use or possession of drugs on the rigs. The drug ban extends to the company-provided sleeping areas, but it does not address employees' drug use during their off-time, so long as they are off of the drilling site. The plaintiffs testified that they were aware of Parker's drug policy.

During a routine safety inspection of the North Slope rigs on February 22, 1983, Parker's Safety Director, John Haynes, was told by two Parker employees, Billy Reynolds and Joe Watkins, that plaintiffs were routinely smoking marijuana on the rig and during their break periods.

Haynes, immediately upon returning to Anchorage, reported these accusations to Gary McCarrell, Parker's Division Manager. Hesitant to act on what might prove to be an unfounded rumor, McCarrell asked Reynolds and Watkins to put their allegations in writing. The handwritten statements were faxed to McCarrell that evening.

Based on these statements, McCarrell suspended plaintiffs pending investigation. At the time of their suspension, plaintiffs were off the rig on their normal two-week rotation.

After confronting plaintiffs, who denied using drugs, and based on the information above, McCarrell fired the plaintiffs. The plaintiffs brought this wrongful termination action in Alaska state court, and the suit was removed to the United States District Court for the District of Alaska. At the conclusion of the trial, the jury found that Parker did not have just cause for terminating the plaintiffs. ² This appeal followed.

STANDARD OF REVIEW

The standard for reviewing jury verdicts is whether they are supported by "substantial evidence," that is, such relevant

                evidence as reasonable minds might accept as adequate to support a conclusion.  Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1013-14 (9th Cir.1985), cert. denied, 474 U.S. 1059, 106 S.Ct. 802, 88 L.Ed.2d 778 (1986)).  When there is sufficient evidence before the jury on a particular issue, and if the instructions of law on the issue were correct, the jury's verdict must stand.  Transgo, 768 F.2d at 1014.    The credibility of the witnesses and the weight of the evidence are issues for the jury and are generally not subject to appellate review.  Id. at 1024;  see also Nicholson v. Rushen, 767 F.2d 1426, 1427 (9th Cir.1985).  Where just cause for termination is required, the employer has the burden of proving that just cause existed.  Skagway City School Board v. Davis, 543 P.2d 218, 222 (Alaska 1975), disapproved on other grounds, Native Alaska Reclamation and Pest Control v. United Bank of Alaska, 685 P.2d 1211 (Alaska 1984)
                

ANALYSIS

Courts addressing whether good cause for dismissal existed generally must answer two separate questions: (1) whether the employee engaged in the conduct the employer alleges; and (2) whether that conduct constitutes just cause for termination of employment. H. Perritt, Employment Dismissal Laws and Practice 226 (1984). We believe that Alaska's courts have adopted this analysis.

The second question is not at issue in this case. The parties do not dispute that drug use on the oil rigs presents a legitimate business reason to terminate employment.

As to the first question, the jury found in its special verdict that Parker did not have just cause to dismiss the plaintiffs. The jury apparently found that Parker did not establish that plaintiffs smoked marijuana on the oil rig as claimed.

Therefore, the question this court must address is whether, under Alaska law, Parker must prove that plaintiffs actually smoked marijuana on the oil rigs, or if Parker need only show that it acted in good faith based on the information available. Alaska's common law is clear in wrongful termination cases; the jury is entitled to decide whether the alleged conduct that led to the termination actually took place unless the facts are so one-sided the issue can be decided as a matter of law.

Rutledge v. Alyeska Pipeline Services Co., 727 P.2d 1050 (Alaska 1986), involved a wrongful termination suit brought by a former employee against Alyeska. Alyeska had dismissed the employee for fighting on company property. While the judge in Rutledge took the question of whether the employee was actually involved in the fight away from the jury, he clearly indicated that the determination was one of fact, generally to be decided by a jury. The court simply exercised its discretion to decide the question of fact as a matter of law, holding "reasonable jurors must conclude that Rutledge fought on company property...." 727 P.2d at 1056.

The Rutledge court cited approvingly, albeit on other grounds, Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W.2d 880 (1980), which held that a just cause requirement for termination would be meaningless if the employer were permitted to be the sole judge of whether just cause existed. 292 N.W.2d at 895. In deciding that the question of just cause presented a jury question, the court in Toussaint held, "Where the employer claims that the employee was discharged for specific misconduct--intoxication, dishonesty, insubordination--and the employee claims he did not commit the misconduct alleged, the question is one of fact: did the employee do what the employer said he did?" 292 N.W.2d at 896. Moreover, there is no indication in Rutledge that the employer's mere erroneous belief, whether reasonable or not, is sufficient to satisfy the "for cause" requirement. We conclude that under the law of Alaska, to carry its alleged burden of just cause for termination, an employer must satisfy its burden of showing the discharged employee engaged in the alleged prohibited conduct. See also Wilkerson v. Wells Fargo Bank, 212 Cal.App.3d 1217, 261 Cal.Rptr. 185, 192 (App.1989) ("[A]n employer's subjective belief it possessed good cause does not dispose of a wrongfully discharged employee's claim for breach of contract. Such employee is entitled to recover for breach of contract notwithstanding the employer's state of mind ... If an employer claims that the employee was discharged for specific misconduct, and the employee denies the charge, the question of whether the misconduct occurred is one of fact for the jury."); McLain v. Great American Insurance, 208 Cal.App.3d 1476, 256 Cal.Rptr. 863, 870 (1989) (Although employer claimed that employee distributed confidential memorandum in violation of company policy, jury found that there was an implied contract that employee could only be terminated for cause, and that employee had established that he did not distribute the memo or act in an insubordinate manner. Since the employee did not violate the company rules as alleged, "there was substantial evidence to support the jury's verdict that [the employer] did not have cause to discharge [the employee] and therefore breached the implied contract.")

The dissent sympathizes with Parker's obligation to provide a safe working environment for its employees. It cites...