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No. 3843 Supreme Court No. S-3990
May 18 1992 Decided
Don Clocksin Wagstaff Pope & Clocksin Anchorage for Appellant. Russellyn S. Carruth Michael W. Seville Burr Pease & Kurtz Anchorage and Lloyd C. Loomis Atlantic Richfield Company Los Angeles for Appellee.
Before: Rabinowitz Chief Justice Burke Matthews Compton and Moore Justices.
The Hon. Justice Moore

MATTHEWS Justice with whom COMPTON Justice joins dissenting in part.

John Bozarth a pilot for Atlantic Richfield Company (ARCO) was fired after he refused to participate in ARCO's random drug-testing program. Bozarth sued claiming that the dismissal was really in retaliation for whistle-blowing. Bozarth had repeatedly complained about unsafe practices in ARCO's aviation department.

Shortly after filing suit Bozarth applied for state unemployment insurance benefits. These were denied on the grounds that Bozarth's discharge was due to work-related misconduct. The denial was upheld by the Appeals Tribunal of the Employment Security Division. No appeal of this decision was taken.

After discovery both parties moved for summary judgment. ARCO's motion was granted. Court based its decision on two alternative grounds. The first was collateral estoppel. Bozarth was bound by the decision of the Appeals Tribunal which established that his dismissal was the result of his misconduct. Second even if Bozarth was not bound by the decision of the Appeals Tribunal there was no genuine issue of material fact. Bozarth failed to introduce admissible evidence that his firing was based on any reason other than his refusal to take the drug test. The trial court stated:

Because [Bozarth] and [ARCO] were represented at the Employment Security Division Appeals Tribunal because the issues argued here are identical to those argued before the Appeals Tribunal and because [Bozarth] did not appeal the Tribunal's final decision on the termination issue Court concludes that [Bozarth] is collaterally estopped from litigating before this forum the circumstances leading to his termination and that his refusal to participate in the drug-testing program was misconduct. DeNardo v. State 740 P.2d 453 (Alaska 1987).

[ARCO] prevails even without resort to a collateral estoppel analysis for there exists no genuine issue of fact regarding the circumstances leading to [Bozarth's] termination. Although [Bozarth] argues that he and his immediate supervisor John Schmidt were in conflict over [Bozarth's] participation in the National Guard and [Bozarth's] whistle-blowing he fails to raise a genuine issue of material fact thereby. Camron Cooper the ARCO supervisor who made the decision to terminate [Bozarth] maintains she was not aware of [Bozarth's] conflict with Schmidt and based her decision to terminate [Bozarth] solely upon [Bozarth's] refusal to participate in [ARCO's] drug-testing program. [Bozarth] dismisses Cooper's testimony as ludicrous but such dismissal is not sufficient. The Cooper testimony stands unrebutted in this record by any opposing admissible evidence. No genuine issue of material fact is created.

ARCO then moved for Counsel's fees seeking an award equal to seventy percent of the Counsel's fees incurred $156,425. Court found a slight overcharge and determined that a reasonable fee for the services performed by ARCO's Counsels was $152,000. Court then awarded fifty percent of this amount $76,000 as partial compensation under Civil Rule 82. In addition Court awarded $14,600 in costs.

On appeal Bozarth claims that Court erred in granting summary judgment to ARCO because the decision of the Appeals Tribunal of the Employment Security Division should not have been given preclusive effect and because there were genuine issues of material fact regarding the reasons for Bozarth's termination. *fn1 In addition Bozarth claims that the award of Counsel's fees is excessive and that the cost award is the product of several errors.

We affirm the decision of the trial court on the grounds that there were no genuine issues of material fact. The record demonstrates that the decision to fire Bozarth was made by Camron Cooper a senior vice-president of ARCO and that she made that decision solely on the basis of his refusal to participate in ARCO's drug-testing program. Cooper asserted that he knew nothing about Bozarth's safety complaints or about other conflicts with his immediate supervisors. This assertion stands unrebutted in the record.

A private employer may with notice require its employees to take a test for drugs. Luedtke v. Nabors Alaska Drilling Inc. 768 P.2d 1123 (Alaska 1989). Failure of an employee to comply with a reasonable order of his employer is cause for discharge. Central Alaska Broadcasting v. Bracale 637 P.2d 711 (Alaska 1981). Bozarth was ordered to submit to a drug test after being notified of ARCO's drug-testing program and he refused to submit. Under the above authorities this failure was a legitimate basis for Bozarth's discharge.

Opposing the award of Counsel's fees Bozarth argues that some of ARCO's Counsels billed at an excessive hourly fee. Bozarth cites Municipality of Anchorage v. Baugh Construction and Engineering Co. 722 P.2d 919 (Alaska 1986). To calculate an award under Civil Rule 82 the trial court in that case reduced Counsel's fees billed at $200 per hour for in-trial work and $175 for out-of-trial work to $120 and $105 respectively. The issue in Baugh however was not whether $175 per hour was excessive. The issue was whether the trial court made a mathematical error in calculating the hourly rate it would allow. Baugh does not stand for the proposition that Counsels may not reasonably charge $175 per hour.

Hourly fees of $165-$175 were charged by the more senior members of the law firm defending ARCO. These fees were represented to be the standard fees for those Counsels. No persuasive evidence has been presented that they are unreasonable. Further because much work was done by firm associates the average hourly fee charged ARCO was about $136 per hour. This rate likewise has not been shown to be unreasonable.

In the context of this case while Court's award of Counsel's fees seems high we are unable to say that the work performed by ARCO's Counsels was not necessary or appropriate or that billing $152,000 for their services was unreasonable. *fn2 Awarding fifty percent of this amount falls comfortably within the partially compensatory standard of Civil Rule 82. Brunet v. Dresser Olympic Div. of Dresser Indus. Inc. 660 P.2d 846 847-48 (Alaska 1983); Stevens By Park View Corp. v. Richardson 755 P.2d 389 396 (Alaska 1988). Therefore the award of Counsel's fees is valid. *fn3

With respect to costs Bozarth challenges the allowance of costs for certain unspecified depositions arguing that deposition costs may be awarded only where the depositions are actually used at trial, or where depositions were actually relied upon in ruling on a pretrial motion. Civil Rule 79(b) allows as awardable costs "the necessary expense of taking depositions for use at trial and producing exhibits . . . ."

In Kaps Transport Inc. v. Henry 572 P.2d 72 (Alaska 1977) we interpreted Civil Rule 79(b) broadly to allow an award for the cost of depositions taken in good faith which were reasonably necessary even if they were not actually used at trial. We noted that depositions might be used to support a pre-trial motion or for cross-examination or to preserve the testimony of a witness who might become unavailable. Id. at 78. Implicit in our discussion in Kaps is the conclusion that it is not possible to make a clear distinction between depositions taken for discovery purposes and depositions taken in preparation for trial. That is illustrated by this case. ARCO contends credibly that all depositions were taken for purposes such as preservation of testimony cross-examination and impeachment as well as discovery. We conclude the actual use standard which Bozarth advocates is in conflict with the reasonably necessary standard of Kaps and that the award of costs met the latter standard and was not an abuse of discretion.


Dissenting: The Hon. Justice Matthews (In Part)

The framers of the Alaska Constitution established the superior court as the trial court of general jurisdiction for our state. Alaska Const. art. IV SEC. 3.One purpose of the superior court is to serve as an institution to which the people of Alaska may resort when they believe that they have suffered a legal wrong. Crushing Counsel's fees such as the $76 000 award which today's opinion approves so seriously limit this purpose that they are in my opinion fundamentally at odds with our constitution.

The general right of access to civil courts was recognized by this court in Bush v. Reid 516 P.2d 1215 1218-21 (Alaska 1973) where we invalidated on due process and equal protection grounds a statute which precluded a person on parole from bringing a civil action. In so doing we relied primarily on Boddie v. Connecticut 401 U.S. 371 28 L. Ed. 2d 113 91 S. Ct. 780 (1971) in which the United States Supreme Court held that indigents could not be deprived of access to divorce courts by the imposition of filing fees which they were unable to pay. Because the parolee's lawsuit in Bush arose out of a personal injury suffered in an automobile accident it was distinguishable from the divorce litigation in Boddie. We found however that this distinction should not dilute the force of the Boddie rationale especially as a matter of state constitutional law. Bush at 1219-20. Similarly in Patrick v. Lynden Transport Inc. 765 P.2d 1375 (Alaska 1988) we recognized the right of access to Court as declared in Boddie and rejected the view that Boddie should be limited to divorce cases. Id. at 1378-79.

We have also recognized the right of access to Court in the specific context of court awarded Counsel's fees. In Malvo v. J.C. Penney Co. 512 P.2d 575 588 (Alaska 1973) we reversed a $10,500 award which represented the prevailing litigant's full Counsel's fees. After noting that the purpose of Civil Rule 82 "is to partially compensate a prevailing party for the costs to which he has been put in the litigation in which he was involved id. at 587 (quoting Preferred General Agency of Alaska, Inc. v. Raffetto, 391 P.2d 951, 954 (Alaska 1964)), we stated:

If a successful litigant were to receive full reimbursement for all expenses incurred in the case with no requirement of justification and no consideration of the "good faith" nature of the unsuccessful party's claim or defense there would be a serious detriment to the judicial system. For where in order to seek judicial remedies a plaintiff must risk liability for the full amount of Counsel's fees the other side sees fit to incur it takes little imagination to foresee that the size of a party's bank account will have a major impact on his access to Court.

Id. (emphasis supplied). We then cited Boddie and quoted the following language from that opinion:

[A] cost requirement valid on its face may offend due process because it operates to foreclose a particular party's opportunity to be heard. The State's obligations under the Fourteenth Amendment are not simply generalized ones; rather the State owes to each individual that process which in light of the values of a free society can be characterized as due.

Malvo at 587. Having referred to the constitutional issue we declined to reach it because as we put it is 'manifestly unreasonable' to establish a policy under Civil Rule 82 that would enable a store owner to receive such a sizeable allowance for Counsel's fees against a party who has brought suit in good faith. Id.

Although the discussion in Malvo was directed to a trial court's award of full fees much of the rationale is also applicable to substantial awards of partial fees against litigants of limited resources. If a $10,500 Counsel's fee award is so great as to "foreclose a particular party's opportunity to be heard" it has that effect independent of whether it represents the prevailing party's full or merely partial fees.

Former Chief Justice Boochever recognized this in his dissent in Sloan v. Atlantic Richfield Co. 552 P.2d 157 161-62 (Alaska 1976). In Sloan the trial court ordered the widow of a deceased construction worker to pay Counsel's fees of $10,750 in a wrongful death case about half of the full fees requested by the prevailing party. Id. at 161. Citing the reasoning of Malvo Mrs. Sloan argued that the award against her was so large it would have a chilling effect on the use of our courts by many holding bona fide claims. A majority of Court rejected this argument noting we do not view this case as falling within an exceptional category. Sloan at 161. Chief Justice Boochever dissented stating that if Mrs. Sloan had "foreknowledge that such a sizeable sum would be awarded as Counsel's fees in the event of her losing "it "could well have constituted an impediment to access to Court preventing litigation of an issue which she had every right to have resolved." Id. at 162. Noting the concern expressed in Malvo "that access to Court might be governed by the size of one's bank account id., Chief Justice Boochever stated that in applying Civil Rule 82, trial courts must give consideration to the nature of the claim and the need for making courts available to resolve disputes without the imposition of intolerable burdens." Id.

I agree with Chief Justice Boochever that in determining what fees constitute a "reasonable amount" under Civil Rule 82(a)(1) trial courts must consider whether the award is so great that it imposes an intolerable burden on a losing litigant which in effect denies the litigant's right of access to Court.

The guidelines for making such a determination are not easy to express. Chief Justice Boochever in Sloan indicated that other than stating broad policy considerations, he was "unable to delineate specific guidelines for a trial Court to follow in awarding Counsel's fees." Id. He then settled on the "admittedly . . . arbitrary figure" of $2,500 as "the maximum that I think could be awarded without unduly limiting access to Court under the facts of this case." Id.

While it is difficult to prescribe guidelines for the trial courts to follow in this area trial courts should at least consider whether an award may be so onerous to the losing litigant that it unduly limits the constitutional right of access. Over time the process of case-by-case adjudication will yield more specific directions. I suggest presently that in wrongful discharge claims the award of Counsel's fees not exceed some fraction of the former employee's annual income.

This case is only one of a number of cases which we have had occasion to review recently involving very large awards of Counsel's fees. See Zeilinger v. Sohio Alaska Petroleum Co. 823 P.2d 653 (Alaska 1992) (superior court awarded $80,470 to employer in wrongful discharge case -- reversed on appeal as excessive); Van Huff v. Sohio Alaska Petroleum Co. appeal pending No. S-4373 (superior court awarded $117,251 in Counsel's fees in favor of employer in wrongful discharge case). In each of these cases an individual citizen believing in good faith that his or her legal rights had been violated pursued dispute resolution in the superior court in the manner contemplated by our constitution. The citizen lost and was subjected to a financially ruinous award of Counsel's fees.

If the superior court is to serve its constitutional purpose as a forum available to all the people superior court Court must consider whether an award of Counsel's fees will impair the constitutional right of access to Court. In the present case it is evident that no such consideration was given. Therefore I would reverse the award of Counsel's fees and remand for further proceedings in accordance with the views expressed herein.


*fn1 Both parties assume for the purposes of this point on appeal that Bozarth could be discharged only for cause.

*fn2 Bozarth sought an award of compensatory damages in excess of $500,000; numerous pre-trial motions were made; and at least twenty-one depositions were taken.

*fn3 The award of $76,000 in Counsel's fees against a dismissed employee is nonetheless disturbing. It tends to cast doubt on the continued desirability of Civil Rule 82. The rule is grounded on basic fairness. One who has been forced to litigate in order to vindicate one's rights should be reimbursed in part for litigation expenses. It may be however that costs of litigation have increased to such an extent that the prospect of having to pay Rule 82 fees deters a broad spectrum of our populace from the voluntary use of our courts. We have asked our Civil Rules Standing Committee to review this question. In this case however we can conceive of no principled basis by which the award of Counsel's fees granted by the superior court can be reduced or vacated.