Central Bering Sea Fisherman's Association and Carl Merculief v. Susan Anderson

A jury awarded Susan Anderson compensatory and punitive damages
against Central Bering Sea Fishermen's Association and its president, Carl Merculief,
based upon her claims of constructive retaliatory discharge, promissory estoppel, and
defamation. The Association and Merculief challenge various aspects of the damages awards. We agree that the jury's award of lost earnings is excessive; however, we
sustain the jury's punitive damages award.

II. FACTS AND PROCEEDINGS

Central Bering Sea Fishermen's Association is a nonprofit economic
development organization established by fishermen in St. Paul in the Prib ilof Islands in
conjunction with the community development quota program ("CDQ"). The program
was instituted by the North Pacific Fisheries Management Council to allocate a portion
of the fisheries' resource to the coastal villages of western Alaska. Carl Merculief was
the president of the Association in 1997 and 1998.

In late 1997 Susan Anderson approached the Association about working
for it as an economic development project coordinator. At the time, Anderson held a
similar job with Yukon Delta Fisheries Development Association, another CDQ group.
After Anderson's first interview, Merculief told her that he would like to hire her but that
he needed the approval of the Association board of directors.

In January 1998 Merculief asked Anderson to start work with the
Association, as Kathy Faltz, the office manager and controller, had suddenly fallen ill
and Merculief needed help with the corporation's accounting. At a January 9 meeting
of the Association board of directors, which Anderson attended, Merculief proposed
hiring Anderson to do economic development work. After some discussion, the board
agreed to hire Anderson and to pay her initially at the rate of $55,600 annually. The
board also promised to give Anderson a written contract and to raise her salary to
$60,000 if she successfully concluded a probationary period. The board instructed
Anderson and Merculief to negotiate an employment contract to present to the board for
approval after the co mpletion of her probation.

Anderson began work on January 16, 1998. She performed some of Faltz's
bookkeeping supervision and accounting duties in addition to her economic development
responsibilities. Despite the burden of additional duties, Anderson performed well in her
economic development work. During this time, personnel working for Anderson began
to approach her to report irregularities and potential theft of Association assets by Faltz.
When Anderson reported these allegations to Merculief, Merculief refused to look into
the matter, citing Faltz's current illness.

In early April 1998 Anderson and Merculief negotiated a draft employment
contract to present to the board. The board was to consider the proposed contract at its
April 13 meeting; however, at the meeting the Association's attorney Roger DuBrock
had a different version of the draft contract. The confusion over the multiple drafts of
the contract was compounded by discussion of where this economic development
position should be located - St. Paul or Anchorage - and whether or not the position
should continue to exist if the Anchorage office closed. Anderson explained to the board
the advantages of having an office in Anchorage and told the board that she would not
be able to live and work on St. Paul. Due to the confusion over the multiple contract
drafts and the contingency of the position on office location, the board voted not to
approve Anderson's contract at that time; however, the board nonetheless assured
Anderson that she was doing a good job and implied that it would approve a contract at
a later date.

Shortly after this bo ard meeting, on April 16, the Association's day-to-day
bookkeeper reported to Anderson that Merculief had been charging personal expenses
to the Association's credit card without submitting the proper reimbursements. Follow-up
on this report revealed multiple instances in which Merculief appeared to have
misappropriated company funds. Anderson informed two board members of the problem and asked if she had the authority to look into this matter. The board members
responded that she did. On April 23, 1998, Anderson brought her concerns to DuBrock,
the Association's attorney. DuBrock responded that they had to proceed very carefully,
as making these allegations could threaten Anderson's job.

The next morning, Merculief met Anderson at her office and, without
explanation, told her to go home. Merculief then called DuBrock, insisting that he
wanted to fire Anderson, but DuBrock advised that any action against Anderson would
have to be taken by the board. That same day, the board met and decided that while it
would order an audit to look into Anderson's allegations, Anderson would be suspended
without pay. In addition, the board ordered that the locks to the Association offices be
changed and that Anderson be instructed not to return to the Association and not to speak
with any representative of the Association other than DuBrock. No one informed
Anderson of the board's actions; however, Anderson received a call that same day from
an industry colleague who had been told that Anderson no longer worked at the
Association and that she had been fired. These statements convinced Anderson that she
was being fired and on Monday morning she went to DuBrock to turn in her office keys
and cell phone. She brought along a memorandum to which she had attached copies of
business records documenting her concerns about Merculief's use of Association funds.
Later that morning, DuBrock delivered to Anderson a letter in which he issued the
board's orders and informed her that she had until May 1, 1998, to document her
concerns about fraud. Anderson retained counsel. On April 30, 1998, she
wrote Du Brock, through counsel, and demanded her job back, asserting that she had a
de facto contract for a definite term with the Association. She also warned that the
Association's actions were improperly retaliatory.

The next day Merculief contacted Glenn Haight, the CDQ manager for the
state, and reported that Anderson had falsely accused Merculief of misappropriation and
that she would be terminated for her misconduct. Merculief also told Haight that
Anderson had threatened previous colleagues both personally and professionally. Haight
passed along Merculief's remarks in an e-mail sent to a number of high officials in state
government as well as members of the CDQ industry.

On May 7, 1998, the Association board held a meeting in which Anderson
was accused of: (1) breaking into Association offices; (2) illegally accessing the
Association's computers; (3) stalking Merculief; (4) making death threats; and (5)
retaliating against the Association by accusing Merculief of wrongdoing after she was
suspended. Neither of the two board members that Anderson had approached with her
concerns voiced their knowledge that Anderson had raised her concerns prior to her
suspension, not after.

The board had DuBrock send a letter to Anderson explaining that the reason
for her suspension was that an employee had told the board that Anderson was out to
destroy Merculief. However, that employee reported to Anderson that the board's
representation of her statement to them was untrue, that those present at the May 7
meeting wanted Anderson "gone," and that no one on the board cared about the
Association's finances.

Meanwhile, DuBrock commissioned an audit to examine the nine instances
of fiscal concern that Anderson had identified. The board reviewed this audit - the
results of which supported most of Anderson's concerns - at its May 22, 1998 board
meeting. At that meeting Merculief alleged that Anderson had instructed him to engage
in misconduct; Anderson denied these allegations at trial.

After some indecision as to what to do with Anderson, the board offered
her the economic development job on St. Paul. The board simultaneously reelected
Merculief president, moved his positio n to St. Paul, and named as Anderson's supervisor
a successful applicant for an internship that Anderson had created and advertised.
Furthermore, the board did not offer Anderson a contract; instead, it appeared that her
employment would be at will. When Anderson talked to others to investigate the
sincerity of the offer, she found that the offer was "just a way [for the Association] to get
rid of her." She thus declined to appear in St. Paul by September 1, 1998, as instructed.
DuBrock wrote Anderson's attorney on September 11, 1998, asserting that the
corporation considered Anderson's failure to appear a resignation.

In order to protect herself, Anderson had begun circulating resumes and
applying for jobs during the summer and fall of 1998. She accepted employment with
Bank of America in mid-September at $45,000 per year. After the bank was sold in
December 1998, Anderson quit her job at the bank and decided to go to school to
become a barrister in Australia.

Anderson filed suit against the Association and Merculief in November
1998. She went to trial in April 2000 on three causes of action: (1) constructive
retaliatory discharge; (2) promissory estoppel; and (3) defamation. She brought the first
two charges against the Association only; they are alternative theories behind Anderson's
claim that she was wrongfully terminated, for which she sought past and future lost
wages. Anderson based her defamation claim on nine statements made about her by
Merculief and other Association agents. Anderson claimed, and the court concluded, that
most of these statements were defamatory per se.

The jury found for Anderson on both of her theories of wrongful
termination and awarded her $20,000 for lost back wages and $217,000 in lost future wages. The jury based the back pay award on the difference between Anderson's annual
salary at the Association and her annual salary at Bank of America. They determined the
future lost wages award by comparing the income Anderson would have had if she had
remained at the Association for the duration of her working life with the income she
would have had if she had remained at Bank of America until retirement.

The jury also found that Anderson proved all nine of the defamatory
statements she asserted. They held Merculief responsible for eight of those statements
and the Association responsible for two of them (including one that had also been
attributed to Merculief). The jury awarded Anderson $15,000 for emotional distress and
$20,000 for loss of reputation as a result of the defamation. In addition, the jury awarded
punitive damages in the amount of $200,000 against Merculief and $400,000 against the
Association.

The Association and Merculief filed a comprehensive post-trial motion to
set aside the verdict, strike components of the economic damages award, order a new
trial, or grant a remittitur of the punitive damages awards. The trial court denied the
motion in its entirety . The Association and Merculief appealed the jury's awards to this
court.

* * *

Click the case caption above for the full
text of the Court's opinion.

Based on the foregoing reasons, we order that the award of lost earnings be
reduced in accordance with this opinion, and we affirm the punitive damages awards.

REVERSED in part and AFFIRMED in part.

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