Unpublished Disposition, 930 F.2d 27 (9th Cir. 1991)

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U.S. Court of Appeals for the Ninth Circuit - 930 F.2d 27 (9th Cir. 1991)

Roland D. HAMMACK, Plaintiff-Appellant,v.PARKER DRILLING COMPANY, an Oklahoma corporation, Defendant-Appellee.

No. 90-35344.

United States Court of Appeals, Ninth Circuit.

Submitted Jan. 7, 1991.* Decided March 27, 1991.

Before EUGENE A. WRIGHT, BRUNETTI and LEAVY, Circuit Judges.


MEMORANDUM** 

Roland Hammack appeals a grant of summary judgment for defendant Parker Drilling on claims of wrongful discharge, breach of the implied covenant of good faith and fair dealing, and age discrimination. We affirm in part and reverse and remand in part.

BACKGROUND

Hammack worked for Parker from 1974 until the spring of 1987. During this time he held a variety of positions on Parker's oil rigs, including the supervisory positions of driller and toolpusher.

Immediately before his termination, he was working as a roughneck, a lower level position. Apparently, this was due to the fact that when drilling activity declined, Parker attempted to retain its experienced toolpushers and drillers by placing them in lower level positions. This allowed Parker to maintain a ready pool of experienced drillers and toolpushers in the event drilling activity increased.

On May 1987, just before Hammack was scheduled to begin a two week shift, he called Faye Upchurch, Parker's Administrative Manager, to report that he could not work the next day. According to Upchurch, Hammack said he had a nonwork-related back injury and she replied that she would have to put him down as a "quit." Hammack testified that he told Upchurch his back was bothering him and that Upchurch did not tell him he would be recorded as a "quit."

In a subsequent letter, Upchurch informed Hammack that he had been recorded as a "quit" and that if a position became available for which he was qualified, he would need a medical release from his doctor. The letter also indicated that his performance had been good and he was recommended for rehire. Hammack interpreted this as meaning he was fired. He was 44 years old.

It is undisputed that Parker had no written termination policies. Hammack testified, however, that when he had previously held a supervisory position, Upchurch told him that employees under his supervision must be given three warnings before they could be terminated. He also alleged that Parker management informed another employee that he would have been terminated but for the fact that he had not been given three warnings.

The district court dismissed Hammack's claims of negligence, intentional interference with contract, and the tort of wrongful and abusive discharge. It granted summary judgment for Parker on his remaining claims of wrongful discharge, breach of the covenant of good faith and fair dealing, and age discrimination. He appeals the grant of summary judgment.

We review de novo a grant of summary judgment. Darring v. Kincheloe, 783 F.2d 874, 876 (9th Cir. 1986). We must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Tzung v. State Farm Fire and Casualty Co., 873 F.2d 1338, 1339-40 (9th Cir. 1989).

DISCUSSION

* Hammack argues that Parker breached the implied covenant of good faith and fair dealing when it fired him after 13 years of satisfactory performance.1 

All Alaska employment agreements contain a covenant of good faith and fair dealing. Mitford v. de Lasala, 666 P.2d 1000, 1007 (Alaska 1983). While not defined precisely, a breach may be found where an employer fires an employee to prevent his profit-sharing, id., retaliates by firing an employee, Reed v. Municipality of Anchorage, 782 P.2d 1155, 1158 (Alaska 1989), applies policies or practices unevenly to employees in like circumstances, Klondike Indus. Corp. v. Gibson, 741 P.2d 1161, 1168 (Alaska 1987), or engages in conduct constituting a violation of public policy, Luedtke v. Nabors Alaska Drilling, Inc., 768 P.2d 1123, 1130 (Alaska 1989).

Alaska courts have not decided whether the termination of a long-term employee without cause might violate the covenant. Most courts that have grappled with the issue have looked beyond mere length of service in determining whether the employer breached an implied covenant. Factors include the course of dealing between employer and employee, whether any assurances of continued employment were made, and employment practices in the industry in which the employee is engaged. Perritt, H., Employee Dismissal Law and Practice Sec. 4.9 (2d ed. & 1990 Supp.).

Here, the course of dealing and practices of the industry indicate that Hammack's termination did not breach an implied covenant. Parker never promised him extended employment.2  The oil drilling business was cyclical, as evidenced by the fact that Hammack's career with Parker was punctuated by large gaps of unemployment. There is no evidence that Parker treated long-term employees differently from others. See Klondike, 741 P.2d at 1168.

Hammack has failed to raise a genuine issue of material fact as to whether his length of service prevented his termination. That claim was properly dismissed.

II

He also claims that Parker failed to follow its alleged policy of requiring three warnings before an employee could be terminated.3  He relies on Jones v. Central Peninsula Gen. Hosp., 779 P.2d 783 (Alaska 1989), which held that an employee handbook's promise to fire only for good cause may modify an at-will employment agreement. Parker contends that Jones should not control because the alleged policy was conveyed orally and was intended to apply to workers who Hammack was supervising, not to him.

The Jones court relied heavily on a Michigan decision, Toussaint v. Blue Cross & Blue Shield of Mich., 292 N.W.2d 880 (Mich.1980), which held that both oral and written statements by an employer can become part of the employment agreement if such statements instill a legitimate expectation of employment security in the employee. Id. at 885. The Jones court's approval of Toussaint makes it unlikely that Alaska courts would distinguish between oral and written employer statements.4 

Hammack alleged also that the policy was well-established and had been applied to another employee. The Jones court quoted the following language in Toussaint:

[W]here an employer chooses to establish [personnel] policies and practices and makes them known to its employees, the employment relationship is presumably enhanced.... No pre-employment negotiations need take place and the parties' minds need not meet on the subject.... It is enough that the employer chooses, presumably in its own interest, to create an environment in which the employee believes that, whatever the personnel policies and practices, they are established and official at any given time, purport to be fair, and are applied consistently and uniformly to each employee.

Id. at 786 (citation omitted). Though his evidence may be weak, Hammack has alleged facts sufficient to create a genuine issue as to whether the warning practice was applied on a company-wide basis, and thus was part of his employment contract.5 

Parker argues that the existence of a warning policy is immaterial, because Hammack was not terminated for disciplinary reasons or poor performance. This begs the question. If Hammack was in fact fired, as he alleges and as we must assume due to the summary judgment posture of the appeal, a policy requiring three warnings may well have been applicable. This issue needs factual development on remand.

We reverse and remand on the issue of whether Parker's failure to follow its alleged policy breached the covenant of good faith and fair dealing.

III

Hammack's third claim is age discrimination under the Alaska Human Rights Act, Alaska Statutes Sec. 18.80.220(a) (1). Alaska courts have relied on analogous federal statutes to interpret the Act. See Thomas v. Anchorage Tel. Util., 741 P.2d 618, 622 (Alaska 1987). Under the federal Age Discrimination in Employment Act,6  the plaintiff must prove, as part of his prima facie case, that he was replaced by a substantially younger employee with equal or inferior qualifications. Rose v. Wells Fargo & Co., 902 F.2d 1417, 1421 (9th Cir. 1990). Hammack has produced no evidence that his position was filled by a younger employee. Dismissal was appropriate on summary judgment.

IV

Parker's request for attorneys' fees is denied. The appeal was not frivolous, unreasonable, or in bad faith. See Whaley v. Alaska Workers' Compensation Bd., 648 P.2d 955, 960 (Alaska 1982).

CONCLUSION

Summary judgment was appropriate on Hammack's age discrimination claim and his claim of breach of an implied covenant of good faith and fair dealing as applied to long-term employees. We reverse and remand on the issue of whether Parker's failure to follow its alleged practice of requiring three warnings before termination breached the covenant of good faith and fair dealing. On remand, the district court should determine whether there was such a policy and whether it applied to Hammack when he was terminated.

AFFIRMED in part and REVERSED and REMANDED in part.

 *

The panel unanimously finds this case suitable for decision without oral argument. Fed. R. App. P. 34(a); Ninth Circuit Rule 34-4

 **

This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3

 1

Hammack's wrongful termination claim is intertwined with his claim of breach of the covenant of good faith and fair dealing

 2

Hammack testified that he "just thought" that as long as he was doing a good job he would continue to be employed by Parker. An employee's subjective unilateral understanding that he will continue to be employed does not modify an at-will employment contract. Somers v. Westours, Inc., 122 L.R.R.M. (BNA) 2092, 2093 (Alaska Super.Ct.1986)

 3

Whether Hammack was terminated at all is disputed. Parker contends he voluntarily quit while Hammack contends he was fired. The notice stated that he was recorded as a "quit," not a "termination." He was recommended for rehire. This is more consistent with a layoff than with either of the arguments advanced by the parties. Nevertheless, because it is plausible that Hammack lost his priority in the rehiring process when he was recorded as a "quit," the practical effect of such an action might be indistinguishable from that of a discharge. Viewing the evidence in the light most favorable to Hammack, we assume that he was discharged

 4

The Alaska Supreme Court has already held that an oral promise of extended employment can modify the terms of an at-will employment relationship. Eales v. Tanana Valley Medical-Surgical Group, Inc., 663 P.2d 958 (Alaska 1983)

 5

Other Alaska cases support our conclusion. In ARCO Alaska, Inc. v. Akers, 753 P.2d 1150 (Alaska 1988), ARCO failed to follow its own procedures in terminating Akers when it inserted a letter of reprimand in his file without first allowing him to meet with an employee relations specialist. The court found this fact, together with other evidence, sufficient to raise an inference that ARCO breached the covenant of good faith and fair dealing. Id. at 1155

Hammack arguably raises another genuine issue of material fact by alleging that the warning policy was applied to another employee but not to him. See Jones, 779 P.2d at 789 n. 6 (covenant of good faith and fair dealing requires that an employer treat like employees alike); Klondike Indus. Corp. v. Gibson, 741 P.2d 1161, 1168 (Alaska 1987) (same); Rutledge v. Alyeska Pipeline Serv. Co., 727 P.2d 1050, 1056 (Alaska 1986) (same).

 6

29 U.S.C. §§ 621-634 (West 1985 & Supp.1990)