Alaska Law Blog

Chris Slottee, my esteemed colleague here at Atkinson, Conway & Gagnon, has already reported on the Alaska Supreme Court’s recent decision in Edenshaw v. Safeway, Inc. Chris’ blog post calmly notes that the decision may impose greater liability on property owners than was previously the case. I think that Chris has vastly understated the significance of the decision. This new decision totally knocks out one of the bulwarks of established tort law. I mean, what the heck happened to the Gritty Banana Peel Doctrine?

When I was in law school (back in the far, far recesses of the last century), they taught us fledgling lawyers that negligence was not the equivalent of strict liability. To be negligent and liable for someone’s injuries, you had to do something wrong. More specifically, you had fail to act in the manner that a reasonable person would have acted. Negligence law, good old Professor Dente said, accounted for the fact that BAD STUFF HAPPENS. Sometimes, its nobody’s fault and the plaintiff just has to take it in the shorts. (I'm paraphrasing the professor's comments here.)

This principle of negligence law meant that just because a guy injures himself by falling down in a grocery store does not mean the store owner is liable. If the guy slipped on a banana peel, the store owner is not responsible unless the owner should have cleaned the thing up. So if the banana peel is a fresh one that was not previously tromped upon, it indicates the damn thing just fell on the floor and the store owner can’t be expected to have known about it or to have picked it up. But if the banana peel is all nasty from being on the floor for awhile this demonstrates a reasonable property owner had time to discover the peel and pick it up. This is the Gritty Banana Peel Doctrine.

You probably think I’m making this up. I'm not. In my first-year casebook on Torts from 1977, there were two cases on banana peels. In Anjou v. Boston Elevated Ry. Co., 94 N.E. 386 (Mass. 1911) the plaintiff won because she provided proof of negligence. The banana peel she slipped on “felt dry, gritty, as if there were dirt upon it,” and it was “black, flattened out and gritty.” But in Joye v. Great Atlantic and Pacific Tea Co., 405 F.2d 464 (4th Cir. 1968) the plaintiff lost because there was no proof of negligence. “Plaintiff offered no direct evidence below as to how long the banana had been on the floor before the accident . . . the jury could not tell whether the banana had been on defendant’s floor for 30 seconds or 3 days.” (My Torts book also had a case about pizza on the floor, but to avoid confusing myself or anyone else I want to stick to one kind of food.)

The Alaska Supreme Court in Edenshaw threw the Gritty Banana Peel Doctrine into the dumpster. The Court said a plaintiff can maintain a negligence action without specific evidence showing that the property owner knew or should have known of the dangerous condition. The Court also did not pin the property owner's liability to him doing anything else in particular wrong (like stacking up the bananas in a faulty manner in the first place). In essence, the Court decided to entirely punt the question of sufficient proof of negligence to the jury. The plaintiff does not have to show the property owner did anything specifically wrong in order to roll the dice with the jury.

Under Edenshaw, it presumably will be enough for the plaintiff to show that he went into the defendant’s store, encountered a patch of gravity there, fell down and hurt himself. The poor trial court judge can only shrug her shoulders, hand the thing off to the jurors, and let them retreat to the back room to make sausage with it.

Many years ago the Alaska Supreme Court eliminated that old common law rules that had been developed in so-called premises liability cases. Those old rules had different standards depending on whether the plaintiff was classified as a trespasser, or a licensee, or an invitee. Since it was often hard to tell who was exactly what type of person, and since feudal law designed to protect landowners at all costs had fallen out of fashion, the Court chucked out these rules in favor of a plain reasonable care standard that applied to everyone. This change in the old rules was brilliant, visionary, super keen. It made life easier for everyone. But junking the Gritty Banana Peel Doctrine and cutting these cases free from any sort of objective proof standard? That’s just goofy.

I predict that Edenshaw will be distinguished into near oblivion as future cases are decided. (Write that down, folks, and remember that you heard it here first.)

The Court's Edenshaw decision only makes sense if you assume they really meant to say advance notice of a dangerous condition is not the only way to prove negligence; a myriad of other ways are permitted. Nevertheless, some sort of minimally adequate proof of negligence still has to be provided to get to the jury (reasonable minds differing and all that). The trial judge can be asked to verify this through a summary judgment or directed verdict motion. I have to admit, though, that the Edenshaw opinion does not come close to expressly stating this. But in my view this is what the opinion should have said.

Well, after a few months of having other things to occupy my time, namely these darling three month olds (Isaac & Aaden), it is time for me to renew Atkinson Conway & Gagnon’s attempt to, ahem, timely summarize the Alaska Supreme Court decisions of the week.

First up is Pebble Limited Partnership v. Parnell, S-13059/S-13060, in which the Alaska Supreme Court rejected an attempt to remove an initiative from the November ballot that will impose new requirements on mining in Alaska. The opinion has no real reasoning, as it’s actually an order with an opinion to follow, issued so that the State has time to print ballots for the election this fall. I won’t go into the arguments regarding the merits of the underlying mining initiative, but if you listen to the radio or watch TV for five minutes, you are almost sure to see ads from both sides of the issue.

The only other opinion of real interest is Edenshaw v. Safeway, Inc., S-12583, in which the Alaska Supreme Court held that to prevail on a premises liability claim in Alaska, a plaintiff does not need to show that the business owner had actual or constructive knowledge of the dangerous condition. Instead, the Court held there was only a basic reasonableness test, in which the business owner’s notice of a dangerous condition was a factor to consider, but not a dispositive or required one. This case is a departure from prior cases in which the Alaska Supreme Court held that the State of Alaska had to have actual or constructive knowledge of a defect in a highway to be liable if that defect caused an injury. In Edenshaw, the Court distinguished these prior cases by noting that a grocery store (which was where the injury occurred in Edenshaw) is a much more tightly controlled area, and thus it was more reasonable to impose a general duty of care on the business owner regardless of whether the business owner had actual or constructive knowledge of a dangerous condition on the property.

This opinion will have a significant effect in future litigation, as business owner now can be exposed to liability for injuries caused by dangerous conditions of which they were both not aware and had no reason to be aware. It is also certain to make premises liability cases more expensive and difficult to defend, as the question of the reasonableness of an owner’s actions will almost always be a fact question. Consequently, now that a business owner cannot rely on a lack of notice, constructive or actual, to avoid liability as a matter of law, it will be very difficult to obtain summary judgment or resolution of a premises liability case short of actual trial.

Let me tell you a secret. The secret is that there is an undisclosed rule of law that governs all of the big civil lawsuits. Lawyers know about this rule. But they either avoid speaking of it all (just like Lord Voldemort), or they talk of it only in guarded tones among themselves. Judges often apply the rule. But the judges will never, ever acknowledge that they are actually doing so. Instead, they will go out of their way to avoid disclosing the existence of the rule at all, writing at length about all kinds of legal esoterica to disguise what is really going on.

This secret rule is generally known by its initials. Those initials are: TFM. TFM stands for TOO FRIGGING MUCH. Actually, I’m fibbing about the "frigging." The “F” in TFM stands for a harsher word than “frigging.” But you get the idea.

TFM is not a new rule of law. It goes way back. But the U.S. Supreme Court just issued what has to be the quintessential decision invoking TFM. I speak, of course, about Exxon Shipping Co. v. Baker. This tarball has blackened all who have touched it. It was released from the hold of the Exxon Valdez just after midnight on March 24, 1989. It rolled around spoiling the most beautiful place on the face the Earth (Prince William Sound), ruined the lives of all sorts of sea creatures (humans among them), and was flushed out down the Alaska coastline all the way to the Aleutians. Then it landed with a plop in federal court in Anchorage, until it was picked up by the Ninth Circuit Court of Appeals. The Court of Appeals used it in a super slo-mo game of ping pong that left a black smear across the federal judiciary. The U.S. Supreme Court finally picked up the dripping mess and dunked it in a vat of WD-40 in an effort to mostly dissolve the damn thing.

We all knew it was coming. When the Big Court accepted cert on the case last fall, you could hear the chant in the hills: “TFM . . . TFM . . . TFM.” The public comments of the Governor and others showed that they knew what was going to happen. (A "kick in the gut" was how Gov. Palin characterized the Court's decision to take the case.) The High and Mighty Supremes did not take the case to just say: “Ditto, Ninth Circuit!” They were going to change the outcome in some way. The oral argument was another sign of things to come. In commenting on why the Supremes took the case, Justice Scalia joked that there was an interesting legal point or two in the case and some “2.5 billion other reasons.”

Still, you wanted to hope that there was at least some chance the large verdict would be upheld. Pristine Alaska wilderness wrecked. A thriving fishing economy ruined. The largest (and most profitable) oil company was responsible for the stupid debacle. A jury of 12 upstanding PFD recipients delivered a deservedly stiff rebuke. A conscientious trial judge carefully controlled the whole thing. If you couldn’t whack Exxon for a few billion dollars out of its petty cash fund in this instance, then when can you whack someone?

But the unspoken rule, TFM, says you can’t whack anybody this hard. Not even Exxon, I guess. Justice Souter wrote a 42 page opinion to explain the Big Court’s reasoning in creating a federal common law rule to limit punitive damages. He needn’t have gone to such lengths. He could just as easily said, “We all puckered up something fierce at the thought of two and a half BILLION (with a "B") dollars. So we just had to chop this thing down to something most of us could stomach.” That would have been a more honest assessment, but it would have required an express acknowledgement of the TFM rule.

One can legitimately debate the reasoning the Curiae Maximus used in its decision. If the purpose of punitive damages is to punish the wrongdoer and deter others, then why tie punitives to a rigid 1:1 ratio with compensatory damages? It is not hard to think of cases where really bad conduct could cause only minimal compensatory losses. The need to punish the bad actor and put a damper on other miscreants should dictate that no rigid 1:1 formula should be followed. And, are the compensatory damages the fisherfolk suffered in the case ($507.5 million) really a good measure for puntives? Exxon trumpeted the fact that it spent some $2.1 billion in an effort to clean up the spill. Wouldn’t tying the punitives to these expenses (or these expenses plus the fisherpeople's compensatories) have been a better measure of the proper amount? After all, aren’t these clean-up expenses part of overall compensation due for the spill even though they were not directly paid to the plaintiffs?

And, gosh, why adopt this as a rule of federal common law just applicable to maritime cases? This sidesteps the more important question of whether due process requires this same ratio as matter of constitutional law. Does the Constitution allow a greater ratio of punitives to compensatories to be employed? If so, why not go to the full limit the Constitution allows in this ugly case? At least why not explain the reasons for not going to the full constitutional limit for this awful and wholly avoidable disaster?

But this sort of quibbling is all very much beside the point. The whole case turned on the unspoken TFM rule. From Alaska's standpoint, its sad to say that $2.5 billion for despoiling the most fabulous place on Earth and groin-punching the citizenry who live and work there was just TOO FRIGGING MUCH.

One of Atkinson, Conway & Gagnon’s very own, Patrick B. Gilmore, received the 2008 Professionalism Award from the Alaska Bar Association. The award was announced at the May 1 Bench and Bar Luncheon, a part of the Bar’s Annual Convention.

The award was a surprise to Pat when he heard his name called. (Pat is better known as “Gil” amongst the cognoscenti of Alaska.) Gil had been lured to the luncheon by a longtime friend, knowing nothing about the award. He probably should have thought it strange that his wife, Chris, and 22 year old daughter, Casey, showed up at a Bar Association lunch. The fact that a couple of Pat’s clients were there as well could have been a tip off that something was in the works. But Gil was as low key as ever, oblivious to it all. (I guess no one ever said “professionalism” was necessarily synonymous with “swift on the uptake.”)

The Bar’s Professionalism Award is a true honor, serving as recognition from fellow lawyers of the respect with which the recipient is held. And really there could not be a better person for the award than Pat. He is a lawyer who quietly and efficiently goes about his client’s business. He is never flashy and never obstructive, but always effective. Unlike many lawyers who talk about the importance of pro bono work, but do not follow through and actually provide it, Pat has without fanfare given substantial time to handling cases for the domestic violence project. He is the embodiment of the highest ideals that every lawyer should strive to achieve. Pat is a throwback to a nobler age, a reminder that the law is a learned profession and not a mercenary pursuit.

So let us all raise a glass to Patrick Gilmore and congratulate him on a well-deserved award!

(Hey, I’m more than willing to make Pat the butt of jokes, but you have to hand it to a guy who gets the Professionalism Award. And besides, anyone who names his dog “Bluto” after the late, great Senator John Blutarsky is A-OK in my book.)

The State of Alaska just cratered on its claims against Eli Lilly & Company over Zyprexa. “Cratered” is a such a harsh word, though. Maybe “had their backbones dissolve into a puddle on the courtroom floor just before closing argument” would be a more accurate description of what happened. In wrapping up the case and dismissing the jurors, Judge Rindner might well have said: “Thank you very much, and please watch your step on the way out!”

I admit that I’m not really qualified to pass judgment on the State’s decision. The only information I actually have about the case is from watching the TV news, unless you count eavesdropping on other non-involved lawyers at the next table while I was eating lunch at the Sandwich Deck. (And it didn’t help that I was choking on a dry-as-death chicken sandwich at the time.) But I’m an American and an Alaska lawyer. So I’m free to go on at length over stuff I actually know nothing about.

The State gave up its claims worth a supposedly solid $200 million for $15 million. (Actually, the Wall Street Journal reported the State’s total claims were originally pegged at a nifty $1 billion.) The math itself shows you who got the better end of this deal. But really all you needed to see were the interviews on Channel 2 News last night. Assistant State Attorney General Ed "The Glide" Sniffen was talking at length about the settlement. He had to explain to everyone -- himself included -- why the State decided to take the deal. The Lilly lawyer said almost nothing at all on camera but was smiling as wide as the Hoosier farmlands.

I can understand the State’s discomfort about the case. The 8,000 pound elephant in the courtroom was the U.S. Supreme Court. The High and Mighty Court earlier this year ruled that defective product claims against medical device makers had to be given the big “No Way Jose!” under the Medical Device Amendment to the Food, Drug and Cosmetic Act. The creeping fear amongst the plaintiff-type lawyers is that the High and Mighties may well extend this same reasoning to another pending case that, like the Zyprexa lawsuit, involves drug labeling under the Act. (The High and Mighties should not be confused with the Tighty Whities, which can ride up, creating a whole different kind of “creeping fear.”)

Still, I would have thought that the State at least would have let the panel of 12 hometown Alaskans render a thumping fine verdict against Lilly. There was always time to compromise later on, while the case was up on appeal. With a bright and shiny jury verdict in hand the State just might have gotten a bit more consideration in the deal.

And what, my friends, does all this portend for the pitfall-laced lawsuit the State has in the works against the actuaries who advised on the State’s pension plans?

[FULL DISCLOSURE: I'm originally from Indianapolis (Lilly's HQ) and I own a small position in Lilly. My equity interest is so small that the bump up in Lilly stock the settlement provided today was only just enough to buy me a couple of lunches of food-like substances at the Sandwich Deck.]

Well, the Alaska Supreme Court did not issue any new opinions today. At Atkinson Conway & Gagnon, weeks like this are met with equal parts frustration and relief. Frustration that no new case law has been made that we can apply on behalf of our clients, and relief that the Alaska Supreme Court has not reached down with its invisible hand to gleefully scatter our carefully researched and briefed motions into chaos.

In short, it's a good Friday and time to head downstairs for the one of the best benefits of working at 420 L Street.

The Alaska Supreme Court issued two new opinions today. Moore v. Peak Oilfield Service Co. reaffirmed prior Alaska Supreme Court case law that a defendant in a civil personal injury lawsuit who is convicted of driving while intoxicated must be found to have acted negligently and reckless as a matter of law. The Court further clarified that such a ruling did not preclude the defendant driver from arguing that his or her negligence/recklessness was not a legal cause of the plaintiff's injury.

In Amerada Hess Pipeline Corp. v. Regulatory Commission of Alaska, the Alaska Supreme Court affirmed the Superior Court's finding that shipping rates charged by the owners of the Trans-Alaska Pipeline were unreasonable and unjust from 1997 to 2007 and that refunds must be given. The Alaska Supreme Court did not address the issues raised by the pipeline owners, but incorporated by reference the Superior Court's 44 page opinion.

Almost every week, the Alaska Supreme Court issues its written opinions on Friday. You can download free PDF versions of these opinions here. You can also subscribe to a free e-mail list that will e-mail you links to each week’s opinions here. Each week, I will try to post a summary of that week’s opinions, focusing primarily on those opinions addressing civil litigation matters. While Supreme Court Opinions dealing with family law (such as disputes over visitation with the family dog) or criminal matters (how to get barred from attending your own criminal trial) offer interesting reading at times, they are not particularly relevant to the issues the lawyers at Atkinson Conway & Gagnon normally face.

This week, there was only one opinion issued that is of interest. In Villaflores v. Alaska State Commission for Human Rights, Clarito Villaflores, who is Asian and over 40 years old, applied for a human resources position with ConocoPhillips. He was not hired. Mr. Villaflores then filed a complaint with Alaska’s Human Rights Commission, alleging that ConocoPhillips did not hire him because of his race and age. The Human Rights Commission rejected this claim and dismissed his case.

The primary issue on appeal was whether the Human Rights Commission’s decision was supported by substantial evidence. The Court noted that to prevail on a his employment discrimination case, Mr. Villaflores had to prove: (1) he belonged to a protected class; (2) he applied for and was qualified for the position he was denied; (3) his application was rejected despite his qualifications; and (4) the employer hired someone not in the same protected class. While Mr. Villaflores was in protected class (Asian and over 40), the Court found that he had failed to establish that he was qualified for the job. Specifically, his job application did not show that he had the requisite five to 10 years of human resources experience required by ConocoPhillips. Moreover, the person hired by ConocoPhillips did. Consequently, Mr. Villaflores claim was properly denied by the Human Rights Commission because Mr. Villaflores failed to make out a prima facie case of employment discrimination.

The Court also rejected Mr. Villaflores argument that a Seventh Circuit case, Milbrook v. IBP, Inc., 280 F.3d 1169 (7th Cir. 2002), required ConocoPhillips to hire the most qualified applicant, which, presumably, Mr. Villaflores argued was him. The Court noted that even if Mr. Villaflores had established that he was qualified for the position (which he had not), Milbrook gave the employer broad discretion to chose between equally qualified candidates.

While Villaflores v. Alaska State Commission for Human Rights does not change Alaska employment discrimination law, it is a good, short summary of some of the elements that an applicant claiming employment discrimination must prove. It also squarely rejects any reading of Milbrook that would tie the hands of an employer choosing between equally well-qualified applicants.

During the course of our business litigation and transactional work here at Atkinson Conway & Gagnon, we often investigate corporations, including making sure they are registered to do business in Alaska, that they are properly licensed, and identifying their officers, shareholders, and registered agents.

A valuable (and free) research tool is the Department of Commerce's Corporations Database. Anyone can use this (free) database to look up corporations registered in Alaska, determine when it was created, make sure it is in good standing, and find out who its shareholders are, as well as who is serving as officers, directors, and registered agent. Oftentimes, a corporation’s biennial reports are also available to download (again for free).

You can search the Corporations Database by name, by their Alaska Entity #, by registered agent, or by the name of their officers.

Another valuable tool is Department of Commerce’s business license search engine, which is also free and can be used to make sure that the company you are about to sign a contract with is actually licensed to operate in Alaska.

In today’s specialized and interconnected business world, banks, law firms, and accountants often find themselves drawn into litigation over financial statements that are either incomplete or false. The Enron and WorldCom cases are great examples of this. In those cases, plaintiffs, often shareholders and creditors, sue law firms, banks, and accountants, alleging that they are liable for their losses because they “aided and abetted” directors and officers who defrauded the company and shareholders. Atkinson Conway & Gagnon has litigated these claims on several occasions in Alaska, both in the course of defending banks and law firms and in representing corporations against accountants that have aided company officers and directors in defrauding the corporation.

This theory of liability, also known as “tortuous assistance of breach of fiduciary duty” can significantly expand the liability of accountants, banks, and law firms, including exposing them to joint and several liability in states that otherwise provide for strict allocation of fault, such as Alaska.

On January 15, 2008, the United States Supreme Court issued an important decision limiting the scope of “aiding and abetting claims.”. Ruling 4 to 3, the United States Supreme Court held that Section 10(b) of the Securities Exchange Act of 1934 did not authorize a private right of action against third parties for aiding and abetting violations of securities law. Instead, plaintiffs who wish to sue banks, accountants and law firms for securities law violations must show that they relied upon an affirmative material misrepresentations by those entities. While banks, law firms, and accountants may be subject to aiding and abetting liability when they have a direct relationship with aggrieved plaintiffs, this is an important decision that limits the liability faced by banks, accountants, and law firms in the shareholder lawsuits that are so often filed when negative financial information is released by corporations.

Atkinson Conway & Gagnon and all Alaskans are carefully watching the litigation arising out of the Exxon Valdez oil spill. After more than eighteen years, the case is still active. In late 2006, the Ninth Circuit affirmed a $2.5 billion punitive damage award against Exxon. With interest, the total punitive damage award against Exxon is estimated to be in excess of $4.5 billion. As expected, Exxon has appealed this decision to the United States Supreme Court.

The primary focus of Exxon’s appeal is the argument that punitive damages were not available under traditional maritime principles. Exxon is not seeking to just reduce the punitive damage award, but eliminate it entirely. The United States Supreme Court has a short summary of the issues it will be deciding.

Oral argument before the United States Supreme Court is scheduled for Wednesday, February 27, 2008. Below are links to the Supreme Court briefs that have been filed, including amicus briefs. Whatever the Supreme Court’s decision, it is certain that all Alaskans will be closely following this case and that it will have substantial impacts on both Alaskans and the law governing the availability punitive damages.

Primary briefs

Exxon's Appeal Brief

Plaintiff's Appeal Brief

Amicus Briefs

In support of Exxon

Chamber of Commerce amicus brief

Transport and Shipowners amicus brief

American Petroleum Institute amicus brief

Washington Legal Foundation amicus brief

Product Liability Advisory Council amicus brief

In support of Plaintiffs

Alaska Legislative Council Amicus Brief

Senator Stevens, Senator Murkowski, and Representative Young's amicus brief