McAnally v. Thompson
2017 Alas. LEXIS 77
| Alaska | 2017Background
- Charley McAnally, hired as an at‑will police officer and promoted to captain, investigated alleged misconduct by Houston city officials (mayor and personnel officer) and spoke with FBI and local prosecutors.
- After several disciplinary actions and a publicized incident, the City suspended and later terminated McAnally; the city disbanded the police department about three weeks after his termination.
- McAnally sued for breach of the implied covenant of good faith and fair dealing, constitutional due process, and retaliatory discharge; he later mentioned a Whistleblower Act claim in a trial brief but never moved to amend his complaint.
- The superior court (1) dismissed the late‑raised Whistleblower Act claim, (2) instructed the jury that termination for a "personality conflict" does not breach the covenant, (3) granted a directed verdict dismissing one defendant, and (4) the jury returned unanimous verdict for defendants.
- The City had served a Rule 68 offer of judgment for $5,000 more than the jury award; the superior court awarded the City 50% of its post‑offer attorney’s fees and costs under Rule 68 and Rule 79(f).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court abused discretion by refusing to allow Whistleblower Act claim | McAnally said Whistleblower Act claim should be allowed and/or whistleblower evidence should support covenant claim; facts were known earlier so no prejudice | City said claims must be pleaded; late addition (three weeks before trial) prejudiced defense and no timely motion to amend | Court: No abuse. Claim properly dismissed for untimely pleading; evidence related to whistleblowing could still be used on other claims but standalone claim was barred. |
| Validity of Jury Instruction that personality conflicts are lawful grounds for termination | Instruction improperly permits bad‑faith termination based on personality conflict | City relied on precedent that personality conflicts do not, by themselves, breach covenant in at‑will context | Court: Instruction was correct under Era Aviation; did not prevent jury finding bad faith where legally present. |
| Whether Rule 68 offer was invalid / whether fee award was abuse of discretion | McAnally argued offer was disingenuous/too low and City’s fees unreasonable (scorched earth) | City argued offer was timely, reasonable given department closure, and fees were reasonable for multi‑party, multi‑year litigation | Court: Offer valid and served Rule 68 purpose; superior court did not abuse discretion in awarding 50% of post‑offer fees. |
| Award of costs (depositions, legal research) under Rule 79(f) | McAnally contended specific costs were excessive | City cited Rule 79(f) authorizing such costs | Court: Costs recoverable under Rule 79(f); award affirmed. |
Key Cases Cited
- Era Aviation, Inc. v. Seekins, 973 P.2d 1137 (Alaska 1999) (an employer may fire an at‑will employee for a personality conflict without breaching the implied covenant of good faith and fair dealing)
- Valdez Fisheries Dev. Ass’n v. Alyeska Pipeline Servs., 45 P.3d 657 (Alaska 2002) (standards for denying leave to amend when new claims are added shortly before trial)
- Marshall v. Peter, 377 P.3d 952 (Alaska 2016) (Rule 68 review and standards for determining compliance with the rule)
- Anderson v. Alyeska Pipeline Serv. Co., 234 P.3d 1282 (Alaska 2010) (Rule 68 offer must serve settlement purpose; invalid nominal offers shortly after answer do not trigger fees)
- Beal v. McGuire, 216 P.3d 1154 (Alaska 2009) (Rule 68 offers for de minimis amounts may be invalid if made in bad faith and do not serve Rule 68’s purpose)