Alaska Employment Law

Ethics Opinions, other Supreme Court Opinions

Review of Arbitration Award for Fraud and Partiality:  In an Uninsured Motorist case reviewed under the state Arbitration Act, the Supreme Court (per C. J. Fabe) unanimously affirmed the trial court (Wolverton), and held a) the driver (pro se) had failed to show “affirmative wrongdoing” by State Farm and thus could not succeed on her claim of fraud under AS 09.43.120(a)(1); and b) the fact that arbitrator’s (J. Justin Ripley) rulings favored State Farm and that State Farm was a “frequent customer of arbitration” did not suffice to show “evident partiality” under AS 09.43.120(a)(2).  On the latter point, the Court said:

As State Farm notes, Gilbert’s explanation that the arbitrator was biased toward State Farm because insurance companies are frequent customers of arbitration would call into question all insurance arbitration decisions - a result contrary to the liberal policy favoring arbitration reflected in Alaska’s Arbitration Act.

Comment: This latter issue - about one party’s superior knowledge (about whom to select) and power (over repeat selections) regarding arbitrators - arises in non-union employee arbitrations, too.

Gilbert v. State Farm Ins. Co., Op. No. 6193 (Alaska Nov. 9, 2007).

Ethics of Hybrid Fee Agreements:  Car purchasers (via the Bankruptcy Trustee) sued their former attorney, Nicholas Kittleson, alleging that their contingent fee agreement violated the Alaska Rules of Professional Conduct.  The Court directed entry of summary judgment on behalf of the former clients.  The fee agreement set a 1/3 contingency fee (of the recovery and any statutory fee award) that would convert to $175/hr. if any settlement returned an effective fee less than $175/hr.

The Court (per Justice Bryner) unanimously held that the agreement 1) impermissibly penalized the client’s absolute right to settle (because the decision to settle converted the fee from a percentage to a more costly hourly fee); and 2) presented the client, at the outset of the attorney-client relationship, with a confusing picture of her or his possible fee obligations that made a considered decision to accept the agreement difficult.  The Court added:

It seems unlikely, too, that the attorney-client agreement between Kittleson and the [clients], with a single sentence devoted to the fee-conversion provision, satisfies an attorney’s duty to fully explain the terms of a fee agreement in such a way that the client can understand.

Compton v. Kittleson, Op. No. 6197 (Alaska Nov. 9, 2007).

AG Ethics Opinions: The AG (by Julia Bockmon) addressed the definition of “official action” and significant v. insignificant “financial interest” in AGO No. 661-07-0014, 2007 WL 3281942 (June 21, 2007).  In a second opinion, the AG (again via Julia Bockmon) reviewed the standards for disclosure of potential conflicts of interest and the procedures for addressing those conflicts.  AGO No. 661-07-0014, 2007 WL 3281939 (Sept. 18, 2007).