## Facts

- Mary Kotowski, a union worker dispatched to Norcon, Inc., worked on a shower barge during the Exxon Valdez cleanup while living in contractor housing on a vessel.
- Kotowski alleged that Norcon foreman Mike Posehn sexually harassed her after reassigning her to another barge where work and housing were not ready.
- Posehn allegedly supplied alcohol in violation of company policy, made sexual propositions, and attempted to prevent Kotowski from leaving his room.
- Kotowski reported the conduct to an Exxon executive and agreed to help document alcohol violations and Posehn’s behavior in connection with an internal investigation.
- Kotowski signed a statement admitting insubordination after assurances it would not cost her job and was later questioned in a hostile manner by company and security personnel.
- Norcon terminated both Posehn and Kotowski on the same day; Kotowski was terminated for alcohol consumption.
- A Purcell Security investigator (Bruce Ford) prepared a memo summarizing interviews with Norcon personnel describing Posehn’s pattern of using alcohol and workplace authority to seek sexual activity with female subordinates.
- A jury found Norcon liable for sexual harassment, intentional infliction of emotional distress, and negligent infliction of emotional distress, awarding modest compensatory damages and approximately $3.77 million in punitive damages.
- The trial court admitted the Ford memo over hearsay objections and ruled that certain other employment-related claims were preempted by the Labor Management Relations Act (LMRA).

## Issues

1. Whether the investigator’s memorandum containing employee statements was admissible despite hearsay objections, including whether the statements qualified as agent admissions and/or within the business-records doctrine.
2. Whether the evidence supported any punitive damages against Norcon under Alaska law’s “outrageous” or “reckless indifference” standard.
3. Whether the punitive damages award was excessive, and if so, the proper remittitur amount.
4. Whether the trial court correctly held that certain claims were preempted by § 301 of the LMRA.

## Decision

- The court affirmed the judgment of liability for sexual harassment and emotional-distress torts.
- The court held admission of the investigator’s memo was not error because the employee statements recorded in the memo were admissible as agent admissions concerning matters within the scope of their employment and reporting duties.
- The court held punitive damages were legally justified because the evidence permitted a finding that Norcon acted with reckless indifference in its response to harassment and its treatment of Kotowski.
- The court held the punitive damages amount was excessive and ordered remittitur, concluding the maximum permissible punitive award on this record was $500,000, conditioned on acceptance.
- The court rejected Kotowski’s cross-appeal and affirmed the trial court’s LMRA preemption rulings.

## Legal Principles

- Employee statements may be admitted against an employer as agent admissions when made during the employment relationship and concerning matters within the scope of employment, including matters the employee has a duty to report.
- Punitive damages are available under Alaska law when the defendant’s conduct is “outrageous,” including conduct reflecting malice, bad motive, or reckless indifference to the interests of another.
- Punitive damages must be reviewed for excessiveness in light of factors including reprehensibility, proportionality to actual harm, and the amount needed to punish and deter without imposing an improper financial penalty.
- LMRA § 301 preempts state-law claims that substantially depend on interpreting a collective bargaining agreement, while independent statutory and tort rights may proceed in court.

## Conclusion

The Alaska Supreme Court upheld the verdict against Norcon for workplace sexual harassment and related emotional-distress torts and found punitive damages warranted, but it ruled the jury’s multi-million-dollar punitive award was excessive and required remittitur to $500,000 while affirming the trial court’s LMRA preemption determinations.


Norcon, Inc. v. Kotowski, 971 P.2d 158 (Alaska 1999)