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Peterson v. City of Surprise

Court of Appeals of Arizona, First Division

February 6, 2018

ALICIA PETERSON, et al., Plaintiffs/Appellees,
v.
CITY OF SURPRISE, a political subdivision of the State of Arizona [1] , Defendant/Appellant.

         Appeal from the Superior Court in Maricopa County No. CV2011-055776 The Honorable John R. Hannah, Jr. Judge

          Manolio & Firestone, PLC, Scottsdale By Veronica L. Manolio Counsel for Plaintiffs/Appellees

          Pierce, Coleman, PLLC, Phoenix By Justin S. Pierce, Kylie Crawford TenBrook Counsel for Defendant/Appellant

          Presiding Judge Diane M. Johnsen delivered the opinion of the Court, in which Judge Michael J. Brown and Judge Jennifer B. Campbell joined.

          OPINION

          JOHNSEN, Judge

         ¶1 A jury awarded damages to a former police detective who alleged the City of Surprise constructively discharged her in retaliation for reporting repeated instances of sexual harassment. We hold that an employee who fails to exhaust administrative remedies for an alleged constructive discharge based on sex discrimination may not sue for retaliation under the Employment Protection Act ("EPA"), Arizona Revised Statutes ("A.R.S.") section 23-1501(A)(3)(c) (2018).[2] Accordingly, we reverse the judgment.

         FACTS AND PROCEDURAL BACKGROUND

         ¶2 The Surprise Police Department hired Alicia Peterson as a patrol officer in April 2005 and later promoted her to detective. At the time, Peterson served in the United States Marine Corps Reserve. In June 2010, the department announced testing for a vacant sergeant position. Because Peterson was away on military reserve duty, she did not receive the announcement until after the application deadline had passed. The department allowed her to test for the position even though she had missed the deadline to apply.

         ¶3 After testing, Peterson advanced to the next phase of the promotion process, and later that summer, she was ranked first among the candidates. On August 17, however, Peterson gave notice she intended to resign. At a meeting with the interim chief of police, Peterson repeated earlier complaints she had raised with her supervisor that other members of the department had repeatedly and persistently harassed her during the promotion process. Peterson resigned effective September 1. Citing "a negative environment" that had caused Peterson to feel "ridiculed . . . undermined and . . . subjected to personal attack by fellow members" of the department, the interim chief closed the promotion process without filling the position.

         ¶4 A year later, Peterson sued the City, alleging constructive discharge and breach of contract. Peterson asserted she was compelled to resign because the City failed to protect her from intolerable discriminatory conduct based on her gender and military status. She also asserted the City breached an implied-in-fact contract by failing to comply with its employee manual.

         ¶5 After discovery, the City moved for summary judgment. The City did not dispute that the harassment Peterson alleged had occurred, but argued it was not so bad that it amounted to constructive discharge. The City argued that to the extent Peterson's wrongful-termination claim was based on her gender, it was barred by her failure to exhaust administrative remedies under the Arizona Civil Rights Act, A.R.S. §§ 41-1401 to -1493.04 (2018). The City also denied it had any employment contract with Peterson.

         ¶6 In response, Peterson argued that exhaustion of administrative remedies is required only for "firsthand" violations of the Arizona Civil Rights Act, and not for a whistleblower's retaliation claim under § 23-1501(A)(3)(c)(ii). She also argued there was a question of fact about whether the City's manual or policies created an employment contract.

         ¶7 The court dismissed Peterson's contract claim but denied the motion for summary judgment on her claim for retaliatory constructive discharge. After a four-day trial, the jury found in favor of Peterson and awarded her $375, 000 in damages. The court denied the City's request for attorney's fees on the contract claim and later denied the City's motion for judgment as a matter of law or for a new trial.

         ¶8 The City timely appealed. We have jurisdiction pursuant to Article 6, Section 9, of the Arizona Constitution ...


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