Luedtke v. Nabors Alaska Drilling, Inc.

Paul M. Luedtke (plaintiff) worked at Nabors Alaska Drilling, Inc. (Nabors) (defendant) prior to his immediate suspension for failing a drug test on November 5, 1982, and his termination for refusing to submit to a drug test on November 30. Luedtke’s test results were positive for marijuana. Luedtke sued Nabors in relation to his termination, alleging that Nabors’s drug tests violated his privacy. The Alaska Supreme Court upheld the termination but ruled that an employee must have notice of an employer’s drug-testing policy, and that the test must occur in reasonable proximity to the employee’s working hours. This rule did not apply to Luedtke’s termination, because he had notice of the drug test that he refused to take on November 30, and the test was in proximity to his working hours. However, the Alaska Supreme Court remanded the case to a superior court for a determination of whether Nabors’s suspension of Luedtke on November 5 violated the covenant of good faith and fair dealing in relation to the factors of notice and timing. On remand, the superior court determined that Luedtke did not have notice of the test. However, the court found that Nabors’s suspension of Luedtke did not violate the covenant of good faith and fair dealing. Luedtke appealed. On appeal, Nabors argued that it had not violated the covenant because it did not act with subjective bad faith, i.e., bad intentions in suspending Luedtke.