      Notice: This opinion is subject to correction before publication in the P ACIFIC R EPORTER .
      Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
      303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
      corrections@appellate.courts.state.ak.us.



               THE SUPREME COURT OF THE STATE OF ALASKA

STATE OF ALASKA,                               )
                                               )        Supreme Court No. S-14701
                      Appellant,               )
                                               )        Superior Court No. 3AN-11-04522 CI
       v.                                      )
                                               )        OPINION
PUBLIC SAFETY EMPLOYEES                        )
ASSOCIATION,                                   )        No. 6903 – May 2, 2014
                                               )
                      Appellee.                )
                                               )

              Appeal from the Superior Court of the State of Alaska, Third

              Judicial District, Anchorage, Mark Rindner, Judge.


              Appearances: William Milks, Assistant Attorney General,

              and Michael C. Geraghty, Attorney General, Juneau, for

              Appellee. Stephen F. Sorensen, Simpson, Tillinghast,

              Sorensen & Sheehan, P.C., Juneau, for Appellee.


              Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and

              Bolger, Justices.


              FABE, Chief Justice.

              MAASSEN, Justice, with whom STOWERS, Justice, joins,

              dissenting.


I.     INTRODUCTION
              An Alaska state trooper was discharged for having consensual sex with a
domestic violence victim the morning after assisting in the arrest of the victim’s husband.
The Public Safety Employees Association (PSEA), the labor organization that represents
the Alaska State Troopers, filed a grievance under its collective bargaining agreement
with the State of Alaska. The matter went to arbitration. The arbitrator ordered that the
trooper be reinstated with back pay after a three-day suspension, concluding that the
State did not have just cause to discharge the trooper. The superior court upheld the
arbitrator’s order of back pay but decided that it could not enforce the ordered
reinstatement because the Alaska Police Standards Council had by this point revoked the
trooper’s police certificate. The State now appeals, arguing that the arbitrator committed
gross error and that the arbitrator’s order is unenforceable as a violation of public policy.
              The keys to this appeal are the level of deference we accord the arbitrator
and the very limited nature of the public policy exception. The State and PSEA’s
collective bargaining agreement provided for binding arbitration to resolve employee
grievances regarding disciplinary actions. We generally will not disturb the results of
a binding arbitration, even where we would reach a different conclusion were we to
review the matter independently. Because no statute, regulation, or written policy
prohibited supervisors from engaging in progressive discipline of the trooper, in lieu of
discharging him for his misconduct, the arbitrator’s decision to impose discipline rather
than uphold the termination does not violate any explicit, well-defined, and dominant
public policy. Because the arbitrator’s award is neither unenforceable nor grossly
erroneous, we affirm the superior court’s decision to uphold the arbitration award in part.
II.    FACTS AND PROCEEDINGS
       A.     Facts
              The following facts are based on the record, the arbitration decision, and
the opinion of the superior court. “[W]e give great deference to an arbitrator’s decision,




                                            -2-                                        6903

including findings of . . . fact.”1 The Trooper-Grievant was discharged on November 2,
2009. The discharge was based on misconduct that occurred in April 2009, a little over
a year after the Trooper-Grievant first entered the trooper training academy and less than
two months after he started his position as a state trooper. The Trooper-Grievant entered
the trooper academy as a recruit in February 2008, undergoing four months of “training
in a variety of subjects including Criminal Code, Domestic Violence, First Aid, Handgun
Radar, Search & Seizure, Handgun, and Traffic Stops.” Following field training and the
completion of his probationary period, the Trooper-Grievant was promoted to the
position of Alaska State Trooper in March 2009.
             In April 2009 the Trooper-Grievant engaged in the misconduct that led to
this case. At the time, he was 24 years old. On April 19 the Trooper-Grievant responded
to a request by Trooper C for backup.2 Trooper C had been dispatched to victim M.H.’s
house after another trooper, Trooper G, asked the dispatch center to request a welfare
check on M.H. Trooper G, who was an acquaintance of M.H., had received calls from
her that day possibly indicating that there was a domestic disturbance at her house and
that she needed assistance.
              When Trooper C arrived at M.H.’s house, M.H. appeared to be afraid of
her husband, J.H. The husband was intoxicated and became physically aggressive
toward Trooper C, who then called for backup. Upon his arrival, the Trooper-Grievant
aided Trooper C in restraining J.H. and in transferring him to Trooper C’s car.
Trooper C interviewed M.H., who reported that J.H. had not struck her but had


         1
             State v. Pub. Safety Emps. Ass’n, 235 P.3d 197, 201 (Alaska 2010) (PSEA
2010).
         2
             To protect the victim’s privacy and the confidentiality of personnel records
under AS 39.25.080(a), we do not identify the victim, her husband, or the troopers
involved in the incident.

                                           -3-                                      6903

threatened her verbally and put her in fear. M.H. reported that J.H. was upset about her
receiving phone calls from Trooper G, and M.H. noted that J.H. believed she was being
unfaithful to him. The Trooper-Grievant was present for portions of Trooper C’s
interview with M.H.
              After Trooper C finished interviewing M.H., he asked the Trooper-Grievant
to go over a pamphlet on domestic violence and victim’s rights with her while Trooper C
interviewed M.H.’s daughter in another part of the house. According to testimony by the
Trooper-Grievant and M.H., “[M.H.] flirted with [the Trooper-Grievant] as he read her
the victim’s rights information.” M.H. asked the Trooper-Grievant for his personal cell
phone number, but he refused to provide it to her. Meanwhile, Trooper C arrested J.H.
and charged him with assault on both M.H. and Trooper C.
              At the end of his shift, at approximately 1:00 a.m., the Trooper-Grievant
returned home and went to sleep. At about 5:30 a.m., the Trooper-Grievant woke up,
obtained M.H.’s cell phone number from his trooper notebook, and sent a text message
to M.H. The Trooper-Grievant told M.H. that he could give her his personal phone
number now that he was off duty. M.H. called the Trooper-Grievant, and after some
discussion the Trooper-Grievant drove to her house in his personal car and out of
uniform, arriving at about 6:00 a.m. According to the arbitrator’s findings, when the
Trooper-Grievant arrived, “M.H. was still upset. She expressed her feeling that she was
‘done with’ her marriage.”        M.H. and the Trooper-Grievant proceeded to have
consensual sex.
              M.H. later told J.H. about her sexual encounter with the Trooper-Grievant.
J.H. told his defense attorney, who in turn told the assistant district attorney. The District
Attorney’s Office investigated, and both M.H. and the Trooper-Grievant confirmed that
the encounter had taken place. Ultimately the charge of assault on Trooper C was
dropped and the charge of assault on M.H. was reduced to harassment. The District

                                             -4-                                        6903

Attorney’s Office made these decisions based on several considerations, including the
Trooper-Grievant’s sexual encounter, M.H. and J.H.’s reconciliation, and the fact that
M.H. was not a cooperative witness. The arbitrator found that there was evidence that
the sexual encounter had a “minimal” impact on the District Attorney’s charging
decisions.
             The State conducted an administrative investigation of the incident, during
which the Trooper-Grievant remained on duty. The investigating officer concluded that
the Trooper-Grievant had violated sections of the Department of Public Safety Operating
Procedure Manual. The Trooper-Grievant’s supervising officer, Captain Dennis E.
Casanovas, recommended suspension rather than termination. Captain Casanovas
recognized that the Trooper-Grievant had been progressing well despite his young age
and lack of prior law enforcement experience. In forming his recommendation, Captain
Casanovas relied on both his extensive previous experience as an investigation
coordinator and his personal knowledge of the Trooper-Grievant’s work capabilities.
But the Director of the State Troopers, Colonel Audie Holloway, overruled Captain
Casanovas and decided to discharge the Trooper-Grievant. The resulting termination
letter informed the Trooper-Grievant that he had violated the Operating Procedure
Manual sections 101.010(B), 101.020(G), 101.070(A), and 101.070(B).3 The letter


      3
             The Department of Public Safety Operating Procedure Manual
section 101.010(B) provides that “[t]he standards of conduct set out in this chapter do
not prohibit every possible act that constitutes unacceptable behavior. Conduct that
shocks the conscience or that violates generally recognized standards of professional
behavior is forbidden.” Operating Procedure Manual section 101.020(G), which
concerns “Canons of Police Ethics” with regard to private conduct, provides:
             The law enforcement officer shall be mindful of his special
             identification by the public as an upholder of the law. Laxity
             of conduct or manner in private life, expression of either
                                                                           (continued...)

                                          -5-                                      6903

stated that “despite your knowledge of this woman’s vulnerable condition after her recent
domestic violence victimization, you put yourself, this agency, the District Attorney’s
Office and the criminal prosecution of this case in jeopardy by surrendering to the
temptations of a sexual encounter.” The letter also characterized the Trooper-Grievant’s
conduct as “shocking” and “a discredit” to the Department of Public Safety.
      B.        Proceedings
                Following the termination, both the Trooper-Grievant and the State sought
further action. The Trooper-Grievant filed a grievance challenging his discharge under


      3
          (...continued)
                 disrespect for the law or seeking to gain special privilege,
                 reflects unfavorably upon the police officer and the police
                 service. The community and the service require that the law
                 enforcement officer lead the life of a decent and honorable
                 man. Following the career of a policeman gives no man
                 special perquisites. It does give the satisfaction and pride of
                 following and furthering an unbroken tradition of
                 safeguarding the American republic. The officer who reflects
                 upon this tradition will not degrade it. Rather he will so
                 conduct his private life that the public will regard him as an
                 example of stability, fidelity, and morality.
Operating Procedure Manual section 101.070(A) provides:
                Employees shall conduct themselves at all times, both on and
                off duty, in such a manner as to reflect most favorably on the
                Department. Conduct unbecoming an employee shall include
                that which brings the Department into disrepute, or reflects
                discredit upon the employee as a member of the Department,
                or that which impairs the operations or efficiency of the
                Department or employee.
Operating Procedure Manual section 101.070(B) provides that “[e]mployees shall
conduct their personal and business affairs in a manner that does not discredit or
otherwise bring the department into disrepute or compromise the employee’s ability to
perform his or her duties.”

                                              -6-                                   6903

his union’s collective bargaining agreement, and the dispute proceeded to arbitration.4
While the arbitration was in process, the State sought revocation of the Trooper­
Grievant’s basic police certificate from the Alaska Police Standards Council, the
regulatory and quasi-judicial body charged with establishing minimum selection and
training standards for police officers.5 This certificate is a requirement for every state
trooper.6
              In December 2010 the arbitrator issued her decision. She found that the
Trooper-Grievant had “engaged in unprofessional conduct and showed poor judgment.”
Yet she also found that the State had not fulfilled its duty to inform the Trooper-Grievant
about the parameters of acceptable behavior. The arbitrator noted that past instances of
sexual misconduct had not resulted in terminations, that just cause required consistent
disciplinary action, and that the State must inform troopers if the policy has shifted to
zero-tolerance. Finally, the arbitrator determined that the Trooper-Grievant’s conduct
did not rise to the level of egregious behavior and that the principles of progressive
discipline thus required the opportunity for rehabilitation. Finding that the Trooper-
Grievant had not been discharged for just cause, the arbitrator ordered that he be
reinstated with back pay and converted his discharge to a three-day suspension.




       4
             See AS 23.40.210(a) (“The agreement shall include a grievance procedure
which shall have binding arbitration as its final step.”); AS 23.40.200(a)(1), (b).
       5
              See AS 18.65.130; AS 18.65.220; AS 18.65.240; see generally
D EPARTMENT OF PUBLIC SAFETY , History, A LASKA POLICE STANDARDS COUNCIL,
http://dps.alaska.gov/apsc/history.aspx (last visited Mar. 21, 2014).
       6
              See 13 Alaska Administrative Code (AAC) 85.010(b)(3)(A) (2012) (“A
participating police department may not hire as a police officer a person . . . who . . . has
had the person’s basic certification revoked . . . .”).

                                            -7-                                        6903

             In January 2011 the State filed a complaint in superior court to vacate the
arbitration award. Before the superior court case could be resolved, however, an
administrative law judge heard the police certificate revocation action and issued his
decision on April 12, 2011. The Police Standards Council had proposed two grounds
for revocation: (1) lack of good moral character under 13 AAC 85.110(a)(3), and (2) a
discharge “for cause for inefficiency, incompetence, or some other reason that adversely
affects the ability and fitness of the police officer to perform job duties or that is
detrimental to the reputation, integrity, or discipline of the police department” under
13 AAC 85.110(a)(2).
             The administrative law judge determined that the Police Standards Council
had a valid basis to revoke the Trooper-Grievant’s police certificate.         But the
administrative law judge found the first of the council’s two proposed grounds for
revocation, lack of good moral character, to be unfounded. The administrative law judge
found that revocation was in fact warranted on the second ground, which allows
revocation of a certificate for an officer who has been discharged on one of the grounds
contained in 13 AAC 85.110(a)(2).7 On May 6, 2011, the Police Standards Council
voted to revoke the Trooper-Grievant’s certificate.8



      7
             The administrative law judge found that the arbitrator’s order of
reinstatement did not preclude the State from revoking the Trooper-Grievant’s license
based on the original discharge. 13 AAC 85.110(f) provides that “[a] personnel action
or subsequent personnel action regarding a police officer by the police officer’s
employer, including a decision resulting from an appeal of the employer’s action, does
not preclude the council from revoking the police officer’s basic, intermediate, or
advanced certificate under this section.”
      8
              The Trooper-Grievant appealed the revocation to superior court, but moved
to dismiss the appeal in July 2011. The superior court accordingly dismissed the appeal
in August 2011.

                                          -8-                                     6903

              On May 9, 2011, the State filed a motion, asking the superior court to
vacate the arbitration award because it was contrary to public policy and because it
resulted from gross error. The superior court asked the parties to provide supplemental
briefing on the effect of the Police Standards Council’s revocation. In its supplemental
briefing, the State argued that because a basic certificate is a requirement to be an Alaska
State Trooper, the Trooper-Grievant could not be lawfully reinstated and thus the
arbitration award could not be enforced.
              Superior Court Judge Mark Rindner concluded that the arbitration award
was not the result of gross error. The superior court additionally determined that the
award could not be vacated under the public policy exception to the enforcement of
arbitration awards “because the State does not have an explicit, well defined, and
dominant public policy that prohibits employing a person as an Alaska State Trooper
who has a consensual sexual encounter with a crime victim.” The superior court
nevertheless held that it could not fully enforce the arbitration award, given that requiring
reinstatement “would violate the regulatory requirement that the [Trooper-Grievant] have
a basic [police] certificate.” 9 The superior court stated that it would only “enforce the
Award to the extent it can be consistent with Alaska law.” The superior court ordered
“that the portions of the arbitrator’s award providing for the payment of lost wages and
benefits after May 6, 2011 [when the Police Standards Council revoked his police
certificate] and for the reinstatement of the former employee are not enforced.” The
superior court upheld the part of the award granting back pay between the date of the
Trooper-Grievant’s termination and the date that his certificate was revoked.10

       9
              The superior court noted that “courts will not enforce contractual terms that
directly violate legislation or regulations promulgated under valid legislation.”
       10
              The superior court also stated that “it may not necessarily agree with the
                                                                           (continued...)

                                            -9-                                        6903
              The State appeals, arguing that (1) the arbitration award should be vacated
in full as contrary to public policy and (2) in the alternative, the arbitration award should
be vacated in full for gross error.
III.	   STANDARD OF REVIEW
              We articulated the relevant standard of review in PSEA 2010:
                     We review de novo the superior court’s decision to
              confirm the arbitration award. Both the common law and
              Alaska statutes evince a strong public policy in favor of
              arbitration. In order to encourage parties to pursue
              arbitration, Alaska courts have a policy of minimizing their
              interference with arbitration decisions. Thus, we give great
              deference to an arbitrator’s decision, including findings of
              both fact and law. We will only vacate an arbitration award
              arising out of a collective bargaining agreement where it is
              the result of gross error — those mistakes that are both
              obvious and significant. We will not vacate such an award
              merely because we would reach a different decision
              ourselves. This deferential standard is key to the decision we
              reach today.[11]
IV.	    DISCUSSION
        A.	   The Arbitration Award Is Not Unenforceable As A Violation Of Public
              Policy.
              The State argues that the arbitration award should be vacated as contrary
to public policy “because it is in conflict with the Alaska Police Standards Council’s
decision to revoke the trooper’s police certification, and because the nature of the
trooper’s conduct undermines the public’s interests in a police force that acts to protect

        10
         (...continued)
arbitrator’s decision or find that it would have ruled in the same manner had this been
a case of first impression.”
        11
              235 P.3d 197, 201 (Alaska 2010) (internal quotation marks and citations
omitted).

                                            -10-	                                      6903

the public and the integrity of the criminal justice system.” In essence, the State contends
that reinstatement violates public policy because the Trooper-Grievant’s underlying
conduct was repugnant and because that conduct violated the public policy requiring
“that law enforcement officers act with the primary purpose of protecting the public in
general and crime and domestic violence victims in particular” and “that officers be
persons of integrity and high moral character.” But the correct question is not whether
the Trooper-Grievant’s conduct violated public policy; rather, it is whether the
arbitration award of reinstatement with back pay itself violates an “explicit, well-
defined, and dominant public policy.”12 Although we cannot disagree with the State that
the Trooper-Grievant’s conduct was censurable, we also cannot overturn an arbitrator’s
decision if that decision does not violate an explicit, well-defined, and dominant public
policy. We therefore must affirm the superior court’s decision to uphold the arbitrator’s
award in part.
              1.	    PSEA 2011 and Alaska’s public policy exception to the
                     enforcement of arbitration awards
              In PSEA 2011 we considered as a matter of first impression whether to
adopt a public policy exception to the enforcement of arbitration awards.13 We decided
to recognize this exception, holding that it applied where enforcement of the arbitration




       12
           See State v. Pub. Safety Emps. Ass’n, 257 P.3d 151, 161 (Alaska 2011)
(PSEA 2011).
       13
              Id. at 155-56. While the question of a public policy exception to arbitration
awards had been raised in prior cases, this court did not previously have the opportunity
to reach the issue, either finding that the issue had not been properly raised below or
deciding the case on other grounds. See PSEA 2010, 235 P.3d at 203; Alaska Pub. Emps.
Ass’n v. State, Dep’t of Envtl. Conservation, 929 P.2d 662, 667 (Alaska 1996).

                                           -11-	                                      6903

decision “ ‘would violate an explicit, well defined, and dominant public policy.’ ”14 In
formulating this definition, we drew on the United States Supreme Court’s approach to
the public policy exception to the enforcement of arbitration awards.15 The public policy
exception derives from the common-law principle that a court may refuse to enforce
illegal contracts.16 Accordingly, we noted in PSEA 2011 that this formulation of the




       14
               PSEA 2011, 257 P.3d at 158 (quoting PSEA 2010, 235 P.3d at 203). This
court laid out three “common principles,” drawn from other jurisdictions, that should be
used in the public policy exception analysis:
              (1) the public policy exception to labor arbitration disputes
              involving public employees in positions of public trust is
              most clearly applicable where a statute or regulation compels
              the termination (or prevents the hiring) of an employee for
              committing the relevant misconduct; (2) the relevant inquiry
              is whether the arbitrator’s decision to reinstate the employee
              violates public policy, not whether an employee’s conduct
              does, so statutes or regulations that merely prohibit the
              conduct are insufficient to support the public policy
              exception; and (3) a court should be particularly vigilant
              where the employee’s misconduct was in the performance of
              his or her duties and directed toward the public, and could
              therefore undermine confidence in public institutions that rely
              upon the public’s trust.
Id. at 162.
       15
             See id. at 156 (citing E. Associated Coal Corp. v. United Mine Workers of
Am., Dist. 17, 531 U.S. 57, 67 (2000)).
       16
             See W.R. Grace & Co. v. Local 759, Int’l Union of United Rubber, Cork,
Linoleum & Plastic Workers of Am., 461 U.S. 757, 766 (1983) (citing Hurd v. Hodge,
334 U.S. 24, 34-35 (1948)) (holding enforcement of collective bargaining agreement
would not violate public policy requiring obedience to court decisions or policy favoring
voluntary compliance with Title VII of the Civil Rights Act of 1964).

                                           -12-                                    6903

exception is consistent with our previous holdings on the unenforceability of contracts.17
In Pavone v. Pavone, we adopted the Restatement (Second) of Contracts § 178 in its
analysis of the public policy exception to the enforcement of contracts.18 This section
of the Restatement provides: “A promise or other term of an agreement is unenforceable
on grounds of public policy if legislation provides that it is unenforceable or the interest
in its enforcement is clearly outweighed in the circumstances by a public policy against
the enforcement of such terms.”19
              The United States Supreme Court has made clear that the public policy
exception to the enforcement of arbitration awards must be narrow and that the public
policy at issue “must be explicit, well defined, and dominant . . . [and] [i]t must be
ascertained by reference to the laws and legal precedents and not from general
considerations of supposed public interests.”20 In addition, the Supreme Court warned
courts to “approach with particular caution pleas to divine further public policy” in a
field in which other political branches have already created a regulatory regime.21
Following the United States Supreme Court’s approach, the test we adopted in
PSEA 2011 “establish[es] a high hurdle for the vacatur of arbitration awards” due to this




       17
              PSEA 2011, 257 P.3d at 158-59.
       18
              Id. at 159 (discussing Pavone v. Pavone, 860 P.2d 1228, 1231 (Alaska
1993)).
       19
              RESTATEMENT (SECOND ) OF CONTRACTS § 178(1) (1981).
       20
             E. Associated Coal Corp., 531 U.S. at 62 (quoting Muschany v. United
States, 324 U.S. 49, 66 (1945)) (emphasis added) (internal quotation marks omitted).
       21
              Id. at 63 (upholding arbitration order to reinstate truck driver who tested
positive for drugs).

                                           -13-                                       6903

court’s “longstanding recognition of Alaska’s ‘strong public policy in favor of
arbitration.’ ”22
              We emphasized in PSEA 2011 that “the relevant inquiry is whether the
arbitrator’s decision to reinstate the employee violates public policy, not whether an
employee’s conduct does, so statutes or regulations that merely prohibit the conduct are
insufficient to support the public policy exception.”23 In applying this rule to the facts
of PSEA 2011, where an arbitrator reinstated a trooper who had lied about performing
a prohibited maneuver at an out-of-state motorcycle training program,24 we provided the
following analysis:
              All of the preceding sources support the conclusion that it is
              Alaska’s policy to maintain an honest police force. But there
              has never been a question that it is against public policy for
              a police officer to lie. The question is whether it is against
              Alaska’s public policy to reinstate a police officer who has
              lied as the Trooper did in the present case.[25]



       22
            PSEA 2011, 257 P.3d at 160 (quoting Baseden v. State, 174 P.3d 233, 237
(Alaska 2008)); see also AS 23.40.210(a) (“The agreement shall include a grievance
procedure which shall have binding arbitration as its final step.”); AS 23.40.200(a)(1),
(b).
       23
               PSEA 2011, 257 P.3d at 162 (emphases added); see also E. Associated Coal
Corp., 531 U.S. at 62-63 (“[T]he question to be answered is not whether [the grievant’s]
drug use itself violates public policy, but whether the agreement to reinstate him does
so.”); City of Boston v. Boston Police Patrolmen’s Ass’n, 824 N.E.2d 855, 861 (Mass.
2005) (citing City of Lynn v. Thompson, 754 N.E.2d 54, 62-63 (Mass. 2001)) (“To
prevail, the city must therefore demonstrate that public policy requires that [the
grievant’s] conduct, as found by the arbitrator, is grounds for dismissal, and that a lesser
sanction would frustrate public policy.”).
       24
              See PSEA 2011, 257 P.3d at 153.
       25
              Id. at 161.

                                           -14-                                       6903

We ultimately characterized the question as being whether there is a “categorical
requirement in Alaska public policy for the termination of officers who engage in
relatively minor forms of dishonesty.”26
              In this case, the question is not whether the Trooper-Grievant’s conduct is
against public policy.    Rather, the relevant inquiry is whether a decision to use
progressive discipline and to continue the employment of a trooper who has engaged in
this type of sexual misconduct is a violation of an explicit, well-defined, and dominant
public policy.
              Focusing selectively on language from PSEA 2011, the dissent contends
that our formulation of the public policy exception to the enforcement of arbitration
awards requires that we make a broader inquiry than we do here. The dissent calls
attention to provisions in the Restatement that we cited in PSEA 2011 as part of our
general discussion of whether to adopt the public policy exception.27 Of particular
importance to the dissent are Restatement provisions suggesting that in some contexts
a court may hold an arbitration award unenforceable even where no explicit public policy
requires that result.28
              But in focusing on our reference to these provisions of the Restatement, the
dissent ignores the overall thrust of PSEA 2011. As we observed then, the Restatement
provides “both general guidelines for determining unenforceability on public policy
grounds and more specific guidelines for making this determination in various commonly




       26
              Id.

       27

              Dissent at 38-40 (quoting RESTATEMENT (SECOND ) OF CONTRACTS § 178(1)
(1981)).
       28
              Id.

                                           -15-                                     6903

recurring contexts.”29 Our express holding in PSEA 2011 was that “reviewing arbitration
awards by determining whether there is an explicit, well-defined, and dominant public
policy against enforcement reflects how the general Restatement rules operate in the
recurring context of arbitration awards.”30 We established this high bar for vacatur of
arbitration awards to incorporate the “special public interest in the enforcement of
arbitration decisions . . . given our longstanding recognition of Alaska’s strong public
policy in favor of arbitration.”31 Only taken out of context can the portions of the
Restatement cited in PSEA 2011 on which the dissent focuses suggest that we favor
substantial latitude in vacating arbitration awards on the basis of our own ideas of
desirable public policy. We clearly recognized in PSEA 2011 the special importance of
arbitration, and we consequently strictly limited the scope of review of arbitration
awards. Our decision today corresponds with that limited review.
              2.	    The reinstatement of the Trooper-Grievant is not unenforceable
                     as a violation of Alaska public policy.
              We begin by considering whether there is “legislation specifically
prohibiting enforcement of the promise or contractual term.”32 In our analysis, we “look
to the entire body of law in the State of Alaska for evidence . . . to determine . . . public
policy.”33 The State does not point to any law or regulation that specifically prohibits the



       29	
              PSEA 2011, 257 P.3d at 159.
       30	
              Id. at 160 (internal quotation marks omitted).
       31
              Id. at 159-60 (internal citations and quotation marks omitted).
       32
              Id. at 160 (quoting Pavone v. Pavone, 860 P.2d 1228, 1231 (Alaska 1993))
(internal quotation marks omitted).
       33
            Id. (omissions in original) (quoting Luedtke v. Nabors Alaska Drilling, Inc.,
768 P.2d 1123, 1132 (Alaska 1989)) (internal quotation marks omitted).

                                            -16-	                                      6903

employment or reinstatement of a trooper who has engaged in sexual misconduct when
that trooper still has a police certificate. Rather, the State focuses on five sources of
authority that it argues justify the public policy exception and prohibit the Trooper­
Grievant’s conduct:     (1) the Alaska Constitution; (2) case law; (3) statutes and
regulations; (4) the Department of Public Safety’s Operating Procedures Manual; and
(5) PSEA 2011’s principles of public trust and heightened vigilance.34 But the State’s
focus is misguided. Again, the relevant inquiry is not whether the officer’s conduct
violated public policy but rather whether the arbitrator’s award violates an explicit, well-
defined, and dominant public policy.35 The public policies cited by the State do not
compel termination. And the State has not directed us to any public policy that would
have compelled the termination of a trooper for the misconduct at issue at the time of the
arbitration. Indeed, the State clearly had the authority — and it was in fact the
recommendation of the Trooper-Grievant’s supervisor — to use progressive discipline
rather than to discharge the Trooper-Grievant.         No statute or internal regulation




       34
               In addition, the State claims that the Alaska Police Standards Council’s
“decision to revoke the Trooper-Grievant’s certification reaffirms that reversing the
officer’s discharge was contrary to public policy.” After the arbitrator ordered
reinstatement, the council revoked the Trooper-Grievant’s certification based on the
underlying “discharg[e] for conduct that adversely affected his ability and fitness to act
as a police officer, and that [was] detrimental to the reputation and integrity of the Alaska
State Troopers.” According to the State, the certificate revocation shows that the
arbitrator’s decision to reverse the discharge violated public policy. But this argument
is somewhat circular. Because the certificate revocation was based on the discharge that
the arbitrator found lacked just cause, it is difficult to see how it can supply the
justification for rejecting the arbitrator’s decision.
       35
              See PSEA 2011, 257 P.3d at 162.

                                            -17-                                       6903

prohibited the use of progressive discipline in this case.36 Because the collective
bargaining agreement provided for binding arbitration,37 the arbitrator also had the
authority to impose progressive discipline. The arbitrator’s order of reinstatement after
suspension, therefore, cannot be characterized as a violation of public policy.
                      a.     Alaska’s Constitution
              The State cites article I, sections 1, 12, and 24 of the Alaska Constitution.
Article I, section 1 provides that all persons are “entitled to equal rights, opportunities
and protection under the law.” Article I, section 12 states that “[c]riminal administration
shall be based upon the following: the need for protecting the public . . . [and] . . . the
rights of victims of crimes.” Article I, section 24 provides that “[c]rime victims . . . shall
have the following rights . . . the right to be reasonably protected from the accused
through the imposition of appropriate bail or conditions of release by the court . . .
[and] . . . the right to be treated with dignity, respect, and fairness during all phases of the
criminal and juvenile justice process.” But these constitutional provisions do not evince
the requisite explicit, well-defined, and dominant public policy to terminate a trooper for
the specific conduct in this case.




       36
              Counsel for the State acknowledged that there is no statute or regulation
specifically prohibiting reinstatement of a trooper who has engaged in this type of
misconduct when the trooper still has the requisite police certificate. Rather, counsel
claimed that the relevant public policy is the trooper’s basic duty to protect the public,
based on a combination of constitutional, statutory, and regulatory principles.
       37
             See AS 23.40.210(a) (“The agreement shall include a grievance procedure
which shall have binding arbitration as its final step.”).

                                             -18-                                         6903

                        b.   Case law
              Next the State relies on our decision in Jones v. Jennings.38 Jones,
however, involved the State’s interest in public disclosure of alleged police misconduct
including assault, battery, and false imprisonment.39 And our decision addressed
privilege and the officer’s right to privacy, not the public policy exception in the context
of arbitration awards.40 Our statement that there is a public interest in “insur[ing] that
police behavior conforms to the code of conduct required of a democratic society” does
not constitute an explicit, well-defined, or dominant public policy.41 The State also cites
to PSEA 2010.42 But our brief commentary on the State’s public policy argument in
PSEA 2010 is not sufficient evidence of an explicit public policy that applies to the
allowable discipline in this case.43
                        c.   Statutes and regulations
              The State cites statutes and regulations concerning the Department of Public
Safety’s Council on Domestic Violence and Sexual Assault and minimum standards for
employment as a police officer. The State points to AS 18.66.010, which establishes the
Council on Domestic Violence and Sexual Assault. The mandate of the council includes




       38
              788 P.2d 732 (Alaska 1990).

       39
              See id. at 733-35.

       40
              See id. at 735-39.

       41
              Id. at 739; see PSEA 2011, 257 P.3d at 160 (concluding that Jones did not
establish a public policy against reinstatement of a dishonest police officer).
       42
              235 P.3d 197, 203 (Alaska 2010).
       43
              See id.

                                           -19-                                       6903

planning and coordinating services for domestic violence victims.44 The State argues that
AS 18.66.010 is an example of how “[t]he State’s strong public policy requiring the
protection of crime victims is evident in our state’s commitment to preventing domestic
violence.” It is true that this statute expresses the State’s public policy of aiding
domestic violence victims.45 Yet the statute does not give any indication that reinstating
a trooper who has engaged in sexual misconduct is against public policy.46 As such, the
statute is insufficient to invoke the public policy exception.
              The State also notes statutory and regulatory provisions that allow it to
establish minimum standards for police officers and revoke the certificate of an officer
who does not meet these standards.47 Alaska Statute 18.65.240(c) merely provides that
the Alaska Police Standards Council “may . . . revoke the certificate of a police officer
who does not meet the standards adopted under (a)(2) of this section,” including the
qualification of moral character. (Emphasis added.) The legislature’s use of “may”
rather than “shall,” in conjunction with the State’s past use of progressive discipline of
troopers who engaged in sexual misconduct, indicates that there is no absolute
requirement for the discharge of troopers who have engaged in this type of misconduct.
              In addition, the State cites 13 AAC 85.110(b)(3), which provides that the
State shall revoke the certificate of an officer who was discharged “for conduct . . . that
would cause a reasonable person to have substantial doubt about an individual’s honesty,

      44
              See AS 18.66.010.
       45
              See id. (establishing the Council on Domestic Violence and Sexual Assault
to “provide for planning and coordination of services to victims of domestic violence or
sexual assault . . . and to provide for crisis intervention and prevention programs”).
       46
              See id.
       47
             See, e.g., AS 18.65.130; AS 18.65.240(c); 13 AAC 85.100(a), (b); 13 AAC
85.110(a)(2), (3).

                                           -20-                                      6903

fairness, and respect for the rights of others and for the laws of this state and the United
States or that is detrimental to the integrity of the police department where the police
officer worked.” In PSEA 2011 we concluded that while this same regulation “strongly
suggests that it is the policy of the State of Alaska not to employ dishonest police
officers . . . it is unclear whether the regulation means to prohibit the employment of
police officers who have been dishonest to any degree or under any circumstance.”48
Similarly, these requirements do not make clear whether the regulation categorically
prohibits the employment of troopers who engaged in consensual sexual misconduct.49
              The dissent takes up the argument where the State leaves off, contending
that 13 AAC 85.110(b)(3) is “more than sufficient” as an expression of public policy to
justify disturbing the arbitrator’s decision here.50 We cannot agree. If a court could
reject an arbitration decision simply because it concludes that the conduct at issue falls
into the broad categories of undesirable behavior described in 13 AAC 85.110(b)(3), the
court would owe an arbitrator’s decision little deference. There are countless acts that
are not grounds for termination — much less mandatory termination — but that
nevertheless might be “detrimental to the integrity of the police department” or might be
matched with one of the other generalities found in 13 AAC 85.110(b)(3). Under the


       48
              PSEA 2011, 257 P.3d 151, 161 (Alaska 2011).
       49
              We also note that the Alaska Police Standards Council did not base
revocation of the Trooper-Grievant’s police certificate on this provision. Rather, the
council revoked his police certificate under 13 AAC 85.110(a)(2), which provides that
the council will, in its discretion, revoke a certificate if the officer “has been
discharged . . . for cause for inefficiency, incompetence, or some other reason that
adversely affects the ability and fitness of the police officer to perform job duties or that
is detrimental to the reputation, integrity, or discipline of the police department where
the police officer worked.”
       50
              Dissent at 42.

                                            -21-                                       6903

dissent’s view, a court should be empowered to reject an otherwise valid arbitration
award solely on the basis that the conduct at issue could reasonably fit into one of those
catch-all categories.
              This view would make nonsense of our statement in PSEA 2011 that the
public policy exception does not permit a court to reject an arbitration decision merely
because the court might have decided the case differently.51 In that case it was
undisputed that the officer lied to his superiors — conduct that we did not hesitate to call
“unworthy of an Alaska state trooper.”52 The officer’s lying would almost certainly
cause a reasonable person to have substantial doubt about the officer’s honesty. Given
the nature of the conduct about which the officer lied — carrying out a prohibited
motorcycle stunt — a reasonable person would likely also have substantial doubt about
the officer’s respect for the law. The integrity of the police department would reasonably
be in question as well. Yet we declined to overturn the arbitrator’s reinstatement of the
officer because the gross error standard sets a higher bar.53 If 13 AAC 85.110(b)(3) were
an expression of public policy sufficient to reject an arbitration decision, the gross error
standard would be meaningless; a court could invalidate arbitration awards far more
freely than that standard allows.
              The dissent further argues that by finding general statements such as
13 AAC 85.110(b)(3) insufficient, we now require the other branches of government to


       51
              As we wrote in PSEA 2011, “If we had stood in the arbitrator’s place, we
may well have determined that under Alaska’s doctrine of ‘just cause,’ the State did have
just cause to terminate the Trooper. . . . But we are bound by the gross error standard,
and it was not gross error for the arbitrator to have taken a different approach from the
one we may have taken.” 257 P.3d at 165.
       52
              Id. at 166.
       53
              Id.

                                           -22-                                       6903

draw unrealistically precise lines beyond which misconduct is intolerable as a matter of
public policy.54 But while we require more from the State than the vague directives at
issue here, we do not demand the “luminous detail” that the dissent suggests will now
be needed.55 The State does not have to detail precisely the forms that sexual misconduct
may take or the circumstances in which it could take place. It does not have to define in
advance all the ways that employees may misbehave. But if the State wishes to bar
categorically the reinstatement of officers discharged for sexual misconduct, it must
make a policy to that effect. In the absence of such a policy, this court will not disturb
a duly reached arbitration award.
                    d.     Internal regulations
             The State cites the Department of Public Safety’s Operating Procedures
Manual. In particular, the State highlights sections that prohibit behavior that “shocks
the conscience or that violates generally recognized standards of professional behavior”
or that “brings the Department into disrepute . . . or . . . impairs the operations or
efficiency of the Department.”
             The State’s argument, though, is contradicted by our holding in PSEA 2011,
where the State relied on a section of the Operating Procedures Manual that requires
employees to respond truthfully to their superiors and to questioning during official
investigations.56 While we recognized the requirements laid out by the Operating
Procedures Manual, we explained that “the Manual says nothing about the kind of
informal investigation during which the Trooper lied, and in general stops short of



      54
             Dissent at 42-43.
      55
             Id. at 43.
      56
             See PSEA 2011, 257 P.3d at 161.

                                          -23­                                      6903
discussing the consequences of dishonesty.”57 Again, the Operating Procedures Manual
sections at issue in this case do not clearly concern circumstances similar to the Trooper­
Grievant’s misconduct. And more importantly, these Operating Procedures Manual
sections do not dictate disciplinary consequences for this type of misconduct. Because
no internal regulation prohibited the State from imposing discipline short of termination
in response to the misconduct, it was also within the arbitrator’s discretion to order
reinstatement and discipline of the Trooper-Grievant.
              e.     The principles of public trust and heightened vigilance
              One of the considerations that we discussed in PSEA 2011 is that the court
“should be particularly vigilant where the employee’s misconduct was in the
performance of his or her duties and directed toward the public, and could therefore
undermine confidence in public institutions that rely upon the public’s trust.”58 The State
argues that the Trooper-Grievant’s misconduct falls within this category of cases and
thus warrants special scrutiny. PSEA responds that the State has not terminated other
troopers whom PSEA alleges have engaged in similar misconduct.
              We acknowledge that the underlying conduct in this case involved the
trooper’s duties to the public. But the public policy exception still requires an explicit,
well-defined, and dominant public policy even in a case involving a trooper’s
performance of duties directed toward the public. For example, other courts have held
that the public policy exception applied in cases of police officers’ inappropriate
behavior with a minor boy in violation of state statute59 and misconduct involving false


       57
              Id.
       58
              Id. at 162.
      59
              See Police Officers Labor Council v. City of Wyoming, No. 258843, 2006
                                                                        (continued...)

                                           -24-                                      6903

arrests, false charges, and perjury.60 And even before we recognized the public policy
exception, we reversed an arbitrator’s award of reinstatement of a public employee who
was discharged for a serious crime, having been convicted of a felony involving violation
of public trust.61 But in the case before us, the public policy exception does not apply
because although the Trooper-Grievant’s misconduct was censurable, the arbitrator’s
order reinstating him does not violate any explicit, well-defined, and dominant public
policy.
              We recognize that while arbitrations in this type of case often involve
egregious employee misconduct that may affect public safety, reinstatements in such
cases are not always against public policy.62        In particular, courts have upheld


       59
        (...continued)
WL 2000136, at *1-2 (Mich. App. July 18, 2006) (concluding that the arbitration order
of reinstatement was contrary to a Michigan statute prohibiting a person from
encouraging a child to engage in delinquent acts and a police regulation).
      60
              See City of Boston v. Boston Police Patrolmen Ass’n, 824 N.E.2d 855, 861
(Mass. 2005) (“The question to be answered is not whether [the officer’s conduct] itself
violates public policy, but whether the agreement to reinstate him does so.”) (citations
omitted) (quoting E. Associated Coal Corp. v. United Mine Workers of Am., Dist. 17, 531
U.S. 57, 62-63 (2000)).
      61
             See Alaska State Emps. Ass’n/AFSCME Local 52 v. State, 74 P.3d 881
(Alaska 2003) (reversing reinstatement where employee was discharged upon revelation
of felony conviction for theft of public funds).
       62
              See City of Worcester v. Worcester Vocational Teachers Ass’n, No.
981686B, 1999 WL 1336075, at *1, *3-4 (Mass. Super. Ct. March 3, 1999) (upholding
arbitrator’s award to reinstate school guidance counselor despite alleged sexually
harassing comments and physical contact with a student); City of Cleveland v. Cleveland
Police Patrolman’s Ass’n, No. 76181, 2000 WL 573195, at *1, *3-4 (Ohio App. May 11,
2000) (affirming arbitrator’s reinstatement of police officer convicted of domestic assault
even though a federal statute prohibited persons convicted of misdemeanor domestic
                                                                             (continued...)

                                           -25-                                      6903

reinstatement of law enforcement officers who had consensual sex with a witness or
informant.63 For example, in an unpublished decision, an Ohio appellate court upheld
an arbitrator’s reinstatement of a deputy sheriff who had been discharged for initiating
and then engaging in consensual sexual conduct with a confidential informant while on
duty and in uniform because the act was not criminal and there was no statute or case law
mandating discharge.64 Similarly, the Michigan Court of Appeals upheld an arbitrator’s
reinstatement of a police officer who had “engaged in an improper consensual act of a
sexual nature with the complaining witness after responding to her call for assistance and
while on duty.”65 In that case, after the officer had an on-duty sexual encounter with the
individual who had called for assistance, the officer failed to note his visit in his log book




       62
        (...continued)
violence from possessing firearms).
       63
              See, e.g., Bureau of Maine State Police v. Pratt, 568 A.2d 501, 505-06 (Me.
1989) (holding that arbitrator’s reinstatement of officer who had sexual encounter with
witness and then possibly perjured himself on the topic did not violate public policy);
City of Lincoln Park v. Lincoln Park Police Officers Ass’n, 438 N.W.2d 875, 876 (Mich.
App. 1989) (holding that enforcement of arbitrator’s order to reinstate the police officer
did not violate public policy even though the officer had engaged in consensual sexual
conduct with a complaining witness after responding to her call for help); Monroe Cnty.
Sheriff v. Fraternal Order of Police, No. 869, 2002 WL 31170168, at *1 (Ohio App.
Sept. 25, 2002) (upholding arbitrator’s order to reinstate the deputy sheriff who had
engaged in consensual sexual conduct with confidential informant while in uniform and
on duty).
       64
             See Monroe Cnty. Sheriff, 2002 WL 31170168, at *1, *7 (noting that the
conduct could be seen as “an abuse of power” but nonetheless upholding the
reinstatement of the deputy sheriff because there was no clearly defined public policy
prohibiting employment of the deputy sheriff).
       65
              Lincoln Park Police Officers Ass’n, 438 N.W.2d at 876.

                                            -26-                                        6903

and failed to file an incident report.66 In response to questions the following day, the
officer lied about the sexual act.67 But because the arbitrator’s reinstatement was based
on the collective bargaining agreement and the penalty of discharge was optional, the
court affirmed the arbitrator’s order to reinstate the officer.68
              In sum, although the question of the public policy exception may arise more
frequently when employee conduct affects the public trust, the award will fall into the
exception only if the award itself violates an explicit, well-defined, and dominant public
policy. All of the State’s sources support the conclusion that Alaska has a policy to
protect victims and prohibit sexual misconduct. But the question is not whether the
Trooper-Grievant’s misconduct violated public policy; it is whether it is against Alaska’s
public policy to use a progressive disciplinary sanction such as suspension for a trooper
who engaged in this misconduct. The State has not pointed to any explicit, well-defined,
and dominant public policy requiring termination, rather than suspension, as the only
proper discipline for a trooper’s consensual and non-criminal sexual misconduct. In fact,
as the arbitrator found, incidents of sexual misconduct often have been punished with
disciplinary sanctions short of termination.69 The discipline and reinstatement of such
a trooper, therefore, is not a violation of public policy.




       66
              See id.
       67
              See id.
       68
              See id. at 877.
       69
               See PSEA 2010, 235 P.3d 197, 201-03 (Alaska 2010) (upholding
arbitrator’s order for reinstatement and suspension of officer who had harassed a fellow
officer at a law enforcement academy).

                                            -27-                                    6903

       B.	    The Arbitrator Did Not Commit Gross Error In Concluding That
              There Was Not Just Cause To Discharge the Trooper-Grievant.
              The State also claims that the arbitrator’s decision constituted gross error.
We have defined gross error as “only those mistakes which are both obvious and
significant.”70 Because we conclude that the arbitrator did not commit gross error, we
affirm the superior court’s decision to uphold the arbitrator’s award.
              1.	    The arbitrator did not commit gross error in interpreting the
                     collective bargaining agreement.
              The State first challenges the arbitrator’s interpretation of the term
“egregious misconduct.” The collective bargaining agreement provides the following
definition: “Egregious misconduct which may result in discharge includes, but is not
limited to, gross disobedience or insubordination, dishonesty, chemical or alcohol
intoxication at the workplace, physical misconduct, criminal conduct, abusive or lewd
behavior, or abandonment of duties.” (Emphasis added.) Relying on this definition, the
arbitrator explained that “[e]gregious behavior that warrants summary discharge includes
extremely serious behavior such as stealing, striking a foreman, persistent refusal to obey
a legitimate order and dishonesty. Less serious infractions of plant rules or of proper
conduct such as insolence, call for some milder penalty aimed at correction.”
              The State argues that the arbitrator committed gross error because she
allegedly used her own definition of egregious misconduct instead of the definition
provided by the collective bargaining agreement. PSEA responds that “[i]t is clear that
throughout her decision [the arbitrator] was applying the correct standard set out in the
Collective Bargaining Agreement as she discussed in great length and in detail the level



       70
             Pub. Safety Emps. Ass’n, Local 92 v. State, 895 P.2d 980, 984 (Alaska
1995) (quoting City of Fairbanks v. Rice, 628 P.2d 565, 567 (Alaska 1981)) (internal
quotation marks omitted).

                                           -28-	                                     6903
of misconduct by the Grievant and similar acts of misconduct by other Troopers.” PSEA
is correct.
              While arbitrators must adhere to the plain language of the contract, “[a]
mere ambiguity in the opinion accompanying an award, which permits the inference that
the arbitrator may have exceeded his authority, is not a reason for refusing to enforce the
award.”71 In addition, “as long as the arbitrator is even arguably construing or applying
the contract and acting within the scope of his authority, that a court is convinced he
committed serious error does not suffice to overturn his decision.”72 The arbitrator has
broad authority to interpret the collective bargaining agreement: “The labor arbitrator’s
source of law is not confined to the express provisions of the contract, as the industrial
common law — the practices of the industry and the shop — is equally a part of the
collective bargaining agreement although not expressed in it.”73 And “if the arbitrator’s
construction is plausible, it must not be disturbed.”74 Here, we need only ask whether


       71
              United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 598
(1960).
       72
              United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 38 (1987);
see also United Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 581-82
(1960); Manville Forest Prods. Corp. v. United Paperworkers Int’l Union, 831 F.2d 72,
76 (5th Cir. 1987) (approving of the use of past practice “to resolve ambiguities and gaps
in written collective bargaining agreements”).
       73
            Warrior & Gulf Nav. Co., 363 U.S. at 581-82; see also Manville Forest
Prods. Corp., 831 F.2d at 75.
       74
              Bhd. of Locomotive Eng’rs & Trainmen v. United Transp. Union, 700 F.3d
891, 902 (6th Cir. 2012); see also Loveless v. E. Air Lines, Inc., 681 F.2d 1272, 1278
n.14 (11th Cir. 1982) (“An arbitrator may be able to discern a latent ambiguity in a
contract based upon his examination of past practice or bargaining history even though
no ambiguity appears on the face of the contract. The arbitrator might then be able to
resolve the latent ambiguity by resort to permissible sources of extrinsic evidence.”).

                                           -29-                                      6903

the arbitrator’s construction of the collective bargaining agreement constitutes an
“obvious and significant” mistake.75 We conclude that the arbitrator’s construction was
not gross error.
              In her decision, the arbitrator interpreted the collective bargaining
agreement definition to determine whether the Trooper-Grievant’s misconduct was
serious enough to constitute “[e]gregious misconduct” warranting discharge. The
arbitrator relied on Captain Casanovas’s testimony and the Trooper-Grievant’s “honest
and forthright and sincere[]” responses during the hearing to assess the seriousness of his
conduct, reasoning that “[w]hy a grievant did what he or she did inevitably relates to the
gravity of the misconduct.” The arbitrator found that “[t]here is no evidence to indicate
that [the Trooper-Grievant’s] behavior could not be corrected,” concluding that, “[b]ased
on the State’s disciplinary approach in similar situations, this type of conduct has
warranted an opportunity to correct the behavior.” Accordingly, the arbitrator expressly
disagreed with Colonel Holloway’s interpretation of “[e]gregious misconduct” and
determined that the Trooper-Grievant’s “unprofessional conduct” and “poor judgment”
did not rise to the level of “[e]gregious behavior . . . warrant[ing] summary discharge”
under the collective bargaining agreement.
              Again, our standard for reviewing an arbitrator’s decision is “very
deferential.”76 We review only for gross error.77 And because the arbitrator analyzed
whether the Trooper-Grievant’s misconduct rose to “[e]gregious misconduct which may
result in discharge” under the collective bargaining agreement and the State’s



       75
              See Pub. Safety Emps. Ass’n, Local 92, 895 P.2d at 984.
       76
              See PSEA 2010, 235 P.3d 197, 202 (Alaska 2010).
       77
              See id.

                                           -30­                                      6903
disciplinary practices in cases of sexual misconduct, we cannot conclude that the
arbitrator’s analysis was gross error.
             Moreover, we have held that “an arbitrator’s ‘use of a well-reasoned
alternative definition’ of just cause ‘would not alone constitute gross error.’ ”78
Therefore, the arbitrator was not bound by this court’s definition of just cause.79 Under
our definition of “just cause,” the termination would have been affirmed.80 But because
we apply a deferential standard of review and because the arbitrator analyzed whether
the Trooper-Grievant’s misconduct rose to “[e]gregious misconduct” warranting
discharge, we conclude the arbitrator’s interpretation of the collective bargaining
agreement was not gross error.
             2.	       The arbitrator did not commit gross error in the disparate
                       treatment analysis.
             The State challenges the arbitrator’s disparate treatment analysis. First, the
State argues that the disparate treatment analysis was inappropriate because it could lead
to toleration of police officer misconduct. Second, the State claims that the “record
evidence did not support the arbitrator’s conclusion” for several reasons: (1) some of the
cases were from the 1990s; (2) many of the cases involved greater discipline than a
three-day suspension; and (3) the cases involved less severe misconduct that did not


      78
          PSEA 2011, 257 P.3d 151, 163 (Alaska 2011) (quoting Alaska State Emps.
Ass’n/AFSCME Local 52 v. State, 74 P.3d 881, 884 (Alaska 2003)).
      79	
             See id.
      80
              We defined “just cause” for discharge as “one which is not for any
arbitrary, capricious, or illegal reason and which is one based on facts (1) supported by
substantial evidence and (2) reasonably believed by the employer to be true.” Alaska
State Employees Ass’n/AFSCME Local 52, 74 P.3d at 883-84 (quoting Manning v.
Alaska R.R. Corp., 853 P.2d 1120, 1125 (Alaska 1993)) (internal quotation marks
omitted).

                                          -31-	                                      6903

mirror the misconduct in this case. Finally, the State contends that the arbitrator failed
to explain how the three-day suspension is consistent with past disciplinary action and
that the record does not provide support for the propriety of this penalty.
             In raising the concern of employer leniency toward misconduct, the State
relies on PSEA 2011 and decisions from other jurisdictions.81 But while we cautioned
in PSEA 2011 that the “disparate treatment doctrine should not operate as a one-way
ratchet toward the acceptance of increasingly unethical behavior,” we also noted that “it
was not gross error for the arbitrator to have taken a different approach from the one we
may have taken.”82 Reasoning that the State cannot “deviate from the negotiated
agreement by implementing zero tolerance for an offense that has previously been
addressed through progressive discipline,” the arbitrator concluded that if the State
decides to implement a new zero-tolerance policy for sexual misconduct, it must provide
notice to its employees.
             The State also attempts to distinguish the other cases relied on by the
arbitrator as involving less severe misconduct or more serious punishments. We will
vacate the arbitrator’s award only if there was an obvious and significant mistake.83
Here, the arbitrator analyzed a number of cases varying in specific misconduct and
severity. The State terminated the trooper in only one out of the eight cases involving




      81
             See, e.g., Town of Bloomfield v. United Elec. Radio & Mach. Workers of
Am., 916 A.2d 882, 885 (Conn. Super. Ct. 2006), rev’d on other grounds, 939 A.2d 561
(Conn. 2008); City of Boston v. Boston Police Patrolmen’s Ass’n, 824 N.E.2d 855, 862
n.9 (Mass. 2005).
      82
             PSEA 2011, 257 P.3d at 165.
      83
             See PSEA 2010, 235 P.3d 197, 201 (Alaska 2010).

                                          -32-                                      6903

sexual misconduct.84 The State imposed less severe discipline in all other instances of
sexual misconduct, including: a trooper’s inappropriate sexual contact in the trooper
office while on duty; sexual harassment of and an inappropriate personal relationship
with the trooper’s supervisee; a trooper instructor’s signing a woman’s breast at a bar in
front of trooper recruits; a trooper’s inappropriate sexual advances; a trooper’s sexual
relationship with a nineteen-year-old intoxicated woman while the trooper was supposed
to investigate her criminal complaint of sexual abuse by her stepfather; a trooper’s
extramarital “sexual relationship with an adult female from the village while on a village
visit on official travel for the Department”; and a trooper’s “sexual relationship with the
daughter of a murder victim during an ongoing investigation.” And in the only case of
sexual misconduct that resulted in a termination, there were allegations of both
inappropriate sexual conduct and dishonesty.85 Moreover, the record reviewed by the
arbitrator suggests that the State still uses progressive discipline, including short periods
of suspension, in cases of sexual misconduct. The arbitrator did not commit an obvious
and significant error in her analysis.
              Finally, the State claims that the arbitrator failed to explain why the three-
day suspension is consistent with the past disciplinary actions. But the arbitrator relied
on Captain Casanovas’s testimony and recommendation of a disciplinary suspension,
which was based on his extensive experience with administrative investigations. The
arbitrator further explained that, based on her findings, progressive discipline was
appropriate because it was possible for the Trooper-Grievant to rehabilitate himself. The


       84
              An arbitrator later reinstated the trooper, finding that the State did not bear
its burden in proving that the alleged misconduct had occurred. However, the relevant
facts here concern the State’s initial disciplinary action, not the arbitration award.
       85
             In that sole termination case, an arbitrator found the State did not have just
cause for termination and ultimately reinstated the trooper.

                                            -33-                                       6903

arbitrator noted that Captain Casanovas recommended suspension rather than termination
after “carefully weigh[ing] . . . his knowledge of the [Trooper]-Grievant’s work
progression . . . and . . . the likelihood of the [Trooper]-Grievant’s correcting his
behavior.” The arbitrator’s reliance on the testimony of Captain Casanovas, who
supervised the Trooper-Grievant and had personal knowledge of the Trooper-Grievant’s
work capabilities, does not meet our standard for gross error.86
V.     CONCLUSION
              The Trooper-Grievant’s misconduct was extremely serious and offensive.
If we had been deciding this case it is likely that we would have concluded that under
Alaska law, the State had “just cause” to discharge the Trooper-Grievant. Engaging in
sexual conduct with a victim shortly after responding to her call for help, even if
consensual, is inappropriate behavior for a state trooper. But we may “not vacate . . . an
award merely because we would reach a different decision ourselves.”87 Because there
is no explicit, well-defined, and dominant public policy in Alaska prohibiting
reinstatement of a law enforcement officer who has engaged in off-duty consensual
sexual misconduct, and because the arbitrator did not commit gross error, we AFFIRM
the superior court’s decision to uphold the arbitrator’s award in part.




       86
              The State also contends that “[t]he arbitrator failed to take into account the
critical importance of public trust in the State Troopers,” but that argument is subsumed
within our public policy discussion. See supra Part IV.A.2.e.
       87
              PSEA 2010, 235 P.3d at 201.

                                           -34-                                       6903
MAASSEN, Justice, with whom STOWERS, Justice, joins, dissenting.
             I respectfully dissent. I would hold that a contractual arbitration remedy
requiring that a state trooper be reinstated after his commander has, with very good
reason, lost confidence in the trooper’s judgment, moral character, and effectiveness as
a law enforcement officer violates Alaska public policy. I recognize that the public
policy exception to the enforcement of arbitration awards is sparingly applied. But the
court today requires an unrealistic degree of precision from the codes of acceptable
conduct that other branches of government are entitled to expect their employees to
follow.
             The arbitrator found in this case (and the court appropriately defers to its
findings) that the Trooper-Grievant was called to the home of M.H. to provide backup
for another trooper, Trooper C, who was investigating a report of domestic violence; that
M.H.’s husband, because he believed M.H. was being unfaithful to him with yet another
state trooper (Trooper G), had “threatened her and placed her in fear”; that it was the
Trooper-Grievant’s duty to read and explain to M.H. her rights as a victim of domestic
violence while Trooper C interviewed another witness in another part of the house; that
the troopers arrested M.H.’s husband and took him to jail; that early the next morning
the Trooper-Grievant, now off-duty, texted M.H. and provided her with his personal
telephone number; that after talking with M.H. on the telephone he returned to her home
out of uniform at 6:00 a.m., where he found her to be “still upset” and “feeling that she
was ‘done with’ her marriage”; and that the Trooper-Grievant and M.H. then had
consensual sex in her home, while her husband was in jail on charges that he had




                                          -35-                                     6903

assaulted her the night before because of jealousy prompted by her suspected adultery
with a state trooper.1
              The court also accepts that the fact of this sexual encounter became known
to the husband and his defense attorney, and that it had some impact, albeit “minimal,”
on the district attorney’s decision to drop an assault charge based on the husband’s
encounter with Trooper C and to reduce to harassment the assault charge involving
M.H.2
              The court also recites the governing police standards of conduct alerting
officers that “every possible act that constitutes unacceptable behavior” cannot be spelled
out explicitly; that “[c]onduct that shocks the conscience or that violates generally
recognized standards of professional behavior is forbidden”; and that how officers
conduct themselves in their professional and private lives, “both on and off duty,” is
subject to the same high standards of honor and decency.3 The court quotes the resulting
termination letter to the Trooper-Grievant stating that “despite your knowledge of this
woman’s vulnerable condition after her recent domestic violence victimization, you put
yourself, this agency, the District Attorney’s Office and the criminal prosecution of this
case in jeopardy by surrendering to the temptations of a sexual encounter” and
characterizing the Trooper-Grievant’s conduct as “shocking” and “a discredit” to the
Department of Public Safety.4




        1
              Op. at 3-4.
        2
              Id. at 5.
        3
              Id. at 5, n.3.
        4
              Id. at 5-6.

                                           -36-                                      6903

              The court further acknowledges that Alaska’s constitution, statutes, and
regulations “support the conclusion that Alaska has a [public] policy to protect victims
and prohibit sexual misconduct.”5 It concludes, however, that none of these legal
sources articulates “an explicit, well-defined, and dominant public policy” that would bar
reinstatement of the Trooper-Grievant despite his reprehensible conduct.
       A. The Court Too Narrowly Defines Its Role In Identifying Public Policy.
              I begin my legal analysis, as the court does, with a recitation of the three
“common principles” that our precedent requires us to consider:
              (1) the public policy exception to labor arbitration disputes
              involving public employees in positions of public trust is
              most clearly applicable where a statute or regulation compels
              the termination (or prevents the hiring) of an employee for
              committing the relevant misconduct; (2) the relevant inquiry
              is whether the arbitrator’s decision to reinstate the employee
              violates public policy, not whether an employee’s conduct
              does, so statutes or regulations that merely prohibit the
              conduct are insufficient to support the public policy
              exception; and (3) a court should be particularly vigilant
              where the employee’s misconduct was in the performance of
              his or her duties and directed toward the public, and could
              therefore undermine confidence in public institutions that rely
              upon the public’s trust.[6]
That the public policy exception is “most clearly applicable where a statute or regulation
compels the [employee’s] termination” necessarily means that the exception may also
apply, though less “clearly” so, where a statute or regulation does not compel the

       5
                Id. at 27. See also id. at 18 (“Article I, section 24 provides that ‘[c]rime
victims . . . shall have . . . the right to be treated with dignity, respect, and fairness during
all phases of the criminal and juvenile justice process.’ ”); id. at 20 (“It is true that [AS
18.66.010] expresses the State’s public policy of aiding domestic violence victims.”).
       6
            Op. at 12, n.14 (quoting State v. Pub. Safety Emps. Ass’n, 257 P.3d 151,
162 (Alaska 2011) (PSEA 2011)) (emphasis added).

                                              -37-                                         6903

termination. This is consistent with the Restatement law from which we drew our
guiding principles. In PSEA 2011, relying on our earlier decision in Pavone v. Pavone,7
we highlighted the Restatement’s recognition that
             [o]nly infrequently does legislation, on grounds of public
             policy, provide that a [contract] term is unenforceable. When
             a court reaches that conclusion, it usually does so on the basis
             of a public policy derived either from its own perception of
             the need to protect some aspect of the public welfare or from
             legislation that is relevant to that policy although it says
             nothing explicitly about unenforceability.[8]
             We elaborated on this point in PSEA 2011 by reciting more extensively, and
approvingly, from the same Restatement comment:
             In some cases the contravention of public policy is so grave,
             as when an agreement involves a serious crime or tort, that
             unenforceability is plain. In other cases the contravention is
             so trivial as that it plainly does not preclude enforcement. In
             doubtful cases, however, a decision as to enforceability is
             reached only after a careful balancing, in the light of all the
             circumstances, of the interest in the enforcement of the
             particular promise against the policy against the enforcement
             of such terms. . . . Enforcement will be denied only if the
             factors that argue against enforcement clearly outweigh the
             law’s traditional interest in protecting the expectations of the
             parties, its abhorrence of any unjust enrichment, and any
             public interest in the enforcement of the particular term.[9]




      7
             860 P.2d 1228, 1231 (Alaska 1993).
      8
            257 P.3d at 159 (emphasis added) (quoting Pavone, 860 P.2d at 1231
(quoting RESTATEMENT (SECOND ) OF CONTRACTS §178(2) cmt. b (1981))).
      9
             Id. at 159 n.38 (quoting RESTATEMENT (SECOND ) OF CONTRACTS § 178(2)
cmt. b (1981)).

                                          -38-                                   6903

And we explicitly stated in PSEA 2011 that our decision in that case was “consonant
with the general guidance offered in Pavone” and with the Restatement principles on
which Pavone was decided.10
              Because of this express sourcing of our guiding principles, endorsed in
PSEA 2011,11 I cannot read PSEA 2011 as requiring in every case that there be explicit
direction from the executive or legislative branch that the specific conduct at issue
prohibits hiring or reinstatement. Rather, in that broad middle ground of “doubtful
cases” between those in which “unenforceability is plain” and those in which “the
contravention is so trivial that it plainly does not preclude enforcement,” we are expected
to do “a careful balancing,”12 keeping in mind that in those “doubtful cases” there is
unlikely to be any express legislative or regulatory direction. The court operating in that
middle ground must rely instead on its own historical ability to derive the relevant
“explicit, well-defined, and dominant public policy” “either from its own perception of



       10
              Id. at 159-60.
       11
              Today’s opinion faults my analysis for relying too heavily on the
Restatement principles we endorsed in PSEA 2011. Op. at 15-16. We expressly adopted
the test of Restatement § 178 in Pavone, holding that in future cases, when faced with
ambiguous public policy, “we will apply the factors listed in subsections 2 and 3 of
[Restatement] section 178 to determine whether the term should be enforced.” 860 P.2d
at 1232. These sections do not even apply unless “there is no legislation specifically
prohibiting enforcement of the promise or contractual term.” Id. at 1231. In PSEA 2011
we stated that the public policy exception to the enforcement of arbitration awards that
we were adopting was consistent with Pavone. PSEA 2011, 257 P.3d at 158-59. The
basic principles about the unenforceability of illegal contracts should not apply in only
a watered-down version in the context of public employee arbitration awards, where the
public interest in judicial review is considerably greater than it is with private contracts.
       12
           PSEA 2011, 257 P.3d at 159 n.38 (quoting R ESTATEMENT (SECOND ) OF
CONTRACTS § 178 cmt. b (1981)).

                                            -39-                                       6903

the need to protect some aspect of the public welfare or from legislation that is relevant
to that policy although it says nothing explicitly about unenforceability.”13
       B.	 Public Policy Requires That The Trooper-Grievant Not Be Retained.
              Blinkered to the breadth of the allowable inquiry, the court today looks for
— and fails to find — “any explicit, well-defined, and dominant public policy requiring
termination, rather than suspension, as the only proper discipline for a trooper’s
consensual and non-criminal sexual misconduct.”14 But while the phrase “consensual
and non-criminal sexual misconduct” is useful shorthand for discussion purposes, it
omits everything that establishes the gravity of the Trooper-Grievant’s misconduct: sex
by a responding officer with a distraught domestic-violence victim within hours of the
alleged crime, likely leaving her in a more vulnerable position when the encounter came
to light (particularly as her husband’s anger stemmed in the first place from her alleged
unfaithfulness with another trooper), damaging the State’s prosecution of the husband
for the crime of domestic violence, damaging the State’s prosecution for the assault on
Trooper C, and damaging the Trooper-Grievant’s future effectiveness as a witness.
              As noted above, the court today agrees that the sources of authority on
which the State relies “support the conclusion that Alaska has a [public] policy to protect
victims and prohibit sexual misconduct.”15 I would go a step further: I believe one of



       13
              Id. at 159 (quoting RESTATEMENT (SECOND ) OF CONTRACTS § 178 cmt. b
(1981)).
       14
              Op. at 27.
       15
               Id. See also id. at 18 (“Article I, section 24 provides that ‘[c]rime victims
. . . shall have . . . the right to be treated with dignity, respect, and fairness during all
phases of the criminal and juvenile justice process.’ ”); id. at 20 (“It is true that
[AS 18.66.010] expresses the State’s public policy of aiding domestic violence
victims.”).

                                            -40-	                                      6903

those sources, 13 AAC 85.110(b), supports the conclusion that a police officer who
violates that public policy in a clearly serious way should no longer be employed. That
regulation provides:
                      The council shall revoke a basic, intermediate, or
              advanced certificate upon a finding that the holder of the
              certificate. . . (3) has been discharged, or resigned under
              threat of discharge, from employment as a police officer in
              this state or any other state or territory for conduct that would
              cause a reasonable person to have substantial doubt about an
              individual’s honesty, fairness, and respect for the rights of
              others and for the laws of this state and the United States or
              that is detrimental to the integrity of the police department
              where the police officer worked.[16]
Discussing this regulation in PSEA 2011, we acknowledged that it “strongly suggests
that it is the policy of the State of Alaska not to employ dishonest police officers,” but
we concluded that it was “unclear whether the regulation means to prohibit the
employment of police officers who have been dishonest to any degree or under any
circumstance.”17 I believe this to be a slight misconstruction of the regulation and one
we are mistaken to carry forward. The regulation is indeed very clear that it means to
prohibit the employment of police officers who have been dishonest (or who have
engaged in sexual misconduct or the exploitation of domestic violence victims or the
misuse of their official position) to some degree and under some circumstances; that is,
where the conduct, whatever it is, “would cause a reasonable person to have substantial
doubt about an individual’s honesty, fairness, and respect for the rights of others and for
the laws of this state and the United States or that is detrimental to the integrity of the
police department where the police officer worked.” A “reasonable person” standard is


       16
              13 AAC 85.110(b).
       17
              257 P.3d at 161.

                                            -41-                                     6903
common in the law and presumed to be generally understood.18 I find the regulatory
language to be more than sufficient to satisfy the Restatement’s guiding principles for
determining public policy, particularly the instruction that in “doubtful cases” we
conduct a “careful balancing” of the interests in favor and against enforcement of the
award.19 One of those interests, poignant under the facts of this case, we highlighted in
PSEA 2011: that we “be particularly vigilant where the employee’s misconduct was in
the performance of his or her duties and directed toward the public, and could therefore
undermine confidence in public institutions that rely upon the public’s trust.”20
              The court today concludes that just as there are gradations of dishonesty
that public policy will tolerate in its police officers, so too there are gradations of sexual
misconduct and the exploitation of victims of domestic violence. That may well be true.
But as the guiding principles in the Restatement and Pavone instruct us, it is unrealistic
to expect other branches of government to have identified the factual context of every
possible instance of misconduct, to have ranked them, and to have drawn precisely the


       18
              “The reasonable person standard is a hallmark of the Anglo-American legal
system,” which “assures that ‘the person of ordinary intelligence [has] a reasonable
opportunity to know what is prohibited, so that he may act accordingly’ ”; it “also serves
to prevent any ad hoc and subjective application by police officers, judges, juries, or
others empowered to enforce [the standard].” Twp. of Plymouth v. Hancock, 600
N.W.2d 380, 383 (Mich. App. 1999) (quoting Grayned v. City of Rockford, 408 U.S.
104, 108-09 (1972)). See also Stevens v. Matanuska-Susitna Borough, 146 P.3d 3, 10-11
(Alaska App. 2006) (quoting City of Beaufort v. Baker, 432 S.E.2d 470, 474 (S.C. 1993))
(“The objective ‘reasonable’ test is used in many areas of the law as an appropriate
determinant of liability and thus a guide to conduct.”); City of Madison v. Baumann, 470
N.W.2d 296, 302 (Wis. 1991) (“The reasonable-person standard is one that has been
relied upon in all branches of the law for generations.”).
       19
          PSEA 2011, 257 P.3d at 159 n.38 (quoting RESTATEMENT (SECOND ) OF
CONTRACTS § 178(2) cmt. b (1981)).
       20
              Id. at 162.

                                            -42-                                        6903

line at which the misconduct becomes intolerable as a public policy matter. Every
instance of potential misconduct need not be predicted in luminous detail before we can
find “an explicit, well-defined, and dominant public policy” against it. The Department
of Public Safety has done what it reasonably could be expected to do by emphasizing,
time and again, how important it is that police officers act with dignity and respect both
on and off the job.21 There seems little room for debate that the conduct at issue here is
such as “would cause a reasonable person to have substantial doubt about [the officer’s]
honesty, fairness, and respect for the rights of others and for the laws of this state and the
United States”; and it cannot reasonably be disputed that the conduct “is detrimental to
the integrity of the police department where the police officer worked.”22 The court
today is unwilling to say so.
              I believe it should. To summarize: It violates Alaska public policy when
police officers engage in sexual misconduct and the exploitation of domestic violence
victims; the Trooper-Grievant’s misconduct in this case, in violation of that policy, was
serious and reprehensible; and 13 AAC 85.110(b) directs, in language that is sufficiently
clear, that an officer who engages in serious misconduct in violation of compelling




       21
               See, e.g., AS 18.65.130 (establishing minimum standards for employment
as a police officer); AS 18.65.240(c) (providing that the Alaska Police Standards Council
may revoke the certificate of a police officer who fails to meet moral character
standards); 13 AAC 85.100(a), (b) (listing justifications for denying police certificates);
13 AAC 85.110(a)(2), (3) (delineating implementation of revocation authority, including
discretionary revocation for actions detrimental to the reputation or integrity of the police
department); Department of Public Safety Operating Procedures Manual (prohibiting
behavior that “shocks the conscience or that violates generally recognized standards of
professional behavior” and that “brings the Department into disrepute”).
       22
              13 AAC 85.110(b).

                                            -43-                                        6903

public policy not be retained. Necessarily, an arbitration decision requiring that the
officer be retained under those circumstances is itself in violation of public policy.
             I would therefore vacate the arbitrator’s award.




                                          -44-                                      6903

