Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca1-06-02501/USCOURTS-ca1-06-02501-0/pdf.json

Nature of Suit Code: 195
Nature of Suit: Contract Product Liability
Cause of Action: 

---

Of the District of Rhode Island, sitting by designation. *

United States Court of Appeals

For the First Circuit

Nos. 06-2501, 06-2519

LUIS R. SOTO-LEBRÓN, 

ELIZABETH ROSARIO DOMENECH, 

CONJUGAL PARTNERSHIP SOTO-ROSARIO,

PLAINTIFFS, APPELLEES/CROSS-APPELLANTS,

v.

FEDERAL EXPRESS CORPORATION,

DEFENDANT, APPELLANT/CROSS-APPELLEE.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Salvador E. Casellas, U.S. Senior District Judge]

Before

 Lipez and Howard, Circuit Judges,

and Smith, District Judge. *

Joseph D. Steinfield, with whom Laurie F. Rubin, Prince,

Lobel, Glovsky & Tye, LLP, and Vilma Maria Dapena were on brief,

for appellees.

Sandra C. Isom, with whom Carl Schuster, Mariela RexachRexach, and Schuster Aguilo LLP were on brief, for appellants.

August 20, 2008

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The complaint also named the conjugal partnership comprised 1

of Soto and Rosario as a co-plaintiff. 

Because Rosario's claim is derivative, we refer to Soto, at 2

times, as if he were the sole plaintiff. 

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LIPEZ, Circuit Judge. Plaintiffs Luis R. Soto-Lebrón

("Soto") and his wife, Elizabeth Rosario Domenech ("Rosario"), sued

Soto's former employer, Federal Express Corporation ("FedEx"),

following Soto's termination by the company for a violation of

company rules. The plaintiffs asserted emotional damages arising 1

from libel, slander, and intentional infliction of emotional

distress ("IIED"). Soto also claimed statutory damages for 2

wrongful termination pursuant to P.R. Laws Ann. tit. 29 §§ 185a185m ("Act 80"). The jury returned a verdict in favor of the

plaintiffs on all claims and awarded a total of $7,014,910.74 in

damages. The district court then granted FedEx's motion for

judgment as a matter of law on the slander claim and ordered a

remittitur on the IIED and libel awards, reducing the total award

to $4,014,910.74. FedEx appeals the sufficiency of the evidence to

support the liability findings and the damage awards, except on the

Act 80 claim. Soto cross-appeals the judgment as a matter of law

on his slander claim.

As we shall explain more fully below, FedEx badly

mishandled the termination of Soto. It conducted a sloppy

investigation of his alleged misconduct before firing him. There

are grounds for the indignation that the jury apparently felt about

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the performance of the company. Nevertheless, any such indignation

cannot overwhelm the legal rules that courts must apply to the

claims of liability and the award of damages in a case such as

this. Therefore, after a careful review of the record, we have

concluded that Soto did not introduce sufficient evidence to

establish FedEx's liability for slander and IIED, and hence we must

vacate those jury verdicts. There was sufficient evidence to

support liability for libel, and hence we affirm the jury's

liability finding on that claim. However, we have concluded that

the admission of irrelevant evidence tainted the jury's damage

calculation and that taint was not cured by the remittitur.

Accordingly, we remand for a new trial on damages on the libel

claim.

I.

Given the challenges to the sufficiency of the evidence,

we recite the facts in the light most favorable to the jury

verdict. Davignon v. Hodgson, 524 F.3d 91, 96 (1st Cir. 2008). 

On May 30, 2002, Soto, a fourteen-year employee of FedEx,

shipped a package through FedEx to Kissimmee, Florida. Soto's

wife, Rosario, a schoolteacher, had given it to him after packaging

it in her classroom with fellow teacher Loyda Romero. Rosario

asked Soto to send the box, which contained hair care products, to

Iris Romero, Loyda's sister, in Florida. Soto shipped it using the

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Section 7-35 of FedEx's "People Manual" states: "FedEx 3

Express offers FedEx Express employees . . . reduced rates for

personal shipping." The "Employee Eligibility" portion of the

policy states that "[t]his policy intends to offer discount

shipping through the FedEx Express system to eligible employees and

members of their immediate families (spouse or dependent children)

as an employee benefit." Soto acknowledged receipt of this policy

by signing a memorandum, dated August 30, 2001, that warned him

that "[a]ny abuse of this benefit may result in termination."

Soto consented to having the security interview tape 4

recorded, but FedEx never produced the tape during discovery,

reporting it lost. Accordingly, the court gave the jury a

spoliation instruction, permitting the jury to draw an adverse

inference from the disappearance of the tape. The facts recited

herein represent Soto's description of the security interview. 

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FedEx employee discount policy, which permits employees and members

of their immediate families to send packages at discounted rates.3

A. The Security Interview

When Soto arrived at work on June 6, 2002, he was told

that security wanted to speak to him. He was taken to a conference

room where Jose Pérez, a FedEx security specialist, was waiting for

him. Pérez said: "Sit there. I am Jose Pérez from security." 4

Throughout the interview Pérez remained seated, "leaning back on

the chair." Pérez told Soto that he "had a problem." Pérez showed

Soto the airwaybill for the package Soto had shipped to Florida and

asked him if he recognized the bill. Soto said that he "had filled

it out to send Iris Romero the package, the gift." 

Pérez then told Soto that "there were problems with that

package, that the package had been seized at the station where the

package ended up." Soto asked what type of problem the package

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had, and Pérez responded that the package "had controlled

substances, drugs" and that it "had been retained" by police. Soto

told him "that is impossible." Pérez responded by stating that

"they had evidence, that they had laboratory reports and police

records that there were drugs there." Soto testified that Pérez

"had some papers on top of the conference room table and during

interrogation he pull[ed] out a document from the documents he had

there that he said were evidence of the drugs and he said 'I have

a lab test' and throughout the interview would show the document

like this . . . . [H]e waived [sic] the document to me and put it

away." Pérez continued "asking [Soto] to tell the truth" and

repeating that "they had evidence."

Pérez said he had been a police officer. He said that he

had "left the police because he was not in agreement with the abuse

of the police and to tell him the truth, that if [Soto] told him

the truth, he would help [him]." Soto testified that Pérez's tone

of voice and demeanor during the interview were "strong[,] . . .

intimidating, with authority."

After "25 or 20 minutes" of interrogation by Pérez, Pedro

Contreras, another FedEx security specialist, entered the

conference room and Pérez left. Soto described Contreras as "more

at ease, more peaceful than Pérez because Pérez was acting with

authority." Soto explained that the substance of Contreras's

questioning was the same as that of Pérez, but that Contreras's

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approach was "quieter" and "calmer." Soto continued to deny that

drugs had been in the package. The questioning by Contreras lasted

"about 20 minutes."

Then, Pérez and Rolando Medina, the station manager, came

into the room, and Pérez said, "This guy has to be suspended

because he sent drugs through the system." Medina left the room

and returned with a letter of suspension, which Soto signed. The

suspension letter indicated that an investigation would be

conducted and advised Soto to contact his manager each morning.

The letter also stated, "[Y]our [sic] are not to contact any FedEx

location or customers without management approval." At the end of

the interview, Soto also prepared and signed a statement indicating

that he had shipped the package on behalf of Loyda Romero as a

favor and that he did not know the contents of the package. 

Following the security interview, Soto told the FedEx

officials that he had to go back to his delivery truck to retrieve

his belongings. Pérez said, "You can't do that. Just stop right

there." Instead, Pérez and Contreras retrieved Soto's belongings.

Then another FedEx employee escorted Soto outside to the security

check point where he got into his personal vehicle. As Soto was

being escorted outside, he passed by an area where he would be able

to see clients or customers of FedEx. He reported seeing one

person in that area. Medina told Soto as he was being escorted

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outside that he should "calm down, to be at ease, not do anything

crazy."

Soto explained that after the interrogation he "was

nervous, confused." He said: "I was shaking. I could not swallow.

I was not well. I was like crazy. I was like I was crazy." When

he left FedEx, he was scared. He explained, "I didn't know what I

was going to do, where I was going to go and then thinking that I

was going to be arrested because what I was told inside was that

the package contained drugs." When he arrived home, he told his

wife he had been suspended. He testified that "[s]he got

hysterical. She started crying, yelling and I tried to be strong

and to calm her down but I wasn't [able] to do so because we were

both in the same condition."

B. FedEx Proceeds to Terminate Soto

Soon after Soto arrived home, he and Rosario called Iris

Romero. Iris reported that she had received the package without

incident. Soto and Rosario were relieved, concluding that there

must have been a misunderstanding or a mistake. Soto immediately

called Security Specialist Pérez to tell him that Iris had received

the package. According to Soto's testimony, Pérez told him "that

the package was at the Federal Express station. That there was a

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The record does not reveal what "Becton and Dickinson" is or 5

why FedEx security personnel used this name for the lab.

-8-

test made by Becton and Dickinson and that there was a police 5

report." 

Because he perceived that Pérez did not believe him, Soto

then called Medina, the FedEx station manager, to explain the

situation. He gave Medina the telephone number for Iris and asked

him to call her, but Medina did not call. Medina repeated what

Pérez had said: that a lab test had been conducted by Becton and

Dickinson and that there was a police report. He told Soto that

the police had the package.

Soto called in to FedEx every morning, as he had been

instructed to do in his suspension letter. Each morning, he asked

to speak to Medina and was instead transferred to Operations

Manager Alberto Calero, Soto's immediate supervisor. Each morning,

Calero responded that "they were dealing with the case." On June

11, Calero prepared and filed a report stating: "Investigation by

Specialist Pérez revealed that on 5-30-02, Soto shipped [airwaybill

number] for a friend of his wife, in violation of FedEx policy 7-35

[the employee reduced rate policy] as admitted by him during a

taped recorded interview. Further investigation by the Orange

County Sheriff Dept., Orlando, FL revealed that the package

contained an undetermined amount of liquid cocaine. Soto was

suspended and consequently terminated for the above violation." 

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On June 13, Soto was told to come into the station at

three in the afternoon. Soto was brought into a conference room

where Calero gave him a termination letter. Soto testified: 

Calero signs my letter of dismissal, of

termination and he hadn't done any

investigation so I asked him, "Calero, why did

you do this? You didn't do any investigation.

Why are you doing this? What did you do with

the information I gave Rolando Medina?

Calero, why did you do this" because he had

told me that he hadn't done any investigation

and if he didn't do any investigation, how can

he sign the paper saying that an investigation

had been done?

Calero responded that Soto "was responsible for what [his] family

did." Soto asked to speak to Pérez. Medina responded that he was

not available. Soto said, "[W]ell, he is not here because he

[knows] that what he had accused me of was a lie because the

package had been delivered and nothing had happened. There hadn't

been any arrests. I had not been interrogated by any police

officer."

Soto's termination letter, dated June 13, 2002, stated:

"A thorough investigation of an alleged violation of the Employee

reduced-rate Shipping Policy 7-35 has determined that you allowed

your employee reduced rate privileges to be utilized to ship a

package for an ineligible person. In addition, the shipment

allowed an illegal substance to be transported through the system

in further violation of FedEx policies."

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It appears that Pérez obtained this information from his 6

supervisor, who had received it from FedEx security personnel in

Florida.

-10-

Soto's termination letter informed him that he could

invoke review procedures under the FedEx "Guaranteed Fair Treatment

Procedure/EEO Complaint Process" ("GFTP") by submitting a request

for review. He did so in a written statement on June 17, asking

the company to further investigate the allegation that the package

contained drugs.

C. FedEx's Investigation into the Contents of the Package

At the time of the initial security interview, neither

Pérez nor Contreras, the two security specialists, had a copy of a

police report or a lab report identifying the contents of the

package as illegal drugs. Pérez testified that, prior to

questioning Soto, he had been briefed by Contreras, who told him

that "the package had been stopped by law enforcement in Orlando

because allegedly it had a drug alert and they did some testing and

whatever." Later the same day, Pérez sent an email to Medina, the

station manager, stating that the package contained approximately

one kilogram of cocaine. The email also stated that Pérez had made

a call to investigate further and learned "that not only was there

a K-9 alert, a field test conducted but, the contents were analyzed

by the FDLE (Florida Dept. of Law Enforcement)." Medina forwarded 6

this email to his supervisor, Managing Director Roby Brown, and

Maruchi Torres, the acting manager of human resources.

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Both Iris Romero and her daughter testified that the package 7

had been delivered by a FedEx truck on June 4. The package was

shown to the jury. Iris testified that one of the bottles, the

hair relaxer, was not in its original package ("it had been taken

out and place[d] in a ziplock bag"). No one from any law

enforcement agency ever contacted Iris or Soto regarding the

package.

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Some time after the interview, Pérez also telephoned John

Matlock, a FedEx security specialist assigned to Orlando, asking

for further documentation regarding the incident. On June 13,

Matlock faxed a copy of the incident report filed by the sheriff's

office in Orange County, Florida to Pérez. The incident report,

which was admitted at trial to show what FedEx knew – rather than

for its truth – states that a K-9 alert identified the package as

containing narcotics. The police officer then obtained a search

warrant and opened the package. Inside, the officer found a "30 cc

syring [sic] bottle" with a white substance in it. The officer

stated that he did a "field persumptive [sic] test" on the

substance and the "test resulted positive for the presence of

cocaine."

It is now clear that the package Soto shipped did not

have cocaine in it. At trial, the judge admitted a lab report

indicating that the 30 cc bottle taken from Soto's package tested

negative for cocaine. The report, completed by the Florida 7

Department of Law Enforcement (FDLE), is dated June 25, 2002 –

twelve days after Soto's termination, but while the company's GFTP

review of that decision was ongoing. 

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FedEx challenges this evidentiary ruling on several grounds. 8

However, we perceive no abuse of discretion in the district court's

decision.

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When the plaintiffs sought to introduce the FDLE lab

report into evidence during their case in chief, FedEx objected on

the basis that there was nothing to link the report to Soto's

package. The trial judge observed that FedEx had had the lab

report throughout the lengthy discovery period in the case, and had

filed numerous motions in limine as to other evidentiary concerns,

but had never before raised the linkage issue. As a result, the

trial judge allowed the plaintiffs time to request a document

linking the lab report to the police officer's incident report and

then allowed the plaintiffs to introduce that document, along with

the lab report, as rebuttal evidence after one of FedEx's witnesses

testified about the initial K-9 alert and field presumptive test.8

In sum, the evidence indicates that the package Soto

shipped was stopped by law enforcement personnel after field

testing indicated the presence of cocaine. A subsequent lab report

revealed that the package contained no illicit drugs. There is no

evidence to suggest that FedEx was aware of the existence of this

lab report prior to the commencement of Soto's litigation. There

is also no evidence to suggest that anyone at FedEx ever

specifically asked for or tried to locate the FDLE lab test results

at any time prior to the commencement of litigation.

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D. The GFTP Review Process

On June 18, Operations Manager Calero and Station Manager

Medina each wrote memoranda explaining the management rationale for

Soto's termination. Calero's memorandum stated: "After reviewing

the Security Investigation outcome it was determined, that Luis R.

Soto sent a package for a friend of his wife using his FedEx

Employee reduced rate-shipping discount. In addition, this

violation of FedEx Policy allowed illegal substances to be shipped

through the system." Medina's memorandum stated: "Luis R. Soto

admitted in a conversation with me and Security Specialist Jose

Pérez, that in fact he shipped a package for a friend of his wife

using his employee discount and that he was not aware of its

contents. The airwaybill utilized had Luis Soto's name as the

shipper. This violation of the Employee Reduced-Rate Shipping

policy allowed an illegal substance to be transported through the

FedEx system. Some other factors considered were; that if we allow

this to happen based on the premises that the contents were not of

the employees [sic] knowledge we will be establishing a precedent

for future situations of this magnitude. The ultimate responsible

[sic] for any shipment sent through the FedEx system is the

shipper."

On June 19, Soto met with Managing Director Brown, who

gave him copies of the incident report prepared by the police in

Florida and the search warrant for the package. Acting Managing

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This appears to be a reference to Pérez, the security 9

specialist who had first interviewed Soto.

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Director of Human Resources Torres, Calero, and Medina were also

present at the meeting. Two days later, Brown sent Soto a letter

upholding the dismissal: "A review . . . clearly demonstrates that

you violated the Employee Reduced Rate Shipping Policy, (P7-35).

It also should be noted that the violation of this policy allowed

an illegal substance to be transported through the FedEx system,

putting your fellow FedEx employees at risk."

Soto initiated the second step of the GFTP process on

June 27 with a letter to Julio Colomba, a FedEx Senior Vice

President. He asked, "Where is the lab report that indicates the

presence of illegal substances?" On July 8, John Matlock, the

Orlando security specialist, sent an email to Jesus Rodriguez, a

human resources person who was working on the investigation,

summarizing the evidence he had about Soto's package: 

The local Police Officer tested the contents

and it tested positive. The cocaine was then

removed from the pkg and then there was an

attempt to deliver. There was no one home and

the package was left at the door in an attempt

to find the recpt. The pkg might have been

delivered but it was not delivered with the

cocaine in it. As far as the written results

request, I sent the Security person there the 9

only written report from the police officer.

Colomba did not meet with Soto. Instead, he wrote a letter dated

July 12, reaffirming the dismissal and once again stating: "A

review of this issue revealed that you shipped a package through

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the FedEx system containing an illegal drug (cocaine)." Colomba's

letter was copied to each of the personnel involved in the GFTP

process (Brown, Medina, Calero and Rodríguez), as well as Juan

Cento (Colomba's boss), Nelly Concepcion (Rodríguez's boss), and

Suzanne Gaal (Concepcion's boss). Soto testified that when he

received this letter, "having a VP of the company state [that Soto]

had sent drugs, cocaine," he felt as if "[his] world came to an

end, [and] fell on [him]." The GFTP review was finalized with a

letter on August 6, 2002. This letter did not state the reason for

the termination or refer to illegal substances or any other

negative information about Soto.

E. The Plaintiffs' Emotional Distress

At trial, Soto testified that he had experienced

"[e]motional damages, anxiety," sleeping problems, and "deep

sadness" following the events described above. He saw a

psychiatrist ten times (the maximum his health insurance would

allow) beginning in October 2002, and was prescribed various

medications for anxiety and panic. He explained that he had sought

psychiatric treatment because he wanted to feel like himself again:

"I mean that I was a happy man like every Puerto Rican. I wanted

to be the heart of the party, to share with my buddies, play

basketball and everything that Luis Soto entailed. I wasn't able

to sleep. I would wake up every night at midnight. I didn't know

what time it was but I couldn't sleep." He described himself as

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"anxious always without being able to talk." When asked

specifically about damage to his reputation, Soto testified: "It

was said that I had sent drugs in a package and to me that was stab

and as of this date, it is still in the record, my record that I

transported drugs through the system, illegal substances through

the system."

Rosario explained her own emotional distress as stemming

from her guilt in having been the one who gave Soto the package and

feeling "impotent to do something to help him." She visited a

psychiatrist a couple of times and took various antidepressant

medications because she was "in extreme anxiety, very nervous" and

"had some panic attacks." 

The district court also admitted testimony that Soto's

co-workers had heard rumors that he was being accused of shipping

drugs through the system, and they conveyed those rumors back to

Soto. Rosario described these rumors as "devastating" for their

reputation. She described her husband as having been "destroyed"

by the knowledge that these rumors were circulating at FedEx.

In response to FedEx's interrogatories during discovery,

Soto stated that he was seeking damages only for emotional

distress. He did not claim economic damages or produce documents

that would have supported a claim for lost wages. Soto failed to

supplement his answers to interrogatories after economic damages

were discussed at various depositions. Accordingly, the court

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ruled that evidence of Soto's economic damages would be excluded

under Fed. R. Civ. P. 37. However, the court permitted testimony

regarding "economic facts . . . to lay the groundwork or foundation

for any emotional damages that this plaintiff may have suffered."

As a result, Soto presented other damage evidence, discussed in

more detail below, describing how his family struggled financially

as a result of his termination from FedEx and the emotional toll

those financial struggles took.

F. The Verdict and Appeal

In submitting this case to the jury following a ten-day

trial, the district court used a special verdict form that required

the jury to make specific findings on the particular elements of

each cause of action and separate damage awards for each claim on

which it found liability. After finding liability as to all

claims, the jury returned statutory damages of $14,910 for wrongful

discharge, a $1,000,000 award for slander, a $3,000,000 award for

libel, a $2,000,000 award for IIED, and a $1,000,000 award for

Rosario on her derivative claim. In response to a motion for

remittitur and judgment as a matter of law, the district court

vacated the slander award, reduced the libel award to $1,800,000,

and reduced the IIED award to $1,200,000. The district court did

not reduce Rosario's $1,000,000 award, on the ground that FedEx did

not argue that it should be remitted.

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FedEx appeals, challenging the sufficiency of the

evidence as to liability for IIED and libel, as well as the amount

of the damage award, and asserting several other errors, including

an evidentiary error in the admission of certain testimony

regarding Soto's emotional distress damages. Soto cross-appeals,

urging us to reinstate the slander award. 

II.

We first consider the backdrop of Puerto Rico's modified

at-will employment law, which plays a critical role in this case,

and then turn to the issues on appeal. Puerto Rico has altered its

at-will employment regime to provide for a statutory damage award

when an employee without a fixed-term contract is terminated

without good cause. P.R. Laws Ann. tit. 29, §§ 185a-185m.

Referred to as Act 80, this statute defines good cause for

termination to include, inter alia, "[t]he employee's repeated

violations of the reasonable rules and regulations established for

the operation of the establishment, provided a written copy thereof

has been opportunely furnished to the employee." P.R. Laws Ann.

tit. 29, § 185b(c). Although the statutory language requires

repeated violations, the Puerto Rico Supreme Court has stated, and

the jury in Soto's case was instructed, that an employer may be

justified in terminating an employee after a single violation of

the employer's rules if the offense is "'of such [seriousness or]

nature as to reveal an attitude or a character trait so dangerous

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The official translations of many of the Puerto Rico cases 10

cited herein do not contain internal page numbers. Accordingly, we

cannot include pin-point citation references for those cases.

-19-

to the peace and good order of the enterprise, that it would be

imprudent to wait for a second offense to separate him from the

enterprise.'" Delgado Zayas v. Hosp. Interamericano de Medicina

Avanzada, 137 D.P.R. 643, 1994 P.R.-Eng. 908,890 (P.R. 1994)10

(quoting Secretario del Trabajo v. I.T.T. W. Hemisphere

Directories, Inc., 108 D.P.R. 536, 544, 8 P.R. Offic. Trans. 564,

569-70 (P.R. 1979)). The employer bears the burden of showing that

the termination was for good cause. 29 P.R. Laws. Ann. tit. 29, §

185a. 

The statute provides a formula for calculating what

amounts to mandatory "severance pay" for employees who are

wrongfully terminated. Id. The formula provides that the employee

is entitled to:

(a) The salary corresponding to two (2)

months, as indemnity, if discharged within the

first five (5) years of service; the salary

corresponding to three (3) months if

discharged after five (5) years and up to

fifteen (15) years of service; the salary

corresponding to six (6) months if discharged

after (15) years of service.

(b) An additional progressive compensation

equal to one (1) week for each year of

service, if discharged within the first five

(5) years of service; to two (2) weeks for

each year of service, if discharged after five

(5) years and up to fifteen (15) years of

service; to three (3) weeks for each year of

service if discharged after fifteen (15) years

of service. 

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This case is not available in English translation in 11

Westlaw's database. We have relied on the slip version of the

official translation. 

-20-

Id. For Soto, this formula produced an award of $14,910.74.

Act 80's damage formula provides the exclusive remedy for

wrongful termination of at-will employees in Puerto Rico. Porto v.

Bentley P.R., Inc., 132 D.P.R. 331, 1992 P.R.-Eng. 754,807 (P.R.

1992); Arroyo v. Rattan Specialities, Inc., 117 D.P.R. 35, 65, 17

P.R. Offic. Trans. 43 (P.R. 1986); Rivera v. Sec. Nat'l Life Ins.

Co., 106 D.P.R. 517, 527, 6 P.R. Offic. Trans. 727 (P.R. 1977)

(referencing prior version of the statute). A wrongfully

terminated employee cannot recover emotional distress damages for

the termination itself. See Porto, 132 D.P.R. 331 ("[T]he only

remedy available to an employee for a mere discharge without just

cause is that provided by Act No. 80."). However, "if other

independent tortious actions concur with the discharge, the

employer may be held liable for said conduct." Porto, 132 D.P.R.

331. Thus, the Puerto Rico Supreme Court has allowed defamation

claims to proceed alongside Act 80 claims, holding that an

employer's defamatory actions can be considered independent of the

discharge. Acevedo Santiago v. W. Digital Caribe, Inc., 140 D.

P.R. 452, 40 P.R. Offic. Trans. ___ (P.R. 1996); Porto, 132 D.P.R. 11

331. 

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The jury could have found liability for wrongful termination 12

either by concluding that the termination was at least partially

motivated by the unfounded drug allegations or by concluding that

a single violation of the employee shipping policy would not be

good cause for termination unless the package actually contained

cocaine. Either way, FedEx's inadequate investigation of the drug

allegations is implicated in the wrongful termination verdict.

-21-

At trial, FedEx contended that it was justified in

terminating Soto on the basis of his single violation of the

employee shipping policy. It argued that the drug allegations were

not the cause of the termination; thus, it was not obliged to fully

investigate them. Soto argued that the drug allegations were

clearly part of FedEx's termination decision and, as a result, they

should have been fully investigated. The jury evidently agreed,

finding the company liable for wrongful termination. The 12

resulting $14,910.74 award is the only compensation available to

Soto for his damages arising from the fact of termination. FedEx

has not appealed that award.

With this discussion as background, we turn to Soto's

allegations that FedEx committed "independent tortious actions"

that caused emotional harm separate from that caused by the

discharge, namely his claims of slander, IIED, and libel.

III.

In assessing the sufficiency of the evidence, we consider

whether, viewing the evidence in the light most favorable to the

verdict, a rational jury could find in favor of the party who

prevailed. Gillespie v. Sears, Roebuck & Co., 386 F.3d 21, 25 (1st

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Soto presented claims for both slander and libel at trial. 13

The two causes of action differ only in that the slander claim is

founded on oral statements, which allegedly accounted for the

-22-

Cir. 2004). Judgment as a matter of law is warranted when "the

presentation of the party's case reveals 'no legally sufficient

evidentiary basis' for a reasonable jury to find for that party."

Mag Jewelry Co. v. Cherokee, Inc., 496 F.3d 108, 117 (1st Cir.

2007) (quoting Fed. R. Civ. P. 50(a)(1)). The district court's

decision to grant or deny a motion for judgment as a matter of law

is reviewed de novo. Mag Jewelry Co., 496 F.3d at 117; Gillespie,

386 F.3d at 25. In this diversity case, Puerto Rico law governs

our sufficiency inquiry. See Erie R. Co. v. Tompkins, 304 U.S. 64,

78 (1938); Correa v. Cruisers, a Div. of KCS Int'l, 298 F.3d 13, 22

(1st Cir. 2002).

A. Cross-Appeal on Slander Award

The district court determined that FedEx was entitled to

judgment as a matter of law as to the slander claim because Soto

had failed to link rumors regarding the cause of his termination to

a FedEx employee acting within the scope of his employment. We

agree. 

To establish his slander claim, Soto bore the burden of

proving that a FedEx employee, acting within the scope of his

employment, transmitted a false and defamatory statement to another

person, and that this transmission was negligent – as opposed to

merely accidental – and non-privileged. Corrada Betances v. Sea- 13

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widespread rumors of Soto's involvement with drugs, while the libel

claim is founded on written statements.

-23-

Land Serv., Inc., No. Civ. 99-1671 JP, 2000 WL 33687211, at *4-5

(D.P.R. July 25, 2000), aff'd, 248 F.3d 40 (1st Cir. 2001); see

also Torres Silva v. El Mundo, Inc., 106 D.P.R. 415, 6 P.R. Offic.

Trans. 581, 598 (P.R. 1977). Circumstantial evidence may be used

to prove that it was the defendant who made a particular –

allegedly defamatory – statement. See Riisna v. Am. Broad. Cos.,

219 F. Supp. 2d 568, 575 (S.D.N.Y. 2002); Robert D. Sack, Sack on

Defamation § 2.5.1, at *2-85 (Mar. 2007) ("[I]t has been said that

circumstantial evidence may be used to establish that the defendant

published the allegedly defamatory words. That is not to say,

however, that the content of an allegedly defamatory statement can

be proven purely through hearsay.").

Soto introduced evidence that rumors regarding the

reasons for his suspension and dismissal circulated widely among

FedEx employees. He testified that he did not tell anyone at FedEx

what had happened. Nonetheless, soon after he was suspended, he

received inquiries from his coworkers, asking whether it was true

that he had been suspended because his wife had given him a package

containing drugs.

Soto also introduced testimony that FedEx kept personnel

files strictly confidential. One witness testified that, based on

his fourteen years with the company, leaked information about an

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-24-

employee could only come from management. However, that same

witness also testified that no member of management had told him

anything about the reasons for Soto's suspension.

Soto argues that the evidence that the rumors did not

come from Soto himself, and that only management would have had

access to the information, allowed the jury to make a reasonable

inference that FedEx management personnel were the source of the

rumors. However, even if it were logical to infer, as Soto argues,

that someone in FedEx management must have said something to

someone to start the rumors, that inference falls far short of

proving each of the elements of slander. See Riisna, 219 F. Supp.

2d at 575 ("There are too many links between any statement by [the

defendant], if any there were, and whatever came back to plaintiff

or her informants to permit a rational inference that whatever the

plaintiff or her informants heard was what [the defendant] said.").

Soto's circumstantial evidence that the rumors originated with

management does not establish whether management personnel spoke

negligently, rather than being accidentally overheard. Soto also

did not establish that the statements that sparked the rumors were

false. For example, management could have stated that Soto's

package was stopped by officials after a K-9 alert for drugs. That

statement is true and could not be grounds for a slander claim,

though it could well have sparked the rumors. 

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In sum, the evidence introduced in support of the slander

claim "does not rise to more than informal rumors" circulating

among employees, for which FedEx cannot be held liable. See

Corrada Betances, 2000 WL 33687211, at *5. Accordingly, we affirm

the district court's judgment as a matter of law in favor of FedEx

on this claim.

B. Intentional Infliction of Emotional Distress

Under Puerto Rico law, the elements of a claim for

intentional infliction of emotional distress are: 1) that the

defendant engaged in extreme and outrageous conduct; 2) that such

conduct was intended to cause the plaintiff severe emotional

distress, or was done with reckless disregard for the plaintiff's

emotional state; 3) that the plaintiff suffered severe emotional

distress; and 4) that the severe distress is causally related to

the extreme and outrageous conduct. Santiago-Ramirez v. Sec'y of

Dep't of Defense, 62 F.3d 445, 448 (1st Cir. 1995); Camacho v.

United States, No. Civ. 04-1816 HL, 2005 WL 2644959, at *7 (D.P.R.

May 24, 2005); Restatement (Second) of Torts § 46 (1965).

 Because there is limited authority in Puerto Rico case

law regarding IIED, we look to the Restatement and the

interpretation of IIED claims in other jurisdictions for guidance.

Santiago-Ramirez, 62 F.3d at 448 (relying on the Restatement and

case law from other jurisdictions in an IIED case under Puerto Rico

law). A comment to the Restatement explains that the plaintiff has

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a heavy burden in proving that the defendant's conduct has been

sufficiently offensive to permit a finding of liability: 

It has not been enough that the defendant has

acted with an intent which is tortious or even

criminal, or that he has intended to inflict

emotional distress, or even that his conduct

has been characterized by "malice," or a

degree of aggravation which would entitle the

plaintiff to punitive damages for another

tort. Liability has been found only where the

conduct has been so outrageous in character,

and so extreme in degree, as to go beyond all

possible bounds of decency, and to be regarded

as atrocious, and utterly intolerable in a

civilized community. Generally, the case is

one in which the recitation of the facts to an

average member of the community would arouse

his resentment against the actor, and lead him

to exclaim, "Outrageous!"

Restatement (Second) of Torts § 46 cmt. d; see also Thorpe v. Mut.

of Omaha Ins. Co., 984 F.2d 541, 545 (1st Cir. 1993) (conduct must

be "extreme and outrageous," "beyond all possible bounds of

decency," and "utterly intolerable in a civilized community").

Moreover, when employers have been accused of outrageous conduct

toward their employees, courts have afforded employers "some

latitude in investigating possible employee misconduct."

Santiago-Ramirez, 62 F.3d at 448 (applying Puerto Rico law) (citing

Starr v. Pearle Vision, Inc., 54 F.3d 1548, 1558 (10th Cir. 1995));

Camacho, 2005 WL 2644959, at *7 (applying Puerto Rico law).

Soto argues that FedEx's treatment of him, "in its

totality, was 'extreme and outrageous.'" He explains that his

"ordeal was not an isolated event but a series of inexcusable acts

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-27-

unrelated to the employment action taken against [him]." In order

to analyze whether FedEx's conduct exceeded the latitude we afford

employers in "investigating possible employee misconduct" and went

"beyond all possible bounds of decency," we must consider the

particular actions by FedEx upon which Soto bases his IIED claim:

the repeated allegations that he had shipped drugs, the security

interview, and the inadequate investigation. We address each in

turn.

1. Allegations That Soto Shipped Drugs

It is now clear that Soto was accused by FedEx,

repeatedly and in writing, of doing something that he did not do:

shipping, or allowing someone else to ship, drugs through the FedEx

system. Those were egregiously false accusations. Those

accusations are precisely the basis of his libel claim. Such a

claim cannot be brought in the guise of an IIED claim, which would

divorce it from the well developed law of defamation with its

attendant privileges and defenses. See Demas v. Levitsky, 738

N.Y.S.2d 402, 409 (N.Y. App. Div. 2002) (holding that where "the

conduct alleged . . . falls squarely within the scope of

plaintiff's defamation claim," the plaintiff's IIED claim should

have been dismissed); Grimes v. Carter, 50 Cal. Rptr. 808, 813

(Cal. Ct. App. 1966) (holding that "[i]n circumstances where a

plaintiff states a case of libel or slander, [emotional distress]

is a matter which may be taken into account in determining the

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-28-

amount of damages to which the plaintiff is entitled, but it does

not give rise to an independent cause of action on the theory of a

separate tort.").

Moreover, the jury here was instructed, without

objection, that "[t]he publication of a defamatory statement does

not constitute extreme and outrageous conduct." This jury

instruction thus became the law of the case and establishes the

standard by which we review the sufficiency of the evidence on

appeal. Rodriguez-Torres v. Caribbean Forms Manufacturer, Inc.,

399 F.3d 52, 58 (1st Cir. 2005); see also Scott-Harris v. City of

Fall River, 134 F.3d 427, 442 & n.16 (1st Cir. 1997), rev'd on

other grounds, 523 U.S. 44 (1998). Soto seeks to avoid the impact

of this jury instruction by asserting that it is the repetition of

the defamatory statements that amounts to the "extreme and

outrageous conduct" here. However, the repetition of the

statements is properly analyzed in the context of an abuse of an

employer's conditional privilege to speak about an employee. See

Porto, 132 D.P.R. 331 (describing the elements of conditional

privilege). Accordingly, to the extent that Soto's IIED claim is

predicated on defamatory statements, the conduct must be considered

under the framework of Soto's libel claim, which we address below,

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Soto's brief states that "the IIED claim revolves around 14

facts that are separate and distinct from the defamation claim and

involve different injuries." Although other portions of the brief

appear to marshal the defamatory conduct in support of his IIED

claim, this statement appears to be an acknowledgment that FedEx's

defamatory actions cannot form the basis of Soto's IIED claim. 

-29-

and cannot, as a matter of law, satisfy the "extreme and outrageous

conduct" requirement of the IIED claim.14

2. The Security Interview

Soto also points to the security interview as "extreme

and outrageous" conduct by FedEx. As we noted above, courts have

afforded employers "some latitude in investigating possible

employee misconduct." Santiago-Ramirez, 62 F.3d at 448 (citing

Starr v. Pearle Vision, Inc., 54 F.3d 1548, 1558 (10th Cir.

1995))(applying Puerto Rico law); Camacho, 2005 WL 2644959 at *7

(applying Puerto Rico law). 

In Santiago-Ramirez, we addressed circumstances

remarkably similar to the security interview conducted in Soto's

case:

Appellant, Santiago, worked as a cashier at

Fort Buchanan's Army Post Exchange Store. The

store's policy prohibited employees from

carrying merchandise through the front door.

On June 29, 1990, Santiago and a co-employee

violated this policy when they removed bags

containing store merchandise through the front

entrance. They placed these bags in the trunk

of the co-employee's car. Unbeknownst to

Santiago, the bags contained stolen

merchandise. The Safety and Security Manager

and Santiago's supervisor questioned her for a

total of 45 minutes concerning this breach of

store policy. Santiago told them that she did

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-30-

not know that the merchandise was stolen but

was aware of the store's regulation that

prohibited employees from carrying merchandise

through the front door. She was later

terminated for violating this regulation.

62 F.3d at 446. During the security interview, Santiago "was shown

a videotape supposedly taken at the store where she worked" and

"told that if she did not cooperate with the investigation 'all of

this could be taken to the F.B.I.'" Id. at 448. We held that

"[b]ecause this questioning was a necessary incident of employment

for an employee who had broken the rules, under Puerto Rican law it

cannot be said to be intentionally tortious." Id. In analyzing

Santiago's claim, we drew an analogy to Starr, a Tenth Circuit case

which held that "a plaintiff's allegations that her employer yelled

at her, pushed her back down into her chair, touched her arm and

blocked her exit from the room during questioning, did not rise to

the level of outrageousness required to state a cause of action for

intentional infliction of emotional distress." Santiago-Ramirez,

62 F.3d at 448 (describing the holding in Starr, 54 F.3d at 1558).

Contrasting the facts in Starr and Santiago-Ramirez with

those in Kaminski v. United Parcel Service, 501 N.Y.S.2d 871 (N.Y.

App. Div. 1986), a case cited by the plaintiffs, is instructive in

evaluating when an employer's interrogation of an employee

suspected of violating company rules crosses over the line into

"outrageous and extreme conduct." In Kaminski, UPS security

personnel accused the plaintiff, a UPS driver, of "not having

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-31-

reported the receipt of a cash payment for a package." 501

N.Y.S.2d at 872. The plaintiff denied the charge. The security

personnel told the plaintiff that he had been identified as the

thief by two eyewitnesses. "They then allegedly began to threaten

him with a criminal prosecution and a prison term at Riker's Island

if plaintiff did not admit stealing the money, agree to return the

money, resign, and waive his rights to all health, hospital and

pension benefits." Id. The plaintiff alleged that "for three

hours he was subjected to these threats which were accompanied by

loud, aggressive, profane and obscene language and gestures." Id.

He claimed that "[a]t all times one or another of the defendants

was blocking the door to the office." Id. Finally, he claimed

that after three hours of this ordeal, "under duress and still

denying the accusation, [he] signed resignation papers and

documents relinquishing his pension plan and health and hospital

benefits and statements admitting his guilt." Id. On these facts,

the court permitted the employee's IIED claim to survive a motion

to dismiss.

Comparing the facts in Soto's case with the facts in

these three cases leads us to the conclusion that, as a matter of

law, the security interview conducted by FedEx does not constitute

"outrageous and extreme conduct." The interview established that

Soto had used his employee discount to ship a package for his

wife's friend without knowledge of its contents in violation of

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-32-

FedEx's policy. The questioning lasted approximately 40-45

minutes, comparable in length to the questioning in SantiagoRamirez. There was no evidence of any physical intimidation,

blocking of the exits, or pushing. Unlike in Kaminski, Security

Specialist Pérez did not threaten Soto with a prison sentence,

pressure him into resigning and relinquishing his pension plan

benefits, or make any other verbal threats. Under these

circumstances, it is more accurate to characterize the security

interview of Soto as a "necessary incident of employment for an

employee who had broken the rules." See Santiago-Ramirez, 62 F.3d

at 449.

The most egregious aspect of the interview was Pérez's

statement that he had a lab report as he waived a piece of paper in

front of Soto. Pérez was, of course, bluffing. He did not have a

copy of any document other than the airwaybill at the time of the

security interview. However, Pérez had been told by his

supervisors that the package was intercepted by police in Florida

and had tested positive for cocaine. Under these circumstances,

his bluff could not reasonably be considered "beyond all possible

bounds of decency." 

Soto also complains that he was "summarily suspended and

publicly escorted off FedEx premises." However, these actions are

well within the latitude we afford employers investigating employee

misconduct. The decision to remove him immediately and accompany

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Soto also argues that the "mysterious" disappearance of the 15

audio tape of the security interview should be considered as one

element in FedEx's egregious course of conduct. However, Soto was

unaware that the tape had been lost until FedEx failed to produce

it during discovery in this case. As such, its disappearance is

not relevant conduct for the IIED inquiry. See Knussman v.

Maryland, 272 F.3d 625, 641 (4th Cir. 2001) ("Generally speaking,

litigation-induced emotional distress is never a compensable

element of damages.").

-33-

him as he left the company property was a reasonable course of

action in the face of the allegations against him. Thus, none of

the conduct during or immediately following the security interview

was "extreme and outrageous." It cannot support the intentional 15

infliction of emotional distress claim. 

3. The Inadequate Investigation

Soto points to the inadequacy of the investigation as

another aspect of FedEx's outrageous conduct: "FedEx did little or

nothing to obtain the facts, apparently preferring to avoid the

truth in favor of a lie." The inadequacy of FedEx's investigation

to support the allegation that Soto's package contained drugs is

unmistakable, and that inadequacy remains a troubling aspect of

this case. Soto emphasized that inadequacy as a key element of his

argument that FedEx's termination of him was wrongful and, as we

describe below, that FedEx had abused its conditional privilege to

publish statements about an employee. However, the inadequate

investigation is not conduct on the part of FedEx that caused harm

to Soto independent of the harms caused by the termination itself

and the publication of the libelous statements. The harm arising

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-34-

from the termination is, as we explained above, compensable only

under Act 80, and cannot factor into our analysis of IIED. P.R.

Laws Ann. tit. 29, § 185a; Vélez Rodríguez v. Pueblo Int'l, Inc.,

135 D.P.R. 500, 1994 P.R.-Eng. 909576 (P.R. 1994) ("The

compensation provided by law is the exclusive remedy for unjust

discharge."). Similarly, Soto's emotional distress arising from

defamatory statements published by the company must be analyzed

under the framework of libel law.

4. The Whole Course of Conduct Theory

Soto argues that the sum total of the repeated

defamation, the failure to investigate, and the security interview

– FedEx's whole course of conduct – amounts to "extreme and

outrageous conduct," even if the individual actions by FedEx, taken

separately, would not. We cannot agree, particularly when two of

the actions cited by Soto – the repeated accusations that he

shipped drugs and the inadequate investigation of that claim –

cannot be considered as conduct relevant to the IIED claim. Soto

has not described any conduct, taken together or separately, that

could properly form the basis of a claim for IIED.

Because Soto has failed to introduce sufficient evidence

to support a finding of "extreme and outrageous conduct" by FedEx,

his IIED claim necessarily fails. Accordingly, we reverse the

district court's denial of FedEx's motion for judgment as a matter

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FedEx separately challenges whether this statement was ever 16

published to any other person within FedEx. However, Operations

Manager Calero's report dated June 11 explicitly refers to an

investigation by Pérez. Thus, we conclude that there was

sufficient evidence to allow the jury to infer that Calero read

Pérez's incident report in preparing his own report.

-35-

of law and vacate Soto's $1.2 million remitted damage award on that

claim.

C. Libel

FedEx also challenges the sufficiency of the evidence to

support Soto's libel claim. Under Puerto Rico law, Soto must prove

that FedEx negligently published false and defamatory written

statements that caused him actual harm. He must also demonstrate

that FedEx abused its conditional privilege to speak about its

employees. Porto, 132 D.P.R. 331.

Soto asserts that FedEx published ten false and

defamatory statements stating that he illegally shipped drugs:

C "The aforementioned [airwaybill] contained approximately

one kg. of cocaine." Email from Security Specialist

Pérez to Station Manager Medina, dated June 6, 2002.

C "[F]urther investigation . . . revealed that the package

contained an undetermined amount of liquid cocaine."

Incident report written by Pérez, dated June 11, 2002.16

C "A thorough investigation . . . has determined that you

. . . allowed an illegal substance to be transported

through the system in further violation of FedEx

policies." Termination letter (copied to Managing

Director Brown and Rodríguez, a human resources officer),

dated June 13, 2002.

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Each of the GFTP memoranda circulated among FedEx management 17

and human resources personnel who were participating in the GFTP

review process.

-36-

C "This violation . . . allowed an illegal substance to be

transported through the FedEx system." GFTP Memorandum

prepared by Medina, dated June 18, 2002.17

C "[T]his violation of FedEx Policy allowed illegal

substances to be shipped through the system." GFTP

Memorandum prepared by Operations Manager Calero, dated

June 18, 2002.

C "A review . . . clearly demonstrates that . . . the

violation . . . allowed an illegal substance to be

transported through the FedEx system, putting your fellow

FedEx employees at risk." Letter from Brown to Soto

(copied to Medina, Calero, Acting Human Resources

Director Torres, and Rodriguez), dated June 21, 2002.

C "Whether or not Luis Soto was aware of the contents of

the package it is clear that by allowing someone other

than an immediate relative to utilize his shipping

privileges he allowed an illegal substance to be placed

in the FedEx system for transportation." GFTP Memorandum

prepared by Brown, dated July 1, 2002.

C "In summary, Mr. Soto . . . placed himself and the

Company in jeopardy by allowing illegal substances to be

transported through the FedEx system." GFTP Memorandum

prepared by Rodriguez, dated July 2, 2002.

C "The local Police Officer tested the contents and it

tested positive. The cocaine was then removed from the

pkg." Email from Matlock, the security specialist in

Orlando, to Rodriguez, dated July 8, 2002.

C "A review of this issue revealed that you shipped a

package through the FedEx system containing an illegal

drug (cocaine)." Letter from Senior Vice President

Colomba to Soto (copied to Brown, Medina, Calero, and

Rodriguez, as well as their bosses, Cento, Concepcion,

and Gaal), dated July 12, 2002.

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FedEx also claims that the district court erred in refusing 18

to include a separate interrogatory as to each individual

defamatory statement on the special verdict form. However, the

district court did instruct the jury that it must consider each

communication separately in making a determination regarding Soto's

libel claim. The special verdict form here was already long and

detailed. It was well within the district court's discretion to

determine that the jury instruction was sufficient and that the

special verdict form requested by FedEx was unnecessarily detailed.

See Santos v. Posadas De P.R. Assocs., Inc., 452 F.3d 59, 65 (1st

Cir. 2006). 

-37-

FedEx challenges the sufficiency of the evidence as to every

element of Soto's libel claim. We address each challenge in turn.18

1. Falsity

FedEx insists that Soto failed to establish that the ten

allegedly defamatory statements were false. FedEx does not assert

that the package Soto shipped did, in fact, contain cocaine.

Nonetheless, the company argues that even if the FDLE lab results

show that Soto's package did not contain cocaine, those results do

"not establish that Bailey, the K-9, did not alert on the package

or that the presumptive field test did not return a positive result

for cocaine." This argument misses the mark. The statements at

issue do not assert that the package tested positive for cocaine in

the field. Rather, they each conclusively assert that the package

actually contained cocaine. Both the FDLE report and the fact that

no law enforcement officer ever questioned Soto or Iris Romero

about this illegal shipment of drugs permitted the jury to

reasonably conclude that the statements were false.

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-38-

2. Publication

FedEx next argues that Soto failed to establish

publication because the statements were published only within FedEx

and such intracorporate communications do not satisfy the

publication element of the libel claim. This argument reflects an

incorrect reading of Puerto Rico law. In Porto, the Puerto Rico

Supreme Court expressly adopted the majority rule that

intracorporate communication of a defamatory statement satisfies

the publication requirement. 132 D.P.R. 331 ("[W]e hold that the

reputation of a person in the workplace may be denigrated through

an intracorporate communication and, if there is evidence of the

same, the publication requirement is satisfied."). FedEx seizes on

isolated language later in the opinion, where the court appears to

conflate the concepts of publication and privilege by noting that

"[t]he presence of the company personnel manager was completely

logical and reasonable" in a meeting where the allegedly defamatory

discharge letter was discussed. Id. However, the Puerto Rico

Supreme Court's adoption of the rule that the publication

requirement is satisfied by intracorporate communications was clear

and unequivocal. Thus, the question of whether the internal

publication was "logical and reasonable" properly belongs in the

discussion of conditional privilege, to which we turn next.

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FedEx asserts on appeal that plaintiffs were required to meet 19

their burden on this issue with "clear and convincing evidence."

Puerto Rico has not adopted this standard and the jury was

instructed, without objection, that the preponderance of the

evidence standard applies. As such, the preponderance standard is

the law of the case. See Rodriguez-Torres, 399 F.3d at 58. FedEx

also challenges the district court's refusal to instruct the jury

that "good faith is presumed." However, the court did instruct the

jury that Soto bore the burden of establishing that FedEx abused

its conditional privilege. No more was required.

-39-

3. Abuse of Conditional Privilege

Under Puerto Rico law, communications among "managers or

supervisors of a discharged employee, regarding the reasons for the

discharge," are conditionally privileged. Porto, 132 D.P.R. 331.

This privilege applies to "'all bona fide communications upon any

subject matter in which the author has an interest or with respect

to which he has a duty to perform to others.'" Id. (quoting

Caraballo v. P.R. Ilustrado, Inc., 70 P.R.R. 265, 272 (1949)). It

is "'termed conditional because the person availing himself of it

must use it in a lawful manner and for a proper purpose.'" Id.

(quoting Caraballo, 70 P.R.R. at 272). Accordingly, the privilege

is lost if the employer abuses it by giving the statement

"excessive publicity" or by publishing it for "improper reasons."19

Id. 

Although there are no Puerto Rico cases directly on

point, case law from other jurisdictions suggests that "improper

reasons" are established and the conditional privilege destroyed

where an employer is on notice that the defamatory statements are

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of questionable validity and yet, with reckless disregard for the

truth, fails to adequately investigate their veracity. See, e.g.,

A.B.C. Needlecraft Co. v. Dun & Bradstreet, Inc., 245 F.2d 775, 777

(2d Cir. 1957) (holding that evidence was sufficient to warrant

submission of the case to the jury as to whether privilege had been

abused when defendant's defamatory statement was based on a

"misunderstood casual remark, with no effort to verify facts,

though to have done so would have been a simple matter"); Torosyan

v. Boehringer Ingelheim Pharm., Inc., 662 A.2d 89, 104 (Conn. 1995)

(conditional privilege destroyed where defendants "failed to

investigate or retract the statement even after the plaintiff

notified them that the statement was false and requested further

review"); Wirig v. Kinney Shoe Corp., 461 N.W.2d 374, 380-81 (Minn.

1990) (conditional privilege destroyed where "an employer . . .

takes no steps to investigate but relies entirely on accusations

either made by employees who may be biased or on second-hand

hearsay with no identification of sources"); Restatement (Second)

of Torts § 600 (1977) (conditional privilege fails if statement

made with knowledge of falsity or reckless disregard as to its

truth). 

In this case, the ten defamatory statements made by FedEx

were clearly within the scope of the conditional privilege as

communications regarding the discharge of an employee. The jury

made this finding on the special verdict form, and it has not been

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The English translation of this case is not available on 20

Westlaw. We have relied on a certified slip translation.

-41-

challenged on appeal. FedEx contends, however, that Soto did not

meet his burden of demonstrating that FedEx had abused the

privilege. FedEx cites Cabrero Muñiz v. Zayas Seijo, 2006 WL

1313775 (P.R. 2006), for the proposition that "bad investigation 20

allows an inference [of] real malice only in exceptional

circumstances and with the benefit of other evidence tending to

show such malice." That case concerned the "actual malice"

requirement in the context of defamation of a public figure, not an

inquiry into abuse of the conditional privilege. However, even if

we were to conclude that the same standard applies to determine

"improper motive" in the privilege inquiry, the jury was entitled

to infer that the circumstances here were sufficiently exceptional

to allow liability to attach. 

The jury heard evidence from which it could reasonably

conclude that FedEx was on notice of the questionable validity of

the cocaine allegations as early as June 6, when Soto called Pérez

and Medina to report that Iris Romero had received the package

without incident. FedEx insisted at trial that Soto was dismissed

for his violation of the employee shipping policy, not for shipping

drugs. As a result, no investigation of the drug allegations was

required. However, regardless of the reasons behind the dismissal,

once FedEx was on notice that the drug allegations were

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The jury could also have reasonably concluded that, because 21

FedEx had not adequately investigated the drug allegations, its

frequent repetition of those allegations constituted "excessive

publication" of the defamatory statements, resulting in loss of the

conditional privilege. See Porto, 132 D.P.R. 331 (noting

"excessive publication" destroys the conditional privilege).

-42-

questionable, it was obligated to either stop repeating them or

adequately investigate them. It did neither. As a result, the

jury was entitled to conclude that FedEx had "improper motives" and

thereby lost the benefit of the conditional privilege because it

acted with reckless disregard for the truth.21

4. Sufficiency of Evidence on Actual Harm

FedEx also asserts that it is entitled to judgment as a

matter of law on the libel claim because Soto failed to prove that

he suffered emotional distress as a result of the publication of

the libelous statements, rather than merely as a result of reading

those statements himself. We reject this assertion. The jury

could have reasonably inferred that Soto's reputation within FedEx

was harmed by the connection between his name and the drug

allegations. See Porto, 132 D.P.R. 331 ("[C]orporate employees are

only too human and when they learn of a defamatory statement the

reputation of the affected employee is clearly demeaned in the

workplace."). Moreover, Soto did present evidence about the shame

and humiliation he experienced as a direct result of knowing that

the drug allegations were circulating among FedEx management. He

explained, for example, that when he received the letter from

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-43-

Senior Vice President Colomba: "[L]ife came to an end for me

because having a V.P. of the company state that I had sent drugs,

cocaine . . . . My world came to an end, fell on me." No more is

required to sustain the jury's finding of liability on the libel

claim. See Gertz v. Robert Welch, Inc., 418 U.S. 323, 350 (1974)

(describing "customary types of actual harm inflicted by defamatory

falsehood [to] include impairment of reputation and standing in the

community, personal humiliation, and mental anguish and

suffering"); Fiori v. Truck Drivers, Local 170, 354 F.3d 84, 87

(1st Cir. 2004) (noting that "emotional distress need be no more

than 'outrage' and 'anger' upon seeing the libelous statements,

since mental distress is the 'natural result' of libel" (quoting

Shafir v. Steele, 727 N.E.2d 1140, 1146 (Mass. 2000))).

Accordingly, we affirm the district court's denial of FedEx's

motion for judgment as a matter of law on that claim.

IV.

In addition to its sufficiency challenges, FedEx contends

that the district court improperly admitted damage testimony that

was not causally linked to any issue in the case and that this

evidence improperly inflated the jury's damage award. In reviewing

an allegation of evidentiary error, we must consider first whether

the district court erred and then whether this error was harmful.

Ahern v. Scholz, 85 F.3d 774, 786 (1st Cir. 1996). "A trial

court's error in an evidentiary ruling only rises to the level of

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harmful error if a party's substantial right is affected." Id. To

determine whether a substantial right is implicated, we examine

"the centrality of the evidence and the prejudicial effect of its

. . . inclusion." Id. Given our disposition of the slander and

IIED claims, we consider only whether the admission of the damage

evidence was prejudicial error that tainted the award on the

surviving libel claim.

Over FedEx's objections, the district court allowed Soto

to testify extensively about emotional damages he suffered as a

result of the financial difficulties his family encountered after

he lost his job at FedEx. For example, he testified: "We don't

have as much time as we had before to share. . . . I work more.

[My wife] has had to take on providing, giving tutoring services

because she is a teacher. So, she gets home from school and

sometimes when I get home from work she is still dealing with

Martin. Martin is my young boy and my intimate life was also

affected." More specifically, Soto's counsel asked what problems

he confronted "after the situation with FedEx with respect" to the

child support payment he owed for another child who lived with his

ex-wife, Janet. He replied: 

Well, since they would take it from my salary

check, I had problems with the Family

Department which is the one that has to do

with child support. I talked with Janet. She

is Ricardo's mother. I told her that I had

been fired from Federal Express; that I had to

take the steps to get another job in order to

be able to pay for the child support; that I

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could not send him the same amount because I

didn't know what my salary was going to be.

She understood it but since the payment was

not reaching the Family Department, well, I

was summoned. I was summoned. I asked Janet

to write a letter stating that I had sent her

the money and she behaved very good with me

and so then I submitted it to the judge who

was presiding over the case. He lowered the

sum . . . . 

Soto's counsel then asked how the situation with the child support

made Soto feel. He responded: "It made me feel very bad because

besides the fact that I would always pay and it would be deducted

from my salary, I always made sure that Ricardo wasn't needing

anything." 

Soto also testified about his family's need to cancel a

vacation in Florida as a result of his termination: 

I first told my wife's relatives, family in

Orlando because they were expecting us to go

there on vacation. So, we had to cancel

vacations because one of the benefits

employees had with FedEx was that we could buy

discount[ed] air fare. We had discount air

fare to buy tickets and the manager has to

authorize you so you can purchase the ticket

and that is when the suspension came up and

then termination but by then they were all

expecting us. They are all over there and so

then after step one [of the GFTP review] we

called Lisa's family and told them about the

tragedy. 

Soto testified that after his termination he obtained

positions at Caribbean Products and then DHL through connections

with family and former co-workers. When Soto was laid-off from

DHL, his supervisor there recommended him for a position at

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Similar testimony was also offered by Rosario's father, who 22

explained that he "had to help them pay[] the studies of the little

boy . . . at La Piedad School . . . [and also help pay for] some

sports studies he was taking." 

-46-

Advance, where he worked at the time of trial. At FedEx he made

$17.45 per hour, at DHL he started at $9.75, and he was earning

less than that at Advanced at the time of the trial. A. 1116.

Soto's counsel asked how these lower earnings affected him

emotionally. He replied: "Well, right now I depend on my wife to

be able to pay things for the house. I feel impotent because of

what I cannot do now. Before I used to be the head of the

household and now sometimes I have to go to my father-in-law to ask

him for help and I do it now very embarrassed because I never did

that before."22

There was never any testimony, however, establishing that

Caribbean Products, DHL, or Advanced ever saw the libelous

statements published by FedEx. There was no testimony that Soto's

subsequent employers' knowledge of his termination at FedEx

adversely impacted his job placement or pay. There was no

testimony that he was not hired at any other company to which he

applied as a result of the events at FedEx.

Soto's financial struggles and the emotional turmoil they

caused have no causal connection to the libel claim. Instead, the

emotional distress Soto described is causally related only to the

fact of termination and thus is evidence only of the damages

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The district court apparently believed that evidence linking 23

the statements and Soto's financial difficulty would be introduced

and ruled that this damage testimony could come in because Soto was

entitled to show the emotional harm he suffered as a result of

FedEx's defamatory statements reaching future employers. However,

at the end of the trial, this causal link was still missing.

-47-

suffered by Soto as a result of the wrongful termination itself.

These damages were not properly before the jury because, as we have

explained, such damages are compensable only pursuant to Act 80,

which specifies a statutorily calculated damage award based on an

employee's salary and years of service. That statute does not

permit the recovery of emotional distress damages for a wrongful

termination.

Soto's testimony regarding the emotional suffering he

endured as a result of his economic struggles would have been

admissible and relevant to prove Soto's damages if he had supplied

a causal link between his economic hardships and the defamatory

statements made by FedEx. For example, Soto might have introduced

evidence that, after his termination by FedEx, a prospective

employer heard the drug allegations and, as result, refused to

offer him a job. However, such a causal link was never established

here. Soto did not introduce any evidence suggesting that a 23

subsequent employer or potential employer treated Soto adversely as

a result of the defamatory statements made by FedEx. Indeed, Soto

failed to show that those statements were ever published to anyone

outside of FedEx. In the absence of such evidence, the powerful

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Such evidence was also irrelevant to the IIED claim, even if 24

that were a viable claim, because there was never any suggestion

that FedEx's security interview or "course of conduct" rendered

Soto so emotionally incapacitated as to make him unable to look for

work, find work, or perform well on the job. Thus, there is

nothing to link the financial hardships the family experienced

following the termination to the allegedly outrageous conduct of

FedEx.

-48-

testimony regarding Soto's struggle to pay his child support, his

wife's need to take on more tutoring, their need to cancel their

vacation to Florida, and their need to rely financially on

Rosario's father was legally irrelevant to any issue properly

before the jury. Thus, we conclude that the district court erred 24

in admitting this testimony.

 We are also convinced that the evidentiary error was not

harmless. The district court did instruct the jury that, with

regard to damages for defamation, "any award you choose to make to

compensate the Plaintiff may only be to redress the consequences

which followed from the injury to the Plaintiff's reputation," and

that "Plaintiffs cannot recover emotional damages that arise as a

result of the mere fact that Soto Lébron's employment was

terminated." However, the erroneously admitted evidence was the

most emotionally compelling and specific damage evidence Soto

presented. It would have been nearly impossible for the jury to

ignore the harsh consequences to Soto and his family stemming from

his wrongful termination. 

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Indeed, the size of the $3 million libel award confirms

that impossibility. In its remittitur decision, the district court

summarized the damage evidence as follows: 

Plaintiffs presented a picture of a forty-six

year old father of two who, after a successful

fourteen-year tenure at Federal Express, was

faced with a false accusation that he had

mailed drugs and had to endure the fact that

such accusation was reproduced in several

written communications between his supervisors

and other members of Defendant's management

team. Furthermore, Plaintiffs emphasized the

distress attendant to Co-plaintiff Soto's

interview with Defendant's security specialist

and his subsequent physical ouster of the

company's premises. Plaintiff's evidence

showed that Co-plaintiff Soto was distraught,

humiliated, even with regards to his family,

had trouble sleeping and suffered from

anxiety, was generally unhappy and lost

interest in his former pastimes. Plaintiffs'

evidence also demonstrated that Co-plaintiff

Soto was affected to such a degree that he had

to seek out mental health services and take

medication.

This summary does not distinguish between the emotional damages

properly attributable to the libel claim and those related only to

the economic damages caused by the termination. This same failure

to distinguish by the jury affected a $3 million libel award that

was grossly disproportionate to the gravity of the damages causally

related to the libel. 

Emotional damages, though difficult to quantify, are not

immune from appellate review. Koster v. Trans World Airlines,

Inc., 181 F.3d 24, 34-35 (1st Cir. 1999). Here, the evidence

reveals that Soto was not disabled – either permanently or

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temporarily – by his emotional distress. He was able to find a new

job and continue working within his field. Moreover, he did not

introduce any medical evidence to prove the severity of his

distress. Id. at 35 ("[A]lthough emotional damages are warranted

even without medical or psychiatric evidence, the lack of such

evidence is relevant to the amount of award."). Thus, given the

enormous size of the award here, it appears that the erroneously

admitted damage evidence tainted the verdict by leading the jury to

compensate Soto not only for the emotional damages stemming from

the defamation but also for the emotional distress he suffered as

a result of his economic woes following the termination. 

The prejudicial effect of the erroneously admitted

evidence could have been removed by a sufficient remittitur.

However, the remitted $1.8 million award remains far beyond the

damages supported by Soto's properly admitted, causally valid

damage evidence. See Sanchez v. Puerto Rico Oil Co., 37 F.3d 712,

724 (1st Cir. 1994) (holding that a remitted award may be

overturned if "the reduced figure remains so extravagant as to

shock the appellate conscience."); Wagenmann v. Adams, 829 F.2d

196, 215 (1st Cir. 1987) (reviewing a remitted verdict to determine

whether the appellant has shown that "the reduced sums remain so

exorbitant, so disturbing to our collective conscience, as to

entitle [it] to [a] new trial[]").

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The two cases cited by the district court in support of

its remittitur suggest that the remitted award should have been far

lower. First, the district court cited Shaffer v. State of Ariz.

Citizens Clean Election Comm'n, No. 03CV2344PHXFJM, 2006 WL 155880,

at *3 (D. Ariz. Jan. 19, 2006), noting that the judge there had

reduced the damages on a defamation claim by 40% "because the jury

took into account damages stemming from plaintiff's termination."

This characterization of Shaffer suggests that the district court

in Soto's case may have been aware of the causation problems in the

damage testimony. However, the Shaffer case itself illustrates why

the district court's remittitur here was insufficient to cure the

evidentiary error.

In Shaffer, a government employee had been wrongfully

accused of felony fraud by his employer and the accusation was

released to the media and appeared in the news. The district court

reduced the $1.1 million damages award to $660,000. Unlike Soto,

Shaffer's prospective employers had been exposed to the defamatory

statements through the media. Id. at *2. However, the trial court

noted that Shaffer, like Soto, had "failed to produce any evidence

that prospective employers considered the defamatory statement in

rejecting Shaffer's employment applications." Id. at *3. The

Shaffer court also noted a causation problem within the damage

award: "Moreover, it is equally plausible that Shaffer's difficulty

in finding employment following his termination arose substantially

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from the fact that he was dismissed from his prior position.

Similarly, his emotional and reputation difficulties logically

arose in part from his termination." Id. In Soto's case, where

there was no evidence that any prospective employer was exposed to

the defamatory statements, it is not merely "equally plausible"

that his economic difficulties, and the emotional distress they

caused, were unrelated to the defamatory statements. It is, in

fact, the only reasonable inference. Nonetheless, Soto's remitted

verdict remains nearly three times larger than the remitted verdict

in Shaffer.

The second case cited by the district court, McCann v.

Ruiz, 802 F. Supp. 606 (D.P.R. 1992), similarly does not support

the $1.8 million remitted award. In that case, the court observed

that the plaintiff had "suffered a mild form of depression and was

concerned about his future and the future of his family" as a

result of his employer's defamatory statements. Id. at 616.

However, noting that the plaintiff's suffering "apparently did not

require treatment nor . . . result in any permanent injury," the

district court found the jury's award of $255,000 to be "grossly

excessive" and ordered a remitted award of $100,000. Id. Soto

arguably suffered a marginally more severe injury than McCann

because he sought treatment from a psychiatrist. However, that

distinction between the cases cannot support the enormous variance

between the size of Soto's award and the award in McCann.

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The theory of liability in Budet-Correa was intentional 25

infliction of emotional distress (based upon the death threat by

the security officer), rather than libel, but the case is

nevertheless instructive as to the valuation of emotional damages.

-53-

The remittitur in Budet-Correa v. United Parcel Service,

322 F. Supp. 2d 139 (D.P.R. 2004), provides another pertinent point

of comparison. In that case, the court reduced a jury award of

$825,000 in emotional distress damages to an employee of UPS who

was accused of attempted murder and received a death threat from a

security officer hired by the company to surveil him. The 25

plaintiff in that case introduced testimony from his treating

psychologist to establish that he had an anxiety disorder. He also

introduced evidence that he had been declared disabled and received

Social Security disability benefits as a result of the

psychological injury attributable to UPS's conduct. Despite this

evidence, the court concluded that the jury award was "grossly

disproportionate to the injuries established by the evidence" and

reduced the award to $250,000. Id. at 142. Soto's damage evidence

did not include any expert psychological testimony and did not come

close to establishing that he was disabled by his emotional injury.

Given these comparisons, the $1.8 million award here remains

shockingly exorbitant.

The district court's task was to determine the maximum

dollar amount that is supported by the evidence. Conjugal P'ship

Comprised by Joseph Jones & Verneta G. Jones v. Conjugal P'ship

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In searching for similar verdicts to guide our review of the 26

level of emotional damages here, we follow the lead of the parties

and the district court and consider cases from both Puerto Rico and

other U.S. jurisdictions. These cases universally suggest that the

$1.8 million dollar award is grossly excessive. See, e.g.,

Whitfield v. Meléndez-Rivera, 431 F.3d 1, 18 (1st Cir. 2005)

(reducing award from $500,000 to $100,000 for mother of plaintiff

who was shot twice in the leg by police officers; mother testified

that "she was so distraught that she could not work for a month");

Peoples Bank & Trust Co. of Mountain Home v. Globe Int'l Publ'g,

Inc., 978 F.2d 1065, 1071 (8th Cir. 1992) (jury verdict of $650,000

remanded for "substantial remittitur" where damage evidence was

"limited to testimony describing [the plaintiff] as angry, upset,

humiliated, embarrassed, depressed and disturbed"); Rady v. Forest

City Enters., Inc., 501 N.E.2d 688, 690 (Ohio Com. Pl. 1986)

(vacating a $1,000,000 compensatory award in a libel case where

"[p]laintiff's discharge and the underlying accusations were not

disclosed to persons outside the immediate group composed of her

supervisors and those responsible for hiring and firing"). The

cases cited by Soto in support of the $1.8 million award each

involve the defamation of individuals who were prevented, by the

defamation, from returning to work in their chosen fields. See,

e.g., Purgess v. Sharrock, 33 F.3d 134 (2d Cir. 1994) (upholding

$3.5 million award, which appears to have encompassed both

emotional distress and lost future wages, for anesthesiologist

based on defamatory statements accusing him of malpractice and

preventing him from finding work in a private hospital). 

-54-

Comprised by Arthur Pineda & Toni Pineda, 22 F.3d 391, 398 (1st

Cir. 1994). The Shaffer, McCann, and Budet-Correa cases do not

support the district court's determination of that maximum dollar

amount here. If Shaffer's $1.1 million jury award, McCann's

$255,000 award, and Budet-Correa's $825,000 award were each grossly

excessive, they cannot help to explain why a $1.8 million award in

Soto's case is appropriate.26

This is not a case where we are merely second-guessing

the amount of the district court's remittitur. See Sanchez, 37

F.3d at 724 (noting that when the district court has already

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In some cases, an appellate court that finds a jury's verdict 27

to be grossly disproportionate to the injuries established by the

evidence may order its own remittitur, setting the proper amount of

the verdict without the need for a second trial on damages. See 11

Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal

Practice and Procedure: Civil 2d § 2820 ("If the appellate court

concludes that the verdict is excessive, it need not necessarily

reverse and order a new trial. It may give plaintiff an

alternative by ordering a new trial unless plaintiff will consent

to a remittitur in a specified amount."); see also, e.g., Koster,

181 F.3d at 36 (concluding that "the evidence of emotional distress

would support a maximum recovery of emotional damages of $250,000"

and conditioning a new trial on damages on plaintiff's rejection of

that lower amount); Marchant v. Dayton Tire & Rubber Co., 836 F.2d

695, 704 (1st Cir. 1988) (setting remittitur at $300,000). In such

cases, there is generally no identifiable legal error that accounts

for the inflated award. In this case, where an identifiable

evidentiary error directly affected the valuation of Soto's

emotional distress, we conclude that our best course of action is

to remand for a new trial rather than attempting to derive a

maximum recovery amount from the flawed evidentiary record.

Rosario's derivative award of $1 million was affected by the 28

same evidentiary error and, additionally, includes damages for the

emotional distress attributable to the now-vacated slander and IIED

verdicts, and must also be vacated. 

-55-

ordered a remittitur, the appellate court's review of the remaining

award is permissible, but quite constrained). Here, there is an

identifiable legal error that is at the heart of the jury's

inflated award. We cannot discern from the court's remittitur 27

decision whether an awareness of this legal error may have been a

factor in that decision. In any case, the district court's

remittitur was insufficient to correct the legal error in admitting

the causally flawed damage testimony. Accordingly, we conclude that

the damage award has been prejudicially tainted and must be

vacated. 

28

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-56-

 We also conclude that our decision to vacate the damage

award for libel does not require us to vacate the liability finding

as well. The district court used a detailed special verdict form,

and appropriate instructions, that required the jury to keep its

liability determination separate from its valuation of the damages.

Thus, we conclude that the evidentiary error that skewed the damage

award here did not taint the finding of liability for libel. That

finding was, as we describe above, amply supported by admissible

evidence. Moreover, we are confident that the damage issue is "'so

distinct and separable from the other issues that a trial of [that]

issue[] alone may be had without injustice.'" La Plante v. Am.

Honda Motor Co., 27 F.3d 731, 738 (1st Cir. 1994); Mandel v. Boston

Phoenix, Inc., 456 F.3d 198, 210 (1st Cir. 2006) ("In the final

analysis, then, the scope of a remand is normally a judgment call

for the appellate court."). As a result, the damages may be

retried as the sole issue on remand. The newly constituted jury

will be able to evaluate Soto's damages after hearing only the

evidence that is causally related to the libel claim.

V.

Although FedEx has prevailed on most of its appellate

issues, its happiness with that outcome should be muted. The

company's termination of Soto's employment was handled badly, even

though Soto himself bears some responsibility for his predicament

because of his violation of the company's employee shipping policy.

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Still, for reasons that remain murky, FedEx never secured the lab

report, completed while the review of Soto's termination was still

underway, which demonstrates that the suspicious substance in the

package that Soto shipped was not liquid cocaine. This failure to

secure that exculpatory drug report cost Soto his job and caused

much of the misery for the Soto family that followed. Even though

the jury's evaluation of this sad story cannot withstand appellate

review for the reasons cited herein, FedEx should understand that

judgment of the jury for what it was – a sharp rebuke for the

company's handling of Soto's termination.

In summary, we affirm the district court's grant of

FedEx's motion for judgment as a matter of law on the slander

claim. We reverse the district court's denial of FedEx's motion

for judgment as a matter of law on the IIED claim. We affirm the

district court's denial of FedEx's motion for judgment as a matter

of law on the libel claim, but vacate the damage awards for both

Soto and Rosario on the libel claim. We remand for a new trial on

damages relating to the libel claim. Each party shall bear its own

costs.

So ordered.

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