Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-07009/USCOURTS-ca10-90-07009-0/pdf.json

Parties Involved:
Aldo T. Eberle
Appellant
Ideal Basic Industries, Inc.
Appellee
Gene Meyers
Appellant
Donald Northcutt
Appellant
Norman Wyche
Appellant

Document Text:

PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

GENE MEYERS; NORMAN WYCHE; ALDO T. EBERLE; 

DONALD NORTHCUTT 1 -

Plaintiffs-Appellants, 

v. 

IDEAL BASIC INDUSTRIES, INC., a Delaware 

Corporation, 

Defendant-Appellee. 

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FILED 

United StateS Court of Appeals 

Tenth Circuit 

AUG 6 1991 

&OBERT L. HOECKER 

Clerk 

No. 90-7009 

ON APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF OKLAHOMA 

(D.C. No. 89-275-C) 

Patrick J. Malloy III of Malloy & Malloy, Inc., Tulsa, Oklahoma 

(Leslie v. Williams, Jr. of Williams & Remmel, Oklahoma City, 

Oklahoma, with him on the briefs), for Plaintiffs-Appellants. 

Mairen c. Kelly of Fisher & Phillips, Atlanta, Georgia (Robert P. 

Foster, and Frank T. Bell of Fisher & Phillips, Atlanta, Georgia; 

J. Warren Jackman of Pray, Walkerr Jackman, Williamson & Marlar, - Tulsa, Oklahoma, with her on the brief), for Defendant-Appellee. 

Before BALDOCK, BARRETT, and BRORBY, Circuit Judges. 

BRORBY, Circuit Judge. 

Appellate Case: 90-7009 Document: 01019638068 Date Filed: 08/06/1991 Page: 1 
I. 

The appellants in this case, Gene Meyers, Norman Wyche, Aldo 

T. Eberle, and Donald Northcutt ("Plaintiffs" or "Appellants"), 

are former employees of Ideal Basic Industries, Inc. ("Defendant" 

or "Ideal"). They instituted an action for malicious prosecution 

and abuse of process against Ideal. Appellants' action followed 

the dismissal of Ideal's lawsuit against Appellants for allegedly 

engaging in a conspiracy to file fraudulent Workmen's Compensation 

claims and sabotage company property. The trial court granted 

Defendant's motion to dismiss the abuse of process claim. 

Plaintiffs' malicious prosecution claim proceeded to trial. The 

jury returned a verdict in favor of Plaintiffs and awarded them, 

collectively, actual damages in the amount of $7 million and 

punitive damages . th t $8 ·11· 1 in e amoun mi ion. Subsequently, the 

trial court granted Defendant's motion for judgment 

notwithstanding the verdict. 

On appeal, Appellants raise the following issues: "Whether 

Or Nat ~ha Triai Court Erred In Sustaining The Defendant's Motion 

For Judgment Notwithstanding the Verdict"; and "Whether Or Not The 

Trial Court Committed Error In Sustaining The Defendant's Motion 

For Summary Judgment With Respect To The Plaintiffs' Abuse Of 

Process Claim." We affirm. 

1 The trial court subsequently reduced the punitive damages award 

to $7 million in accordance with Okla. Stat. tit. 23, § 9. 

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II. 

Ideal is a cement manufacturer with facilities located 

throughout the United States. Since 1984, due to an impasse in 

bargaining negotiations, Ideal's unionized employees at the plant 

in Ada, Oklahoma, have worked without a contract. In 1988, Gary 

Sauer was installed as the. new plant manager at this facility. 

Prior to his arrival, Mr. Sauer familiarized himself with the 

history of relations with the employees at the Ada plant. During 

this time, Mr. Sauer learned that the plant in Ada had recently 

been the target of acts of sabotage and that an unprecedented 

number of Workmen's Compensation claims for hearing and lung 

damage were filed by Ideal's workers at the Ada plant. 

Shortly after his arrival in Ada, Mr. Sauer formed the 

opinion that there was illegal activity occurring "in the form of 

phony Work Comp filings and sabotage." He then obtained 

authorization to consult with outside counsel to seek advice on 

whether any legal remedy was available to stop what he believed 

was illegal activity. Ideal complied with this request and 

procured the services of Walter Kruger, a partner in a law firm 

specializing in labor law. Mr. Kruger came to Ada and conducted 

an investigation into the existence of illegal activity at the 

plant. Ideal placed no restrictions as to the scope of Mr. 

Kruger's investigation. Following his investigation, Mr. Kruger 

returned to Atlanta to evaluate the information he had compiled 

during his investigation. During the next few weeks, Mr. Kruger 

contacted Mr. Sauer several times requesting additional 

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information such as further data from the employee files. 

Subsequently, Mr. Kruger informed Mr. Sauer there was sufficient 

cause to file a lawsuit against the Appellants. 

Ideal then filed a complaint against Appellants charging, 

inter alia: conspiracy to file fraudulent Workmen's Compensation 

claims; deceit; sabotage; and violation of anti-racketeering laws. 

This complaint was subsequently dismissed by a consent order. 

Following the dismissal, Appellants brought this action against 

Ideal alleging malicious prosecution and abuse of process based 

upon Ideal's instigation of suit against them. 

The district court dismissed the abuse of process claim prior 

to trial, and following a jury verdict in favor of the employeePlaintiffs on the malicious prosecution claim, granted Defendant's 

motion for judgment notwithstanding the verdict. The court also 

ruled hypothetically on Defendant's alternative motion for new 

trial, holding that absent the entry of judgment notwithstanding 

the verdict, it would grant a new trial. 

III. 

Dismissal of Abuse of Process Claim 

We review the district court's dismissal for failure to state 

a claim de novo, applying the same scrutiny to the complaint as 

did the trial court. Morgan v. City of Rawlins, 792 F.2d 975, 978 

(10th Cir. 1986). Thus, we also will "clothe plaintiff's claim in 

such fashion to presume all allegations true." Id. 

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As this is a diversity case, we apply the substantive law of 

the forum state. Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). 

Under Oklahoma law, an abuse of process claim requires a showing 

of three elements: (1) issuance of process; (2) an ulterior 

purpose; and (3) a willful act in the use of process not proper in 

the regular conduct of the proceeding. Tulsa Radiology Assocs., 

Inc. v. Hickman, 683 P.2d 537, 539 (Okla. Ct. App. 1984); see also 

w. Keeton, D. Dobbs, R. Keeton & D. Owen, Prosser & Keeton on the 

Law of Torts,§ 121 (5th ed. 1984) (hereinafter "Prosser"). In 

this case, the district court focused on Plaintiffs' failure to 

"allege facts in support of the third element [stating there 

was] no showing that Ideal was using its lawsuit to obtain an 

advantage that was collateral to the lawsuit itself." In other 

words, the complaint failed to allege a willful act in the use of 

process not proper in the regular conduct of the proceeding. The 

court concluded Plaintiffs had failed to establish the necessary 

elements for the claim and therefore granted Defendant's motion to 

dismiss. We agree with this determination~ 

In this case, Plaintiffs alleged in their complaint, inter 

alia, that the action brought against them by Ideal was based on 

allegations: "made with the ulterior and unlawful purpose of: 

intimidating the individual Plaintiffs [and] other 

employees of the Defendant corporation into an abandonment of 

their legitimate Workers Compensation claims; [and] extorting 

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concessions from the Plaintiff labor union in contract 

negotiations." 

"Abuse of process occurs when legal process is used for an 

improper purpose, to accomplish an end not lawfully obtainable, or 

to compel someone to do some collateral thing he could not legally 

be compelled to do." Houghton v. Foremost Fin. Servs. Corp., 724 

F.2d 112, 116 (10th Cir. 1983) (citing Neil v. Pennsylvania Life 

Ins. Co., 474 P.2d 961, 965 (Okla. 1970)). To establish the 

element of improper use of the process, it is clear that the 

plaintiff must show some definite act or threat by the defendant 

not authorized by the process. Gore v. Taylor, 792 P.2d 432, 435 

(Okla. Ct. App. 1990); see also, Prosser§ 121. Prosser provides 

the following elaboration of this element: 

Some definite act or threat not authorized by the 

process, or aimed at an objective not legitimate in the 

use of the process, is required; and there is no 

liability where the defendant has done nothing more than 

carry out the process to its authorized conclusion, even 

though with bad intentions. 

Prosser, S 121 at 898. Thus, merely showing the defendant 

"'carr[ied] out the process to its authorized conclusion, even 

though with bad intentions,'" is insufficient to establish an 

abuse of process claim. Gore, 792 P.2d at 435-36 (quoting 

Prosser, Handbook of the Law of Torts,§ 121 (4th ed. 1971)). 

Even viewing Plaintiffs' complaint in the favorable light 

that we must, taking the allegations therein as true, we find it 

nevertheless fails to establish the necessary element of improper 

use of the process. While we take as true Plaintiffs' allegations 

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that the ulterior and unlawful purpose of Ideal in bringing the 

claim was to intimidate Plaintiffs and other employees of Ideal 

into abandoning legitimate Worlanen's Compensation claims and to 

extort concessions from the Union, Plaintiffs' complaint still 

fails to establish an abuse of process claim since there is no 

allegation of some definite action or threat by Ideal. See Gore, 

792 P.2d at 435-36. The only definite act alleged in Plaintiffs' 

complaint was Ideal's filing of the lawsuit. Under Oklahoma law, 

the absence of an allegation that some definite act or threat 

occurred showing an improper use of the process def eats a claim of 

abuse of process. Id. Without such an allegation the element of 

a willful use of the process not proper in the regular conduct of 

the proceeding cannot be satisfied. Therefore, we hold the 

district court's dismissal of the abuse of process claim prior to 

trial was proper. 

Judgment Notwithstanding the Verdict -- Malicious Prosecution 

We review a grant or denial of a motion for judgment 

notwithstanding the verdict de JlQYQ., applying th& same standard as 

did the trial court. Rajala v. Allied Corp., 919 F.2d 610, 615 

(10th Cir. 1990), cert. denied, 111 s.ct. 1685 (1991); Suggs v. 

State Farm Fire & Casualty Co., 833 F.2d 883, 886 (10th Cir. 

1987), cert. denied, 486 U.S. 1007 (1988). We have expressed the 

appropriate inquiry under this standard as being "'whether there 

is evidence upon which the jury could properly find a verdict for 

the party [against whom the motion is directed].'" Rajala, 919 

F.2d at 615 (quoting Hurd v. American Hoist & Derrick Co., 734 

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F.2d 495, 498-99 (10th Cir. 1984)). 

we must view the evidence and all 

favorable to the nonmoving party. 

In making this determination 

inferences in a light most 

Rajala, 919 F.2d at 615. The 

nonmovant's position, however, must be supported by more than a 

mere scintilla of evidence. E.E.O.C. v. Sperry Corp., 852 F.2d 

503, 507 (10th Cir. 1988). 

Because our review of the entry of a judgment notwithstanding 

the verdict asks whether evidence was presented such that the jury 

could properly find for the party against whom the motion was 

made, id., our consideration is framed in terms of the underlying 

evidentiary standards applicable at the trial on the merits. 

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). 

Under Oklahoma law, a plaintiff bears the burden of 

affirmatively showing the following elements to establish a claim 

of malicious prosecution: (1) the bringing of the action, (2) its 

successful termination in favor of the plaintiffs, (3) want of 

probable cause, (4) malice, and (5) damages. Young v. First State 

Bank, 628 P.2d 707, 709 (Okla. 1981); Tulsa Radiology Assocs., 

Inc. v. Hickman, 683 P.2d 537, 539 (Okla. Ct. App. 1984). 

Malicious prosecution actions are disfavored by the Oklahoma 

courts, and the elements of the action are narrowly construed. 

See Glasgow v. Fox, 757 P.2d 836, 838-39 (Okla. 1988). 

The element at issue in this case is Ideal's want of probable 

cause. More particularly, the issue is whether Ideal's reliance 

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on the advice of counsel, if made in good faith, vitiates any 

claim by Appellants of Ideal's lack of probable cause. The 

existence of probable cause is determined in light of the facts 

existing at the time the underlying action was filed. Tulsa, 683 

P.2d at 539. The existence of probable cause constitutes a 

complete defense to an action for malicious prosecution. Id. 

"The fact that the action which is alleged to constitute the 

malicious prosecution has been terminated in favor of the 

complaining party is of itself insufficient to establish lack of 

probable cause on the part of the defendant .... 11 Lewis v. 

Crystal Gas Co., 532 P.2d 431, 433 (Okla. 1975). As to the effect 

of good faith reliance on the advice of counsel: 

As a general rule, where defendant acts in good 

faith on the properly secured advice of counsel, he is 

relieved from liability for a civil action instituted by 

him. It is well settled in this jurisdiction that where 

the uncontroverted evidence shows that g party has 

communicated all the facts bearing Qil the case within 

his knowledge before g competent attorney, and has acted 

honestly and in good faith upon the advice given, then 

the absence of malice is established, the want of 

probable cause negatived, and he is exonerated from all 

liability. Under these circumstances, an action for 

malicious prosecution will not lie. 

Id. (emphasis added). 

In this case, Gary Sauer was the decision-maker who initiated 

the action against Appellants that was subsequently dismissed. 

Mr. Sauer is vice president and general manager of Ideal's 

Southern division. Shortly after his arrival at the Ada plant, 

Mr. Sauer decided to hire outside legal counsel to investigate and 

advise him on whether there was a legal remedy available to 

redress what he suspected was illegal activity in the form of 

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false Workmen's Compensation claims and sabotage. While Mr. Sauer 

possessed this general suspicion of illegal activity, he did not 

have evidence of any particular individual's involvement. Mr. 

Sauer instructed full cooperation with the attorney hired, and did 

not impose any limitations upon the scope of the attorney's 

investigation. Following several weeks of investigation and 

evaluation, Mr. Kruger advised Mr. Sauer that sufficient factual 

and legal grounds existed to bring this lawsuit against the four 

Appellants. Ideal contends the decision to initiate this action 

against Appellants was based upon its good faith reliance on this 

advice by counsel. 

Appellants contend, however, that Ideal did not rely in good 

faith on the advice of counsel. In support of their contention, 

Appellants argue the reliance could not have been in good faith 

because: (1) Ideal possessed specific knowledge relative to the 

Appellants; (2) Ideal conducted an independent investigation, or 

one in concert with counsel; and (3) Ideal did not make full or 

truthful disclaaure to its counsel. 

The district court granted Ideal's motion for judgment 

notwithstanding the verdict based on its conclusion "that it is 

uncontroverted that Sauer consulted competent counsel, imparted to 

him all facts known to Sauer, and thereafter relied upon counsel's 

advice in good faith." Prior to reaching its conclusion, the 

court articulated its concerns with the case as being: "(1) the 

distinction between probable cause for litigation as opposed to 

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probable cause for litigation against an individual, and (2) the 

extent to which reliance on counsel forms a shield." The district 

court explained its analysis of these concerns as follows: 

In the case at bar, the decision-maker had evidence of 

acts of sabotage and suspicions of fraudulent workers' 

compensation claims. He turned the matter over to 

counsel, both for a factual investigation and the 

fashioning of any appropriate legal remedy. Perhaps to 

this day, and certainly during this trial, Sauer cannot 

relate what evidence made a lawsuit against these four 

individuals appropriate. The defense of reliance on 

counsel makes eminent sense in the criminal context. A 

citizen reports the facts as he knows them to the 

district attorney, for example. The district attorney 

then serves as an impartial arbiter who examines the 

facts and determines whether a criminal prosecution is 

appropriate. Thus, if the charging party has provided 

all facts known to him and in good faith follows the 

advice of the impartial prosecutor, the charging party 

should face no liability. 

The analogy holds to some extent in the civil 

context, and the law of Oklahoma recognizes the defense 

in civil cases. See Lewis, 532 P.2d 434. The Court was 

troubled in this case by the fact that, when Sauer 

consulted attorney Kruger, Sauer had certain facts 

arguably supporting a lawsuit, but virtually no facts 

implicating the four individuals ultimately named in the 

lawsuit. The dichotomy of charging party-facts/ 

attorney-law, usually present in a malicious prosecution 

action, is far from clear here. To sustain defendant's 

motion, the concept of reliance must be stretched to 

encompass not merely whether a legal action may succeed, 

but whether it may succeed against individuals not 

previously identified by the charging party .•.• 

In Lewis, supra, the court upheld a grant of 

summary judgment in favor of a charging party who 

undisputedly relied upon a lawyer's advice to name a 

particular defendant in a lawsuit. 532 P.2d at 432. 

The opinion does not indicate the amount of facts 

conveyed by the charging party. In Herrick v. Devorak, 

155 P. 1153 (Okla. 1916), the charging party advised the 

county attorney of the destruction of his property by 

fire. The county attorney and the sheriff thereupon 

investigated and made a determination as to who the 

guilty parties were. Those charged were found not 

guilty by a jury and brought a malicious prosecution 

action. The court found such an action would not lie 

under those facts. Id. at 1154. Again, this Court 

believes that the structural safeguard of an official 

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prosecutor's investigation, as opposed to that of one's 

own attorney in the civil context, is not to be ignored, 

but the Court has simply found no authority that such a 

consideration overrides Oklahoma's disfavor of malicious 

prosecution actions. The required disclosure is not of 

all facts discoverable, but all facts within the 

charging party's knowledge. Williams v. Frey, 78 P.2d 

1052, 1056 (Okla. 1938). Plaintiffs assert a fact 

question as to good faith reliance, but have produced no 

supporting evidence. 

On this point, as opposed to probable cause, 

Sauer's ignorance inures to defendant's benefit. There 

was no evidence that Sauer had previously suspected 

these four workers; therefore, there was necessarily no 

evidence that he "targeted" them or of lack of good 

faith. It is the jury's province to judge the 

credibility of witnesses. However, an inference is not 

reasonable where it is only a guess or a possibility not 

based upon the evidence. Daniels v. Twin Oaks Nursing 

Home, 692 F.2d 1321, 1324 (11th Cir. 1982). Where the 

evidence is uncontroverted, it is a complete defense. 

Young, 628 P.2d at 711. 

Appellants argue that because Ideal possessed knowledge 

relative to the Appellants and conducted its own investigation in 

this case, the decision by Ideal to file suit upon reliance of 

counsel could not have been in good faith. The district court 

appropriately focused on the distinction of probable cause as to 

the existence of unlawful activities in general versus probable 

cause as to the named parties in the lawsuit. Moreover, probable 

cause in the context of malicious prosecution "'does not mean 

legal cause .... Probable cause has been defined as reasonable 

cause that of an honest suspicion or belief on the part of the 

instigator thereof, founded upon facts sufficiently strong to 

warrant the average person in believing the charge to be true.'" 

Young, 628 P.2d at 710 (quoting Lewis, 532 P.2d at 433). Here, 

Mr. Sauer did conduct some preliminary investigation into his 

general concerns regarding the history of worker relations at the 

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Ada facility, the recent acts of sabotage that had occurred, and 

the unprecedented number of hearing and lung damage claims filed 

by Ada workers. This initial investigation led to his suspicions 

as to the existence of unlawful activities and possible motives 

therefor. However, Mr. Sauer did not possess any evidence as to 

the Appellants, nor did he encourage or suggest these Appellants 

be named. Mr. Sauer clearly testified his decision to bring the 

lawsuit against the four Appellants was made in reliance upon the 

investigation and advice of counsel. No evidence exists in the 

record to suggest otherwise. In addition, Ideal's knowledge about 

the Appellants did not negate the good faith reliance it placed on 

the advice of its counsel. Ideal procured counsel to factually 

investigate the situation in Ada, assimilate 

compiled, and advise Ideal as to whether or how to 

the information 

proceed. Mr. 

Sauer does not possess any legal training, and did not understand 

the legalities of the case as explained by Mr. Kruger. Mr. Sauer 

was entitled to assume Mr. Kruger considered all relevant 

information in making his recommendation as to the existence of 

sufficient factual and legal basis to brinq a lawsuit against 

these four Appellants. Ideal did not know anything about these 

Appellants that would have alerted them to a concern as to the 

propriety of Mr. Kruger's recommendation. 

We also have found no evidence 

Appellants' claim that Ideal did not 

presented 

make full 

to support 

and honest 

disclosure. Recognizing that disclosure in this context does not 

mean "a disclosure of all facts discoverable, but of all facts 

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within [defendant's] knowledge known either personally by 

defendant, or by credible information which he had reasonable 

grounds to believe," Lewis, 532 P.2d at 433, we still find the 

evidence that such full disclosure was made is uncontroverted. 

Upon careful consideration of the evidence presented at 

trial, and viewing that evidence and the inferences therefrom 

most favorably to the Appellants, we hold Ideal's instigation of 

the lawsuit against Appellants was based upon good faith reliance 

on counsel and the evidence supporting this conclusion is 

uncontroverted. 2 Indeed, we hold the evidence so strongly 

supports Ideal's claim of good faith reliance on counsel that 

reasonable minds could not·differ on this issue. See Ware v. 

Unified School Dist. No. 492, 881 F.2d 906, 911 (10th Cir. 1989). 

As noted, the burden is upon the plaintiff in a malicious 

prosecution action to affirmatively prove want of probable cause. 

Young, 628 P.2d at 709. See also Lewis, 532 P.2d at 433 ("In an 

action for malicious prosecution, the burden of proof is upon the 

plaintiff to prove want of probable cause.") Good faith reliance 

upon counsel by defendant is a complete defense to any such claim. 

Id. Under Oklahoma law, it is clear that when a party consults 

counsel and makes a complete and honest disclosure, "he has the 

right to rely on counsel's advice not only as to the legal effect 

2 In reaching this holding we dismiss Appellants' claim that the 

question of good faith reliance "was a fact question for the jury" 

as meritless as this determination would be a fact question only 

if evidence were presented by Appellants for their position. We 

have found no such evidence. 

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but also as to the legal sufficiency of the facts furnished." Id. 

at 434. Having found the evidence uncontradicted on the issue of 

good faith reliance on counsel, we conclude the Appellants' claim 

that Ideal lacked probable cause to instigate the action was 

negated. Thus, there exists no evidence upon which the jury could 

properly have found for Appellants. Rajala, 919 F.2d at 615. 

Therefore, we hold the judgment notwithstanding the verdict was 

properly granted. 

IV. 

In light of our decision affirming the district court's grant 

of Ideal's motion for judgment notwithstanding the verdict, 

Ideal's motion for new trial is moot, as are Appellants' arguments 

relating thereto. SA J. Moore & J. Lucas, Moore's Federal 

Practice, ~ 50.14 (2d ed. 1991). 

For the aforementioned reasons we AFFIRM the decision of the 

district court in all respects. 

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