NOT RECOMMENDED F OR F ULL-TEXT PUBLICATION F ile Nam e: 11a0545n.06 No. 10-1408 UNITED STAT ES COURT OF AP P EALS F OR THE S IXTH CIRCUIT
G. SCOTT WHI TI

NG, Plaintiff-Appellant,

v. AL L STATE I

NSURANCE CO., Def endant- Appellee

. ) ) ) ) ) ) ) ) ) ON APPEAL FROM THE UNI TED STATES DI STRI CT COU RT FOR THE EASTERN DI STRI CT OF MI CHI GAN

Be fore : SUTTON and COOK , Circuit J udg es; GREER, District J udg e. *
SUTTON, Circuit J udg e. Scott Whit ing, a former employ ee of Allstate I nsuranc e Company , challeng es the dismiss al of his defa mation claim. Be cause businesses have a qualified privileg e to communicate a

bout their employ ees, this claim fa ils as a matter of law.

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W h i t i n g b egan working for Allstate in 1986 as a support staff member and over the y ear s
ear ned sever al promotions. During his tenure , Whit ing rec eived many favor able revie ws and sever al

awa rds for his ser

vice.

The Honora

ble J

. Ronnie Gre er, Uni t ed S t at es District J udg e for the Easter n District of * Tenne ssee, sitting by

desig nation.No. 10-1408

W hiting v. Allstat e Ins. Co. At the hear

t of W hiting’s complaint is an insurance -cla ims prac tice known as “mana g ed dispositi on,” by

which some Allstate of

fice s alleg edly reg

ulated their monthly

pay out numbers by off- setting larg e claims ag ainst man y smaller claims. At times, Whit ing say s, his supervisors instructed h i m to delay claims pay ments. At other times, they remove d his authority to pay larg e claims at the e nd of the month, which a lso had the ef fec t of delay

ing pa y ments.
On J une 27, 2006, Whit ing s en t an email to Dennis Shelton, a claims adjuster in I ndiana, authorizing him to pay a claim for more than $100,000 but telling him to delay the pay ment until afte r Jul y 1. Shelton noted the delay in the customer’ s file.

I n J anuar y 2007, an Allstate invest ig a to r c o n ta c te d Wh it in g a

b o u t th e d e la

y ed claim pay

ment. The investiga tor wrote a repor t disc ussing the email exchang e with Shelton as well as notations in the files about Whiting’s instructions to delay the pay ment.
After revie wing this repor t, Allstate in-house counsel Susan Rosboroug h asked C h ri sti Rushing, a human resour ces manag er, to fire Whit ing. The discharg e letter said that “Whiting instructed a remote adjuster to delay a claim pay ment with a signific ant dollar amount until afte r the end of the second quarte r” of 2006 and conclude d that “Whiting violated the Allstate Code of Ethics . . . by delay ing pay ments on a claim.” R.40-19 at 2. This behavior , the l etter added, viol ated the following ethics provision:

As one of Allstate’s core values, integ rity mus t b e p ar t of all business g oals and activities. We tr eat ever

y stakeholder

acc ording ly

. We a ct honestly and deal fairly and ethica lly

with customers, suppliers, compe titors and other e mploy ees. - 2 -No. 10-1408

W hiting v. Allstat e Ins. Co.

R.40-19 at 3. Acc ording to the letter, t he Allstate Human Resource s Policy Guide rec ommended immediate discharg e for offe nses of this sort. Be cause Whit ing had worke d at Allstate for more than twenty y ear s, the discharg e letter require d the signa tures of three manag ers, eac h of whom revie wed this letter and sig ned it.

On J une 11, 2007, Allstate fir ed Whiting, citing a bre ach of ethics.

On J une 12, 2007, Whit ing r ece ived a phone call fr om J ohn Ba rre tt, a proper

ty manag er at the home office in I llinois , offe ring his condolenc es and rela y in g t h at h e h ear d Whit ing had been fired for a brea ch of ethics. Whit ing rec eived o t h er p h o n e calls over the next month from other employ ees a

nd vendors who ha d hear d about the firing

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Whit ing fi led this lawsuit ag ainst Allstate in Michig an state court, claiming defa mation. Allstate remove d the case to fede ral court based on diversity jurisdiction. 28 U.S.C. § 1332. At that point, Whit ing added a wrong ful termination claim to h i s compl aint, and afte r discovery Allstate

succe ssfully moved for summary judgme nt on both c laims. W hiting now appea ls the dismiss al of his defama tion claim.

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Under Michig an law, a statement is defa matory if it tends to harm the reputa tion of another by lowering the estimation of that person in the community or by deter ring third parties from

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W hiting v. Allstat e Ins. Co. associating wi th him. Smith v. Anonymous Joint Enter. , 793 N.W.2d 533, 540 (Mich. 2010). Among other elements of the claim, a plaintiff must establish that the defe ndant made an unprivileged communication to a third party , id ., which prese nts a problem for Whit ing: The rec ord does not contain any unprivileg ed communication by Allstate to any third party about this discharg e.
I n his complaint, Whit ing s ay s that Har ry Wright (Claim Field Direc tor) and Dan Hebe l (Vice President of the Easter n Terr itory of Field Claims) “made statements reg arding plaintiff which said, direc tly or by implicati o n , that [W hiting] had behave d in violation of Allstate’s ethical standards .

. . [and] prac tices and policies.” R.35 ¶ 32. L ater in the complaint, Whit ing mentions “fa lse statements made by Hebe l, Wright and other Allstate employ ees,” but he never identifies other employ ees or

statements. R.35 ¶ 34.
Whit ing’ s brief points to three defa matory s t at em en ts involving six speake rs. Two of the statements are included in the discharg e letter: that Whit ing “violated the Allstate Code of Ethics” and that he “ violated company policy .” Whit ing Br

. 31–32. The third is a g ener al ac cusation that Whit ing was “verbally castig ated” for h av i ng committed a breac h of ethics beca use t hree Allstate employ ees (Susan Rosboroug h, in-house counsel; Christi Rushing, human resour ces manag er; L uke Yang , internal investiga tor) spoke to eac h other and with Whit ing about the internal investiga tion. Id. at 32.
There is some re as o n to doubt whether Whit ing’ s pleading suffice s to bring into play the statements mentioned in his briefs. See Scheid v. Fanny Farmer Candy Shops, Inc. , 859 F.2d 434,
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W hiting v. Allstat e Ins. Co. 436 (6th Cir. 1988) (“complaint m u s t co n t ain either direc t or i nfer ential allega tions respe cting all the m ater ial elements to s ustain a recove ry under some viable lega l theory ”); cf. Gonyea v. Motor Parts Fed. Credit Union , 480 N.W.2d 297, 299 (Mich. C t. App. 1991) (a claimant must plead the elements of a defa

mation claim with specific ity , including the alleg edly defa matory wo rd s , the

connec tion betwee n the words and the plaintiff and their publication). Even if we o v er look this potential pleading defic iency , none of the statements ref ere nced in the complaint or briefs satisfies the pre requisites of a

n unprivileg ed def

amatory statement.
Under Michig an law, as under the law of most (if not all) States, employ ers have a qualified privileg e “to defa

me an employ ee by making statements t o other em ploy ees whose dut ies interest them in the subject matter.” Id

. at 300. Supervisory employ ees fre quently have the need, sometimes the duty , to comment on the behavior and work habits of their char g es. See Beaumont v. Brown , 257 N.W.2d 522, 527 (Mich. 1977); Cole v. Knoll, Inc. , 984 F. Supp. 1117, 1134 (W.D. Mich. 1997). Consist ent with the imp er at i ves of manag ing a company , to say nothing of common sense, supervisory employ ees t h u s may “discuss .

. . alleg ations,

. . . make appropriate inquiries, and .

. . commit their findings to writing ” without violating the defa mation laws. Id. How else could one

run a company ? “Employ ers responsible for hiring and firing ” must be able “to hear acc usations of employ ee misconduct which war rant dismiss al” and deal with them appropr iately —which often includes further communications with other super visors and employ ees. Merritt v. De troit Mem’l Hosp. , 265 N.W.2d 124, 126–27 (Mich. Ct. App. 1978).

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W hiting v. Allstat e Ins. Co. This privileg e cover s all of the targ eted statem en ts. Eac h statement conce rns Whit ing’ s behavior as an Allstate empl o y ee—his instruction to a claims adjuster to delay pay ment on an authorized claim. And eac h of the speak er s was a supervisory employ ee involved in the investiga tion and discussion of Whit ing’ s behavior. Three of the e mploy ees—Y ang , Rosboroug h and Rushing—we re direc tly responsible for overse eing the behavior of employ ees and fo r participa ting in the investiga tion and documentation of misbehavior. The other three —Hebe l, Wright and Kar leen Z uzich—were executive manag ers who oversa w Whit ing and other employ ees l ike him. All six employ ees had an interest in Whit ing’ s conduct on the job, and t h ei r p o s i t i o n s require d them to in vestig ate this incident and decide whether it require d his firing

. The privileg e thus covers the ir conve rsations and wr itten communications.
The privileg e, we rec og nize, is not without limit s. I t does not extend to defa matory communications made to other employ ees who are not supervisors but “s i m p l y fellow employ ees in the identical work” as t h e p er s on defa med. Sias v. Gen. Motors Corp ., 127 N.W.2d 357, 360 (Mich. 1963); see also Patillo v. Equitable Life Assurance Soc’y , 502 N.W.2d 696, 699–700 (Mich. Ct. App. 1993); Horton v. 48th Dist. Court , 446 F. S u p p . 2d 756, 765 (E.D. Mich. 2006). I n Whit ing’ s case , howeve r, all six of the rele vant employ ees had supervisory roles. See Cole , 984 F. Supp. at 1134.
Whit ing insists that the supervisory employ ees violated the privileg e by disseminating the defa matory documents to lower- level employ ees. But no evidenc e supports this claim. “[R] umors

. . . circ ulating in the work place ” by themselves do not suffice to establish a triable issue of fac t in - 6 -No. 10-1408

W hiting v. Allstat e Ins. Co. a def amation claim, id ., espec ially when W hiting admits that he “[ doesn’t] know who” orig inated the rumors and that only one person mentioned the code of ethics to him. R.40-4 at 62, 76–77, 101.

A claimant, we also rec og nize, may overc ome the privileg e by showing actua l malice—that the s upervisor made t he defamatory statement wit h “knowledg e of its fa lsity or re ckless dis reg ard of the truth.” Gonye a , 480 N.W.2d at 300. Whit ing alleg es that his supervisors knew that delay ing claim pay ments was an acc epted business prac tice at Allstate and contends that at least some of the supervisory employ ees “fe igne d ignor ance ” of the prac tice in t h ei r d ep o s i t ions. R.11 at 59–60. The rec ord, howeve r, does not permit the infere nce that the six supervisory employ ees knew of any such prac tice within the Michig an office

. Five of the supervisors worke d in Allstate office s in other States and supervised the Michig an office from a distance. The six th supervisor worke d in the Michig an office but in the human resour ces depar tment, a distinct division (phy sically and in terms of substantive re sponsibili ty ) fr om the claims are a whe re Whiting wor ked.

Two of the six supervisors revie wed only the termination reque st, which outlined Whit ing’ s behavior and the rele vant policy sections, but g ave no indication that Whit ing had told investiga tors that his be havior confor

med with the instructions of his supe riors and the prac tice in the Michig an office

. The four other supervisors revie wed Yang ’s inv e s ti g a ti o n r eport, which contained conflicting information—Whiti ng ’s statement that L ionel Be ckles direc ted him to delay the claim pay ment and the contra ry testimony of Be ckles himself, who denied telling Whit ing to delay a claim pay ment and who emailed the office ’s employ ees instructing them not to delay pay men t s . At most, the Yang repor t reve als that Whit ing hear d one thing and Be ckle s t es t i fi ed he said something else. I n - 7 -No. 10-1408

W hiting v. Allstat e Ins. Co. respe cting one ver sion of what wa s said, including the version supported by an off ice- wide ema il, the supervisors hardly showed knowledg e of a falsity or for that matter any rec kless disreg ard of the truth.

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For these re asons, we a ffirm.

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