Court Opinion

ID: 7800139
Source: CourtListenerOpinion
Date Created: 2022-08-12 14:05:45.362306+00
Date Added: 2024-06-11T16:29:02.313537
License: Public Domain

RENDERED: AUGUST 5, 2022; 10:00 A.M.
                  NOT TO BE PUBLISHED

          OPINION OF JUNE 17, 2022, WITHDRAWN

          Commonwealth of Kentucky
                  Court of Appeals

                    NO. 2020-CA-1115-MR

CUSTOM FOOD PRODUCTS, LLC
AND THERESA BALENTINE                              APPELLANTS

            APPEAL FROM BATH CIRCUIT COURT
v.        HONORABLE ROBERT W. MCGINNIS, JUDGE
                 ACTION NO. 16-CI-90163

STELLA SHROUT                                        APPELLEE

AND

                    NO. 2020-CA-1180-MR

STELLA SHROUT                               CROSS-APPELLANT

         CROSS-APPEAL FROM BATH CIRCUIT COURT
v.       HONORABLE ROBERT W. MCGINNIS, JUDGE
                 ACTION NO. 16-CI-90163

CUSTOM FOOD PRODUCTS, LLC
AND THERESA BALENTINE                       CROSS-APPELLEES
                                         OPINION
                                    AFFIRMING IN PART
                                  AND REVERSING IN PART

                                            ** ** ** ** **

BEFORE: CLAYTON, CHIEF JUDGE; GOODWINE AND MCNEILL,
JUDGES.

MCNEILL, JUDGE: Custom Food Products, LLC (“Custom Food”) and Theresa

Balentine (“Balentine”) appeal from a Bath Circuit Court judgment awarding

Stella Shrout (“Shrout”) $1,087,440 in damages following a jury trial. Shrout

cross-appeals from the same judgment. For the reasons set forth below, we reverse

the judgment as to the appeal and affirm the judgment as to the cross-appeal, with

directions that a new judgment be entered in conformity this Opinion.

                  Custom Food manufactures processed beef, chicken, and pork for

consumption across the United States. Shrout worked as an at-will employee at

Custom Food’s Owingsville, Kentucky facility until she was terminated on

October 6, 2016. On that date, a forklift hit Shrout as she was showing a new

employee around the production floor.1 Pursuant to company policy, Shrout was

taken to a nearby medical clinic to be drug tested.

1
    Shrout was not physically injured as a result of this incident.

                                                   -2-
               Shrout tested positive for oxycodone, opiates, and methamphetamine.2

Based upon these results, Balentine, Custom Food’s Human Resources Director at

the time, terminated Shrout’s employment. Shrout disputed the positive test result

and requested the opportunity to be retested. Shrout was emotional and crying and

tried to convince Balentine to change her mind. According to Shrout, Balentine

authorized her to be tested again by a different medical facility and told her if the

result was different she would reconsider.

               Shrout went to St. Claire Medical Center to be retested. While

awaiting the results, Shrout called Balentine multiple times denying the positive

drug test and asking for her job back. The second test was negative for oxycodone

and methamphetamine; however, the document provided by the medical review

service that confirmed the test simply states, “Negative Opiates.” Shrout informed

Balentine of the negative result but Balentine refused to reconsider Shrout’s

termination.

               On December 2, 2016, Shrout filed a complaint in the Bath Circuit

Court against Custom Food and Balentine alleging defamation, workers’

compensation retaliation, wrongful use of administrative proceeding, negligence,

2
  Shrout apparently had a prescription for hydrocodone (an opiate) and had provided a list of her
medications to Custom Food when she was hired. It is unclear if Balentine was aware of this
information at the time Shrout was terminated.

                                               -3-
intentional infliction of emotional distress (IIED), and negligent infliction of

emotional distress (NIED). A jury trial was held on February 26, 2020.

             At trial, Shrout presented evidence that her termination caused her

great emotional distress. She testified that employees from Custom Food would

approach her in public about the positive drug test and that she carried her negative

drug test in her pocket to prove she was clean. She further testified the negative

drug test prevented her from getting another job because she had to notify

prospective employers that she had been fired for a “dirty” drug test. She stated

she had many “dark days” where she would just sit in her apartment for days at a

time and do nothing.

             Shrout’s expert psychologist testified that she suffered from a form of

post-traumatic stress disorder because of her termination. He testified that Shrout

took great pride in her work and that losing her job was traumatic. It impacted her

self-esteem and caused financial stress. He further opined that Shrout would need

continued therapy and medication and would unlikely be able to work for the

remainder of her life.

             At the close of Shrout’s case, appellants moved for directed verdict on

all claims. The trial court granted the motion as to defamation and wrongful use of

administrative proceeding. Following the evidence, the trial court denied

appellants’ renewed motion for directed verdict on the remaining claims.

                                          -4-
               The jury returned a verdict in favor of appellants on the workers’

compensation retaliation and IIED claims and in favor of Shrout on the negligence

and NIED claims. Shrout was awarded $750,000 for pain and suffering, $37,440

for medical expenses, and $300,000 for loss of income and loss of ability to earn

income in the future for a total award of $1,087,440 in damages. This appeal and

cross-appeal followed. Further facts will be set forth as necessary below.

               Appellants maintain they were entitled to a directed verdict as a

matter of law on Shrout’s negligence and NIED claims because Shrout was an at-

will employee and was owed no duty of care regarding her termination. As an

initial matter, Shrout contends appellants have waived this argument by failing to

tender jury instructions on negligence and NIED.3 However, appellants’ challenge

is to the giving of the instruction itself, not the language of the instruction.

Appellants moved for directed verdict at the close of Shrout’s case and again at the

close of all evidence thus preserving the issue for appeal. Ray v. Commonwealth,

611 S.W.3d 250, 266 (Ky. 2020), cert. denied sub nom. Ray v. Kentucky, No. 20-

8236, 2021 WL 4508153 (U.S. Oct. 4, 2021).

               Turning first to the negligence claim, to prove negligence, a plaintiff

must show “(1) a duty on the part of the defendant; (2) a breach of that duty; and

3
  Appellants did in fact tender jury instructions on negligence and NIED at trial following the
court’s denial of their motion for directed verdict, while maintaining they owed no duty of care
to Shrout as a matter of law.

                                               -5-
(3) consequent injury.” Mullins v. Commonwealth Life Ins. Co., 839 S.W.2d 245,

247 (Ky. 1992) (citation omitted). “If no duty is owed by the defendant to the

plaintiff, there can be no breach thereof, and therefore no actionable

negligence.” Ashcraft v. Peoples Liberty Bank & Trust Co., Inc., 724 S.W.2d 228,

229 (Ky. App. 1986). Whether a duty exists is a question of law and is reviewed

de novo. Pathways, Inc. v. Hammons, 113 S.W.3d 85, 89 (Ky. 2003). “When a

court resolves a question of duty it is essentially making a policy determination.”

Mullins v. Commonwealth Life Ins. Co., 839 S.W.2d 245, 248 (Ky. 1992).

             The trial court’s ruling concerning duty is somewhat unclear from the

record, both as to the exact nature of the duty owed and the basis for finding a

duty. The Court’s negligence instruction to the jury provided: “You will find for

Stella Shrout on her Negligence claim if you are satisfied from the evidence that

Defendants failed to use ordinary care regarding Ms. Shrout’s drug testing process

and that this failure was a substantial factor in the harm suffered by Ms. Shrout.”

             Throughout trial, Shrout argued that appellants were negligent for

terminating Shrout’s employment based upon a faulty initial drug test instead of

using a more accurate confirmatory test. Shrout has not cited, and the Court has

not found, any Kentucky law imposing a duty on employers to drug test reasonably

in connection with terminating an employee. “[T]his Court will not recognize . . .

                                         -6-
a duty where no such duty has existed before in the Commonwealth.” Johnson v.

United Parcel Serv., Inc., 326 S.W.3d 812, 815 (Ky. App. 2010).

             Other jurisdictions have explicitly declined to find a duty under the

same or similar circumstances. E.g., Mission Petroleum Carriers, Inc. v. Solomon,

106 S.W.3d 705, 716 (Tex. 2003) (“Just as we have consistently preserved the

doctrine of employment-at-will from encroachment by other liability theories, we

decline Solomon’s invitation to adopt a new theory of liability for negligent drug

testing.”); Bellinger v. Weight Watcher Gourmet Food Co., 756 N.E.2d 1251, 1257

(Ohio Ct. App. 2001) (“Weight Watchers owed no duty to appellant as to drug

testing as appellant was an employee-at-will. Weight Watchers could have

discharged appellant without even conducting drug tests.”); Baca v. Fisher Sand &

Gravel, Co., No. CV-09-0221-DJS-RHS, 2010 WL 11493830, at *7 (D.N.M.

2010) (interpreting New Mexico law) (“In this case, Plaintiffs Baca and Ulibarri do

not dispute they were at-will employees. Consequently, Fisher owed no duty to

Plaintiffs Baca and Ulibarri to conduct drug testing in any particular manner, and it

was entitled to discharge them whether they failed or passed the drug test or give

no reason at all for their termination.”).

             Shrout makes several arguments in support of the trial court’s ruling,

none of which are persuasive. First, she focuses on appellants’ alleged negligent

conduct, without identifying any duty, which is the subject of the directed verdict

                                             -7-
motion and this appeal. As to duty, she cites a “universal duty of care” but

“Kentucky has never recognized a general ‘universal duty of care,’ that would

allow for new causes of action to arise that did not previously exist.” Johnson, 326

S.W.3d at 816.

             She also argues that appellants assumed a duty to drug test her

reasonably based upon Custom Food’s drug testing policy. Shrout cites Estep v.

B.F. Saul Real Estate Investment Trust, 843 S.W.2d 911 (Ky. App. 1992), for the

“well-known rule that a duty voluntarily assumed cannot be carelessly undertaken

without incurring liability therefore.” Id. at 914. However, Kentucky has adopted

the Restatement (Second) of Torts § 324A (1965) “regarding the elements

necessary for liability for the breach of a voluntarily assumed duty.” Morgan v.

Scott, 291 S.W.3d 622, 632 (Ky. 2009). Under the facts of this case, “[w]e do not

find that [appellants] undertook to render any ‘services’ (as the term is

contemplated by the Restatement (Second) of Torts ) to [Shrout], and can find no

support in this jurisdiction or others for such a proposition.” Johnson, 326 S.W.3d

at 817. Without a duty, appellants cannot be liable for negligence. Therefore, they

were entitled to directed verdict as a matter of law.

             Appellants were also entitled to a directed verdict on Shrout’s claim

for NIED. A party seeking to recover damages for emotional distress “must

present evidence of the recognized elements of a common law negligence claim[.]”

                                          -8-
Osborne v. Keeney, 399 S.W.3d 1, 17 (Ky. 2012). Because Shrout’s negligence

claim fails as a matter of law, her NIED claim likewise fails. Therefore, the trial

court erred in failing to direct a verdict in favor of appellants on Shrout’s NIED

claim.

             Because we conclude the trial court should have entered a directed

verdict in favor of appellants, it is not necessary to address their other claims of

error.

             Shrout has cross-appealed from the Bath Circuit Court judgment,

arguing the trial court erred: (1) in directing a verdict on her defamation claim; (2)

in directing a verdict on her wrongful use of an administrative proceeding claim;

(3) in incorrectly instructing the jury on her workers’ compensation retaliation

claim; and (4) in excluding a statement from a co-worker that he was going to be

fired for filing a workers’ compensation claim.

             As to claims of error one and two,

             [o]ur directed-verdict standard of review is well settled.
             First of all, when presented with a motion for directed
             verdict, a trial court must draw all fair and reasonable
             inferences from the evidence in favor of the party
             opposing the motion. As a reviewing court, we must
             ascribe to the evidence all reasonable inferences and
             deductions which support the claim of the prevailing
             party. . . . The judgment of the trial court in such matters
             will only be substituted when clearly erroneous. In the
             end, a trial court should only grant a directed verdict
             when there is a complete absence of proof on a material
             issue or if no disputed issues of fact exist upon which

                                          -9-
              reasonable minds could differ.

Toler v. Süd-Chemie, Inc., 458 S.W.3d 276, 285 (Ky. 2014), as corrected (Apr. 7,

2015) (internal quotation marks and citations omitted).

              Turning to the defamation claim, the requisite elements of defamation

are “(a) a false and defamatory statement concerning another; (b) an unprivileged

publication to a third party; (c) fault amounting at least to negligence on the part of

the publisher; and (d) either actionability of the statement irrespective of special

harm or the existence of special harm caused by the publication.” RESTATEMENT

(SECOND) OF TORTS § 558 Elements Stated (1977).

              Here, because Shrout’s complaint only alleged defamation against

Balentine, only Balentine’s alleged defamatory statements are at issue. According

to Shrout, when Balentine called her into her office to discuss her drug test results,

Balentine told her that she “was so high on meth that she could not believe that of

me, that she ought to call the law and have me arrested.”4 Balentine made this

statement in the presence of Jeff Boggs and Karen Bailey, two of Custom Food’s

managers. Boggs had investigated the forklift incident and requested that Shrout

be drug tested and Bailey had accompanied Shrout to the testing center.

4
  While Shrout suggests additional defamatory statements based upon employee statements to
her concerning her negative drug test, we consider any argument based upon these alleged
additional statements to be waived. While arguing the motion for directed verdict, Shrout
conceded on the record that the only statements at issue were those Balentine made in her office
in the presence of Jeff Boggs and Karen Bailey.

                                              -10-
             Balentine tells the story differently. She testified that when Shrout

returned from the drug screen she was already very upset, crying, and yelling,

saying, “you’re not going to tell me these results.” When Balentine told her of the

positive drug test results, Shrout argued the results must be incorrect. Shrout

became angry and began cursing at Balentine. Balentine stated she was

uncomfortable with Shrout’s reaction and wanted Boggs and Bailey in the room.

She further stated that Boggs and Bailey had been part of the events of that day and

had informed her previously of some of the explanations for the positive drug test

Shrout had made on the return from the clinic.

             The trial court determined that Balentine’s statements in the presence

of Boggs and Bailey were privileged. We agree. “The determination of the

existence of privilege is a matter of law.” Harstad v. Whiteman, 338 S.W.3d 804,

810 (Ky. App. 2011) (citation omitted). “Unflattering language made within the

scope of the employment relationship – and particularly ‘[i]n matters involving

communications between employees in the chain of command[,]’ – are qualifiedly

privileged, and ‘no recovery [for defamation] can be had.’” Fortney v. Guzman,

482 S.W.3d 784, 790 (Ky. App. 2015) (citations omitted). This is because “society

benefits when employers, or others who share common interests, are permitted to

discuss matters freely, even if those discussions are found to be based on erroneous

beliefs or misinformation.” Toler, 458 S.W.3d at 286.

                                        -11-
             However, “[a] qualified privilege can be lost if abused or exceeded.”

Fortney, 482 S.W.3d at 790 (citation omitted). “The burden of showing such

abuse of privilege is the plaintiff’s.” Toler, 458 S.W.3d at 284. A plaintiff must

show both malice and falsity to overcome the qualified privilege. Id. at 287.

Abuse of the privilege may be shown by (1) “the publisher’s knowledge or reckless

disregard as to the falsity of the defamatory matter”; (2) the “publication of the

defamatory matter for some improper purpose”; (3) “excessive publication”; or (4)

“the publication of defamatory matter not reasonably believed to be necessary to

accomplish the purpose for which the occasion is privileged.” RESTATEMENT

(SECOND) OF TORTS § 596 Common Interest, cmt. a (1977).

             Here, Shrout has presented no evidence that Balentine’s statements

were the result of malice. “With the qualified privilege, it is not so much what was

said as it is how it was said.” Toler, 458 S.W.3d at 284. Instead, Shrout’s

arguments pertain mainly to the falsity of Balentine’s statements. However, she

“was required to do more than assert that these statements were false; people are

sometimes wrong without even suspecting it.” Harstad, 338 S.W.3d at 813.

             Adapting the words of the Harstad Court:

             It was [Shrout]’s burden to present some evidence that
             would incline a reasonable person to believe that
             [Balentine]’s perception was not simply the product of
             mistaken observation, but the result of malice, i.e., some
             evidence that [Balentine] knew she was lying or making

                                         -12-
               wholly unfounded statements without regard to their truth
               or falsity.

Id. Here, there is no such evidence. In fact, Shrout testified that she believed

Balentine thought she was on drugs and terminated her because of that actual, if

inaccurate, belief.

               While Shrout is correct that “[t]he abuse-of-privilege question

typically is one for the jury,” Toler, 458 S.W.3d at 287, “a directed verdict is

appropriate where there is no evidence of probative value to support an opposite

result because [t]he jury may not be permitted to reach a verdict upon speculation

or conjecture.” Id. at 285 (internal quotation marks and citation omitted). Because

there was no evidence of malice, the trial court was not clearly erroneous in

granting Balentine’s motion for directed verdict on Shrout’s defamation claim.

               Shrout next argues the trial court erred in granting a directed verdict

on her claim for wrongful use of administrative proceedings.5 We disagree. In

Martin, 507 S.W.3d at 11-12, our Supreme Court set forth the elements of a claim

for wrongful use of civil proceedings or malicious prosecution:

5
  As an aside, we have serious doubts whether Shrout has stated a cognizable claim for wrongful
use of civil proceedings. Also known as malicious prosecution, this claim requires proof, among
other things, that “the defendant initiated, continued, or procured a criminal or civil judicial
proceeding, or an administrative disciplinary proceeding against the plaintiff[.]” Martin v.
O’Daniel, 507 S.W.3d 1, 11 (Ky. 2016). Unemployment proceedings are not an “administrative
disciplinary proceeding against the plaintiff.” At least one court has declined to recognize such a
claim under similar facts. See Wilkinson v. Shoney’s, Inc., 4 P.3d 1149, 1159 (Kan. 2000)
(declining to recognize cause of action for malicious defense based upon an employer’s
challenge of a claim for unemployment compensation benefits).

                                               -13-
             A malicious prosecution action may be established by
             showing that:

             1) the defendant initiated, continued, or procured a
                 criminal or civil judicial proceeding, or an
                 administrative disciplinary proceeding against the
                 plaintiff;

             2) the defendant acted without probable cause;

             3) the defendant acted with malice, which, in the criminal
                 context, means seeking to achieve a purpose other
                 than bringing an offender to justice; and in the civil
                 context, means seeking to achieve a purpose other
                 than the proper adjudication of the claim upon which
                 the underlying proceeding was based;

             4) the proceeding, except in ex parte civil actions,
                 terminated in favor of the person against whom it was
                 brought; and

             5) the plaintiff suffered damages as a result of the
                 proceeding.

             The trial court directed a verdict in favor of appellants, finding there

was no evidence any action by appellants “continued” the proceedings. It

specifically noted the lack of evidence from the Kentucky Division of

Unemployment Insurance (“Division”) showing that any action by appellants

influenced its decision respecting Shrout’s benefits. Shrout argues on appeal, as

she did below, that Custom Food’s submissions to the Division concerning her

termination effectively “continued” the unemployment proceedings against her,

delaying her benefits. She specifically points to the fact that Balentine had in the

                                         -14-
past entered into settlement agreements with employees to not challenge their

receipt of benefits, which she argues shows that Balentine (and thus Custom Food)

was aware that responding to the Division’s request for information would delay or

prevent the receipt of benefits.

             We agree with the trial court that Shrout failed to present evidence

concerning this element of her wrongful use of civil proceedings claim. There is

no evidence in the record that Custom Food’s submissions to the Division delayed

or affected its decision concerning Shrout’s benefits in any way. Shrout seems to

believe that if Custom Food had not responded to the Division’s requests for

information concerning Shrout’s termination she would have automatically

qualified for benefits. However, “[n]o Kentucky authority stands for the

proposition that if an employer fails to contest a worker’s claim for unemployment

benefits, the worker must be awarded unemployment benefits.” Kentucky

Unemployment Ins. Comm’n v. Watts, 407 S.W.3d 569, 574-75 (Ky. App. 2013).

             Further, Shrout’s own submissions to the Division contain

substantially the same information as Custom Food’s. Thus, without further

evidence, she cannot prove that it was Custom Food’s action, as opposed to her

own, that continued the proceeding. As noted above, “a directed verdict is

appropriate where there is no evidence of probative value to support an opposite

result because [t]he jury may not be permitted to reach a verdict upon speculation

                                        -15-
or conjecture.” Toler, 458 S.W.3d at 285 (internal quotation marks and citation

omitted). Without evidence that appellants continued the unemployment

proceeding, Shrout could not prove an essential element of her claim and directed

verdict was proper.

             Next, Shrout alleges the trial court’s instruction on her workers’

compensation retaliation claim misled the jury into believing she had to prove she

was pursuing a workers’ compensation claim prior to being terminated, rather than

simply intending to pursue such. We review alleged errors in jury instructions de

novo. Lawson v. Commonwealth, 425 S.W.3d 912, 915 (Ky. App. 2014) (citations

omitted). The trial court’s instruction provided in relevant part:

             You will find for Stella Shrout on her Workers’
             Compensation Retaliation claim if you are satisfied from
             the evidence that: Plaintiff was pursuing a Workers’
             Compensation claim at the time she was terminated . . .
             [and] Plaintiff’s pursuit of a Workers’ Compensation
             claim was a substantial and motivative factor in
             Defendants’ decision to discharge Stella Shrout.

             Shrout now contends the trial court’s instruction should have stated

that Shrout “intended to file and pursue” a workers’ compensation claim, citing

First Prop. Management Corporation v. Zarebidaki, 867 S.W.2d 185 (Ky. 1993).

We find Shrout’s argument is not preserved for appellate review because Shrout

never argued the suggested language to the trial court; neither is it located in her

                                         -16-
tendered instructions. See CR6 51(3); Sand Hill Energy, Inc. v. Smith, 142 S.W.3d

153, 163 (Ky. 2004) (citation omitted) (noting that an allegation of instructional

error is not preserved for appellate review when “the omitted language or

instruction was not contained in the instruction tendered to the trial court; i.e.,

when the allegation of error was not presented to the trial court at all[.]”).

                Finally, Shrout argues the trial court erred in excluding a co-worker’s

statement to her that he was going to be fired for pursuing a workers’

compensation claim. Shrout argues this evidence is relevant to her state of mind

concerning why she was afraid to file a workers’ compensation claim. A trial

court’s evidentiary rulings are reviewed for abuse of discretion. Goodyear Tire &

Rubber Co. v. Thompson, 11 S.W.3d 575, 577 (Ky. 2000) (citations omitted).

                At trial, Shrout attempted to testify that a co-worker, Ernie Anderson,

told her he was going to be fired for filing a workers’ compensation claim.

Appellants objected that the testimony was inadmissible hearsay and Shrout

countered that the statement went to her state of mind. The trial court excluded the

statement stating, “if he’s not going to be a witness, I’m going to sustain the

6
    Kentucky Rules of Civil Procedure.

                                           -17-
objection.” We interpret the trial court’s ruling as holding the statement was

hearsay7 and find no error in excluding it.

                Hearsay evidence is not admissible unless it qualifies for an

exception. KRE8 802. While Shrout argues the statement goes to her state of

mind, “KRE 803(3), by its very language, only applies to prove the state of mind

of the declarant[.]” Moseley v. Commonwealth, 960 S.W.2d 460, 462 (Ky. 1997).

                Based upon the foregoing, the Bath Circuit Court’s judgment is

reversed as to the appeal and affirmed as to the cross-appeal, with directions for the

trial court to set aside the jury verdict and enter a new judgment in favor of Custom

Food and Balentine.

                ALL CONCUR.

    BRIEFS FOR APPELLANTS/                     BRIEFS FOR APPELLEE/CROSS-
    CROSS-APPELLEES:                           APPELLANT:

    Jacinta F. Porter                          Laraclay Parker
    Keith Moorman                              J. Dale Golden
    Lexington, Kentucky                        Alexandra DeMoss-Campbell
                                               Lexington, Kentucky

7
 Prior to trial, the court granted appellants’ general motion in limine to exclude evidence of
other Custom Food employees allegedly being terminated for workers’ compensation retaliation
based upon Shrout’s lack of personal knowledge.
8
    Kentucky Rules of Evidence.

                                             -18-