Court Opinion

ID: 9883895
Source: CourtListenerOpinion
Date Created: 2023-10-06 02:24:10.9089+00
Date Added: 2024-06-11T07:48:32.690578
License: Public Domain

WOZNIAK, Judge
(dissenting).
I respectfully dissent.
We are initially confronted with the bizarre result of the jury finding that Frank-son was employed at will, that there was no breach of his written employment contract, that he was not wrongfully terminated by DSI, and yet that he is entitled to $195,000 in general and punitive damages based solely on an internal termination letter which was shown only to those corporate employees within the chain of command who needed to know and without any evidence from Frankson of any damage.
1. The first element which a plaintiff must prove in a defamation action is that there was publication of the defamatory statement. Olson v. Holland, 181 Minn. 364, 232 N.W. 625 (1930). Publication is the communication of the defamatory matter to a third person or persons. Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 255 (Minn.1980).
In the present case, Frankson’s termination letter, containing the alleged defamatory statement, was seen by three other persons: the secretary who typed the letter, Frankson’s supervisor, and the company president. The letter was not communicated to any other person within or outside the corporation. It was restricted to those within the corporation who had a “need to know.”
Upon review of the relevant caselaw, I conclude that Minnesota law does not consider such restricted intra-corporate communication made within the chain of command on a need-to-know basis to be a publication.
The majority incorrectly cites Hebner v. Great Northern Railway Co., 78 Minn. 289, 80 N.W. 1128 (1899), for the proposition that an in-house communication of a defamatory statement constitutes publication. In Hebner, the issue of publication was not appealed, and the court only assumed publication in order to decide the case on a privilege question:
[I]t is conceded on this appeal that the only question to be determined is whether the evidence adduced at the trial would have warranted the jury in finding that the defendant, when publishing these words of and concerning plaintiff, was actuated by malice, or did otherwise than a reasonably prudent man would have done under the same circumstances.
Id. at 291, 80 N.W. at 1128.
Subsequent to Hebner, however, the supreme court clarified the rule concerning such intra-corporate communication. In Cleary v. Great Northern Railway Co., 147 Minn. 403, 180 N.W. 545 (1920), the plaintiff’s supervisor at work directed the personnel office of the company to place a defamatory statement in plaintiff’s personnel file. The entry in the file stated: “Relieved, on account unable to properly handle work assigned and men.” Plaintiff then brought a defamation action against the company without the company ever having communicated the defamatory matter outside the company. In upholding the trial court, the Minnesota Supreme Court reasoned as follows:
[PJlaintiff failed to adduce any proof to carry other essential issues to the jury. There was no testimony that any other [employer] had received information in respect to the record mentioned from this defendant. It must be conceded that defendant has the right to discharge plaintiff, even if no cause therefor existed. It could also make a record for its own use as to the reason for the discharge. So long as this record was not furnished to others, or made use of to prevent plaintiff from securing work, it could not injure or damage plaintiff, though false. Plaintiff testified that he got the certificate of clearance from defendant, but he did not claim that he exhibited it to any one. * * * There is an entire absence of proof that plain*573tiff was denied any work or place whatever, on account of the record made by defendant’s employment bureau, or because of defendant’s interference or statements.
Id. at 405, 180 N.W. at 546 (emphasis supplied). While the court noted that “The instant case was not brought or tried as a libel suit, nor is the language of the clearance actionable per se,” id. at 407, 180 N.W. at 547, the policies underlying the decision are identical to those which should be applied in this case. Contrary to the limited authorities relied upon by the majority, the more sensible and workable rule is that the preparation by a secretary of a termination letter (or file memorandum) dictated by the personnel manager, and its distribution only to the employee’s supervisor and the company president, do not constitute “publication” for purposes of a defamation action.
Such a formulation of the publication requirement is not a license for the widespread communication of defamatory matter within a company. Rather, the role is limited to that communication which is made within the chain of command on a need-to-know basis. This appears to be the majority rule. See Jones v. Golden Spike Corp., 97 Nev. 24, 623 P.2d 970 (1981); see also Commercial Union Insurance Co. v. Melikyan, 424 So.2d 1114 (La.Ct.App.1982); Ellis v. Jewish Hospital of St. Louis, 581 S.W.2d 850 (Mo.App.1979); Jackson v. Douglas County Electric Membership Corp., 150 Ga.App. 523, 258 S.E.2d 152 (1979); Burney v. Southern Railway Co., 276 Ala. 637, 165 So.2d 726 (1964); Anderson v. Southern Railway Co., 224 S.C. 65, 77 S.E.2d 350 (1953); Magnolia Petroleum Co. v. Davidson, 194 Okl. 115, 148 P.2d 468 (1944); Chalkley v. Atlantic Coast Line Railway Co., 150 Va. 301, 143 S.E. 631 (1928); Prins v. Holland-North America Mortgage Co., 107 Wash. 206, 181 P. 680 (1919). In the present case, it is undisputed that the termination letter was communicated only to those employees of DSI who were within the chain of command on a need-to-know basis.
The majority decision makes a drastic extension of the law of defamation. Where the contents of a termination letter are communicated only to company employees, the critical issue in a defamation action is whether publication exists. To decide that dictation to a secretary and distribution to key employees of a corporation constitute publication is to undermine the reasons for the publication requirement. An intra-cor-porate communication, among agents of the same corporation and in relation to their duties for the corporation, is merely a communication of the corporation itself. The majority’s position restricts the ability of a business to operate effectively. It inhibits the necessary flow of information between corporate employees. It discourages the documentation of ordinary performance reviews or disciplinary action. Upon dismissal or discipline of employees, employers might justifiably refuse to disclose the reasons for the action out of fear of defamation lawsuits. Such results can only be said to be detrimental to employees.
The majority’s decision also extends our recent case of Lewis v. Equitable Life Assurance Society of the United States, 361 N.W.2d 875 (Minn.Ct.App.1985), pet. for rev. granted (Minn. March 29, 1985), itself an extension of existing law. While Lewis involved the self-publication of a defamatory statement to potential employers, our case is considerably narrower. Here, there is no claim of publication to any person outside the corporation. The argument presented by the dissent in Lewis applies with even greater force here: “The majority ruling recognizes, in thin disguise, the tort of wrongful termination rejected by our supreme court.” Id. at 884.
If the majority position becomes law, it would virtually make every statement made by a supervisor or personnel manager in the employment context subject to jury scrutiny to determine whether a jury agrees with the reasons for the personnel action taken. This would overthrow the employment at will doctrine by subversion since virtually every decision could be chai-*574lenged as defamatory and thus subject to being reviewed by a jury to determine if they agree with the reason given for the personnel action.
2. Even if the alleged defamatory statements are deemed, as the majority holds, to be published within the corporation as a matter of law, Frankson did not make the showing of actual malice necessary to defeat the qualified privilege protecting communications between employer and employee.
The jury found that a qualified privilege existed here. Once DSI had shown that the termination letter was qualifiedly privileged, the burden shifted to Frankson to prove that the privilege had been abused. See Stuempges, 297 N.W.2d at 257. To demonstrate malice, a plaintiff must prove that the defendant “made the statement from ill will and improper motives, or causelessly and wantonly for the purpose of injuring the plaintiff.” Id. at 257 (emphasis added) (quoting McKenzie v. William J. Burns International Detective Agency, Inc., 149 Minn. 311, 312, 183 N.W. 516, 517 (1921)).
Here, the evidence presented by Frank-son was totally insufficient to permit the malice issue to go to the jury. Frankson produced no direct evidence of actual malice. Rather, he produced evidence which tended to show the falsity of the statements made by DSI. Such evidence, however, does not by itself indicate that DSI intended “wantonly to injure” Frankson or demonstrate any “ill will” toward Frank-son. DSI stated that Frankson was not doing his job adequately. Unlike the plaintiff in Stuempges, Frankson made no showing that he was threatened with being “blackballed” or given a poor recommendation. The jury concluded that DSI was entitled to terminate Frankson under the terms of his at will employment contract. The absence of any communication of the defamatory statements to persons outside DSI corroborates the conclusion that DSI did not act primarily out of ill will.
Further, as a matter of law there was no evidence of malice. The evidence is clear that representatives of DSI did not act from ill will or improper motives or cause-lessly or wantonly for the purpose of injuring plaintiff. The termination letter and the reasons for Frankson’s termination were never discussed with outside parties by any representatives of DSI. DSI employees took no action to jeopardize plaintiff’s search for new employment. The letter terminating his employment did not say that he was a bad salesman or that he was guilty of any misconduct. It merely stated that he had failed to increase business as a “major projects representative.” This does not establish that defendants acted with malice in terminating him for his failure adequately to increase sales as a major products representative.
In allowing the malice issue to go to the jury, the trial court improperly permitted the jury to speculate as to possible ulterior motives of DSI. The trial court allowed the jury to second-guess DSI’s business judgment regarding the termination and to decide that they disagreed as to the reason for Frankson’s termination. Once again, it is clear that this claim for defamation is but a thinly veiled attempt to circumvent the supreme court’s refusal to recognize a claim for wrongful discharge.
3. Finally, there is insufficient evidence to support either the jury’s award of $70,-000 in general damages or the award of $125,000 in punitive damages.
Because the words contained in the termination letter were actionable per se, Frankson was not required to prove actual damages. However, this fact does not relieve Frankson of the duty to present evidence of some damage. Professor Prosser writes:
When there has been a publication of defamatory matter to the general public, it is rational to permit the jury to assume that there has been some harm to reputation, and substantial compensatory damages should be awarded as vindication of the plaintiff’s good name. But it is not so obvious that any impairment to reputation will inevitably result from the publication of libel privately to one or more *575persons who may or may not believe the statement to be true.
* * ⅜ * * *
It would seem, * * *, that courts should require as a minimum for recovery in every case either evidence from which harm to reputation could reasonably be inferred or direct evidence of harm to reputation.
W.P. Keeton, D. Dobbs, R. Keeton & D. Owen, Prosser & Keeton on The Law of Torts, § 113, at 797 (5th ed. 1984). See also Restatement (Second) of Torts § 621 (1977).
Frankson presented no evidence whatsoever of any actual damage caused by the statement itself, as opposed to damage from the termination which the jury found to be proper and legal. He made no effort to contact other employers because he felt no one would hire a salesman who had been fired. Because no evidence of damages was presented, the jury could only speculate. Damage awards based on pure speculation and conjecture have never been tolerated by Minnesota courts. See e.g. Hammersten v. Reiling, 262 Minn. 200, 115 N.W.2d 259, cert. denied, 371 U.S. 862, 83 S.Ct. 120, 9 L.Ed.2d 100 (1962); Hornblower & Weeks-Hemphill Noyes v. Lazere, 301 Minn. 462, 467, 222 N.W.2d 799, 803 (1974). At most, assuming Frankson made out all other elements of his case, he is entitled to only nominal damages.
As to punitive damages, Minn.Stat. § 549.20 provides:
Punitive damages shall be allowed in civil actions only upon clear and convincing evidence that the acts of the defendant show a willful indifference to the rights or safety of others.
(Emphasis added.)
As stated above, Frankson failed to show by any evidence, let alone by clear and convincing evidence, that DSI acted with malice when its agents stated the reason for Frankson’s termination. It bears repeating that the jury found that Frankson was properly terminated. The act of preparing a termination letter and discussing it with those employees who needed to know cannot constitute clear and convincing evidence of willful indifference to the rights of others.
By any rational standard, this jury’s award of $195,000 of damages in a case in which the plaintiff did not show even $1.00 of damages is not only excessive, but shocking.
I would reverse the trial court.