Commonwealth of Kentucky Court of Appeals

Transcription

1 RENDERED: APRIL 29, 2016; 10:00 A.M. NOT TO BE PUBLISHED Commonwealth of Kentucky Court of Appeals NO CA MR SHERI LYNN HAAS, AND SCOTT HAAS APPELLANTS APPEAL FROM LEE CIRCUIT COURT v. HONORABLE THOMAS P. JONES, JUDGE ACTION NO. 11-CI CORRECTIONS CORPORATION OF AMERICA; LADONNA THOMPSON; AL PARKE; JON COLLETT; AND JAMES J. VAN NORT APPELLEES OPINION AFFIRMING ** ** ** ** ** BEFORE: JONES, STUMBO AND VANMETER, JUDGES. JONES, JUDGE: The Appellants, Sheri Lynn Haas and Scott Haas, filed the underlying action in Lee Circuit Court against the Appellees, Corrections Corporation of America, Ladonna Thompson, Al Parke, Jon Collett, and James J. Van Nort seeking compensatory and punitive damages for defamation and false

2 light invasion of privacy. The Appellants' claims arose out of an investigation conducted by the Kentucky Department of Corrections and Corrections Corporation of America regarding Sheri Haas's work hours and Scott Haas's role, if any, in assisting Sheri in obtaining her employment with the Appellees. Ultimately, the Lee Circuit Court granted summary judgment to the Appellees upon concluding that the statements in question were privileged because they were made as part of a reasonable employment-related investigation, and Appellants had failed to present any evidence of malice to show that the privilege had been abused. On appeal, Appellants assert the Lee Circuit Court invaded the jury's province and decided factual issues. Having carefully considered the record and the parties respective arguments, we affirm the Lee Circuit Court. I. BACKGROUND Sheri Haas is a clinical psychologist. Sheri began working for the Kentucky Department of Corrections ("KDOC") in 1999 in general services. In 2002, while still employed at the KDOC, Sheri began working for Corrections Corporations of America ("CCA") on a contract basis for approximately ten hours per week. In 2003, Sheri met Scott Haas, a medical doctor licensed in Kentucky, with a specialty in psychiatry. Dr. Haas was also employed by the KDOC. The two started dating in February of As KDOC's Medical Director, Dr. Haas had supervisory authority and up-the-chain command over Sheri. According to Dr. -2-

3 Haas and Sheri, this was one of the reasons Sheri decided to resign from the KDOC in September of At the time Sheri resigned from the KDOC, she believed she had enough service years to obtain retirement. After leaving the KDOC, Sheri began working full-time, 32 hours per week, for CCA. Sometime thereafter, Sheri realized that her calculations regarding her eligibility for retirement from the KDOC were incorrect. As a result, she sought reemployment with the KDOC. She was ultimately rehired by the KDOC in April of 2009 as a full-time, 37.5 hours per week, psychologist in the Sex Offenders Risk Assessment Unit. 1 Sheri maintained her full-time status with CCA subsequent to her reemployment with the KDOC. From April 2009 through June 2010, Sheri was employed both by the KDOC as a full-time employee working 37.5 hours a week and by CCA as a full-time employee working 32 hours a week. Sheri's KDOC salary was approximately $49,000. Her CCA salary was approximately $87,000. Sheri received health insurance and other employmentrelated benefits from both CCA and the KDOC. Sometime in May of 2010, Sheri's KDOC and CCA co-workers were conversing with each other concerning Sheri's employment. Based on their discussions, the co-workers discovered Sheri's dual, full-time employment with the KDOC and CCA. Not knowing whether this was permissible, the co-workers alerted their respective supervisors regarding their discovery. Around this same 1 By this time, Sheri and Dr. Haas had married. -3-

4 time, on May 24, 2010, the KDOC s administrative services division discovered that Sheri s travel vouchers contained numerous policy violations. The KDOC Investigation Kevin Pangburn, the KDOC s Director of Mental Health, disclosed a conflict allegation against Sheri as it appeared to him that Sheri was claiming to work full-time, weekday, first-shift hours for both the KDOC and CCA. Pangburn then asked Deputy Commissioner Al Parke to look into any impropriety with respect to Sheri's KDOC employment. Parke discussed both sets of allegations, the travel vouchers and the dual employment, with his supervisor, Commissioner LaDonna Thompson. Commissioner Thompson ordered Parke to investigate both matters further. Parke assigned the travel voucher and work conflict inquiries to KDOC Special Investigator Jon Collett and Human Resources Branch Manager Teresa Harris. Shortly thereafter, Sheri submitted acceptable travel vouchers, ending this aspect of the investigation. Jon Collett and Teresa Harris continued on with the investigation regarding Sheri s work locations and hours. The KDOC contacted CCA and requested information about Sheri's work hours. CCA s acting warden, Donna Stivers, confirmed that Sheri was a full-time, first-shift, weekday psychologist for CCA. Yet, Dr. James Van Nort, Sheri s second-line supervisor at the KDOC, also expected Sheri to work a regular 37.5 hour, Monday through Friday work week in what would be described as a first-shift time frame. -4-

5 Sheri s unsigned KDOC timecards from April 1, 2009, through July 31, 2010, indicated that she worked for the KDOC from 8:00 a.m. to 4:00 p.m., Monday through Friday. CCA time scans showed that Sheri primarily worked first-shift, weekday hours for CCA. She worked more than ten hours per day at CCA on several dates. The KDOC documentation made it appear that Sheri received full-time pay from both the KDOC and CCA on 189 days between April 1, 2009, and June 18, This would entail working 17.5 to 20 hours per day for over six months. On June 9, 2010, Collett and Harris interviewed Sheri s first- and second-line supervisors: Smith and Van Nort. Collett and Harris then interviewed Sheri on July 8, On July 26, 2010, HR Branch Manager Teresa Harris wrote the rough draft of an investigation memorandum to Al Parke (who requested the investigation). In the memorandum, Harrison concluded that Sheri received pay for two full time jobs while claiming simultaneous hours of work. On August 13, 2010, after reviewing the information of Sheri s work time at the KDOC and CCA, Commissioner Thompson placed Sheri on special leave with pay to further investigate whether Sheri had committed time and attendance fraud. Commissioner Thomson then asked Greg Muravchick from the Justice Cabinet s Office of Investigations whether his office could conduct a thirdparty review of Sheri s case. After reviewing Harris s July 2010 memorandum, Muravchick advised Commissioner Thompson to take her concerns to the -5-

6 Kentucky State Police. Thereafter, Thompson ordered Parke to turn the investigation over to the state police. In March or April 2011, Commissioner Thomson learned that the Commonwealth Attorney declined to prosecute Sheri based upon information and belief that Sheri technically could have been working 17.5 to 20 hours per day for 189 days. 2 Commissioner Thompson allowed Sheri to return to work on November 3, 2010, with no discipline. 3 The CCA Investigation CCA also began its own investigation into Sheri's employment. On July 27, 2010, CCA employee Kevin Myers issued a letter to Warden Perry at the Lee County Adjustment Center, where Sheri was assigned to work by CCA, giving instructions to initiate the investigation. In August, 2010, CCA engaged Verita, LLC, an unaffiliated company that specializes in employment-related investigations, to conduct the investigation. Verita assigned Alex Rubin to conduct the CCA investigation. Rubin interviewed various CCA employees as part of his investigation. CCA s investigation determined that while Sheri had not followed CCA policies and protocols for approval of a second employment, CCA excused her failure. CCA found no additional fault of her in the investigation and it 2 Sheri eventually explained that she worked weekends and nights at CCA, that she did not have set hours at CCA, and that she sometimes let her hours at CCA overlap her hours with KDOC by working on KDOC s evaluation while at the CCA facility and by taking calls for CCA while working for KDOC. 3 Sheri ultimately resigned from the KDOC on February 28,

7 continued Sheri s employment with CCA. On September 9, 2010, Kevin Myers issued a letter stating that the investigation was over, Sheri could continue to work for CCA, and she had approval to work for KDOC. The Haas's Lawsuit As KDOC and CCA employees were interviewed as part of the investigation process, various employees began to speculate about Dr. Haas s involvement in Sheri s hiring. Additionally, employees began to question what Sheri had done to warrant such serious investigations. Employees made statements of speculation stating whomever it is that they re investigating must have done something horribly wrong. KDOC employees also made statements that Sheri s investigation had led to restrictions on other employees and others asked Sheri what she had done to spur an investigation. On June 29, 2011, Appellants filed suit. This case originally contained seven counts, alleging defamation, false light, negligent infliction of emotional distress, negligent supervision, malicious prosecution, respondeat superior, and punitive damage. After extensive summary judgment briefing, the circuit court granted summary judgment to all the defendants on all counts. Appellants appealed the circuit court only as related to their defamation and false light claims. II. STANDARD OF REVIEW Summary judgment serves to terminate litigation where the pleadings, depositions, answers to interrogatories, stipulations, and admissions on -7-

8 file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Kentucky Rules of Civil Procedure (CR) Summary judgment should be granted only if it appears impossible that the nonmoving party will be able to produce evidence at trial warranting a judgment in his favor. Steelvest, Inc. v. Scansteel Serv. Cn'tr, Inc., 807 S.W.2d 476 (Ky. 1991). Summary judgment is proper where the movant shows that the adverse party could not prevail under any circumstances. Id. (citing Paintsville Hosp. Co. v. Rose, 683 S.W.2d 255 (Ky. 1985)). On appeal, we must consider whether the circuit court correctly determined that there were no genuine issues of material fact and that the moving party was entitled to judgment as a matter of law. Scifres v. Kraft, 916 S.W.2d 779 (Ky. App. 1996). Because summary judgment involves only questions of law and not the resolution of disputed material facts, an appellate court does not defer to the circuit court s decision. Goldsmith v. Allied Bld'g Components Inc., 833 S.W.2d 378 (Ky. 1992). Our review is de novo. Cumberland Valley Contractors., Inc. v. Bell County Coal Corp., 238 S.W.3d 644, 647 (Ky. 2007). III. ANALYSIS At the center of this controversy are statements concerning Sheri's alleged falsification of time sheets and overlapping hours worked while employed by both KDOC and CCA. A sub-controversy are statements and rumors that followed the investigations concerning an alleged improper relationship between -8-

9 Sheri and her now-husband, Dr. Scott Haas, before their marriage, that may have impacted her hiring by one of these entities. A. Defamation The requisite elements for a defamation claim 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. Toler v. Sud-Chemie, Inc., 458 S.W.3d 276, (Ky. 2014), quoting Restatement (Second) of Torts 558 (1977). When the communication concerns untrue allegations of criminal behavior or unfitness to perform a job, the communication is libelous per se or slanderous per se. Harstad v. Whiteman, 338 S.W.3d 804, 810 (Ky. App. 2011). This simply means there is a conclusive presumption of both malice and damage. Toler, 458 S.W.3d at (footnote omitted). If a communication can be labeled per se defamatory, recovery is permitted without proof of special damages because injury to reputation is presumed and the words are actionable on their face. Id. Appellants established a prima facie case for defamation by alleging that each of the Appellees falsely accused Sheri of fraudulent time reporting and falsely accused her of unethical behavior. However, in return, Appellees countered that the alleged defamatory statements were protected by a qualified privilege. -9-

10 In certain circumstances, otherwise defamatory per se communications are allowed because the societal interest in the unrestricted flow of communication is greater than the private interest. Stringer v. Walmart, Inc., 151 S.W.3d 781, 794 (Ky. 2004). Specifically, courts have recognized a privilege for individuals communicating where the communication is one in which the party has an interest and it is made to another having a corresponding interest. Stringer, 151 S.W.3d at 795 (quotation marks omitted). Kentucky courts apply the common interest application of qualified privilege to the employment context. Dossett v. New York Mining. & Mfg. Co., 451 S.W.2d 843, (Ky. 1970), Calor v. Ashland Corp WL (Ky. Sept. 22, 2011); Columbia Sussex Corp., Inc. v. Hay, 627 S.W.2d 270, (Ky. App. 1981). While malice is presumed in the defamatory per se context, the qualified privilege, however, negates this presumption. As such, false and defamatory statements will not give rise to a cause of action unless maliciously uttered. Toler, 458 S.W.3d at When a qualified privilege is established, the prima facie presumption of malice disappears. Id. (holding that the qualified privilege negates the presumption of malice). Once a qualified privilege is established, there is a presumption of the absence of malice. It then falls upon the plaintiff to prove malice and defeat the privilege. Id. A qualified privilege can be lost if abused or exceeded. Id.; Baker v. Clark, 186 Ky. 816, 218 S.W. 280, 285 (1920) ( [T]hat a defendant would lose his right of qualified privilege if he acted maliciously or in excess of the privilege, or -10-

11 with knowledge of the falsity of the communication, is well settled. ). Abuse of the qualified privilege may be shown in several ways. These include: (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. Toler, 458 S.W.3d at The burden of proving abuse of privilege falls on the plaintiff to show that either there was no privilege under the circumstances or that it had been abused. Columbia Sussex Corp. 627 S.W.2d at 276. Toler is illustrative regarding the burden of proof with respect to a claim for qualified privilege. In Toler, a former manager sued his ex-employer for defamation. The manager had been investigated and later discharged for making racist comments at work. After the manager presented his evidence at trial, the court directed a verdict for the employer, citing qualified privilege to defamation. The Supreme Court held that the determination of whether a defendant abused its qualified privilege is generally a question of fact for the jury. 458 S.W.3d 285. However, the plaintiff must put forth some evidence that would incline a reasonable person to believe that the statements were the result of malice to properly place the question before the jury. The Supreme Court noted that the defendant company had acted prudently within the scope of its qualified privilege by investigating the claims against the manager, meeting with the manager to -11-

12 discuss the claims, and enforcing a well-known, reasonable corporate police against racist statements. Id at 286. In contrast, the manager presented no evidence that the company had behaved maliciously. He had merely weav[ed] a dramatic narrative filled with collusion and rumor. Id. The Court held, simply alleging [malice] without any further proof cannot support a jury verdict. Id. Toler presents a paradigmatic example of why qualified privilege is recognized: 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. Id. We are cognizant that Toler was decided the context of a directed verdict. We are likewise cognizant that issues regarding abuse of the privilege are generally left to the jury to decide. This does not mean, however, that summary judgment is never appropriate when abuse of privilege is at issue. To the contrary, summary judgment "is appropriate when the record shows no facts which would lead to the conclusion that the Appellees acted with malice." Cargill v. Greater Salem Baptist Church, 215 S.W.3d 63, 68 (Ky. App. 2006). In Harstad, we considered whether summary judgment was appropriate in a defamation case involving qualified privilege. In so doing, we held that the appropriate inquiry by the court when deciding whether to grant summary judgment is whether the plaintiff presented some evidence that would incline a reasonable person to believe that the defendant knew he or she was -12-

13 "lying or making wholly unfounded statements without regard to their truth or falsity." 338 S.W.3d at 813. Appellants argue that numerous and significant issues of material fact remain on the question of malice. For example, Appellants allege that the KDOC and CCA colluded with each other in an attempt to cobble together a case against Sheri, even though a competent investigator would have known that Sheri had not committed any crime However, Appellants cite only to their own circuit court brief, which contained a bare legal argument void of any factual support. Having reviewed the record, we believe the circuit court was correct in granting summary judgment on the basis that the Appellants failed to present any material issues of disputed fact with respect to malice. Despite months of discovery, Appellants offered no evidence that the various comments attributed to Appellees were malicious or made with an improper motive. The fact the statements concerning Sheri's fraudulent hours proved to be untrue or that Sheri was not ultimately disciplined is of no help to the Appellants. Even if the statements are ultimately proven to be untrue or unfounded, the plaintiff must still prove malice. Ultimate falsity of the statements does not defeat the privilege. Harstad, 338 S.W.3d at 813. The initial evidence showed that Sheri was working full-time, firstshift, weekday hours for two employers, and billed for 17 ½ to 20 hours of work per day for over six months. Given these facts, it was entirely reasonable for the KDOC and the CCA to presume that some fraud may have occurred and to -13-

14 commence an investigation of Sheri's work hours and reporting. No evidence in the record suggests that the KDOC or the CCA commenced the investigation for an improper basis or that they acted inappropriately. 4 Statements made in the context of the employment relationship are qualifiedly privileged so that every-day business can be carried out without the threat of suit. Wyant v. SCM Corporation, 692 S.W.2d 814 (Ky. App. 1985). Likewise, we disagree with Sheri that it was improper for Parke to communicate with CCA about the KDOC's concerns. The KDOC had to communicate with the CCA regarding Sheri's hours to complete its investigation. And, it was entirely reasonable for Parke to explain to the CCA the reason for its questions. It is also important to note that Parke told CCA that Sheri was under investigation for possible fraud. Parke did not tell CCA that Sheri had committed fraud. Parke's statements were true. Finally, we disagree with the Appellants that the accusations that arose during the investigation regarding Dr. Haas's improper influence in Sheri s hiring are actionable. The Appellants have not proven that any of the Appellees made such a statement. Rather, it appears that as a result of the investigation into 4 Appellants argue that CCA investigator Alix Rubin inappropriately questioned workers about the beginning of Scott and Sheri s relationship and whether there was a potential conflict of interest. CCA investigator Rubin sought to investigate these matters, as a conflict of interest could have explained the unusual circumstance of Sheri working two full-time jobs simultaneously. Even assuming that this line of questioning was remote or immaterial, Appellants provided no evidence that such questions were malicious. Once the qualified privilege attaches, then even false and defamatory statements will not give rise to a cause of action unless maliciously uttered. Stewart v. Williams, 218 S.W.2d 948, 950 (Ky. 1949). Appellants failed to present any evidence that Rubin had an improper purpose for this line of questioning. -14-

15 Sheri, rumors began to circulate. The fact that the investigation caused unnamed individuals to engage in spreading rumors and innuendo is not actionable. See Brett v. Media Gen. Operations, Inc., 326 S.W.3d 452, 459 (Ky. App. 2010). B. False Light Next, Appellants claim that the trial court incorrectly dismissed their false light claim. In McCall v. Courier Journal & Louisville Times Co., 623 S.W.2d 882, (Ky. 1981), our Supreme Court explained the nature of a false light claim: Id. at 888, n.9. Id. at 888. Much has been written as to the similarity of false light and defamation. The purpose of a false light action is to protect the individual in not being made to appear before the public in an unreasonably objectionable false light and otherwise than as he is. To sustain this action, the person need not be defamed. It is sufficient that the publicity attribute to him characteristics, conduct or beliefs that are false, and that he is placed before the public in a false position. See comment b to Restatement (Second) of Torts, Sec. 652E (1976). See also False Light-Invasion of Privacy? 15 Tulsa Law Review 113 (1979). The two basic requirements to sustain a false light cause of action are: (1) the false light in which the other was placed would be highly offensive to a reasonable person, and (2) the publisher had knowledge of, or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the other was placed. Restatement (Second) of Torts, 652E (1976)). Kentucky has adopted an actual malice standard for false light cases. -15-

16 Yancey v. Hamilton, 786 S.W.2d 854, 860 (Ky. 1989). The actual malice standard of New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 696 (1964), must be met in order for a false light claimant to prevail at trial when the subject matter of the speech is of public interest. Yancey v. Hamilton, 786 S.W.2d 854, 860 (Ky. 1989). State employees are paid with taxpayer dollars. The public has an interest in making sure public employees perform the work they are paid to perform. The investigation into Sheri's time records involved a question of whether she actually worked the hours for which she was paid by the state. Therefore, we believe that the speech at issue involved a matter of public interest requiring Sheri to prove actual malice. Appellants assert that in the course of the investigation, Appellees accused Sheri of committing fraud and falsifying time records. Again, she contends that because the investigations terminated in her favor, she has proven malice. We cannot agree. Based on the record, a good faith basis undisputedly existed for the belief that an investigation was required. Moreover, the fact that the Commonwealth Attorney chose not to prosecute does not mean that there was no factual basis to investigate in the first instance. Having reviewed all the statements at issue, we find no basis to support a claim for false light. Sheri failed to produce any evidence to demonstrate malice on the part of any of the Appellees. To the contrary, the evidence of record, -16-

17 even when viewed in a light most favorable to the Appellants, indicates only that the Appellees undertook an investigation in good faith for a proper purpose. C. Punitive Damages As Appellants have not provided any grounds for reversal of summary judgment, we find it is unnecessary to address their arguments concerning punitive damages. IV. CONCLUSION For the reasons set forth above, we affirm the Lee Circuit Court's June 18, 2014, Order on Motions for Summary Judgment. ALL CONCUR. BRIEF FOR APPELLANTS: Danielle Brown Mark A. Wohlander Caitlin Wohlander Lexington, Kentucky BRIEF FOR APPELLEE CORRECTIONS CORPORATION OF AMERICA: G. Edward Henry II Lexington, Kentucky BRIEF FOR APPELLEES THOMPSON, PARKE, COLLETT, AND VAN NORT: Jennifer Wolsing Frankfort, Kentucky -17-