Sigal Construction Corp. v. Stanbury

In this defamation case, a jury awarded appellee, Kenneth S. Stanbury, $370,440 against his former employer, appellant Si-gal Construction Corporation. The jury found that a Sigal project manager, Paul Littman, had slandered Stanbury while giving an employment reference to another construction company after Sigal had ter *1206 minated Stanbury’s employment. The trial court denied Sigal’s motion for judgment notwithstanding the verdict or for a new trial. The court, however, granted a remit-titur ordering Stanbury to accept $250,000 or a new trial for damages. Stanbury accepted the $250,000. Sigal appeals the trial court’s denial of its motion for judgment notwithstanding the verdict, claiming: (1) Littman’s statements were constitutionally protected opinions, not actionable statements of fact; (2) the statements, even if factual, were protected by a qualified privilege which had not been overcome by clear and convincing evidence showing common law malice; (3) Sigal, in any event, could not be held liable for Littman’s statements because he had not made them within the scope of his employment, either as a matter of actual authority — express or implied — or as a matter of apparent authority; (4) the court erroneously gave jury instructions on implied and apparent authority; erroneously gave other instructions that allowed the jury improperly to find Stanbury had overcome Sigal’s qualified privilege by a showing of mere negligence; and erroneously refused to give an instruction on “corporate malice” that would have permitted the jury to find Sigal liable only upon a showing that Sigal had authorized or ratified Littman’s conduct; and (5) the evidence, in any event, was insufficient to sustain the award of damages in the remitted amount of $250,000. Stanbury cross-appeals, contending the trial court abused its discretion in ordering the remittitur. We affirm.

I. Facts AND Proceedings

Stanbury worked as a project manager for Sigal from May 1984 to June 1985. According to Sigal’s personnel manager, Pamela Heiber, Sigal terminated Stan-bury’s employment because he “was not doing his job correctly.” Sigal, however, told Stanbury he was let go for “lack of work or reduction in work.” According to Heiber, “[w]e felt sympathy for Ken because of his age in life” (he was 63 when Sigal terminated his employment). Stan-bury contacted Ray Stevens, a previous employer and Regional Manager at Daniel Construction, to find out whether any work was available. Some time later, Stevens called Stanbury about employment as a project manager on the Pentagon City project. Stanbury was eventually offered the job subject to approval by the owner of the project, Lincoln Properties.

William Janes, a Lincoln Properties general partner, had responsibility for investigating Stanbury’s employment references. Janes called David Orr, a former Sigal project executive, who suggested that Janes contact Paul Littman, a current Sigal project executive. Janes did so, and Litt-man later memorialized the conversation:

[Janes] claimed David [Orr] had told him not to hire Ken [Stanbury] and asked me what I thought. I told him.

1) Ken seemed detail oriented to the point of losing sight of the big picture.

2) He had a lot of knowledge and experience on big jobs.

3) With a large staff might be a very competent P.M. [project manager].

4) Obviously he no longer worked for us and that might say enough.

These paraphrase what I said nearly word for word.

At trial, Littman acknowledged and Stan-bury confirmed that Littman had made these statements without having supervised, evaluated, read an evaluation of, or. even worked with Stanbury (other than seeing Stanbury in the halls at the office). According to them both, their contact was entirely casual. More specifically, Stan-bury testified without contradiction that he had talked to Littman only once during Stanbury’s fourteen months with Sigal, and that this conversation was a general discussion about Stanbury’s previous job. According to Littman, in evaluating Stanbury for Janes he relied entirely on the “general impression [he] had developed” from “hearing people talk about [Stanbury’s] work at the job”, perhaps at “casual luncheons” or “project executive meetings” or “over a beer on a Friday afternoon.” 1 Littman did *1207 nothing to verify the second-hand knowledge he had acquired about Stanbury. At trial, he could recall no facts or work-related incidents that would support the impressions he reported to Janes. When asked where his information about one of Stan-bury’s projects came from, Littman testified that “[t]here aren’t any real specific instances I can point to. I think it was a general opinion I had just developed in the year or two [Stanbury] had been there.” Littman thought that his opinion “possibly” came from “hearing people talk about [Stanbury’s] work or job.”

In contrast with Littman’s acknowledgments at trial that his information about Stanbury was limited to vague hearsay, Janes testified at trial that Littman appeared to have knowledge of Stanbury’s performance — indeed, that Littman told Janes he had worked with Stanbury on a project. Janes further testified that he could not recall whether Littman had acknowledged never supervising or seeing an evaluation of Stanbury. Littman’s trial testimony substantially corroborated Janes’ account of his interaction with Littman. Littman testified that Janes knew Littman was a project executive (who would supervise a project manager), that Stanbury was a project manager, and that Littman did not tell Janes he had never supervised, worked with, evaluated, or read an evaluation of Stanbury even though Littman knew Janes wanted to speak with someone who had “interacted]” with Stanbury. Littman also testified that, although he lacked explicit authority from Sigal to provide employment references, it was common in the construction industry for someone in his position to do so.

Although the impact of Littman’s statements on Janes was disputed at trial, 2 Daniel Construction did not hire Stanbury for the Pentagon City project or for any other project. According to Stanbury, Stevens told him that Daniel Construction had not hired him because Lincoln Properties would not approve him. Stanbury further testified that, according to Stevens, Lincoln Properties (presumably Janes) had made “serious negative comments” about Stan-bury and that Daniel Construction would have hired him but for Lincoln Properties’ disapproval. Stanbury concluded, after further contacts, that Daniel Construction would not consider him for other projects because of Lincoln Properties’ negative impression attributable to Littman’s comments.

Stanbury did not find employment until April 1986, when Mergentine-Perini Corporation hired him at an annual salary of $27,000 (he had received unemployment compensation from June 1985 to April 1986). In July 1987, Stanbury resigned from Mergentine because his wife no longer could work and they no longer could afford to live in this area on his salary. They moved back to Pennsylvania. In September 1988, Stanbury began working at Holicong Hardware as an independent contractor at $6.00 per hour.

Stanbury filed this lawsuit in December 1986 claiming (1) defamation, (2) tortious interference with business relations, (8) negligence, and (4) breach of contract. Specifically, he claimed damages for loss of employment, wages, and benefits totalling *1208 $250,000 and damage to his professional reputation and standing, as well as humiliation and mental anguish, totalling $500,000. In his pretrial statement, Stanbury specified $210,000 as damages for lost wages. Sigal moved for summary judgment, which the trial court denied. After trial began, the court allowed Stanbury to amend the complaint to request compensatory damages for loss of reputation, embarrassment, and humiliation totalling $500,000. After presentation of Stanbury’s evidence, the trial court granted Sigal’s motion for directed verdict on the counts alleging negligence and breach of contract, and specifically ruled that the negligence count was subsumed under the defamation count. At the close of all the evidence Sigal moved, once again, for a directed verdict, which the court denied.

Over objection, the trial court instructed the jury on negligence, as well as on implied and apparent authority, and refused to instruct the jury on “corporate malice.” The jury returned a plaintiff’s verdict for $370,440.

Sigal moved for judgment notwithstanding verdict and, in the alternative, for a new trial or a remittitur. The trial court denied a judgment n.o.v. and a new trial but ordered Stanbury to accept a remittitur of $120,440 for damage to his career (leaving a total award of $250,000) or a new damage trial. Stanbury accepted the reduced award. Sigal filed a timely notice of appeal, and Stanbury cross-appealed as to the remittitur.

II. Applicable Law

The parties agree that Virginia law governs this case. The trial court apparently accepted this proposition, but the record does not make clear why Virginia law should apply. Furthermore, although Virginia law resolved the summary judgment motion, the parties and the court did not look to Virginia in all instances. For example, no one objected to the trial court’s use of the District of Columbia’s standard jury instruction for scope of employment, even though Virginia caselaw indicated a somewhat different — although similar — formulation. Compare Johnson v. Weinberg, 434 A.2d 404, 408 (D.C.1981), with United Bd. of Carpenters & Joiners of Am. v. Humphreys, 203 Va. 781, 787, 127 S.E.2d 98, 102 (1962), cert. denied, 371 U.S. 954, 83 S.Ct. 509, 9 L.Ed.2d 501 (1963). In fact, aside from the trial court’s failure to give a “corporate malice” instruction, the choice of law was not in issue at trial. With this one exception, the parties do not fault the trial court’s choice of law for instructional purposes, and thus, overall, they apparently agreed on the law which the trial court applied (perhaps because there are few discernible differences between Virginia and District of Columbia defamation law). On the other hand, it is important to note that on the significant issue of defining and applying the “qualified privilege” which a defendant can lose upon a showing of “common law malice” — as discussed later in Part IV — the trial court, and this court on appeal, employ the Virginia definitions set forth in the court’s elaborate jury instruction. See infra note 18. In sum, we look to Virginia law for resolution of this case where the parties and the trial court have done so, but otherwise we feel free to rely on this court’s previous decisions, in addition to Virginia caselaw, where we perceive no material differences in treating common law issues in the respective jurisdictions.

III. OpinioN Or Fact?

Sigal first challenges the trial court’s refusal to grant a judgment n.o.v. on the ground that the court erroneously characterized Littman’s statements as purported facts, not opinions. 3 This argument is attributable to Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974), where the Supreme Court stated in dictum:

*1209 Under the' First Amendment there is no such thing as a false idea. However pernicious an opinion may seem, we depend for its correction not on the conscience of judges and juries but on the competition of other ideas. But there is no constitutional value in false statements of fact.

Id. at 339-40, 94 S.Ct. at 3006-07 (footnote omitted). Thereafter, a majority of the federal circuit courts of appeal have interpreted the Gertz dictum to mean that statements of fact can be actionable defamation; statements of opinion cannot. See Potomac Valve & Fitting Inc. v. Crawford Fitting Co., 829 F.2d 1280, 1286 (4th Cir.1987) (“The constitutional distinction between fact and opinion is now firmly established in the case law of the circuits”); Ollman v. Evans, 242 U.S. App.D.C. 301, 305-06 n. 6, 750 F.2d 970, 974-75 n. 6 (1984) (listing federal circuit court decisions adopting the fact/opinion dichotomy). This court has joined the trend. See Myers v. Plan Takoma, Inc., 472 A.2d 44, 47 (D.C.1983) (per curiam).

Recently, however, in Milkovich v. Lorain Journal Co., — U.S. -, 110 S.Ct. 2695, 111 L.Ed.2d 1 (1990), the Supreme Court ruled that freedom of expression “is adequately secured by existing constitutional doctrine without creation of an artificial dichotomy between ‘opinion’ and fact.” Id. 110 S.Ct. at 2706. The Court said, in effect, that the lower courts had misinterpreted the Gertz dictum:

Read in context, ... the fair meaning of the passage is to equate the word “opinion” in the second sentence with the word “idea” in the first sentence. Under this view, the language was merely a reiteration of Justice Holmes’ classic “marketplace of ideas” concept. (Citation omitted.)

Thus we do not think this passage from Gertz was intended to create a wholesale defamation exemption for anything that might be labeled “opinion.” (Citation omitted.) Not only would such an interpretation be contrary to the tenor and context of the passage, but it would also ignore the fact that expressions of “opinion” may often imply an assertion of objective fact.

Id. 110 S.Ct. at 2705 (emphasis added; citation omitted).

Accordingly, while reserving a place for non-actionable “figurative or hyperbolic language” that could not reasonably be understood as a defamatory statement, id. at 2707; see id. at 2706, the Court concluded that the perceived distinction between “opinion” and “fact” was an “artificial dichotomy,” id. at 2706, which did not advance constitutional analysis. Rather, according to Milkovich, any statement — even one expressed as an “opinion” — can amount to actionable defamation, 4 unprotected by the First Amendment, if it reasonably implies a false assertion of fact 5 *1210 and the statement is made with the level of fault required for recovery, respectively, by public figures 6 or officials 7 or by private figures. 8

This case, however, was tried, and appellate briefs were filed, on the premise that the opinion/fact dichotomy derived from Gertz and ensuing cases was the applicable law. Thus, the Supreme Court’s later decision in Milkovich — apparently making some “opinions” actionable that previously would not have been — presents the difficult question whether Milkovich applies to this ease or, instead, represents a clear enough break with the past to justify only prospective application. See Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07, 92 S.Ct. 349, 355-56, 30 L.Ed.2d 296 (1971). Because we conclude (as elaborated below) that Litt-man’s statements about Stanbury were sufficiently factual under the pre-Milkovich standard to preclude constitutional protection as “opinion,” we need not decide whether Milkovich applies. We therefore turn to the Gertz caselaw.

Whether Littman made statements of “fact” or of “opinion” is a question of law for the court. See Myers, 472 A.2d at 47 n. 2 (citations omitted). In Myers, we elaborated a four-part test to help the court determine whether a statement is a constitutionally protected opinion or an actionable assertion of fact. The court must: (1) “examine the allegedly defamatory words in the context of the entire document in which they appear”; (2) determine whether the statements “could be said to imply undisclosed defamatory facts”; (3) “consider whether the allegedly defamatory words are susceptible to proof of their truth or falsity”; and (4) “consider the context in which the document containing the allegedly defamatory reference is published.” Id. at 47.

Importantly, application of these criteria must be guided by two principles. First, the allegedly defamatory statements must be viewed in their totality, not as isolated phrases or words. Id.; Smith v. McMullen, 589 F.Supp. 642, 645 (S.D.Tex.1984); see Information Control Corp. v. Genesis One Computer Corp., 611 F.2d 781, 784 (9th Cir.1980); Froess v. Bulman, 610 F.Supp. 332, 340 (D.R.I.1984). Thus, while certain words or phrases may not, in themselves, imply facts, the statement will be actionable if, taken as a whole, it is objectively verifiable. See Smith, 589 F.Supp. at 645.

Second, allowance must be made for “ ‘imaginative expression’ or the ‘rhetorical hyperbole’ which has traditionally added much to the discourse of our Nation.” Milkovich, 110 S.Ct. at 2706 (citation omitted). Although a statement may, on first impression, seem factual, often words are used not to implicate underlying acts but “merely in a ‘loose, figurative sense’ to demonstrate [defendant’s] strong disagreement with some of plaintiff’s dispositions.” Rinaldi v. Holt, Rinehart & Winston, Inc., 42 N.Y.2d 369, 381-82, 366 N.E.2d 1299, 1307, 397 N.Y.S.2d 943, 951, cert. denied, 434 U.S. 969, 98 S.Ct. 514, 54 L.Ed.2d 456 (1977); see Letter Carriers v. Austin, 418 U.S. 264, 284, 286, 94 S.Ct. 2770, 2781, 2782, 41 L.Ed.2d 745 (1974) (“scab”, in context of union newsletter, was used “in a *1211 loose, figurative sense ... merely [as] rhetorical hyperbole”); Greenbelt Coop. Publishing Ass’n v. Bresler, 398 U.S. 6, 13-14, 90 S.Ct. 1537, 1541-42, 26 L.Ed.2d 6 (1970) (“blackmail,” in context, was hyperbole and not actionable). If, for example, an average reader would likely understand that particular words, in the context of an entire article, were not meant to imply factual data but, rather, were intended merely to disagree strongly with the views of the person against whom the words were directed, those words would be protected despite their factual content. See Letter Corners, 418 U.S. at 285, 94 S.Ct. at 2781 (quoting Greenbelt, 398 U.S. at 14, 90 S.Ct. at 1542).

Applying these principles to this case, we conclude that — viewed (as they must be) in the light most favorable to Stanbury — Littman’s statements were expressions of fact, not of constitutionally protected opinion. We look, first, at context. 9 Littman told Janes that Stanbury was “detail oriented ... to the point of losing sight of the big picture.” 10 The context of this statement was an interview intended to help Janes (and thus Lincoln Properties) determine Stanbury’s suitability for employment. 11 In commenting on Stanbury’s work habits, Littman must have known, or at least should have known, that Janes would interpret his statements as factual evaluations of Stanbury’s approach to managing a construction project; otherwise, the information would have been meaningless in the context that had generated Janes’ inquiry.

Furthermore, in considering the entire context of the statements — an employment reference — we note that, in the very conversation in which Littman made the allegedly defamatory remarks, he made several undisputed factual statements to Janes about Stanbury’s history as a project manager, as well as a remark that “he no longer worked for us and that might say enough.” 12 These remarks add still additional evidence to support the conclusion that Littman stated actionable facts, not protected opinion. Finally, the fact that Stanbury was not hired, apparently because of Littman’s statements, could reasonably be taken as evidence of a factual content to the statements.

As to the second Myers criterion, Litt-man’s statements can be said to have implied “undisclosed defamatory facts.” Stanbury testified, without contradiction, that “not seeing the big picture” meant in the construction trade that he did not perform his job properly, could not recognize unusual problems, and thus could not determine what is necessary to correct such problems so that the project would be properly completed on time. Stanbury also testified that “seeing the big picture” was critical to the job of project manager:

It is important because unless you can visualize the whole project and determine whether it is normal or if it is unusual, and if it is unusual how it is unusual, what has to be done to fix it, it can seriously] affect your final completion and your cost ... the project manager is the planner and the person that is responsible for the job, and he is the one that has to visualize and make the decisions.

*1212 Moreover, Littman’s own testimony buttressed Stanbury’s interpretation. Littman said he meant “as an outside observer that the project wasn’t going well, and that in the end that was the big picture.” Thus, a reasonable juror could find that Littman’s statements to Janes implied undisclosed factual data.

The third Myers criterion is the verifiability of the statements. Both parties introduced evidence to support either the truth or the falsity of Littman’s statements. This evidence made clear that whether Stanbury was too detail oriented to complete the project properly and on time could be objectively evaluated and thus verified. 13 Sigal has proffered no alternative meaning for Littman’s statement, either in the trial court or on appeal, that would suggest the words were subjective or vague. We agree with the trial court:

While [Sigal] asserts that the meaning of the statement may vary from individual to individual, there was no evidence produced by [Sigal] which suggested that the statement made in the context in which it was made, meant anything different than what Plaintiff sought to prove it meant.

Memorandum Opinion and Order, D.C.Super.Ct., June 12, 1989 at 5. In fact, Janes — the person to whom the statement was made, and who was in the best position to interpret what it meant — testified that he derived from Littman’s comments specific information concerning Stanbury’s work.

Sigal, however, tries to persuade us that Cole v. Westinghouse Broadcasting Co., 886 Mass. 303, 435 N.E.2d 1021, cert. denied, 459 U.S. 1037, 103 S.Ct. 449, 74 L.Ed.2d 603 (1982), supports its position that Littman stated protected opinion. In Cole, an investigative reporter was fired for what his ex-employer later called “sloppy and irresponsible reporting”; he claimed damage to reputation from this and related comments. The court ruled that the statements were protected opinions. Critical to the court’s conclusion, however, were the context of the comments and the public nature of the controversy:

Cole was a public figure at the time of this incident, and that the circumstances surrounding his dismissal were a matter of public interest.... The audience which received the statements, first the reporters and later those reading the newspaper articles, were aware that Cole and [his previous employer] claimed different reasons for Cole’s contested dismissal. The newspaper articles included this information. Both reporters acknowledged that [the defendant employer] had made the statements at issue only in response to their further questioning and after qualifying [the employer representative’s] remarks as “unofficial.” The reporters testified that they understood that her statements were not part of the television station’s official release. These factors lend support to our view that the statements were matters of opinion rather than fact.

Id. at 311, 435 N.E.2d at 1025-26. No such factors are present in this case. Stanbury is not a public figure; his affairs are not a matter of public interest; there was no apparent dispute about the reasons for his dismissal; Janes was not made aware that Stanbury would contest Littman’s statements; and Littman’s statements were never qualified as unofficial or unauthorized. Because Cole derived these distinctions from an altogether different context, it cannot guide us here.

Sigal also relies on Rinaldi. In that case, a judge sued an author and the publisher over allegedly defamatory remarks in an article about the ten worst judges in New York. The court concluded that some of the comments were protected opinion: 14

*1213 To state that a Judge is incompetent is to express an opinion regarding the Judge’s performance in office. Likewise, to advocate a Judge’s removal from office is to express the opinion that the Judge is unfit for his office. Both opinions, even if falsely and insincerely held, are constitutionally protected, if the facts supporting the opinions are set forth. Here, [defendant author] set forth the basis for his belief that plaintiff is incompetent and should be removed. Based upon the facts stated and public debate provoked by the statements, each reader may draw his [or her] own conclusion as to whether [the author’s] views should be supported or challenged. In short, the matter is subject to public debate. 15

42 N.Y.2d at 381, 366 N.E.2d at 1306, 397 N.Y.S.2d at 950-51. No such circumstances are present in this case. Littman’s comments did not enhance public debate. Moreover, Stanbury had no timely, effective opportunity to respond because the comments were made to Janes without Stanbury’s knowledge. In short, unlike Ri-naldi, the present case reveals no basis on which Janes could objectively evaluate Litt-man’s reported conclusions.

Given the context in which Littman aired his comments about Stanbury, and judged in their entirety, we conclude the statements were assertions of fact within the meaning of Gertz and Myers, not constitutionally protected opinions.

IY. Qualified PRivilege and Common Law Malice

Although Littman’s statements were actionable assertions of “fact,” not constitutionally protected “opinion,” Stan-bury had the burden of proving Sigal (through Littman) was negligent, including the fact that Littman’s statements were false. See supra note 5. The trial court accordingly gave the jury a negligence instruction. 16 Sigal does not contest, on appeal, either that the statements were false or were negligently made. Sigal does contend, however — and Stanbury does not dispute — that Littman’s negligent statements were subject to a “qualified privilege.” 17 Great Coastal Express, Inc. v. Ellington, 230 Va. 142, 152, 334 S.E.2d 846, 853 (1985); see Brown v. Collins, 131 U.S. App.D.C. 68, 72, 402 F.2d 209, 213 (1968). According to the Virginia Supreme Court:

A communication, made in good faith, on a subject matter in which the person communicating has an interest, or owes a duty, legal, moral, or social, is qualifiedly privileged if made to a person having a corresponding interest or duty.

*1214 Great Coastal, 230 Va. at 153, 334 S.E.2d at 853 (quoting Taylor v. Grace, 166 Va. 138, 144, 184 S.E. 211, 213 (1936)); see Moss v. Stockard, 580 A.2d 1011, 1024 (D.C.1990); Alfred A. Altimont, Inc. v. Chatelain, Samperton & Nolan, 374 A.2d 284, 290 (D.C.1977) (quoting Restatement of Torts § 596). Recently, we have characterized this particular kind of privilege as a “qualified ‘common interest’ privilege.” Moss, 580 A.2d at 1023-24.

Once the privilege applies, the plaintiff has the burden of proving the defendant has abused, and thus lost, it. Chatelain, 374 A.2d at 290; Gazette, Inc. v. Harris, 229 Va. 1, 14, 325 S.E.2d 713, 727, cert. denied, 472 U.S. 1032, 105 S.Ct. 3513, 87 L.Ed.2d 643 (1985). To defeat the privilege, a plaintiff must prove the defendant acted with “common law malice.” See Moss, 580 A.2d at 1024; Great Coastal, 230 Va. at 149, 334 S.E.2d at 851 n. 3, 853-54. Such malice implies a greater level of ill will than the mind-set reflected by mere negligence. In this jurisdiction, we have equated common law malice with “bad faith.” See Moss, 580 A.2d at 1024; Chatelain, 374 A.2d at 290. In Virginia the common law malice formulation, which the trial court used for its instruction, includes “bad faith” but is more comprehensive. 18 The trial court instructed the jury, moreover, that a “privilege is abused” when the plaintiff proves common law malice “by clear and convincing evidence.” 19 Importantly, we review the evidence in the light most favorable to the plaintiff. See supra note 3. Only if there is no evidence to support a finding of common law malice will a court be justified in withholding the issue from the jury. Richmond Television Corp. v. United States, 354 F.2d 410, 414 (4th Cir.1965); see May Dep 't Stores Co. v. Devercelli, 314 A.2d 767, 774 (D.C.1973).

There was sufficient evidence at trial, viewed in the light most favorable to Stanbury, from which a reasonable jury could find by clear and convincing evidence that Littman and Sigal had abused the qualified privilege under Virginia law by acting with “such gross indifference or recklessness as to amount to wanton and willful disregard of the rights of” Stanbury. Great Coastal, 230 Va. at 151, 334 *1215 S.E.2d at 854,