United States District Court, E.D. Kentucky, Southern Division, London
OPINION & ORDER
E. Wier, United States District Judge
case primarily about employment, Plaintiff Kenton Jones seeks
leave to add claims centering on post-firing administrative
litigation for unemployment benefits. Specifically, Jones
moves to add tort theories-wrongful use of administrative
proceedings and a newly minted claim hinging on a statutory
violation-to address Progressive's allegedly improper
acts in contesting unemployment benefits. DE 13 (Motion). The
matter is briefed. DE 14 (Response); DE 22 (Reply).
amendment request is timely relative to the case schedule.
Acknowledging the liberal amendment standard of Rule
15(a)(2), the defense concedes on proposed Count XI
(“Wrongful Use of Administrative Proceeding”).
Progressive opposes proposed Count XII (“Negligence
Per Se”) on futility grounds. Though the
Federal Rules establish a permissive amendment presumption,
courts may deny leave to amend for a variety of
reasons-“such as undue delay, bad faith or dilatory
motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of allowance of the
amendment, futility of amendment, etc.” Foman v.
Davis, 83 S.Ct. 227, 230 (1962). “Amendment of a
complaint is futile when the proposed amendment would not
permit the complaint to survive a motion to dismiss.”
Miller v. Calhoun Cnty., 408 F.3d 803, 807 (6th Cir.
2005) (citing Neighborhood Dev. Corp. v. Advisory Council
on Historic Pres., 632 F.2d 21, 23 (6th Cir. 1980)). The
Supreme Court of Kentucky only just recognized the cause of
action presented, and it did so in a nearly identical
context. See Hickey v. Gen. Elec. Co., 539 S.W.3d
19, 25 (Ky. 2018) (“[Plaintiff's] KRS 446.070 claim
against [Defendant] for an alleged violation of KRS
341.990(6)(a) is cognizable under Kentucky law.”).
Progressive contends that the Commonwealth's high court
built this new house on sand by overlooking the impact of the
judicial statements privilege on any claim. Generally,
statements made “in pleadings [and testimony] in
judicial proceedings are absolutely privileged[.]”
Schmitt v. Mann, 163 S.W.2d 281, 283 (Ky. 1942)
(internal citations and quotation marks omitted).
Unemployment proceedings are at least quasi-judicial. See
Hawkins v. Miller, 301 S.W.3d 507, 508 (Ky. Ct. App.
2009) (“[S]tatements were made” during Kentucky
Unemployment Insurance Commission and EEOC proceedings
“in a quasi-judicial setting[.]”); see also
Sams v. Wal-Mart Stores E., LP, 2010 WL 4740330, at *2-3
(Ky. Ct. App. Nov. 24, 2010) (treating “statements . .
. made at . . . unemployment compensation hearings” as
occurring in a “judicial proceeding” for purposes
of privilege analysis); cf. Grimes v. Kentucky
Unemployment Ins. Comm'n, 340 S.W.3d 104, 106 (Ky.
Ct. App. 2011) (“[A] quasi-judicial agency such as the
[Kentucky Unemployment Insurance] Commission, like a court,
has the implied authority to determine its own
jurisdiction.”). Kentucky recognizes two requirements
for application of the privilege:
First, the communication must have been made
“preliminary to a proposed judicial proceeding, or in
the institution of, or during the course and as part of a
judicial proceeding.” General Elec. Co. v. Sargent
& Lundy, 916 F.2d 1119, 1127 (6th Cir. 1990) (citing
Restatement (Second) of Torts § 587 (1977)).
Second, the communication must be material, pertinent, and
relevant to the judicial proceeding. Smith, 199
S.W.3d at 193 (citing Lisanby v. Illinois Cent. R.
Co., 209 Ky. 325, 272 S.W. 753, 754 (1925)).
Morgan & Pottinger, Attorneys, P.S.C. v. Botts,
348 S.W.3d 599, 602 (Ky. 2011). Thus, if the tort hinges on
employer statements made in connection with, and relevant to,
a judicial proceeding, then the privilege would thwart
underpinning of the claim. This is a smart argument.
responds not by direct refutation; rather, Jones claims he
targets only “conduct” and is not trying to
recover for statements. This, perhaps, is a stretch, given
the infant tort's foundation. See KRS 341.990(6)
(criminalizing “knowingly mak[ing] a false statement or
representation” in administrative employment
proceedings). But see Id. (criminalizing
“knowingly fail[ing] to disclose a material
fact”). However, the Amended Complaint does include the
distinguishing language, see DE 13-2, at ¶ 70,
and the Kentucky courts do delimit the privilege in that way.
See Halle v. Banner Indus. of N.E., Inc., 453 S.W.3d
179, 189 (Ky. Ct. App. 2014) (“[T]he judicial
statements privilege does not apply to conduct.”).
But see Botts, 348 S.W.3d at 604 (“[W]e
conclude that the judicial statements privilege encompasses
the act of filing [a KBA] complaint, in addition to the
statements contained therein.”); Kinney v.
Maggard, No. 2014-CA-001127-MR, 2018 WL 1022549, at *6
(Ky. Ct. App. Feb. 23, 2018) (extending Botts to
KBML complaint filing).
would take some brass to dismiss under Rule 12(b)(6), or the
futility equivalent here, a claim the Kentucky Supreme Court
just declared valid. Progressive may be right about the
practical effect of other Kentucky laws on the tort. However,
what Progressive is really asserting is a form of affirmative
defense, and one that truly affects available evidence rather
than claim assertion. See Halle, 453 S.W.3d at 184
(“As its name implies, [the judicial statements
privilege] precludes the use of [ ] privileged communications
to sustain a cause of action. It does not bar the cause of
action but only renders it unsustainable if based exclusively
on statements privileged under the law.”). Absent
clarity on the face of the pleadings, the Court generally
would not find futility, and thus a basis to deny amendment,
in this context. See Walburn v. Lockheed Martin Util.
Servs., Inc., 443 Fed.Appx. 43, 47 (6th Cir. 2011) (An
affirmative defense “may be the basis for dismissal
under Rule 12(b)(6) when the facts are definitively
ascertainable from the pleadings and conclusively establish
the affirmative defense.”). Here, the Court has
insufficient information about the statements or conduct at
issue, the precise context of either, or the relationship of
either to the KRS Chapter 341 process.
remains to be seen whether Jones can thread the needle
between Kentucky's privilege for “statement[s] made
. . . during the course of” a judicial proceeding and
the newly recognized Hickey cause of action. The
Court also will need more complete and substantive briefing,
at the proper time, on the contours of the judicial
statements doctrine, whether the statutory foundation of this
tort impacts application, whether Jones can pin the claim on
non-exempt “conduct” instead of statements, and
whether the privilege is as absolute as some of the case
language (and Progressive here) suggests.
due respect to the Supreme Court of Kentucky and a nod to
comity, the Court does not facially accept the contention
that Hickey created a self-destructing tort.
Kentucky expressly validated the claim in the unemployment
litigation milieu. Progressive may have unearthed a
foundational flaw, but the Court sees a count and record in
need of development before the argument ripens. This Court
will not call futile what Hickey, from the ultimate
Kentucky-law voice, contemporaneously calls
the Court GRANTS DE 13 and
DIRECTS the Clerk to file the previously
tendered exhibit (DE 13-2) as Plaintiff Kenton Jones's
First Amended Complaint.
 Botts, 348 S.W.3d at
 The Court also questions
Defendant's characterization of Hawkins.
Compare DE 14, at 4 n.2 (“[I]n
Hawkins, the Kentucky Court of Appeals simply
affirmed a trial court finding regarding qualified
privilege[.]”), with Hawkins, 301 S.W.3d at
508 (“The Appellees moved to dismiss the action on the
grounds that, since the statements were made in a
quasi-judicial setting, the Appellees are entitled to