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Desai v. Charter Communications, LLC

United States District Court, W.D. Kentucky, Louisville Division

March 29, 2019

KRUTI DESAI et al., Plaintiffs,



         Plaintiffs Kruti Desai, Melanie Fink, Belinda Gale Parkerson, Jeremy Parkerson, Daniel Popp, and Carolyn Vincent alleged that their former employer, Charter Communications, LLC, falsely accused them of theft after their employment was terminated. (Docket No. 7) Following a weeklong trial, a jury agreed, finding Charter liable for defamation per se. (D.N. 168) Charter has moved for judgment as a matter of law or a new trial. (D.N. 183) In the alternative, it seeks reduction of the damage award. For the reasons explained below, the Court will reduce the punitive damages and deny Charter's motion in all other respects.

         I. BACKGROUND

The Court previously summarized the facts of this case as follows:
Plaintiffs worked at Charter's call center in Louisville, Kentucky, in various capacities. Each was given a Hewlett-Packard (HP) computer printer by Linda Showalter, an administrative assistant at Charter. Plaintiffs maintain that they believed Showalter's distribution of printers was authorized by management. Charter, however, considered Plaintiffs' acceptance of the printers to be a violation of its policy against removing company property without authorization, and it terminated most of the employees involved.
Approximately one month after Plaintiffs were fired, Charter Human Resources Manager Rodger Simms gave a PowerPoint presentation during a Charter leadership conference. On a slide with the heading “Leadership and Judgment, ” Simms referred to “‘Operation . . .' Green-light, Buzz-kill, Printer-gate.” He encouraged employees to “[a]ct with Integrity and Character.” The notes for Simms's oral presentation accompanying the slide state: “Let's get the elephant in the room out in the open, how many of you have heard of . . . Operation codes for things that weren't right! All examples of poor judgment. Not bad people, people we know and love but they made the wrong choices.” Simms emphasized the importance of “integrity, ” “character, ” and having “the courage to do the right thing.” He also warned that “[k]nowing something isn't right and allowing it to continue is the same as you doing it!” “Green-light” referred to an incident in which a Charter employee used a company credit card for personal benefit and was terminated as a result. “Buzz-kill” involved the sale of illegal drugs on Charter property by Charter employees; those employees were also terminated.
Plaintiffs sued Charter for defamation on the ground that “Charter made false statements alleging misconduct on the part of the Plaintiffs relating to the . . . distribution of Hewlett-Packard ink jet printers, including but not limited to the [PowerPoint] presentation.” They contend that the use of the term “Printer-gate, ” particularly in conjunction with references to employee theft and drug-dealing, implied that their actions were criminal.

(D.N. 129, PageID # 2710-11 (internal citations and footnote omitted))

         The case was tried solely on a theory of defamation per se. At the close of Plaintiffs' case, Charter moved for judgment as a matter of law, arguing that “Printer-gate” could not constitute defamation per se because it had no “objectively understood definition” (D.N. 148-1, PageID # 3243) and was not defamatory on its face (id., PageID # 3243-45); that Plaintiffs had no proof of damages to support a claim of defamation per quod (id., PageID # 3245-47); and that any inference arising from “Printer-gate” was true because the term referred to “an incident involving the unauthorized removal of company printers from Charter's premises.” (Id., PageID # 3248; see id., PageID # 3247) The Court denied that motion and later granted Plaintiffs' motion for judgment as a matter of law on Charter's truth defense, concluding that there was insufficient evidence from which a reasonable jury could find that Plaintiffs' actions constituted criminal theft. (D.N. 175, PageID # 4091-92) The jury ultimately found Charter liable, awarding each plaintiff $350, 000 in compensatory damages and $1 million in punitive damages. (D.N. 168) The Court entered judgment for Plaintiffs in accordance with the jury's verdict (D.N. 179), and Charter timely sought relief under Rules 50 and 59 of the Federal Rules of Civil Procedure. (D.N. 183)

         II. ANALYSIS

         Charter renews its Rule 50 motion for judgment as a matter of law on the issue of whether the term “Printer-gate” can constitute defamation per se. (D.N. 183-1, PageID # 4372-86; see D.N. 148) It further argues that it is entitled to a new trial on the grounds that it should have been allowed to present the defenses of truth and qualified privilege; that James Eversole's testimony was admitted in error; and that the jury was required to find malice by clear and convincing evidence in order to award punitive damages. (See D.N. 183-1, PageID # 4386-4404)

         Because this is a diversity case, Kentucky law governs the Court's Rule 50 analysis. See Lindenberg v. Jackson Nat'l Life Ins. Co., 912 F.3d 348, 360 (6th Cir. 2018) (“In this Circuit, a federal court sitting in diversity must apply the standard for judgments as a matter of law of the state whose substantive law governs.” (quoting DXS, Inc. v. Siemens Med. Sys., Inc., 100 F.3d 462, 468 (6th Cir. 1996))).

Under Kentucky law, “a motion for a directed verdict . . . should be granted only if there is a complete absence of proof on a material issue in the action, or if no disputed issue of fact exists upon which reasonable minds could differ. In deciding such a question, every favorable inference which may reasonably be drawn from the evidence should be accorded the party against whom the motion is made.”

Ventas, Inc. v. HCP, Inc., 647 F.3d 291, 314 (6th Cir. 2011) (quoting Morales v. Am. Honda Motor Co., 151 F.3d 500, 506 (6th Cir. 1998)); see also Toler v. Süd-Chemie, Inc., 458 S.W.3d 276, 285 (Ky. 2014) (citations omitted).

There is likewise a high bar for relief under Rule 59:
[the Sixth Circuit] ha[s] interpreted Rule 59 to mean that “a new trial is warranted when a jury has reached a ‘seriously erroneous result' as evidenced by: (1) the verdict being against the weight of the evidence; (2) the damages being excessive; or (3) the trial being unfair to the moving party in some fashion, i.e., the proceedings being influenced by prejudice or bias.”

Mosby-Meachem v. Memphis Light, Gas & Water Div., 883 F.3d 595, 606 (6th Cir. 2018) (quoting Holmes v. City of Massillon, Ohio, 78 F.3d 1041, 1045-46 (6th Cir. 1996)). Charter has not demonstrated that either remedy is warranted here.

         A. Defamation Per Se

         As it has on numerous prior occasions, Charter argues that the term “Printer-gate” cannot constitute defamation per se. Charter first asserts that there was no evidence to support a finding that Simms's presentation imputed criminal conduct to Plaintiffs. (D.N. 183-1, PageID # 4372-76) It further contends that the Court, not the jury, should have determined whether defamation per se occurred. (Id., PageID # 4376-86) Neither argument is persuasive.

         1. Sufficiency of the Evidence

         According to Charter, “on the evidence presented at trial, no reasonable jury could have concluded that the use of the term ‘Printer-gate' suggested that the Plaintiffs had engaged in theft.” (Id., PageID # 4372) But that was not the issue before the jury; the Court had already found, as a matter of law, that the term was “capable of bearing a defamatory meaning.” (D.N. 129, PageID # 2717 (quoting Yancey v. Hamilton, 786 S.W.2d 854, 858-59 (Ky. 1989)); see id., PageID # 2718 (“Construing the[] facts in the light most favorable to Plaintiffs, Simms's reference to ‘Printer-gate' imputed criminal conduct-theft-to Plaintiffs.”)) The jury was tasked with deciding whether the “Printer-gate” reference “was reasonably understood by persons who heard it as accusing the plaintiffs of criminal theft.”[1] (D.N. 167, PageID # 3519)

         Charter observes that “multiple witnesses who attended the presentation testified that they did not understand the term to suggest anything criminal at all.” (D.N. 183-1, PageID # 4373) It cites the testimony of current Charter employees Mike Barnard, Sandi Streicher, and Theo Carney defining “Printer-gate” as they understood it. (Id.) Charter acknowledges, however, that two witnesses who attended the meeting-Samantha Little and James Eversole-testified that they understood the term to imply that Plaintiffs had stolen from the company. (Id., PageID # 4373-74) Contrary to Charter's representation, Little did not merely “testif[y] vaguely that the term ‘insinuates that some type of illegal activity had been performed'” (id., PageID # 4374); she also testified that she interpreted it as referring to theft.[2] (D.N. 172, PageID # 3661-62) And Eversole, in addition to his statement that the presentation “kind of compar[ed] [Plaintiffs] to gambling and murder”[3] (id., PageID # 3677), stated that

the message that was given during the summit didn't really filter into the conversations that were afterward. Those particular conversations were like, oh, well, that was the time that we fired a bunch of people because they stole equipment. Like don't do it, like don't take anything from the company.

(Id., PageID # 3677-78 (emphasis added)) Thus, both Little and Eversole provided testimony supporting the jury's verdict.[4]

         Charter next asserts that Little's testimony cannot support the verdict because “the vague inference of illegal activity that Little drew from the presentation depended entirely on coupling “Printer-gate” with the two other incidents mentioned in the same presentation (Green-light and Buzz-kill) and upon knowledge of what those incidents involved.” (D.N. 183-1, PageID # 4374) According to Charter, “Kentucky courts long ago decided that merely mentioning an incident involving the plaintiff in the same context as incidents involving illegal conduct cannot be treated as implying that [the] plaintiff engaged in some illegality.” (Id.) The single case it cites in support of this contention, Boyd v. Hutton, 244 S.W. 880 (Ky. 1922), made no such proclamation and involved starkly different facts.

         In Boyd, the plaintiff alleged that he was defamed by a 1920 newspaper report, clearly offensive by today's standards, that read: “Last Thursday night there were lots of fireworks in Harrodsburg. Jim Boyd, colored, claimed that someone shot him through an open window while he was reading, or lacing his shoes. The shots covered nearly all of his entire body.” Id. at 881. The report appeared under the same headline-“Shootings in Town”-as reports that another person had “shot at a chicken thief the same night” and a third person “shot at a prowler on his premises.” Id. Boyd argued that “the reporting of the three news items in one article was intended to connect him with one of the other two shootings, and did in fact impute to him conduct of a disgraceful or degrading nature.” Id. In a four-paragraph opinion affirming the directed verdict in favor of the defendant, the court found Boyd's “construction of the article . . . to be wholly fanciful, for it certainly is not warranted by any fair interpretation of the publication itself.” Id.

         The Court finds Charter's reliance on Boyd curious in light of the case's historical context; given this context, and the opinion's limited analysis, it has little precedential value. In any event, the facts are clearly distinguishable from those at issue here. Simms's presentation explicitly linked “Printer-gate” to the drug and embezzlement incidents, describing them as “[a]ll examples of poor judgment” in which the individuals involved “made the wrong choices.” (D.N. 90-3, PageID # 1984) Moreover, as discussed above, there was testimony that some Charter employees who attended the presentation construed the “Printer-gate” reference as imputing criminal conduct to Plaintiffs; in Boyd, there was apparently no testimony beyond the plaintiff's own. See 244 S.W. at 881. In short, Boyd does not preclude consideration of the context in which the “Printer-gate” reference was made-indeed, even Charter has acknowledged that allegedly defamatory words “must be evaluated in context.” (D.N. 94, PageID # 2187)

         Viewing the evidence in the light most favorable to Plaintiffs and drawing all reasonable inferences in their favor, the Court concludes that there was sufficient evidence to support the jury's verdict.

         2. Definition of Defamation Per Se

         Charter's overarching argument is that the “Printer-gate” reference in Simms's presentation cannot constitute defamation per se because it requires consideration of extrinsic circumstances. (See D.N. 183-1, PageID # 4373-86) The definition of defamation per se has been a point of contention throughout this case, despite the Kentucky Supreme Court and Court of Appeals' numerous declarations that a statement falsely imputing crime-particularly theft- constitutes defamation per se. See Stringer v. Wal-Mart Stores, Inc., 151 S.W.3d 781, 795 (Ky. 2004) (“[A] ‘false accusation of theft is actionable per se-that is, libelous or slanderous per se.'” (quoting 50 Am. Jur. 2d Libel and Slander § 185 at 465 (1995))), overruled on other grounds by Toler, 458 S.W.3d at 287; Welch v. Am. Publ'g Co. of State, 3 S.W.3d 724, 735 (Ky. 1999) (“When criminal activity is alleged, the publication is libelous per se.” (citations omitted)); Fortney v. Guzman, 482 S.W.3d 784, 789-90 (Ky. Ct. App. 2015) (“‘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.' This simply means ‘there is a conclusive presumption of both malice and damage.'” (citations omitted)); Harstad v. Whiteman, 338 S.W.3d 804, 810 (Ky. Ct. App. 2011) (“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, and proof of context indicating malice is not required.”); Gilliam v. Pikeville United Methodist Hosp. of Ky., Inc., 215 S.W.3d 56, 61 (Ky. Ct. App. 2006) (“Statements classified as defamatory per se include those which attribute to someone a criminal offense, a loathsome disease, serious sexual misconduct, or conduct which is incompatible with his business, trade, profession, or office.” (citing Restatement (Second) of Torts § 570 (1977))); Columbia Sussex Corp. v. Hay, 627 S.W.2d 270, 274 (Ky. Ct. App. 1981) (“Although . . . it is not necessary that involvement in a crime be imputed to establish slander per se, certainly when such activity is indeed suggested, the requisites are met.”).

         Notwithstanding this extensive precedent, Charter insists that “Printer-gate” cannot be defamation per se because it is not defamatory on its face. Quoting Stringer, Charter repeatedly asserts that “‘if a comprehension of the defamatory nature of the written or spoken words requires extrinsic evidence of context or circumstances,' then the statement can solely be ‘libelous or slanderous per quod' and ‘special damages, i.e., actual injury to reputation, must be affirmatively proved.'” (D.N. 183-1, PageID # 4380 (quoting Stringer, 151 S.W.3d at 795); see also id., PageID # 4383, 4385)) By taking this passage out of context, however, Charter misses its point:

In comparison to slanderous per se oral statements, which must contain defamatory language of a specific nature, the common law treats a broader class of written defamatory statements as actionable per se: “while spoken words are slanderous per se only if they impute crime, infectious disease, or unfitness to perform duties of office, or tend to disinherit him, written or printed publications, which are false and tend to injure one in his reputation or to expose him to public hatred, contempt, scorn, obloquy, or shame, are libelous per se.” All other defamatory statements are merely libelous or slanderous per quod, and special damages, i.e., actual injury to reputation, must be affirmatively proved if a comprehension of the defamatory nature of the written or spoken words requires extrinsic evidence of context or circumstances. We need not belabor this discussion further, however, because a “false accusation of theft is actionable per se-that is, libelous or slanderous per se.” Accordingly, Appellants were not required to provide affirmative proof of injury to their reputations in order to recover for the defamatory statements at issue in this case[.]

Stringer, 151 S.W.3d at 794-95 (citations and footnotes omitted).

         In other words, certain types of statements-including false accusations of theft-are presumed to have damaged the plaintiffs' reputations, and thus no proof of injury resulting from such statements is required: they are “actionable per se.” Id. “All other defamatory statements are merely libelous or slanderous per quod”; these require “affirmative proof of injury to [the Plaintiffs'] reputations.” Id. at 795 (emphasis added). Charter's contention that the per se/per quod determination turns on whether extrinsic proof is needed to interpret the statement as defamatory is thus misguided; it is instead “the proof necessary to demonstrate an injury to reputation” that “varies depending upon the characterization of the defamatory language” as defamation per se or per quod.[5] Id. at 794.

         Charter cites two Kentucky cases, Sweeney & Co. v. Brown, 60 S.W.2d 381 (Ky. 1933), and Towles v. Travelers Insurance Co., 137 S.W.2d 1110 (Ky. 1940) (which followed Sweeney), for the proposition that an ambiguous statement cannot constitute defamation per se. (D.N. 183-1, PageID # 4378-79) Specifically, Charter points to the Sweeney court's definition of libel per quod as “words reasonably susceptible of a defamatory meaning as well as an innocent one.” (D.N. 183-1, PageID # 4378 (quoting Sweeney, 60 S.W.2d at 383)) Such words, according to Sweeney, “require evidence of pecuniary loss arising from the use thereof, other than their use to sustain a recovery”; they “may be defamatory by reason of their imputation, or by reason of certain extrinsic facts, connoting they were meant to be, and were, understood by the general public, or those reading them, to have such meaning, and that on receiving them were so construed.” 60 S.W.2d at 383 (citations omitted). While Charter presents Sweeney as clear authority that has been “followed in Kentucky ever since, ” resulting in “decades of firmly established Kentucky law, ” the only other published Kentucky case Charter cites for this proposition is from 1951; the rest are unpublished decisions from the Kentucky Court of Appeals, rulings of this Court, and cases from various other states-none of which, of course, are binding here.[6] (See D.N. 183-1, PageID # 4377-82) Given the Kentucky Supreme Court's equally thorough and far more recent discussion in Stringer on facts strikingly similar to those at issue here, the Court finds Stringer to be the more relevant precedent.

         Like the instant case, Stringer involved terminated employees who alleged that they were later falsely painted as thieves by their former employer. One of the statements at issue was that “there was more to [the plaintiffs' firing] than” eating candy from open bags (known as “claims candy”). 151 S.W.3d at 792; see Id. at 786. The Stringer court concluded that this statement alone was enough to support the jury's finding of defamation per se.[7] See Id. at 798-99.

         Clearly, the words “there was more to it than that” are not, on their face, defamatory. Nor was the statement an obvious reference to theft even if placed in context: an assistant manager, “when asked whether [the plaintiffs] had been terminated for eating candy from the claims area, responded [that] ‘“there was more to it than that” and that he couldn't talk about it.'” Id. at 792. Indeed, as in this case, the context (with its reference to “claims candy” or “candy from the claims area”) likely would not have been understood by a non-employee. Yet because another employee testified that she interpreted the statement “as an assertion that [the plaintiffs] had stolen items in addition to claims candy, ” it was sufficient to support a verdict in favor of the plaintiffs. Id. at 798. Charter's contention that the jury could not properly consider the context in which “Printer-gate” was discussed is therefore unavailing.

         At bottom, the dispute over the characterization of “Printer-gate” is whether it is actionable per se or per quod-i.e., whether Plaintiffs should have been required to prove damages. (See D.N. 183-1, PageID # 4381-82 (asserting that an ambiguous statement can only constitute defamation per quod and that therefore, “judgment as a matter of law should have been entered for Charter, because Plaintiffs had no evidence of special damages to sustain a claim of defamation per quod”)) As explained in Stringer, no proof of damages is required where the statement ...

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