Libel lawsuit against Staples can proceed

A fired salesman can proceed with a libel suit against his former employer even though the statements in question were true, the 1st U.S. Circuit Court of Appeals has found.

The defendant, Staples Inc., argued that the salesman’s claim could not move forward as a matter of law where the evidence clearly established a company-wide e-mail explaining the firing contained no misstatements of fact and that the message was distributed to more than 1,500 employees to emphasize the importance of complying with company policy.

But the 1st Circuit on rehearing disagreed, reversing a lower court decision after finding a jury could permissibly infer Staples singled out the salesman, a private figure, in an effort to humiliate him.

“The district court concluded that there was no evidence of actual malice,” Judge Juan R. Torruella wrote on behalf of the court. “Viewing ‘actual malice’ as ‘ill will,’ we disagree.”
Torruella said the 1st Circuit’s conclusion was based in large part on G.L.c. 231, §92, a statute enacted in 1902.

The 34-page decision is Noonan v. Staples, Inc.

‘On its ear’

Robert A. Bertsche, a lawyer at Boston’s Prince, Lobel, Glovsky & Tye who was not involved in the case, said until now attorneys have long relied on the principle that truth is an absolute defense to libel.

At a minimum, he said, most practitioners assumed there had to be a false statement of fact in order to have an actionable libel claim.

“This decision takes that most basic axiom that we thought we all knew and turns it on its ear,” he said. “Based on this ruling, it appears there are some classes of cases brought by private people in which you are not permitted, under Massachusetts law, to make a true statement about them that would harm their reputation.”

Bertsche said the notion that truth is an absolute defense to libel is so well established that most of the nationwide treatises on the subject do not even address the topic. In an effort to properly understand the ruling, he questioned why the 1st Circuit gave so little explanation about its conclusion.

“Exactly what the contours of this odd ruling are seem to be undetermined,” he said. “Given that they are making a statement they say is in accord with this old statute but is counter to accepted libel law of virtually every jurisdiction in the nation, you would think they would have at least discussed the implications of their decision a bit further.”

But Wendy H. Sibbison of Greenfield, Mass., who represented the plaintiff salesman, said earlier rulings in Noonan erroneously concluded that the common-law definition of actual malice had been replaced in all defamation cases by the specialized First Amendment meaning of the words.

“What the court has done is reaffirm the idea that causes of action for defamatory but literally true statements only apply where there is no public figure involved, no media party and no issue of public importance,” she said. “Those are the areas where the [Supreme Judicial Court in Massachusetts] and the [U.S] Supreme Court have restricted libel actions.”
Sibbison cited the 1903 Conner v. Standard Pub. Co. case, decided a year after the enactment of the statute, in which the SJC found the Massachusetts Legislature intended malice to be defined in the popular sense of hatred or ill will.

Use of that definition, she said, had never been overturned by an appellate court. And while the SJC has held that the statute’s scope is limited by the First Amendment, Sibbison said the salesman was not a public figure. She added that Staples was not a media defendant, and the alleged policy violations were not issues of public concern.

“In short, the Court of Appeals recognized that Staples had no First Amendment right to broadcast [the salesman’s] termination in an e-mail to at least 1,500 employees, and its motive for doing so is an issue to be explored at trial,” said Sibbison.
The lawyer for Staples, Ariel D. Cudkowicz, of Seyfarth Shaw in Boston, could not be reached for comment prior to deadline.

Expensive reports

The plaintiff, Alan Noonan, was a salesman at Staples, a job that required extensive travel for which he submitted expense reports.

When the company discovered that another employee, James Dorman, had been embezzling money, it began an audit of expense reports on its 65 North American traveling employees, including Noonan.

During the investigation, auditors alleged that they found several violations, including one instance in which Noonan requested more money than he actually spent. Noonan was fired after a team of certified accountants and a former police investigator concluded that he had deliberately falsified his expense reports.

The next day, a Staples executive vice president sent a company-wide e-mail informing employees that Noonan was fired for violating travel and expense policies.
Staples also denied Noonan his severance benefits and refused to allow him to exercise his
stock options, claiming he was ineligible because he had been fired for cause.

When Noonan sued in state court for libel and breach of contract, Staples removed the matter to federal court in Boston. U.S. District Court Judge Morris E. Lasker granted summary judgment in Staples’ favor.

Question for jury

In reversing the lower court, Torruella said the salesman’s only hope for keeping his libel claim alive would be to prove that Staples acted with actual malice by deliberately trying to cause him ill will.

“[U]nder Massachusetts law, even a true statement can form the basis of a libel action if the plaintiff proves that the defendant acted with ‘actual malice,’” he said.
Torruella said that in the executive vice president’s 12 years with the company, the evidence could show he had never referred to a fired employee by name in an e-mail or other mass communication.

“From this evidence, a jury could permissibly infer that [the vice president] singled out Noonan in order to humiliate him,” he wrote.

The evidence could further prove, Torruella added, that even though the vice president had supervised Dorman and had failed to notice his misconduct, he did not send Staples employees a similar e-mail regarding his conduct.

“Noonan explains that he will argue to the jury that they should infer that [the vice president] singled out Noonan to detract attention away from the Dorman scandal,” the judge wrote. “These facts, while speculative on their own, could provide additional background to support Noonan’s pretext argument.”

Torruella said a jury could further find that the company sent the e-mail to a list of between 1,500 to 1,600 employees, many of whom did not travel and had no reason to be advised of the travel policy.

“Noonan will thus ask the jury to infer that the e-mail’s excessive publication shows [the vice president’s], and thus Staples’s, malevolent desire to harm Noonan’s reputation,” the judge said. “Thus, considering the large number of recipients, a jury could find that [the vice president] published the e-mail excessively.”