McQirk v. Donnelley

• Citation: 189 F.3d 793
• Parties: (9th Cir. 1999) PHILIP M. McQUIRK, Plaintiff-Appellant, v. LOUIS KEVIN DONNELLEY, Sheriff Glenn County; GLENN COUNTY, Defendants-Appellees. 97-17174
• Decision Date: 12 February 1999
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 793

189 F.3d 793 (9th Cir. 1999)

PHILIP M. McQUIRK, Plaintiff-Appellant, v. LOUIS KEVIN DONNELLEY, Sheriff Glenn County; GLENN COUNTY, Defendants-Appellees.

97-17174

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted February 12, 1999--San Francisco, California

Filed August 20, 1999

Brett L. McKague, Sacramento, California, and Geoffrey O. Evers, San Francisco, California, for the plaintiff-appellant.

Leonard G. Krup, Frost, Krup & Atlas, Willows, California, for the defendants-appellees.

Stephen D. Underwood, Rancho Cordova, California, for amicus curiae CSAC Excess Insurance Authority.

Richard R. Terzian, LeBoeuf, Lamb, Greene & MacRae, Los Angeles, California, for amicus curiae California State Association of Counties.

Appeal from the United States District Court for the Eastern District of California. Lawrence K. Karlton, District Judge, Presiding. D.C. No. CV-96-00811 LKK.

Before: Betty B. Fletcher and A. Wallace Tashima, Circuit Judges, and James M. Fitzgerald,^* District Judge.

TASHIMA, Circuit Judge:

Philip McQuirk, a former employee of the Glenn County, California, Sheriff's Office, applied for a job with the Mountlake Terrace, Washington, Police Department. The day before McQuirk was to begin working, Louis Donnelley, the Sheriff of Glenn County, made a number of allegedly defamatory statements about McQuirk's performance as an employee of the Glenn County Sheriff's Office to Commander Scott Smith of the Mountlake Terrace Police Department. As a result of these statements, Smith rescinded the offer of employment to McQuirk. McQuirk sued Donnelley and Glenn County for defamation and other related torts. The district court granted summary judgment to both defendants on the grounds that McQuirk had consented to the disclosure of this information and that defendants were immune from liability under California law. McQuirk appeals, contending that the district court misapplied California law. We have jurisdiction pursuant to 28 U.S.C. S 1291, and we reverse and remand for further proceedings.

I.

McQuirk worked for the Glenn County Sheriff's Office from 1976 until he retired for medical reasons in 1990. Approximately five years after his retirement, McQuirk applied for the non-peace officer position of Property Room Manager with the Mountlake Terrace Police Department. As part of the application process, McQuirk signed a release that authorized the recipient to furnish the Mountlake Terrace Police Department with information about "me, my work record, my reputation, my financial and credit status," and excused the recipient from any liability resulting from the provision of this information.¹ On April 11, 1995, McQuirk signed a form consenting to be hired and was instructed to report to work on April 13, 1995.

On April 12, 1995, Commander Smith returned a phone call from Donnelley. McQuirk alleges that Donnelley made five defamatory statements about him during the twentyminute conversation: (1) that a splitting maul had disappeared from the evidence room over which McQuirk had responsibility and that the maul had reappeared after McQuirk was notified that its owner wanted it; (2) that McQuirk had submitted a false insurance claim for damage to the tires of his car; (3) that McQuirk had committed perjury while testifying in a criminal case; (4) that Donnelley personally knew that McQuirk had fabricated a police report; and (5) that McQuirk had stolen a ring from another officer in the sheriff's locker room. Donnelley was later told that a ring had in fact not been stolen, but he did not so notify Smith. It is disputed whether Donnelley informed Smith that some of his comments were based on rumor. Smith subsequently rescinded McQuirk's offer of employment.

McQuirk filed suit in Washington state court against Donnelley and Glenn County, seeking damages and injunctive relief for defamation, interference with business expectancy, and outrage. Defendants removed the case to the United States District Court for the Western District of Washington and then secured a change of venue to the Eastern District of California. McQuirk amended his complaint to include claims for negligent and intentional infliction of emotional distress. The district court granted defendants' motion for summary judgment.

McQuirk contends that the district court erred in granting summary judgment with respect to his claims for defamation, interference with business expectancy, outrage, and intentional infliction of emotional distress.²

II.

We review the grant of summary judgment de novo. See Griggs v. Pace American Group, Inc., 170 F.3d 877, 879 (9th Cir. 1999).Viewing the evidence in the light most favorable to the nonmoving party, we must determine whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. See id. Further, because this case is premised on diversity jurisdiction and the substantive law of California applies,³ we must render the decision we believe the California Supreme Court would render. See Elliott v. City of Union City, 25 F.3d 800, 802 n.3 (9th Cir. 1994).

III.

McQuirk contests the district court's grant of summary judgment on two grounds. First, he contends that the release did not constitute consent to the making of defamatory statements and, if it did, it violates California law. Second, he argues that Donnelley's provision of a job reference was not a discretionary act entitled to immunity from liability under California law.

A. Consent

Although we agree with the district court that the scope of the release is broad enough to encompass Donnelley's statements, we conclude that the release violatesS 1668 of the California Civil Code by shielding Donnelley from liability for intentional torts. Therefore, the release is not enforceable.

Section 1668 provides that "[a]ll contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law." Cal. Civ. Code S 1668 (West 1999). McQuirk's claims for defamation, inter- ference with business expectancy, outrage, and intentional infliction of emotional distress are all intentional wrongs. See Miller v. National Broad. Co., 232 Cal. Rptr. 668, 681 (Ct. App. 1986) (intentional infliction of emotional distress);⁴ Ramona Manor Convalescent Hosp. v. Care Enters., 225 Cal. Rptr. 120, 124 (Ct. App. 1986) (intentional interference with prospective economic advantage); 5 B. E. Witkin, SUMMARY OF CALIF. LAW, Torts,S 471, at 558 (9th ed. 1988) (defamation).

The California Court of Appeal has noted that "contractual releases of future liability for fraud and other intentional wrongs are invariably invalidated." Farnham v. Superior Court, 70 Cal. Rptr.2d 85, 86 (Ct. App. 1997). In Farnham, the court was presented with the issue of whether a waiver in an employment agreement precluded a claim for defamation. Farnham sued his former employer and two of its directors, contending that the waiver violated S 1668. See id. at 86-88. The court found the waiver not to contravene S 1668 because the waiver only protected the directors from liability, not the corporation. See id. at 89-90. Because Farnham "retain[ed] his right to seek redress from the corporation," id. at 90, the contractual waiver was enforceable. Farnham thus stands for the proposition that S 1668 invalidates the total release of future liability for intentional wrongs. Therefore, under Farnham, the release McQuirk signed is invalid.⁵

Donnelley contends that we should apply the Second Restatement of Torts instead of S 1668. According to Donnelley, McQuirk's consent cloaked Donnelley's statements in an absolute privilege, because "[e]xcept as stated in S 584, the consent of another to the publication of defamatory matter concerning him is a complete defense to his action for defamation." Restatement (Second) of Torts S 583 (1977).

The court applied S 583 of the Restatement in Royer v. Steinberg, 153 Cal. Rptr. 499 (Ct. App. 1979), a case involving a school superintendent's suit for defamation against a school board. The school board sent the superintendent a confidential letter detailing the reasons for his demotion. See id. at 502. The superintendent subsequently caused to be published in a newspaper an "open letter" to the public that reproduced the school board's confidential letter, included his response, and requested that the school board prove its allegations. See id. The court found absolutely privileged the school board's reply, noting that "[o]ne of the oldest and most widely recognized defenses to the publication of defamatory matter is the doctrine of consent . . . ." Id. at 503 (citing Restatement (Second) S 583).

The California courts have applied this doctrine of consent to a contractual release once before. In Kelly v. William Morrow & Co., 231 Cal. Rptr. 497 (Ct. App. 1986), Kelly sued the publishers of a book for, among other things, defamation arising from the book's portrayal of Kelly. See id. The court found the scope of the waiver Kelly had signed to be ambiguous and therefore not an appropriate basis for summary judgment. See id. at 502-03. What is important for our purposes is what the court did not decide: at no time did the court discuss whether the waiver was invalid under S 1668.

When faced with conflicting authority, we must predict what the California Supreme Court would do. See Elliott, 25 F.3d at 802 n.3. We conclude that the California Supreme Court would apply S 1668 and invalidate McQuirk's release.⁶ First, as Farnham recognized, "contractual releases of future liability for . . . intentional wrongs are invariably invalidated." 70 Cal. Rptr.2d at 86. This is borne out by the case law, save for Kelly. Second, the language of S 1668 explicitly renders invalid contracts that...