Rice v. Nova Biomedical Corp.

• Decision Date: 05 January 1995
• Docket Number: 93-2018 and 93-2685,Nos. 93-1831,s. 93-1831
• Citation: 38 F.3d 909
• Parties: Dale S. RICE, Plaintiff-Appellee, Cross-Appellant, v. NOVA BIOMEDICAL CORPORATION and Robert Christopher, Defendants-Appellants, Cross-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 909

38 F.3d 909

Dale S. RICE, Plaintiff-Appellee, Cross-Appellant, v. NOVA BIOMEDICAL CORPORATION and Robert Christopher Defendants-Appellants, Cross-Appellees.

Nos. 93-1831, 93-2018 and 93-2685.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 7, 1994.

Decided Oct. 25, 1994.

Rehearing Denied Jan. 5, 1995.

Lawrence R. Levin (argued), Marc W. O'Brien, Jonathan Vegosen, Damon E. Dunn, Vance L. Liebman, Levin & Funkhouser, Chicago, IL, for Dale S. Rice.

J. Stephen Poor, Marcia A. Mahoney, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, IL, Robert W. Harrington (argued), Boston, MA, for Nova Biomedical Corp. and Robert Christopher.

Before POSNER, Chief Judge, and WELLFORD ^* and EASTERBROOK, Circuit Judges.

POSNER, Chief Judge.

In 1981 Nova Biomedical Corporation, a manufacturer of medical instruments, hired Dale Rice as a field service representative, installing and servicing Nova equipment in three midwestern states. He was later promoted to regional technical specialist, supervising field service representatives all over the country. He worked out of his home in Illinois. His boss was Robert Christopher, Nova's director of technical services, who works at Nova's headquarters in Massachusetts. Christopher fired Rice--an employee at will--in 1989, ostensibly because Rice had disobeyed instructions, missed service calls, and mismanaged the inventory of parts for Nova equipment that Rice stored in his garage. Rice responded the following year with this diversity suit. The complaint charged Nova and Christopher with defamation and with retaliatory discharge for Rice's having filed workers' compensation claims, and Christopher with intentional interference with advantageous business relations. Four months after being fired, Rice obtained a higher-paying job and later became the president of a company at a still higher salary. (We were told at argument that he has become unemployed since the trial.) Nevertheless the jury awarded $10,000 in actual and $50,000 in punitive damages against Nova, and $40,000 in punitive damages against Christopher, for a total of $100,000. The jury rendered a verdict for both defendants on the retaliatory-discharge count, however.

This is rather a poor excuse for a lawsuit. At the time of trial, Mr. Rice had improved his economic position by being fired. The defendants were allowed, all unavailingly, to argue to the jury that Rice's serendipitous gains from being fired should be offset against the loss of income that he incurred during his brief period of unemployment. It is true that this argument, despite its appeal to common sense, was not relevant to damages, and in fact the evidence on which it was based was admitted only to rebut evidence that Rice had experienced a loss of self-esteem as a result of being fired. He could not have recovered for losses that, though they would not have occurred but for the discharge, were not the sort of loss made more likely by it, Brackett v. Peters, 11 F.3d 78, 79 (7th Cir.1993); DeShaney v. Winnebago County Dept. of Social Services, 812 F.2d 298, 302 (7th Cir.1987), aff'd, 489 U.S. 189, 109 S.Ct. 998, 103 L.Ed.2d 249 (1989); it would be as if he had been injured as a result of slipping on a banana peel on his way from the meeting at which Christopher fired him. It follows that he should not be denied serendipitous gains--gains that while they would not have accrued had it not been for the discharge were not made more likely by it. Otherwise tort damages would be systematically underestimated. Still, having suffered in fact, if not in the contemplation of law, no pecuniary injury from being discharged (and presumably only a transient diminution in self-esteem), Rice might have been expected to use his time to better advantage than litigating. The suit is four years old and after paying his lawyers Rice is unlikely to have obtained a compensatory rate of return on the investment of time and emotion that he must have made in the suit. It is not only his own time and emotional tranquillity that he has spent bounteously. Beset by swollen dockets, judges cannot be expected to look with favor upon lawsuits brought not to recoup losses but to vent indignation or generate windfall gains.

Besides not being hurt, at least in any very palpable sense, by the defendants' alleged wrongdoing, Rice was skating on the thinnest of legal ice in bringing this suit; the expected as distinct from the realized value of suing must have been meager indeed. He had no employment contract, so could not complain about being fired as such. He tried three end runs. Oddly, the most plausible--retaliatory discharge--failed, and the other two, which are not plausible, succeeded. The first of the implausible claims--that his discharge constituted a tortious interference with advantageous business relations--is perhaps better described merely as peculiar, since it is not questioned by the defendants or barren of support in case law. See, e.g., Mittelman v. Witous, 135 Ill.2d 220, 142 Ill.Dec. 232, 235-36, 246, 552 N.E.2d 973, 976-77, 987 (1989). Still, it makes little sense in a case such as this where the employer is not complaining of having been tortiously deprived of the plaintiff's services. The theory of the tortious-interference claim is that Christopher improperly interfered with Rice's relations with Christopher's own employer, Nova. Were this plausible, one might expect Nova to be a coplaintiff rather than a codefendant, indignant at its employee's disloyal act in procuring the discharge of a fellow employee on entirely personal grounds, and wanting to place as much distance as possible between itself and Christopher to avoid the imposition of derivative liability on it for his wrongdoing. That is not Nova's tack at all. Nova is not complaining that Rice has left its employ. It is content with the discharge. It has indeed ratified Christopher's act in firing Rice, making it its own act, and as an employer at will it could fire Rice on any nonprivileged ground, even one as perverse as another employee's animosity to him.

Rice's other successful end run around the doctrine of employment at will was to charge defamation. Yet the only significant harm that he can have suffered from defamation arises from the fact that Rice himself disclosed to prospective employers the ostensible grounds of his discharge, grounds that because they disparaged his professional competence were, once made known to other people, defamatory per se under Illinois law. Id. at 241, 552 N.E.2d at 982; Brown & Williamson Tobacco Corp. v. Jacobson, 713 F.2d 262, 267-69 (7th Cir.1983). He was as it were his own defamer, but was able to turn this curious posture for the plaintiff in a defamation case to his advantage by invoking the doctrine of "compelled republication," or as it is sometimes called (underscoring its absurdity, as it seems to us) self-defamation. Prospective employers asked Rice why he had been fired; honesty required him to divulge Nova's stated grounds even if (even though) false. Lewis v. Equitable Life Assurance Society, 389 N.W.2d 876, 886-88 (Minn.1986), and cases cited there. The combination of the doctrines of defamation per se and self-defamation gives employees who regret not having negotiated an employment contract a tort surrogate for it. But not in Illinois, where the only case to address the doctrine of compelled self-defamation noted that it is a minority view and rejected it, Layne v. Builders Plumbing Supply Co., 210 Ill.App.3d 966, 155 Ill.Dec. 493, 499-500, 569 N.E.2d 1104, 1110-11 (1991)--as the defendants' lawyer failed to inform the district court. Since it is a minority view, and a very questionable one--it makes it impossible for an employer to communicate his grounds for discharging an employee to the employee even confidentially without incurring a grave risk of being sued for defamation--we believe it unlikely that the Supreme Court of Illinois would take a different view from the intermediate appellate court in Layne. Without the doctrine of self-defamation Rice could not show that he suffered significant harm from the defamation, although, because it is a case of defamation per se, he could still obtain an award of general damages. Kolegas v. Heftel Broadcasting Corp., 154 Ill.2d 1, 180 Ill.Dec. 307, 312, 607 N.E.2d 201, 206 (1992); Girsberger v. Kresz, 261 Ill.App.3d 398, 198 Ill.Dec. 940, 952, 633 N.E.2d 781, 793 (1993); Brown & Williamson Tobacco Corp. v. Jacobson, supra, 713 F.2d at 268. But the point has been waived.

The defendants base their attack on the judgment on other and less promising grounds. The first, which is limited to Christopher, is that the district court did not obtain personal jurisdiction over him under Illinois' long-arm statute, because of the "fiduciary shield" doctrine. This doctrine, recognized by the courts of many states including Illinois--though also much criticized and by many jurisdictions rejected, see, e.g., Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 527 N.Y.S.2d 195, 199-202, 522 N.E.2d 40, 44-47 (1988); Columbia Briargate Co. v. First National Bank, 713 F.2d 1052, 1055-77 (4th Cir.1983); Robert A. Koenig, Comment, "Personal Jurisdiction and the Corporate Employee: Minimum Contacts Meet the Fiduciary Shield," 38 Stan.L.Rev. 813 (1986)--denies personal jurisdiction over an individual whose presence and activity in the state in which the suit is brought were solely on behalf of his employer or other principal. Rollins v. Ellwood, 141 Ill.2d 244, 152 Ill.Dec. 384, 395-400, 565 N.E.2d 1302, 1313-18 (1990); People ex rel. Hartigan v. Kennedy, 215 Ill.App.3d 880, 159 Ill.Dec. 438, 445-46, 576 N.E.2d 107, 114-15 (1991). So a policeman sent into a state to serve an arrest warrant cannot be sued there for false arrest, although his superiors, who sent him, can be by virtue of his having come into the state on their business. That was Rollins. If Christopher's action in coming into Illinois to...