Amoroso v. Schuh, 15–cv–119–wmc

• Decision Date: 30 September 2017
• Docket Number: 15–cv–119–wmc
• Citation: 278 F.Supp.3d 1106
• Parties: Vince AMOROSO, Plaintiff, v. Dale R. SCHUH, Kenneth Erler, Peter McPartland and James Pearson, Defendants.
• Court: U.S. District Court — Western District of Wisconsin

278 F.Supp.3d 1106

Vince AMOROSO, Plaintiff,

v.Dale R. SCHUH, Kenneth Erler, Peter McPartland and James Pearson, Defendants.

15–cv–119–wmc

United States District Court, W.D. Wisconsin.

Signed September 30, 2017

Robert Bennett Corris, Hartland, WI, for Plaintiff.

Eric J. Wilson, Godfrey & Kahn S.C., Madison, WI, Karim Basaria, Walter C. Carlson, Sidley Austin LLP, Chicago, IL, for Defendant.

OPINION AND ORDER

WILLIAM M. CONLEY, District Judge

In this lawsuit, plaintiff Vince Amoroso asserts defamation claims against four former colleagues at Sentry Insurance, a Mutual Insurance Company, arising out of a memorandum circulated among Sentry's Board of Directors ("the Board"). The memorandum purported to apprise the Board of potential issues arising under the attorney-client privilege using three different "scenarios," each involving an unnamed "Director X." Defendants have moved to dismiss on three grounds: (1) the statements forming the basis for plaintiff's defamation claims are incapable of having defamatory meaning; (2) the statements at issue are subject to the common interest privilege; and (3) plaintiff's alleged injury is not cognizable under defamation law. (Dkt. # 24.) Although a close question in light of the context and arguably innocuous indirect nature of the defamatory statements, the court will nevertheless deny defendants' motion for the reasons set forth below.

ALLEGATIONS OF FACT

A. The Parties

Plaintiff Vince Amoroso is a citizen of Florida, where he resides. From 2003 until 2014, Amoroso served as a member on the Board of Directors of Sentry Insurance, which has its principal place of business in Stevens Point, Wisconsin.

Defendants Dale R. Schuh, Kenneth Erler and Peter McPartland all reside in and are citizens of Wisconsin, as well as officers of Sentry Insurance during the times relevant to this lawsuit. Schuh was the Chief Executive Officer of Sentry and Chairman of its Board; Erler was Sentry's Senior Vice President, Chief Administrative Officer and General Counsel; McPartland was Sentry's President, later succeeding Schuh as Chief Executive Officer and Chairman of the Board. Finally, defendant James Pearson is a citizen of Illinois and was Chairperson of Sentry's Governance Committee during the times relevant to this lawsuit.¹

B. Board Membership

Amoroso was a member on Sentry's Board from 2003 until 2014, for which he received about $200,000 per year in compensation. Between 2003 and 2012, Amoroso was elected to consecutive three-year terms, consistent with Sentry's Governance Committee customary practice of recommending to re-elect a Board member whose term is expiring at a regularly scheduled Board meeting in November. At a meeting in the following February, the Board would then "perfunctorily adopt[ ] the recommendation of the Governance Committee." (Compl. (dkt. # 1) ¶ 53.) Finally, during a meeting the following April, the Board's selections are typically re-elected.² (Id. )

With respect to his own qualifications, Amoroso has been a practicing actuary for more than 40 years. He became a member of Sentry's Audit Committee in 2003, chairing it between 2006 and 2011. Amoroso further asserts that until his removal in 2014, Sentry's Board of Directors had consistently included an actuary as a member since the early 1980s.

C. The Attorney–Client Privilege Memorandum

After a Board meeting on February 26, 2012, Amoroso alleges that defendants Schuh or Erler developed three "scenarios," each involving a director referred to only as "Director X." Those scenarios were then set forth in a memorandum titled "Application of the Attorney–Client Privilege," which was attached to another a memorandum titled "Overview of the Attorney–Client Privilege and Work Product Doctrine." (Defs.' Opening Br. Ex. A (dkt. # 25–1) ECF 2.) An accompanying cover letter explains that the two memoranda were being circulated in response to requests by "a number of Directors" after the February 26 Board meeting for "updated information relating to the handling of sensitive information, and the Attorney–Client Privilege." (Id. ) The cover letter further explains that "[t]he second memo applies these concepts in specific situations and is self explanatory." (Id. )

Despite the expressly stated purposes of the memoranda, plaintiff nevertheless asserts that the three scenarios "were prepared with false statements of fact in order to disparage [him] and with the purpose ... [of] inducing members of the Governance Committee and Board of Directors to remove or not re-nominate [him] to the Board[.]" (Compl. (dkt. # 1) ¶ 17.) Although the second memorandum only named a generic "Director X," plaintiff further asserts that the recipients knew he was the individual to whom the memorandum referred. (Id. at ¶ 16.)

D. The Three Scenarios

In the opening scenario set forth in the second memorandum, Director X "uses unfortunate terminology describing [an] actuarial methodology" in emails sent to auditors outside of the company, which is involved in litigation with the IRS. (Compl. (dkt. # 1) ¶ 18.) Plaintiff alleges that when he complained this scenario was inaccurate, Erler informed him that Director X's use of "unfortunate terminology" is actually referring to Amoroso's use of the term "cushion" in a first draft of a memo. (Id. at ¶ 19.) Plaintiff asserts that this first scenario is still misleading because (1) "cushion" was removed in the final version of the memo and (2) the term was used to describe terminology in the insurance industry, not an actuarial methodology. (Id. at ¶ 23–24.)

In the memorandum's second scenario, Director X calls an outside attorney acquaintance to discuss his concerns with the fees paid by one of the company's benefit plans to an affiliated provider. (Id. at ¶ 25.) Plaintiff alleges that this scenario is also based on his actions and is likewise misleading. Specifically, plaintiff claims Schuh encouraged him to call the attorney to discuss risks that Amoroso had identified at a meeting. Also, plaintiff alleges the discussion with the attorney concerned a particular "immunization" strategy Sentry that was then considering, not whether the provider's fees were reasonable. (Compl. (dkt. # 1) ¶ 32.)

In the third scenario, "Director X sends emails to other directors" after a Board meeting considering changes in measures to evaluate management performance, which "lay[es] out in detail his reasons for dissenting at the regular meetings, and further explain[s] why he feels the [performance] measures being used are either not complete or otherwise not proper." (Id. ¶ 33.) As with the first two, plaintiff alleges that this scenario was intended to reflect his conduct, though inaccurately. Instead, plaintiff alleges that Schuh called him, along with the other members of the Board, to ask whether he had any concerns regarding any Board matter. (Id. at ¶ 35.) After reporting his concerns and suggestions, plaintiff claims Schuh asked him to prepare a memo, which he then discussed with defendant Pearson. (Id. at ¶ 36.) Plaintiff further alleges that Pearson told him to send the memo to the chair of the relevant committee and to copy Schuh. (Compl. (dkt. # 1) ¶ 36.) These facts, plaintiff asserts, render the third scenario inaccurate to the point of being "defamatory," since it implies that Amoroso sent emails reporting his concerns to other Board members on his own volition.

E. Fallout from the Memorandum

Plaintiff alleges that Pearson, as Chairperson of the Board's Governance Committee, sent the privilege memoranda containing the three scenarios to every member of Sentry's Board on March 26, 2012. On April 6, 2012, Sentry's Senior Vice President Erler told Amoroso that he prepared the scenarios based on information provided by Schuh. On that same day, Amoroso claims he advised the Chairperson of the Board and CEO Erler that the scenarios were untrue, and Erler said he would correct the false statements, but never did so.

On April 8, 2012, Pearson also asked Amoroso to draft a short memo for the Board to "correct" any inaccuracies in each scenario. The next day, Amoroso sent the memo to Pearson's wife and asked her to relay it to Pearson. At some point between April 9 and April 27, 2012, Pearson then asked to meet with Amoroso. This meeting with Pearson and Peter Pestillo, another member of the Governance Committee, took place on April 27. At that meeting, Amoroso was informed that the Governance Committee would not correct the scenarios.

Plaintiff claims that as a result of these scenarios, he was only re-nominated in November of 2012 and re-elected in April of 2013 to a one-year Board term, rather than the typical three-year term. After the same thing happened at the Board meeting the following November, 2013, Amoroso asked Pestillo why he was only being nominated for a one-year re-election, rather than three years, to which Pestillo allegedly responded that "the reason was continued concern about the Scenarios." (Compl. (dkt. # 1) at ¶ 48.) The next year, November of 2014, Pearson and Pestillo told Amoroso shortly before the Board meeting that the Governance Committee would not be re-nominating Amoroso at all. The committee made that same announcement at the meeting, and Amoroso was not re-elected.

Plaintiff generally alleges that Schuh created the false scenarios for the purpose of defaming him and that Sentry's President McPartland caused Erler and Pearson not to correct the misleading scenarios, although all three knew they were inaccurate. (Id. at ¶ 58.) Plaintiff attributes defendants' actions to Schuh and McPartland's desire to replace him on the Board with someone who would not challenge their management policies, a desire that he alleges Erler and Pearson were aware. (Id. at ¶ 59–60.) Plaintiff further contends that such actions were not without precedent, since McPartland, with the help of Erler, orchestrated the removal of another Board member who questioned McPartland's management in 2013. (Id. at ¶ 62.) Finally, in further...