Banas v. Matthews Intern. Corp.

Decision Date20 December 1985
Docket NumberNo. 01205,01205
Citation502 A.2d 637,348 Pa.Super. 464
Parties, 121 L.R.R.M. (BNA) 2515, 107 Lab.Cas. P 55,767 Robert W. BANAS v. MATTHEWS INTERNATIONAL CORPORATION, Appellant. Pitts. 1982.
CourtPennsylvania Superior Court

Eric P. Reif, Pittsburgh, for appellant.

Robert C. Gallo, Pittsburgh, for appellee.


SPAETH, President Judge:

This is an action for defamation and breach of contract. The action arises out of appellee's dismissal as an employee of appellant. Appellant is engaged in the business of making, among other things, bronze grave markers. When appellee was dismissed, in July 1979, he was a tooler. In late June 1979, the Resurrection Cemetery, one of appellant's customers, notified appellant that contrary to the settled practice between the cemetery and appellant, a grave marker made at appellant's plant had been placed on a grave in the cemetery without having first been purchased through the cemetery. Appellant engaged a private investigator to determine who had removed the marker from its plant. The investigator's report disclosed that appellee had, and that the marker had been placed on his nephew's grave. On July 31, 1979, following a meeting with several of appellant's officers during which appellee admitted having made and removed the marker, appellee was dismissed. Appellee's action for defamation is based on certain remarks concerning his dismissal made by two of appellant's officers. His action for breach of contract alleges breach of a section of appellant's employee handbook that provided that employees could do personal jobs with their supervisor's permission. A jury awarded appellee $15,000 for defamation, $25,000 punitive damages for defamation, and $10,000 for breach of contract. We affirm the award of $15,000 for defamation but otherwise reverse and enter judgment in favor of appellant. Appellee did not prove the sort of conduct on the part of appellant's officers that would entitle him to punitive damages for defamation. Neither did he prove the existence of an employment contract that could provide the basis of an action for breach of contract. The trial court should therefore have granted appellant's motion for judgment notwithstanding the jury's verdicts for punitive damages and damages for breach of contract.

I The Defamation Claim

Appellant has argued two issues: whether the trial court erred in charging the jury that appellant's conditional privilege could be abused, and therefore lost, by a defamatory communication that was made negligently; and whether the trial court erred in charging the jury on punitive damages.


Appellant argues that its conditional privilege could be abused, and therefore lost, only by a defamatory communication made with malice--not simply negligently, as the trial court charged the jury. This argument may be disposed of summarily.

In Rutt v. Bethlehems' Globe Publishing Co., 335 Pa.Super. 163, 484 A.2d 72 (1984), we stated:

Matus [v. Triangle Publications, Inc., 445 Pa. 384, 286 A.2d 357 (1971) cert. denied, 408 U.S. 930, 92 S.Ct. 2494, 33 L.Ed.2d 343 (1972) ], ... declare[s] quite unequivocally, that under Pennsylvania law, once the issue of conditional privilege is raised by a defendant who has been sued by a private figure for defamatory communications concerning matters which are not of public concern, the burden of proof of the plaintiff in order to establish abuse of the conditional privilege is 'want of reasonable care and diligence to ascertain the truth' or more simply put, negligence. Id. 445 Pa. at 398, 286 A.2d at 365 (quoting Purcell v. Westinghouse Broadcasting Co., supra, 411 Pa. at 179, 191 A.2d at 668 [ (1963) ].

335 Pa.Super. at 185, 484 A.2d at 83.

We made this statement in the course of discussing the effects of the United States Supreme Court's decisions in Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974) ("so long as they do not impose liability without fault, the states may define for themselves the appropriate standard of liability for a publisher or broadcaster of defamatory falsehood injurious to a private individual"), and Rosenbloom v. Metromedia, Inc., 403 U.S. 29, 91 S.Ct. 1811, 29 L.Ed.2d 296 (1971) (private figure plaintiff must prove 'actual malice') (plurality opinion), on Pennsylvania defamation law. The issue in Rutt was not the burden of proof to establish abuse of a conditional privilege but rather the burden to establish liability in a private figure defamation case, but our conclusion that Gertz and Rosenbloom had not altered the burden to establish liability compels the conclusion here that neither did those decisions alter the burden to establish abuse of a conditional privilege, and the latter burden is settled. The Pennsylvania Supreme Court has long held that "[w]ant of reasonable care and diligence to ascertain the truth, before giving currency to an untrue communication, will destroy the privilege." Montgomery v. Dennison, 363 Pa. 255, 262, 69 A.2d 520, 524 (1949), quoting Hartman v. Hyman & Lieberman, 287 Pa. 78, 83-84, 134 A. 486, 487-488 (1926). See also Baird v. Dun & Bradstreet, Inc., 446 Pa. 266, 275, 285 A.2d 166, 171 (1971) (negligence establishes abuse of conditional privilege). And see Hepps v. Philadelph Newspapers, Inc., 506 Pa. 304, 314, 485 A.2d 374, 380 (1984),appeal pending --- U.S.----, 105 S.Ct. 3496, 87 L.Ed.2d 628 (1985) ("privilege is abused if the defamatory statement is negligently published"). 1


Appellant argues that the trial court erred in charging the jury on punitive damages in two respects: the charge represented an incorrect, or at least confusing, statement of the law; and even if correct, the charge should not have been given because as a matter of law the evidence was insufficient to support an award of punitive damages. We do not consider the first argument, for we agree that the evidence was insufficient to support an award of punitive damages. Accordingly, on appellee's defamation claim, we vacate the award of $25,000 punitive damages. Appellant has not challenged the award of $15,000 compensatory damages, and it is affirmed.

The test to be applied in determining the sufficiency of evidence to support an award of punitive damages is stated in Hepps v. Philadelphia Newspapers, Inc., supra. There, the trial court withdrew the issue of punitive damages from the jury on the ground that the evidence was "insufficient to establish 'actual malice.' " Id. at 330, 485 A.2d at 388. On the plaintiff's appeal, the Supreme Court held that to be entitled to punitive damages, the plaintiff had to establish that the defamatory publication was made either with knowledge that it was false or with reckless disregard of whether it was false. Id. at 331, 485 A.2d at 389. Applying this test, the Court concluded that "there was no basis for the jury to have concluded that the publication was made with knowledge of the falsity of its content", and that "[w]hile the plaintiff attempted to show that the dissemination was made with reckless disregard of the truth of its content, it is equally apparent that a jury issue was not created under the clear and convincing test required for such an award of damages." Id. at 332, 485 A.2d at 389 (citations omitted). The Court therefore affirmed the trial court's decision to withdraw the issue of punitive damages from the jury. 2

Here, too, the trial court should have withdrawn the issue of punitive damages from the jury. Having failed to do that, the court should have granted appellant's motion for judgment n.o.v. as to the award of punitive damages.

Two statements served as the basis of appellee's defamation claim. The first statement was made at a meeting on July 31, 1979, preceding appellee's dismissal for having made a grave marker for his nephew's grave. The meeting was attended by Francis Donnelly, Vice President in charge of manufacturing, Charles Krepp, Vice President and Plant Manager, and Alfred Lee, Vice President and Director of Personnel. Appellee was shown a photograph of the grave marker and was asked whether and how he had made it. He admitted having made and removed the marker. N.T. 53. Then, according to appellee, Donnelly stated: "We can't have thieves around here, because we have a lot of valuable stuff in here." Id. The second statement was by Krepp. In response to the "uproar" that followed appellee's dismissal, Krepp met with employees in small groups to explain the reasons for the dismissal. At trial Krepp testified that "[p]eople were very concerned, because their security had been shaken." N.T. 159-60. He told the employees that appellee had been dismissed for the "unauthorized removal of company property." N.T. 161. He "may have" told "one or two employees" that appellee could have been "indicted because of this action." Id. He also stated that appellee "not only violated the company rules, but he also violated the rules of the municipality." Id. (quotation from Krepp's deposition as read into trial transcript).

Appellee's case hinged upon whether he had received permission to make the grave marker. He claimed that he had received permission in compliance with the following provision in appellant's employee handbook:

Personal Jobs Employees are not generally permitted to work on personal jobs during company time or on company premises. However, supervisors will often cooperate by giving permission for you to use our equipment and waste material for your personal work.

In support of this claim, appellee testified that he asked for and received permission to make the marker from Jack Campbell, his immediate supervisor. N.T. 42-43, 333. Appellee also testified that William Donatelli, the general foreman of the plant, gave him permission to take the piece of bronze scrap that he used in making the marker, N.T. 37, and...

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