Burke v. Deiner

Decision Date02 August 1984
Citation97 N.J. 465,479 A.2d 393
PartiesFrederick R. BURKE, Plaintiff-Respondent, v. John J. DEINER, Warren Glaser and George Buono, Defendants-Appellants, and Rosenthal and Attinger, Certified Public Accountants, and James J. Winters, Edward Reese, Herbert Fenrow, Isadore Attinger, individually and as employees of Rosenthal and Attinger, Defendants.
CourtNew Jersey Supreme Court

Joseph J. Benedict, New Brunswick, for defendants-appellants (Benedict & Altman, New Brunswick, attorneys; Harold I. Braff, Livingston, of counsel).

Joseph R. Bulman, Woodbridge, for plaintiff-respondent (Arthur W. Burgess, Woodbridge, attorney).

The opinion of the Court was delivered by

O'HERN, J.

The central issue in this appeal is whether municipal authority members have a qualified or an absolute privilege with respect to an allegedly defamatory resolution discharging the authority's executive director. We hold the privilege is a qualified one but find that the privilege has not been lost here since the record will not sustain a finding by clear and convincing proof that the authority members knew or had reason to question that the matters contained in the resolution were false.

Plaintiff, Frederick Burke, was hired as the Executive Director of the New Brunswick Parking Authority in 1971. In the summer of 1976, his daughter, an employee of the Authority, was charged with theft of receipts. The Authority asked its accountants, Rosenthal & Attinger, to conduct a special audit. Their audit report, entitled "Weaknesses and Deficiencies in Internal Control," reported ten deficiencies, including: cash receipts were not deposited daily; the use of cash register tapes had been discontinued; employees had taken funds home to count the receipts; and employees had cashed their payroll checks with daily cash collections. The auditors recommended specific changes in these fiscal practices.

Burke challenged this report at the September 14, 1976 meeting of the Authority. At the September 28 meeting, a majority of the Authority members voted to replace Rosenthal & Attinger with a new auditor. (That vote was rescinded at a later meeting.)

In October 1976, New Brunswick Mayor Richard Mulligan appointed the defendants Warren Glaser and George Buono to the Authority. On October 28, these two commissioners took office to serve with the three remaining commissioners, one of whom was the defendant John J. Deiner.

At that first meeting, the three defendants, Deiner, Glaser, and Buono, voted to adopt a resolution discharging Burke as Executive Director. Because Burke had an employment contract with the Authority, the discharge had to be for cause. Among the grounds justifying discharge was "[m]isappropriation or misuse of property of the Authority." In addition, Burke could be discharged for "inefficiencies in the discharge of his duties, first providing, those inefficiencies are set forth in writing and with particularity."

The resolution of October 28, 1976, set forth a variety of reasons for discharging Burke, including: the criminal charges pending against his daughter; the mayor's wish that he resign; and the presence of trash and debris on Authority property, which had led to citations from the Health Department. For our purposes, attention focused on the clause charging him with "negligent operation of the Parking Authority, which borders on misappropriation or misuse of the property of the Authority."

Pursuant to the terms of his contract, plaintiff sought reinstatement by court action within fifteen days. He was restored to duty with back pay in June 1977.

In August 1978, plaintiff filed a complaint against the Authority, all the commissioners, Rosenthal & Attinger, and its employees. All claims were dismissed before or at trial with the exception of the defamation claim against the three defendant commissioners, based upon the language of the resolution discharging Burke. The jury awarded plaintiff $2000 in compensatory damages for the injury to his reputation, and punitive damages against the defendants Deiner, Buono, and Glaser in the sums of $2000, $5000, and $11,000, The Appellate Division affirmed the judgment against the commissioners, rejecting their claim of absolute immunity. 190 N.J. Super. 382, 391, 463 A.2d 963 (1983). It reversed the dismissal of Burke's defamation action against Rosenthal & Attinger. It held that the accountants' privilege is qualified, but as critics of a public official the accountants, too, are protected by the constitutional privilege of "actual malice." It remanded for a new trial on that claim but otherwise affirmed the trial court. Id. at 393, 463 A.2d 963.

We granted the defendant commissioners' petition for certification, 95 N.J. 201, 470 A.2d 422 (1983). The accountants have not appealed.

I.

There are two concepts of immunity that we must consider in this case. The first is the general discretionary immunity that cloaks the public officer in the exercise of his or her duties; the second is the immunity that flows from the first amendment's guarantee of freedom of speech. See Jaffe, "Suits Against Governments and Officers: Damage Actions," 77 Harv. L. Rev. 209 (1963).

The former concept is related to concepts of sovereign immunity. Professor Jaffe states that the "prototype of discretionary immunity has been that of the King's judge." Id. at 222. He wryly observes of the rationale for the rule: "[W]ere he not immune for his mistakes, 'no man but a beggar, or a fool, would be a Judge.' * * * But then what of police officers?"--or here we may ask, unpaid parking commissioners? Id. at 220 (quoting Miller v. Hope, 2 Shaw, H.L. 125, 134 (1824)).

This absolute privilege, judicial in origin, has been extended to executive and legislative officers. Spalding v. Vilas, 161 U.S. 483, 16 S.Ct. 631, 40 L.Ed. 780 (1896), granted absolute immunity to the Postmaster General. The Court found that the same considerations of public policy that impel judicial immunity apply to a large extent to official communications by heads of executive departments when engaged in the discharge of duties imposed on them by law. Id. at 498, 16 S.Ct. at 637, 40 L.Ed. at 785.

In Gregoire v. Biddle, 177 F.2d 579 (2d Cir.1949), cert. denied, 339 U.S. 949, 70 S.Ct. 803, 94 L.Ed. 1363 (1950), Judge Learned Hand extended the immunity to officers of the Department of Justice engaged in the prosecution function. He likened their duties to judges and wrote that "to submit all officials, the innocent as well as the guilty, to the burden of a trial and to the inevitable danger of its outcome, would dampen the ardor of all but the most resolute, or the most irresponsible, in the unflinching discharge of their duties." 177F.2d at 581.

Although recognizing the absolute immunity of the President from liability for damages for an executive action, Nixon v. Fitzgerald, 457 U.S. 731, 102 S.Ct. 2690, 73 L.Ed.2d 349 (1982), of members of Congress, acting in their legislative capacity, Dombrowski v. Eastland, 387 U.S. 82, 87 S.Ct. 1425, 18 L.Ed.2d 577 (1967), and of judges, in their judicial functions, Stump v. Sparkman, 435 U.S. 349, 98 S.Ct. 1099, 55 L.Ed.2d 331, (1978), but see Pulliam v. Allen, 466 U.S. 522, 104 S.Ct. 1970, 80 L.Ed.2d 565 (1984) (immunity of judges qualified as to injunctive claims), the Supreme Court has held that absolute immunity is not without its limits:

For executive officials in general, however, our cases make plain that qualified immunity represents the norm. In Scheuer v. Rhodes, 416 US 232, 40 L Ed 2d 90, 94 S Ct 1683, 71 Ohio Ops 2d 474 (1974), we acknowledged that high officials require greater protection than those with less complex discretionary responsibilities. Nonetheless, we held that a governor and his aides could receive the requisite protection from qualified or good-faith immunity. Id., at 247-248, 40 L Ed 2d 90, 94 S Ct 1683, [at 1691-1692], 71 Ohio Ops 2d 474. In Butz v. Economou, [438 U.S. 478, 98 S.Ct. 2894, 57 L.Ed.2d 895 (1978)], we extended the approach of Scheuer to high federal officials of the Executive Branch. Discussing in detail the considerations that also had underlain our decision in Scheuer, we explained that the recognition of a qualified immunity defense for high executives reflected an attempt to balance competing values: not only the importance of a damages remedy to protect the rights of citizens, 438 US, at 504-505, 57 L Ed 2d 895, 98 S Ct 2894, [at 2909-2910], but also "the need to protect officials who are required to exercise their discretion and the related public interest in encouraging the vigorous exercise of official authority." Id., at 506, 57 L Ed 2d 895, 98 S Ct 2894, [at 2911]. [Harlow v. Fitzgerald, 457 U.S. 800, 807, 102 S.Ct. 2727, [2733], 73 L.Ed.2d 396, 403-04 (1982).]

New Jersey law is similar, although our cases have construed the absolute privilege more narrowly. See Cashen v. Spann, 66 N.J. 541, 334 A.2d 8, cert. denied, 423 U.S. 829, 96 S.Ct. 48, 46 L.Ed.2d 46 (1975) (prosecutor's conduct not absolutely privileged); Earl v. Winne, 14 N.J. 119, 101 A.2d 535 (1953); DeGroot v. Muccio, 115 N.J. Super. 15, 277 A.2d 899 (Law Div.1971). Chief Justice Hughes expressed our concepts:

[E]xecutive officers are entitled to immunity where they act in good faith, as defined by the [United States Supreme] Court:

"[I]n varying scope, a qualified immunity is available to officers of the executive branch of government, the variation being dependent upon the scope of discretion and responsibilities of the office and all the circumstances as they reasonably appeared at the time of the action on which liability is sought to be based. It is the existence of reasonable grounds for the belief formed at the time and in light of all the circumstances, coupled with good-faith belief, that affords a basis for qualified immunity of executive officers for acts performed in the course of official conduct." Scheuer v. Rhodes, 416 U.S....

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