Frakes v. Crete Carrier Corp.

• Decision Date: 12 August 2009
• Docket Number: No. 08-10603.,08-10603.
• Citation: 579 F.3d 426
• Parties: Lawrence FRAKES, Plaintiff-Appellant, v. CRETE CARRIER CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

579 F.3d 426

Lawrence FRAKES, Plaintiff-Appellant, v. CRETE CARRIER CORPORATION, Defendant-Appellee.

No. 08-10603.

United States Court of Appeals, Fifth Circuit.

August 12, 2009.

Robert John Clary, Owens, Clary & Aiken, L.L.P., Dallas, TX, for Plaintiff-Appellant.

Sheri Lyn Caldwell, Hilaree A. Casada, Monte Keith Hurst, Hermes Sargent Bates, Dallas, TX, for Defendant-Appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before WIENER, GARZA, and ELROD, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

In this diversity case, plaintiff Lawrence Frakes ("Frakes") filed suit for slander against his former employer, Crete Carrier Corporation ("Crete"). The district court granted Crete's motion for summary judgment, finding that the defamatory statement alleged by Frakes was subject to a qualified privilege under Texas law. Frakes now appeals. For the following reasons, we affirm the judgment of the district court.

I

Crete is a trucking company based in Nebraska. In 2006, Crete hired Frakes to work as a night-shift mechanic in its facility in Wilmer, Texas (the "Wilmer facility"). Around one year later, Crete terminated Frakes for allegedly stealing diesel fuel from a company tractor, resulting in the instant litigation. Because the facts of Frakes' dismissal are significant, they are recounted in some detail:

On the evening of the alleged fuel theft, Frakes drove to work in his standard vehicle—a white Dodge Ram diesel-fuel pickup with an auxiliary fuel tank affixed to the back. Although the Wilmer facility had assigned parking for employees, Frakes parked directly behind the mechanics' shop in an area reserved for company tractors in need of repair. Frakes clocked in for his shift around 3:00 p.m.

Around 8:30 to 9:00 p.m. that night, Crete driver Ignatius Edoh ("Edoh") arrived at the Wilmer facility in order to load supplies into his company tractor for a trip that evening. According to Edoh, as he approached his assigned tractor, he observed "a white pickup truck parked very close to [the tractor] on the left side." A man dressed in a mechanic's uniform immediately approached Edoh and asked "can I help you?" Edoh responded "that's my tractor," and the man replied "oh, I'll get my truck out of the way for you." At this point, the unidentified man walked away, and Edoh left his personal vehicle to inspect the situation. While walking around the scene, Edoh noticed a fuel storage tank in the back of the white pickup with a running motorized siphon attached to a hose. Edoh observed that the hose ran from the back of the white pickup, around the front of his assigned tractor, and into the fuel tank of the adjacent tractor. Edoh asked the man if he was "supposed to be doing this," and the man responded affirmatively.

Remaining suspicious, Edoh recorded the license-plate number of the white pickup and left to report the incident to the night foreman on duty, Joe Labellarte ("Labellarte"). Edoh told Labellarte that someone might be stealing fuel from one of the tractors but that Edoh did not recognize the man involved. Several minutes later, Labellarte joined Edoh at the scene of the incident, where the white pickup had been moved 30 to 40 feet away from the tractors and the man had disappeared. Edoh confirmed that the white pickup was the same vehicle that he had seen earlier, and Labellarte immediately recognized the pickup as Frakes' Dodge Ram truck.

Labellarte then returned to his office and called the shop manager, Pat Sedivy ("Sedivy"), at his home. Sedivy instructed Labellarte to make a diagram of the scene, check whether there was fresh diesel around the fuel caps of the two involved tractors, confirm whether the hose in Frakes' truck was long enough to reach the tractors, and check whether there was fresh diesel on the end of the hose. After performing a brief investigation, Labellarte again called Sedivy and confirmed the length of the hose and the existence of wet diesel around the hose and the caps of the two tractors.

The following day, Sedivy arrived at the Wilmer facility and spoke to Edoh over the phone. Edoh reiterated the events of the preceding night and stated that he had not recognized the man in the mechanic's uniform.¹ He also stated his belief that diesel had been stolen from his tractor based on his fuel level from the preceding evening. When Frakes arrived for his evening shift at 3:00 p.m., Sedivy asked him to come to Sedivy's office. Sedivy told Frakes that an eyewitness had seen him take fuel from a company tractor and asked for a response. Frakes flatly denied the theft and asked to speak to the eyewitness. Sedivy then asked Frakes why he had parked his pickup in the area designated for company tractors, and Frakes responded that there had been nowhere else to park. Unsatisfied with these responses, Sedivy terminated Frakes' employment without further investigation.

By that evening, the news that Frakes had been terminated for fuel theft was common knowledge at the Wilmer facility, providing the impetus for the instant defamation suit. According to Frakes' version of events, the news became widespread because Sedivy told Paul Gann ("Gann"), a "lead man" mechanic and close friend of Frakes, that Frakes had been fired for stealing fuel. Gann then repeated the theft allegation to various other employees at the Wilmer facility.

Frakes filed suit against Crete in federal district court, raising claims of slander under Texas law. Specifically, Frakes alleged that Sedivy's statement to Gann was false, defamatory, and attributable to Crete.² Crete moved for summary judgment, arguing, inter alia, that Sedivy's statement to Gann was (1) true or substantially true and (2) subject to a qualified privilege for employer communications under Texas law. The district court granted summary judgment on the basis of qualified privilege and did not reach the truth of the theft allegation against Frakes.³ Frakes now appeals, arguing that the district court erred in its application of the qualified privilege.

II

We review a grant of summary judgment de novo, applying the same standards as the district court. Paz v. Brush Engineered Materials, Inc., 555 F.3d 383, 391 (5th Cir.2009). Summary judgment is appropriate where the record demonstrates "that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). "A genuine issue of material fact exists if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Paz, 555 F.3d at 391 (internal quotation marks and citations omitted). In reviewing the entire record, we consider "all evidence in a light most favorable to the non-moving party and draw[] all reasonable inferences in favor of the non-moving party." Id.

III

Under Texas law, a qualified privilege extends to any communication by an employer about an employee made to a person having a corresponding interest or duty in the subject matter of the communication. Burch v. Coca-Cola Co., 119 F.3d 305, 323 (5th Cir.1997). Generally, this qualified privilege acts as a complete defense to a claim of defamation unless the employer's statement is made with "actual malice" or the privilege is abused. See id.; Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 646 (Tex.1995).

The district court dismissed Frakes' claim of slander on the basis of this qualified privilege. Frakes now contends that summary judgment was improper because (1) Sedivy's statement to Gann was not subject to the qualified privilege; (2) the statement was made with actual malice, thereby defeating any claim of privilege; and (3) Crete lost the benefit of the privilege after Gann repeated the allegations to his fellow employees. We consider each allegation in turn.

A

Frakes first contends that summary judgment was improper because Sedivy's statement was not subject to a qualified privilege, as Gann had no "interest or duty" in the reason for Frakes' termination. "Whether a conditional or qualified privilege exists is a question of law for the court." E. Tex. Med. Ctr. Cancer Inst. v. Anderson, 991 S.W.2d 55, 60 (Tex. App.—Tyler 1998, pet. denied); see Dollar v. Georgia-Pacific Corp., 59 F.3d 1242, 1995 WL 413067, *2 (5th Cir.1995) (unpublished).

Under Texas law, a qualified privilege extends to all "[a]ccusations or comments about an employee by his employer, made to a person having an interest or duty in the matter to which the communication relates...." Burch, 119 F.3d at 323 (emphasis added). Based on the undisputed facts, Gann clearly had an interest in the reason for Frakes' termination based on Gann's position at the Wilmer facility. On the day of Frakes' dismissal, Gann was working as a "lead man"—an experienced mechanic responsible for monitoring and assisting other mechanics, including the mechanics in Frakes' assigned area. Frakes has provided no authority to support the proposition that a supervisory employee such as Gann lacks a sufficient interest in the reason for a subordinate's termination,⁴ and we decline to endorse such a narrow interpretation of the qualified-privilege rule. See Ehrhardt v. Elec. & Instrumentation Unlimited of La., 220 F.Supp.2d 649, 659 (E.D.Tex.2002) (finding that an employer's statement to "individuals who worked directly with [the plaintiff]" was protected by the privilege). Accordingly, the district court did not err in finding Sedivy's communication subject to a qualified privilege under Texas law.

B

Frakes next contends that summary judgment was improper because Sedivy's statement was made with actual malice. The presence of actual malice defeats an employer's qualified privilege. See Burch, 119 F.3d at 323. At the summary-judgment stage, the plaintiff has the burden to put forth sufficient evidence to create a genuine dispute as to the existence of actual malice. Duffy v. Leading Edge Prods., Inc., 44 F.3d 308, 313-14 (5th Cir.1995...