Gonzalez v. Avon Products, Inc.

• Citation: 609 F. Supp. 1555
• Decision Date: 04 June 1985
• Docket Number: Civ. A. No. 84-248-JLL.
• Parties: Esther GONZALEZ, Frances Fish, and Audrey Charsha, Plaintiffs, v. AVON PRODUCTS, INC., Defendant.
• Court: U.S. District Court — District of Delaware

609 F. Supp. 1555

Esther GONZALEZ, Frances Fish, and Audrey Charsha, Plaintiffs, v. AVON PRODUCTS, INC., Defendant.

Civ. A. No. 84-248-JLL.

United States District Court, D. Delaware.

June 4, 1985.

Jacob Kreshtool, Wilmington, Del., for plaintiffs.

Wayne N. Elliott of Prickett, Jones, Elliott, Kristol & Schnee, Wilmington, Del., for defendant.

MEMORANDUM OPINION

LATCHUM, Senior District Judge.

This libel suit is presently before the Court¹ on the defendant's motion for summary judgment. (Docket Item "D.I." 12.) Because there is yet an issue of material fact to be resolved, the motion must be denied.

I. BACKGROUND

This litigation arises from a series of events which took place in April of 1983 at the defendant's ("Avon") plant in Newark, Delaware. At that time, the three plaintiffs were employed by Avon in the Returned Goods or Merchandise Control Department at the plant. (D.I. 24 at 3, A-3.) On April 18, an Avon security guard spotted an employee from the Returned Goods Department attempting to steal a cookbook. (D.I. 15A at A-20 to A-21, A-30.) That employee, identified as Helen Goodine (id.), was subsequently interrogated on three occasions, first on April 21 by Donald Graham, a Safety and Security Section Manager (id. at A-19, A-27), again on the following day by James Willcox, the General Manager of the Newark plant (id. at A-29, A-30), and then again by Graham on the following Monday. (Id. at A-21 to A-22.) On these occasions Goodine stated that theft was a common occurrence in the Returned Goods Department (id. at A-28, A-30), and at her meeting with Willcox and her second meeting with Graham she identified the plaintiffs as having stolen a variety of items from Avon. (Id. at A-30 to A-31.) Goodine's allegations were corroborated by another employee of the Returned Goods Department who detailed numerous instances of larceny supposedly perpetrated by the plaintiffs. (Id. at A-31 to A-33.) Managers at the Newark plant accepted these statements as confirmation of a theft problem they had long suspected of being rooted in the Returned Goods Department. (See id. at A-29 to A-30.) On April 25, Graham and an employee from Avon's New York office investigated the allegations by interviewing Newark plant employees, including the plaintiffs. (Id. at A-33.) The following day, the plaintiffs were "suspended for cause." (Id.) Two days later, on April 28, the plaintiffs and five other individuals were "terminated for cause." (Id. at A-34, A-35a.) This decision was based on what Willcox called a "very thorough investigation." (Id. at A-34.)

That same day, Willcox called a special meeting of all plant employees, some 900-1000 people (id. at A-34 to A-35; D.I. 24 at 4), and read to them a prepared statement² that referred to "5 regular employees and 3 reserves that ... were terminated for cause," (D.I. 15A at A-35a) and spoke in general terms about a violation of trust, the importance of contributing to and not taking away from the company, and the need for random searches as a "reminder to stop and think before doing something that will have lifelong implications." (Id. at A-35b to A-35c.)

Approximately one year later, the plaintiffs filed this suit, claiming they were falsely and in bad faith defamed by Willcox's speech and that they have, as a consequence, suffered injury to their reputations, emotional distress, and financial losses. (D.I. 1.)

II. LAW

A. Summary Judgment

The well-established law governing the Court's consideration of Avon's motion provides that summary judgment shall be rendered if the record before the Court shows that there is no issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R. Civ.P. 56(c). The burden of demonstrating that this standard has been met is upon the moving party, and the evidence and inferences from it are to be construed in the light most favorable to the opposing party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970).

B. Libel

It is undisputed that Delaware law controls this diversity suit. Delaware courts have frequently cited two authoritative sources on the common law of defamation: Professor Prosser's hornbook on the Law of Torts ("Prosser") and the Restatement of the Law of Torts ("Restatement"). See, e.g., Andres v. Williams, Del.Supr., 405 A.2d 121, 122-23 (1979) (citing with approval Restatement §§ 559, 762, and Prosser § 111); Spence v. Funk, Del.Supr., 396 A.2d 967, 969-71 (1978) (citing with approval Restatement §§ 559, 569, 570, and Prosser §§ 111, 112); Pierce v. Burns, 55 Del. 166, 185 A.2d 477, 479 (1962) (citing with approval Restatement §§ 559, 593, 596(d), 599, 600, 605, and Prosser § 95). Because the parties have not cited and the Court has not found Delaware precedent for all of the points of law at issue in this case, the Court must in part predict the law of Delaware; the Court believes Delaware would again rely on the law as described in Prosser and the Restatement to resolve issues that its own courts have not already addressed. Cf. Avins v. White, 627 F.2d 637, 642 (3d Cir.), cert. denied, 449 U.S. 982, 101 S.Ct. 398, 66 L.Ed.2d 244 (1980).

Among the matters the Delaware courts have addressed is the distinction between libel and slander, and although the parties in their briefing have apparently assumed without discussion that the alleged defamation is libel, it is worth noting why the speech made to the Avon employees should be considered under the law of libel rather than the law of slander. The scope of liability for libel is broader than it is for slander. Spence v. Funk, Del.Supr., 396 A.2d 967, 970 (1978). "This is to say, that while all slanderous statements would be libelous if written, not all libelous statements would be slanderous if spoken." Id. In this case, the alleged defamation was written down (see D.I. 15A at A-34 to A-35), and so is properly considered under the broader liability standard of libel, even though it was communicated to the Avon employees by the spoken word, which is ordinarily the hallmark of slander. See Restatement § 568, comment e.³

The elements of a cause of action for libel are as follows: (1) a false statement (2) which is defamatory, (3) which is of and concerning the plaintiffs, (4) which was made in an unprivileged publication to a third party, and (5) the making of which was a consequence of fault amounting at least to negligence on the publisher's part. See Restatement §§ 558, 569;⁴ cf. Prosser § 113 at 802.⁵ Avon has, for purposes of this summary judgment motion, conceded the existence of elements one through three. (See D.I. 15 at 18; D.I. 27 at 8-9.) Avon argues, however, that it is entitled to summary judgment because, as a matter of law, its employee Willcox was protected by a qualified privilege in making the remarks he did (D.I. 15 at 9-11), and because no fault on Willcox's part resulted in forfeiture of that privilege.⁶ (Id. at 11-16.) But Avon has ignored an issue of fact concerning Willcox's good faith in saying what he did in his speech. To understand the materiality of that issue, a brief discussion of the law of privilege and abuse of privilege is necessary.

The privilege of which Avon claims the benefit is that expressed in section 596 of the Restatement:

An occasion makes a publication conditionally privileged if the circumstances lead any one of several persons having a common interest in a particular subject matter correctly or reasonably to believe that there is information that another sharing the common interest is entitled to know.

This privilege has been explicitly adopted in Delaware, see Pierce v. Burns, 55 Del. 166, 185 A.2d 477, 479 (1962): Battista v. Chrysler Corp., Del.Super., 454 A.2d 286, 290-91 (1982), and under Delaware law, the existence of the privilege in a given set of circumstances is a matter to be determined by the Court. Pierce v. Burns, supra, 185 A.2d at 480. Thus the Court must decide whether this "common interest" privilege applies to the speech Willcox made to Avon's assembled Newark plant employees.

Avon asserts that the common interest of management and labor in operating a successful business clearly qualifies communications in furtherance of that goal as being privileged (D.I. 15 at 10-11), and Delaware precedent appears to bear this out: "This common interest qualified privilege is particularly germane to the employer-employee relationship...." Battista, supra, 454 A.2d at 291. Cf. Burr v. Atlantic Aviation Corp., Del.Supr., 348 A.2d 179 (1975). Although they failed to brief the issue, the plaintiffs contested at oral argument the applicability of privilege to this case. Their arguments, however, centered on the number of employees who heard the publication and the manner in which the publication was made, concerns which are more properly classified with considerations of abuse of privilege. The Court agrees with Avon that the common interest privilege does apply to this case. The dispositive question thus becomes whether Willcox abused that privilege.

A qualified privilege will be deemed abused and hence forfeited if there has been "1 excessive or improper publication, ... 2 the use of the occasion for a purpose not embraced within the privilege, ... 3 the making of a statement which the speaker knows is false," Pierce v. Burns, supra, 185 A.2d at 479, "4 express malice ... , 5 any desire to cause harm," Short v. News-Journal Co., Del.Super., 205 A.2d 6, 8 (1965), or 6 bad faith in the exercise of the privilege. Battista, supra, 454 A.2d at 291. These types of abuse of privilege, particularly the last four, are closely related and involve some inquiry into the mind of the publisher. Such an investigation into subjective intent is ordinarily not a matter for summary judgment. See Look Enterprises S.A. v. Look, Inc., 596 F.Supp. 774, 779 (D.Del. 1984). This is surely why Delaware has traditionally reserved the question of abuse of privilege...