Hayes Microcomputer Products v. Franza
| Decision Date | 06 July 2004 |
| Docket Number | No. A04A0354.,A04A0354. |
| Citation | 601 S.E.2d 824,268 Ga. App. 340 |
| Parties | HAYES MICROCOMPUTER PRODUCTS, INC. v. FRANZA et al. |
| Court | Georgia Court of Appeals |
OPINION TEXT STARTS HERE
Robert Shannon, Randall Farmer, Hall, Booth, Smith & Slover, P.C., Atlanta, for Appellant.
John Almond, Rogers & Hardin, Atlanta, for Appellee.
Hayes Microcomputer Products, Inc. (Hayes) appeals from the trial court's denial of its motion for judgment notwithstanding the verdict and motion for new trial following the entry of judgment on the jury's verdict in favor of Gary Franza and John Stuckey, former executives of Hayes, on their claims for libel, punitive damages, and attorney fees.1
A judgment [notwithstanding the verdict] is properly granted only when there can be only one reasonable conclusion as to the proper judgment; if there is any evidentiary basis for the jury's verdict, viewing the evidence most favorably to the party who secured the verdict, it is not error to deny the motion. Also, the grant or denial of a motion for new trial is a matter within the sound discretion of the trial court and will not be disturbed if there is any evidence to authorize it.
(Citations and punctuation omitted; emphasis supplied.) Professional Consulting Svcs., etc. v. Ibrahim, 206 Ga.App. 663, 665(1), 426 S.E.2d 376 (1992).
Viewed in favor of the verdict for Franza and Stuckey, the evidence was that Hayes filed its original Chapter 11 bankruptcy petition in November 1994. At that time, Dennis Hayes was the company's Chairman (and only member of the Board of Directors), President, and largest stockholder. Franza was Vice President of Sales, Stuckey was Vice President of Product Management, and Mikhail Drabkin was Vice President of Engineering. All were at will-employees.
It became obvious in 1995 that Hayes was a seriously troubled company and one of its major problems was that it had long since outgrown its management structure. The primary feature of this structure was that Dennis Hayes maintained a highly personalized and autocratic style of management that involved him in the day-to-day details of running the company. Regarding this problem, the attorney for the Official Committee of Unsecured Creditors in the original 1994 bankruptcy said "[t]he Committee's view was — and again, this was expressed very openly to Mr. Hayes — that Mr. Hayes had taken on too many things himself; that Hayes Microcomputer had grown to the point that one person couldn't do all of that, and that he needed a separate person to be responsible for day-to-day operations." This view was also held by Franza, Stuckey, and Drabkin, as well as other employees of Hayes, including Murphy, Hayes' accountant. Numerous frustrated managers privately went to Stuckey to complain about Mr. Hayes' micro-management.
In order for Hayes to emerge from bankruptcy, it was necessary for a plan of reorganization to be approved by the bankruptcy court. Franza and Stuckey, as well as others executives, were involved in the preparation of Hayes' Plan and understood that, as part of that Plan, Mr. Hayes would be stepping back from day-to-day operations of the company, and these duties would be turned over to a new Chief Operating Officer to be hired from outside Hayes.
As Hayes' proposed Plan was being finalized in preparation for presentation to the bankruptcy court for approval, Franza and Stuckey learned that, contrary to what they had been led to believe, the proposed Plan did not address key management structure issues regarding Mr. Hayes' role in the company. In fact, the proposed Plan was drafted so that Mr. Hayes could remain very much involved in day-to-day decision making. Franza and Stuckey, along with others, made Mr. Hayes aware that they did not agree with this part of the proposed Plan.
Franza, Stuckey, and Drabkin realized that their situation regarding the upcoming bankruptcy court hearings on Hayes' Plan placed them in a precarious position regarding their own personal interests. As key executives of Hayes, they knew they would be called to testify by Hayes and interested creditors during the hearings regarding confirmation of Hayes' proposed Plan, including specifically their views regarding management structure issues. They also were aware that, if they testified truthfully, their position would put them in direct conflict with that of Mr. Hayes.
Concerned with their duties to Hayes, the creditors, the bankruptcy court on one side and the conflicting position of Mr. Hayes on the other, Franza, Stuckey, and Drabkin retained personal counsel to advise them during the week prior to the confirmation hearing which was to begin December 18, 1995. A series of confidential meetings occurred between the three executives and their attorney and Hayes, Mr. Hayes, and their attorney regarding the proposed Plan and Mr. Hayes' intentions regarding his role. An attempt was made to persuade the three executives that it was really Mr. Hayes' intention to reduce his responsibilities and leave the day-to-day operations to a fully empowered Chief Operating Officer. Mr. Hayes, however, would not agree to modify the proposed Plan to insure this result. These meetings were intended to be private and confidential from other employees, including other management personnel, and were held off site for that reason. On Sunday afternoon, December 17, immediately preceding the confirmation hearing on Monday, Mr. Hayes called an "emergency meeting" of all managers except Franza, Stuckey, and Drabkin. Among those who were included in the meeting were a number of managers who reported directly to the three excluded executives. At that meeting, Mr. Hayes told the managers that "we're at war" with the three executives and his wife proceeded to personally attack these men.
Franza, Stuckey, and Drabkin felt compelled to call a meeting, open to any interested employees, on Monday afternoon, to explain their position and answer any questions arising from the Sunday meeting. Mr. Hayes was attending the confirmation hearing, but, when given a note by Dod, the company communications director, requesting that the conference center at Hayes be turned over to the three executives for a meeting, Mr. Hayes indicated consent. Dod also advised Mr. Hayes that he would attend the meeting.
When Franza, Stuckey, and Drabkin arrived for the meeting, it was apparent that there was great tension in the audience. The intent of the three executives, who were in charge of important areas of the company's management, was not to solicit support or opinion, but to make sure these employees knew what their concerns were concerning management of the company and to "try to dampen down what we felt was a very high state of anxiety on the part of the employees when we arrived." Dod described the presentation at the meeting by Stuckey, who spoke for the three, as "very methodical" and "very careful in his choice of words ... what he viewed as the crux of the issue." Franza, Stuckey, and Drabkin believed that they were attempting in good faith to fulfill their fiduciary duties to Hayes, its employees, and its creditors, although knowing that it would adversely impact their careers.
The confirmation hearings continued over several weeks and both Franza and Stuckey were called to testify. They testified truthfully regarding their concerns about the management structure and Mr. Hayes' participation in it. Of the three competing plans for reorganization,2 the one submitted by Hayes was confirmed by order of the bankruptcy court on March 8, 1996.
On March 18, 1996, the day on which the bankruptcy court's order became nonappealable, the jobs of Franza and Stuckey were terminated. On that day, Hayes sent an e-mail to all employees worldwide who had an e-mail address on the company's system stating that Employees in Australia and Hong Kong, unconnected to Franza and Stuckey, received the e-mail as well as those in the United States over whom Franza and Stuckey had authority.
Although attempts were made to mediate the dispute between the three executives and Hayes, they were unsuccessful. On March 21, 1996, Hayes filed the original suit for declaratory judgment and breach of fiduciary duties against the three executives, resulting in the defamation counterclaim. In addition to filing suit, Hayes' attorney, its publicist, and Mr. Hayes called a reporter for the Atlanta Journal-Constitution and advised that the three had been fired "for cause." The reporter was also advised that Hayes contended that they had committed a "breach of fiduciary duty outside the courtroom." The newspaper ran an article reporting that the three executives had been terminated "for cause" and they had reportedly engaged in breaches of fiduciary duties.
The day suit was filed, Hayes sent another e-mail to all employees on the e-mail system advising that it had sued the three executives "for breach of fiduciary duty to the company." This e-mail also again stated that the three had been "terminated for cause." Dod, Hayes' publicist, stated that he saw nothing in the conduct of the three men that struck him as disloyal or a breach of fiduciary duty to the company or anything else to suggest that they were acting against Hayes' interests. Further, during the happening of these events, the three men were not given any specific explanation as to why they had been fired. Hayes' counsel did advise, in one of the meetings held after their termination, that the publicity surrounding their bankruptcy court testimony was "the problem [with] what [they] had done."
1. In its first and third enumerations of error, Hayes argues that denial of its motion for directed verdict was error because: (a) to say someone has been terminated "for cause" is not defamatory as a...
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