Hern v. Bankers Life Cas. Co.

• Decision Date: 12 January 2001
• Docket Number: Civ.No. 00-697(JMR/RLE).
• Citation: 133 F.Supp.2d 1130
• Parties: John E. HERN, Plaintiff, v. BANKERS LIFE CASUALTY COMPANY, Defendant.
• Court: U.S. District Court — District of Minnesota

133 F.Supp.2d 1130

John E. HERN, Plaintiff, v. BANKERS LIFE CASUALTY COMPANY, Defendant.

Civ.No. 00-697(JMR/RLE).

United States District Court, D. Minnesota.

January 12, 2001.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Sonia M. Sturdevant, Rebekka L. Eisenmenger, Halverson Watters Downs Reyelts, Duluth, MN, for plaintiff.

Brian R. McCarthy, McCarthy & Strifert, Duluth, MN, Heather Wilson, Ariane S. Johnson, Ogletree Deakins Nash Smoak & Stewart, Indianapolis, IN, for defendant.

ORDER

ERICKSON, United States Magistrate Judge.

I. Introduction

This matter came before the undersigned United States Magistrate Judge pursuant to a general assignment, made in accordance with the provisions of Title 28 U.S.C. § 636(b)(1)(A), upon the Motion of the Plaintiff John E. Hern ("Hern") for an Order allowing him to Amend his Complaint, so as to plead a claim for punitive damages. A Hearing on the Motion was conducted on September 28, 2000, at which time Hern appeared by Sonia M. Sturdevant, Esq., and the Defendant Bankers Life Casualty Company ("Bankers Life") appeared by Ariane Schallwig Johnson, Esq.

For reasons which follow, the Plaintiff's Motion to Amend his Complaint, in order to assert a claim for punitive damages, is denied.

II. Discussion

The Plaintiff commenced this action against his former employer, Bankers Life, for claims arising out of his employment with that insurance company. He began working for the company in August of 1997, as a commissioned sales person, and was later promoted to a position of Agent Development Associate. See, Hern Affidavit at ¶¶ 2-3, attached to Sturdevant Affidavit. During his tenure with the company, Hern worked out of the Duluth Branch Office. In September of 1999, he was demoted from his position as Agent Development Associate, and his employment with the company was fully terminated in October of 1999. Id. at ¶¶ 14-15.

Hern contends that he was terminated for a number of reasons, including his age, and because he participated in the investigation of a complaint of sexual harassment against a co-worker in the Duluth Office. As a result, Hern alleges that Bankers Life engaged in age discrimination, and in reprisal discrimination, in violation of the Minnesota Human Rights Act ("MHRA").

Hern also alleges a number of State common law causes of action. His first common law claim is for defamation, in which he asserts that Robert Stellflue ("Stellflue"), who was his supervisor in the Madison, Wisconsin, office, made defamatory statements about him, and his involvement with outside brokerage contracts — statements which Hern alleges Stellflue knew to be untrue. Hern next claims to have been the subject of a negligent infliction of emotional distress, which also arises out of the same circumstances that undergird his defamation claim. In addition, Hern asserts a claim for the tortious interference with a business relation, which is premised on an allegedly negative reference that was provided by Robert Harmsen ("Harmsen"), who was Hern's supervisor. Hern also alleges a breach of contract, which is based upon an agreement that he purportedly had with Bankers Life, and which is alleged to have required "just cause" for any employment termination. Lastly, Hern asserts a claim for an interference with a prospective economic advantage, which alleges that Hern was promised a promotion, by the new Regional Vice President of Bankers Life, Chris Mackey ("Mackey"), if the sales in the Duluth office reached an $80,000 goal during a one-month period. Hern claims that Harmsen discouraged the agents from reaching that goal and, later, Mackey unilaterally withdrew the promotion agreement.

Hern now seeks leave to plead punitive damages with respect to both his claims under the MHRA, and his State common law causes of action. Bankers Life opposes only the request to amend as it relates to Hern's State common law causes of action.¹

A. Standard of Review. As we have previously recounted, "`[i]n the Federal Courts of this District, the pleading of punitive damages claims, under causes of actions premised upon the Law of the State of Minnesota, must generally conform to the requirements of Minnesota Statutes Sections 549.191 and 549.20.'" Olson v. Snap Products, Inc., 29 F.Supp.2d 1027, 1034 (D.Minn.1998), quoting Ulrich v. City of Crosby, 848 F.Supp. 861, 866 (D.Minn.1994); see also, Bunker v. Meshbesher, 147 F.3d 691, 696 (8th Cir. 1998). Under Section 549.191, a plaintiff who seeks to assert a punitive damage claim must first obtain leave of the Court to do so, based upon a prima facie showing of entitlement. See, Ulrich v. City of Crosby, supra at 867. A plaintiff need not demonstrate an entitlement to punitive damages per se, but only an entitlement to allege such damages.² See, Olson v. Snap Products, Inc., supra at 1034. As the Statute provides, a Court "shall grant a Motion to amend to allege punitive damages if it finds prima facie evidence in support of the motion." Bunker v. Meshbesher, supra at 696 [quotations omitted].

In order to establish a claim for punitive damages, a party must show, by clear and convincing evidence, that the Defendant acted with a "deliberate disregard for the rights or safety of others." Minnesota Statutes Section 549.20, Subdivision 1(a). The pivotal term "deliberate disregard" has been statutorily defined as follows:

(b) A defendant has acted with deliberate disregard for the rights or safety of others if the Defendant has knowledge of facts or intentionally disregards facts that create a high probability of injury to the rights or safety of others and:

(1) deliberately proceeds to act in conscious or intentional disregard of the high degree of probability of injury to the rights or safety of others; or

(2) deliberately proceeds to act with indifference to the high probability of injury to the rights or safety of others.

Minnesota Statutes Section 549.20, Subdivision 1(b).

In substance, "[a] defendant operates with `deliberate disregard' by acting with intent or indifference to threaten the rights or safety of others." Gamma-10 Plastics, Inc. v. American President Lines, Ltd., 32 F.3d 1244, 1256 (8th Cir. 1994). As such, "[a] mere showing of negligence is not sufficient" to sustain a claim of punitive damages. Admiral Merchants Motor Freight, Inc. v. O'Connor & Hannan, 494 N.W.2d 261, 268 (Minn.1992).

In addition, under the Section 549.20 standard, the Court "is required to search for evidence which is `clear and convincing.'" Olson v. Snap Products, Inc., supra at 1036. "To be `clear and convincing,' there must be `more than a preponderance of the evidence but less than proof beyond a reasonable doubt.'" Ulrich v. City of Crosby, supra at 868, quoting Weber v. Anderson, 269 N.W.2d 892, 895 (Minn.1978). Ultimately, the Court's independent search for clear and convincing, prima facie evidence, that the Defendant acted with a deliberate disregard for the rights or safety of others, requires the Court to do more than "rubber stamp" the allegations in the Motion papers. Id.; Swanlund v. Shimano Indus. Corp., Ltd., 459 N.W.2d 151, 154 (Minn.App.1990).

2. Legal Analysis. Since Hern asks for leave to assert a punitive damages claim as to five separate, and somewhat distinct State law causes of action, we address his Motion, with respect to each claim, separately.

a. The Defamation Claim.

Hern contends that he is entitled to plead punitive damages, arising from Stellflue's assertedly defamatory statements concerning Hern's involvement in "outside contracts." "It is ... firmly established in Minnesota that punitive damages can be awarded in cases of defamation per se without proof of actual damage to the plaintiff." Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 259 (Minn.1980), citing Anderson v. Kammeier, 262 N.W.2d 366, 372 (Minn.1977); Loftsgaarden v. Reiling, 267 Minn. 181, 126 N.W.2d 154 (1964). To establish a claim for defamation, the Plaintiff must establish each of the following elements: (1) a false statement; (2) communication of the false statement to someone other than the plaintiff; and (3) a showing that the false statement would tend to harm the plaintiff's reputation or lower his esteem in the community. See, Thompson v. Olsten Kimberly Qualitycare, Inc., 33 F.Supp.2d 806, 815 (D.Minn.1999); Ferrell v. Cross, 557 N.W.2d 560, 565 (Minn.1997); Richie v. Paramount Pictures Corp., 544 N.W.2d 21, 25 (Minn.1996); Bersch v. Rgnonti & Associates, Inc., 584 N.W.2d 783 (Minn. App.1998).

Hern claims that Stellflue accused him of having brokerage contracts which were impermissible at Bankers Life, and that Stell-flue conveyed that Hern had "outside contracts" to individuals at a convention of insurance agents in Las Vegas See, Hern Affidavit at ¶ 7, Attached to Sturdevant Affidavit; Plaintiff's Memorandum of Law in Support of Plaintiff's Motion to Amend the Complaint, at 6 ("Plaintiff's Memorandum"). Hern has not, however, attempted to show how these statements were defamatory to his reputation. He does not contend that Stellflue told the individuals at the convention that the outside contracts were illegal, socially condemnable, or otherwise impermissible in the insurance industry as a whole.

Moreover importantly, Hern appears to admit that he did have such contracts at the time, but that they were inactive. Id. ("Mr. Hern at that time told Mr. Stellflue that those were inactive contracts and that he was entitled to his renewals, as is the standard in the industry."). Nonetheless, he offers no showing that Stellflue characterized the contracts as active or inactive. Hern only alleged that Stellflue commented, to several unidentified individuals, that Hern had "outside brokerage contracts." Thus, based on Hern's bare assertion that Stellflue told these individuals that he had "outside brokerage contracts," we cannot conclude that the statements, as recounted by Hern, were false.

As a consequence, since Hern cannot establish a prima...