Hohmann v. Gtech Corp.

• Decision Date: 10 December 2012
• Docket Number: No. 3:09–cv–00410 (CSH).,3:09–cv–00410 (CSH).
• Citation: 910 F.Supp.2d 400
• Parties: Gregory HOHMANN and Patricia Hohmann, Plaintiffs, v. GTECH CORP., GTECH Printing Corp. and William Miller, Defendants.
• Court: U.S. District Court — District of Connecticut

910 F.Supp.2d 400

Gregory HOHMANN and Patricia Hohmann, Plaintiffs,

v.GTECH CORP., GTECH Printing Corp. and William Miller, Defendants.

No. 3:09–cv–00410 (CSH).

United States District Court,

D. Connecticut.

Dec. 10, 2012.

Gregory M. Cantwell, Law Office of Jefferson D. Jelly, W. Hartford, CT, for Plaintiffs.

Donald E. Frechette, Edwards Wildman Palmer LLP, Hartford, CT, for Defendants.

RULING ON MOTION TO DISMISS

HAIGHT, Senior District Judge.

Plaintiffs Gregory Hohmann and Patricia Hohmann seek damages from defendants GTECH Corporation, GTECH Printing Corporation (collectively “GTECH”), and William Miller based on two statements made by Miller in connection with a fraud investigation conducted by the Connecticut Lottery Corporation (CLC) and the Connecticut Division of Special Revenue (DSR). Defendants have filed a Motion to Dismiss under Fed.R.Civ.P. 12(b)(6) (the “Motion”) [Doc. 13] arguing that each of the eight counts in Plaintiffs' Complaint [Doc. 1–2 pp. 4–24] is defective. In response, Plaintiffs state that they do not object to dismissal of Counts Four and Eight, but object to dismissal of the other six counts. Memorandum in Support of Objection to Motion to Dismiss (“Pl. Memo.”) [Doc. 21–2].

I. Background

This action arises from a lottery ticket (the “Ticket”) issued by the CLC. The Ticket included two “dice.” If the total number of dots on the “dice” equaled seven, the buyer would win $1 million. The Ticket, however, has brought Plaintiffs not a fortune but, by their own account, the loss of their license to sell such tickets, loss of profits, public humiliation, and distress.

The following facts are taken from Plaintiffs' Complaint and from the findings in the administrative decision in this matter, of which the Court takes judicial notice. Notice of Decision, In the Matter of Gary Brown, et al., No. L–07–10 (Div. of Special Revenue April 26, 2007) (the “Decision”). ¹ In January 2007, plaintiff Gregory Hohmann operated a business named Founders Plaza Service Station, Inc. (“Founders Plaza”), which held a license to sell lottery tickets issued by the CLC. Defendant Miller, who has been employed in the lottery printing industry since 1983, was the Vice President of Manufacturing for GTECH, which manufactured lottery tickets for the CLC, including the Ticket.

On January 7, 2007, Gregory Hohmann purchased the Ticket from Founders Plaza. Two days later, Patricia Hohmann presented the Ticket to a CLC claim center and filled out a claim form. Both Plaintiffs had signed the back of the Ticket. The Ticket was scanned at the center, and Patricia Hohmann was told that it was not a winner. The scratched Ticket appeared to show a die with four dots and a die with three dots, but the word “two” appeared under the die with three dots.

The CLC and DSR both conducted investigations of the Ticket. The CLC submitted the Ticket to Miller, asking him to examine it. After examining the Ticket, Miller submitted a letter to the CLC on February 22, 2007 (the “Letter”). In the Letter, Miller stated, inter alia, that the Ticket had been altered after it was scratched off.

The DSR sought to revoke Founders Plaza's lottery ticket license, and a hearing was held in the matter by a DSR hearing officer, Anne Stiber (the “Officer”) on March 14, 2007. Based on testimony and evidence offered at the hearing, the Officer recommended that the license be revoked. The Officer found that “there is no question that this is an altered ticket.” Decision at 14. “[I]t is clear to the naked eye the dots do not properly align in the play area in question.” Id. She accepted Miller's statement that the Ticket had been altered by adding a dot to one of the “dice” after the Ticket was scratched off. She further found that Plaintiffs had presented the Ticket for a claim. Id. at 14–15.

Defendants further assert, and Plaintiffs do not deny, that the Decision was appealed to the Gaming Policy Board (the “Board”), which affirmed the Decision on September 24, 2007. Def. Memo. at 7. Plaintiffs appealed that decision to the Connecticut Superior Court. On February 23, 2009, Plaintiffs withdrew the appeal. Id. at 7–8. Thereafter, Plaintiffs filed this action.

Counts Four and Eight, now effectively withdrawn, alleged fraud against Miller and GTECH. In the remaining counts, Plaintiffs plead negligence (Counts One and Five), recklessness (Counts Two and Six) and defamation (Count Three and Seven) against Miller and GTECH.

II. DiscussionA. Standard for Motion to Dismiss

In order to survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). In deciding a Rule 12(b)(6) motion, the court accepts the allegations contained in the complaint as true and draws all reasonable inferences in favor of the nonmovingparty, unless the allegations are supported by mere conclusory statements. Hayden v. Paterson, 594 F.3d 150, 157 n. 4 (2d Cir.2010). In addition to the allegations of the complaint, the Court may also consider matters of which judicial notice may be taken. Garanti Finansal Kiralama A.S. v. Aqua Marine & Trading Inc., 697 F.3d 59, 64 n. 4 (2d Cir.2012). The matters of which a court may take judicial notice include the decisions of an administrative agency. Golden Hill Paugussett Tribe of Indians v. Rell, 463 F.Supp.2d 192, 197 (D.Conn.2006).

B. Defamation Claims: Qualified Privilege/Failure to Allege Malice

In Counts Three and Seven, Plaintiffs bring defamation counts against Miller and GTECH. They allege that both Defendants defamed them by publishing the Letter “indicating the Hohmann ticket was a ‘fraud’ which is a crime of moral turpitude.” Complaint, Count Three ¶ 24, Count Seven ¶ 24.

Defendants argue that these claims are deficient because any statements in the Letter were “conditionally privileged” and therefore actionable only if made with “actual malice.” Def. Memo. at 9. Plaintiffs respond that it is too early in the case to determine whether Miller enjoyed a conditional privilege or if it had been abused. Pl. Memo. at 1–2. Defendants' Answer and discovery will, they say, “ultimately flesh out what type of investigation was being pursued; by what entity it was being pursued; and toward what end.” Id. at 2.

Under Connecticut defamation law, statements made in connection with judicial proceedings are entitled to either absolute or qualified privilege. Gallo v. Barile, 284 Conn. 459, 465–68, 935 A.2d 103 (2007). The privilege extends to police investigations. “The scope of privileged communication extends not merely to those made directly to a tribunal, but also to those preparatory communications that may be directed to the goal of the proceeding.” Hopkins v. O'Connor, 282 Conn. 821, 832, 925 A.2d 1030 (2007). “Our Supreme Court has held that statements made to the police in connection with a criminal investigation, such as the defendant's statements in the present case, are entitled to protection by a qualified privilege.” Mara v. Otto, 127 Conn.App. 404, 409, 13 A.3d 1134 (2011).

The Connecticut appellate courts have not ruled directly on the issue of what privilege applies to statements made to officials other than the police. However, the Connecticut Supreme Court's reasoning in Gallo v. Barile makes it clear that at a minimum, qualified privilege applies. In that case, the plaintiff alleged that the defendants had defamed him in statements made to a state trooper investigating the plaintiff's allegedly threatening behavior towards his supervisor. The Court treated the issue as being whether statements made to the police in connection with a criminal investigation are protected by absolute or qualified privilege. Gallo at 460, 935 A.2d 103. The Court concluded that such statements are entitled to qualified privilege. Id. at 468, 935 A.2d 103. It did not even consider the possibility that such statements are not entitled to any privilege.

Statements elicited by agencies like the CLC and the DSR may also be privileged. The Connecticut Supreme Court has, for instance, granted absolute privilege to a statement elicited by an administrative agency for use at a hearing. Petyan v. Ellis, 200 Conn. 243, 251, 510 A.2d 1337 (1986). In administrative investigations as in police investigations, some degree of privilege serves the public policy behind such privileges. “The policy underlying the privilege is that in certain situations the public interest in having people speak freely outweighs the risk that individuals will occasionally abuse the privilege by making false and malicious statements.” Gallo at 466, 935 A.2d 103.

Clearly, the Supreme Court's holding in Gallo establishes that qualified (if not absolute) privilege applies to statements elicited by the CLC and DSR in the course of their investigations. As long as the statements are relevant to the investigation, “[p]articipants in a judicial process must be able to testify or otherwise take part without being hampered by fear of defamation suits.” Hopkins v. O'Connor, 282 Conn. 821, 838–39, 925 A.2d 1030 (2007).

In this case, the allegations of the Complaint themselves establish the existence of a qualified privilege. Plaintiffs' assertion that discovery is necessary to determine what type of investigation was being pursued, by what entity, and towards what end, and what the nature of Miller's participation was, Pl. Memo. at 1–2, fails to recognize that the Complaint itself makes allegations on every one of those points.

In support of the defamation claims, Plaintiffs allege only one act: Miller's submission of the Letter to the CLC.² The allegations of the Complaint establish that the Letter was elicited by the CLC as part of its investigation of the Ticket:

17. As part of Connecticut Lottery Corporation and/or Division of Special Revenue's investigation, information and an opinion regarding the subject lottery...