Meyers v. Ideal Basic Industries, Inc.

Decision Date06 August 1991
Docket NumberNo. 90-7009,90-7009
Citation940 F.2d 1379
PartiesGene MEYERS; Norman Wyche; Aldo T. Eberle; Donald Northcutt, Plaintiffs-Appellants, v. IDEAL BASIC INDUSTRIES, INC., a Delaware Corporation, Defendant-Appellee.
CourtU.S. Court of Appeals — Tenth Circuit

Patrick J. Malloy, III, of Malloy & Malloy, Inc., Tulsa, Okl. (Leslie V. Williams, Jr. of Williams & Remmel, Oklahoma City, Okl., with him on the briefs), for plaintiffs-appellants.

Mairen C. Kelly of Fisher & Phillips, Atlanta, Ga. (Robert P. Foster, and Frank T. Bell of Fisher & Phillips, Atlanta, Ga.; J. Warren Jackman of Pray, Walker, Jackman, Williamson & Marlar, Tulsa, Okl with her on the brief), for defendant-appellee.

Before BALDOCK, BARRETT and BRORBY, Circuit Judges.

BRORBY, Circuit Judge.

I.

The appellants in this case, Gene Meyers, Norman Wyche, Aldo T. Eberle, and Donald Northcutt ("Plaintiffs" or "Appellants"), are former employees of Ideal Basic Industries, Inc. ("Defendant" or "Ideal"). They instituted an action for malicious prosecution and abuse of process against Ideal. Appellants' action followed the dismissal of Ideal's lawsuit against Appellants for allegedly engaging in a conspiracy to file fraudulent Workmen's Compensation claims and sabotage company property. The trial court granted Defendant's motion to dismiss the abuse of process claim. Plaintiffs' malicious prosecution claim proceeded to trial. The jury returned a verdict in favor of Plaintiffs and awarded them, collectively, actual damages in the amount of $7 million and punitive damages in the amount $8 million. 1 Subsequently, the trial court granted Defendant's motion for judgment notwithstanding the verdict.

On appeal, Appellants raise the following issues: "Whether Or Not The Trial Court Erred In Sustaining The Defendant's Motion For Judgment Notwithstanding the Verdict"; and "Whether Or Not The Trial Court Committed Error In Sustaining The Defendant's Motion For Summary Judgment With Respect To The Plaintiffs' Abuse Of Process Claim." We affirm.

II.

Ideal is a cement manufacturer with facilities located throughout the United States. Since 1984, due to an impasse in bargaining negotiations, Ideal's unionized employees at the plant in Ada, Oklahoma, have worked without a contract. In 1988, Gary Sauer was installed as the new plant manager at this facility. Prior to his arrival, Mr. Sauer familiarized himself with the history of relations with the employees at the Ada plant. During this time, Mr. Sauer learned that the plant in Ada had recently been the target of acts of sabotage and that an unprecedented number of Workmen's Compensation claims for hearing and lung damage were filed by Ideal's workers at the Ada plant.

Shortly after his arrival in Ada, Mr. Sauer formed the opinion that there was illegal activity occurring "in the form of phony Work Comp filings and sabotage." He then obtained authorization to consult with outside counsel to seek advice on whether any legal remedy was available to stop what he believed was illegal activity. Ideal complied with this request and procured the services of Walter Kruger, a partner in a law firm specializing in labor law. Mr. Kruger came to Ada and conducted an investigation into the existence of illegal activity at the plant. Ideal placed no restrictions as to the scope of Mr. Kruger's investigation. Following his investigation, Mr. Kruger returned to Atlanta to evaluate the information he had compiled during his investigation. During the next few weeks, Mr. Kruger contacted Mr. Sauer several times requesting additional information such as further data from the employee files. Subsequently, Mr. Kruger informed Mr. Sauer there was sufficient cause to file a lawsuit against the Appellants.

Ideal then filed a complaint against Appellants charging, inter alia: conspiracy to file fraudulent Workmen's Compensation claims; deceit; sabotage; and violation of anti-racketeering laws. This complaint was subsequently dismissed by a consent order. Following the dismissal, Appellants brought this action against Ideal alleging malicious prosecution and abuse of process based upon Ideal's instigation of suit against them.

The district court dismissed the abuse of process claim prior to trial, and following a jury verdict in favor of the employee-Plaintiffs on the malicious prosecution claim, granted Defendant's motion for judgment notwithstanding the verdict. The court also ruled hypothetically on Defendant's alternative motion for new trial, holding that absent the entry of judgment notwithstanding the verdict, it would grant a new trial.

III. Dismissal of Abuse of Process Claim

We review the district court's dismissal for failure to state a claim de novo, applying the same scrutiny to the complaint as did the trial court. Morgan v. City of Rawlins, 792 F.2d 975, 978 (10th Cir.1986). Thus, we also will "clothe plaintiff's claim in such fashion to presume all allegations true." Id.

As this is a diversity case, we apply the substantive law of the forum state. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Under Oklahoma law, an abuse of process claim requires a showing of three elements: (1) issuance of process; (2) an ulterior purpose; and (3) a willful act in the use of process not proper in the regular conduct of the proceeding. Tulsa Radiology Assocs., Inc. v. Hickman, 683 P.2d 537, 539 (Okla.Ct.App.1984); see also W. Keeton, D. Dobbs, R. Keeton & D. Owen, Prosser & Keeton on the Law of Torts, Sec. 121 (5th ed. 1984) (hereinafter "Prosser"). In this case, the district court focused on Plaintiffs' failure to "allege facts in support of the third element ... [stating there was] no showing that Ideal was using its lawsuit to obtain an advantage that was collateral to the lawsuit itself." In other words, the complaint failed to allege a willful act in the use of process not proper in the regular conduct of the proceeding. The court concluded Plaintiffs had failed to establish the necessary elements for the claim and therefore granted Defendant's motion to dismiss. We agree with this determination.

In this case, Plaintiffs alleged in their complaint, inter alia, that the action brought against them by Ideal was based on allegations: "made with the ulterior and unlawful purpose of: ... intimidating the individual Plaintiffs [and] ... other employees of the Defendant corporation into an abandonment of their legitimate Workers Compensation claims; [and] ... extorting concessions from the Plaintiff labor union in contract negotiations."

"Abuse of process occurs when legal process is used for an improper purpose, to accomplish an end not lawfully obtainable, or to compel someone to do some collateral thing he could not legally be compelled to do." Houghton v. Foremost Fin. Servs. Corp., 724 F.2d 112, 116 (10th Cir.1983) (citing Neil v. Pennsylvania Life Ins. Co., 474 P.2d 961, 965 (Okla.1970)). To establish the element of improper use of the process, it is clear that the plaintiff must show some definite act or threat by the defendant not authorized by the process. Gore v. Taylor, 792 P.2d 432, 435 (Okla.Ct.App.1990); see also, Prosser Sec. 121. Prosser provides the following elaboration of this element:

Some definite act or threat not authorized by the process, or aimed at an objective not legitimate in the use of the process, is required; and there is no liability where the defendant has done nothing more than carry out the process to its authorized conclusion, even though with bad intentions.

Prosser, Sec. 121 at 898. Thus, merely showing the defendant " 'carr[ied] out the process to its authorized conclusion, even though with bad intentions,' " is insufficient to establish an abuse of process claim. Gore, 792 P.2d at 435-36 (quoting Prosser, Handbook of the Law of Torts, Sec. 121 (4th ed. 1971)).

Even viewing Plaintiffs' complaint in the favorable light that we must, taking the allegations therein as true, we find it nevertheless fails to establish the necessary element of improper use of the process. While we take as true Plaintiffs' allegations that the ulterior and unlawful purpose of Ideal in bringing the claim was to intimidate Plaintiffs and other employees of Ideal into abandoning legitimate Workmen's Compensation claims and to extort concessions from the Union, Plaintiffs' complaint still fails to establish an abuse of process claim since there is no allegation of some definite action or threat by Ideal. See Gore, 792 P.2d at 435-36. The only definite act alleged in Plaintiffs' complaint was Ideal's filing of the lawsuit. Under Oklahoma law, the absence of an allegation that some definite act or threat occurred showing an improper use of the process defeats a claim of abuse of process. Id. Without such an allegation the element of a willful use of the process not proper in the regular conduct of the proceeding cannot be satisfied. Therefore, we hold the district court's dismissal of the abuse of process claim prior to trial was proper.

Judgment Notwithstanding the Verdict--Malicious Prosecution

We review a grant or denial of a motion for judgment notwithstanding the verdict de novo, applying the same standard as did the trial court. Rajala v. Allied Corp., 919 F.2d 610, 615 (10th Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 1685, 114 L.Ed.2d 80 (1991); Suggs v. State Farm Fire & Casualty Co., 833 F.2d 883, 886 (10th Cir.1987), cert. denied, 486 U.S. 1007, 108 S.Ct. 1732, 100 L.Ed.2d 196 (1988). We have expressed the appropriate inquiry under this standard as being " 'whether there is evidence upon which the jury could properly find a verdict for the party [against whom the motion is directed].' " Rajala, 919 F.2d at 615 (quoting Hurd v. American Hoist & Derrick Co., 734 F.2d 495, 498-99 (10th Cir.1984)). In making this determination we must view the evidence and all inferences in a light most favorable to the nonmoving party. Rajala, 919 F.2d at 615. The nonmovant's position,...

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