Minyard Food Stores, Inc. v. Goodman

• Decision Date: 13 June 2002
• Docket Number: No. 01-0734.,01-0734.
• Citation: 80 S.W.3d 573
• Parties: MINYARD FOOD STORES, INC., Petitioner, v. Brenda GOODMAN, Respondent.
• Court: Texas Supreme Court

80 S.W.3d 573

MINYARD FOOD STORES, INC., Petitioner, v. Brenda GOODMAN, Respondent.

No. 01-0734.

Supreme Court of Texas.

Argued April 17, 2002.

Decided June 13, 2002.

Rehearing Denied August 22, 2002.

Bryant Scott McFall, Andrew T. Turner, Ronald Wayne Chapman, Ogletree Deakins Nash Smoak & Stewart, Dallas, for petitioner.

William Paul Rossini, Vial Hamilton Koch & Knox, Steven B. Thorpe, Carla S. Hatcher, Thorpe, Hatcher & Washington, LLP, Dallas, for respondent.

Justice BAKER delivered the opinion of the Court.

In this defamation case, we decide whether an employee who defames another employee to his employer during a workplace misconduct investigation was acting within the course and scope of his employment. A jury found that the culpable employee was acting within the course and scope and awarded both actual and punitive damages. The trial court rendered judgment on the verdict for actual damages against the defaming employee and the employer jointly and severally, but it disregarded the jury's punitive damages award. A divided court of appeals affirmed the trial court's judgment. 50 S.W.3d 131, 143. The court of appeals held that the employee's defamatory statements during the investigation were made within the scope and course of his employment, and thus, the employer was liable. 50 S.W.3d at 139.

We conclude there is no evidence to support the jury's finding that the culpable employee was acting within the course and scope of his employment when he defamed another employee to his employer during the employer's investigation for workplace misconduct. Accordingly, we reverse the court of appeals' judgment in part and render judgment that the defamed employee take nothing from the employer.

I. BACKGROUND

Les Heflin, Brenda Goodman, Sheila Hughes, and Alejandra Marks all worked for Minyard's Store No. 83 in Highland Village in Denton, Texas. Heflin was the store manager. Goodman served as the point of sale coordinator, responsible for ensuring that merchandise was properly and accurately priced in the store. Hughes and Marks served as checkers.

On January 15, 1998, Hughes accused Goodman of having an affair with Heflin. Goodman was in her office at the store when Hughes approached her screaming, "You better pack your bags. I'm fixing to get you fired." Hughes pointed to Heflin and said to Goodman, "There's the man you've been having the affair with." Additionally, Hughes called Gary Flowers, Minyard's District Manager, and said she wished to speak with him. Hughes told Flowers that Heflin had confided in her about Heflin and Goodman kissing and hugging on a few occasions. Hughes believed Goodman discovered Heflin telling Hughes this and was "taking it out" on her. Shortly thereafter, Flowers arrived at the store. Flowers spoke with Marks who reported that Heflin had similarly told her that he and Goodman had kissed and hugged.

Flowers then confronted Heflin, who admitted to kissing and hugging Goodman but denied having a "sexual relationship" with her. Heflin also admitted that he kissed Marks. On that same day, Heflin gave Flowers a written statement outlining these admissions. In contrast, Goodman told Flowers that she had allowed Heflin to rub her shoulders and that she had given him a "friendly hug," but she denied ever kissing him.

Following Flowers' January 15 investigation, Minyard transferred Heflin, Goodman, and Marks to different Minyard stores. While at her new store, Goodman received about four to six calls a day from other Minyard employees who heard that Minyard transferred her for having an affair with Heflin. Further, while attempting to purchase groceries at the new store, a checker made an unsolicited comment to Goodman that it must have been difficult to tell her husband that Minyard had transferred her because of the accusation that Goodman had an affair with Heflin. After that conversation, Goodman concluded that she could not stay at Minyard and thus she resigned.

Goodman sued Minyard, Hughes, Marks, and Heflin for defamation. She alleged that Hughes' and Marks' allegations to Minyard and other Minyard employees about Goodman's "illicit sexual relations" with Heflin defamed her. Further, Goodman alleged that Heflin's oral and written statements to Minyard management that he had kissed her on several occasions defamed her. A jury found that Heflin defamed Goodman but Hughes and Marks did not. The jury further found that Heflin's defamatory statements were made in the course and scope of his employment at Minyard. The jury awarded actual damages of $325,000 and $500,000 punitive damages. The trial court disregarded the punitive damages award and rendered judgment on the verdict for the actual damages against Minyard and Heflin, jointly and severally.

Minyard and Heflin appealed the adverse judgment. Minyard challenged the legal and factual sufficiency of the evidence that Heflin was acting in the scope and course of his employment with Minyard when he defamed Goodman. Heflin argued that the evidence was insufficient. to support the jury's finding that he defamed Goodman. A divided court of appeals affirmed the trial court's judgment against both Minyard and Heflin. 50 S.W.3d at 142-43. The court of appeals concluded that, even if an employee's act is unauthorized or without the employer's approval, this does not mean that the employee acted outside the scope of his employment. Rather, the court of appeals determined, an employer is liable for its employee's acts, even if the specific act is unauthorized or contrary to express orders, so long as the act is done while the employee is acting within his general authority and for the employer's benefit. The court of appeals observed that Heflin's cooperation with an upper management investigation concerning claims about Heflin's workplace misconduct was clearly within Heflin's authority and responsibility as a Minyard store manager. Consequently, the court of appeals concluded that there was some evidence to allow a jury to reasonably find that Heflin was acting within the course and scope of his employment when he made the defamatory statements to Flowers. 50 S.W.3d at 143.

On the other hand, though the dissent concurred with affirming the judgment against Heflin, it disagreed that there was evidence to support Minyard's liability. The dissent concluded that, despite Minyard's requiring Heflin to cooperate with Flowers' investigation, there was no evidence that Heflin lied about Goodman to accomplish any objective for which he was employed. Thus, the dissent would have reversed the judgment against Minyard, rendered judgment that Goodman take nothing on her claims against Minyard, and affirmed only the judgment finding Heflin liable. 50 S.W.3d at 143.

The sole issue we decide is whether there is legally sufficient evidence to support the jury finding that Heflin was acting in the course and scope of his employment with Minyard when he defamed Goodman — orally and in the written statement — to Flowers during the workplace misconduct investigation.

II. THE PARTIES' CONTENTIONS

A. MINYARD

Minyard argues that, as a matter of law and policy, an employee who defames another employee to his employer during an investigation for workplace misconduct is not acting in the course and scope of his employment. Minyard contends that an employer is liable for its employee's tort only when the tortious act falls within the scope of the employee's general authority in furtherance of the employer's business and for the accomplishment of the object for which the employee was hired. See Robertson Tank Lines, Inc. v. Van Cleave, 468 S.W.2d 354, 357 (Tex.1971); Lyon v. Allsup's Convenience Stores, Inc., 997 S.W.2d 345, 347 (Tex.App.-Fort Worth 1999, no pet.). Minyard argues that this case is analogous to Lyon in which an employee sued Allsup's for a supervisor's defamation. Lyon, 997 S.W.2d at 347. The Lyon court of appeals affirmed the trial court's summary judgment order, holding that the supervisor's defamation "obviously was not done to accomplish any object for which [he] was hired." Lyon, 997 S.W.2d at 348. Here, Minyard contends, Heflin's lie to Flowers about Goodman kissing him was likewise not done to accomplish any object for which he was hired. Nevertheless, Minyard asserts, the court of appeals ignored Lyon and other Texas precedent to hold to the contrary. See, e.g., Wal-Mart Stores, Inc. v. Lane, 31 S.W.3d 282 (Tex. App Corpus Christi 2000, pet. denied); ITT Consumer Fin. Corp. v. Tovar, 932 S.W.2d 147 (Tex.App.-El Paso 1996, writ denied); Saenz v. Family Sec. Ins. Co. of Am., 786 S.W.2d 110 (Tex.App.-San Antonio 1990, no writ).

Minyard further contends that there is a critical distinction in Texas between defaming someone to one's employer and defaming someone for one's employer. Compare Lyon, 997 S.W.2d at 345 with Hooper v. Pitney Bowes, Inc., 895 S.W.2d 773, 777 (Tex.App.-Texarkana 1995, writ denied). Minyard points out that, in Lyon, the employee lied to further his own ends, and thus, the employer was not liable. See Lyon, 997 S.W.2d at 348. In contrast, in Hooper, the employer's investigators lied based on their belief that they were acting in the employer's interests, thereby making the employer liable. See Hooper, 895 S.W.2d at 777. Thus, according to Minyard, Lyon, not Hooper, applies, because Heflin lied to and not for Minyard.

B. GOODMAN

Goodman acknowledges that, generally, respondeat superior liability is established when an employee acts within the course and scope of employment. See Van Cleave, 468 S.W.2d at 357. However, Goodman contends that Texam Oil Corp. v. Poynor, 436 S.W.2d 129 (Tex.1968), establishes a different test in cases involving an employee's defamatory statements. Goodman argues that, in the defamation context, the test is whether the employee had a duty to the employer and made defamatory statements while discharging that duty. Thus, Goodman asserts, because Heflin had a duty to cooperate in...