Schrader v. Eli Lilly and Co.

• Decision Date: 21 September 1993
• Docket Number: No. 12A02-9209-CV-437,12A02-9209-CV-437
• Citation: 621 N.E.2d 635
• Parties: Paul Steven SCHRADER, Steven L. Dunbar, Glenn E. Lawson, Appellants-Plaintiffs, v. ELI LILLY AND COMPANY, Appellee-Defendant. Ralph BODLE, Appellant-Plaintiff, v. ELI LILLY AND COMPANY, Appellee-Defendant. Francis BEHLER, Appellant-Plaintiff, v. ELI LILLY AND COMPANY, Appellee-Defendant. 1
• Court: Indiana Appellate Court

Page 635

621 N.E.2d 635

Paul Steven SCHRADER, Steven L. Dunbar, Glenn E. Lawson, Appellants-Plaintiffs, v. ELI LILLY AND COMPANY, Appellee-Defendant.

Ralph BODLE, Appellant-Plaintiff, v. ELI LILLY AND COMPANY, Appellee-Defendant.

Francis BEHLER, Appellant-Plaintiff, v. ELI LILLY AND COMPANY, Appellee-Defendant.

No. 12A02-9209-CV-437. ¹

Court of Appeals of Indiana First District.

Sept. 21, 1993.

Rehearing Denied Oct. 29, 1993.

Douglass R. Shortridge, Indianapolis, James R. Martin, Kokomo, for appellants-plaintiffs.

Roberta Sabin Recker, Robert K. Stanley, Ellen E. Boshkoff, Baker & Daniels, Gayle L. Pettinga, Eli Lilly and Company, Indianapolis, for appellee-defendant.

ROBERTSON, Judge.

Paul Steven Schrader, Steven L. Dunbar, Glenn E. Lawson, Ralph Bodle, and Francis Behler appeal from the grant of summary judgment in favor of their former employer, Eli Lilly and Company, in their defamation suit. They allege the following errors:

I. Did the trial court commit error in granting Summary Judgment to Eli Lilly and Company ("Lilly") on the basis that intracompany transfers of information concerning allegations of theft against employees as communicated to management personnel and to fellow employees did not constitute a "publication" as required by Indiana law in a defamation action?

II. Did the trial court incorrectly apply the law of qualified privilege applicable to a defamation action by granting Summary Judgment to Lilly when the former employees came forward with evidence of malice by showing excessive publication which under Indiana law creates a question of fact for the jury?

III. Did the trial court commit error in granting Summary Judgment to Lilly on the basis that the statements made of and concerning the Appellants (employees) and accusing them of theft were "true" when Indiana law provides that the determination of truth in a defamation action is a question of fact for the jury?

We affirm in part and reverse in part.

A summary judgment is proper only where there is no genuine issue about any material fact and the moving party is entitled to judgment as a matter of law. City of Evansville v. Moore (1990), Ind., 563 N.E.2d 113, 114. Any doubt about the existence of a factual issue should be resolved against the movant, with all properly asserted facts and reasonable inferences construed in favor of the nonmovant. Id.

On review of a ruling on summary judgment, this Court applies the same standard applicable in the trial court. Webb v. Jarvis (1991), Ind., 575 N.E.2d 992, 994. The appellants must persuade this court that the determination below was erroneous. Depart. of Revenue v. Caylor-Nickel Clinic (1992), Ind., 587 N.E.2d 1311, 1313. The trial court's determination must be carefully scrutinized on appeal to assure that the appellant is not improperly prevented from having its day in court. Id.

The designated evidence in the light most favorable to the former employees reveals that they had all been long-time employees of Lilly when rumors arose about theft at the Tippecanoe Laboratories. In the summer of 1990, Lilly management began an internal investigation of these theft rumors and interviewed more than 30 employees, including the former employees involved in this suit. As a result of the investigation, Lilly discharged these five former employees.

The rumors continued during and after the termination. During the investigation, the rumors had reached the point where some of the approximately 1500 employees of the Tippecanoe Laboratories had believed that these five or six employees would be fired for stealing. Some of the rumors had specifically named one or more of these former employees. Lilly had not formally communicated the fact of the investigation to the employees, but Lilly also could not have hidden the fact that many employees were being interviewed. After the employees' discharge, rumors circulated in the plant and in the surrounding community that the former employees had been fired for stealing and that as many as 100 of the other employees in other areas of the plant were to be fired for theft.

In light of these continued rumors, the Director of the Tippecanoe Laboratories included a slide presentation in his weekly plant staff meeting for the managers of the plant on September 19, 1990. Some of the managers regularly took notes of these meetings so that they could communicate the pertinent information to department heads, supervisors, and employees under them. One such manager took notes on the contents of the slide presentation on September 19, 1990, and had his secretary type them for him. The typed notes were then transmitted to various department heads, supervisors, and employees; and, according to usual policy, one of the department heads posted the typed notes on the bulletin board in Building T-6. The typed notes stated:

6. Warehouse Situation--[Director]

- Six employees have been dismissed

- Other disciplinary actions have been taken

- The reason for separation is a loss of confidence in those individuals as employees of Eli Lilly and Company

- The process has been fair, firm and consistent

- Respect for the individual has been an integral part of the process

- The core values of Lilly are based on trust and honesty--we must communicate these clearly

- We cannot tolerate a loss of trust and honesty as a company or as individuals

- It is over.

At the pre-appeal conference, the former employees limited their appeal to their actions for libel. See ORDER PURSUANT TO APPELLATE RULE 2(C) CONFERENCE. Our review is therefore limited to the effects of the slide presentation and the written notes and does not include any unrelated oral statements consistent with the contents of the written statements.

Lilly has removed the issue of publication to its employees from this appeal. Lilly submitted its MOTION TO AMEND ORDER PURSUANT TO APPELLATE RULE 2(C) CONFERENCE, which included a statement that "Lilly has elected not to argue lack of publication as a ground for affirming the trial court's entry of summary judgment on the [former employees'] libel claims." Lilly requested that this court amend its pre-appeal order to read that Lilly:

agrees that it will not argue lack of publication as a ground for affirming the trial court's entry of summary judgment for [Lilly] on the [former employees'] libel claims. Accordingly, publication will not be an issue on appeal with regard to the [former employees'] libel claims.

This Court granted the motion and amended its pre-appeal order accordingly.

To maintain an action for defamation, a plaintiff must show a communication with defamatory imputation, malice, publication, and damages. Rambo v. Cohen (1992), Ind.App., 587 N.E.2d 140, trans. denied. As for defamatory imputation, some communications are reasonably susceptible to either a defamatory or a nondefamatory interpretation. See id. Words not actionable in themselves may express a criminal charge, by reason of their allusion to some extrinsic fact, or of their being used and understood in a different sense from their natural meaning, and thus become actionable. Hays v. Mitchell (1844), 7 Blackf. 117. Such words are deemed actionable per quod, and they acquire a defamatory meaning when placed in context or are connected with extrinsic facts or circumstances. Jacobs v. City of Columbus (1983), Ind.App., 454 N.E.2d 1253, 1264 (citing concurring opinion in Gibson v. Kincaid (1966), 140 Ind.App. 186, 221 N.E.2d 834). If the defamatory nature of the words appears without resort to extrinsic facts or circumstances, then the words are deemed actionable per se.

The words involved in this case--the reason for separation is a loss of confidence in those individuals and Lilly cannot tolerate a loss of trust and honesty--are not actionable, in and of themselves, as an imputation that the individuals committed theft. A trier of fact could, however, determine that a defamatory imputation is present in this case in light of the extrinsic facts and circumstances, such as the rumors about the thefts, the existence of the investigation of the former employees, and the terminations of their employments. Lilly relies upon Tacket v. Delco Remy Div. of General Motors Corp. (S.D.Ind.1987), 678 F.Supp. 1387, aff'd in part, rev'd in part on other grounds (7th Cir.1987), 836 F.2d 1042, in which Delco suspended Tacket on suspicion of misconduct and other employees inferred that the misconduct meant theft. The Tacket court stated that some misunderstanding was inevitable and that the employer was not liable for the misunderstandings some people are bound to entertain about a suspension, even after it has been explained to them. The Tacket court affirmed the district court, which had taken the case away from the jury on the issue of truth, and stated:

The defense of truth, recognized in Indiana, Elliott v. Roach, 409 N.E.2d 661, 681 (Ind.App.1980), would be worth very little if misunderstandings of true statements--misunderstandings generated by rumors that the speaker may have been trying to control--gave rise to liability. The district court, applying the "qualitative" assessment permitted under Indiana law, was entitled to conclude that in the circumstances of this case an inference of falsehood from the "understandings" of witnesses unable to recount the speakers' words would not be reasonable.

Id. at 1046. In the present case, we are not faced with a possible inference of falsehood from the "understandings" of witnesses unable to recount the speakers' words. Here, we have a possible falsehood from written notes in which the words and their placement are present and undisputed. An inference of falsehood in the present case would not be unreasonable.

Also with regard to truth as a defense, Lilly claims it should not be held liable for telling its own employees the same thing the former employees and their family members tell others to explain their terminations. Lilly should direct its truth...