Schrader v. Eli Lilly and Co.

Decision Date16 August 1994
Docket NumberNo. 12S02-9408-CV-682,12S02-9408-CV-682
Parties128 Lab.Cas. P 57,756, 9 IER Cases 1830 Paul Steven SCHRADER, Steven L. Dunbar, Glenn E. Lawson, Ralph Bodle, and Francis Behler, Appellants-Plaintiffs, v. ELI LILLY AND COMPANY, Appellee-Defendant.
CourtIndiana Supreme Court

DeBRULER, Justice.

In this case, the court of appeals consolidated multiple actions for defamation arising from the same factual circumstances. Appellee Eli Lilly and Company discharged six employees from its Tippecanoe County, Indiana, warehouse operation. Five of the discharged employees filed suit against Lilly, claiming that Lilly had defamed the employees when informing the remaining Lilly employees about the terminations. In each action, Lilly moved for summary judgment, and the trial courts granted the motions. The five former employees appealed, and their cases were consolidated on appeal. The court of appeals affirmed in part and reversed in part. Schrader v. Eli Lilly and Co. (1993), Ind.App., 621 N.E.2d 635. Lilly petitions for transfer. Transfer is granted.

Rumors about theft arose at the Tippecanoe Laboratories of Eli Lilly and Company. In the summer of 1990, Lilly management began an internal investigation of these theft rumors and interviewed more than 30 employees. As a result of the investigation, Lilly fired six employees, placed several others on probation, and reassigned some employees within the plant.

For some time after Lilly took these actions, rumors about the terminations lingered. A number of the 1,500 employees of the Tippecanoe Laboratories believed that the six employees were fired for stealing. A few of the rumors had specifically named one or more of the terminated employees. After the employees were fired, rumors circulated in the plant and in the surrounding community that they had been fired for stealing and that as many as 100 other employees in other areas of the plant were to be fired as well.

To quell these rumors, which were viewed as detrimental to the workers' morale, James Kleck, the Director of Lilly's Tippecanoe Laboratories, included a slide presentation in his weekly plant staff meeting for the managers of the plant on September 19, 1990. The slide presentation included the names of the six terminated employees, as well as the reasons for their separation from the company. The information contained on the slide read as follows:




A) Six individuals have been separated

                       *    [excised from the record-not a plaintiff in this action]
                       *    Frannie Behler         (Group Leader)         26 years
                       *    Steve Dunbar           (Operator)             17 years
                       *    Glenn Lawson           (Operator)             17 years
                       *    Steve Schrader         (Operator)             20 years
                       *    Ralph Bodle            (Supervisor)           29 years

B) Various disciplinary actions were taken with other employees


Loss of confidence in those individuals as employees of Eli Lilly and Co.





---------- One manager took notes on the contents of the slide presentation and had his

secretary type the notes for him. The manager then passed the typed notes to

various department heads, supervisors, and employees. One of the department

heads posted the notes on a bulletin board in Building T"6. The relevant

section of the typed notes read:

6. Warehouse Situation--Jim Kleck

-- 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


-- It is over.

Appellants, in their appeal of the grant of summary judgment for Lilly, have limited their appeal to their action for libel, which is based upon the statements made in the slide presentation and the subsequent posted notes. In granting summary judgment, the trial court found three separate and independent grounds to support the summary judgment, namely, 1) the lack of publication of the statements; 2) the statements were protected by a qualified privilege; and 3) the statements were true. Each ground is independently sufficient to support a summary judgment. On appeal, appellants must successfully challenge each of these grounds for summary judgment in order to prevail. In the absence of such a successful challenge, the judgment of the trial court must be affirmed.

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. Ind.Trial Rule 56(C); Oelling v. Rao (1992), Ind., 593 N.E.2d 189. 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 appeal from a summary judgment, the reviewing court examines the same issues, and applies the same analysis as the trial court does. However, the party that lost in the trial court has the burden of persuading the appellate tribunal that the trial court's decision was erroneous. The appellate court's role is to ensure that the non-prevailing party is not denied his or her day in court. Id.

To maintain an action for defamation, a plaintiff must show a communication with four elements: 1) defamatory imputation; 2) malice; 3) publication; and 4) damages. Rambo v. Cohen (1992), Ind.App., 587 N.E.2d 140. Defamatory words are not actionable unless they refer to some ascertained or ascertainable person, and that person must be the plaintiff. Lee v. Weston (1980), Ind.App., 402 N.E.2d 23. The trial court did not make a determination of whether the statements carried a defamatory imputation. The first ground relied upon by the trial court to grant Lilly's motion for summary judgment was the lack of publication. In a defamation action, the plaintiff must show that the alleged defamatory matter was published, that is, communicated to a third person or persons. Bals v. Verduzco (1992), Ind., 600 N.E.2d 1353. The trial court held:

The undisputed, material facts show that there was no publication of the allegedly defamatory statements because the statements were intracorporate transfers of information communicated to personnel with an interest in the information.

However, for purposes of this appeal, appellee Lilly has stipulated that it had published the allegedly defamatory statements to its employees, in light of this Court's holding in Bals. In Bals, we held "that employee evaluation information communicated intracompany to management personnel may be considered published for purposes of a defamation action." Bals, 600 N.E.2d at 1356. Such intracompany transfers are considered published for the purpose of using such statements as the basis for a defamation claim. In the present case, Lilly agreed that the trial court's entry of summary judgment cannot be sustained because there was no publication. The trial court's first ground for granting summary judgment, that the statements were not published, is eliminated.

The second ground supporting the grant of Lilly's motion for summary judgment was the qualified privilege. Assuming arguendo that the statements attributed to Lilly were defamatory, the trial court found that the statements were made pursuant to a qualified privilege of common interest. The privilege applies to communications made in good faith on any subject matter in which the party making the communication has an interest or in reference to which he has a duty, either public or private, either legal, moral, or social, if made to a person having a corresponding interest or duty. Bals, 600 N.E.2d at 1356. Intracompany communications regarding the fitness of an employee are protected by the qualified privilege, in order to accommodate the important role of free and open intracompany communications and legitimate human resource management needs. Id. The privilege protects personnel evaluation information communicated in good faith. Absent a factual dispute, whether a statement is protected by a qualified privilege is a question of law. Id.

Here, appellants conceded that the alleged defamatory statements made via the overhead slide projector would fall within the qualified privilege. The appellants,...

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