Smith v. Klein

• Decision Date: 21 March 1985
• Docket Number: No. 48749,48749
• Citation: 23 OBR 387,23 Ohio App.3d 146,492 N.E.2d 852
• Parties: , 23 O.B.R. 387 SMITH, Appellant, v. KLEIN et al., Appellees.
• Court: Ohio Court of Appeals

Page 146

23 Ohio App.3d 146

492 N.E.2d 852, 23 O.B.R. 387

SMITH, Appellant, v. KLEIN et al., Appellees.

No. 48749.

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

March 21, 1985.

Syllabus by the Court

1. A cause of action is cognizable for interference with an employment relationship, even absent a contract.

2. Usually, communication, when made in good faith on a matter of common interest between an employer and an employee or between two employees concerning a third employee is protected by a qualified privilege. However, where the defamation is published (including spoken or written) to someone not within the qualified privilege or is done with actual malice, the privilege will not protect an individual.

3. If a defendant submits evidence indicating that his statements were qualifiedly privileged, then the plaintiff has the additional burden of showing that the defendant exceeded the privilege.

4. In order to prove actual malice, the plaintiff must show that the statements were made with knowledge of their falsity, or with reckless disregard of whether they were false or not. The jury must then decide whether the evidence is sufficient to establish actual malice.

5. When opposing counsel do not cooperate, the proper regulation of discovery practice is committed to the discretion of the trial court. The court has the same if not greater right and duty to regulate discovery as it does to control the trial and to impose reasonable limits and conditions, consistent with the rules, to expedite the administration of justice.

6. However, where a trial court's refusal to allow discovery is improvident and prejudicially affects the substantial rights of the parties, an appellate court will rectify the trial court's abuse of discretion.

James M. Mackey and Frank P. Giaimo, Cleveland, for appellant.

William A. Viscomi and Joseph W. Pappalardo, Cleveland, for appellees.

JACKSON, Presiding Judge.

Appellant, George Smith, III, is a certified public accountant. He was hired in April 1981 by Manco Tape, Inc. From the newly created post of financial vice president, appellant was expected to supervise the accounting department and also perform financial planning functions to conform with the growth of the company.

At the time of appellant's arrival at Manco, the day-to-day operations of the accounting department were performed by a staff of clerks, supervised by a controller. Appellant had been with Manco for only a few days when the controller resigned. The position of controller remained vacant through the summer months. During that time the accounting department did not operate smoothly.

In August 1981, appellant approached Jack Kahl, the president of Manco, and suggested that a new controller was needed to restore the efficient functioning of the accounting department. Appellant recommended that the appellee, Gregory Klein, be hired for the job. Appellant also attributed much of the confusion in bookkeeping to Ms. Hildegarde Rehner, the accounts payable clerk. Rehner was a long-time employee of Manco, but appellant did not believe that she was performing her duties competently. In addition, there was a personality conflict between appellant and Rehner.

Apparently as a result of appellant's suggestions to Jack Kahl, in September 1981, Klein was hired as controller, and Rehner was transferred out of the accounting department. Klein's responsibilities as controller were to install and maintain accounting records, audit the accounts, and locate and rectify problems with the corporation's books.

On the morning of October 8, 1981, just a couple of weeks after Klein assumed the responsibilities of controller, he arranged a private meeting with Jack Mulloy, who was at that time the executive vice president of Manco Tape. Precisely what Klein said to Mulloy at that meeting is not known, but subsequently, during lunch, Mulloy told appellant that he could not believe what Klein was saying about appellant.

Mulloy and Klein met with Kahl that afternoon. At about four o'clock, appellant was summoned to Kahl's office and fired.

Appellant subsequently filed a complaint in common pleas court, alleging that Klein had intentionally and maliciously interfered in the employment relation between appellant and Manco Tape, and also that Klein had defamed appellant.

Based on his noontime conversation with Mulloy on October 8, appellant believes that Klein accused him of embezzling company funds, mistreating employees, and other wrong-doing. If appellant is to prevail on either of his causes of action, he must discover what Klein said to Mulloy at the private meeting between them and later what Klein said to Kahl at the meeting that afternoon between Klein, Mulloy and Kahl. Appellant's two separate attempts to take Mulloy's deposition, however, were both disrupted by Klein's attorney. The second attempted deposition was unilaterally terminated by Klein's attorney.

On January 13, 1984, Klein filed a motion for summary judgment, supported by the affidavit of Kahl. Appellant opposed the motion with his own affidavit. Moreover, appellant filed a motion to compel discovery and for sanctions, and moved the trial court to stay the ruling on summary judgment, pending resolution of the discovery dispute. The trial court denied appellant's motions, and granted summary judgment in favor of defendant Klein.

In his two assignments of error, appellant argues that the court below erred in granting Klein's motion for summary judgment, and that the court erred in denying appellant's motion to compel and for sanctions.

I

Summary Judgment

Civ.R. 56(C) governing summary judgment provides that:

"Summary judgment shall be rendered * * * if the pleading, depositions, * * * affidavits, transcripts of evidence * * * show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." (Emphasis added.)

This rule further provides:

"A summary judgment shall not be rendered unless it appears from such evidence or stipulation and only therefrom, that reasonable minds can come to but one conclusion and that conclusion is adverse to the party against whom the motion for summary judgment is made, such party being entitled to have the evidence or stipulation construed most strongly in his favor." (Emphasis added.)

Klein advanced three reasons in support of his position that summary judgment in his favor was appropriate.

A

First, Klein argues that there can be no tort of interference with business relations unless there is a contract, ¹ and that since appellant's employment with Manco was terminable at will by either the employer or employee, appellant had no contract and no cause of action.

We note initially that the Ohio courts, while recognizing the continued viability of the concept, have consistently referred to it as an employment contract, terminable at will. ² Professor Corbin explained:

"Another example of a unilateral contract in the form of an offered promise to pay for service to be rendered, is the case of an agreement to employ a person for an indefinite period at a stated salary per day or month or year. In a good many such cases, it has been held that the employee has made no promise of any kind; he accepts the offer by merely continuing to render the specified service, and becomes entitled to the promised salary in proportion to the work actually done. By such an interpretation of the expressions of the parties as this, the transaction is a 'hiring at will.' " 1 Corbin, Contracts (1963) 292-293, Section 70.

Even in West v. Roadway Express, Inc. (1982), 8 OBR 155, cited to the trial court by Klein, the court stated:

"However, a cause of action is cognizable for interference with an employment relationship, even absent a contract." West, supra, at 165.

On a policy level, this court is not inclined to declare an "open season" on those employees who do not have fixed-term contracts. An employee who is terminable at will may nonetheless justifiably expect that his continued employment depends on the will of the employer, not upon the whim of an office Iago.

As a matter of law, Klein is not entitled to summary judgment upon this first ground.

B

Second, Klein contends that any statements he made were privileged and therefore are not actionable even if false.

Ordinarily, defamatory statements that injure a person in his trade or profession are actionable per se. Hedrick v. Center for Comprehensive Alcoholism Treatment (1982), 7 Ohio App.3d 211, 454 N.E.2d 1343. However, Ohio courts have recognized the applicability of a qualified privilege in both defamation ³ and interference ⁴ cases.

" 'A qualified or conditionally privileged communication is one made in good faith on any subject matter in which the person communicating has an interest, or in reference to which he has a right or duty, if made to a person having a corresponding interest or duty on a privileged occasion and in a manner and under circumstances fairly warranted by the occasion and duty, right or interest. The essential elements thereof are good faith, an interest to be upheld, a statement limited in its scope to this purpose, a proper occasion, and publication in a proper manner and to proper parties only.' (Emphasis added.)" Hahn v. Kotten (1975), 43 Ohio St.2d 237, 244, 331 N.E.2d 713 (quoting 50 American Jurisprudence 2d 698, Libel and Slander, Section 195).

The existence vel non of a qualified privilege is an issue frequently raised in defamation suits between fellow employees. Generally, if made in good faith, such communications are privileged. Gray v. General Motors Corp. (1977), 52 Ohio App.2d 348, 370 N.E.2d 747 .

A threshold showing of qualified privilege would not dispose of this case; instead, it merely triggers a second level of inquiry:

"Usually, such communication, when made in good faith on a matter of common interest, between an employer and an employee or between two...