Smith v. McDonald

• Decision Date: 28 February 1990
• Docket Number: No. 89-1401,89-1401
• Citation: 895 F.2d 147
• Parties: 17 Media L. Rep. 1499 David I. SMITH, Plaintiff-Appellee, v. Robert McDONALD, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 147

895 F.2d 147

17 Media L. Rep. 1499

David I. SMITH, Plaintiff-Appellee, v. Robert McDONALD, Defendant-Appellant.

No. 89-1401.

United States Court of Appeals Fourth Circuit.

Argued May 8, 1989.

Decided Feb. 2, 1990.

Rehearing and Rehearing Denied En Banc Denied Feb. 28, 1990.

William Woodward Webb (Broughton, Wilkins, Webb & Gammon, Raleigh, N.C., on brief), for defendant-appellant.

William Albert Eagles (B.F. Wood, Latham, Wood, Eagles & Hawkins, Graham, N.C., on brief), for plaintiff-appellee.

Before RUSSELL and WIDENER, Circuit Judges, and TURK, Chief District Judge for the Western District of Virginia, sitting by designation.

WIDENER, Circuit Judge:

Robert McDonald appeals from judgment on a jury verdict in a libel case against him which awarded both compensatory and punitive damages. 713 F.Supp. 871. Because we conclude that McDonald's statements were absolutely privileged under the common law of North Carolina, we reverse.

Robert McDonald sent two letters to the President of the United States, with copies to a few other public officials, concerning David I. Smith, an attorney who actively was seeking to be appointed United States Attorney for the Middle District of North Carolina. McDonald's letters related what he said were numerous details about Smith's character and previous conduct that McDonald felt rendered Smith unfit to be United States Attorney. After the President chose not to appoint Smith, Smith instituted a common law action for libel in a North Carolina state court, alleging that the statements in McDonald's letters were "false, slanderous, libelous, inflammatory, and derogatory." In addition, Smith alleged that McDonald composed the letters maliciously and with evil intent.

McDonald removed the action to federal court on the basis of diverse citizenship, and subsequently filed a motion for judgment on the pleadings on the ground that his communications to the President were absolutely privileged under the petition clause of the first amendment and the appointments and speech or debate clauses of the United States Constitution. The district court denied the motion. ¹ On appeal, both this court and the United States Supreme Court affirmed, finding that the Constitution conferred no absolute constitutional privilege on McDonald's letters, rather a qualified constitutional privilege under the petition clause of the first amendment, and the case was remanded to the district court. ² Upon a trial by jury, a verdict was returned against McDonald in the amount of $50,000 compensatory damages and $150,000 punitive damages, which specifically found that some of the statements in McDonald's letters were both false and made with reckless disregard of whether false or not, the equivalent of malice. McDonald now appeals, arguing that his letters to the President were absolutely privileged under North Carolina common law. ³

The parties tacitly agree that the common law of North Carolina governs this libel action. Accordingly, the parties not arguing otherwise, the substantive law of the forum controls, and we apply North Carolina law. See National Ass'n of Sporting Goods Wholesalers v. F.T.L. Marketing Corp., 779 F.2d 1281, 1284-85 (7th Cir.1985).

Whether the occasion is privileged is a question of law to be determined by the court. Stewart v. Nation-Wide Check Corp., 279 N.C. 278, 182 S.E.2d 410, 414 (1971). Privilege is determined by the occasion and circumstances surrounding a communication, and may be either "absolute" or "qualified." Ramsey v. Cheek, 109 N.C. 270, 13 S.E. 775, 775 (1891). The Supreme Court of North Carolina in Ramsey distinguished the two types of privileged communications as follows:

Privileged communications are of two kinds: (1) Absolutely privileged,--which are restricted to cases in which it is so much to the public interest that the defendant should speak out his mind fully and freely that all actions in respect to the words used are absolutely forbidden, even though it be alleged that they were used falsely, knowingly, and with express malice. This complete immunity obtains only where the public service or the due administration of justice requires it, e.g., words used in debate in congress and the state legislatures, reports of military or other officers to their superiors in the line of their duty, everything said by a judge on the bench, by a witness in the box, and the like. In these cases the action is absolutely barred. (2) Qualified privilege. In less important matters, where the public interest does not require such absolute immunity, the plaintiff will recover in spite of the privilege if he can prove that the words were not used bona fide, but that the defendant used the privileged occasion artfully and knowingly to falsely defame the plaintiff. In this class of cases an action will lie only where the party is guilty of falsehood and express malice.

Ramsey, 13 S.E. at 775 (citations omitted). Thus, although Smith has alleged, and a jury has found, that some of McDonald's communications were both false and malicious, if those communications were absolutely privileged, Smith's action for libel must fail.

Because "[t]he great underlying principle of the doctrine of privileged communications rests in public policy," Alexander v. Vann, 180 N.C. 187, 104 S.E. 360, 361 (1920), the settings that the Ramsey court identified in which communications are absolutely privileged were obviously by way of example rather than by way of limitation. And several subsequent cases have considered one of those settings in particular: statements made in the course of judicial proceedings. See, e.g., Jarman v. Offutt, 239 N.C. 468, 80 S.E.2d 248 (1954); Jones v. City of Greensboro, 51 N.C.App. 571, 277 S.E.2d 562 (1981); Mazzucco v. North Carolina Bd. of Medical Examiners, 31 N.C.App. 47, 228 S.E.2d 529, petition for discretionary review denied and appeal dismissed for want of substantial constitutional question, 291 N.C. 323, 230 S.E.2d 676 (1976).

In North Carolina the absolute privilege that attaches to statements made in the course of judicial proceedings is not confined to civil or criminal trials; in determining the scope of the privilege, courts have defined the term "judicial proceeding" broadly. Harris v. NCNB Nat'l Bank of North Carolina, 85 N.C.App. 669, 355 S.E.2d 838, 842 (1987). Thus, the privilege covers not only oral statements made during a trial, but has been extended to encompass communications in pleadings and other papers filed in a proceeding, Scott v. Statesville Plywood & Veneer Co., 240 N.C. 73, 81 S.E.2d 146 (1954); out-of-court affidavits or reports, if submitted to the court and relevant to the proceedings, Bailey v. McGill, 247 N.C. 286, 100 S.E.2d 860 (1957); out-of-court statements between attorneys for the parties to a pending case, if relevant to the proceeding, Burton v. NCNB Nat'l Bank of North Carolina, 85 N.C.App. 702, 355 S.E.2d 800 (1987); and attorneys' out-of-court communications preliminary to proposed or anticipated litigation, Harris v. NCNB Nat'l Bank of North Carolina, 85 N.C.App. 669, 355 S.E.2d 838 (1987). In addition, communications made in the course of an administrative proceeding are absolutely privileged if the administrative officer or agency is exercising a judicial or quasi-judicial function. Mazzucco, 228 S.E.2d at 532. Although no North Carolina court has determined whether the actions of an appointing authority, in evaluating and selecting a nominee for an important public position, constitute a quasi-judicial function, the decision of the North Carolina Court of Appeals in Angel v. Ward, 43 N.C.App. 288, 258 S.E.2d 788 (1979), is instructive.

In Angel the North Carolina Court of Appeals considered whether a private citizen's letter to a federal government employee's superior, who was collecting evidence to support a decision to terminate the employee, was sent in connection with a quasi-judicial proceeding and thus was absolutely privileged. Angel, 258 S.E.2d at 791-92. In Angel the defendant, a certified public accountant, telephoned the supervisor of the plaintiff to complain about the plaintiff's conduct and competence in her position as an Internal Revenue Service agent. Id. at 789. After the plaintiff's supervisor asked the defendant to put his complaints in writing, the defendant sent the supervisor a letter. ⁴ Id. at 789-90. Later, the plaintiff's supervisor terminated the plaintiff's employment, and the plaintiff filed suit in libel because of the contents of the letter.

In determining whether the defendant's letter was absolutely privileged, the Angel court noted that quasi-judicial is "[a] term applied to the action, discretion, etc., of public administrative officers, who are required to investigate facts, or ascertain the existence of facts, and draw conclusions from them, as a basis for their official action, and to exercise discretion of a judicial nature." Id. at 792 (quoting Black's Law Dictionary (4th ed. rev.1968)). The court in Angel then applied the definition of the term quasi-judicial to the facts of the case:

Mr. Allen in his solicitation of defendants' letter was acting for and on behalf of the Internal Revenue Service in a governmental matter. He was in the process of evaluating plaintiff in connection with her employment. The agency had decided to terminate plaintiff's employment, and Mr. Allen was preparing an evidentiary file to support the termination decision.

Id. Thus, because the supervisor's actions were those of one who was "required to investigate facts, or ascertain the existence of facts, and draw conclusions from them, as a basis for their official action, and to...