Southern Co. v. Hamburg, A95A2745

• Court: United States Court of Appeals (Georgia)
• Citation: 470 S.E.2d 467,220 Ga.App. 834
• Docket Number: No. A95A2745,A95A2745
• Parties: SOUTHERN COMPANY et al. v. HAMBURG.
• Decision Date: 15 March 1996

Page 467

470 S.E.2d 467

220 Ga.App. 834

SOUTHERN COMPANY et al. v. HAMBURG.

No. A95A2745.

Court of Appeals of Georgia.

March 15, 1996.

Reconsideration Denied March 27, 1996.

Certiorari Denied May 31, 1996.

Jones, Day, Reavis & Pogue, W. Lyman Dillon, David M. Monde, Atlanta, for appellants.

Arnall, Golden & Gregory, Kevin B. Getzendanner, Scott E. Taylor, Atlanta, for appellee.

McMURRAY, Presiding Judge.

This defamation action arose after The Southern Company ("Southern") issued two press releases regarding the suspension and discharge of Jeffrey R. Hamburg as President and Chief Executive Officer of a Southern subsidiary known as Southern Electrical International, Inc. ("SEI"). Southern, SEI and Paul DeNicola, Southern's executive vice president and member of SEI's board of directors, (defendants) filed this appeal, challenging the sufficiency of the evidence with regard to awards on Hamburg's claims for defamation, breach of his employment contract and attorney fees and expenses of litigation under OCGA § 13-6-11. We affirm in part, reverse in part, and remand for consideration of the probative evidence supporting Hamburg's claim for attorney fees and expenses of litigation.

On October 3, 1991, Kimberly Dozier, a reporter with a leading utility industry publication known as The Energy Daily, received a telephone call from a man who said that SEI's president and chief executive officer "is being fired." The tipster "didn't identify himself and told [the reporter] to look into it." Dozier hung up and immediately telephoned Gale Klappa, Southern Company's vice president in charge of public relations. Klappa responded by dictating the following press release: "An internal review of Southern Electric International's business practices is being conducted to determine whether the company's ethical standards have been met. SEI President Jeff Hamburg is cooperating with this review, and pending the outcome of the evaluation, J.R. Harris, who recently served as vice president of our investor relations office in New York, has assumed Hamburg's administrative responsibilities at SEI. More detailed information will be made available at the conclusion of this review--which we expect to be completed by early next week." ¹

Three days later, during a Sunday evening meeting on October 6, 1991, SEI's board of directors voted to discharge Hamburg and, at 10:00 the next morning, Gale Klappa telephoned Kimberly Dozier and told her, "we've got the rest of the story[,] or the results of our investigation are done [and we] have a statement, would you like it?" Klappa then read a prepared statement and affirmed that SEI's investigation involved "the Pego Plant, [a] 600 megawatt oil plant [in Portugal]." A written memorandum from Klappa was later forwarded to Dozier and made available to other news publishers across the country. The memorandum is captioned, "News Advisory From Southern Electric International--a subsidiary of The Southern Company." It states as follows: "Over the past several days, the board of directors of Southern Electric International has been conducting an internal review of the business practices of the organization. SEI--a subsidiary of The Southern Company--designs, builds, owns, and operates cogeneration and independent power production facilities. SEI also provides a broad range of technical services to industrial companies and utilities in domestic and international markets. The internal review focused primarily on a project under development in Portugal. Acting on the results of the investigation, the SEI board has dismissed the president and chief executive of the company. Jeff Hamburg has served in this position since July of 1989. All information obtained from the review is being provided to the appropriate government agencies. 'We're committed to taking decisive action when our business standards are not met,' said Paul DeNicola, a member of the SEI board and executive vice president of The Southern Company. On an interim basis J.R. Harris, who recently served as vice president in The Southern Company's investor relations office in New York, has been named president of SEI. 'We will begin a search for a new president immediately,' DeNicola said, 'and I'm confident that the quality of service and expertise that SEI employees have provided to their clients throughout the world will be maintained today and in the years ahead.' "

Kimberly Dozier authored an article in the October 8, 1991, edition of The Energy Daily captioned, "SEI's Hamburg Fired For Unethical Acts." The article states: "Southern Electric International fired its President and Chief Executive Officer Jeff Hamburg on Monday for unethical business practices in bidding for a coal-fired power plant in Portugal, the SEI board said. Hamburg has served in these positions since July 1989. Hamburg was dismissed after the SEI board conducted an internal review of the company late last week, the board said. The resulting information is being given to the appropriate government agencies, added Southern Co. Spokesman Gale Klappa. SEI is the Southern Co. affiliate that designs, builds, owns and operates cogeneration and independent power production facilities. 'We're committed to taking decisive action when our business standards are not met,' said Paul DeNicola, a member of the SEI board and executive vice president of the Southern Co. J.R. Harris, who recently served as vice president in Southern's investor relations office in New York, has been named SEI's interim president. The Portugal project that led to the investigation is a two-unit, 600 megawatt coal-fired facility north of Lisbon. The Portuguese national power agency, Electricidade de Portugal, is selling the partially constructed plant as part of its plan to privatize its power industry. The buyer would complete one unit of the plant by 1993, and the second by 1995, and would sell power back to the power agency. SEI is the major player in one of four groups that submitted bids for the project in June. The Portuguese government is expected to make a decision on the bid by or before the end of the next year, Klappa said."

Vice President Klappa telephoned Kimberly Dozier a day or so after the appearance of her October 8, 1991, article and "said that in their statement they never directly said what [Dozier] reported, [i.e.,] that Mr. Hamburg was fired for unethical business practices, to which [Kimberly Dozier] replied, but your first release said that the investigation was into the company's ethical standards, your second release said acting on the results of the investigation the board has dismissed the president, and then two paragraphs down you have a company spokesman, Paul DeNicola, ... saying, we're committed to taking decisive actions when our business standards are not met. [Dozier then asked Klappa,] What do you want? Would you like us to publish a correction?" Klappa responded, "no, that won't be necessary, I just wanted you to keep in mind for the next time you read a story on this, that we never said that."

After his discharge, Jeffrey R. Hamburg brought an action against defendants, seeking damages for defamation, intentional infliction of emotional distress and breach of his employment contract. Hamburg also sought attorney fees and expenses of litigation pursuant to OCGA § 13-6-11, alleging that defendants acted in bad faith, have been stubbornly litigious, or have caused him unnecessary trouble and expense. Defendants asserted truth as a defense to Hamburg's defamation claims and alleged (in the pre-trial order) that they were justified in discharging Hamburg "for cause, gross negligence and/or willful misconduct by virtue of his blatant insubordination, his efforts to funnel money to SEI's foreign partners under highly suspicious circumstances and other misconduct." Hamburg's response was that defendants maliciously and publically trumped-up charges against him to screen their long-time knowledge of alleged improprieties by SEI's Portuguese partner, information that may have required SEI's withdrawal from bidding on the prospectively profitable "Pego Project." Hamburg claimed (in the pre-trial order) that defendants set him up as a "scapegoat."

After almost three years of litigation, the case was tried before a jury upon a tangle of conflicting evidence. The jury returned a special verdict, awarding Hamburg $181,000 on his breach of contract claim, $624 in medical expenses and no general damages on his intentional infliction of emotional distress claim, and $543,000 in lost earnings, $2,000,000 in general damages and no punitive damages on his defamation claim. The jury also found Hamburg entitled to attorney fees and expenses of litigation. The trial court conducted a hearing and received evidence on this finding and later entered judgment, awarding Hamburg an aggregate amount of $2,009,689 for attorney fees and expenses of litigation. This appeal is from the denial of defendants' joint motion for judgment notwithstanding the verdicts ("j.n.o.v.") as to Hamburg's defamation, breach of contract and attorney fees and expenses of litigation claims. Held:

1. Defendants challenge the denial of their motion for j.n.o.v. as to Hamburg's defamation claim, contending the press releases Gale Klappa gave the media were not defamatory, as a matter of law, because neither statement targets a particular individual with regard to the reported ethics investigation. Defendants also assert that the second press release accurately reports that Hamburg was discharged after an investigation of SEI's "business practices" and that both of the carefully worded statements cannot be enlarged, via innuendo, to convey a derogatory meaning. In support of these assertions, defendants cite Zielinski v. Clorox Co., 215 Ga.App. 97, 99(2), 450 S.E.2d 222; Hylton v. American Assn., etc., 214 Ga.App. 635, 638(3), 448 S.E.2d 741; Cox Enterprises v. Bakin, 206 Ga.App. 813, 816(1), 426...