Sparshott v. Feld Entertainment, Inc.

• Citation: 311 F.3d 425
• Decision Date: 29 November 2002
• Docket Number: No. 01-7143.,No. 01-7144.,No. 01-7145.,No. 01-7146.,01-7143.,01-7144.,01-7145.,01-7146.
• Parties: Shan SPARSHOTT and Morgan J. Sparshott, Appellees/Cross-Appellants, v. FELD ENTERTAINMENT, INC., Appellant/Cross-Appellee, and Charles F. Smith, Appellant/Cross-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 425

311 F.3d 425

Shan SPARSHOTT and Morgan J. Sparshott, Appellees/Cross-Appellants, v. FELD ENTERTAINMENT, INC., Appellant/Cross-Appellee, and Charles F. Smith, Appellant/Cross-Appellee.

No. 01-7143.

No. 01-7144.

No. 01-7145.

No. 01-7146.

United States Court of Appeals, District of Columbia Circuit.

Argued October 21, 2002.

Decided November 29, 2002.

Rehearing and Rehearing En Banc Denied January 10, 2003.

COPYRIGHT MATERIAL OMITTED

Appeals from the United States District Court for the District of Columbia (No. 99cv00551).

Stephen M. McNabb argued the cause for appellant/cross-appellee Feld Entertainment, Inc. With him on the briefs were Joseph T. Small, Jr., John M. Simpson, Anthony E. DiResta, and Karen M. Moran.

Dawn E. Boyce argued the cause for appellant/cross-appellee Charles F. Smith. With her on the briefs was Whitney Adams.

James M. Burns argued the cause for appellees/cross-appellants Shan Sparshott and Morgan J. Sparshott. With him on the briefs was Bruce L. Marcus. Richard J. Leon and Robert C. Bonsib entered appearances.

Before: GINSBURG, Chief Judge, HENDERSON, Circuit Judge, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge WILLIAMS.

STEPHEN F. WILLIAMS, Senior Circuit Judge:

Shan Sparshott and Charles Smith were both employees of Feld Entertainment, Inc., the operator of the Ringling Bros. circus. Smith was the Chief Financial Officer, a board member, and a minority shareholder; his responsibilities included management of firm security. Sparshott worked in the travel office. In 1993 the two began a romantic relationship; early in 1994 Shan Sparshott moved out of the home that she and her daughter Morgan had shared with her husband Tracy Sparshott and into a house for which Smith paid the rent.

Shan Sparshott has alleged, with powerful supporting evidence, that Smith conducted surveillance over her in a variety of ways virtually from the start of the relationship — having her followed, videotaping her at home and work, and wiretapping her home and office phones. Indeed Smith brought the relationship crashing to a halt on March 3, 1997 when he confronted her with an audiotape of a phone call that he claimed showed she was having an affair with another Feld employee. Out of all this arose the welter of claims before us now, as well as quite a few that have dropped by the wayside.

Shan and Morgan Sparshott sued Smith and Feld for violations of the wiretap provisions of the Omnibus Crime Control and Safe Streets Act of 1968, ch. 119, 82 Stat. 197, 212 (1968) ("Crime Control Act") (codified as amended at 18 U.S.C. §§ 2510-2522 (2000)), and sued Feld under Virginia law for wrongful retention of Smith as an employee. They also brought several other state law claims, but those claims did not survive summary judgment and the Sparshotts have not appealed their dismissal. (Although Morgan joined in the surviving claims, the district court's dismissal of her wiretapping claims is not appealed, and in relation to negligent retention her position is in no way superior to her mother's losing claim. Accordingly we refer to Shan Sparshott simply as Sparshott and to Morgan not at all.) Smith brought counterclaims against Sparshott, one for malicious prosecution and three others that were dismissed and are not appealed.

At the close of the plaintiffs' case, the judge granted judgment as a matter of law for Feld on Sparshott's claims for punitive damages and for negligent retention. On the wiretapping claims the jury found for Sparshott against Feld and Smith, holding them jointly and severally liable for $250,000 in compensatory damages. It also awarded her $250,000 in punitive damages against Smith. Finally, it found against Smith on his one then-surviving counterclaim.

On appeal the parties raise a variety of issues. Feld and Smith argue that Sparshott did not sue on the wiretapping claim within the prescribed period, namely, within two years of having "a reasonable opportunity to discover the violation," 18 U.S.C. § 2520(e), so that they should have been granted judgment as a matter of law. We agree and reverse the district court. This ruling moots their other arguments on the wiretapping claims, as well as Sparshott's cross-appeal for punitive damages against Feld for the wiretapping.

Next, Sparshott argues in a cross-appeal that the district court erred in granting judgment as a matter of law for Feld on the negligent retention claims. We affirm, finding that there wasn't enough evidence for a reasonable jury to find that Feld knew or should have known that Smith posed a danger to others.

What remains is Smith's counterclaim for malicious prosecution. Here we reverse the district court's denial of Smith's request for a new trial. We agree with his argument that the district court's allowance of far less time for him to present his case than for Sparshott to present hers was unjustified and prejudicial. The only other issue Smith raises that clearly relates to his counterclaim is whether the trial court should have prevented a police officer from testifying as to facts underlying a charge that had been expunged. We affirm the district court, finding that Virginia law does not prevent this sort of testimony.

* * *

Statute of limitations. The statute of limitations for § 2520 states:

A civil action under this section may not be commenced later than two years after the date upon which the claimant first has a reasonable opportunity to discover the violation.

18 U.S.C. § 2520(e). In other words, the statute bars a suit if the plaintiff had such notice as would lead a reasonable person either to sue or to launch an investigation that would likely uncover the requisite facts. Cf. Davis v. Zirkelbach, 149 F.3d 614, 618 (7th Cir.1998) (describing the inquiry as requiring "enough to put [the plaintiff] on inquiry notice that his rights might have been invaded.").

On both the limitations and negligent retention issues we review de novo the judge's decision whether to grant judgment as a matter of law. Holbrook v. Reno, 196 F.3d 255, 259-60 (D.C.Cir.1999). A court can grant judgment as a matter of law only if no reasonable juror could have resolved the issues in the plaintiff's favor. Id. We view the evidence in the light most favorable to the plaintiff and draw all inferences in favor of the plaintiff. Id. Here we find that no reasonable jury could have found that Sparshott did not have a reasonable opportunity to discover Smith's wiretapping of her more than two years before the start of the lawsuit.

Sparshott brought suit on March 3, 1999, exactly two years after March 3, 1997, when Smith used her recorded phone conversations to accuse her of infidelity. Sparshott first points to her testimony that she was unaware of the wiretapping until that date, arguing that as the jury could believe her, it could reasonably find notice inadequate. This argument misunderstands the law. Sparshott's subjective state of mind is irrelevant. Additionally, there is no need that someone actually "discover" or be aware of the violation. Rather, the question is whether the person had a reasonable opportunity to discover the wiretapping.

From the very start of her relationship with Smith in 1993 Sparshott made successive discoveries not only of Smith's wiretapping but also of other similar intelligence gathering. True, Smith put her off with promises never to do it again or with explanations that (we may assume) were not transparently false. But even if the cumulative effect of the repeated discoveries were not enough, she also received outside warnings of his wiretapping — warnings with considerable objective credibility. All told, notice was plainly sufficient well before the critical date. Below we trace the details of these developments.

In 1994 Sparshott found two recording devices under her bed and connected to the phone jack. The discovery did not itself tell her that it was Smith who was wiretapping her, but was clearly evidence of a violation by someone. When Sparshott told Smith about this equipment, Smith suggested that it was Tracy Sparshott, her ex-husband. Soon after that, she enlisted Smith's help in wiretapping her ex-husband, her daughter, and her nanny, and he provided equipment strikingly similar to the recording devices she had found under the bed. In 1995, picking up a suit of Smith's at the cleaner's, she found in the suit an audiotape of her business conversations from work. According to Sparshott's own testimony, Smith admitted making this recording but promised not to do it again. This find gave her actual notice that Smith had been wiretapping her, as well as added reason to suspect his denial of the earlier recording. Later in 1995 or 1996, Sparshott found a recording device attached to the home office phone. Smith admitted owning the recording device but claimed he was simply taping his own business calls. Altogether, the evidence of wiretapping gave Sparshott good reason to be skeptical of Smith's explanations and promises.

In addition, Sparshott had substantial evidence that Smith was spying on her in other ways. Starting after she had first moved into a house separate from her husband, Sparshott several times noticed that someone was following her, and in January 1997 confirmed that the shadow had been hired by Smith. She confronted Smith and demanded that he get counseling. In early 1996, Sparshott discovered five video cameras hidden inside her house. Smith responded to her inquiries by saying that the cameras were part of a security mechanism to protect their house from burglary; but he had told her nothing about the video cameras earlier, even though it was she and her daughter who lived in the house. For a reasonable person these events would surely undermine Smith's explanations, denials and promise to quit wiretapping her.

Finally, in 1996, Sparshott's ex-husband, a police detective, warned her that Smith was tapping her home...