Sue Skaskiw & Vt. Volunteer Servs. for Animals Humane Soc'y v. Vt. Agency of Agric., No. 2014-041

CourtUnited States State Supreme Court of Washington
Writing for the CourtDOOLEY, J.
Citation2014 VT 133
PartiesSue Skaskiw and Vermont Volunteer Services for Animals Humane Society v. Vermont Agency of Agriculture, Department for Children & Families, Kristin Haas, Kathleen Smith and Carol Maloney
Docket NumberNo. 2014-041
Decision Date19 December 2014

2014 VT 133

Sue Skaskiw and Vermont Volunteer Services for Animals Humane Society
Vermont Agency of Agriculture, Department for Children & Families,
Kristin Haas, Kathleen Smith and Carol Maloney

No. 2014-041

Supreme Court On Appeal from Superior Court, Washington Unit, Civil Division

September Term, 2014
December 19, 2014

Helen M. Toor, J.

Samantha C. Balmes, Beaverton, Oregon, for Plaintiffs-Appellants.

William H. Sorrell, Attorney General, and Danforth Cardozo, III, Assistant Attorney General, Montpelier, for Defendants-Appellees.

PRESENT: Reiber, C.J., Dooley and Skoglund, JJ., and Pearson and Durkin, Supr. JJ.,

Specially Assigned

¶ 1. DOOLEY, J. Plaintiffs Sue Skaskiw and Vermont Volunteer Services for Animals Humane Society appeal the trial court's decision to grant the motion to dismiss of defendants Vermont Agency of Agriculture, Department for Children and Families, Kristin Haas, Kathleen Smith, and Carol Maloney on Skaskiw's claims of defamation, violation of due process, economic interference, and failure to discharge a mandatory duty. We affirm.

¶ 2. The Vermont Spay/Neuter Incentive Program (VSNIP) was created in 2006 to subsidize dog, cat, and wolf-hybrid sterilization procedures for low-income Vermonters. Sue Skaskiw and the organization she directs, Vermont Volunteer Services for Animals Humane Society (VVSA), administered the VSNIP program from its inception in 2006 until the expiration of Skaskiw's contract in October 2012. Defendant Vermont Agency of Agriculture initially managed the program but responsibility was transferred to defendant Department for Children and Families (DCF), a department within the Agency of Human Services, in 2011. Defendant Haas is an employee of the Agency of Agriculture; defendants Smith and Maloney are employees of DCF.

¶ 3. Sometime after the program's inception, the Agency of Agriculture contracted with Skaskiw to run VSNIP. She still held the contract when responsibility shifted to DCF in 2011, but at that time DCF put the contract out for a competitive bid. Two bidders, Skaskiw and VT-CAN!, submitted proposals, and VT-CAN! won the contract. Skaskiw subsequently filed this lawsuit.

¶ 4. In her complaint, Skaskiw pleaded one count of defamation against Smith and DCF; one count of violation of due process against Smith; one count of tortious interference with a prospective economic advantage against all defendants based on conduct by Haas, Smith, and Maloney; and one count of failure to discharge a mandatory duty against DCF. The thrust of Skaskiw's complaint is that Smith made libelous statements to coworkers about her ability to run the program and that these libelous statements prejudiced the bid selection committee against her; that Haas, Smith, and Maloney manipulated the bid selection process to disadvantage her; that DCF administered the bidding process in ways that disadvantaged her; that VT-CAN! had a "known conflict of interest" with DCF and was improperly using VSNIP to benefit its own veterinary practice; and that DCF continues to mismanage the VSNIP program to Skaskiw's detriment.

¶ 5. In response to Skaskiw's complaint, the defendants filed a motion to dismiss for failure to state a claim upon which relief can be granted under Vermont Rule of Civil Procedure 12(b)(6). The trial court granted defendants' motion and dismissed Skaskiw's claims. This appeal followed.

¶ 6. We review decisions on a motion to dismiss de novo under the same standard as the trial court and will uphold a motion to dismiss for failure to state a claim if "it is beyond doubt that there exist no facts or circumstances that would entitle the plaintiff to relief." Dernier v. Mortg. Network, Inc., 2013 VT 96, ¶ 23, 195 Vt. 113, 87 A.3d 465 (quotation omitted). We assume as true all facts as pleaded in the complaint, accept as true all reasonable inferences that may be derived from the plaintiff's pleadings, and assume as false all contravening assertions in the defendant's pleadings. Id. Our role in reviewing the trial court's decision on such a motion is limited to determining "whether the bare allegations of the complaint are sufficient to state a claim." Kaplan v. Morgan Stanley & Co., 2009 VT 78, ¶ 7, 186 Vt. 605, 987 A.2d 258 (mem.).

I. Defamation

¶ 7. We turn first to Skaskiw's defamation claim against Smith. In Count I of her amended complaint, Skaskiw alleged that Smith made false statements about her to coworkers during the bid selection process and that DCF is vicariously liable for these defamatory statements. She alleged that the "statements are blatantly false, and defendants have failed to provide proof of the statements' validity after repeated requests" and that Smith "made these statements during the course of her employment with defendant DCF and used her official DCF email account." Defendants moved to dismiss this claim on the grounds that Smith's statements were privileged, Smith is entitled to qualified immunity, and DCF is entitled to sovereign immunity. The trial court found that even if Smith's statements were conditionally privileged, she may have abused that privilege by knowingly making false statements, but the court ultimately dismissed the claims against Smith and DCF on immunity grounds.[1]

¶ 8. A successful defamation claim requires:

(1) a false and defamatory statement concerning [the plaintiff]; (2) some negligence, or greater fault, in publishing the statement; (3) publication to at least one third person; (4) lack of privilege in the publication; (5) special damages, unless actionable per se; and (6) some actual harm [to the plaintiff] so as to warrant compensatory damages.

Stone v. Town of Irasburg, 2014 VT 43, ¶ 61, ___ Vt. ___, 98 A.3d 769 (quoting Lent v. Huntoon, 143 Vt. 539, 546-47, 470 A.2d 1162, 1168 (1983)). Under consideration here is whether the statements were published to a third person and, if so, whether they were privileged.

¶ 9. We frequently have adopted provisions of the Restatement (Second) of Torts with respect to defamation, Sullivan v. Stear, 2011 VT 37, ¶ 11, 189 Vt. 442, 23 A.3d 663, and turn there now for guidance. Defamatory statements are published if they are communicated "intentionally or by a negligent act to one other than the person defamed." Restatement (Second) of Torts § 577 (1977). Statements made within the scope of employment to agents of the same principal are considered published for the purposes of defamation. Id. § 577 cmt. i. We therefore conclude that the second and third elements set out above sufficiently were alleged in Skaskiw's complaint.

¶ 10. Such statements between co-employees are not actionable, however, if they are "published upon an occasion that makes [them] conditionally privileged" and "the privilege is not abused." Id. § 593. The privilege is abused when the defendant "knows the matter to be false" or "acts in reckless disregard as to its truth or falsity," id. § 600; communicates the matter for an improper purpose, id. § 603; knowingly communicates the matter to individuals not otherwise privileged, id. § 604; or does not reasonably believe that communicating the matter is "necessary to accomplish the purpose for which the privilege is given." Id. § 605. Plainly speaking, the defendant must have communicated the statements in furtherance of the interests sought to be protected by the conditional privilege and not "solely from spite or ill will." Id. § 603 cmt. a. Our cases have characterized the elements of the abuse of a privilege as the presence of "malice." Crump v. P & C Food Mkts., Inc., 154 Vt. 284, 293, 576 A.2d 441, 447 (1990); Lent, 143 Vt. at 548-49, 470 A.2d at 1169.

¶ 11. One particular conditional privilege recognized by the Restatement is applicable here: a conditional privilege for an inferior state officer whose statements were made in performance of official duties.[2] Restatement (Second) of Torts § 598A. This privilege extends to communications made between government officers and from an officer to individuals outside the government. Id. § 598A cmt. d. Although we have not had the occasion to recognize this privilege in the past, other jurisdictions have done so. See D. Elder, Defamation: A Lawyer's Guide § 2:28 (2003) ("The majority rule provides a qualified privilege to inferior state governmental officers or officials making defamatory statements necessary to the performance of official duties . . . ." (footnotes omitted) (quotation omitted)).[3] Given our previous reliance on the Restatement in this area of law, we adopt this privilege. It is directly applicable because Skaskiw alleged Smith was an employee of DCF and made the statements in the course of her employment. As noted above, a conditional privilege is abused, and becomes ineffective, if the defendant acted with malice. A conditional privilege is overcome by a showing of one of two forms of malice: (1) "conduct manifesting personal ill will, reckless or wanton disregard of plaintiff's rights, or carried out under circumstances evidencing insult or oppression" or (2) "knowledge of the statement's falsity or with reckless disregard of its truth." Crump, 154 Vt. at 293, 576 A.2d at 447 (quoting Lent, 143 Vt. at 550, 470 A.2d at 1170).

¶ 12. Although we described absence of privilege as an element of the tort in Stone, it should, for pleading rules, be seen as an affirmative defense with the burden of proof on the defendant. See Burbage v. Burbage, No. 12-0563, 2014 WL 4252274, at *3 (Tex. Aug. 29, 2014). Since a plaintiff has no obligation to plead absence of privilege, this treatment normally would preclude grounding a motion to dismiss on the presence of a privilege. Courts have recognized an exception, however, where the plaintiff's allegations in the complaint show the presence of a privilege. Helmstadter v. N. Am. Biological, Inc., 559 N.W.2d 794, 801 (Neb. Ct. App. 1997); Dell v. K.E. McCay's Mkt., 543 P.2d 678, 681 (Or. 1975); see alsoBurbage, 2014 WL 4252274, at *3 (stating that...

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