Wilkinson v. Sheets
| Docket Number | 3:19-CV-902-RLM |
| Decision Date | 06 December 2021 |
| Parties | WILLIAM JAY WILKINSON, et al., Plaintiffs, v. MATTHEW SHEETS Defendant |
| Court | U.S. District Court — Northern District of Indiana |
William Jay Wilkinson and Jeffrey Miller invest in staffing companies through Hoosier Investments, LLC, and Hoosier's subsidiary company, DSS Holdings, LLC. In January 2018, Mr Wilkinson and Mr. Miller entered into a business agreement with Matthew Sheets, who owned his own staffing company, Day Star Staffing, LLC. Later in the year, their business relationship soured, but the parties reached a separation and settlement agreement. Mr. Wilkinson, Mr. Miller, Hoosier Investments, and DSS Holdings sued Mr. Sheets for breaching the settlement agreement and for defamation. Mr. Sheets filed various tort and contract claims in response. Before the court are Mr. Sheets's motion for summary judgment on the plaintiffs' defamation per se claim, [Doc. No. 123], the plaintiffs' motion for summary judgment on all of Mr Sheets's counterclaims, [Doc. No. 114], and the plaintiffs' motion to strike various materials related to Mr. Sheets's opposition brief, [Doc. No. 142]. The court heard oral argument on November 29, and now DENIES Mr Sheets's motion for summary judgment GRANTS the plaintiffs' motion for summary judgment, and DENIES the plaintiffs' motion to strike as moot.
William Wilkinson and Jeffrey Miller work together in the business of light industrial staffing and invest in the industry through Hoosier Investments, LLC, and Hoosier's subsidiary company, DSS Holdings, LLC. They are based in Indiana but invest in companies in other states in the region. In January 2018, Mr. Wilkinson and Mr. Sheets entered into a business agreement with Matthew Sheets. Mr. Sheets owned a staffing business, Day Star Staffing, LLC, based in Ohio. Under that agreement, Mr. Sheets sold Day Star Staffing to DSS Holdings in exchange for a 20% interest in DSS Holdings and an employment contract by which Mr. Sheets would manage Day Star's day-to-day operations.
The parties' business relationship became untenable. They reached a separation and settlement agreement in November 2018 that ended Mr. Sheets's employment with DSS Holdings. According to the agreement, Mr. Sheets also released all claims against Mr. Wilkinson, Mr. Sheets, and the companies.
Around January 2019, the parties had a new dispute about a contract that Mr. Wilkinson and Mr. Miller claimed Mr. Sheets had executed on behalf of DSS without authorization and installment payments that were due to Mr. Sheets. The parties renegotiated and entered into a new settlement agreement in April 2019. Mr. Sheets would receive $160, 000 in exchange for a release of all claims against Mr. Wilkinson, Mr. Miller, and their companies. The release read in relevant part:
I, Matt Sheets, for and in consideration of the payment of $160, 000, the receipt and sufficiency of which is hereby acknowledged . . . do hereby release and forever discharge DSS Holdings, LLC (“DSS”), Hoosier Investments, LLC (“Hoosier”) and their respective agents . . . from any and all claims, demands, damages, actions, causes of action or suits of any kind or nature whatsoever, known or unknown, which I now have or may hereafter have, including but not limited to any arising out of or in any way relating to the Separation and Settlement Agreement, General release, and Covenant Not To Sue, dated November 19, 2019 and any non-performance by DSS or Hoosier of their obligations thereunder.
On September 4, 2019, Mr. Sheets published a Facebook post that gave rise to the plaintiffs' defamation claim. The post included the following:
(Image Omitted)
The Facebook post's images appeared to show Mr. Wilkinson and Mr. Miller burying Mr. Sheets alive and holding a gun to his head. There was also an image of a rat with Mr. Miller's face. The text of the post said in part, and “The second picture is from a time when through force, among other things I was told I had to sign some papers selling certain assets or else.”
The plaintiffs sued Mr. Sheets in state court in September 2019, alleging that he breached their settlement agreement's non-compete and non-disparagement provisions and alleging defamation per se and defamation per quod, arising from his Facebook post. Mr. Sheets removed the case to federal court and filed ten counterclaims against the plaintiffs. The plaintiffs moved to dismiss Mr. Sheets's counterclaims, and the court dismissed two claims but denied the motion as to all other claims. That left claims for (1) breach of contract; (2) breach of fiduciary duty; (3) a declaratory judgment that the 2018 settlement agreement is void or voidable; (4) securities fraud; (5) common law fraud; (6) civil conspiracy; (7) defamation, libel, invasion of privacy, and false light; and (8) failure to provide an accounting.
Mr. Sheets and the plaintiffs both filed motions for summary judgment. The plaintiffs also filed a motion to strike various materials related to Mr. Sheets's brief in opposition to their motion for summary judgment. Shortly before the court heard argument on the motions, the plaintiffs voluntarily dismissed their claims for breach of contract and defamation per quod, leaving only their claim for defamation per se. Pending before the court is the plaintiffs' motion for summary judgment, Mr. Sheets's motion for summary judgment, and the plaintiffs' motion to strike.
Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). A genuine issue of material fact exists whenever “there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). In deciding whether a genuine issue of material fact exists, we accept the non-movant's evidence as true and draw all inferences in his favor. Id. at 255. Nevertheless, the nonmoving party it not entitled to “[i]nferences that are supported by only speculation or conjecture.” Argyropoulos v. City of Alton, 539 F.3d 724, 732 (7th Cir. 2008). The existence of an alleged factual dispute, by itself, won't defeat a summary judgment motion; “instead, the nonmovant must present definite, competent evidence in rebuttal, ” Parent v. Home Depot U.S.A., Inc., 694 F.3d 919, 922 (7th Cir. 2012), and “must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact that requires trial.” Hemsworth v. Quotesmith.com, Inc., 476 F.3d 487, 490 (7th Cir. 2007); see also Fed.R.Civ.P. 56(e)(2).
The court is hearing the parties' claims under its diversity jurisdiction, so the court must first determine which law applies to the dispute. A federal court exercising its diversity jurisdiction applies the choice-of-law rules of the state in which it sits. NewSpin Sports, LLC v. Arrow Elecs., Inc., 910 F.3d 293, 300 (7th Cir. 2018). Indiana choice of law doctrine favors enforcement of choice-of-law clauses included in contracts. Allen v. Great Am. Reserve Ins. Co., 766 N.E.2d 1157, 1162 (Ind. 2002). The parties' settlement agreements designated Indiana law as their choice of law. Although Mr. Sheets argues he isn't bound by the agreement, he agrees that Indiana law governs the suit. Accordingly, Indiana law applies to the parties' claims.
Mr. Sheets moves for summary judgment, arguing that the Facebook post doesn't amount to defamation per se, for several reasons. To prove defamation per se, a plaintiff must show (1) a communication imputing criminal conduct; a loathsome disease; misconduct in one's trade, profession, office, or occupation; or sexual misconduct, (2) malice, [1] and (3) publication. Baker v. Tremco Inc., 917 N.E.2d 650, 657 (Ind. 2009). A defendant shows actual malice by publishing a defamatory communication either with knowledge that it's false or with reckless disregard as to its truth or falsity. Poyser v. Peerless, 775 N.E.2d 1101, 1107 (Ind.Ct.App. 2002) (citations and quotations omitted). Although defamation normally requires special damages, damages are presumed for defamation per se. Baker v. Tremco, 917 N.E.2d at 657.
First, Mr. Sheets argues that he's entitled to judgment because the Facebook post doesn't identify the plaintiffs by name with words. Indiana defamation law doesn't specifically require words but requires a communication. Communication is defined broadly-defamatory communications can be “expressed either by writing or printing, or by signs, pictures, effigies, or the like.” Cronin v. Zimmerman, 88 N.E. 718, 719 (Ind. App. 1909) (citation omitted).
Although some of the cases Mr. Sheets cites refer to “words, ” “text, ” or “statements, ” the courts deciding those cases used these words interchangeably with “communication” because the communications in those cases were expressed with written words-the cases don't hold that a defamatory statement must identify the plaintiff with text. See Ind. Newspapers Inc. v. Junior Achievement of Cent. Ind., Inc., 963 N.E.2d 534 (Ind.Ct.App. 2012) (); Baker v. Tremco Inc., 917 N.E.2d 650, 658 (Ind. 2009) (); Moore v. Univ. of Notre Dame, 968 F.Supp. 1330, 1334 (N.D. Ind. 1997) (...
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