Foster v. GE CV-96-151-SD 09/02/98 UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEW HAMPSHIRE
Walter H. Foster III; Foster Steam Turbine Consultants, Ltd.
_____ v. Civil No. 96-151-SD
General Electric Co.; John Welch; Robert Nardelli
O R D E R
Foster Steam Turbine Consultants, Ltd. (FSTC) and Walter H.
Foster III allege that defendants General Electric Company (GE)
and its corporate executives interfered with their business
relationships. Plaintiffs filed claims for defamation; civil
conspiracy; tortious interference with business relationships;
interference with the right to work; negligence; respondeat
superior; negligent hiring, training and supervision; and breach
of contract. Presently before the court are four motions:
defendants' motion for summary judgment; a motion for summary
judgment filed by defendants Nardelli and Welch; defendants'
motion to strike the affidavit of Walter Foster; and plaintiffs'
assented-to motion to exceed page limit. Objections have been filed to the first three motions; the motion to exceed page limit
is herewith granted.
Background
Walter H. Foster (Foster) was employed at GE for a period
in excess of twenty-five years. On May 1, 1995, Foster was
permanently laid off as part of GE's reduction in its workforce.
Under GE policy, laid-off employees had to submit for inspection
and approval any property or personal effects they wanted to
remove from the plant. Before leaving, Foster submitted several
boxes of papers to a GE inspector. He was denied approval to
remove some of the papers, which were seized by the inspector.
Shortly after Foster left GE, he began his own business,
Foster Steam Turbine Consultants, and began representing GE
customers as an inspector, consultant, and auditor. Foster was
permitted unescorted access to several GE plants to conduct his
business as an inspecting agent for his customers. In the fall
1995, GE officials decided to terminate Foster's access to GE
facilities, citing as the reason his attempted removal of
proprietary information when he was laid off.
2 Discussion
1. Standard for Suramary Judgment
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. Rule 56 (c), Fed. R. Civ. P.;
Lehman v. Prudential Ins. Co. of A m . , 74 F.3d 323, 327 (1st Cir.
1996). The court's function at this stage is not to "'weigh the
evidence and determine the truth of the matter but to determine
whether there is a genuine issue for trial.'" Stone & Michaud
Ins, v. Bank Five for Savinas, 785 F. Supp. 1065, 1068 (D.N.H.
1992) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249
(1986)).
The moving party has the burden of establishing the lack of
a genuine issue of material fact. Finn v. Consolidated Rail
Corp., 782 F.2d 13, 15 (1st Cir. 1986). The court views the
record in the light most favorable to the nonmoving party,
granting all inferences in favor of the nonmoving party. Caputo
v. Boston Edison Co., 924 F.2d 11, 13 (1st Cir. 1991). To
survive summary judgment, the nonmoving party must make a
"showing sufficient to establish the existence of [each] element
essential to that party's case," Celotex Corp. v. Catrett, 477
U.S. 317, 322-23 (1986), and cannot merely rely on allegations or
denials within the pleadings. LeBlanc v. Great Am. Ins. Co., 6
3 F.3d 836, 841 (1st Cir. 1993), cert, denied, 511 U.S. 1018
(1994); Anderson, supra, 477 U.S. at 256. When reviewing a
summary judgment motion, [t]he question is not whether there is
literally no evidence favoring the non-movant, but whether there
is any upon which a jury could properly proceed to find a verdict
in that party's favor.'" Caputo, supra, 924 F.2d at 13 (quoting
De Arteaga v. Pall Ultrafine Filtration Corp., 862 F.2d 940, 941
(1st Cir. 1988)).
2. Defendants' Motion for Summary Judgment
a. Defamation
GE seeks summary judgment on Foster's defamation claim. To
establish defamation, a plaintiff must show that the "defendant
failed to exercise reasonable care in publishing, without a valid
privilege, a false and defamatory statement of fact about the
plaintiff to a third party." Independent Mechanical Contractors,
Inc. v . Gordon T . Burke & Sons, Inc., 138 N.H. 110, 118, 635 A.2d
487, 492 (1993) (citing R e s t a t e m e n t (S e c o n d ) of T orts § 558 (1977); 8
R ichard B. M c N a m a r a , N e w H a m p s h i r e Pr ac ti c e, Personal In j u r y , T ort and
In su r a n c e Practice § 2 (1988) ) . A statement is defamatory if "it
tends so to harm the reputation of another as to lower him in the
estimation of the community or to deter third persons from
associating or dealing with him." Restatement, supra, § 559. The
4 court must "consider all the words used, not merely a particular
phrase or sentence." Information Control Corp. v. Genesis One
Computer Corp., 611 F.2d 781, 784 (1st Cir. 1980).
The first defamatory statement alleged by Foster was made by
Donald Leger, a product director at GE. Leger wrote one of
plaintiff's clients, Phil Bader of the Dresser Rand Corporation,
in essence, that GE prohibited Foster from entering GE
facilities. Leger wrote, "Your customer has engaged an agency,
Foster Steam Turbine Consultants, Ltd., . . . with whom we will
no longer do business. And, as a result, their privilege to
enter into or work at our facilities has been revoked."
Plaintiffs' Exhibits in Support of Their Opposition to
Defendants' Motion for Summary Judgment, Exhibit 29. Later,
Leger explained further to Bader, "please be assured our reasons
deal with his prior employment with us and not his performance as
an auditor." Id., Exhibit 30.
Similarly, Charles Beck, a GE Power Systems employee, made
the following statement to ICI Purchasing and Supply Company, a
potential client of plaintiff. "In principal Seller has no
objection to inspection of progress by Buyer or Buyer's
designated agent, however Mr. W. Foster is not acceptable to
witness any inspections or witness points in G E 's facilities."
Id., Exhibit 27, at 2. To explain the reasons for excluding
5 Foster from GE facilities, Leger wrote, "the decision to ban Walt
Foster or any of his associates from GE facilities was primarily
due to events prior to his involvement on the Pertamina project."
Id., Exhibit 36.
A reasonable interpretation of these statements is that
Foster committed wrongful acts against GE that justified banning
him from GE facilities. Such allegations of wrongdoing would
tend to harm Foster's reputation, and, if untrue, would
constitute defamation.
The next defamatory statement alleged by Foster was made in
February 1996 by Grace Matthews, in-house counsel for GE, who
spoke with Wayne Webber, an attorney with VICO, Foster's
customer, concerning the reasons for G E 's lock-out of Foster.
Webber asked Matthews if Foster had done anything "illegal." In
response, Matthews read to Webber the following sentence from a
letter previously written by Foster to GE personnel: "I then
boxed personal items and items that I considered non-proprietary
for removal from the plant." Id., Exhibit 36, at 68 (Matthews
Deposition). It is a reasonable inference that Matthews was
implying, without directly asserting, that Foster had wrongfully
taken proprietary information from GE.
First, GE argues that Matthews merely repeated Foster's own
words to Webber, which cannot constitute defamation. However,
6 G E 's position is incorrect. It is axiomatic that the meaning of
words varies with context. Foster's words carried a different
meaning when repeated by Matthews in the context of a
conversation with Webber. Second, GE argues that Foster had
already told VICO personnel that GE locked him out because of a
dispute over the document removal incident. Without authority,
GE asserts that " [a]s a matter of law, it cannot constitute
defamation for a party to convey information to a third party
that has already been conveyed to that third party by the
plaintiff himself." Defendants' Memorandum in Support of Motion
for Summary Judgment at 21. Once again, G E 's position is
incorrect. If a plaintiff tells a third party that the defendant
has made derogatory allegations against plaintiff, it does not
give the defendant license to make those derogatory allegations
directly to the third party.
The next defamatory statement alleged by plaintiff was made
by George Gunderson, a GE employee, who allegedly told some of
Foster's clients that Foster had stolen GE documents. However,
plaintiff has submitted no evidence that Gunderson made such
statements. Plaintiff's memorandum claims that Foster's students
in Indonesia told him that Gunderson called Foster a thief. The
memo erroneously cites Foster's affidavit, which does not allege
such a conversation between Foster and his Indonesian students.
7 Furthermore, there is absolutely no evidence of when or where
Gunderson allegedly told the Indonesian students that Foster was
a thief. There is a "well-established rule that defamation
claims must clearly identify the time and place of the alleged
defamatory statements." Mesiti v. Microdot, 739 F. Supp. 57, 66
(D.N.H. 1990). Defendant's motion for summary judgment must be
granted as to the alleged defamatory statements by Gunderson to
the Indonesian students.
The next defamatory statements alleged by plaintiff are
certain intra-corporate statements accusing Foster of stealing
proprietary information. Defendants claim these statements were
privileged under Chagnon v. Union Leader Corp., 103 N.H. 426,
438, 174 A.2d 825, 833 (1961), cert, denied. 369 U.S. 830 (1962),
which provides, "A conditional privilege . . . is established if
the facts, although untrue, were published on a lawful occasion,
in good faith, for a justifiable purpose, and with a belief,
founded on reasonable grounds of its truth." Defendants claim
the intra-corporate statements were made in good faith to protect
G E 's interest in proprietary information, while plaintiff claims
the statements were made in bad faith solely to tarnish his
reputation.
This court has previously ruled that "the determination of
the existence of . . . a conditional privilege must be made by
8 the trier of fact." Chamberlain v. 101 Realty Inc., 626 F. Supp.
865, 871 (D.N.H. 1985) (citing Pickering v. Frink, 123 N.H. 326,
329, 461 A.2d 117, 119 (1983)). Thus it is a jury question
whether GE employees published the allegedly defamatory
statements in good faith.
in February 1996 at a meeting in Jakarta, Indonesia, when
Gunderson, a GE employee, publicly called plaintiff a "liar" and
"incompetent." Defendant argues that these statements merely
express opinion, and are protected under Gertz v. Robert Welch,
Inc., 418 U.S. 323, 339 (1974) ("Under the First Amendment there
is no such thing as a false idea."). However, the Court has
rejected an "artificial dichotomy between 'opinion' and fact,"
Milkovich v. Lorain Journal Co., 497 U.S. 1, 19 (1990), because
expressions of "opinion" may nonetheless imply an underlying
objective evaluation that is "susceptible of being proved true or
false." Id. at 21. Summary judgment on the grounds that the
statement constitutes protected opinion is only appropriate if no
reasonable person could conclude that the communication implies a
defamatory statement of fact. See White v. Fraternal Order of
Police, 909 F.2d 512, 518 (D.C. Cir. 1990).
A reasonable person could conclude that Gunderson's opinion
of Foster's competency and probity nonetheless implies an
9 underlying factual basis for the opinion that Foster performed
incompetently and that he lied. Thus it is a jury question
whether the statements constitute expressions of opinion.
Defendants claim that Foster admitted in deposition that he
never heard Gunderson call him a liar. The assertion that the
word "liar" was used comes from Foster's wife. See Plaintiffs'
Opposition, supra, Exhibit 37, Deposition of JoAnn Quinn-Foster,
at 58. Defendants claim that plaintiff cannot create an issue of
material fact by contradicting himself. See Colantuoni v. Alfred
Calgagni & Sons, Inc., 44 F.3d 1, 4-5 (1st Cir. 1994) ("When an
interested witness has given clear answers to unambiguous
questions, he cannot create a conflict and resist summary
judgment with an affidavit that is clearly contradictory, but
does not give a satisfactory explanation of why the testimony is
changed."). However, there is obviously no contradiction here.
Simply because Foster did not himself hear Gunderson call him a
liar does not mean that Foster's wife did not hear that.
b. Civil Conspiracy
Plaintiff alleges that defendants conspired to put Foster
out of business by defaming him and interfering with his
contractual relations. The elements of civil conspiracy are:
(1) two or more persons (including corporations); (2) an object to be accomplished (i.e., an 10 unlawful object to be achieved by lawful or unlawful means or a lawful object to be achieved by unlawful means); (3) an agreement on the object or course of action; (4) one or more unlawful overt acts; and (5) damages as the proximate result thereof.
Edwards v. Baker, 130 N.H. 41, 47, 534 A.2d 706, 709 (1987).
Foster has provided absolutely no evidence of an agreement or
concerted action to defame Foster or interfere with his business
relations. Thus defendants' motion for summary judgment on the
civil conspiracy claim is granted.
c. Tortious Interference With Business Relationships
Plaintiffs contend that defendants wrongfully interfered
with contracts between plaintiffs and three companies, ICJV, ICI,
and PT Badak. The elements of a prima facie case of tortious
interference with business relationships are: "(1) a business
relationship or contemplated contract of economic benefit; (2)
the defendant's knowledge of such relationship; (3) the
defendant's interference with it through improper motive or
means; and (4) the plaintiff's loss of advantage directly
resulting from the defendant's conduct." American Private Line
Services v. Eastern Microwave, 980 F.2d 33, 36 (1st Cir. 1992)
(footnote omitted).
GE claims that the interference with Foster's contractual
relations was privileged because the means of interference was 11 GE's assertion of its right to exclude Foster from its property.
GE claims that its property rights are absolute. Let it be
settled once and for all, ownership rights never have been, are
not now, and never will be absolute. It would be impossible,
except for the most static uses of property. With dynamic
property uses, irreconcilable conflict between property owners is
unavoidable. Owner A wants to operate a smoke-billowing factory,
and Owner B wants his quiet family home to be smoke free. Both
of their property rights cannot be absolute, and one of them must
be subject to legal limitations. Defendant's correctly point out
that "[t]he power to exclude has traditionally been considered
one of the most treasured strands in an owner's bundle of
property rights." Loretto v. Teleprompter Manhattan CATV Corp.,
458 U.S. 419, 435 (1982). However, even the right to exclude
must be subject to limitations. As one court has noted, "The
privilege of a property owner to arbitrarily exclude others . . .
may be qualified when its exercise is seen to interfere with
other interests the protection of which is deemed to be
paramount." Posa v. Miller Brewing Co., 642 F. Supp. 1198, 1205
(E.D.N.Y. 1986). For instance, under the privilege of necessity,
a person may trespass upon the property of another to save
himself or his own property, or even a third person or his
property from a harm greater than that caused by the trespass.
12 Prosser and K eeton on T orts 147 (5th ed. 1984) . Furthermore,
"society's interest in a free and competitive marketplace,"
Posa, supra, 642 F. Supp. at 1205, may trump an owner's right to
exclude. As an extension of this principle, protecting
contractual relations may be deemed paramount to the right to
exclude. The R e s t a t e m e n t (S e c o n d ) of T orts § 767 (1977) lists the
following factors as relevant to whether interference with
contracts is wrongful:
(a) the nature of the actor's conduct, (b) the actor's motive, (c) the interests of the other with which the actor's conduct interferes, (d) the interests sought to be advanced by the actor, (e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other, (f) the proximity or remoteness of the actor's conduct to the interference and (g) the relations between the parties.
The nature of the actor's conduct, even the admittedly
important prerogative of excluding from property, is simply a
factor, but is not dispositive. In sum, it is always a balance
of interests, and it is entirely unhelpful to speak in terms of
absolute privileges.
One of the important factors that must be balanced is the
motive that animated GE's assertion of its right to exclude. GE
claims it barred Foster from GE facilities because Foster
attempted to remove proprietary information. Memorandum of Law 13 in Support of Motion of Defendants John Welch and Robert Nardelli
for Summary Judgment, Exhibit G. Foster claims GE barred him for
more sinister motives; namely, to interfere with his business.
Plaintiffs' Objection to Motion of Welch and Nardelli, Affidavit
of Walter H. Foster 5 4. Since GE's state of mind is contested,
there remains a genuine issue of material fact to be determined
by a jury. Flesner v. Technical Communications Corporation, 410
Mass. 805, 809, 575 N.E.2d 1107, 1110 (1991); Pederson v. Time,
404 Mass. 14, 17, 532 N.E.2d 1211, 1214 (1989) (generally
accepted rule disfavors granting summary judgment where party's
state of mind constitutes essential element of cause of action);
Mitchell v. Aldrich, 112 Vt. 19, 24, 163 A.2d 833, 836 (1960)
("Whether an occasion exists which justifies the invasion of
another's contract or business relationships by the defendant is
generally a question for the jury."). Defendants' motion for
summary judgment on the tortious interference claim is therefore
denied.
d. Intentional Interference with the Right To Work
Plaintiff's compliant alleges intentional interference with
the right to work, citing the century-old case Smyth v. Ames, 169
U.S. 466, modified on other grounds, 171 U.S. 361 (1898).
However, Ames dealt with citizens' property rights against
14 interfering state regulation. That case has no application to
commercial disputes between private actors, and Foster's contrary
assertion is entirely unreasonable. Thus defendants' motion for
summary judgment on the claim of intentional interference with
the right to work is granted.
e. Negligence
GE seeks summary judgment on Foster's claim for negligence
and negligent supervision. Foster's memorandum contains only a
cursory and cryptic defense of the negligence claims. Plaintiffs'
Memorandum in Opposition at 45, which fails to point to even one
shred of evidence. The court is left without any clue as to the
plaintiff's theory of negligence. To the extent Foster expects
this court to do his lawyering for him in constructing his
negligence claims, he is incorrect. Thus summary judgment is
granted as to Foster's negligence and negligent supervision
claims.
f. Respondeat Superior
GE moves for summary judgment on the respondeat superior
claims on the ground that GE is entitled to summary judgment on
the underlying torts for which GE is allegedly vicariously
liable. GE does not dispute that the employee tortfeasors were
15 acting within the scope of their employment. As the court has
not granted summary judgment on the underlying torts, neither
will the court grant summary judgment on the respondeat superior
claim.
q. Breach of Contract
GE moves for summary judgment on Foster's claim for breach
of contract. Foster alleges that he is a third-party beneficiary
of contracts between GE and GE's customers, under which the
customers had the right to inspect GE's facilities. The
customers hired Foster to conduct the inspection, and by denying
Foster access to GE facilities, GE has breached the contract with
its customers. To qualify as a third-party beneficiary, the
contract must give the promisor reason to know that the promisee
has entered into the agreement, at least in part, in order to
benefit a third party. Arlington Trust Co. v. Estate of Wood,
123 N.H. 765, 767-68, 465 A.2d 917, 918 (1983). Foster has
pointed to no evidence indicating that GE knew its customers
entered into the contracts, in part, to benefit Foster. Indeed,
none of Foster's memoranda even address the breach of contract
issue. Parties must assert only causes of action founded upon
good faith. Once a good faith basis for a claim disappears, it
is incumbent upon the party affirmatively to withdraw the claim.
16 Defendants' motion for summary judgment is granted for Foster's
breach of contract claim.
9. Motion of Nardelli and Welch for Summary Judgment
Nardelli and Welch move for summary judgment on grounds of
(1) lack of personal jurisdiction in New Hampshire and (2) lack
of evidence of their involvement in the tortious conduct alleged
by Foster. Foster argues that ruling on this summary judgment
motion would be premature because discovery is not yet complete.
Foster served interrogatories on the defendants, which have not
been answered because defendants filed motions for protective
orders. Those protective orders have been denied, but it is
unclear to the court whether the interrogatories have been
answered. The court will deny Nardelli and Welch's motion for
summary judgment under Rule 56(f), which is appropriate when the
requesting party "'(1) articulate[s] a plausible basis for the
belief that discoverable materials exist which would raise a
[genuine issue of material fact] and (2) "demonstrates good cause
for failure to have conducted the discovery earlier."'" Fennell
v. First Step Designs, 83 F.3d 526, 531 (1st Cir. 1996) (quoting
Price v. General Motors Corp., 931 F.2d 162, 164 (1st Cir. 1991)
(quoting Paterson-Leitch Co. v. Massachusetts Mun. Wholesale
Elec. Co., 840 F.2d 985, 988 (1st Cir. 1988))). Foster has meet
17 both requirements. When all relevant discovery is completed,
defendants may renew their motion for summary judgment.
10. Defendants' Motion to Strike Supplemental Affidavit of
Walter H. Foster III
Defendants ask the court to strike paragraphs 4 and 5 of
Foster's supplemental affidavit (filed May 22, 1998) because they
contradict Foster's deposition testimony. However, Foster did
testify in deposition that Gunderson called him a "liar". Foster
Deposition at 368 (attached to plaintiff's objection to motion to
strike). Therefore, Foster's affidavit stating that Gunderson
called him a liar is not inconsistent with Foster's deposition.
Defendants also ask the court to strike paragraphs 7, 8, 9,
and 10, which relate to Gunderson's allegedly defamatory
statements to others. As the court has granted summary judgment
on the defamation claim as it pertains to those statements, that
portion of the motion to strike is moot.
____________________________ Conclusion
For the abovementioned reasons, the motion for summary
judgment filed by all defendants (document 66) is granted as to
the defamation claim (Count 1) regarding the statements from
Gunderson to the Indonesian students, the civil conspiracy claim
18 (Count 2), the claims of intentional interference with the right
to work (Count 4), negligence (Count 5), negligent hiring,
training, and supervision (Count 7), and breach of contract
(Count 8). Summary judgment is denied on the rest of the
defamation claims in Count 1, on the claim of tortious
interference with contractual relations (Count 3), and on the
respondeat superior claim (Count 7).
The motion for summary judgment filed by defendants Nardelli
and Welch (document 52) is denied.
Defendants' Motion to Strike Supplemental Affidavit of
Walter H. Foster III (document 86) as regards 55 4 and 5 is
denied; as to 55 7-10, the motion is moot.
Plaintiffs' Assented-To Motion to Exceed Page Limit
(document 76) is granted.
SO ORDERED.
Shane Devine, Senior Judge United States District Court
September 2, 1998
cc: Joseph S. Hoppock, Esq. Ellen M. Bach, Esq. James K. Brown, Esq. Steven M. Gordon, Esq.