Thomas Boyd v. Nationwide Mutual Insurance Company

208 F.3d 406, 16 I.E.R. Cas. (BNA) 263, 2000 U.S. App. LEXIS 5035
CourtCourt of Appeals for the Second Circuit
DecidedMarch 24, 2000
Docket1999
StatusPublished
Cited by48 cases

This text of 208 F.3d 406 (Thomas Boyd v. Nationwide Mutual Insurance Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thomas Boyd v. Nationwide Mutual Insurance Company, 208 F.3d 406, 16 I.E.R. Cas. (BNA) 263, 2000 U.S. App. LEXIS 5035 (2d Cir. 2000).

Opinion

POOLER, Circuit Judge:

We decide here whether the plaintiff-employee in a defamation lawsuit against his employer may proceed to discovery even though the defendant-employer has a qualified privilege to share evidence of the employee’s wrongdoing with law enforcement. We do so where the employer failed to first verify objective matters entirely within its control. It is well settled that a defendant’s failure to investigate before making defamatory statements does not support a finding of actual malice. See, e.g., Harte-Hanks Communications, Inc. v. Connaughton, 491 U.S. 657, 666-67, 109 S.Ct. 2678, 105 L.Ed.2d 562 (1989). Although failure to investigate is not enough to establish constitutional actual malice, it can be enough to permit discovery at least as to common law malice. In this case, the defendant’s failure to check its own records regarding a simple factual question before speaking raises sufficient doubt about the defendant’s good faith to allow the plaintiff to proceed to discovery.

BACKGROUND

Because this appeal follows a motion to dismiss on the pleadings, we take as true the allegations contained in plaintiff Thomas Boyd’s complaint, which provides the basis of our recitation of the facts. See, e.g., Lee v. Bankers Trust Co., 166 F.3d 540, 543 (2d Cir.1999). Nationwide Mutual Insurance Company (“Nationwide”) hired Boyd as a claims representative in April 1993 and promoted him to senior claims representative in 1995. In August 1997, Nationwide promoted Boyd to master claims representative. Boyd worked without incident until Nationwide fired him on October 1, 1997, for stealing, receiving kickbacks, and committing other financial improprieties. On the day of his dismissal, Boyd’s supervisors — Don Santarpia, a district claims manager, and Terry Toranjoe, a sales supervisor — summoned Boyd to a meeting. For three hours, Santarpia, To-ranjoe, and an unnamed Nationwide inter *409 nal investigator interrogated Boyd about the alleged misconduct, which he steadfastly denied. Nationwide then terminated Boyd’s employment and informed Michael DeWitt, a New York state trooper, that Boyd had stolen $3,760 from Nationwide by writing and cashing two checks for a single insurance claim. Nationwide, however, failed to investigate its own records, which showed that both checks had not been cashed. 1 Relying upon Nationwide’s representation, Trooper DeWitt drafted a felony complaint against Boyd and charged him with third-degree grand larceny. A local newspaper, the Sunday Record, reported Boyd’s arrest. On December 10, 1997, the local district attorney dismissed the charges against Boyd.

Boyd sued Nationwide in federal court based on diversity jurisdiction for defamation, malicious prosecution, intentional infliction of emotional distress and negligent infliction of emotional distress. At a hearing on February 19, 1999, Judge Colleen McMahon of the United States District Court for the Southern District of New York dismissed Boyd’s claims pursuant to Fed.R.Civ.P. 12(b)(6) without leave to amend. As to Boyd’s claim for defamation, Judge McMahon observed, “it seems well settled that the failure to investigate a statement does not constitute reckless disregard for purposes of establishing the malice necessary to defeat a qualified privilege, and that is true even if a prudent person would have investigated before publishing the statement.” 2 On appeal, Boyd challenges only the district court’s dismissal of his defamation claim.

DISCUSSION

We review a district court’s grant of a motion to dismiss de novo, assuming the truth oí ail factual allegations contained in the complaint and drawing all reasonable inferences in the plaintiffs favor. See Stuto v. Fleishman, 164 F.3d 820, 824-25 (2d Cir.1999). “A dismissal under Rule 12(b)(6) for failure to state a cognizable claim may be affirmed only where ‘it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief.’ ” Id. (quoting Citibank, N.A. v. K-H Corp., 968 F.2d 1489, 1494 (2d Cir.1992)).

A. Legal Standard

Under New York law, a cause of action for slander contains four elements: “(1) an oral defamatory statement of fact, (2) regarding the plaintiff, (3) published to a third party by the defendant, and (4) injury to the plaintiff.” Weldy v. Piedmont Airlines, Inc., 985 F.2d 57, 61 (2d Cir.1993). The court presumes compensa-ble injury if the defamatory statement falls within a category of slander per se. Id. at 61-62 (citing Liberman v. Gelstein, 80 N.Y.2d 429, 590 N.Y.S.2d 857, 860-61, 605 N.E.2d 344 (1992)). A false accusation of serious crime constitutes slander per se. See id.

Nationwide’s inaccurate allegation that Boyd committed felony larceny therefore was slander per se. Boyd admitted, however, that Nationwide’s accusation was subject to a qualified privilege. Qualified privilege is a defense to claims of slander. See Weldy, 985 F.2d at 62. “‘[G]ood faith communications of a party having an interest in the subject, or a *410 moral or societal duty to speak, are protected by a qualified privilege if made to a party having a corresponding interest or duty.’ ” Zeevi v. Union Bank of Switzerland, No. 89 Civ. 4637, 1993 WL 148871 at *6 (S.D.N.Y. Apr.30, 1993) (citation omitted); see also Olivieri v. McDonald’s Corp., 678 F.Supp. 996, 1001-02 (E.D.N.Y.1988); see also Byam v. Collins, 111 N.Y. 143, 150, 19 N.E. 75 (1888). The qualified privilege creates a “rebuttable presumption of good faith that may constitute a complete defense.” Weldy, 985 F.2d at 62. Reporting crime to a police officer easily falls within the scope of the privilege. See Robert D. Sack, Libel, Slander, and Related Problems, § 9.2.1, at 9-7 (3d ed.1999).

In order to overcome a qualified privilege, plaintiff must demonstrate that defendant’s statement was false. See Weldy, 985 F.2d at 62 (citations omitted). Plaintiff also must show that defendant abused the privilege by acting beyond the scope of the privilege, acting with common law malice, or acting with “knowledge that the statement was false or with a reckless disregard as to its truth.” Id. Nationwide concedes that its accusation of larceny was false. Boyd therefore must show abuse of the privilege in any of the above three ways.

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Bluebook (online)
208 F.3d 406, 16 I.E.R. Cas. (BNA) 263, 2000 U.S. App. LEXIS 5035, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thomas-boyd-v-nationwide-mutual-insurance-company-ca2-2000.