|
COURT OF APPEALS
DECISION
DATED AND FILED
March 15, 2011
A. John Voelker
Acting Clerk of Court of Appeals
|
|
NOTICE
|
|
|
|
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official
Reports.
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See Wis. Stat. § 808.10 and Rule 809.62.
|
|
|
Appeal No.
|
|
|
|
STATE OF WISCONSIN
|
IN COURT OF
APPEALS
|
|
|
|
|
|
|
|
|
|
|
Gene Anderson,
Plaintiff-Appellant,
v.
Duane Hebert and County of Barron,
Defendants-Respondents.
|
|
|
|
|
|
|
|
|
APPEAL
from a judgment of the circuit court for Barron County: EUGENE
D. HARRINGTON, Judge. Reversed.
Before Hoover,
P.J., Peterson and Brunner, JJ.
¶1 PETERSON, J. Gene Anderson is a former
employee of Barron
County. He claims that, after he left his employment,
Duane Hebert, the county administrator, defamed him. The circuit court concluded Anderson’s exclusive remedy was under the
Worker’s Compensation Act. It therefore
granted summary judgment dismissing Anderson’s
defamation claim. However, because Anderson was no longer a County employee when the alleged
defamatory statements were made, we conclude the Worker’s Compensation Act is
not Anderson’s
exclusive remedy. We also conclude
genuine issues of material fact remain regarding whether the allegedly
defamatory statements were substantially true and whether they were made with
actual malice. We therefore reverse.
BACKGROUND
¶2 Anderson was employed as the Barron County highway
department’s patrol superintendent.
Pursuant to a service contract with the State of Wisconsin, the County was responsible for
routine maintenance and snow removal on various state-owned roads. The state paid a higher reimbursement rate
when the County used large trucks or snowplows, and a lower rate when the
County used pickup trucks or other small equipment.
¶3 In late November 2007, highway department employees Todd
Huset and Bradley Thompson complained to Hebert, the county administrator,
about the department’s operation. Among
other things, they told Hebert that Anderson
had instructed them to use pickup trucks to maintain state roads but to report
that they had used larger equipment.
This practice would allow the County to take advantage of the state’s
higher reimbursement rate, while actually using equipment that is less costly
to operate.
¶4 After meeting with Huset and Thompson, Hebert placed Anderson on
administrative leave pending an investigation into the highway department’s
reimbursement practices. The County and
state then performed audits, which concluded the County had overcharged the
state for highway maintenance. Hebert
met with Anderson
and gave him a choice between resigning or facing possible termination. Anderson
chose to resign.
¶5 Shortly after Anderson
resigned, Hebert made a number of statements to the local media and in an open
meeting of the county board. For
example, one newspaper article quoted Hebert as saying that the County placed Anderson on leave after
discovering discrepancies in road maintenance fees charged to the state. According to another article, “Hebert stated
that [Anderson]
allegedly told county workers to incorrectly fill out reimbursement forms,
which resulted in the state paying higher amounts to the county.” At a county board meeting, Hebert stated,
“The [state audit], along with additional information collected, proves not
only the failure of management responsibilities, but also the unethical and
irresponsible direction of falsification of official documents hundreds of
times in the past year.”
¶6 Anderson
sued the County for breach of contract, conversion and misappropriation, and
defamation. The County moved for summary
judgment, which the circuit court granted as to all but the defamation claim. The County later moved for reconsideration on
the defamation claim, based on our decision in Farady-Sultze v. Aurora Medical
Center, 2010 WI App 99, 327 Wis. 2d 110, 787 N.W.2d 433. The County argued Farady-Sultze stands for
the proposition that the Worker’s Compensation Act provides the exclusive
remedy for defamation by an employer, even if the defamation occurs after the
employee has been terminated. The
circuit court agreed and dismissed Anderson’s
defamation claim. Anderson now appeals.
DISCUSSION
¶7 We independently review a grant of summary judgment, using
the same methodology as the circuit court.
Hocking v. City of Dodgeville, 2009 WI 70, ¶7, 318 Wis. 2d 681, 768
N.W.2d 552. Summary judgment is
appropriate if there is no genuine issue as to any material fact and the moving
party is entitled to a judgment as a matter of law. Wis.
Stat. § 802.08(2). We construe the facts and all reasonable inferences
in the nonmoving party’s favor. Strozinsky
v. School Dist. of Brown Deer, 2000 WI 97, ¶32, 237 Wis. 2d 19, 614
N.W.2d 443.
I. Worker’s Compensation Act
¶8 The circuit court concluded the Worker’s Compensation Act’s
exclusive remedy provision bars Anderson’s
defamation claim. This is an issue of
statutory interpretation, which we review independently. Lentz v. Young, 195 Wis. 2d 457, 468,
536 N.W.2d 451 (Ct. App. 1995).
Statutory interpretation begins with the language of the statute. State ex rel. Kalal v. Circuit Court for
Dane Cnty., 2004 WI 58, ¶45, 271 Wis. 2d 633, 681 N.W.2d 110. If the meaning of the words in the statute is
plain and unambiguous, our analysis goes no further. Id.
¶9 We conclude the language of the Act is plain and
unambiguous. The Act’s exclusive remedy
provision states that, where an injury is covered by the Act, “the right to the
recovery of compensation under [the Act] shall be the exclusive remedy against
the employer, any other employee of the same employer and the worker’s
compensation insurance carrier.” Wis. Stat. § 102.03(2). An injury is covered by the Act where certain
conditions are present. See Wis.
Stat. § 102.03(1).
¶10 As relevant here, an injury is only covered if, at the time of
the injury: (1) both the employer and
employee are subject to the provisions of the Act; and (2) the employee is
performing service growing out of and incidental to his or her employment. Wis.
Stat. § 102.03(1)(b)-(c)1.
It is undisputed that the injury to Anderson—the
alleged defamation—did not occur until after Anderson resigned. Thus, at the time of the injury, Anderson was not the
County’s employee and was not subject to the provisions of the Act. See
Wis. Stat. § 102.03(1)(b). Furthermore, because he had already resigned,
Anderson was
not “performing service growing out of and incidental to his … employment” at
the time of the injury. See Wis.
Stat. § 102.03(1)(c)1. Anderson’s injury
therefore is not covered by the Act.
Consequently, the Act’s exclusive remedy provision does not bar his
defamation claim.
¶11 Despite the plain language of the Act, the County cites two
cases for the proposition that the Act is Anderson’s
exclusive remedy: Wolf v. F & M Banks,
193 Wis. 2d 439, 534 N.W.2d 877 (Ct. App. 1995), and Farady-Sultze, 327 Wis. 2d 110. In Wolf, the plaintiff sued his former
employer for defamation arising from two sources: (1) a letter prepared during his employment
that accused him of sexual harassment; and (2) post-termination statements that
he had been fired for engaging in sexual harassment. Wolf, 193 Wis. 2d at 447-48. Although some of the defamatory statements
were made after Wolf’s termination, we nevertheless affirmed dismissal of his
claim based on the Act’s exclusive remedy provision. Id.
at 455-56. However, we did not address
the timing of the defamatory statements, nor did we analyze whether the
exclusive remedy provision applies to post-termination injuries. Rather, the issue we addressed in Wolf
was whether, as a general principle, defamation is an injury contemplated by
the Act. We noted, “Wolf’s appellate
argument is limited to his challenge to the court of appeals decision in Becker
v. Automatic Garage Door Co., 156 Wis. 2d 409, 465 N.W.2d 888 (Ct. App.
1990).” Id. at 455 n.6. The import of our decision in Wolf
was to reaffirm Becker’s holding that the Act covers pre-termination
defamation. Id.
at 455-56; see also Becker, 156 Wis.
2d at 418. Wolf does not control the
dispositive question in this case—whether the Act covers post-termination
defamation.
¶12 In Farady-Sultze, the plaintiff sued her former employer for
defamation, based on the employer’s policy of affirmatively disclosing the
reason for an employee’s termination to prospective employers. Farady-Sultze, 327 Wis. 2d 110, ¶13. We affirmed the dismissal of Farady-Sultze’s
claim because there was no evidence her employer actually carried through with
its policy by disclosing the reason for her termination. Id. We stated, “In other words, if there is to be
such an allegation of defamation, there is no evidence that it has occurred yet
or that it ever may occur.” Id. The County points out we also “note[d] that,
in Wolf,
the claimed defamation occurred after discharge, which is similar to what
Farady-Sultze alleges is the case here.”
Id. However, we went on to indicate that the two
cases were factually distinguishable and that our holding in Farady-Sultze
was based on the total lack of evidence that defamation actually occurred. Id. Consequently, Farady-Sultze does not
compel us to conclude the Act’s exclusive remedy provision bars
post-termination defamation claims.
¶13 The County also contends Wisconsin
courts have applied the exclusive remedy provision to bar claims arising from
post-termination injuries other than defamation. The County principally relies on Pederson
& Voechting v. Kromrey, 201 Wis.
599, 231 N.W. 267 (1930). There, Kromrey
was terminated on a Saturday afternoon. Id. at
600. He returned to his former employer’s
premises on Monday morning to receive his paycheck and collect his tools. Id. While there, he slipped and fell, injuring
his foot. Id.
On appeal, the issue was “whether, under these circumstances, the
relation of employer and employee existed” so that Kromrey was entitled to
worker’s compensation benefits. Id. at
600-01. Our supreme court held Kromrey
was not an employee at the time of the injury because he returned to the
workplace for his own personal convenience.
The court stated, “If the [employment relationship] does exist, it must
appear that the errand of the employee was not merely for his personal
convenience, but that his presence there was referable to his contract of
employment, and in some measure, in obedience to his contractual
obligation.” Id. at 604. Anderson
alleges he was defamed after he resigned from his employment and his injury was
not incurred “in obedience to his contractual obligation.” See id.
Thus, Pederson & Voechting actually supports Anderson’s position that post-termination
defamation is not covered by the Act and therefore is not subject to the
exclusive remedy provision.
II. Substantial truth
¶14 As an alternative ground for affirming the summary judgment,
the County argues Hebert’s statements about Anderson were substantially true. By definition, a defamatory statement must be
false. Hart v. Bennet, 2003 WI
App 231, ¶21, 267 Wis. 2d
919, 672 N.W.2d 306. Truth is an
absolute defense to a defamation claim. See Lathan v. Journal Co., 30 Wis. 2d 146, 158, 140
N.W.2d 417 (1966). It is not necessary
that the “statement in question be true in every particular. All that is required is that the statement be
substantially true.” Id.
¶15 The County points out that Anderson has admitted the truth of some of
Hebert’s statements. For instance, in
his deposition, Anderson
admitted it was true that the County began investigating him after discovering
discrepancies in maintenance fees charged to the state. Anderson
also conceded the truth of Hebert’s statement that “[highway department]
workers reported that they were told to falsely record using machinery for
state highway work that yielded more reimbursement from the state.”
¶16 However, Hebert made other allegedly defamatory statements
whose truth Anderson
has not admitted. For example, in one
newspaper article Hebert was quoted as saying that the highway department’s
management personnel were aware of the reimbursement discrepancies and actually
directed workers to falsely report the equipment they used. According to another article, “Hebert stated
that [Anderson]
allegedly told county workers to incorrectly fill out reimbursement forms,
which resulted in the state paying higher amounts to the county.” Elsewhere, Hebert referred to Anderson as having
“allegedly cheated the state.” Hebert
“guess[ed]” that Anderson
did so to pad his budget and leave behind a legacy of success. As the County concedes, Anderson disputes the truth of any statements
regarding his own responsibility for the reimbursement discrepancies.
¶17 The County nevertheless argues Hebert’s statements were
substantially true because they were “supported by reports from County
employees.” However, mere allegations by
County employees do not prove that Hebert’s statements were true. Anderson
denies the truth of the employees’ allegations and calls into question their
motivation for reporting.
¶18 The County also suggests Hebert’s statements were substantially
true because they were confirmed by the audits.
Anderson
concedes the audits concluded the County overcharged the state, but he notes
that neither audit accused him of misconduct or fraud. Thus, the audits do not support Hebert’s
statements that Anderson
“cheated the state,” directed employees to falsify records, and engaged in
“unethical and irresponsible” conduct.
¶19 The County further contends Hebert’s statements were
substantially true because they were couched in language of speculation or were
qualified by the word “allegedly.”
However, “communications are not made nondefamatory as a matter of law
merely because they are phrased as opinions, suspicions or beliefs …. ‘One may
be libeled by implication and innuendo quite as easily as by direct
affirmation.’” Converters Equip. Corp. v. Condes
Corp., 80 Wis. 2d 257, 263-64, 258
N.W.2d 712 (1977) (quoting Frinzi v. Hanson, 30 Wis. 2d 271, 277, 140
N.W.2d 259 (1966)).
¶20 On the whole, the County attempts to parse out individual
pieces of Hebert’s statements, support the truth of each piece, and then
conclude the entire statement is true.
This approach ignores the rule that an allegedly defamatory statement
“must be interpreted in light of the overall context in which it was
made.” Denny v. Mertz, 106 Wis. 2d 636, 662, 318
N.W.2d 141 (1982). Individual words and
elements in an article “may not be viewed in isolation, but must be considered
in context in relation to the whole.” Westby
v. Madison Newspapers, Inc., 81 Wis. 2d
1, 6, 259 N.W.2d 691 (1977). When
considered in context, the truth of Hebert’s statements is disputed. Accordingly, summary judgment would be inappropriate.
III. Actual malice
¶21 Alternatively, the County contends summary judgment is
warranted because Anderson
cannot prove Hebert’s statements were made with actual malice. See Storms v. Action Wis.,
Inc., 2008 WI 56, ¶38, 309 Wis. 2d 704, 750 N.W.2d 739 (when a
public figure asserts a defamation claim, he or she must prove the allegedly
defamatory statement was made with actual malice). Anderson
concedes he is a limited purpose public figure
and therefore must prove actual malice to recover. However, he argues a genuine issue of
material fact remains regarding whether Hebert acted with actual malice.
¶22 A defendant acts with actual malice when he or she either knows
a statement is false or makes the statement with reckless disregard for its
truth or falsity. Erdmann v. SF Broad., 229
Wis. 2d
156, 169, 599 N.W.2d 1 (Ct. App. 1999). To
establish reckless disregard, a plaintiff “must show that the defendant in fact
entertained serious doubts as to the publication’s truth.” Id.
at 169-70. This does not mean that a
defendant can escape liability simply by claiming he or she believed a statement
was true. St. Amant v. Thompson,
390 U.S.
727, 732 (1968). In certain instances, a
jury may infer doubts about a statement from circumstantial evidence. See id.
Specifically, “recklessness may be found where there are obvious reasons
to doubt the veracity of the informant or the accuracy of his reports.” Id.
¶23 Here, a reasonable jury could conclude Hebert had reason to
doubt the veracity of Huset and Thompson’s allegations. Huset and Thompson conceded their primary
reason for reporting to Hebert was that they wanted to be transferred off of
the night shift. Their motivation could
have prompted Hebert to question whether their allegations were true. Moreover, Huset and Thompson waited over ten
months to report Anderson’s
alleged misconduct. When they did
report, they went directly to Hebert and to the County’s finance director,
rather than going up the highway department’s chain of command. They never reported any concerns to their
union representative, who asserted he would have taken immediate action had he
known about the alleged falsification.
Based on these facts, a jury could conclude Hebert had reason to doubt
the truth of Huset and Thompson’s allegations and acted with actual malice by
repeating those allegations to the press.
¶24 Furthermore, the county and state audits could support a
finding of actual malice. Speaking to
the press and the county board, Hebert stated that Anderson “allegedly cheated the state,”
directed employees to falsify records, and acted unethically. Neither audit reached these conclusions or
used these words. While the audits
determined the County owed the state money, they did not conclude that any
fraud had taken place, nor did they blame Anderson
for the reimbursement discrepancies.
Thus, a jury could conclude Hebert acted with reckless disregard for the
truth or falsity of his statements when he accused Anderson
of cheating the state and blamed Anderson
for directing employees to falsify records.
¶25 A jury could also find actual malice based on Hebert’s
behavior. After Huset and Thompson
accused Anderson of misconduct, Hebert chose not
to question Anderson
about the allegations. Nor did he speak
to the highway department’s shop superintendent. Had he done so, he would have learned that
the superintendent never heard Anderson instruct
employees to falsify records and never received any reports from employees that
Anderson had
directed them to do so. On these facts,
a reasonable jury could conclude Hebert failed to adequately investigate Huset
and Thompson’s allegations, and therefore acted with reckless disregard for
their truth or falsity when he repeated them to the press.
¶26 Overall, there is evidence for a jury to conclude Hebert’s
statements about Anderson
were made with actual malice.
Accordingly, genuine issues of material fact make summary judgment on
this basis inappropriate.
By the Court.—Judgment reversed.