Powell v. XO Services, Inc. et al

Filing 118

Enter MEMORANDUM Opinion and Order. Signed by the Honorable Elaine E. Bucklo on 11/7/2012. Mailed notice (jdh)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

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RICHARD D. POWELL,
Plaintiff,
v.
XO SERVICES, INC., a Delaware
corporation, and SCOTT GENTLES,
Defendants.

No. 10 C 6813

MEMORANDUM OPINION AND ORDER
The operative complaint in this case asserts two state-law
claims for per se defamation against defendants XO Services, Inc.
(“XO”)

and

prospective

Scott

Gentles

economic

and

advantage

for

tortious

against

interference

Gentles.1

The

with
basic

background facts have been described in my April 1, 2011, opinion
in this case and will not be repeated here.

Defendants have each

moved separately for summary judgment on all claims, and for the
following reasons, defendants’ motions are granted.
After David Nash and Trent Edwards were dismissed from this
case, see Powell v. XO Services, Inc., 781 F. Supp. 2d 706 (N.D.
Ill. 2011), plaintiff has proceeded under the theory that Gentles
verbally published certain annotations he made to the Nash-Edwards
Report during a January 7, 2010, meeting with XO management to

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The operative complaint also includes a claim for breach
of contract against XO, but this claims was previously dismissed.

discuss the report and discipline for plaintiff and Tom Schreck,
another XO employee.

After the meeting, plaintiff was terminated.

Gentles’ annotations consist of a series of statements, some of
them defamatory and some of them not, that were handwritten in the
margins of the Nash-Edwards Report and at the end of the report.
As I held in my April 1, 2011, opinion, while many of Gentles’
handwritten statements are susceptible to innocent construction,
those that accuse Powell of engaging in a pattern of lying and of
authorizing false documents are actionable.

See Powell, 781 F.

Supp. 2d at 713-14. Consistent with my February 7, 2012, statement
in this case, plaintiff’s amended complaint alleged additional
contextual and publication facts but did not allege any new
defamatory statements beyond Gentles’ handwritten statements.
To succeed on his defamation claim, plaintiff must show that
Gentles “made a false statement concerning plaintiff, that there
was an unprivileged publication of the defamatory statement to a
third party by [Gentles] and that plaintiff was damaged.” Wynne v.
Loyola Univ. of Chicago, 741 N.E.2d 669, 675 (Ill. App. Ct. 2000)
(citing Cianci v. Pettibone Corp., 698 N.E.2d 674, 679 (Ill. App.
Ct. 1998)).

A defendant has the burden of establishing that a

qualified privilege exists by showing that the occasion for the
communication “created some recognized duty or interest to make the
communication so as to make it privileged.” Kuwik v. Starmark Star
Mktg. and Admin., Inc., 619 N.E.2d 129, 134 (Ill. 1993) (citing

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Restatement (Second) of Torts §§ 593 through 599 (1977)).

There

are three conditionally privileged occasions: “(1) situations in
which some interest of the person who publishes the defamatory
matter is involved[;] (2) situations in which some interest of the
person to whom the matter is published or of some other third
person is involved[;] (3) situations in which a recognized interest
of the public is involved.”

Kuwik, 619 N.E.2d at 135 (quoting S.

Harper, F. James & O. Gray, The Law of Torts § 5.25, at 216 (2d ed.
1986)).
“However, once a defendant establishes a qualified privilege,
a plaintiff must prove that the defendant either intentionally
published the material while knowing the matter was false, or
displayed a reckless disregard as to the matter’s falseness.”
Kuwik, 619 N.E.2d at 133 (citing Mittelman v. Witous, 552 N.E.2d
973, 981 (Ill. 1989)).

“Thus, an abuse of a qualified privilege

may consist of any reckless act which shows a disregard for the
defamed

party’s

rights,

including

the

failure

to

properly

investigate the truth of the matter, limit the scope of the
material, or send the material to only the proper parties.” Kuwik,
619 N.E.2d at 136.

Whether a qualified privilege exists is a

question of law for the court, but the issue of whether the
privilege was abused is a question of fact for the jury.

Kuwick,

619 N.E.2d at 133; see also Giant Screen Sports v. Canadian
Imperial Bank of Commerce, 553 F.3d 527, 536 (7th Cir. 2009).

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Gentles allegedly published the defamatory statements during
a meeting with upper management on January 7, 2010, and the
question is whether Gentles’ statements during that meeting are
privileged.

The meeting took place after David Nash, Director of

XO’s Human Resources Department, and Trent Edwards, XO’s Director
of Operations for the Central Region, issued their report following
an investigation into the whereabouts of XO equipment.

The report

advocated for Schreck’s termination and Powell’s reprimand.

It is

undisputed that Powell reported to Edwards and Schreck was an XO
employee under Gentles’ supervisory authority.
Plaintiff’s memorandum in opposition to Gentles’ motion for
summary judgment does not directly address the issue of whether
defendants have established the existence of a qualified privilege.
In fact, plaintiff asserts, incorrectly and without support, that
whether Gentles had an “interest” in Powell’s actions is a question
of fact for the jury.

(Pl.’s Resp., at 3).

Plaintiff seems to be

arguing that Gentles had no interests at stake because he had not
authority to fire Powell.

But by focusing on Gentles’ working

relationship with Powell within the XO hierarchy, plaintiff misses
the thrust of the existing law, which is focused on the occasion
for the communication.

Kuwik, 619 N.E.2d at 134 (“Under the

Restatement (Second) of Torts [adopted by the Illinois Supreme
Court],

a

court

looks

only

to

the

occasion

itself

for

the

communication and determines as a matter of law and general policy

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whether the occasion created some recognized duty or interest to
make the communication so as to make it privileged.”).

The point

plaintiff raises goes more properly to whether the privilege was
abused, not whether it existed in the first instance.
Courts have regularly held that statements made by employees
during

workplace

privilege.

investigations

are

covered

by

the

qualified

See Katial v. Mass. Mut. Life Ins. Co., 2002 WL

1632556, at *10 (N.D. Ill. July 22, 2002); Naeemullah v. Citicorp
Services, Inc., 78 F.Supp.2d 783, 792-93 (N.D. Ill. 1999); Vickers
v. Abbott Laboratories, 719 N.E.2d 1101, 1108-1110 (Ill. App. Ct.
1999).

This approach gives effect to policy reasons for the

privilege, namely “facilitating a free flow of information so that
correct information may ultimately be attained.”

Vickers, 719

N.E.2d at 1108 (citing Kuwik, 619 N.E.2d at 133). Though the NashEdwards Report had already been distributed to XO management and
Powell

had

terminated
statements.

received
when
Any

a

reprimand,

Gentles

allegedly

such

statements,

Schreck

had

published
then,

not
his

were

yet

been

defamatory

made

in

an

investigatory context.
Here, the first two occasions described in Kuwik apply to
establish a qualified privilege. The Nash-Edwards Report suggested
that Schreck, one of Gentles’ employees, should be fired as a
result of the investigation. Both Schreck’s and Powell’s immediate
superiors took part in the January 7 meeting, along with other

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relevant parties.

(Defs.’ Statement of Facts, at ¶ 63).

Gentles

was also involved with the investigation to the extent that it
involved XO equipment that he had been charged with inventorying.
(Defs.’ Statement of Facts, at ¶ 22).

For both of these reasons,

Gentles had an interest in participating in the January 7 meeting.
Contrary to plaintiff’s assertions, it is immaterial that Gentles
testified that he advocated to Christoph Winkelmann for a meeting
of the relevant decision-makers.
As defendants correctly note, plaintiff has failed to grapple
with XO’s interest in the matter. Any statements Gentles made were
made to XO’s upper management, all of whom had an interest in the
outcome of the investigation into the whereabouts of company
equipment and in taking appropriate disciplinary actions.
management

therefore

had

a

legitimate

interest

in

XO

statements

Gentles may have made regarding what he knew about Powell’s role in
the disposal of the equipment.

I conclude that the privilege

existed here as a matter of law.
Of course, the privilege may be lost if abused.

While abuse

of the privilege is an issue of fact, “once a defendant has
established a qualified privilege, the plaintiff must come foward
with actual evidence” to create a genuine dispute for trial.
Vickers, 719 N.E.2d at 1110.
such evidence.

Plaintiff has failed to submit any

Plaintiff argues that Gentles abused his privilege

in this case because he had no supervisory authority over Powell.

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Plaintiff concedes that Gentles “may have had an interest to
initially raise a question about the disposal of the cases” but
contends that Gentles overstepped his authority in disagreeing with
the Nash-Edwards Report’s conclusions regarding Powell.
Resp., at 3).

(Pl.’s

According to plaintiff, Gentles had no authority

over Powell’s employment.

But the fact that Gentles was not

Powell’s supervisor or manager (in other words, the fact that
Gentles could not independently discipline Powell) is not evidence
that Gentles acted improperly by participating in discussions
regarding Powell’s involvement in the disposal of equipment for
which Gentles was unquestionably responsible.

Gentles did not

exceed the scope of the privilege by speaking with XO management
about Powell in relation to the Nash-Edwards Report.
Plaintiff also argues that Gentles abused the privilege by
publishing the defamatory statements knowing they were false or
displaying a reckless disregard to their falseness.

First, I note

that while plaintiff argues that Gentles knew or should have known
certain facts, he has not connected those facts with any specific
defamatory statement.

The closest he gets to identifying specific

defamatory statements is when he states that Gentles “intentionally
made statements of fact that were false, concealed key facts that
would have made a difference, or was reckless in disregarding the
false

nature

of

his

statements

accusing

Powell

of

lying

to

investigators and fabricating documents during the investigation.”

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(Pl.’s Resp., at 5).

But even here he falls short.

Gentles’

handwritten notes refer to “lying” or “manipulating” in response to
a number of the findings in the Nash-Edwards Report.

(See Defs.’

Ex. 38). Some of these annotated findings relate to fabrication of
the Pacheco receipt, but others relate to directing employees to
cover up, to writing an email for an employee, and to other
matters.

(Id.).

It is therefore not clear from plaintiff’s

filings precisely which defamatory statements would constitute an
abuse of the privilege.
To the extent that plaintiff focuses on certain facts about
the Pacheco receipt, I take him to argue that Gentles intentionally
or recklessly published the defamatory statements imputing Powell’s
integrity or ability to perform his job as it relates to his
involvement in creating the receipt. Primarily, plaintiff contends
that Gentles knew Edwards directed Powell and others to create the
receipt and withheld this information in order to make Winkelmann
and Steve Nocella believe that Powell had created it alone and then
tried to cover up with the investigators.

According to plaintiff,

Gentles’ knowledge of the circumstances surrounding the Pacheco
receipt comes from a string of emails sent to him from Jonathan
Gippe on December 11, 2009.

(Pl.’s Resp., at 4; Pl.’s Ex. 18).

The email chain includes two emails from Edwards directing Powell
and others to obtain an invoice or other proof of disposal from
Rene Pacheco. Nowhere does Edwards direct Powell or anyone else to

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create the receipt.
obtain

proof

of

In fact, Edwards’ emails direct the group to
disposal

or,

alternatively,

information directly from Pacheco.

(Id.).

the

relevant

And when Don Robinson

forwarded the Pacheco receipt to Edwards, Edwards expressed his
disapproval of the document in a follow-up email sent on December
16, 2009.

(Pl.’s Ex. 31).

Not only does the evidence submitted by

plaintiff not support the contention that Edwards directed the
creation

of

the

Pacheco

receipt,

it

also

does

not

support

plaintiff’s argument that Gentles knowingly or recklessly failed to
account for such information in making his statements regarding
Powell’s involvement in creating the receipt.
Plaintiff also argues that Gentles knew or should have known
that no new emergency power plant was delivered to Chicago in 2007
or was missing in 2009.

Plaintiff contends that Gentles knew from

Schreck as early as February 2009 that there were three cases in
Chicago containing miscellaneous scrap, but he fails to explain how
such knowledge would constitute evidence that Gentles abused the
privilege in publishing any defamatory statement.

Similarly,

plaintiff’s

statements

without
Again,

argument

conducting
plaintiff

a

does

that

Gentles

reasonable
not

made

defamatory

investigation

identify

any

is

particular

statement made without a proper investigation.

unavailing.
defamatory

Further, it is

undisputed that Gentles was charged with taking an inventory of
XO’s portable power plants (Defs.’s Statement of Facts, at ¶ 22),

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that an investigation grew out of that inventory project (id. at
¶ 26), and that the allegedly defamatory comments Gentles is
accused of making were made at the close of the investigation.
There is simply no evidence that Gentles abused his privilege in
this case.

To the contrary, the statements about which plaintiff

complains were made, if they were made at all, to interested and
proper parties in the context of a workplace investigation and were
made in reaction to the report documenting the findings of that
investigation.
As plaintiff has not submitted any evidence that Gentles
abused his privilege in making any defamatory statements to XO
management, any such statements were privileged and plaintiff’s
claim for defamation must be dismissed.

Further, for a claim for

tortious interference to succeed, a plaintiff must prove that the
defendant’s acts were “independently tortious, for example as fraud
or defamation,” Preston v. Wisconsin Health Fund, 397 F.3d 539, 544
(7th Cir. 2005).

Plaintiff does not come forward with evidence

that Gentles committed another tort against him and, therefore,
plaintiff’s second claim is dependant on the first.
For these reasons, summary judgment is granted in defendants’
favor.

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ENTER ORDER:

____________________________
Elaine E. Bucklo
United States District Judge

Dated: November 7, 2012

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