Kennedy v. Schneider Electric et al

Filing 20

OPINION and ORDER ADOPTING REPORT AND RECOMMENDATIONS adopting Report 19 Report and Recommendations it its entirety ; denying 9 Motion to Dismiss count II.. Plaintiff is granted to and including January 14, 2013, to file an amended complaint establishing the citizenship of Defendants John Doe 110 or, alternatively, either party may show cause why the case as pled should not be remanded for lack of subject matter jurisdiction. Signed by Judge Jon E DeGuilio on 12/10/12. (mc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
BENNIE KENNEDY,
Plaintiff,
v.
SCHNEIDER ELECTRIC f/k/a SQUARE D
COMPANY and JOHN DOES 1-10,
Defendants.

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CAUSE NO. 2:12-CV-122-JD

OPINION and ORDER
On February 10, 2012, the Plaintiff Bennie Kennedy filed a complaint in state court
against his employer Schneider Electric and its unknown employees John Does 1-10 asserting
claims of defamation (Count I) and malicious interference with advantageous relationship (Count
II) [DE 1]. On March 20, 2012, Defendant filed a notice of removal asserting jurisdiction based
on diversity1 [DE 2] and filed a motion to dismiss for failure to state a claim, pursuant to Fed. R.
Civ. P. 12(b)(6) [DE 9]. Plaintiff filed a response to the motion to dismiss [DE 15]2 and
Defendant filed a reply [DE 17]. Upon referral of the motion, on November 16, 2012,
Magistrate Judge Cherry issued a Report and Recommendation indicating that the motion ought
to be denied [DE 19]. No party filed a timely objection to the Report and Recommendation. For
the reasons set forth below, the Court hereby adopts the Report and Recommendation in its

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After removal of the case on March 20, 2012, no motion to remand on any procedural defect
was timely filed. See 28 U.S.C. § 1447(c) (a motion to remand on the basis of any defect other
than lack of subject matter jurisdiction must be made within thirty days after the filing of the
notice of removal).
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Despite the Plaintiff’s belated filing of the response, the Court considers the same because the
delay was minimal (only two days late) and consideration of the response does not change the
outcome of this Order.

entirety.
I. BACKGROUND
The litigation arises from an allegedly false statement sent from an unknown individual
working at Schneider Electric to someone at Prairie State College, where Mr. Kennedy was
employed as a part-time instructor [DE 1]. Mr. Kennedy was also employed by Schneider
Electric, working at its Crown Point, Indiana office [DE 1 at 1]. According to the complaint, on
or about July 22, 2010, someone at Schneider Electric “sent an accusation that ‘Plaintiff’
obtained or took some, at present unnamed, proprietary property belonging to ‘Defendant(s)’
without authority or the permission of the ‘Defendant(s).’” Id. Mr. Kenney further alleges that
“the known ‘Defendant(s),’ Veiled and unspecified property, which known ‘Defendant(s)’ stated
was stolen or taken without authority by ‘Plaintiff’ was published to persons and administrators
of Prairie State College, to which ‘Plaintiff’ was employed during all times material hereto, as a
part-time instructor.” Id. Mr. Kenney asserts that the Defendants’ accusations are untrue and
“have damaged and lowered” his reputation and character within his community and “among the
persons to whom he was known and with whom he was employed, to-wit, Prairie State College.”
Id. He further alleges that the untrue accusations were published in writing and verbally and
have affected his reputation and character as well as caused him financial harm because he was
dismissed from his employment with Prairie State College. Id. at 1-2.
In Count I, Mr. Kennedy brings a defamation per se claim alleging that Schneider
Electric, from its location in Crown Point, Indiana, “intentionally published a statement directly
and by innuendo, which was untrue, about the character (honesty) of ‘Plaintiff’ who was
employed with Schneider Electric” to Mr. Kennedy’s other employer, Prairie State College,

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which represents “the community in which ‘Plaintiff’ was known, damaging the ‘Plaintiff[‘s]’
reputation in that community and to the effect of the general public, in that Prairie State College
re-published [the] statements generally to many members and employees of Prairie State College
who know and worked with ‘Plaintiff.’” [DE 1 at 2]. Mr. Kennedy asserts that Defendants knew
that the statements were false. Id.
In Count II, Mr. Kennedy asserts a claim of malicious interference with advantageous
relationship [DE 1 at 3]. Mr. Kennedy alleges that Schneider Electric was aware that Mr.
Kennedy was a part-time instructor at Prairie State College and that Schneider Electric
“knowingly and intentionally published a statement to Prairie State College accusing ‘Plaintiff’
of taking or appropriating ‘proprietary property of Defendant(s)’ without authority, permission
or right, knowing to a substantial degree that this false statement would cause Prairie State
College to take negative action against ‘Plaintiff.’” Id. Plaintiff further asserts that Prairie State
College informed him that he was being dismissed from his position as a part-time instructor of
an accredited course, which he had held for six years, “because Prairie State College was told by
‘Defendant(s)’ that ‘Plaintiff’ had taken, or appropriated ‘proprietary’ property of said
‘Defendant(s)’ without permission or authority.” Id.
Schneider Electric moved to dismiss Mr. Kennedy’s claims on the grounds that the
defamation claim (Count I) is not pled with sufficient specificity under Indiana law and the
malicious interference claim (Count II) cannot be supported by the conduct alleged in the
complaint [DE 9]. Magistrate Judge Cherry issued his report recommending that the motion to
dismiss be denied [DE 19], to which no party has timely objected.

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II. DISCUSSION
A.

Standard of Review
The district court has discretion to accept, reject, or modify, in whole or in part, the

findings or recommendations of the magistrate judge. 28 U.S.C. § 636(b)(1). Consistent with
Federal Rule of Civil Procedure 72(b), the district court must undertake a de novo review “only
of those portions of the magistrate judge’s disposition to which specific written objection is
made.” See Johnson v. Zema Sys. Corp., 170 F.3d 734, 739 (7th Cir. 1999) (citing Goffman v.
Gross, 59 F.3d 668, 671 (7th Cir. 1995)). If no objection or only a partial objection is made, the
court reviews those unobjected portions for clear error. Id. Under the clear error standard, the
court can only overturn a magistrate judge’s ruling if the court is left with “the definite and firm
conviction that a mistake has been made.” Weeks v. Samsung Heavy Indus. Co., Ltd., 126 F.3d
926, 943 (7th Cir.1997). Here, the Magistrate Judge employed the proper standard of review for
a motion to dismiss under Rule 12(b)(6) [DE 19 at 4], and the Court reviews his uncontested
recommendation for clear error.
B.

Count I: Defamation
The Magistrate Judge held, and the parties agreed, that Indiana law applies to this case.

See Camp v. TNT Logistics Corp., 553 F.3d 502, 505 (7th Cir. 2009) (“[a]s a federal court sitting
in diversity, we apply state substantive law and federal procedural law.”) (citation omitted).
Thus, the substantive rights of the parties are governed by Indiana law. See Mass. Bay Ins. Co. v.
Vic Koenig Leasing, Inc., 136 F.3d 1116, 1120 (7th Cir. 1998) (“Courts do not worry about
conflict of laws unless the parties disagree on which state’s law applies.”). However, in a
diversity case, federal law governs procedure. Fednav Intern. Ltd. v. Cont’l Ins. Co., 624 F.3d

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834, 838 (7th Cir. 2010) (citation omitted).
In accordance with this precedent, and given its own review of the complaint, the Court
agrees with the Magistrate Judge that the Defendant’s argument that Mr. Kennedy failed to
sufficiently plead a claim for defamation under Indiana’s heightened pleading standard, has no
merit given that this Court applies the federal pleading standard, and that the complaint satisfies
that standard consistent with Rule 12 and the United States Supreme Court’s holdings in
Twombly3 and Iqbal.4 See id. at 837. See Muzikowski v. Paramount Pictures Corp., 322 F.3d
918, 926 (7th Cir. 2003) (even if the state had heightened pleading requirement for defamation
claims, plaintiff need only satisfy the federal notice pleading requirements of Rule 8); see also
Martino v. W. & S. Fin. Group, No. 3:08-CV-308-TS, 2009 WL 3444652 *6 (N.D. Ind. Oct. 22,
2009) (finding that a heightened pleading standard should not be imposed on the Plaintiff’s
defamation claim); Cain v. Elgin, Joliet & E. Ry. Co., No. 2:04-CV-347, 2005 WL 1172722 *3-5
(N.D. Ind. May 3, 2005) (same). Given that this is the only argument made by Schneider
Electric in support of its requesting dismissal of the defamation claim (Count I), the Court denies
the request to dismiss Count I and adopts the Report and Recommendation in this respect.
C.

Count II: Malicious Interference with Advantageous Relationship
Relative to Count II which alleges a claim for malicious interference with advantageous

relationship, Schneider Electric argues that Indiana does not recognize such a claim, and
although it recognizes the similar claim of tortious interference with a business relationship,
defamation does not constitute an independent illegal action. See United Consumers Club, Inc. v.

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Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007).

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Ashcroft v. Iqbal, 556 U.S. 662 (2009).
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Bledsoe, 441 F.Supp.2d 967, 982 (N.D. Ind. 2006) (noting that Indiana does not recognize the
tort of interference with advantageous relationships and interpreting the claim as one for tortious
interference with a business relationship).
While Defendant’s position is valid, the Court is required to consider whether Mr.
Kennedy could prevail on Count II under any legal theory. County of McHenry v. Ins. Co. of the
W., 438 F.3d 813, 818 (7th Cir. 2006). For instance, the elements of an action for tortious
interference with a contract are: (1) the existence of a valid and enforceable contract; (2)
defendant’s knowledge of the existence of the contract; (3) defendant’s intentional inducement
of breach of the contract; (4) the absence of justification; and (5) damages resulting from
defendant’s wrongful inducement of the breach. Melton v. Ousley, 925 N.E.2d 430, 440 (Ind. Ct.
App. 2010) (citation omitted). As the Magistrate Judge determined, Mr. Kennedy plausibly
alleges a claim for tortious interference with a contractual relationship given the allegations that
his employment as a part-time instructor with Prairie State College, of which Defendants “were
aware,” was terminated after the “knowing[] and intentional[]” interference occurred. See
Bochnowski v. Peoples Fed. Sav. & Loan Ass’n, 571 N.E.2d 282, 284-85 (Ind. 1991) (reversing
the court of appeals and holding that an at will employee can bring a claim of tortious
interference with a contractual relationship under Indiana law); see also Bradley v. Hall, 720
N.E.2d 747, 751 (Ind. Ct. App. 1999) (rejecting the parties’ characterization of the at will
employee plaintiff’s claim as one for interference with a business relationship and holding that
the plaintiff stated a claim for interference with a contractual relationship, which does not require
the plaintiff to plead or prove illegality in order to sustain the cause of action). Accordingly, the
Court adopts Magistrate Judge Cherry’s recommendation that the request to dismiss Count II be

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denied.
III. CONCLUSION
Having reviewed the unopposed Report and Recommendation and finding no clear error
therein, the Court ADOPTS the Report and Recommendation in its entirety [DE 19].
Before concluding, the Court offers a final note on jurisdiction. Jurisdiction over this
action is based on diversity, 28 U.S.C. § 1332, because Plaintiff is a resident and citizen of the
State of Indiana and Schneider Electric is a citizen of Delaware and Illinois [DE 2 at 2]. The
Defendant also asserts facts in support of its assertion that the amount in controversy exceeds
$75,000 [DE 2 at 2-3], an assertion that Plaintiff does not contest [DE 2 at 3]. In addition, the
complaint alleges that defendants Does 1–10 are responsible in some manner for the claims
made, but unidentified Doe defendants are ordinarily not permitted in federal diversity suits. See
Howell v. Tribune Entm’t Co., 106 F.3d 215, 218 (7th Cir. 1997). Diversity jurisdiction must be
proved by the plaintiff rather than assumed as a default, Moore v. Gen. Motors Pension Plans, 91
F.3d 848, 850 (7th Cir. 1996), so “the existence of diversity jurisdiction cannot be determined
without knowledge of every defendant’s place of citizenship.” Howell, 106 F.3d at 218; see
Rouben v. Parkview Hosp., Inc., No. 1:10–CV–397, 2010 WL 5027562 at *1 (N.D. Ind. Dec. 3,
2010) (“The clearly established requirement that diversity jurisdiction be plead on personal
knowledge means that the plaintiff must actually state the identity of the ‘John Doe’ defendants
to establish their citizenship—one cannot allege they have personal knowledge of the citizenship
of unknown parties.”). While some exceptions to the John Doe ban exist—when John Doe
defendants “are merely nominal parties, irrelevant to diversity jurisdiction,” or when a John Doe
defendant will not defeat the named defendant’s right to otherwise remove the case to federal

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court—the Court is unable to determine whether these exceptions are applicable here. See
Howell, 106 F.3d at 218. As a result, the Plaintiff is granted to and including Monday, January
14, 2013, to file an amended complaint establishing the citizenship of Defendants John Doe 1–10
or, alternatively, either party may show cause why the case as pled should not be remanded for
lack of subject matter jurisdiction.
SO ORDERED.
ENTERED:

December 10, 2012

/s/ JON E. DEGUILIO
Judge
United States District Court

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