Wigington v. Metropolitan Nashville Airport Authority
Filing
69
MEMORANDUM OPINION AND ORDER: For the foregoing reasons, Individual Defendants Joslin and Samuels' motion to dismiss Wigington's claims as to them is denied, (Dkt. No. 37), and Wigington's motion to dismiss MNAA's amended counterclaim is granted with prejudice, (Dkt. No. 39). It is so ordered. Signed by Judge Marvin E. Aspen on 3/20/19. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(am)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
ROBERT WIGINGTON,
Plaintiff,
v.
METROPOLITAN NASHVILLE
AIRPORT AUTHORITY,
BOBBY JOSLIN, and
A. DEXTER SAMUELS,
Defendant.
METROPOLITAN NASHVILLE
AIRPORT AUTHORITY,
Counter Plaintiff,
v.
ROBERT WIGINGTON,
Counter Defendant.
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3:17 C 1523
Hon. Marvin E. Aspen
MEMORANDUM OPINION AND ORDER
MARVIN E. ASPEN, District Judge:
Plaintiff Robert Wigington filed this suit against Defendant Metropolitan Nashville
Airport Authority (“MNAA”) on December 4, 2017, asserting federal and state claims arising
out of his termination as MNAA’s chief executive officer (“CEO”). (Compl. (Dkt. No. 1).)
Wigington amended his complaint on January 17, 2018 to add as defendants MNAA Board
members Bobby Joslin and A. Dexter Samuels (together “Individual Defendants”).
(Dkt. No. 13.) MNAA answered Wigington’s initial complaint and counterclaimed against him
on February 1, 2018, alleging breach of fiduciary duty. (Dkt. No. 17.) Following additional
amendments, the pleadings now operative are Wigington’s second amended complaint (Second
Am. Compl. (“SAC”) (Dkt. No. 34)), and MNAA’s renewed answer and counterclaim, (Answer
to Pl.’s Second Am. Compl. and Am. Countercl. (“Am. Countercl.”) (Dkt. No. 36)).
Before us are two motions: Individual Defendants’ motion to dismiss Wigington’s claims
as to them, (Dkt. No. 37), and Wigington’s motion to dismiss MNAA’s amended counterclaim,
(Dkt. No. 39). For the reasons below, we deny the Individual Defendants’ motion, and grant
Wigington’s motion.
BACKGROUND
The factual allegations that follow, all taken as true for purposes of a motion to dismiss,
are drawn from Wigington’s second amended complaint and MNAA’s corresponding
counterclaim. (SAC; Am. Countercl.) Ashcroft v. Iqbal, 556 U.S. 662, 678,
129 S. Ct. 1937, 1949 (2009). MNAA is a public corporation that owns and operates two
Nashville-area airports, the Nashville International Airport (“BNA”) and John C. Tune Airport
(“JWN”). (See SAC ¶ 26; Am. Countercl. ¶ 2; Dkt. No. 34–1 at 2 (Wigington employment
agreement identifying MNAA as a corporation created pursuant to Tenn. Code
Ann. § 42-4-101, et seq.).) MNAA policies are shaped by a ten-member Board of
Commissioners (“Board”), appointed by the mayor of Nashville-Davidson County. (SAC ¶ 20.)
The Board’s Management Committee is comprised of the Chair, Vice Chair, and Secretary of the
full Board. (Id.) As of the filing of the second amended complaint, Defendant Joslin served as
the Board’s Chair and Defendant Samuels served as Vice Chair. (Id. ¶ 22.)
Wigington began his work with MNAA in 2011 and served as CEO from July 1, 2012
through October 18, 2017. (Id. ¶ 2.) On June 7, 2017, Wigington informed the MNAA
Management Committee at a publicly noticed meeting that he would require a medical leave of
2
absence to undergo a liver transplant to treat liver cancer. (Id. ¶¶ 4, 33–35.) Wigington
informed the full Board of his anticipated leave on June 21, 2017. (Id. ¶ 41.)
Wigington’s medical leave began on July 22, 2017, when he underwent a liver transplant
and named an acting President and CEO to serve in the interim, and it extended through
September 5, 2017, when he attempted to return to his position. (Id. ¶¶ 5, 54–56.) On
August 18, 2017, Wigington had written to inform MNAA that a doctor had approved his return
to work on September 4, 2017. (Id. ¶ 68.) On September 1, 2017, Samuels invited Wigington to
a meeting of the Management Committee on September 5, 2017. (Id. ¶ 76.) At this meeting, the
Management Committee told Wigington that MNAA had decided to go in a different direction
and would be relieving Wigington of his duties. (Id. ¶¶ 77–78.) Wigington alleges that this
meeting was not publicly noticed. (Id. ¶ 83.) Joslin sent Wigington a letter on
September 6, 2017, explaining that Wigington was no longer authorized to act on behalf of
MNAA and that his security badge, computer, and email address were deactivated. (Id. ¶ 84.)
On October 18, 2017, the MNAA Management Committee (comprised of the Individual
Defendants and Secretary Aubrey “Trey” Harwell) voted to recommend that the Board terminate
Wigington’s employment as CEO. (Id. ¶ 91.) Upon their recommendation, the Board voted to
terminate that same day. (Id. 92.) The Management Committee distributed to Board members
and the media a list of “reported behaviors” they attributed to Wigington to support his
termination. (Id. ¶ 92.) Among the allegations were that Wigington failed to disclose the
content or amount of incentives provided to an airline to fly out of Nashville, that he was dilatory
in appointing key staff positions during a large capital effort and improperly planned for the
succession of those staff once they were named, and that he lacked proper financial controls,
failed to address major employment and management issues, and failed to properly communicate
or deliberately concealed information from the MNAA Board.
3
(Id. ¶¶ 112, 134, 156, 171, 193, 209.) Wigington alleges that each of these reported behaviors
are false, did not motivate MNAA’s termination decision, and could not justify that decision.
(E.g., id. ¶ 110.)
On December 6, 2017, the Individual Defendants, acting as the Management Committee,
voted to recommend to the Board that Wigington’s termination be reclassified as “for cause.”
(Id. ¶¶ 103–04.) The Individual Defendants and another member of the Management Committee
described new allegations against Wigington, along with the previously released “reported
behaviors,” at this meeting and again at a Board meeting on December 13, 2017. (Id. ¶ 105.)
The new allegations asserted that Wigington did not properly invest $200 million from a 2015
bond issue and that he exceeded reimbursements on business travel expenses. (Id. ¶¶ 234, 237.)
The Board took up the Management Committee’s recommendation and voted to label
Wigington’s termination as “for cause” at the meeting on December 13, 2017. (Id. ¶ 105.)
Wigington maintains that the new allegations did not and could not justify his termination “for
cause,” and served instead only as pretext for a decision that he alleges is retaliatory and meant
to harm his reputation. (Id. ¶ 244.)
As relevant here, Wigington asserts claims of defamation and false light invasion of
privacy against the Individual Defendants, in their individual capacity, stemming from their
statements and actions during the Management Committee and Board meetings on
October 18, 2017, the Management Committee meeting on December 6, 2017, and the Board
meeting on December 13, 2017. (See id. ¶¶ 330–35, 339–45.) 1
1
The current motions do not challenge Wigington’s claims against MNAA, which allege federal
and state discrimination and retaliation claims and state contract claims.
(See SAC ¶¶ 262–64, 268, 280–83, 292–94, 300–03, 313, 321–26.)
4
MNAA’s counterclaims charge Wigington with breach of his fiduciary duty to MNAA.
(See Am. Countercl. ¶¶ 31, 37.) MNAA alleges that in December 2015, Wigington should have
placed proceeds from an approximately $200 million MNAA bond issue into interest-bearing
investments instead of leaving the decision to a subordinate who kept the money, plus a
substantial amount of previously accumulated money, in cash or cash equivalents.
(Id. ¶¶ 12–19.) Despite specific advice from MNAA’s Chief Financial Officer (“CFO”),
Wigington refused to make a decision to hire consultants or persons with expertise to manage
MNAA’s assets. (Id. ¶¶ 22–24.) Wigington did not act when investment advisors tendered
proposals to MNAA in December 2015 and December 2016 to invest the money, costing MNAA
at least $3 million total in lost interest income. (Id. ¶¶ 40–43.) The CFO also told Wigington of
a time-sensitive opportunity in fall 2016 to refinance debt incurred from designing and building a
rental car facility, which Wigington decided not to act upon, costing MNAA approximately
$4.8 million. (Id. ¶¶ 25–29.) Through these events, MNAA claims Wigington breached his
fiduciary duty by failing to discharge his duties in good faith and with ordinary care, failing to
inform himself of important decisions or to rely upon information provided to him by officers or
employees of MNAA, and failing to fully disclose the facts of his decisions or non-decisions to
the Board. (Id. ¶¶ 33–34, 46.)
LEGAL STANDARD
Dismissal pursuant to Rule 12(b)(6) is proper only if a complaint lacks enough facts “to
state a claim [for] relief that is plausible on its face.” Iqbal, 556 U.S. at 678,
129 S. Ct. at 1949–50 (2009) (internal quotations omitted) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570, 127 S. Ct. 1955, 1974 (2007)); accord Hensley Mfg. v. ProPride, Inc.,
579 F.3d 603, 609 (6th Cir. 2009). The plausibility standard “is not akin to a ‘probability
requirement,’ but it asks for more than a sheer possibility that a defendant has acted
5
unlawfully.” Iqbal, 556 U.S. at 678, 129 S. Ct. at 1949 (quoting Twombly, 550 U.S. at 555,
127 S. Ct. at 1964–65). That is, while the plaintiff need not plead “detailed factual allegations,”
the complaint must allege facts sufficient “to raise a right to relief above the speculative
level.” Twombly, 550 U.S. at 555, 127 S. Ct. at 1964–65. Again, we accept as true all
well-pleaded factual allegations and draw all reasonable inferences in favor of the
plaintiff. Iqbal, 556 U.S. at 678, 129 S. Ct. at 1949; Delay v. Rosenthal Collins Grp., LLC,
585 F.3d 1003, 1005 (6th Cir. 2009). “However, ‘a legal conclusion couched as a factual
allegation’ need not be accepted as true on a motion to dismiss, nor are recitations of the
elements of a cause of action sufficient.” Fritz v. Charter Twp. of Comstock, 592 F.3d 718, 722
(6th Cir. 2010) (quoting Hensley Mfg., 579 F.3d at 609).
ANALYSIS
I.
INDIVIDUAL DEFENDANTS’ MOTION TO DISMISS
Individual Defendants Joslin and Samuels’ motion to dismiss argues that, as members of
MNAA’s Board acting in their official capacity, they are entitled to absolute immunity under
Tennessee statutory and common law. (Dkt. No. 37 at 1–2.) Furthermore, Individual
Defendants argue that Wigington has not sufficiently pleaded ill motive necessary to state a
claim for defamation or false light invasion of privacy. (Id. at 2.) We consider each argument in
turn.
A.
Applicable Immunity
Individual Defendants ground their immunity argument in the Tennessee Governmental
Tort Liability Act (“GTLA”), Tenn. Code Ann. § 29-20-101, et seq., and Tennessee courts’
adoption of legislative immunity. (See Joslin and Samuels’ Mem. in Supp. of Mot. to Dismiss
(“I.D. Mem.”) (Dkt. No. 38) 6–7.) The GTLA provides “[c]omplete and absolute immunity” to
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“government entity boards, commissions, authorities and other governing agencies.” Tenn. Code
Ann. § 29-20-201(b)(1). The GLTA further provides:
(2) All members of boards, commissions, agencies, authorities, and other governing
bodies of any governmental entity, created by public or private act, whether compensated
or not, shall be immune from suit arising from the conduct of the affairs of such board,
commission, agency, authority, or other governing body. Such immunity from suit shall
be removed when such conduct amounts to willful, wanton, or gross negligence.
Id. § 29-20-201(b)(2) (emphasis added).
Individual Defendants claim that the GTLA, as interpreted by Tennessee courts, bestows
absolute immunity from suit to members of boards acting within the scope of their government
role. (I.D. Mem at 6–7 & n.4.) Individual Defendants heavily rely on Miller v. Wyatt,
457 S.W.3d 405 (Tenn. Ct. App. 2014), to support their argument. (I.D. Mem. at 9–14.) In
Miller, the Tennessee Court of Appeals considered whether a city council member was entitled
to immunity from a defamation suit. The court analyzed the constitutional history of absolute
legislative immunity and found that the GTLA “adopted and codified the common law
legislative privilege for city council members and other legislators at the local level.” Id. at 410.
The court held that the suit, which alleged the city council member made defamatory statements
while performing his legislative duties at a council meeting, was barred by legislative privilege.
Id. at 412. Having applied the privilege, the court declined to inquire further into the council
member’s motivation behind the alleged defamation. Id.
Following Miller, Individual Defendants claim they are likewise entitled to absolute
immunity under the GTLA, shielding them from suit even if alleged to have acted with actual
malice. (I.D. Mem. at 14.) Individual Defendants argue that the GTLA applies not only to
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legislators, but to any member of a governmental entity board. (Id. at 13.) 2 Because the claims
against Individual Defendants all concern statements they allegedly made during official
Management Committee and MNAA Board meetings about Wigington’s performance as CEO,
they argue their statements fall squarely within the course of their duties, preserving their
immunity. (Id. at 12–13.) Although the GTLA removes immunity “when such conduct amounts
to willful, wanton, or gross negligence,” Tenn. Code Ann. § 29-20-201(b)(2), Individual
Defendants reason that this statutory text refers only to “private slanders” that either occur
outside of or deviate substantially from their official duties. (I.D. Mem. at 11 (quoting Miller,
457 S.W.3d at 410); see also I.D. Reply at 5.)
Wigington agrees the GTLA governs in this case but disputes Individual Defendants’
claim to absolute immunity under its provisions. (See Pl.’s Opp. to Defs. Joslin and Samuels’
Mot. to Dismiss (“Wigington Resp.”) (Dkt. No. 42) at 2.) Wigington argues that while the
GTLA grants absolute immunity to government boards themselves, it confers only qualified
immunity on other public officials. (Id. at 6–7.) These officials, he argues, are immune from tort
suits in all cases except those in which the officials act in a willful, wanton, or grossly negligent
manner. (Id. at 4–5.) See Tenn. Code Ann. § 29-20-201(b)(2). Wigington disagrees with
Individual Defendants’ reading of Miller, arguing that the case rested on common law legislative
immunity, and not on the text of the GTLA. (Wigington Resp. at 8.) Wigington further denies
2
Individual Defendants argue in their opening brief that, to the extent GTLA immunity applies
only to legislative activity, their investigation into Wigington’s conduct suffices to shield them
from suit. (I.D. Mem. at 13 (citing Tenney v. Brandhove, 341 U.S. 367, 369 (1951), for the
proposition that investigations are part of the legislative function).) Individual Defendants
appear to abandon this position in their reply. (See Joslin and Samuels’ Reply (“I.D. Reply”)
(Dkt. No 46) at 5 n.3 (disclaiming need to analyze legislative versus non-legislative function and
arguing that the GTLA text itself incorporates absolute immunity for all work done within the
scope of the government function).) See Smith v. ABN AMRO Mortg. Grp. Inc.,
434 F. App’x 454, 466 (6th Cir. 2011) (considering an argument raised in opening brief
abandoned when discarded at oral argument and in reply brief).
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that Individual Defendants, who are municipal executive appointees, could be characterized as
legislators who qualify for common law legislative immunity. (Id. at 9.)
As an initial matter, we are skeptical that Miller v. Wyatt transforms the text of the GTLA
into absolute immunity for any member of a government board, whether or not acting as a
legislator. To be sure, the concept of legislative immunity enjoys a long pedigree and a wide
berth under United States Supreme Court precedent. E.g., Bogan v. Scott-Harris,
523 U.S. 44, 54, 118 S. Ct. 966, 972 (1998) (immunity for local legislators from suits under
42 U.S.C. § 1983); Tenney v. Brandhove, 341 U.S. 367, 375, 71 S. Ct. 783, 788 (1951)
(immunity for state legislators); Kilbourn v. Thompson, 103 U.S. 168, 202–04 (1880) (immunity
for Members of Congress under the Speech and Debate Clause, U.S. Const., art. I, § 6). Miller
recounts much of this case history, as well as Tennessee precedent extending the privilege to city
council members. 457 S.W.3d at 409 (citing and discussing Issa v. Benson, 420 S.W.3d 23
(Tenn. Ct. App. 2013), and Cornett v. Fetzer, 604 S.W.2d 62 (Tenn. Ct. App. 1980)). But
Miller’s ultimate holding appears to ground the city council member’s immunity in common law
legislative privilege, not in the text of the GTLA. Id. at 412 (holding that local legislator’s
conduct arose during a city council meeting, fell into the scope of legislative function, and
“therefore was cloaked with immunity”). Although Miller asserts that the GTLA “codified the
common law legislative privilege,” the rest of that sentence limits that codification to “city
council members and other legislators at the local level,” saying nothing about its effect on nonlegislators. Id. at 410 (emphasis added). Tellingly, the only Tennessee case Miller cites in its
holding does not mention the GTLA. Id. at 412 (citing Issa, 420 S.W.3d at 28). And while
Miller delineates legislative privilege as not extending to “private slanders,” the case analyzes
this limit under the common law of legislative immunity, not the text of the GTLA that removes
immunity for willful, wanton, or grossly negligent conduct. Id. at 410 (discussing Tennessee and
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U.S. Supreme Court cases that rest on common law or constitutionally conferred legislative
immunity). “Just as a square is always a rectangle but a rectangle is not always a square,” United
States v. Fitzgerald, 906 F.3d 437, 452 (6th Cir. 2018) (Griffin, J., dissenting), Miller finds that
absolute legislative immunity is incorporated into the GTLA, but it is far less clear that the
GTLA extends absolute immunity to non-legislators. As a federal court interpreting Tennessee
law, we decline to extend the immunity conferred by the GTLA beyond the Tennessee Appellate
Court’s narrow holding in Miller.
The conclusion that the GTLA does not grant absolute immunity to non-legislators draws
support from the text of the GTLA and from Tennessee case law pre- and postdating Miller. The
GTLA plainly states that “members” of governmental boards are immune from suit, but that
“[s]uch immunity from suit shall be removed when such conduct amounts to willful, wanton, or
gross negligence.” Tenn. Code App. § 29-20-201(b)(2). Put another way, “the plain language of
this statute provides that immunity will not extend to the ‘members’ of governmental entities
who act in willful, wanton, or grossly negligent manners.” Fitzgerald v. Hickman Cty. Gov’t,
No. M2017–00565–COA–R3–CV, 2018 WL 1634111, at *5 (Tenn. Ct. App. Apr. 4, 2018). The
Fitzgerald court based its reading in part on earlier case law that “previously held that ‘[l]ocal
government officials are not immune from suit for willful or wanton acts or acts amounting to
gross negligence.’” Id. (quoting Moore Const. Co. v. Story Eng’g Co.,
No. 01A01–9606–CV–00267, 1998 WL 382198, at *4 (Tenn. Ct. App. July 10, 1998)). The
Tennessee Supreme Court has also observed that “members” of government boards can face
liability when their conduct crosses the statutory line. Jenkins v. Loudon Cty.,
736 S.W.2d 603, 608 n.7 (Tenn. 1987), abrogated on other grounds by Limbaugh v. Coffee Med.
Ctr., 59 S.W.3d 73 (Tenn. 2001) (under Tenn. Code Ann. § 29-20-201(b), “members of certain
boards, etc., are not immune if their ‘conduct amounts to willful, wanton, or gross negligence.’”)
10
Individual Defendants argue that this plain text removes immunity only for private
slanders, not for actions by government officials within “the conduct of the affairs” of a
government board. (I.D. Reply at 2 (quoting Tenn. Code App. § 29-20-201(b)(2)).) But this
argument is not supported by the case law, which has applied the “private slanders” carveout
only to local legislators acting in an official capacity. See Miller, 457 S.W.3d at 410 (quoting
Issa, 420 S.W.3d at 27). Individual Defendants do not characterize themselves as legislators or
their activity as legislative, arguing “[i]t would be nonsensical to apply different types of
immunity to different government actors when that immunity is based on the exact same
statutory language” in the GTLA. (I.D. Reply at 5 n.3.) We agree. As Miller appears to hold,
while common law legislative privilege might be incorporated in and extend beyond the GTLA
text, the text itself does not extend to non-legislators.
Individual Defendants have produced no case that grants absolute immunity to
defendants in their position—executive appointees to a municipal board. The closest they come
is Jones v. State, 426 S.W.3d 50, 56–58 (Tenn. 2013), which extended common law absolute
immunity to cabinet-level executive officers acting pursuant to their public duties.
(I.D. Mem. at 8.) Individual Defendants do not claim that they qualify as this type of highranking official. The Tennessee Appellate Court’s more recent exposition, in
Fitzgerald v. Hickman County Government, of the GTLA’s removal of immunity for willful
actions makes no distinction between private and public offenses, nor does the text of the GTLA.
See Fitzgerald, 2018 WL 1634111, at *5. We refuse to read this distinction into the statute. 3
3
Individual Defendants challenge Fitzgerald as holding that a plaintiff could not sue board
members in their official capacity as a back-door way to sue an immune county.
(I.D. Reply at 4 n.2.) But Fitzgerald’s discussion reveals only that individuals sued in their
official capacities are immune if the government entity they represent is also immune.
Fitzgerald, 2018 WL 1634111, at *5. Plaintiff here has sued Individual Defendants in their
individual capacities. (SAC ¶¶ 329, 338.) See Kentucky v. Graham, 473 U.S. 159, 165–67,
11
Accordingly, we hold that in this case, Individual Defendants are not entitled to immunity
under the GTLA in the course of their MNAA duties if their conduct was willful, wanton, or
amounted to gross negligence. Tenn. Code App. § 29-20-201(b)(2). For purposes of this motion
to dismiss, we next consider whether Plaintiff has sufficiently pleaded such conduct to state
claims against Individual Defendants.
B.
Sufficiency of Pleadings
Individual Defendants assert that Wigington has not sufficiently pleaded that they acted
with the mental states necessary to remove their immunity under the GTLA and to state claims
for defamation and false light invasion of privacy. (I.D. Mem. at 15.) Individual Defendants
point to allegations in Wigington’s complaint that merely restate the requisite legal standard that
they acted “willfully, wantonly, and with actual malice.” (Id. at 16 (quoting SAC ¶¶ 335, 345).)
Of course, we need not “accept as true a legal conclusion couched as a factual allegation.” Iqbal,
556 U.S. at 678.
As discussed above, Wigington must plead that Individual Defendants acted willfully,
wantonly, or with gross negligence to remove their immunity under the GTLA. 4 See Tenn. Code
Ann. § 29-20-201(b)(2). Wigington argues that Tennessee courts have not clearly defined the
showing required for the enumerated mental states. (Wigington Resp. at 14.) See, e.g.,
Stratienko, M.D. v. Chattanooga-Hamilton Cty. Hosp. Auth., No. 1:07-CV-258,
105 S. Ct. 3099, 3105–06 (1985) (explaining distinction between suits in official versus
individual capacities). Indeed, Fitzgerald goes on to allow suit against a mayor in his individual
capacity under a similar provision of the GTLA, Tenn. Code App. § 29-20-310(c), for torts
allegedly committed while the mayor presided over a city council meeting. Fitzgerald,
2018 WL 1634111, at *7, *13.
4
Even if Wigington sufficiently alleges that Individual Defendants acted in such a way as to
remove immunity at the motion to dismiss stage, Individual Defendants may still be entitled to
immunity under the GTLA if the facts as developed through discovery show that their conduct
does not reach the threshold to remove it.
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2008 WL 4191275, at *7 (E.D. Tenn. Sept. 8, 2008) (“The Court has found no Tennessee case
law clearly defining malice, in the context of the Tennessee Governmental Tort Liability
Act . . . .”). But related case law is instructive. See, e.g., Ingram v. Tenn. Dep’t of Labor &
Workforce Dev., No. 3:12-CV-01106, 2013 WL 1965130, at *4 (M.D. Tenn. May 10, 2013)
(roughly translating “willful” and “malicious” as “a deliberate desire to wrong [the plaintiff]”
(quoting Purisch v. Tenn. Tech. Univ., 76 F.3d 1414, 1421 (6th Cir. 1996))); Autry v. Hooker,
304 S.W.3d 356, 364 (Tenn. Ct. App. 2009) (“‘Gross negligence’ is ‘conscious neglect of duty
or a callous indifference to consequences.’” (quoting Conroy v. City of Dickson,
49 S.W.3d 868, 871 (Tenn. Ct. App. 2001))).
In addition, a public official stating a claim for defamation must plead that Individual
Defendants acted with “actual malice,” 5 defined as “knowledge that [the defamatory statement]
was false or with reckless disregard of whether it was false or not.” Hibdon v. Grabowski,
195 S.W.3d 48, 58 (Tenn. Ct. App. 2005) (quoting New York Times Co. v. Sullivan,
376 U.S. 254, 279–80, 84 S. Ct. 710, 726 (1964)); see also West v. Media Gen. Operations, Inc.,
120 F. App’x 601, 618 (6th Cir. 2005). The same “actual malice” standard applies to a false
light claim from a public official. Lewis v. NewsChannel 5 Network, L.P., 238 S.W.3d 270, 303
(Tenn. Ct. App. 2007).
Taking these standards together, Wigington’s complaint would be sufficient if it alleges
that Individual Defendants made public statements that they knew were false or that deliberately
put Wigington’s reputation in a false light while knowing or recklessly disregarding their
falsehood. See Autry, 304 S.W.3d at 364; Hibdon, 195 S.W.3d at 58; Lewis, 238 S.W.3d at 303.
Wigington alleges that Individual Defendants presented a list of “reported behaviors” to the
5
For purposes of this motion to dismiss, we assume, without deciding, that Wigington is a public
official subject to the heightened pleading standards for defamation and false light invasion of
privacy.
13
MNAA Board and the press, first to justify his termination, and then, along with additional
allegations, to justify his firing “for cause.” (SAC ¶¶ 330–34, 339–43.) Wigington further
alleges that the “reported behaviors” were false, and that Individual Defendants knew they were
false. For example, one of the “reported behaviors” was that Wigington failed to disclose the
content of negotiations or the amount of incentives provided to British Airways to establish a
direct route to London. (SAC ¶ 112.) Wigington alleges that, on the contrary, he did disclose
the negotiations and incentives, and that Individual Defendants were kept continuously informed
of both. (See id. ¶¶ 116–19, 125–27.) Wigington alleges that the allegation publicized by
Individual Defendants “has no basis in fact.” (Id.¶¶ 131–32.) For another example, when the
Board decided to classify Wigington’s termination “for cause,” Wigington alleges that the
Management Committee claimed Wigington “exceeded reimbursements permitted by policy” on
his business travel expenses. (Id. ¶ 237.) Wigington alleges he in fact followed MNAA’s travel
policy and chose only the most cost-effective mode of travel and lodging, and that the
Management Committee had never raised business expense issues during any previous
discussions or Board meetings or during Wigington’s initial termination. (Id. ¶¶ 240–43.)
Wigington claims that this allegation publicized by Individual Defendants “has no basis in fact”
and was “merely pretext” to reclassify his termination as “for cause.” (Id. ¶ 244.) Taking these
allegations as true, as we must on a motion to dismiss, Wigington alleges sufficient factual
material to support the plausibility that Individual Defendants acted willfully, wantonly, or
grossly negligently, and with actual malice.
For the foregoing reasons, Individual Defendants’ motion to dismiss is denied.
II.
WIGINGTON’S MOTION TO DISMISS COUNTERCLAIMS
Wigington moves to dismiss MNAA’s amended counterclaims. (Dkt. No. 39.) He
advances several grounds for dismissal, including that the statute of limitations bars MNAA’s
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claims, that MNAA fails to make out a prima facie case of breach of fiduciary duty, and that his
decision as to the refinancing of debt from the car rental facility is protected by the business
judgment rule. (Counter-Def.’s Mem. in Supp. of Mot. to Dismiss Counterclaims
(“Wigington Mem.”) (Dkt. No. 40) 5–15.) Wigington also asserts that MNAA’s counterclaims
should be dismissed because they constitute unlawful retaliation. (Id. at 2–5.) Because we find
that MNAA’s counterclaims as pleaded are barred by the applicable statute of limitations, we
address only those arguments in the following analysis.
Wigington argues that MNAA’s counterclaims are barred by the one-year statute of
limitations for breach of fiduciary duty actions under Tennessee law. (Wigington Mem. at 5.)
Tennessee Code Annotated § 48-18-601 defines the applicable statute of limitations in this case
and states, in relevant part:
Any action alleging breach of fiduciary duties by directors or officers . . . must be
brought within one (1) year from the date of such breach or violation; provided, that in
the event the alleged breach or violation is not discovered nor reasonably should have
been discovered within the one-year period, the period of limitation shall be one (1) year
from the date such was discovered or reasonably should have been discovered. In no
event shall any such action be brought more than three (3) years after the date on which
the breach or violation occurred, [except for claims of fraudulent concealment, not
alleged here] . . . .
Tenn. Code Ann. § 48-18-601. MNAA does not dispute that this statute governs the limitations
period for its counterclaims. (See MNAA’s Resp. to Wigington’s Mot. to Dismiss Countercl.
(“MNAA Resp.”) (Dkt. No. 43) 16.) “[W]hile a defendant ordinarily has the burden to establish
its statute of limitations defense, when the court can ascertain from the complaint that the period
for bringing the claim has expired, a plaintiff must affirmatively plead an exception to the
limitations statute.” Reid v. Baker, 499 F. App’x 520, 526 (6th Cir. 2012). The Tennessee
statute codifies the discovery rule, “an equitable exception that tolls the running of the statute of
limitations.” Id. at 525 (quoting Pero’s Steak & Spaghetti House v. Lee, 90 S.W.3d 614, 621
15
(Tenn. 2002)). However, to get the benefit of the discovery rule, a plaintiff must plead either
that the alleged breach of duty was discovered within the one-year statute of limitations or that
the wrongdoing could not reasonably have been discovered within the limitations period.
(Id. at 526.) Since MNAA filed its counterclaims on February 1, 2018, (Dkt. No. 17), MNAA
must plead that Wigington’s breaches occurred on or after February 1, 2017, or that MNAA did
not discover nor could have reasonably discovered Wigington’s breaches until after
February 1, 2017. Reid, 499 F. App’x at 526.
Wigington argues that the allegations in MNAA’s counterclaims all, on their face,
occurred outside the limitations period. (Wigington Mem. at 6.) Wigington further argues that
because the counterclaims are facially time-barred, MNAA is responsible for pleading facts that
would excuse the delay under Tennessee law, but fails to do so. (Id. at 7; Reply in Supp. of
Counter-Def.’s Mot. to Dismiss (“Wigington Reply”) (Dkt. No. 47) 2.) MNAA asserts that
Wigington mischaracterizes its counterclaims as discrete events and urges that its counterclaims
instead allege an ongoing pattern of continuing violations, such that no cause of action would
have accrued until Wigington was relieved of his duties as CEO in July 2017.
(MNAA Resp. at 13–14.) MNAA also argues that it is entitled to tolling under the statutory
discovery rule and that Wigington’s statute of limitations arguments require factual development
that counsels against dismissal. (Id. at 15–19.)
MNAA’s counterclaims allege facts that all on their face occur outside of the one-year
limitations period. MNAA alleges that, in December 2015, Wigington should have decided how
to invest approximately $200 million in bond issue proceeds instead of leaving the decision to a
subordinate who chose a cash-equivalent investment that yielded lower returns for MNAA.
(Am. Countercl. ¶¶ 12–15, 17–18.) Also in December 2015, and again in December 2016,
MNAA alleges Wigington failed to act on a professional financial advisor’s tender of financial
16
services to manage MNAA’s bond issue and other cash-equivalent assets. (Id. ¶¶ 19–24, 40–43.)
Finally, MNAA claims that Wigington decided in the fall of 2016 not to pursue an opportunity to
refinance debt incurred from the building of the car rental facility at MNAA.
(Id. ¶¶ 25–29, 44–45.) None of these allegations occur on or after February 1, 2017, the start of
the limitations period in this case. Indeed, the only factual allegation in MNAA’s counterclaims
that occurs within the limitations period is Wigington’s date of termination, October 18, 2017.
(Id. ¶ 1.) It is thus apparent that no events forming the basis of MNAA’s counterclaims took
place within the one-year limitations period for breach of fiduciary duty called for by Tennessee
Code Annotated § 48-18-601.
MNAA argues that Wigington misconstrues MNAA’s counterclaims, which should be
read as one continuous violation extending through the end of Wigington’s active tenure as CEO
in July 2017, thus rendering the counterclaims timely or tolling the statute of limitations.
(MNAA Resp. at 13–14.) The “continuing violation” or “ongoing violation” doctrine is most
often invoked in discrimination actions under Title VII of the Civil Rights Act of 1964,
Sharpe v. Cureton, 319 F.3d 259, 267 (6th Cir. 2003), although it has been extended to other
areas of the law as well. Nat’l Parks Conservation Ass’n, Inc. v. Tenn. Valley Auth.,
480 F.3d 410, 416–17 (6th Cir. 2007) (observing, without deciding, that no principled reason
exists to limit continuing violation doctrine to civil rights and employment claims). In the
discrimination context, the Sixth Circuit previously recognized two forms of continuing
violation: “[1] those alleging serial violations and [2] those identified with a longstanding and
demonstrable policy of discrimination.” Sharpe, 319 F.3d at 266. The subsequent Supreme
Court case National Railroad Passenger Corporation v. Morgan undermined the first form of
this doctrine. 536 U.S. 101, 114, 122 S. Ct. 2061, 2072–73 (2002) (reversing lower court
holding that “serial violations” can trigger continuing violations doctrine). “Morgan overturns
17
prior Sixth Circuit law addressing serial violations, i.e., plaintiffs are now precluded from
establishing a continuing violation exception by proof that the alleged acts of discrimination
occurring prior to the limitations period are sufficiently related to those occurring within the
limitations period.” Sharpe, 319 F.3d at 268.
We have not found a Sixth Circuit case applying the continuing violation doctrine to
breach of fiduciary duty, although MNAA argues that this doctrine has been extended to such
claims. (MNAA Resp. at 13 (citing Burkholder v. United Auto. Aerospace and Agric. Implement
Workers of Am., Local No. 12, 700 F. Supp. 2d 895, 907 (N.D. Ohio 2010)).) However, we need
not decide whether the doctrine applies to fiduciary duty claims, because we find that MNAA
has alleged a series of breaches that would make the doctrine inapplicable in any event.
Nowhere in its counterclaims does MNAA allege that Wigington’s breaches continued until he
was removed from his position as CEO. The allegations instead allege a series of discrete
decisions or non-decisions that all occur outside the limitations period.
(See Am. Countercl. ¶¶ 14–15, 25–29, 40–43.) MNAA itself characterizes Wigington’s alleged
misconduct as a “series of inactions,” a “pattern of inactions,” and a “pattern of breach,”
language that suggests a series of violations instead of one continuing breach.
(MNAA Resp. at 13, 14.) A series of breaches does not constitute a continuing violation.
Morgan, 536 U.S. at 114, 122 S. Ct. at 2072–73; Sharpe, 319 F.3d at 268.
Alternatively, MNAA argues that its counterclaims trigger the discovery rule codified in
Tennessee’s fiduciary duty statute of limitations. Tenn. Code. Ann. § 48-18-601 (“[I]n the event
the alleged breach or violation is not discovered nor reasonably should have been discovered
within the one-year period, the period of limitation shall be one (1) year from the date such was
discovered or reasonably should have been discovered.”) (MNAA Resp. at 15–18.) Because
Wigington’s alleged wrongdoing all occurred outside of the one-year period in MNAA’s
18
counterclaims, MNAA must establish why a tolling exception should apply in its pleadings.
Reid, 499 F. App’x at 526–27.
MNAA claims in its brief that the earliest it could have discovered Wigington’s alleged
breaches of fiduciary duty was on the first date that he no longer acted as CEO, July 22, 2017.
(MNAA Resp. at 17.) Before that date, MNAA argues, only Wigington himself knew of his
breaches of duty, and he should not be able to impute knowledge of his own breaches to MNAA
as a corporate entity. (Id.) MNAA pinpoints one specific allegation to support the argument that
MNAA could not have discovered Wigington’s misdeeds before his departure:
Wigington failed or refused to fully disclose these facts to the Board of Commissioners,
thereby breaching his duty to fully disclose the information that properly should have
been presented to the Board of Commissioners, thereby breaching his fiduciary duties.
The losses could and would have been avoided had Wigington complied with his
fiduciary duty to disclose relevant information to the Board of Commissioners in a timely
manner.
(Am. Countercl. ¶ 46; see MNAA Resp. at 17.)
Wigington replies that MNAA “fails to allege any facts regarding the discovery of
Mr. Wigington’s alleged breaches,” and therefore does not meet its “‘burden to plead
affirmatively why the statute of limitations should be tolled.’” (Wigington Reply at 4
(quoting Reid, 499 F. App’x at 527).) Wigington contends that MNAA’s one allegation possibly
supporting application of the discovery rule, (Am. Countercl. ¶ 46), only says that Wigington did
not fully disclose information to the Board, but says nothing about when the Board discovered
Wigington’s alleged breaches. (Wigington Reply at 5.) Moreover, Wigington asserts that
MNAA’s counterclaims disclose that another agent of MNAA—the Chief Financial Officer
(“CFO”)—had continuous knowledge of Wigington’s allegedly dilatory actions, and whose
knowledge could indeed be imputed to MNAA. (Id. at 5 n.1.)
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Wigington has the better of this argument. MNAA fails to allege facts that support the
notion that it did not or could not have discovered Wigington’s breaches of duty until after he
was relieved as CEO. The one allegation MNAA identifies that suggests the Board did not have
full knowledge of Wigington’s actions does not say anything about when the Board became
aware of actionable facts. (See Am. Countercl. ¶ 46.) “Where, as here, defendants have
highlighted the apparent untimeliness of the complaint, plaintiffs may not simply rely on the bare
assertion that they were unaware of the facts underlying their cause of action.” Bishop v. Lucent
Techs., Inc., 520 F.3d 516, 520 (6th Cir. 2008). Reading MNAA’s counterclaims in the light
most favorable to it, as we must, does not require us to give MNAA’s silence on when it
plausibly knew of Wigington’s breaches the benefit of the doubt. See id. (“[I]t is not enough for
plaintiffs to argue that the complaint, because it is silent as to when they first acquired actual
knowledge, must be read in the light most favorable to them . . . .”).
MNAA argues that Wigington asks us to impute his knowledge of his own wrongdoing to
MNAA, thus establishing that MNAA had knowledge of a cause of action outside the limitations
period. (MNAA Resp. at 15–16.) As MNAA points out, a “corporation acts through its agents.”
(Id. at 15 (quoting Edmonds v. Fehler & Feinauer Const. Co., 252 F.2d 639, 641
(6th Cir. 1958).) It is also generally accepted that “a corporate body, as a legal entity, cannot
itself have knowledge. If it can be said to have knowledge at all, it must be the imputed
knowledge of some corporate agent.” 3 Fletcher Cyc. Corp. § 787 (Sept. 2018 update); see also
Bland v. Allstate Ins. Co., 944 S.W.2d 372, 376 (Tenn. Ct. App. 1996) (“Of course, the
knowledge of an agent is imputed to his principal.”). An agent’s knowledge is imputed to the
principal even if not specifically communicated. Griffith Motors, Inc. v. Parker,
633 S.W.2d 319, 322 (Tenn. Ct. App. 1982) (quoting Fletcher’s Cyclopedia of
Corporations, § 790). And, as MNAA argues, (MNAA Resp. at 15), the knowledge of an agent
20
who acts in his own interests or adverse to the principal should not be imputed to the principal.
Id. (citing an exception to the rule of imputed knowledge “where the agent is dealing with the
principal in his own interests or where his interests are adverse to that of the principal so that it is
to his own advantage not to impart his knowledge to the principal”).
But several allegations in MNAA’s counterclaims place a non-Wigington MNAA agent
in the room with the alleged wrongdoer. MNAA’s allegations reveal that its CFO both knew of
and advised Wigington of the facts surrounding Wigington’s alleged failure to invest cash and
cash equivalents at all relevant times. (See Wigington Reply at 5 n.1 (citing Am. Countercl.).)
The CFO furnished Wigington with quarterly reports that “described how much money MNAA
had sitting in cash or cash equivalents.” (Am. Countercl. ¶ 20; see also MNAA Resp. at 14 (“All
the while, Wigington received quarterly reports from MNAA’s then Chief Financial Officer
describing how much money MNAA had sitting in cash or cash equivalents.”).) The CFO
“specifically advised” Wigington “that MNAA did not have executives or managers with
sufficient knowledge or skill” to invest MNAA’s cash-on-hand wisely. (Am. Countercl. ¶ 22.)
The CFO informed Wigington in the fall of 2016 of the opportunity to refinance debt on
MNAA’s rental car facility, and Wigington told the CFO directly to “hold on” with the
refinancing, eventually instructing the CFO to cease the effort altogether. (Id. ¶¶ 25–26, 28–29.)
The counterclaims thus allege on their face that MNAA’s CFO knew facts that would give rise to
the claim of breach of fiduciary duty for all alleged wrongdoing, all of which occurred outside
the limitations period. 6 In addition, MNAA alleges that another of its agents, “an employee
subordinate” of Wigington’s, necessarily knew of Wigington’s alleged failure to select an
6
MNAA’s counterclaims also allege that Wigington fired this CFO. (Am. Countercl. ¶ 34.)
This does not alter the inference apparent on the face of MNAA’s counterclaims that the CFO
was an agent of MNAA while employed during the period of Wigington’s alleged breaches of
fiduciary duty.
21
investment vehicle for MNAA’s $200 million bond issue because the employee was tasked with
making the final call as late as January 2016. (Am. Countercl. ¶¶ 18–19.)
The knowledge of these agents is imputed to the principal even if not specifically
communicated to it. Griffith Motors, Inc., 633 S.W.2d 322. MNAA’s counterclaims thus allege
that MNAA had contemporaneous constructive knowledge of Wigington’s breaches as they
happened. “[A] plaintiff cannot be permitted to wait until he knows all of the injurious effects or
consequences of an actionable wrong to delay the accrual of a cause of action.” Cavalier Metal
Corp. v. Finch & McBroom, No. W2004-01536-COA-R3CV, 2005 WL 645201, at *4
(Tenn. Ct. App. Mar. 17, 2005) (quoting Memphis Aero Corp. v. Swain, 732 S.W.2d 608
(Tenn. Ct. App. 1986)).
MNAA argues that resting our decision on statute of limitations grounds is inappropriate
because it requires a factual inquiry. (MNAA Resp. at 18.) Although dismissing pleadings as
barred by the statute of limitations is generally disfavored, “sometimes the allegations in the
complaint affirmatively show that the claim is time-barred. When that is the case, as it is here,
dismissing the claim under Rule 12(b)(6) is appropriate.” Cataldo v. U.S. Steel Corp.,
676 F.3d 542, 547 (6th Cir. 2012). We have determined that MNAA’s counterclaims
affirmatively show that each alleged breach of fiduciary duty occurred prior to the applicable
limitations period, and fails to establish a tolling exception.
We therefore conclude that MNAA’s counterclaims are barred by the one-year statute of
limitations set forth in Tennessee Code Annotated § 48-18-601, and we grant Wigington’s
motion to dismiss. Because it appears MNAA may not simply re-plead its counterclaims by
removing its agents from the picture, we do so with prejudice.
22
CONCLUSION
For the foregoing reasons, Individual Defendants Joslin and Samuels’ motion to dismiss
Wigington’s claims as to them is denied, (Dkt. No. 37), and Wigington’s motion to dismiss
MNAA’s amended counterclaim is granted with prejudice, (Dkt. No. 39). It is so ordered.
___________________________________
Marvin E. Aspen
United States District Judge
Dated: March 20, 2019
Chicago, Illinois
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