Staples v. Bangor Hydro-Electric Co.

Citations: 629 A.2d 601; 62 U.S.L.W. 2152; 8 I.E.R. Cas. (BNA) 1153; 1993 Me. LEXIS 165

Court: Supreme Judicial Court of Maine; August 3, 1993; Maine; State Supreme Court

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Richard Staples filed a lawsuit against Bangor Hydro-Electric Company, claiming slander by his supervisor, Avery Caldwell. The Supreme Judicial Court of Maine upheld the lower court's finding that the statements made by Caldwell were defamatory and communicated to third parties, rejecting Bangor Hydro’s arguments against these points. However, the court agreed with Bangor Hydro regarding the insufficiency of evidence for awarding punitive damages, leading to a modification of the judgment. The case stemmed from Staples' employment as a microcomputer specialist, where he criticized Caldwell's management in a memo and faced retaliation, including a demotion and eventual termination. Following the trial, the jury awarded Staples compensatory and punitive damages. Bangor Hydro appealed the verdict, claiming Caldwell’s statements were merely opinions rather than defamatory facts.

An expression of opinion can be considered actionable if it suggests undisclosed defamatory facts, as established in Lester v. Powers. If a statement is reasonably interpreted by an ordinary person as implying such facts, the determination of whether it is an opinion or a factual statement is a matter for the jury. In this case, the jury could find that Caldwell’s statement about Staples sabotaging computers implied undisclosed defamatory facts. 

Bangor Hydro's claim that communications among its employees do not constitute publication for defamation purposes is rejected. While a communication may be protected by a qualified privilege, it still qualifies as a publication. The court distinguishes this from the reasoning in certain jurisdictions that treat intracorporate communications as internal. Instead, it aligns with jurisdictions that argue that damage to reputation within a corporation is significant and should not be treated differently than outside communications, with qualified privilege providing sufficient defense.

Bangor Hydro also contends that Caldwell’s statements were conditionally privileged and that Staples did not prove an abuse of that privilege. A conditional privilege exists when there is a societal interest in fostering free speech, as noted in the Restatement (Second) of Torts. Staples argues that the jury's verdict is supported by evidence of actual malice and ill will, despite the court's previous remarks on the ambiguity of the term "actual malice."

Conditional privilege in defamation cases can be lost if the defendant either knows their statement is false, recklessly disregards its truth, or acts out of ill will. The jury was properly instructed on the burden of proof for abuse of privilege, and their finding of abuse is not clearly erroneous. To claim punitive damages, a plaintiff must prove ill will or outrageous conduct by clear and convincing evidence. Although Staples met the preponderance standard for proving ill will, the evidence did not satisfy the higher clear and convincing threshold necessary for punitive damages. Consequently, the judgment is modified to eliminate the punitive damages award. 

A dissenting opinion argues that Caldwell’s statements were made under a conditional privilege, and Staples failed to prove any abuse of that privilege. The dissent emphasizes that the jury could not have rationally found that Caldwell knew his statements were false, acted with reckless disregard for their truth, or acted solely out of ill will. Additionally, Caldwell acted under the direction of his supervisor, which further undermines the claim of privilege abuse. The dissent concludes that the evidence supports Caldwell’s entitlement to the conditional privilege, and therefore, the judgment should be vacated.