Kass v. Great Coastal Express, Inc.

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SYLLABUS
 

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

Ian David Kass v. Great Coastal Express, Inc., et al. (A-11-97)

 
Argued January 5, 1998 -- Decided February 9, 1998

PER CURIAM
 
This appeal concerns the law of private defamation and the qualified privilege that applies to bar such claims.

Ian David Kass brought a trade libel suit against his former employer, Great Coastal Express, Inc. (Great Coastal) alleging that Great Coastal had provided prospective employers with defamatory references concerning his employment record. At the conclusion of trial, the trial court entered judgment in favor of the Great Coastal on the basis of the jury's answers to certain interrogatories. The critical questions to the jury were:
 
3. Has plaintiff proven by a preponderance of the evidence that the statements made about him were made by the defendants with the knowledge that they were false or with reckless disregard for their truth or falsity? Answer - Yes: 5-1

4. Has plaintiff proven by clear and convincing evidence the defendant's sole, chief or primary motivation in communicating the statement was ill will or spite toward the plaintiff? Answer - No: 6-0

On Kass's appeal, the Appellate Division granted a new trial on liability and damages. The members of the appellate panel agreed that Kass had established the trade libel and that the jury had been incorrectly charged in regard to Great Coastal's qualified privilege to furnish information about the qualifications of a former employee. One member of the panel dissented, concluding that the retrial should be limited to the issue of qualified privilege only, since the jury had already established the libel and the resulting damages.

Great Coastal appealed to the Supreme Court as of right based on the dissent in the Appellate Division. The Court also granted Great Coastal's petition for certification.

HELD: Although the answer to Jury Interrogatory 3 was sufficient to establish the tort of private defamation, Interrogatories 3 & 4 did not give the jury the opportunity to consider whether the defendant abused its qualified privilege. Therefore, a retrial is necessary and should be limited to the privilege issue only.

1. In trade libel actions, the qualified privilege extends to an employer who responds in good faith to the specific inquiries of a third party concerning the qualifications of an employee. A publisher abuses that privilege if: 1) the publisher knows the statement is false or the publisher acts in reckless disregard of its truth or falsity; 2) the publication serves a purpose contrary to the interests of the qualified privilege; and 3) the statement is excessively published. An abuse of a qualified privilege must be proven by clear and convincing evidence. (p. 3)

2. A new trial is required in this case. Although the answer to Interrogatory 3 was sufficient to establish the tort of private defamation, Interrogatories 3 & 4, which derive from an out-dated model jury instruction, did not give the jury the opportunity properly to consider whether Great Coastal abused its qualified privilege. (pp. 3-4)

3. Interrogatory 3 focused on one of the three elements for establishing an abuse of the qualified privilege, but it did not require the jury to find knowledge or recklessness by clear and convincing evidence. Interrogatory 4 included the appropriate burden of proof but only asked the jury to consider whether Great Coastal spoke with ill will or spite. The jury was not asked to consider whether Great Coastal's speech served some other purpose contrary to the interests of the privilege. Nor did the court ask whether Great Coastal excessively published its statement. (p. 4)

4. The retrial should be limited to the privilege issue only. The jury's verdict, finding that Great Coastal had defamed Kass, that the defamation caused $15,000 in damages, and that Kass was not entitled to collect punitive damages, was not irremediably tainted by the error in the jury charge. (pp. 4-5)

5. Although the Court agrees that it is somewhat confusing to ask a jury to consider under two standards of proof whether the allegedly defamatory statements were made with the knowledge of or reckless disregard for falsity, it cannot agree that a plaintiff must cross a higher threshold of clear and convincing proof in order to establish the tort when there are other bases to prove an abuse of the qualified privilege. (pp. 5-6)

6. The Committee on Model Jury Charges, Civil, recently modified the model jury charge on abuse of the qualified privilege. However, that instruction would allow a plaintiff to establish an abuse of the privilege by showing by a mere proponderance of the evidence that a defendant has spoken with knowledge of or reckless disregard for a statement's falsity. The Committee may wish to specify that, even though knowledge or recklessness need only be proven by a preponderance of the evidence to establish trade libel, if knowledge or recklessness is to serve as the basis for the speaker's abuse of the privilege, it must be proven by clear and convincing evidence. (p. 6)

Judgment of the Appellate Division is AFFIRMED IN PART, REVERSED IN PART and REMANDED for a trial on the abuse-of-the-privilege issue.

CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI, STEIN, and COLEMAN join in this PER CURIAM opinion.


SUPREME COURT OF NEW JERSEY
A- 11 September Term 1997
 

IAN DAVID KASS,

Plaintiff-Respondent,

V.

GREAT COASTAL EXPRESS, INC.,

Defendant-Appellant,

and

ALGER BATTS, JR., Individually and as Agent of GREAT COASTAL EXPRESS, INC., JAMES VENA, Individually and as an Agent of GREAT COASTAL EXPRESS, INC., RICHARD WIMBISH and CHARLES DEES, t/a DAC SERVICES and JOHN DOES NOS. I, II, III and IV,

Defendants.

Argued January 5, 1998 -- Decided February 9, 1998

On certification to the Superior Court, Appellate Division.

Grayson Barber argued the cause for appellant (Smith, Stratton, Wise, Heher & Brennan, attorneys; Peter R. Freed, of counsel; Ms. Barber and Peter R. Freed, on the briefs).

Franklyn C. Steinberg, III, argued the cause for respondent.

PER CURIAM

This case involves the law of private defamation and the qualified privilege that applies to bar such claims. Plaintiff has brought a trade libel action against his former employer alleging that the employer had furnished to prospective employers defamatory references concerning plaintiff's employment record. The trial court entered judgment in favor of defendant on the basis of the jury's answers to certain interrogatories. The two critical interrogatories were:
3. Has plaintiff proven by a preponderance of the evidence that the statements made about him were made by the defendants with the knowledge that they were false or with reckless disregard for their truth or falsity?

Answer - Yes: 5-1.

4. Has plaintiff proven by clear and convincing evidence that defendant's sole, chief or primary motivation in communicating the statement was ill will or spite toward the plaintiff?

Answer - No: 6-0.

On plaintiff's appeal the Appellate Division granted him a new trial on liability and damages. All of the panel members agreed that plaintiff had established the trade libel and that the jury had been incorrectly charged concerning the employer's qualified privilege to furnish information concerning the qualifications of a former employee. One member of the panel dissented. He would have limited the retrial to the issue of qualified privilege only, the jury having established the libel and the resulting damages. Defendant's appeal is as of right on the basis of the dissent below and by our grant of defendant's petition for certification. 149 N.J. 34 (1997). We affirm in part and modify

in part, substantially for the reasons stated in the two opinions reported at 291 N.J. Super. 10 (1996).
In trade libel actions, the qualified privilege to publish defamatory information has "emerged as one of the prime means for the common law to balance the interests in reputation with the publication of information in the public interest." Dairy Stores, Inc. v. Sentinel Publ'g Co., 104 N.J. 125, 137 (1986). In trade libel actions, "a qualified privilege extends to an employer who responds in good faith to the specific inquiries of a third party regarding the qualifications of an employee." Erickson v. Marsh & McLennan Co., 117 N.J. 539, 562 (1990).
The privilege has limits. A publisher abuses the privilege "if (1) the publisher knows the statement is false or the publisher acts in reckless disregard of its truth or falsity; (2) the publication serves a purpose contrary to the interests of the qualified privilege; or (3) the statement is excessively published." Williams v. Bell Tel. Lab. Inc., 132 N.J. 109, 121 (1993) (citations omitted). As articulated in Erickson, supra, an abuse of a qualified privilege must be proven by clear and convincing evidence. 117 N.J. at 565.
We therefore agree with the majority of the Appellate Division that a new trial is required because, although the answer to interrogatory three was sufficient to establish the tort of private defamation,See footnote 1 questions three and four, which

derive from an out-dated model jury instruction, did not give the jury the opportunity properly to consider whether defendant abused its qualified privilege. Although question three focused on one of the three elements set forth in Williams, supra, 132 N.J. at 121, for establishing an abuse of the privilege, it did not require the jury to find knowledge or recklessness by clear and convincing evidence. Question four, although it included the appropriate burden of proof, only asked the jury to consider whether defendant spoke with ill will or spite. Although the speech of one who is primarily or chiefly motivated by spite does not serve the interests that the qualified privilege is designed to serve, the jury in this case was not asked to consider whether defendant's speech served some other purpose contrary to the interests of the privilege. Nor did the court ask the jury whether defendant excessively published its statement.
We agree, however, with the dissenting member of the Appellate Division that the retrial should be limited to the privilege issue only. The jury's verdict, finding that defendant had defamed plaintiff, that the defamation caused $15,000 in damages, and that plaintiff was not entitled to collect punitive damages, was not irremediably tainted by the error in the charge. Because knowledge of or reckless disregard for falsity serves to establish both (1) an element of the tort of private defamation, and (2) if proven by clear and convincing evidence,

an abuse of an employer's qualified privilege to furnish employment records, the Appellate Division majority reasoned that when the qualified privilege is at issue a jury should be asked to consider the issue only once and under the standard of clear and convincing proof. Although we agree that it is a bit confusing to ask a jury to consider under two standards of proof (preponderance of the evidence versus clear and convincing evidence) whether the allegedly defamatory statements were made with knowledge of or reckless disregard for falsity, we cannot agree that the plaintiff must be required to cross the higher threshold of clear and convincing proof in order to establish the tort when there are other bases to prove an abuse of the qualified privilege. For example, a jury in another case might find by a preponderance of the evidence, but not by clear and convincing evidence, that a defendant showed a reckless disregard for the truth or falsity of its reports on a former employee. The jury might also find by clear and convincing evidence that that defendant published its reports excessively. The plaintiff employee, based on such findings, would be entitled to receive whatever damages the jury awarded. However, if the court had only asked whether clear and convincing evidence supported the finding of recklessness, the jury would have responded in the negative. The defamation, although proven by a preponderance of the evidence, would not have been established by the jury's answers to the special interrogatories.
We note that the Committee on Model Jury Charges, Civil, has modified the model jury charge on abuse of the qualified privilege in light of the Appellate Division's opinion in this

matter. Model Jury Charges (Civil) 3.11B3 Qualified Privilege (May 23, 1997). It appears, however, that the instruction would allow a plaintiff to establish an abuse of the qualified privilege by showing to a mere preponderance of the evidence that a defendant has spoken with knowledge of or reckless disregard for a statement's falsity. The Committee may wish to specify that, even though knowledge or recklessness need only be proven by a preponderance of the evidence to establish the trade libel, if knowledge or recklessness is to serve as the basis for the speaker's abuse of the privilege, it must be proven by clear and convincing evidence.
The opinion of the Appellate Division is affirmed in part, reversed in part, and remanded for a trial on the abuse-of-privilege issue.

CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI, STEIN, and COLEMAN join in this PER CURIAM opinion.

SUPREME COURT OF NEW JERSEY
 

NO. A-11

SEPTEMBER TERM 1997
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court

IAN DAVID KASS,
Plaintiff-Respondent,
v.
GREAT COASTAL EXPRESS, INC.,
Defendant-Appellant,
and
ALGER BATTS, JR., etc., et al.,
Defendants.

DECIDED

February 9, 1998
Chief Justice Poritz PRESIDING
OPINION BY PER CURIAM
CONCURRING OPINION BY DISSENTING OPINION BY
CHECKLIST
AFFIRM IN PART; REVERSE IN PART; REMAND CHIEF JUSTICE PORITZ X JUSTICE HANDLER X JUSTICE POLLOCK X JUSTICE O'HERN X JUSTICE GARIBALDI X JUSTICE STEIN X JUSTICE COLEMAN X TOTALS
7 Footnote: 1In order successfully to prove a private defamation claim--that is, a claim of defamation involving a statement that does not relate to a public figure or to matters of public concern--a plaintiff must establish that the speaker knew the statement was false when communicated, that the statement was made with reckless disregard of its truth or falsity, or that the speaker

acted negligently in failing to ascertain the falsity of the statement before communicating it. 291 N.J. Super. at 17 (citing Turf Lawnmower Repair, Inc. v. Bergen Record Corp., 139 N.J. 392, 413 (1995), cert. denied, ___ U.S. ___, 116 S. Ct. 752, 133 L. Ed. 2d 700 (1996)).