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filed: December 20, 1985.


Appeal from the Judgment in the Court of Common Pleas of Allegheny County, Civil No. G.D. 80-9221


Eric P. Reif, Pittsburgh, for appellant.

Robert C. Gallo, Pittsburgh, for appellee.

Spaeth, President Judge, and Cavanaugh, Wickersham, Rowley, Olszewski, Montemuro, Beck, Tamilia and Johnson, JJ. Rowley, J., files a concurring and dissenting Statement. Beck, J., files a concurring and dissenting opinion in which Johnson, J., joins.

Author: Spaeth

[ 348 Pa. Super. Page 466]

This is an action for defamation and breach of contract. The action arises out of appellee's dismissal as an employee of appellant. Appellant is engaged in the business of making, among other things, bronze grave markers. When appellee was dismissed, in July 1979, he was a tooler. In late June 1979, the Resurrection Cemetery, one of appellant's customers, notified appellant that contrary to the settled practice between the cemetery and appellant, a grave marker made at appellant's plant had been placed on

[ 348 Pa. Super. Page 467]

    a grave in the cemetery without having first been purchased through the cemetery. Appellant engaged a private investigator to determine who had removed the marker from its plant. The investigator's report disclosed that appellee had, and that the marker had been placed on his nephew's grave. On July 31, 1979, following a meeting with several of appellant's officers during which appellee admitted having made and removed the marker, appellee was dismissed. Appellee's action for defamation is based on certain remarks concerning his dismissal made by two of appellant's officers. His action for breach of contract alleges breach of a section of appellant's employee handbook that provided that employees could do personal jobs with their supervisor's permission. A jury awarded appellee $15,000 for defamation, $25,000 punitive damages for defamation, and $10,000 for breach of contract. We affirm the award of $15,000 for defamation but otherwise reverse and enter judgment in favor of appellant. Appellee did not prove the sort of conduct on the part of appellant's officers that would entitle him to punitive damages for defamation. Neither did he prove the existence of an employment contract that could provide the basis of an action for breach of contract. The trial court should therefore have granted appellant's motion for judgment notwithstanding the jury's verdicts for punitive damages and damages for breach of contract.


The Defamation Claim

Appellant has argued two issues: whether the trial court erred in charging the jury that appellant's conditional privilege could be abused, and therefore lost, by a defamatory communication that was made negligently; and whether the trial court erred in charging the jury on punitive damages.


Appellant argues that its conditional privilege could be abused, and therefore lost, only by a defamatory communication

[ 348 Pa. Super. Page 468]

    made with malice -- not simply negligently, as the trial court charged the jury. This argument may be disposed of summarily.

In Rutt v. Bethlehems' Globe Publishing Co., 335 Pa. Super. 163, 484 A.2d 72 (1984), we stated:

Matus [v. Triangle Publications, Inc., 445 Pa. 384, 286 A.2d 357 (1971) cert. denied, 408 U.S. 930, 92 S.Ct. 2494, 33 L.Ed.2d 343 (1972)], . . . declare[s] quite unequivocally, that under Pennsylvania law, once the issue of conditional privilege is raised by a defendant who has been sued by a private figure for defamatory communications concerning matters which are not of public concern, the burden of proof of the plaintiff in order to establish abuse of the conditional privilege is 'want of reasonable care and diligence to ascertain the truth' or more simply put, negligence. Id. 445 Pa. at 398, 286 A.2d at 365 (quoting Purcell v. Westinghouse Broadcasting Co., supra, 411 Pa. [167] at 179, 191 A.2d [662] at 668 [(1963)].

335 Pa. Super. at 185, 484 A.2d at 83.

We made this statement in the course of discussing the effects of the United States Supreme Court's decisions in Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974) ("so long as they do not impose liability without fault, the states may define for themselves the appropriate standard of liability for a publisher or broadcaster of defamatory falsehood injurious to a private individual"), and Rosenbloom v. Metromedia, Inc., 403 U.S. 29, 91 S.Ct. 1811, 29 L.Ed.2d 296 (1971) (private figure plaintiff must prove 'actual malice') (plurality opinion), on Pennsylvania defamation law. The issue in Rutt was not the burden of proof to establish abuse of a conditional privilege but rather the burden to establish liability in a private figure defamation case, but our conclusion that Gertz and Rosenbloom had not altered the burden to establish liability compels the conclusion here that neither did those decisions alter the burden to establish abuse of a conditional privilege, and the latter burden is settled. The Pennsylvania Supreme Court has long held that "[w]ant of reasonable

[ 348 Pa. Super. Page 469]

    care and diligence to ascertain the truth, before giving currency to an untrue communication, will destroy the privilege." Montgomery v. Dennison, 363 Pa. 255, 262, 69 A.2d 520, 524 (1949), quoting Hartman v. Hyman & Lieberman, 287 Pa. 78, 83-84, 134 A. 486, 487-488 (1926). See also Baird v. Dun & Bradstreet, Inc., 446 Pa. 266, 275, 285 A.2d 166, 171 (1971) (negligence establishes abuse of conditional privilege). And see Hepps v. Philadelph Newspapers, Inc., 506 Pa. 304, 314, 485 A.2d 374, 380 (1984), appeal pending U.S. , 105 S.Ct. 3496, 87 L.Ed.2d 628 (1985) ("privilege is abused if the defamatory statement is negligently published").*fn1

[ 348 Pa. Super. Page 470]

Here, too, the trial court should have withdrawn the issue of punitive damages from the jury. Having failed to do that, the court should have granted appellant's motion for judgment n.o.v. as to the award of punitive damages.

Two statements served as the basis of appellee's defamation claim. The first statement was made at a meeting on July 31, 1979, preceding appellee's dismissal for having made a grave marker for his nephew's grave. The meeting was attended by Francis Donnelly, Vice President in charge of manufacturing, Charles Krepp, Vice President and Plant Manager, and Alfred Lee, Vice President and Director of Personnel. Appellee was shown a photograph of the grave marker and was asked whether and how he had made it. He admitted having made and removed the marker. N.T. 53. Then, according to appellee, Donnelly stated: "We can't have thieves around here, because we have a lot of valuable stuff in here." Id. The second statement was by Krepp. In response to the "uproar" that followed appellee's dismissal, Krepp met with employees in small groups to explain the reasons for the dismissal. At trial Krepp testified that "[p]eople were very concerned, because their security had been shaken." N.T. 159-60. He told the employees that appellee had been dismissed for the "unauthorized removal of company property." N.T. 161. He "may have" told "one or two employees" that appellee could have been "indicted because of this action." Id. He also stated that appellee "not only violated the company rules, but he also violated the rules of the municipality." Id. (quotation from Krepp's deposition as read into trial transcript).

Appellee's case hinged upon whether he had received permission to make the grave marker. He claimed that he

[ 348 Pa. Super. Page 472]

    had received permission in compliance with the following provision in appellant's employee handbook:

Personal Jobs

Employees are not generally permitted to work on personal jobs during company time or on company premises. However, supervisors will often cooperate by giving permission for you to use our equipment and waste material for your personal work.

In support of this claim, appellee testified that he asked for and received permission to make the marker from Jack Campbell, his immediate supervisor. N.T. 42-43, 333. Appellee also testified that William Donatelli, the general foreman of the plant, gave him permission to take the piece of bronze scrap that he used in making the marker, N.T. 37, and that Betty Desport, a nonsupervisory receiver, gave him permission to take a scrap bronze vase used in making the marker, N.T. 76-77, 330. (Campbell, Donatelli and Desport denied having given the permission that appellee claimed they had. N.T. 333-34, 325, 330.) Appellee also testified that some seven to eight years previously he had made a marker for the grave of Donatelli's father as a personal job. N.T. 32. (Donatelli testified that he had not. N.T. 324.)

Appellant introduced a written policy statement, entitled "Bronze Division Procedures", that provided in part: "For the good of all concerned it should be thoroughly understood that we cannot run the risk of offending our customers by permitting employees to buy direct from Matthews. Every employee who desires to purchase a bronze memorial should contact the cemetery office and arrange for said purchase." N.T. 274-75. Appellee testified, however, that he did not become aware of this policy until after he had been dismissed. N.T. 81.

Also in regard to appellant's policy, appellant's witnesses testified that making a grave marker did not come within the handbook provision covering personal jobs. For example, Donatelli testified that under company policy, "you weren't allowed to make a memorial" for personal purposes.

[ 348 Pa. Super. Page 473]

N.T. 324. He also stated that he had become aware of the policy before he became a supervisor. Campbell testified that "[w]e never classified a [c]emetery memorial as a 'government job'" N.T. 325.*fn3 He stated that he had learned of the policy when he first became employed in 1946. N.T. 333-34. Donnelly testified that he considered personal jobs as "favor type projects that people request, such as house numbers, identification plates for the front of automobiles, perhaps initials for car doors . . ." N.T. 344. Removing a marker from the plant, he said, is "an obvious violation of company policy." N.T. 345. Ralph West, Vice President and manager of memorial and architectural systems, testified that company policy was not to "give cemetery memorials to employees . . . because it offends our customers." N.T. 275. He described typical personal jobs as projects like "house numbers, license plates, numbers, desk plates, things like that, . . ." N.T. 276. Krepp testified that "the company was more than happy to allow people to use scrap or waste material for small personal jobs. It's in our handbook." N.T. 148. He further testified that "[a] license plate with initials 'RAB' on it is something that could very well be a bona fide order, but more likely it is a personal job. That is totally different than a memorial." N.T. 150.

When Krepp and West learned that a marker had been removed from the plant, they reported to Donnelly as their superior. West had received a telephone call from one of the plant managers "indicating that the cemetery had called and was quite concerned that we had changed our policy and were supplying memorials directly to our customers." N.T. 281. The matter was then turned over to James Parker, Vice President and General Counsel. N.T. 282. Parker ordered a private firm, Universal Security Consultants, Inc., to conduct an investigation to determine who had removed the marker. N.T. 192. Meanwhile, Krepp held a meeting of the plant foremen, including Campbell and Donatelli.

[ 348 Pa. Super. Page 474]

Krepp testified that he "asked them the specific question, were memorials ever approved for personal jobs, and the answer was a resounding no." N.T. 150. (Campbell testified that he did not recall Krepp or anyone else asking him "if Bob Banas had permission to do a 'government job.'" N.T. 135. Donatelli was not asked about the foremen meeting.) The private investigator's report concluded that appellee had removed the marker from the plant.*fn4 When Krepp told Donnelly the results of the report, Donnelly called the July 31 meeting at which, after reviewing the report, with appellee present, he said, "We can't have thieves around here . . . ." The testimony on the issue whether during that meeting appellee was asked whether he had received permission to make the marker is at variance. Appellee testified that he told those attending the meeting that Campbell had given him permission. N.T. 86. Krepp testified that appellee said he had received permission from Donatelli. N.T. 304. According to Lee, appellee was asked whether he had received permission but he "did not . . . name anyone at that time." N.T. 309. Donnelly testified that appellee said that he had not received permission. N.T. 347.

Of course, in considering the sufficiency of this evidence, we must view it in the light most favorable to appellee:

[ 348 Pa. Super. Page 475]

In reviewing an order denying judgment n.o.v., we must view the evidence, together with all reasonable inferences therefrom, in the light most favorable to appellee as the verdict winner. See, e.g., Lynch v. Metropolitan Life Insurance Co., 427 Pa. 418, 423, 235 A.2d 406, 409 (1967). See also, Atkins v. Urban Redevelopment Authority of Pittsburgh, 489 Pa. 344, 414 A.2d 100 (1980). Judgment n.o.v. should be entered when the facts are such that no two reasonable persons could disagree that the verdict was improper. See, e.g., Cummings v. Page 475} Borough of Nazareth, 427 Pa. 14, 25-26, 233 A.2d 874, 880-81 (1967); Bottorf v. Waltz, 245 Pa. Super. 139, 142-44, 369 A.2d 332, 334 (1976). Accordingly, when the lower court would be warranted in giving binding instructions to the jury, see, e.g., Connelly v. Ziegler, 251 Pa. Super. 521, 523-24, 380 A.2d 902, 903 (1977); Albright v. Metropolitan Life Insurance Co., 143 Pa. Super. 158, 164, 17 A.2d 709, 711 (1941), or when the evidence is insufficient to sustain a verdict against the losing party, see, e.g., Fitzgerald v. McCutcheon, 270 Pa. Super. 102, 105-06, 410 A.2d 1270, 1271 (1979); Szumski v. Lehman Homes, Inc., 267 Pa. Super. 478, 480-81, 406 A.2d 1142, 1143 (1979); Trawick v. Nationwide Mutual Insurance Co., 242 Pa. Super. 271, 274-75, 363 A.2d 1265, 1266-67 (1976), the court should enter a judgment n.o.v.

McCloskey v. New York Life Insurance Company, 292 Pa. Super. 1, 5, 436 A.2d 690, 691-92 (1981).

By this test, there can be no question that the evidence was sufficient to show that the two statements in question were false and defamatory. The jury was entitled to accept appellee's testimony that he had been given permission to make the grave marker, and to reject the testimony of Campbell, Donatelli, and Desport that he had not been, from which it follows that the jury was entitled to find that appellee was not a thief. This conclusion, however, does not dispose of the issue of punitive damages. On that issue, the dispositive questions are: What was Donnelly's state of mind, when he charged appellant with being a thief, and what was Krepp's, when he told other employees that appellee had taken company property without authority and could be indicted? Did either man make his statement "with knowledge of the falsity of its content" or "with reckless disregard of the truth of its content"? Hepps v. Philadelphia Newspapers, Inc., supra, 506 Pa. at 331, 485 A.2d at 389. And was the evidence of either man's state of mind "clear and convincing"? Id.

To answer these questions we must focus our attention on the evidence of how matters stood as of the July 31st

[ 348 Pa. Super. Page 476]

    meeting, when Donnelly charged appellee with being a thief. The evidence on this point is substantially uncontradicted: Donnelly knew that a grave marker had been taken; that this was against both company policy and practice of many years standing; and that a private investigator, engaged on the advice of company counsel, had reported that appellee had taken the grave marker. In addition, Donnelly had received a report from Krepp, his immediate subordinate and the person in charge of the plant's operations; Krepp had met with the foremen and had been told by them that they had never given approval for a grave marker to be made as a personal job. According to appellee's testimony, which we take as true because the jury accepted it, he told Donnelly that Campbell, his foreman, had given him permission to make the marker. Obviously, Donnelly did not believe appellee, or else he would not have rejoined that "[w]e can't have thieves around here . . . .; (stating, in effect, "I don't believe you had permission; I think you stole the marker.") We find no basis for concluding, however, either that Donnelly knew that what he had said was false, or that he said it with reckless disregard of whether it was false.

Appellee contends that "management" -- presumably referring to Donnelly and Krepp -- should have asked Campbell whether he had given appellee permission to make the grave marker. Supplemental Brief for Appellee at 22. This argument, however, is not persuasive.

It cannot be maintained that Donnelly's failure to ask Campbell shows that he knew that his statement to appellee was false. Thus what appellee evidently contends is that Donnelly made his statement recklessly. But the evidence refutes, or at least does not support, that contention. An executive who relies on settled company policy, an investigator's report, and the plant manager's report is not acting recklessly. The fallacy of appellee's argument is the assumption -- which appellee either does not recognize or does not acknowledge -- that if Donnelly had asked Campbell whether he had given appellee permission to make the

[ 348 Pa. Super. Page 477]

    grave marker, Campbell would have said that yes, he had. Nothing supports this assumption. To the contrary, Campbell testified on cross-examination that appellee had never asked him for permission to make a grave marker. N.T. 127.

Nor can it be maintained that Krepp's failure to ask Campbell whether he had given appellee permission to make the grave marker warrants punitive damages. When Krepp met with the plant foremen, including Campbell, it had not been determined that appellee had taken the marker. It is therefore hardly surprising that Krepp only asked the foremen whether they had given anyone permission to take the marker; he had no reason to ask whether appellee had been given permission. Appellee argues that after he was dismissed by Donnelly, at the July 31st meeting, "Charlie Krepp, the plant superintendent, without talking to Campbell, then went onto the plant floor and called [appellee] a thief and stated that he could be indicted in front of most all of his colleagues." Supplemental Brief for Appellee at 22. This evidence, however, could not show that Krepp knew that what he was saying was false. As for whether he said it with reckless disregard of whether it was false: Again, as is the case with regard to Donnelly's statement, appellee assumes that if, after receiving the private investigator's report, Krepp had asked Campbell whether he had given appellee permission to take the grave marker, Campbell would have said that yes, he had, and there is no basis in the evidence for that assumption.*fn5

[ 348 Pa. Super. Page 478]

What appellee has done is to confuse his claim for punitive damages for defamation with his claim for compensatory damages for breach of an alleged employment contract. This confusion is manifest in his brief. Thus he contends that he was "made a scapegoat because the [cemetery company] threatened to cancel its business with [appellant]." Supplemental Brief for Appellee at 6. And see id. at 18. Whether appellant acted wrongfully in dismissing appellee is a separate issue, which will be discussed next; it has nothing ...

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