Present: Hassell, C.J., Lacy, Keenan, Koontz, Lemons, and Agee,
JJ.
UNION OF NEEDLETRADES, INDUSTRIAL
AND TEXTILE EMPLOYEES, AFL-CIO
OPINION BY
v. Record No. 032757 JUSTICE LAWRENCE L. KOONTZ, JR.
November 5, 2004
CECIL N. JONES
FROM THE CIRCUIT COURT OF THE CITY OF FREDERICKSBURG
John W. Scott, Jr., Judge
The dispositive issue in this appeal involving an action
for common law defamation is whether the evidence adduced at
trial shows that the alleged defamatory statement was false.
BACKGROUND
The extensive record in this case contains depositions,
oral testimony, and lengthy exhibits introduced in evidence
during a three-day jury trial. Because of the view we take
regarding the dispositive issue presented on appeal, we will
limit our recitation of the facts to those material to our
resolution of that specific issue.
Union of Needletrades, Industrial and Textile Employees,
AFL-CIO is an international union that resulted from a 1995
merger of the Amalgamated Clothing and Textile Workers Union and
the International Ladies’ Garment Workers Union. Although many
of the background events pertinent to this appeal occurred prior
to this merger in 1995, for brevity we will refer to this union
as “UNITE” throughout this opinion with the understanding that,
in context, at times one of its predecessor unions is intended.
In addition, it is to be understood that “Local 713” references
a local union affiliate of UNITE or its predecessor.
Local 713 originally represented workers at a Sylvania
cellophane plant in the Fredericksburg area. In 1954, members
of Local 713 formed Sylvania Employees, Inc. in order to
purchase a local building to serve as a union hall. In addition
to providing space for union offices and meetings, the building
was sufficiently large to afford the union rental income from
various commercial occupants.
In 1973, UNITE hired Cecil N. Jones to work as a union
organizer in the Fredericksburg area. Jones initially worked
with R. Warwick Daniel, UNITE’s representative at Local 713, and
in 1985 assumed the duties of union representative upon Daniel’s
retirement. Jones remained union representative at Local 713
until his own retirement in February 1997. During Jones’ term
as the union representative at Local 713, he was directly
responsible to Bruce A. Dunton, the director of UNITE’s Mid-
Atlantic Regional Joint Board and a member of UNITE’s General
Executive Board.
In 1978, the Sylvania plant closed. Daniel and Jones
successfully organized a new union shop at Webster Brick, which
subsequently was acquired by General Shale Products Corp.
(General Shale). The new union at Webster Brick/General Shale
2
continued to be designated as “Local 713” and to use the union
hall for its meetings and business operations. Thereafter,
Sylvania Employees, Inc. was voluntarily dissolved, and by deed
dated February 11, 1982 the union hall was conveyed in trust to
Daniel and three officers of Local 713 at Webster Brick/General
Shale.
Daniel and Jones subsequently organized two other union
shops at manufacturing plants in the Fredericksburg area. These
local unions were both designated as “Local 713.” One of the
disputes between the parties is whether these two local unions
were independent of the local union at Webster Brick/General
Shale, as Jones maintains, or whether all three shops were
jointly organized and designated Local 713 as a single local
union, as UNITE contends.1 It is not disputed, however, that
each local union was an affiliate of UNITE, and that its union
dues and other monies were deposited in a single bank account
maintained by Daniel and subsequently by Jones. Jones contended
that the funds of each local union were separately accounted for
1
For purposes of our resolution of this appeal we need not
resolve that dispute. We note it only because UNITE’s position
that Local 713 was a multi-employer local was part of the basis
for UNITE’s actions that ultimately spawned this defamation suit
by Jones.
3
in bookkeeping records of Local 713 at Webster Brick/General
Shale.
On May 15, 1985, the union members of Local 713 at Webster
Brick/General Shale adopted a resolution regarding the future
ownership of the union hall and certain bank accounts. In
pertinent part, the resolution provided that these assets “shall
continue under the control and ownership of the local . . . so
long as Warwick Daniel and/or Cecil Jones shall maintain an
active interest in the local and at such time as Daniel and/or
Jones cease to be interested in the local then it is the intent
of the membership that [the union hall] and funds being held by
the local shall become the property of the Mid-Atlantic Regional
Joint Board” of UNITE.
Although it appears that for most of his employment with
UNITE Jones maintained good relations with Dunton, beginning in
1996 an apparent dispute arose between the two concerning Jones’
role in the control of the union hall and the accumulated union
funds. In response, the officers of Local 713 at Webster
Brick/General Shale, in a resolution and two letters to Dunton,
expressed confidence in Jones as the local’s “business agent”
and rejected a request from Dunton that Jones be required to
turn over the keys to his office in the union hall. In January
1997, while negotiations for a new contract were ongoing,
General Shale, which by that time had acquired Webster Brick,
4
withdrew recognition of Local 713 on the ground that the union
no longer represented the majority of the employees at its
plant. Although denied by Dunton, Jones would later maintain
that Dunton had deliberately delayed contract negotiations with
General Shale to enable the company to withdraw recognition of
the union.
During this same time, Dunton became concerned about the
management of Local 713 because it appeared to him that the
assets of Local 713 were under the control of Jones and the
officers of the local union at General Shale, with no oversight
by its members and with no input from the union members at the
other two shops. Accordingly, on January 23, 1997, Dunton sent
a letter to Jay Mazur, the President of UNITE, as a follow-up to
a telephone conversation the two had concerning this matter. In
that letter, Dunton stated that Jones would be retiring in about
a month, that Jones “has had responsibility for [Local 713’s]
funds and shop for many years,” and that “four (4) people
control approximately $65,000, as well as the assets of the
building, which should all be in the Region.” Dunton further
stated that a “review of the Cash Reports indicates questionable
expenditures.” Dunton recommended that UNITE temporarily take
control of Local 713 by appointing an administrator as
authorized by UNITE’s constitution.
5
On January 30, 1997, the Executive Committee of UNITE’s
General Executive Board adopted a resolution to appoint Harold
L. Bock, the associate director of UNITE’s Mid-Atlantic Regional
Joint Board, as administrator “to take possession of and
administer the affairs, funds and property of Local 713 and to
assume and perform the duties of its officers.” The resolution
stated that “information has been made available to the [General
Executive Board] indicating that financial malpractice has
occurred with respect to the assets of Local 713.” The
resolution also appointed a union official to serve as a hearing
officer and directed him to conduct a hearing on the matter and
to prepare a report for consideration by the General Executive
Board.
On the next day, UNITE’s secretary-treasurer sent a letter
to the president and three other officers of Local 713 at
General Shale advising them that UNITE had assumed control of
the local union and its assets pending the review by the hearing
officer. A copy of the resolution was enclosed with the letter.
Neither the resolution nor the letter expressly identified Jones
by name or otherwise indicated that he had committed “financial
malpractice.”
The hearing was conducted on November 18, 1997. The
hearing officer, after noting that Local 713 was a “multi-
employer local” and that General Shale was not under contract
6
with UNITE, recommended that the administratorship be terminated
after the election of new officers of Local 713. Although the
hearing officer expressed “concerns about the finances of Local
713,” he concluded that there was no evidence of financial
malpractice, or wrongdoing, by Jones or anyone else. By the
time this hearing concluded, Jones had retired from UNITE and,
consistent with the previously described May 15, 1985 resolution
of members of Local 713, the union hall and various bank
accounts ultimately became the property of UNITE.2
On June 24, 1999, Jones filed a motion for judgment in the
Circuit Court of the City of Fredericksburg (the trial court)
against Dunton, Bock, and UNITE. In that pleading, Jones
asserted that the statement in the January 30, 1997 resolution
regarding “financial malpractice . . . with respect to the
assets of Local 713” was “totally false,” “defamatory per se,”
and “would be normally understood to apply to [Jones’] conduct
and activities.” Jones further maintained that “Dunton and/or
Bock were the only persons who presented or could have presented
2
Neither the authority of UNITE to appoint an administrator
and temporarily assume control of the assets of Local 713 at
General Shale nor the justification for doing so are at issue in
this appeal. The union hall was eventually sold by UNITE and
the proceeds from the sale as well as the other funds made
available to the Regional Board.
7
any information concerning ‘financial malpractice’ of Local 713
to the General Executive Board.” Jones also alleged that the
statements “were made with actual malice, knowledge of their
falsity, and/or with reckless disregard for their truth.” Jones
sought compensatory damages of $350,000 and punitive damages of
a like amount.3
After a demurrer to the motion for judgment was denied,
UNITE, Dunton, and Bock filed a joint grounds of defense. On
February 12, 2001, the trial court entered an order dismissing
Bock from the action with prejudice on Jones’ motion. The case
then proceeded through protracted discovery and pre-trial
motions until a jury trial commenced in the trial court on April
2, 2003. In addition to the above-recited evidence, Jones
presented evidence through his own testimony and that of three
of the officers of the Local 713 at General Shale who had been
sent copies of the January 30, 1997 resolution. In substance,
that evidence was intended to show that Jones’ reputation had
3
Jones had alleged in a further count of his motion for
judgment that Dunton and Bock conspired to injure his reputation
in violation of Code § 18.2-499 and sought compensatory damages
not to exceed $75,000 and treble damages not to exceed $75,000
under Code § 18.2-500. However, after Jones stipulated in a
pre-trial proceeding that Dunton and Bock were acting in their
respective capacities as agents of UNITE, and thus could not be
guilty of a conspiracy, the trial court granted summary judgment
to the defendants on that issue.
8
been damaged by the reference to “financial malpractice” in the
resolution. The union officers testified that they interpreted
this term to mean that Jones was a “crook,” because Jones was
primarily responsible for managing the assets of Local 713.
At the conclusion of Jones’ case-in-chief, UNITE and Dunton
moved to strike the evidence. The trial court sustained the
motion to strike as to Dunton, apparently agreeing with the
argument made by his counsel that the statements made by Dunton
in the January 23, 1997 letter to Mazur were matters of opinion
or subject to a qualified privilege because they were made
within an employment setting and that actual malice had not been
proven by a preponderance of the evidence. After denying
UNITE’s renewed motion to strike at the conclusion of the
presentation of its evidence, the trial court permitted the case
to go forward as to UNITE.
The jury returned its verdict for Jones, awarding him
$150,000 in compensatory damages and $350,000 in punitive
damages. UNITE filed a motion to set aside the verdict arguing,
among other points, that Jones had failed to prove that the
statement at issue in the January 30, 1997 resolution was false.
In a final order entered September 3, 2003, the trial court
denied UNITE’s motion to set aside the verdict and entered
judgment on the jury’s verdict, but reduced the amount of
punitive damages to $150,000. We awarded UNITE this appeal.
9
DISCUSSION
The law of defamation with respect to a statement made by a
non-media defendant allegedly defaming a private individual is
well settled in Virginia. “At common law, defamatory words that
prejudice a person in his or her profession or trade are
actionable as defamation per se. A defamatory statement may be
made by inference, implication or insinuation. However . . .
speech which does not contain a provably false factual
connotation, or statements which cannot reasonably be
interpreted as stating actual facts about a person cannot form
the basis of a common law defamation action.” Fuste v.
Riverside Healthcare Association, Inc., 265 Va. 127, 132, 575
S.E.2d 858, 861 (2003) (internal citations, emendation, and
quotation marks omitted). Thus, the defendant is not required
to plead and prove the truth of his statement as an affirmative
defense. “Instead, the plaintiff must prove falsity, because he
is required to establish negligence with respect to such
falsity.” The Gazette, Inc. v. Harris, 229 Va. 1, 15, 325
S.E.2d 713, 725 (1985). “The application of this negligence
standard is expressly limited, however, to circumstances where
the defamatory statement makes substantial danger to reputation
apparent.” Id.
We frequently have addressed the issue of an alleged
defamation within the context of an employment relationship, as
10
is the case here. Typically in such cases, the allegedly
defamatory statement is afforded a qualified privilege because
the statement is made “between persons on a subject in which the
persons have an interest or duty.” Larimore v. Blaylock, 259
Va. 568, 572, 528 S.E.2d 119, 121 (2000). In such instances,
the plaintiff must establish both that the statement was false
and that the defendant acted with actual malice.4 Id.; see also
Fuste, 265 Va. at 134, 575 S.E.2d at 862-63. In this context,
“actual malice” is “behavior actuated by motives of personal
spite, or ill-will, independent of the occasion on which the
communication was made.” Gazette, Inc., 229 Va. at 18, 325
S.E.2d at 727; Fuste, 265 Va. at 134-35, 575 S.E.2d at 863.
However, in every defamation action the plaintiff’s initial
burden is to produce sufficient evidence to show that the
allegedly defamatory statement was false. If the plaintiff does
not establish the falsity of the statement by a preponderance of
the evidence in his case-in-chief, he has not met this threshold
4
Within the context of defamation law, there is also an
intermediate standard between simple negligence and actual
malice, sometimes referred to as “New York Times malice,”
wherein the plaintiff need show only that the statement was made
with knowledge that it was false or with a reckless disregard
for the truth, even if the defendant bore no ill-will toward the
plaintiff. See New York Times Co. v. Sullivan, 376 U.S. 254,
280 (1964); Great Coastal Express, Inc. v. Ellington, 230 Va.
142, 149, 334 S.E.2d 846, 851 (1985).
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burden, and the trial court should strike the evidence and grant
summary judgment to the defendant.
UNITE contends that the trial court erred in refusing to
grant its motion to strike or its motion to set aside the jury
verdict because Jones failed to meet his burden of proving that
the statement in the January 30, 1997 resolution that
“information has been made available to the [General Executive
Board] indicating that financial malpractice has occurred with
respect to the assets of Local 713” was false. UNITE contends
that this statement did not affirmatively state that “financial
malpractice” had occurred, but only that information had been
provided to UNITE that indicated such might be the case. This
statement was true, UNITE contends, because Dunton had provided
such information to UNITE’s General Executive Board by way of
his letter to Mazur.
In support of that contention, UNITE maintains that the
term “financial malpractice,” both in the broad meaning of
“improper practice,” and as a term-of-art applicable to the
specific circumstance of a trade union as found in federal law,
see, e.g., 29 U.S.C. § 462, and in UNITE’s constitution, does
not equate with criminal wrongdoing. Rather, UNITE maintains
that the term imputes merely mismanagement or improper practice
with respect to the fiduciary duties of a union officer. In
that context, UNITE contends that the evidence establishes that
12
the statement in the resolution was true because the control of
Local 713 assets by Jones and the local union officers under the
circumstances of this case indicated that financial malpractice
had occurred with respect to those assets.
Jones contends that the statement was false because no
information indicating financial malpractice or wrongdoing at
Local 713 had been presented to UNITE’s General Executive Board
at the time the resolution was adopted. He further contends
that UNITE’s construction of the term “financial malpractice” is
unsupported by the record because no evidence was presented to
show that the term connotes something other than corrupt or
criminal practices. Rather, Jones contends that the only
evidence regarding the meaning of the term came from the
testimony of the local union members that it implied Jones was a
“crook.”
We agree with UNITE that the statement in the January 30,
1997 resolution did not affirmatively assert that financial
malpractice had occurred at Local 713, but rather, only stated
that the General Executive Board had received information
indicating that possibility. Moreover, it is clear from the
context of the resolution as a whole that the Executive
Committee of UNITE’s General Executive Board was exercising its
power to appoint an administrator under UNITE’s constitution in
order to investigate the validity of Dunton’s information. The
13
question then becomes not whether financial malpractice had
occurred in fact, but rather, whether at the time the resolution
was adopted the General Executive Board had received credible
information to warrant its action.
The parties agree that, on this record, the only source of
the information ultimately provided to UNITE’s General Executive
Board was Dunton’s letter of January 23, 1997 to Mazur. As
Dunton explained at trial, the “thrust” of that letter was that
he had found a small group of people controlling the local’s
assets without member oversight. In recommending that an
administrator be appointed, Dunton undoubtedly drew on UNITE’s
authority to do so under its constitutional provision to
“prevent or correct corruption or financial malpractice” when he
referred to financial malpractice. (Emphasis added).
Significantly, Dunton did not include a reference or suggestion
of “corruption” in his letter or otherwise suggest criminal
wrongdoing. Dunton’s letter did not assert that financial
malpractice, however defined, had in fact occurred. The
information contained in Dunton’s letter, however, was
sufficient to establish the truth of the statement in the
resolution that UNITE’s General Executive Board had been
provided with “information . . . indicating that financial
malpractice has occurred.” The fact that this “information”
subsequently only raised “concerns about the finances of Local
14
713” in the inquiry by the hearing officer does not convert the
statement, true at the time of its publication in the
resolution, into one that was false and defamatory.
While Jones undoubtedly desired the jury and the trial
court to focus attention on the alleged efforts of Dunton to
discredit him in order for UNITE to assume the operation of
Local 713 and the control of its assets, his cause of action
against UNITE was limited to the allegation that he had been
defamed by the publication of the January 30, 1997 resolution.
Jones failed to prove that the allegedly defamatory statement in
that resolution was false. Accordingly, we hold that the trial
court erred in failing to grant UNITE’s motion to strike Jones’
evidence.
CONCLUSION
For these reasons, we will reverse the judgment of the
trial court and enter final judgment for UNITE.
Reversed and final judgment.
15