Noonan v. Staples, Inc.

United States Court of Appeals
For the First Circuit

No. 07-2159

ALAN S. NOONAN,

Plaintiff, Appellant,

v.

STAPLES, INC.,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Morris E. Lasker, U.S. District Judge]

Before

Torruella, Wallace,* and Lipez,
Circuit Judges.

Wendy Sibbison, with whom Richard M. Gelb, Stamenia
Tzouganatos, Daniel K. Gelb, and Gelb & Gelb LLP, were on brief for
appellant.
Ariel D. Cudkowicz, with whom Krista Green Pratt and Seyfarth
Shaw LLP, were on brief for appellee.

August 21, 2008

*
Of the Ninth Circuit, sitting by designation.
 TORRUELLA, Circuit Judge. Alan S. Noonan was fired from

his job as a salesman at Staples, Inc. for allegedly padding

expense reports. A Staples executive then sent a mass e-mail to

about 1,500 employees informing them that Noonan had been fired for

violating the company's travel and expense policy. Staples also

denied Noonan his severance benefits and refused to allow him to

exercise his stock options, claiming that, under the terms of the

agreements setting forth the right to these benefits, Noonan was

ineligible because he had been fired "for cause." Noonan sued

Staples in Massachusetts court for libel and breach of those

agreements, and Staples removed to federal court. Both parties

moved for summary judgment, the district court granted summary

judgment in favor of Staples, and Noonan now appeals. After

careful consideration, we affirm.

I. Background

Because this case comes to us on appeal from summary

judgment, we relate the relevant facts in the light that most

favors the nonmovant, Noonan. Franceschi v. U.S. Dep't of Veterans

Affairs, 514 F.3d 81, 83 (1st Cir. 2008). Noonan was a Staples

sales director who did much traveling for business and had to

compile expense reports to be reimbursed for travel, food, and

other business-related expenses. Staples had a travel and expense

policy requiring employees to submit receipts for all expenses over

$75, and for all meals regardless of price; to use their corporate

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credit card for business expenses instead of their personal credit

card; and to book all work-related travel through Staples's travel

department. Noonan claims, with support in the record, that these

directives were irregularly enforced and often not followed by many

employees.

In November 2005, Staples discovered that an employee

named James Dorman had been embezzling money from the company

through fraudulent expense claims and fired him. It then undertook

an audit of expense reports based on a sample of sixty-five

traveling employees in the North American Division, including

Noonan. Auditors investigating Noonan discovered a May 2005

expense report in which he had requested $1,622 in excess of what

he had actually spent. The team also found that Noonan had used

his personal credit card for many of these purchases, had booked

the travel through a non-company travel agent, and had failed to

submit all the required receipts.

These anomalies led Staples to assemble a special team,

composed of certified accountants and a former police investigator,

to look further into Noonan's past expense reports. Noonan

admitted to the team that he often "pre-populated" his reports

before a given trip -- that is, he estimated what his expenses

would be in advance, and submitted the report with these estimates,

but with (Noonan claims) the intention to amend the report later to

the extent the actual expenses differed from the estimates. The

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team found that Noonan had failed to enter such adjustments on a

number of expense reports and discovered other anomalies, such as

entries where the amount claimed was exactly $100 more than what

the item actually cost, and entries where decimal points had been

shifted two places to the right (resulting, for example, in an

$1,129 meal at an airport McDonald's, instead of $11.29). Noonan

also committed errors in Staples's favor. When the team asked him

about the large amounts of extra money that had been deposited into

his checking account, Noonan responded that he had not noticed.

Based on its findings, the team unanimously concluded

that Noonan had deliberately falsified the audited expense reports

and, as a result, Staples fired him. It sent him a letter stating

that he had been terminated "for cause" for violating the travel

and expense policy and the company's Code of Ethics, and that he

was consequently ineligible for severance benefits. The following

day, Executive Vice-President Jay Baitler sent an e-mail to all the

employees in Staples's North American Division, a group whose

precise number is unknown and disputed, but that totaled somewhere

around 1,500 people. The e-mail stated as follows:

It is with sincere regret that I must inform
you of the termination of Alan Noonan's
employment with Staples. A thorough
investigation determined that Alan was not in
compliance with our [travel and expenses]
policies. As always, our policies are
consistently applied to everyone and
compliance is mandatory on everyone's part.
It is incumbent on all managers to understand
Staples['s] policies and to consistently

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 communicate, educate and monitor compliance
every single day. Compliance with company
policies is not subject to personal discretion
and is not optional. In addition to ensuring
compliance, the approver's responsibility to
monitor and question is a critical factor in
effective management of this and all policies.

If you have any questions about Staples['s]
policies or Code of Ethics, call the Ethics
Hotline . . . or ask your human resources
manager.

Over the course of Noonan's employment, he and Staples

entered into two stock-option agreements, dating respectively from

1992 and 2004 (respectively, the "1992 Stock-Option Agreement" and

the "2004 Stock-Option Agreement"). The pertinent language in the

1992 Stock-Option Agreement provided as follows:

[I]f [Noonan's] relationship with Staples is
terminated by Staples for "cause" (as defined
below) . . . the right to exercise this option
with respect to any shares not previously
exercised shall terminate immediately . . . .

"Cause" shall mean willful misconduct by
[Noonan] or willful failure to perform his or
her responsibilities in the best interests of
Staples (including, without limitation, breach
by [Noonan] of any provision of any
employment, consulting, advisory,
nondisclosure, non-competition or other
similar agreement between [Noonan] and
Staples), as determined by Staples, which
determination shall be conclusive.

(Emphasis added.) The 2004 Stock-Option Agreement contained this

language, and added other grounds constituting "cause," including

"violation by [Noonan] of the Code of Ethics or an attempt by

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[Noonan] to secure any improper personal profit in connection with

the business of Staples."

Six days before being fired, Noonan sent Staples a

$290,714.40 check and notified it that he was exercising his vested

right to purchase 23,825 shares of stock -- 22,700 governed by the

1992 Stock-Option Agreement, and 1,125 governed by the 2004 Stock-

Option Agreement. Staples returned the check uncashed, noting that

the investigation into Noonan's expense-reporting practices was

ongoing, and that if Staples ultimately terminated him for cause,

he would not be entitled to gains on the shares. Staples did not

ultimately allow Noonan to exercise the stock options.

Noonan also had a severance agreement with Staples which

stated that Staples would not be required to pay benefits if Noonan

was terminated "for '[c]ause'" -- that is, if Noonan "wilfully

fail[ed] to substantially perform [his] duties with Staples,"

"violate[d] the Code of Ethics or attempt[ed] to secure any

improper personal profit," or "engage[d] in misconduct which is

demonstrably and materially injurious to Staples . . . ." On these

grounds, Staples did not give Noonan severance benefits.

Noonan, a Florida resident, filed suit in Massachusetts

state court; Staples, a Massachusetts corporation, removed to the

U.S. District Court for the District of Massachusetts. Noonan's

complaint alleged (1) libel based on the Baitler e-mail; (2) breach

of the two stock-option agreements; and (3) breach of the severance

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agreement.1 Noonan moved for summary judgment on a portion of the

libel claim and on the claim alleging breach of the stock-option

agreements; Staples filed a cross-motion for summary judgment on

all counts in the complaint. The district court granted summary

judgment on behalf of Staples. On the libel claim, the district

court determined that what was stated in the e-mail was true, and

that Noonan had presented no evidence of actual malice on the part

of Staples. On the breach-of-contract claims, the court found that

Noonan had been fired for cause and that, pursuant to the terms of

the agreements, he was therefore ineligible for the stock options

and benefits. Noonan now appeals.

II. Discussion

A. Standard of Review

We will affirm a district court's summary judgment where

"the pleadings, the discovery and disclosure materials on file, and

any affidavits show that there is no genuine issue as to any

material fact and that the movant is entitled to judgment as a

matter of law." Fed. R. Civ. P. 56(c). At summary judgment, the

court's task is not "'to weigh the evidence and determine the truth

of the matter but to determine whether there is a genuine issue for

trial.'" Asociación de Periodistas de P.R. v. Mueller, 529 F.3d

52, 55 (1st Cir. 2008) (quoting Anderson v. Liberty Lobby, Inc.,

1
Noonan made two other claims that were also dismissed by the
district court. He does not appeal those dismissals.

-7-
477 U.S. 242, 250 (1986)). We accord plenary review to summary

judgment and view the record in the light most favorable to the

nonmovant, drawing reasonable inferences in his favor. Franceschi,

514 F.3d at 84.

B. Libel Claim

Noonan claims first that Staples committed actionable

libel against him through the sending of the Baitler e-mail. Under

Massachusetts law, a plaintiff alleging libel must ordinarily

establish five elements: (1) that the defendant published a

written statement; (2) of and concerning the plaintiff; that was

both (3) defamatory, and (4) false; and (5) either caused economic

loss, or is actionable without proof of economic loss.2 Stanton v.

Metro Corp., 438 F.3d 119, 124 (1st Cir. 2006) (citing White v.

Blue Cross & Blue Shield of Mass., Inc., 809 N.E.2d 1034, 1036

(Mass. 2004)); Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass'n,

142 F.3d 26, 42 (1st Cir. 2006) (quoting McAvoy v. Shufrin, 518

N.E.2d 513, 517 (Mass. 1988)). A statement is defamatory if it

"may reasonably be read as discrediting [the plaintiff] in the

2
The parties do not dispute that the first element of Noonan's
libel claim, which "requires that the defendant communicate the
defamatory statement to a third party," White v. Blue Cross & Blue
Shield of Mass., Inc., 809 N.E.2d 1034, 1036 (Mass. 2004), was
satisfied by the sending of the Baitler e-mail to some 1,500
Staples employees. The parties likewise do not dispute that the
e-mail concerned the plaintiff, Noonan. Given our holding below
affirming the district court's grant of summary judgment on
Noonan's libel claim due to the absence of the fourth element, we
need not reach the question of whether the third and fifth elements
are fulfilled on the record of this case.

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minds of any considerable and respectable class of the community."

Disend v. Meadowbrook Sch., 604 N.E.2d 54, 55 (Mass. App. Ct. 1992)

(citing Sharratt v. Housing Innovations, Inc., 310 N.E.2d 343, 346

(Mass. 1974)); accord White, 809 N.E.2d at 1036. With the

exception of statements that are true, Massachusetts courts will

not grant summary judgment for a libel defendant unless "the

publication is not reasonably capable of any defamatory meaning,

and cannot reasonably be understood in any defamatory sense."

Sharratt, 310 N.E.2d at 345 (quoting King v. Ne. Pub'g Co.,

2 N.E.2d 486, 487 (Mass. 1936)); see also Smith v. Suburban Rests.

Inc., 373 N.E.2d 215, 217 (Mass. 1978) ("Inferences which might be

drawn by a considerable and respectable segment of the community

can make a publication actionable."); Amtrak Productions, Inc. v.

Morton, 410 F.3d 69, 72 (1st Cir. 2005) (in determining whether

statement was defamatory, courts ask what a "reasonable reader"

would think upon reading it) (quoting Foley v. Lowell Sun Publ'g

Co., 533 N.E.2d 196, 197 (Mass. 1989)).

Since a given statement, even if libelous, must also be

false to give rise to a cause of action, the defendant may assert

the statement's truth as an absolute defense to a libel claim.

Mass. Sch. of Law at Andover, 142 F.3d at 42 (citing Bander v.

Metro. Life Ins. Co., 47 N.E.2d 595, 598 (Mass. 1943)); McAvoy, 518

N.E.2d at 517. Massachusetts law, however, recognizes a narrow

exception to this defense: the truth or falsity of the statement

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is immaterial, and the libel action may proceed, if the plaintiff

can show that the defendant acted with "actual malice" in

publishing the statement. White, 809 N.E.2d at 1036 n.4 (citing

Mass. Gen. Laws ch. 231, § 92).

Noonan argued before the district court, and reiterates

before us, that Baitler's e-mail was both defamatory and false, and

thus constituted actionable libel. Staples countered that the

evidence clearly established that Noonan did indeed violate the

company's travel and expense policy, and that the e-mail was

consequently true and no libel action could lie. The district

court sided with Staples, concluding that Noonan's libel claim

could not proceed as a matter of law because the Baitler e-mail was

true: even when viewed in the light most favorable to Noonan, the

record demonstrates that he failed to comply with the policy. Our

review of the record and Massachusetts law leads us to the same

conclusion. Thus, there is no triable issue of fact on the

question of truth.

We focus first on Noonan's arguments concerning the

e-mail's falsity, because if the evidence corroborates Staples's

asserted defense that the e-mail's contents were true, then absent

actual malice on the part of Staples, the libel claim must be

dismissed regardless of whether the e-mail defamed Noonan. See id.

at 1036. Noonan does not seriously challenge that, on their face,

all the sentences in the e-mail were true. As the e-mail states

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and the record bears out, Staples did indeed commission an

investigation of Noonan's expense-reporting practices, and the

investigators determined that he was not in compliance with the

travel and expense policy. Even Noonan admits that he frequently

disregarded the letter of the policy, booking travel with non-

company travel agents, using his personal credit card instead of

the company card, and failing to turn in receipts. Whether, as

Noonan asserts, he actually saved Staples money -- through, for

example, buying cheaper plane tickets from online agents or

committing mathematical or typographical errors on his expense

reports in Staples's favor -- is immaterial.3 Whether, as Noonan

asserts, many other traveling employees also regularly disregarded

the policy is likewise irrelevant. Even taking these assertions as

accurate, they do not change the simple fact relayed in the e-mail,

and supported by the evidence in the record, that Staples fired

Noonan after an investigation determined him to be out of

compliance with the travel and expense policy.

Noonan urges us, however, to look beyond the letter of

the e-mail to the effect it must have had on its approximately

1,500 recipients. He argues that reasonable recipients could have

read other passages in the e-mail and, viewing the e-mail in its

3
For this reason, we need not attempt to determine whose
calculations -- Noonan's or Staples's -- were correct, or whether
it was Noonan or Staples who received the ultimate windfall from
Noonan's typographical and mathematical errors.

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totality, drawn the inference that he arrogantly regarded Staples's

policies as subject to his personal whim and committed some sort of

grave misconduct -- grave enough that Baitler himself departed from

company policy on employee privacy by referring to Noonan by name

in the e-mail. Indeed, according to Noonan, the e-mail's reference

to an "investigation," the recent experience with the firing and

later indictment of Dorman for stealing money from the company, and

the fact that Staples took the drastic step of terminating Noonan

instead of merely reprimanding him or delaying the relevant

reimbursements, could have led reasonable readers to conclude that

he, like Dorman, committed a crime. At the very least, the e-

mail's reference to the company Code of Ethics could have given

reasonable readers the impression that Noonan was terminated for

illegal or unethical conduct in the reporting of his travel

expenses. As support for these arguments, Noonan cites a number of

cases applying Massachusetts law and holding that, to determine

whether a given statement is defamatory, the court must look at it

as a whole and in the context in which it was published. See,

e.g., Stanton, 438 F.3d at 125, 128; Foley, 533 N.E.2d at 197

(court must examine statement "'in its totality in the context in

which it was uttered or published[,] . . . consider[ing] all the

words used, not merely a particular phrase or sentence'" (quoting

Myers v. Boston Magazine Co., 403 N.E.2d 376, 379 (Mass. 1980));

Smith, 373 N.E.2d at 218; Sharrat, 310 N.E.2d at 346 ("attendant

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circumstances may be shown as proof of the defamatory nature of the

words"); Disend, 604 N.E.2d at 55 ("Words not inherently

disparaging may . . . have that effect if viewed contextually,

i.e., in the light of attendant circumstances." (citing Sharratt,

310 N.E.2d at 346)).

Crucially, all of Noonan's cited cases concern how a

court determines whether a given statement is, or could be

understood as, defamatory,4 and not with the separate inquiry of

whether the statement is true or false. As noted above, the

impugned statement must be both defamatory and false for a libel

action to lie, and these are distinct elements. Without saying so

explicitly, Noonan is, in essence, asking us to import the corpus

of legal principles for determining a statement's defamatory nature

into the examination of the statement's truth or falsity. Noonan

wants us to adopt a rule whereby even an objectively true statement

can give rise to a libel claim if reasonable readers might infer

from it other, untrue characteristics of the plaintiff or conduct

by him.

4
Massachusetts courts engage in a similar inquiry when
determining the second element of a libel claim -- whether the
statement is of or concerning the plaintiff. See, e.g., Stanton,
438 F.3d at 128 ("Like the question of whether a communication can
reasonably be understood to be defamatory, whether a communication
can reasonably be understood to be of and concerning the plaintiff
depends on the circumstances." (citing New Eng. Tractor-Trailer of
Conn., Inc. v. Globe Newspaper Co., 480 N.E.2d 1005, 1010 n.5
(Mass. 1985)).

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 Unfortunately for Noonan, our survey of the relevant

Massachusetts law has uncovered no clear support for this

interpretation, and we are reluctant to recognize such a

significant expansion in view of our limited role as a federal

court sitting under our diversity jurisdiction. See Gill v.

Gulfstream Park Racing Ass'n, Inc., 399 F.3d 391, 402 (1st Cir.

2005) ("A federal court sitting in diversity cannot be expected to

create new doctrines expanding state law."); A. Johnson & Co., Inc.

v. Aetna Cas. & Sur. Co., 933 F.2d 66, 73 n.10 (1st Cir. 1991)

(diversity plaintiff "cannot expect this court 'to torture state

law into strange configurations or precipitously to blaze new and

unprecedented jurisprudential trails'" (quoting Kotler v. Am.

Tobacco Co., 926 F.2d 1217, 1224 (1st Cir. 1990))). Instead, the

relevant Massachusetts cases reveal the truth-or-falsity inquiry to

be a much simpler one. Our review of the record in the light most

favorable to Noonan reveals no triable issue of fact because, as

Staples asserts, everything said in the e-mail was true -- or at

least substantially true -- and substantial truth is all that is

required.5 See Murphy v. Boston Herald, Inc., 865 N.E.2d 746, 754

(Mass. 2007); Jones v. Taibbi, 512 N.E.2d 260, 266 (Mass. 1987).6

5
Thus, even though Noonan may dispute whether the investigation
was, as the Baitler e-mail characterized it, "thorough," this minor
detail does not deprive the e-mail of its substantially true
character.
6
To the extent the brief discussion in Perry v. Hearst Corp., 334
F.2d 800, 801-02 (1st Cir. 1964), suggests a different outcome, we

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 Given this holding, Noonan's only hope for keeping his

libel claim alive is to prove that Staples -- or other employees

responsible for composing and sending the e-mail -- acted with

actual malice. As noted above, under Massachusetts law, even a

true statement can form the basis of a libel action if the

plaintiff proves that the defendant acted with actual malice.

White, 809 N.E.2d at 1036 n.4 (citing Mass. Gen. Laws ch. 231,

§ 92); Conroy v. Fall River Herald News Pub. Co., 28 N.E.2d 729,

731-32 (Mass. 1940).

Noonan mounts a two-pronged argument for why a jury could

conclude that Staples published the e-mail with actual malice.

First, he alleges that Baitler harbored ill-will toward him and

wished to cause him harm. In his twelve years with the company,

Baitler had never before referred to a fired employee by name in an

e-mail or other mass communication, and in his deposition he had

difficulty explaining why it was necessary to mention Noonan by

name; thus, Noonan avers, "the language of the libel itself [could]

be found as a fact to breathe malevolence." Hubbard v. Allyn, 86

N.E. 356, 359 (Mass. 1908). As additional evidence of Baitler's

ill-will, Noonan points out that Baitler had been Dorman's

supervisor and had failed to notice the latter's theft of money

from the company; Noonan argues that a jury could infer from the

do not believe that such an outcome comports with Massachusetts law
as it stands today.

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record that Baitler pilloried him to detract attention away from

the Dorman scandal and Baitler's embarrassing role in it.

Second, Noonan claims that the e-mail's excessive

publication is evidence of Baitler's, and thus Staples's, actual

malice. Baitler had the e-mail sent to all 1,500 or so employees

in the North American Division by including in the e-mail's "To"

field a group recipient called "Contract Remote." Noonan alleges

that someone at Staples then deleted the original electronic

version of the e-mail despite Noonan's lawyer's written request,

and Staples's in-house counsel's subsequent instructions to the

relevant managers and employees, that it not be deleted. Because

employees are constantly being added to and taken off the Contract

Remote list, this deletion made it impossible to determine exactly

who was on the list, how many people the list included, and whether

the e-mail's recipients then forwarded it to additional persons

outside the North American Division or outside the company. Noonan

contends that the e-mail's deletion raises a permissible inference

that the destroyed evidence must have been unfavorable to Staples,

see, e.g., Blinzler v. Marriott Int'l, Inc., 81 F.3d 1148, 1158-59

(1st Cir. 1996) -- namely, that the e-mail was published

excessively.

Neither of these arguments withstands close scrutiny. As

for Noonan's first argument -- that Baitler harbored ill-will

toward him and thus acted with actual malice -- Noonan has provided

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us with an incorrect and outdated rendition of Massachusetts law.7

The Supreme Judicial Court has clearly stated that actual malice in

the defamation context "does not mean the defendant's dislike of,

hatred of, or ill will toward, the plaintiff." Rotkiewicz v.

Sadowsky, 730 N.E.2d 282, 289 (Mass. 2000). Instead, the plaintiff

establishes actual malice by proving that the defendant knew the

allegedly libelous statement was false when it was published, or

that the defendant acted with "reckless disregard" for whether it

was true or false -- that is, the defendant "entertained serious

doubts" as to its truth or falsity. McAvoy, 518 N.E.2d at 517-18

(citation and internal quotation marks omitted); accord Murphy, 865

N.E.2d at 752; see also Rotkiewicz, 730 N.E.2d at 289 ("The inquiry

is a subjective one as to the defendant's attitude toward the truth

or falsity of the statement rather than the defendant's attitude

toward the plaintiff." (citing Cantrell v. Forest City Publ'g Co.,

419 U.S. 245, 252 (1974))).

Viewing the record in the light most favorable to Noonan

and considering this standard, there is no evidence of actual

malice on the part of Baitler or any other relevant Staples

employee. It was reasonable for Baitler to rely on the findings of

the experienced team of investigators that Staples put together for

7
Older Massachusetts law, cited by Noonan, defined actual malice
for a libel claim in the more traditional sense of hatred or ill-
will. See, e.g., Fay v. Harrington, 57 N.E. 369, 371 (Mass. 1900).
This law has been superseded by the modern definition. See Richard
W. Bishop, 17A Mass. Practice § 43.6 n.5.

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the purpose of auditing Noonan's expense reports. There is simply

nothing in the record to suggest that Baitler or another relevant

employee believed Noonan not to have contravened the travel and

expense policy, or that they sent the e-mail with reckless

disregard for whether Noonan contravened the policy. Moreover,

since actual malice in Massachusetts does not equate to hatred or

ill-will, Rotkiewicz, 730 N.E.2d at 289, Baitler's own personal

feelings toward Noonan are inconsequential, and we need not state

a view on -- or remand for a jury to determine -- whether Baitler

did indeed dislike Noonan or wish to sabotage his good reputation.

As for Noonan's second argument -- that the e-mail's

excessive publication evinces Staples's actual malice -- under

Massachusetts law excessive publication has been interpreted not as

a manifestation of actual malice, but as something different. The

question of excessive publication routinely comes up in the context

of determining whether a defendant has abused its conditional

privilege to publish defamatory material. The Massachusetts courts

consistently speak of two ways in which the defendant may lose such

a privilege: through actual (sometimes called "express") malice

or, as an alternative, through unnecessary, unreasonable, or

excessive publication. See, e.g., Galvin v. N.Y., New Haven &

Hartford R.R. Co., 168 N.E.2d 262, 266 (Mass. 1960) ("We think the

time has now come to recognize that there can be an abuse of a

conditional privilege by conduct which cannot fairly be classed as

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express or actual malice."); see also Petition of Retailers

Commercial Agency, Inc., 174 N.E.2d 376, 379-80 (Mass. 1961)

(noting the lack of evidence of actual or express malice, but

stating that the qualified privilege may be lost nonetheless

through unnecessary, unreasonable, or excessive publication);

accord Mulgrew v. City of Taunton, 574 N.E.2d 389, 391 (Mass.

1991); Bratt v. Int'l Bus. Machs., Inc., 467 N.E.2d 126, 131 (Mass.

1984). Thus, even if the record showed that Staples published the

e-mail excessively, this would not constitute actual malice under

Massachusetts law and render the alleged libel actionable despite

its truth.8

For these reasons, the record viewed in the light most

favorable to Noonan leads us to conclude that the e-mail is

substantially true, that Staples did not act with actual malice and

thus did not forfeit its defense of truth, and that no triable

issue of material fact therefore remains on Noonan's libel claim.9

We accordingly affirm the district court's summary judgment in

8
The possibility that Staples may have destroyed the electronic
version of the e-mail notwithstanding requests to preserve it does
not compel a contrary result. This is so because the actual malice
inquiry turns on the defendant's state of mind at the time it
published the alleged libel, and it is undisputed that the Baitler
e-mail's possible destruction took place several days after its
publication.
9
Because we conclude that no actionable libel was published in
the first place, we need not reach the question of whether Staples
nonetheless retained its conditional privilege -- a point argued at
length by both parties.

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favor of Staples on the libel claim, and move on to Noonan's claim

that Staples breached its stock-option agreements with him.

C. Breach of Stock-Option Agreements

Noonan next argues that the district court erred in

granting summary judgment to Staples on his claim that the latter

breached the two stock-option agreements by not allowing him to

exercise his options. The district court noted the language in the

agreements providing that Noonan was ineligible for the stock

options if Staples determined that his termination was "for cause,"

and dismissed the claim because "Staples's classification of

[Noonan's] actions as willful misconduct appears reasonable and

applicable in the circumstances."

As an initial matter, we must ascertain the correct

rubric through which to evaluate Noonan's assertion that he did

not, in fact, engage in willful misconduct or any other activity

that would qualify as cause for his firing. Staples contends that

we are prohibited from reaching the merits of this question, as the

stock-option agreements entrust the decision on what constitutes

"cause" to Staples, and Staples alone. It argues that several

courts have held similar clauses to be a valid limitation on

contractual remedies. See, e.g., McIntyre v. Phila. Suburban

Corp., 90 F. Supp. 2d 596, 600 (E.D. Pa. 2000); Stemerman v.

Ackerman, 184 A.2d 28, 33 (Del. Ch. 1962). Noonan, by contrast,

urges us to declare the relevant clauses in the agreements invalid

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because they violate public policy, because they allow Staples to

be the judge in its own case. See, e.g., Ellis v. Emhart Mfg. Co.,

191 A.2d 546, 549 (Conn. 1963) (clause in stock-option agreement

violated public policy by providing that board of directors'

interpretation was final and conclusive) (citing, inter alia,

Patton v. Babson's Statistical Org., Inc., 156 N.E. 534, 536 (Mass.

1927)). Noonan invites us instead to engage in de novo review of

whether there was cause to fire him. For the reasons explained

below, the weight of authority pushes us onto a middle course

between these two extremes.

The question we must answer is whether Staples's

contractual prerogative to determine what constitutes "cause" is

unreviewable. If so, the matter ends there and we need not look at

the evidence to determine whether cause did indeed exist for firing

Noonan, because Staples undisputably determined that it did.

Unlike the inquiry into an alleged libel's truth or falsity

discussed above -- which Massachusetts courts have addressed -- our

survey of Massachusetts law reveals no pronouncement by that

state's courts on this precise question. Since this case rests on

diversity jurisdiction, we must attempt to divine how the

Massachusetts courts, and in particular the Supreme Judicial Court,

would answer the question if faced squarely with it. See Hardy v.

Loon Mt. Recreation Corp., 276 F.3d 18, 20 (1st Cir. 2002); accord

Liberty Mutual Ins. Co. v. Metro. Life Ins. Co., 260 F.3d 54, 65

-21-
(1st Cir. 2001) ("Absent a decision by the state's highest court,

we are free to make our own best guess as to Massachusetts law . .

. ."). In coming up with our "best guess," we may look to

analogous decisions from other jurisdictions. Hardy, 276 F.3d at

20 (citing Stratford Sch. Dist., S.A.U. #58 v. Employers Reins.

Corp., 162 F.3d 718, 720 (1st Cir. 1998)); see also Vigortone AG

Prods., Inc. v. PM AG Prods., Inc., 316 F.3d 641, 644 (7th Cir.

2002) (explaining that "the best guess is that the state's highest

court, should it ever be presented with the issues, will line up

with the majority of the states"). We may also find guidance in

pronouncements on similar matters by Massachusetts courts.

Staples points us to what is probably the most closely

analogous published case of the handful that exist dealing with

this question, Weir v. Anaconda Co., 773 F.2d 1073 (10th Cir.

1985). In that case, Weir and his former employer, the Anaconda

Company, had a stock-option plan which gave an Anaconda

compensation committee the sole authority to determine whether Weir

had been fired for cause, and was thereby precluded from exercising

a stock option. Contrary to Staples's suggestion, however, the

Tenth Circuit did not hold that the compensation committee's cause

decision was unreviewable. Id. at 1078. Instead, according to

that court's reading of the applicable Kansas law, the committee's

decision should be treated in a manner similar to an agency

decision, and thus reviewed for whether it was arbitrary,

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fraudulent, or made in bad faith. Id. at 1078-79. After

evaluating the evidence relating to Weir's firing in the light most

favorable to him, the court concluded that the committee's decision

suffered from none of these defects, and affirmed summary judgment

in favor of Anaconda. See id. at 1081-83. Importantly, the court

expressly rejected Weir's request that it apply, as Noonan implores

us to do here, a fully de novo standard of review to the

committee's decision. Id. at 1078.

Our survey of other jurisdictions has uncovered several

cases adopting similar standards of review. See, e.g., Scribner v.

Worldcom, Inc., 249 F.3d 902, 909 (9th Cir. 2001) (applying

Washington law, court reviews stock-option committee's

interpretation of plan's terms to determine whether it was made in

good faith); Craig v. Pillsbury Non-Qualified Pension Plan, 458

F.3d 748, 752 (8th Cir. 2006) (similar); W.R. Berkley Corp. v.

Hall, No. Civ.A. 03C-12-146WCC, 2005 WL 406348, at *4 (Del. Super.

Ct. Feb. 16, 2005) (unpublished) (when stock-option committee is

vested with final authority to determine rights under plan, court

will not second-guess its decision absent showing of fraud or bad

faith); Schwartz v. Century Circuit, Inc., 163 A.2d 793, 796 (Del.

Ch. 1960) (similar). These standards, and that propounded by the

Weir court, comport with the standard consistently used by

Massachusetts courts for determining whether a government official

acted properly in discharging another government employee. See,

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e.g., Flomenbaum v. Commonwealth, 889 N.E.2d 423, 429 (Mass. 2008)

(arbitrary or capricious); Levy v. Acting Governor, 767 N.E.2d 66,

79 (Mass. 2002); McSweeney v. Town Manager of Lexington, 401 N.E.2d

113, 117 (Mass. 1980); cf., e.g., Madera v. Marsh USA, Inc., 426

F.3d 56, 63-64 (1st Cir. 2005) (where ERISA benefits plan gives

plan administrator or fiduciary discretionary authority to

determine employee's eligibility for benefits, the determination is

subject to an arbitrary and capricious standard of review, and the

decision must be upheld "'if there is any reasonable basis for it'"

(quoting Brigham v. Sun Life of Can., 317 F.3d 72, 81 (1st Cir.

2003)).

In view of this authority, our best prediction is that

the Massachusetts Supreme Judicial Court would hold that Staples's

"for cause" decision is not unreviewable, nor reviewable de novo,10

but instead that the courts may perform a limited review of the

decision to determine if it was arbitrary, capricious, or made in

10
Noonan claims that we are bound by the Patton case, in which the
Supreme Judicial Court held invalid a contractual clause giving a
company president the sole authority to determine whether a fired
employee would receive a deferred salary. See Patton, 156 N.E. at
536. Yet Massachusetts courts strongly favor the freedom of
contract absent serious misconduct or fraud. See, e.g., Sound
Techniques, Inc. v. Hoffman, 737 N.E.2d 920, 927 (Mass. App. Ct.
2000). There is no evidence in the record that Noonan, a
sophisticated party, was under duress when he signed onto the
stock-option agreements, or that the agreements suffered from some
other infirmity invalidating their plain terms. In any event,
Patton dates from 1927, and we do not think the Court would take
the same view today when faced with a modern stock-option agreement
like the two at issue here.

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bad faith.11 Even if we might disagree with Staples's action

regarding Noonan's firing, if Staples's decision was not arbitrary,

capricious, or made in bad faith, then we must accord it deference,

and consequently affirm the denial of Noonan's stock options under

the plain terms of the agreements. Cf., e.g., Mesnick v. Gen.

Elec. Co., 950 F.2d 816, 825 (1st Cir. 1991) (courts are not "super

personnel departments," and should not ordinarily second-guess

employers' business decisions). In performing this portion of the

inquiry, we adopt the definition of "cause" common to both stock-

option agreements -- willful misconduct or willful failure to

perform responsibilities in the best interests of Staples -- a

definition which Noonan seems to accept as applicable here.

Cf. DiPietro v. Sipex Corp., 865 N.E.2d 1190, 1194 n.3 (Mass. App.

Ct. 2007) (applying definition of "for cause" as set forth in the

relevant agreement).

Noonan argues that, while he undoubtedly committed a

number of errors on the expense reports audited by Staples's

investigation team, these were merely the result of inadvertence or

carelessness, and not a willful attempt to defraud Staples. At the

very least, Noonan contends, the determination of whether his

conduct was willful involves looking into his state of mind, a

question ordinarily reserved for the jury. See Maimaron v.

11
At another point in its brief, Staples concedes that its cause
decision must have been made in good faith, and that we have the
authority to review the decision at least to that extent.

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Commonwealth, 865 N.E.2d 1098, 1109 (Mass. 2007). Again, however,

our task here -- and the jury's, if this case were to survive

summary judgment -- is not to determine whether Noonan did indeed

act willfully, but whether Staples's assessment that he acted

willfully was arbitrary, capricious, or made in bad faith.

Notwithstanding a viewing of the evidence in Noonan's favor, we

hold that there is no material fact in dispute on this issue.

Noonan does not dispute that the team of investigators

was competent and experienced. The team looked at not just one or

two of his expense reports, but at thirty-seven, spread across

2005. It uncovered dozens of instances in which Noonan claimed

more than he was entitled to and determined unanimously that the

discrepancies must have been intentional. Our review of the record

reveals no material dispute of this fact. Even if, in fact, the

dozens of discrepancies were all the result of some extreme

sloppiness or inattentiveness on Noonan's part (as he rather

unblushingly contends), we discern no triable issue of fact on

whether the team -- and the Staples officers who reviewed and acted

upon the team's findings -- had a good-faith basis for concluding

that Noonan deliberately doctored these entries. For example, even

taking Noonan's $1,100 Big Mac as an honest keypadding slip (as

Noonan claims it was), the several entries showing the item claimed

as exactly $100 more than it actually cost are extremely damaging

to Noonan's case. The record reveals that the team found these to

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refute his claim that the discrepancies were merely instances in

which he pre-populated the expense report (that is, he guessed at

how much the item would cost) and simply forgot to go back and

correct the entry later after he bought it and knew how much it

actually cost. Also damaging to Noonan's case, and taken into

account by the team, was his failure to notice (and his inability

to explain this failure to the investigators) the large amounts of

extra money being deposited into his account as a result of his

over-reimbursements.12

Therefore, regardless of whether Noonan also made errors

that, in the end, resulted in an ultimate windfall for Staples,13

the evidence viewed in Noonan's favor still shows highly suspicious

expense-reporting practices sufficient to ground a finding that

Noonan intentionally manipulated at least some expense reports so

that he would receive money he did not deserve. As Noonan

repeatedly argues or intimates, Staples may have been wiser to

conduct yet another, even more searching investigation into his

12
Another relevant factor is that Staples's termination letter to
Noonan told him that he was being fired for cause. See Hammond v.
T.J. Litle & Co., 82 F.3d 1166, 1175 (1st Cir. 1996) (applying
Massachusetts law and remarking that "when an employee may only be
terminated for cause, whether the employer so informs the employee
plays a decisive role in a court's later determination of whether
the employee was discharged for cause").
13
As noted above, the parties vigorously dispute which party
received the ultimate windfall. We need not determine who is
correct on this question in order to resolve the issues presented
in this appeal. See supra note 3.

-27-
conduct; to give him a second chance before firing him; to impose

some less-severe form of discipline; or to punish other violators

in the North American Division -- of whom Noonan claims there were

many -- with the same harsh penalty. Nevertheless, even indulging

Noonan all reasonable inferences, we cannot say that Staples's

decision that Noonan engaged in willful misconduct or willfully

failed to perform his duties in its best interest -- based as it

was on the findings of experienced auditors -- was arbitrary,

capricious, or made in bad faith.

For these reasons, there is no triable issue of material

fact with respect to Staples's decision that cause existed to fire

Noonan, and under the plain terms of the stock-option agreements,

Staples was thus entitled to determine Noonan ineligible for the

stock options. Accordingly, the district court did not err in

granting summary judgment to Staples on Noonan's claims concerning

the stock-option agreements, and we move on to his last ground of

appeal.

D. Breach of Severance Agreement

Lastly, Noonan contends that the district court erred in

granting summary judgment to Staples on his claim that it violated

the severance agreement. We need not dwell long on this ground of

appeal because it is foreclosed by the plain terms of the relevant

instruments. The severance agreement provided that Noonan would

not receive his severance benefits if Staples terminated him "for

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'[c]ause.'" Another clause in the agreement provided that "cause,"

for purposes of the severance agreement, includes a violation of

Staples's Code of Ethics. The Code of Ethics, in turn, contained

the following provision:

We expect you to keep accurate records and
reports . . . . All company books, records,
and accounts must be maintained in accordance
with all applicable regulations and standards
and accurately reflect the transactions they
record. . . . We do not permit . . . false or
misleading entries in the company's books or
records for any reason. . . .

Even viewed in the light most favorable to Noonan, the

evidence in the record readily shows that he failed to abide by

this clause of the Code of Ethics.14 As Staples suggests, even if

all of Noonan's many expense-reporting discrepancies were simply

careless mistakes or instances where he forgot to amend

pre-populated entries after figuring out what the item actually

cost, the mere fact that he deliberately created inaccurate entries

through the practice of pre-population transgresses this provision.

Thus, under the plain terms of the severance agreement, Noonan was

fired for cause, as that term is specifically defined in that

agreement. See, e.g., Cabot Corp. v. AVX Corp., 863 N.E.2d 503,

513 (Mass. 2007) (where a contract's language is unambiguous, its

14
The quoted language comes from the 2005 version of the Code of
Ethics. Noonan seems to argue that he was bound by the 2001
version of the Code; Staples asserts that he was bound by the 2005
version. We need not decide which party is correct, as the
relevant language in the 2001 version is identical.

-29-
interpretation is a question of law that may be resolved on summary

judgment); Eigerman v. Putnam Invs., Inc., 877 N.E.2d 1258, 1263

(Mass. 2007) (courts interpret contracts according to plain terms

where these are unambiguous). The district court therefore acted

properly in determining that Noonan forfeited his entitlement to

severance benefits, and summary judgment in favor of Staples on

this claim also must stand.15

III. Conclusion

For the foregoing reasons, we affirm the district court's

grant of summary judgment in favor of Staples in all respects.

Affirmed.

15
We add that the 2004 Stock-Option Agreement (but not the 1992
Stock-Option Agreement) also included violation of the Code of
Ethics as a ground constituting "cause." Summary judgment in favor
of Staples with respect to that agreement could therefore have been
affirmed for this reason as an alternative to the ground discussed
above.

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