NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 11a0545n.06
No. 10-1408
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FILED
G. SCOTT WHITING, ) Aug 08, 2011
) LEONARD GREEN, Clerk
Plaintiff-Appellant, )
)
v. ) ON APPEAL FROM THE UNITED
) STATES DISTRICT COURT FOR THE
ALLSTATE INSURANCE CO., ) EASTERN DISTRICT OF MICHIGAN
)
Defendant-Appellee. )
Before: SUTTON and COOK, Circuit Judges; GREER, District Judge.*
SUTTON, Circuit Judge. Scott Whiting, a former employee of Allstate Insurance Company,
challenges the dismissal of his defamation claim. Because businesses have a qualified privilege to
communicate about their employees, this claim fails as a matter of law.
I.
Whiting began working for Allstate in 1986 as a support staff member and over the years
earned several promotions. During his tenure, Whiting received many favorable reviews and several
awards for his service.
*
The Honorable J. Ronnie Greer, United States District Judge for the Eastern District of
Tennessee, sitting by designation.
No. 10-1408
Whiting v. Allstate Ins. Co.
At the heart of Whiting’s complaint is an insurance-claims practice known as “managed
disposition,” by which some Allstate offices allegedly regulated their monthly payout numbers by
off-setting large claims against many smaller claims. At times, Whiting says, his supervisors
instructed him to delay claims payments. At other times, they removed his authority to pay large
claims at the end of the month, which also had the effect of delaying payments.
On June 27, 2006, Whiting sent an email to Dennis Shelton, a claims adjuster in Indiana,
authorizing him to pay a claim for more than $100,000 but telling him to delay the payment until
after July 1. Shelton noted the delay in the customer’s file.
In January 2007, an Allstate investigator contacted Whiting about the delayed claim payment.
The investigator wrote a report discussing the email exchange with Shelton as well as notations in
the files about Whiting’s instructions to delay the payment.
After reviewing this report, Allstate in-house counsel Susan Rosborough asked Christi
Rushing, a human resources manager, to fire Whiting. The discharge letter said that “Whiting
instructed a remote adjuster to delay a claim payment with a significant dollar amount until after the
end of the second quarter” of 2006 and concluded that “Whiting violated the Allstate Code of Ethics
. . . by delaying payments on a claim.” R.40-19 at 2. This behavior, the letter added, violated the
following ethics provision:
As one of Allstate’s core values, integrity must be part of all business goals and
activities. We treat every stakeholder accordingly. We act honestly and deal fairly
and ethically with customers, suppliers, competitors and other employees.
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No. 10-1408
Whiting v. Allstate Ins. Co.
R.40-19 at 3. According to the letter, the Allstate Human Resources Policy Guide recommended
immediate discharge for offenses of this sort. Because Whiting had worked at Allstate for more than
twenty years, the discharge letter required the signatures of three managers, each of whom reviewed
this letter and signed it.
On June 11, 2007, Allstate fired Whiting, citing a breach of ethics.
On June 12, 2007, Whiting received a phone call from John Barrett, a property manager at
the home office in Illinois, offering his condolences and relaying that he heard Whiting had been
fired for a breach of ethics. Whiting received other phone calls over the next month from other
employees and vendors who had heard about the firing.
Whiting filed this lawsuit against Allstate in Michigan state court, claiming defamation.
Allstate removed the case to federal court based on diversity jurisdiction. 28 U.S.C. § 1332. At that
point, Whiting added a wrongful termination claim to his complaint, and after discovery Allstate
successfully moved for summary judgment on both claims. Whiting now appeals the dismissal of
his defamation claim.
II.
Under Michigan law, a statement is defamatory if it tends to harm the reputation of another
by lowering the estimation of that person in the community or by deterring third parties from
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Whiting v. Allstate Ins. Co.
associating with him. Smith v. Anonymous Joint Enter., 793 N.W.2d 533, 540 (Mich. 2010).
Among other elements of the claim, a plaintiff must establish that the defendant made an
unprivileged communication to a third party, id., which presents a problem for Whiting: The record
does not contain any unprivileged communication by Allstate to any third party about this discharge.
In his complaint, Whiting says that Harry Wright (Claim Field Director) and Dan Hebel
(Vice President of the Eastern Territory of Field Claims) “made statements regarding plaintiff which
said, directly or by implication, that [Whiting] had behaved in violation of Allstate’s ethical
standards . . . [and] practices and policies.” R.35 ¶ 32. Later in the complaint, Whiting mentions
“false statements made by Hebel, Wright and other Allstate employees,” but he never identifies other
employees or statements. R.35 ¶ 34.
Whiting’s brief points to three defamatory statements involving six speakers. Two of the
statements are included in the discharge letter: that Whiting “violated the Allstate Code of Ethics”
and that he “violated company policy.” Whiting Br. 31–32. The third is a general accusation that
Whiting was “verbally castigated” for having committed a breach of ethics because three Allstate
employees (Susan Rosborough, in-house counsel; Christi Rushing, human resources manager; Luke
Yang, internal investigator) spoke to each other and with Whiting about the internal investigation.
Id. at 32.
There is some reason to doubt whether Whiting’s pleading suffices to bring into play the
statements mentioned in his briefs. See Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434,
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No. 10-1408
Whiting v. Allstate Ins. Co.
436 (6th Cir. 1988) (“complaint must contain either direct or inferential allegations respecting all
the material elements to sustain a recovery under some viable legal theory”); cf. Gonyea v. Motor
Parts Fed. Credit Union, 480 N.W.2d 297, 299 (Mich. Ct. App. 1991) (a claimant must plead the
elements of a defamation claim with specificity, including the allegedly defamatory words, the
connection between the words and the plaintiff and their publication). Even if we overlook this
potential pleading deficiency, none of the statements referenced in the complaint or briefs satisfies
the prerequisites of an unprivileged defamatory statement.
Under Michigan law, as under the law of most (if not all) States, employers have a qualified
privilege “to defame an employee by making statements to other employees whose duties interest
them in the subject matter.” Id. at 300. Supervisory employees frequently have the need, sometimes
the duty, to comment on the behavior and work habits of their charges. See Beaumont v. Brown, 257
N.W.2d 522, 527 (Mich. 1977); Cole v. Knoll, Inc., 984 F. Supp. 1117, 1134 (W.D. Mich. 1997).
Consistent with the imperatives of managing a company, to say nothing of common sense,
supervisory employees thus may “discuss . . . allegations, . . . make appropriate inquiries, and . . .
commit their findings to writing” without violating the defamation laws. Id. How else could one
run a company? “Employers responsible for hiring and firing” must be able “to hear accusations of
employee misconduct which warrant dismissal” and deal with them appropriately—which often
includes further communications with other supervisors and employees. Merritt v. Detroit Mem’l
Hosp., 265 N.W.2d 124, 126–27 (Mich. Ct. App. 1978).
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No. 10-1408
Whiting v. Allstate Ins. Co.
This privilege covers all of the targeted statements. Each statement concerns Whiting’s
behavior as an Allstate employee—his instruction to a claims adjuster to delay payment on an
authorized claim. And each of the speakers was a supervisory employee involved in the
investigation and discussion of Whiting’s behavior. Three of the employees—Yang, Rosborough
and Rushing—were directly responsible for overseeing the behavior of employees and for
participating in the investigation and documentation of misbehavior. The other three—Hebel,
Wright and Karleen Zuzich—were executive managers who oversaw Whiting and other employees
like him. All six employees had an interest in Whiting’s conduct on the job, and their positions
required them to investigate this incident and decide whether it required his firing. The privilege
thus covers their conversations and written communications.
The privilege, we recognize, is not without limits. It does not extend to defamatory
communications made to other employees who are not supervisors but “simply fellow employees
in the identical work” as the person defamed. Sias v. Gen. Motors Corp., 127 N.W.2d 357, 360
(Mich. 1963); see also Patillo v. Equitable Life Assurance Soc’y, 502 N.W.2d 696, 699–700 (Mich.
Ct. App. 1993); Horton v. 48th Dist. Court, 446 F. Supp. 2d 756, 765 (E.D. Mich. 2006). In
Whiting’s case, however, all six of the relevant employees had supervisory roles. See Cole, 984 F.
Supp. at 1134.
Whiting insists that the supervisory employees violated the privilege by disseminating the
defamatory documents to lower-level employees. But no evidence supports this claim. “[R]umors
. . . circulating in the work place” by themselves do not suffice to establish a triable issue of fact in
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Whiting v. Allstate Ins. Co.
a defamation claim, id., especially when Whiting admits that he “[doesn’t] know who” originated
the rumors and that only one person mentioned the code of ethics to him. R.40-4 at 62, 76–77, 101.
A claimant, we also recognize, may overcome the privilege by showing actual malice—that
the supervisor made the defamatory statement with “knowledge of its falsity or reckless disregard
of the truth.” Gonyea, 480 N.W.2d at 300. Whiting alleges that his supervisors knew that delaying
claim payments was an accepted business practice at Allstate and contends that at least some of the
supervisory employees “feigned ignorance” of the practice in their depositions. R.11 at 59–60.
The record, however, does not permit the inference that the six supervisory employees knew
of any such practice within the Michigan office. Five of the supervisors worked in Allstate offices
in other States and supervised the Michigan office from a distance. The sixth supervisor worked in
the Michigan office but in the human resources department, a distinct division (physically and in
terms of substantive responsibility) from the claims area where Whiting worked.
Two of the six supervisors reviewed only the termination request, which outlined Whiting’s
behavior and the relevant policy sections, but gave no indication that Whiting had told investigators
that his behavior conformed with the instructions of his superiors and the practice in the Michigan
office. The four other supervisors reviewed Yang’s investigation report, which contained conflicting
information—Whiting’s statement that Lionel Beckles directed him to delay the claim payment and
the contrary testimony of Beckles himself, who denied telling Whiting to delay a claim payment and
who emailed the office’s employees instructing them not to delay payments. At most, the Yang
report reveals that Whiting heard one thing and Beckles testified he said something else. In
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Whiting v. Allstate Ins. Co.
respecting one version of what was said, including the version supported by an office-wide email,
the supervisors hardly showed knowledge of a falsity or for that matter any reckless disregard of the
truth.
III.
For these reasons, we affirm.
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