___________
No. 95-1569
___________
Tilak Raj Sawheny, also known *
as Roger Sawheny, *
*
Appellant, *
* Appeal from the United States
v. * District Court for the
* Southern District of Iowa.
Pioneer Hi-Bred International, *
Inc., an Iowa Corporation, *
*
Appellee. *
___________
Submitted: March 11, 1996
Filed: August 27, 1996
___________
Before McMILLIAN, BEAM, and HANSEN, Circuit Judges.
___________
BEAM, Circuit Judge.
In this diversity action for damages, Roger Sawheny appeals the
district court's1 orders: (1) granting summary judgment to Pioneer Hi-Bred
International, Inc. (Pioneer) on Sawheny's RICO claim; (2) entering
judgment for Pioneer after a bench trial on Sawheny's litany of tort and
breach of contract claims; and (3) denying Sawheny's post-judgment motion
to make additional findings of fact. We affirm.
1
The Honorable Charles R. Wolle, United States District Judge
for the Southern District of Iowa.
I. BACKGROUND
Pioneer is an Iowa corporation engaged in the seed business. In
1978, Pioneer, through its wholly-owned subsidiary Pioneer Oversees
2
Corporation (POC), formed Pioneer Seed Company Limited (PSCL) as a
corporation licensed under the laws of India. To comply with Indian law,
Pioneer retained ownership of only forty percent of the PSCL stock. Indian
nationals owned the remaining sixty percent of the stock: Sanjogta Kapoor
owned just under forty percent and her brother, Surinder Sehgal, owned
twenty percent of the PSCL shares. Pioneer provided most of the funding
for PSCL. Sehgal served as President of POC until 1988.
After the formation of PSCL, numerous agreements were executed
between POC, Pioneer, and PSCL. These contracts included research
agreements, a registered user agreement, a collaboration agreement, and a
loan agreement. The Indian government approved each of these agreements
when necessary. Under these agreements, Pioneer retained its proprietary
rights in all seeds and their progeny, other genetic materials, research
data, and research results.
In July 1983, Sawheny, a Canadian citizen, was hired by POC at
Sehgal's behest. At the time, Sawheny was unemployed but married to
Sehgal's niece. After an orientation period, Sawheny's primary duty was
to investigate the condition of PSCL and report back to Sehgal, the
President of POC. At meetings held in December 1983, Sawheny reported that
PSCL was being mismanaged. In 1984, pursuant to the collaboration
agreement with PSCL and with the approval of the Indian government, Pioneer
sent Sawheny to India, where he soon became the General Manager of PSCL.
Pioneer "deputed" or loaned Sawheny from its POC subsidiary to PSCL.
Sawheny received a salary from POC of $30,000, which was deposited in a
bank in Iowa. In
2
Because POC is a wholly-owned subsidiary of Pioneer, we
sometimes refer to POC as "Pioneer."
-2-
addition, he received a separate salary in Indian currency (5,000 rupees
per month), tax-free, and other benefits, from PSCL.
When Pioneer first hired Sawheny, he completed and signed a form
stating that he was a Canadian citizen working outside of the United
States. This form was filed with the appropriate income tax authorities.
In a letter signed by Sehgal and dated July 5, 1983, Pioneer acknowledged
that Sawheny was a POC employee beginning on July 1, 1983, and that his
base salary was $30,000. The letter does not state that Sawheny's salary
was to be tax free; nor does it state that Sawheny had no obligation to pay
income tax.
In contrast, PSCL had agreed that Sawheny's salary would be tax-free.
The Indian government, however, denied PSCL's application to have Sawheny's
PSCL income declared exempt from Indian income taxes. As a result, PSCL
paid the income taxes on Sawheny's PSCL salary as it had agreed to do.
This tax obligation imposed upon Sawheny's PSCL income made him anxious
about paying Indian income tax on his salary from POC. Consequently,
Sawheny asked for a letter from POC designed to provide him with a
colorable defense if Indian tax authorities attempted to tax his POC
salary. In response to Sawheny's request, Sehgal asked POC counsel Ross
Porter to prepare a letter. Porter drafted a letter for Sehgal, dated June
19, 1987, stating that POC would continue to compensate Sawheny for his
work done outside of India while PSCL would continue to pay him a salary
for his work done in India. This letter, however, also expressly stated
that "every employee of Pioneer and its subsidiaries is expected to pay his
or her own personal taxes." Joint App. at 5121.
In 1985, Sawheny was named President of PSCL, which was a change in
title only because his duties remained the same as when he was General
Manager. While working for both POC and PSCL from 1984 to late 1987,
Sawheny did most of his work in India. In
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December 1987, Pioneer promoted Sawheny to the position of Regional
Operations Director of POC's Asia/Pacific Region.
During this time, Pioneer had been working with its Indian lawyers
and accountants to increase its share of PSCL stock to seventy percent, in
accordance with a change in Indian law. Although neither Sehgal nor
Sawheny objected to the proposed transfer of PSCL stock, Sehgal resisted
efforts to reorganize Pioneer's overseas operations. Dissatisfied when the
reorganization took place, Sehgal decided to leave Pioneer. He sought out
persons who could supply him with venture capital in order to start a new
company that would compete directly with Pioneer. In the fall of 1987,
Sehgal held secret meetings which were attended by key POC employees (Hari
Shukla and Ken Mishra), an employee of a Pioneer competitor (Dave Nanda),
and Sawheny. At Sehgal's direction, Mishra prepared a plant breeding plan
in which hybrids and inbreds owned by Pioneer, along with similar materials
from other institutions and firms, would be used as genetic stock in a
manner that would disguise their pilfered parentage.
In late February 1988, Mishra informed Pioneer's President and CEO,
Thomas Urban, that Sehgal intended to start a new seed company to compete
with Pioneer. Urban initially did not believe that his trusted employee
Sehgal would do such a thing. Urban asked Mishra to gather proof of
Sehgal's planned defection. On February 28, 1988, Mishra made a tape
recording of a conversation with Sehgal that substantiated Mishra's
allegation that Sehgal was planning to start a new company which would use
Pioneer's technology. The tape was played to Pioneer executives. They
were shocked by the plan. The next day, Sehgal met with venture
capitalists in Boston who pledged $5 million for the new company.
On March 8, 1988, Urban confronted Sehgal. When Sehgal refused to
confirm or refute the Mishra allegations, Urban
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terminated Sehgal.3 On the same day, Urban called Sawheny, who was
traveling on business in Thailand, and told him about Sehgal's termination.
At that time, neither Urban nor the other executives at Pioneer knew that
Sawheny participated in the secret meetings. They knew, however, that
Sawheny was married to Sehgal's niece and thus Urban told Sawheny not to
have contact with Sehgal. Concerned that its genetic material was at risk,
Pioneer sent POC's Mishra to India to do whatever he could to protect the
germplasm. Mishra and other Pioneer executives became concerned when
Sawheny demonstrated reluctance to assist in complying with Pioneer's order
to secure its property.
In March 1988, Urban contacted Sawheny and requested that he travel
to Des Moines, Iowa, to discuss the establishment of POC's regional office
in the Philippines. Urban, who became the President of POC upon Sehgal's
termination, wanted to meet with Sawheny to be sure that Sawheny was the
right person to serve as the Regional Director for the Asia/Pacific Region.
Urban decided that Sawheny could not serve as both the Regional Director
for POC in the Philippines and at the same time perform his full-time job
as President of PSCL in India. Accordingly, Urban asked Sawheny to resign
from PSCL. Sawheny agreed and signed a letter of resignation. Urban also
recognized that Sawheny could face personal conflicts managing a company
competing with his wife's uncle, Sehgal, and thus Urban decided to remove
India from the countries within Pioneer's Asia/Pacific region. Sawheny
agreed that he would go to India for three weeks to put his personal
affairs in order and then he and his family would move to the Philippines
where he would work as POC's Regional Director for the Asia/Pacific Region.
Once again, Urban told Sawheny not to have any contact with Sehgal. Sehgal
had, on March 19, already contacted Sawheny at Sawheny's hotel in Des
Moines. Despite
3
Pioneer filed a lawsuit against Sehgal, which, along with a
counterclaim, was eventually settled in the fall of 1989.
-5-
Urban's admonitions, Sawheny continued to speak with Sehgal about how
Sehgal planned to handle PSCL.
Sawheny's resignation as PSCL President was approved at a PSCL board
meeting on March 31, 1988. In the meantime, Sehgal was orchestrating the
handling of PSCL affairs through his sister, Kapoor. She scheduled a
second meeting of the board to be chaired by Sehgal. While in India at
Urban's request, Mishra learned that Sawheny planned to attend this rival
board meeting. Upon learning of this from Mishra, Urban told Mishra to
have Sawheny call him. Sawheny did not contact Urban. On April 14,
Sawheny went to the PSCL offices to attend the board meeting, where he was
confronted by Mishra and employees loyal to Pioneer. When asked whether
he was joining Sehgal or remaining loyal to Pioneer, Sawheny refused to
answer, thereby implying that he had decided to switch loyalties and work
with Sehgal. Pioneer's legal counsel in India obtained an ex parte
injunction barring the April 14 PSCL board meeting. The injunction was
served on Sehgal moments before the meeting, which then did not take place.
After Urban had heard what transpired, he concluded that Sawheny was no
longer loyal to Pioneer, but instead was working with Sehgal to free PSCL
from Pioneer's control. On April 15, a termination letter was drafted and
sent to Sawheny, who claims not to have received it. Without a POC job,
Sawheny's deputation ended and he lost his authority to remain in India.
On April 22, Sehgal held a PSCL board meeting at which a newly
constituted board (including two additional relatives of Sehgal) refused
to accept Sawheny's previously tendered resignation from PSCL. Sawheny
immediately went back to work as President of PSCL. The next day, Sawheny
sent a letter to Pioneer in which he informed Urban that he refused to go
to the Philippines for POC and intended to resume his position with PSCL.
In that letter, Sawheny also alleged that he had been coerced into signing
his previous letter of resignation from PSCL. Although the letter was
unnecessary given that Sawheny had already been terminated from POC, Urban
-6-
nevertheless construed it to be a letter of resignation from POC.
Sawheny claims he did not know of his termination from POC until the
fall of 1988. He did not, however, report to the Philippines or prepare
any reports for POC after April 22. Notice of Sawheny's termination from
POC was published in the Pioneer Insider publication (a corporate
communication for Pioneer's employees), along with a warning that Pioneer
employees should not travel to India.
At the April 22, 1988, board meeting, Sehgal took control of PSCL.
In response, Pioneer established another company, PHI Biogene (Biogene),
to carry out its Indian operations. Several Indian agencies, including the
Ministry of Agriculture, granted Biogene permission to establish operations
in India. In June 1988, H.R. Bhardwaj, the Research Director for Biogene,
sent a letter on POC letterhead to the Indian Secretary of Agriculture to
explain various disputes and litigation involving Biogene and PSCL.4 In
this letter, Bhardwaj reported that Sehgal and Sawheny were dishonest and
were attempting to make false allegations against Biogene. During this
time, Sawheny and PSCL were also sending various materials to the Indian
government hoping to persuade it to reject Biogene's application to do
business in India.
In June 1988, Porter, POC's counsel, was informed that the Indian
government had requested a letter regarding Sawheny's POC income for the
years 1983 through 1988. Porter prepared the letter, which stated:
To Whom It May Concern: This is to confirm that Mr. T.R.
Sawheny, whose services were delegated by us to PSCL New Delhi,
received remuneration from us in the U.S.A. for the services
rendered by him in India. The gross
4
During 1988, approximately 20 lawsuits were filed in India by
and against Pioneer, PSCL, and their agents.
-7-
remuneration paid to him in the U.S.A. during April 1984
through March 1988 was U.S. $175,543.80. After deductions of
U.S. $2,283.50 his net remuneration of U.S. $173,260.30 was
deposited by us in his bank accounts in the U.S.A.
The record does not indicate whether this letter was ever sent to or
received by the Indian government. Jerry Chicoine, Assistant Secretary of
POC, prepared a similar letter, the contents of which were quoted in the
tax assessment levied against Sawheny by the Indian government.
In the summer of 1988, PSCL applied to the Indian government for an
extension of Sawheny's visa, which was due to expire on October 3, 1988.
Because Sawheny was no longer a POC employee, the standard letter
consenting to his continued deputation was not included in the application.
The Indian government refused the visa extension request. In December
1988, the Indian Foreign Exchange Regulation Department and Indian income
tax authorities summoned Sawheny to appear on December 16, 1988. Sawheny
asserts that he was advised by his Indian accountant to leave the country
immediately. Prior to leaving, Sawheny sent Indian authorities a medical
certification stating that due to a heart condition he would not be able
to participate in the hearing. Upon arriving in the United States, Sawheny
visited a medical doctor who wrote a letter that Sawheny was in poor health
and unable to travel. This letter was sent to the Indian government.
Despite these representations, Sawheny immediately traveled to Canada to
interview for a new job with a prior employer. Sawheny refused that
position but accepted a position with a company in Iowa, where he worked
until 1993.
After leaving India, PSCL continued to furnish Sawheny with an
accountant to help him with his Indian tax problems. Sawheny, however,
never returned to India to defend against the Indian tax charges, nor did
he provide the documentary evidence requested by
-8-
the Indian government. In February 1991, his accountant falsely told
Indian authorities that Sawheny's whereabouts were unknown. The Indian tax
authorities found Sawheny in default and ordered him to pay back taxes plus
interest and penalties. Sawheny has refused to pay those sums.
In April 1990, Sawheny filed this action in federal district court
alleging that Pioneer tortiously interfered with his employment contract
and defamed him. Sawheny then filed an amended complaint in which he added
an additional RICO claim. See 18 U.S.C. §§ 1961, 1962. On February 19,
1993, the district court granted Pioneer's motion for partial summary
judgment and dismissed the RICO claim. Sawheny then filed another amended
complaint, in which he asserted claims for common law fraud, breach of
employment contract, wrongful discharge, and defamation, as well as
preserving his right to appeal the dismissal of his RICO claim.
A bench trial was held in August 1993. The district court entered
judgment for Pioneer on all claims. Subsequently, the district court
denied Sawheny's post-trial motion to make additional findings of fact.
Sawheny now appeals from these district court orders.
On appeal, Sawheny makes four arguments. First, he claims that the
district court ignored the criteria established by the Iowa Supreme Court
for determining whether actions are "intentional" or "improper" in a case
of interference with an employment relationship. Second, Sawheny argues
that the district court erred in concluding that Pioneer had a qualified
privilege to libel him. Third, Sawheny asserts that the district court
should have made the additional findings requested in his Rule 52(b)
motion. Finally, Sawheny contends that the district court erred in
dismissing his RICO claim on summary judgment because he did allege acts
giving him standing to bring his claim under RICO.
-9-
II. DISCUSSION
Sawheny's first two arguments require us to review the district
court's order entering judgment for Pioneer. While we review a district
court's conclusions of law de novo, we review the district court's findings
of fact under the clearly erroneous standard. See Fed. R. Civ. P. 52(a).
Under clear error review, we will not overturn a finding of fact unless:
(1) such finding is not supported by substantial evidence; (2) such finding
is based upon an erroneous view of the law; or (3) we are left with the
definite and firm conviction that an error has been made. See, e.g.,
Stevens v. McHan, 3 F.3d 1204, 1206 (8th Cir. 1993).
A. Tortious Interference with Employment Contract Claim
Sawheny first contends that Pioneer intentionally interfered with his
contractual relationship with PSCL after he decided to remain President of
PSCL and not to work for POC.5 Sawheny claims that he would still be
President of PSCL today if he had not been forced to leave India due to the
tax problems caused by Pioneer's submission of information to Indian tax
authorities on Sawheny's POC income.
Under the applicable law of Iowa, based on the Restatement (Second)
of Torts §§ 766, 766A, & 766B (1979) (hereafter cited as "Restatement"),
"`[o]ne who intentionally and improperly interferes with the performance
of a contract (except a contract to marry) between another and a third
person'" is liable for resulting damages. See Grahek v. Voluntary Hosp.
Coop. Ass'n of Iowa, Inc.,
5
We note that the district court concluded that Pioneer had
not improperly interfered with Sawheny's relationship with PSCL
when he agreed to resign and work full time as POC's Regional
Director. Sawheny has not challenged this ruling on appeal.
-10-
473 N.W.2d 31, 35 (Iowa 1991) (quoting Restatement § 766).6 Therefore,
Sawheny had the burden of proving, by a preponderance of the evidence, the
following elements: (1) an existing valid contractual relationship or
business expectancy with PSCL; (2) knowledge of this by Pioneer; (3)
intentional interference inducing or causing a breach or termination of the
contract; and (4) resulting damages. Westway Trading Corp. v. River
Terminal Corp., 314 N.W.2d 398, 402-03 (Iowa 1982). Although Sawheny need
not prove Pioneer acted with malice, he must demonstrate that Pioneer's
actions were improper. Hunter v. Board of Trustees of Broadlawns Medical
Ctr., 481 N.W.2d 510, 518 (Iowa 1992). In determining whether Pioneer's
actions constituted improper interference under Iowa law, we consider the
following factors:
(a) the nature of the actor's conduct,
(b) the actor's motive,
(c) the interests of the other with which the actor's
conduct interferes,
(d) the interests sought to be advanced by the actor,
(e) the social interests in protecting the freedom of
action of the actor and the contractual interests
of the other,
(f) the proximity or remoteness of the actor's conduct
to the interference and
(g) the relations between the parties.
Id. (quoting Restatement § 767). Applying these factors, we conclude that
Sawheny failed to prove that Pioneer's conduct was improper.
In attempting to prove that Pioneer improperly interfered with
Sawheny's business relationship with PSCL by submitting information about
his POC income to Indian tax authorities, Sawheny primarily
6
We note that the Restatement contains several different
sections on the tort of intentional interference with contract.
Regardless of which section Sawheny relies upon, he must prove that
Pioneer acted improperly. See Restatement § 767 cmt. a. On these
facts, he has failed to make such a showing.
-11-
relies on two pieces of evidence. First, Sawheny argues that a statement
made by Pioneer executives at a meeting held in London in late April of
1988 provides proof of the impropriety of Pioneer supplying Indian tax
authorities with information about Sawheny's income. Specifically, one of
the Pioneer executives stated that Sawheny's tax situation might be used
to "level the playing field." When this statement is considered in the
context of what was occurring at that time, however, it fails to provide
any proof of impropriety on the part of Pioneer. Sawheny had just defected
from POC and sided with Sehgal in the battle for control of PSCL. Pioneer
had recently formed a new company to compete with PSCL and was attempting
to obtain authorization from the Indian government. Furthermore, Pioneer's
notification to Indian tax authorities that Sawheny received income from
POC for work done while in India was apparently necessary to comply with
Indian tax laws.7 In a memorandum prepared by a tax lawyer specializing
in Indian tax law, the lawyer advised POC that Sawheny would not be liable
for Indian income tax on salary received from POC "so long as the services
are rendered by him wholly outside India and the salary is paid outside
India." Joint App. at 5206. The memorandum also warned that "POC could
be exposed to violation of Indian income tax laws and other laws on the
ground that it aided and abetted such violations by the employee." Id. at
5207. The evidence shows that Sawheny spent the vast majority of his time
working in India. Moreover, the record indicates that Pioneer submitted
information about Sawheny's POC income in response to a request by Indian
tax authorities. Thus, Pioneer had both the right and duty to provide the
government of India with accurate tax information concerning Sawheny's POC
income and potential tax liability.
7
The fact that PSCL and Biogene, Pioneer's newly-established
Indian company, were competitors does not alone prove improper
interference. See Restatement § 768(2).
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Second, Sawheny asserts that Pioneer acted improperly when it told
Indian tax authorities that Sawheny had received a salary from POC for
doing PSCL work in India, thereby causing Sawheny to incur a tax obligation
in India, while at the same time deducting the full amount of Sawheny's POC
salary on POC's U.S. tax returns. To support this assertion, Sawheny
points to the Indian tax assessment in which it quotes a letter from POC
Assistant Secretary Chicoine. In this letter, Chicoine states that during
the period from February 1984 to March 1988, "besides renumeration [sic]
derived by [Sawheny] from Pioneer Seed Company Limited, New Delhi, India,
he was drawing renumeration [sic] from the Company for the services
rendered by him to Pioneer Seed Company Limited, New Delhi, India." Joint
App. at 5228-29. Sawheny correctly points out that a deduction for salary
payments under 26 U.S.C. § 162 must be reasonable and necessary for that
particular company. Thus, he alleges POC should not have deducted the full
amount of Sawheny's salary if part of his POC salary was in fact paid for
PSCL work.
While Sawheny's argument may correctly articulate the general rule
under U.S. income tax law, it fails to demonstrate that Pioneer acted
improperly when it provided Indian tax authorities with information on
Sawheny's POC salary. Chicoine testified that Pioneer was authorized to
deduct Sawheny's POC salary under two provisions of the U.S. Internal
Revenue Code (Code): (1) as an ordinary and necessary business expense
under 26 U.S.C. § 162; and (2) as an expense reasonably incurred in the
oversight of a company's investments under 26 U.S.C. § 212. The record
indicates that POC owned forty percent of PSCL and had numerous operating
agreements with it. Moreover, the Chicoine letter quoted in the Indian tax
assessment does not state that Sawheny was paid by Pioneer for work done
solely for PSCL. Given the circumstances of Sawheny's dual employment and
the relationship between the companies, Sawheny has failed to establish
that Pioneer's tax treatment of his POC income did not comply with U.S.
income tax laws. In any event, we are not called upon in this case to
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scrutinize Pioneer's tax returns. Therefore, Sawheny failed to establish
that Pioneer improperly interfered with his employment relationship with
PSCL.
Sawheny also seems to suggest that Pioneer acted improperly in
reporting to Indian tax authorities that Sawheny had done work for POC
while in India because POC knew that Sawheny would be liable for Indian
taxes on income earned in India. The record indicates that Sawheny spent
the vast majority of his time in India while working in his dual capacity
for PSCL and POC. Regardless of which company Sawheny was working for, he
was obligated to pay Indian income tax for work done while in India.
Sawheny knew that he was responsible, directly or indirectly, for the
payment of all income taxes. Once the Indian tax authorities
investigated Sawheny, he fled the country and has not opposed the tax
assessment or provided the documentary evidence requested.
Even if Sawheny demonstrated that Pioneer improperly interfered with
a contractual relationship with PSCL, he nevertheless failed to prove that
such interference caused him to lose his job with PSCL. Causation is both
a factor to consider in analyzing whether Pioneer's actions were improper,
see Restatement § 767(f), and one of the elements of Sawheny's tortious
interference with employment contract claim, see Westway Trading Corp., 314
N.W.2d at 402-03. In fact, the record indicates that Sawheny's visa had
already expired on October 3, 1988, approximately two months before he left
India. Moreover, Sawheny may have left India for health reasons. Although
Pioneer provided the tax information to the Indian authorities, the record
indicates that the investigation into Sawheny's tax liability in India
began before any documents were submitted by Pioneer. Sawheny has not
demonstrated that the assessment of those taxes in India was incorrect; nor
has he challenged the imposition of those taxes in India. Therefore,
Sawheny failed to prove that any improper interference by Pioneer caused
him to abandon his contract with
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PSCL.8 Accordingly, we conclude that Sawheny failed to prove that Pioneer
improperly interfered with his employment relationship with PSCL and failed
to demonstrate that any action by Pioneer caused him to lose his job with
PSCL.
B. Defamation Claim
Sawheny next contends that several Pioneer employees wrote defamatory
letters and sent them to Indian officials or other individuals in the
agricultural seed business. On appeal, Sawheny focuses on a letter, dated
June 1, 1988, written by Bhardwaj on POC letterhead, stating that Sawheny
had been dismissed by Pioneer because Sawheny was dishonest and disloyal.9
Sawheny asserts that this letter was mailed to the Indian Secretary of
Agriculture. Moreover, according to Sawheny, Mishra, also an employee of
Pioneer at the time, sent copies of Bhardwaj's letter to several
individuals associated with the seed business in India and England. The
district court concluded that although the statements in the Bhardwaj
letter were actionable per se because they attacked Sawheny's integrity,
Pioneer satisfied its burden of proving that it had a qualified privilege
to make these statements and they were substantially true. We agree.
8
Sawheny's reliance on Sehgal's testimony that Sawheny would
still be President of PSCL if it were not for his tax problems in
India misses the mark because Sawheny failed to demonstrate that he
would have no tax problems in India if it were not for the alleged
improper actions of Pioneer or that his visa problem would have
been resolved.
9
Sawheny has apparently abandoned his argument that Pioneer
libeled him by publishing that he had been terminated for cause in
the Pioneer publication, Insider. He also has seemingly abandoned
his contention that Pioneer libeled him when Porter and Chicoine
sent letters to Indian tax authorities in which they stated that
Sawheny's POC salary was for work performed in India. To the
extent he has not abandoned these arguments, we nevertheless find
them to be without merit.
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Under Iowa law, libel is the "`malicious publication, expressed
either in printing or in writing, or by signs and pictures, tending to
injure the reputation of another person or to expose [the person] to public
hatred, contempt, or ridicule or to injure [the person] in the maintenance
of [the person's] business.'" Vinson v. Linn-Mar Community Sch. Dist., 360
N.W.2d 108, 115 (Iowa 1984) (quoting Plendl v. Beuttler, 111 N.W.2d 669,
670-71 (Iowa 1961)). Attacking the integrity and moral character of a
party constitutes libel per se. Id. at 116. Iowa law provides for an
affirmative defense of qualified privilege, which applies when the
statements are made on an appropriate occasion in good faith on a subject
in which both the party making the allegedly libelous statement and the
party receiving that statement have a shared interest, right, or duty. Id.
We agree with the district court that the Bhardwaj letter, as well as other
letters by Porter and Chicoine to Indian tax authorities, were matters of
legitimate concern for Pioneer's business interests and of legitimate
concern to the Indian government. Therefore, Pioneer adequately
established a defense of qualified privilege.
The affirmative defense of qualified privilege only protects
statements made without actual malice, which is separate and distinct from
the type of malice that is implied in a libel per se case. See id. at 116-
17 (stating that libel per se presumes "implied malice" or "malice in law"
but to defeat a qualified privilege defense the plaintiff must nevertheless
prove actual malice, which requires proof that the statement was made with
ill-will or wrongful motive). Although the Bhardwaj letter does state that
Sawheny was dishonest and disloyal--assertions which Sawheny asserts were
disputed during trial--when the letter is read in its entirety, the reader
is left with the impression that the letter was written as part of the
ongoing battle between Sehgal's faction, which included Sawheny, and
Pioneer over obtaining a larger market-share in India. Thus, we agree with
the district court that
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Sawheny failed to prove that the persons who wrote and published the
letters did so with actual malice.10
In fact, the record indicates that Bhardwaj's statement was his
characterization of what had transpired and was nevertheless substantially
true. The Supreme Court of Iowa has held "that if an allegedly defamatory
statement is substantially true, it provides an absolute defense to an
action for defamation." Hovey v. Iowa State Daily Publication Bd., Inc.,
372 N.W.2d 253, 256 (Iowa 1985). In a letter dated April 15, 1988, Urban
notified Sawheny that his employment with Pioneer and any of its
subsidiaries was terminated for several reasons including:
your insubordination in failing to comply with direct orders
communicated to you to immediately contact [me], attendance and
participation in a meeting called and directed by Surinder
Sehgal at the offices of [PSCL] without having obtained
requisite consent to attend and instructions from your
supervisor, interference with the affairs of [PSCL], and
insubordination in contacting and communicating with Dr. Sehgal
in direct violation of instructions of your supervisor.
Joint App. at 4905. Bhardwaj's deposition in Sehgal's case, which was
received into evidence in the present case, demonstrates that Bhardwaj
thought Sawheny had acted dishonestly and disloyally when he asked for time
off to visit India before beginning his new full-time job with POC and went
to the PSCL board meeting called by Sehgal. Joint App. at 1328-29. The
record supports Pioneer's
10
Sawheny's counsel asserted at oral argument that all of
Sawheny's claims are built upon the premise that Pioneer acted
improperly when it deducted all of the salary paid by POC to
Sawheny as a necessary and reasonable business expense under U.S.
income tax laws while at the same time informing the Indian tax
authorities that Sawheny was paid by POC for PSCL work in India.
As discussed above, he has failed to establish that Pioneer acted
improperly. Therefore, just as Sawheny failed to prove that
Pioneer acted improperly under his tortious interference with
employment contract claim, he also failed to prove that Pioneer's
conduct constituted actual malice in his defamation claim.
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position that Sawheny remained in constant contact with Sehgal, in direct
violation of his commitment to Urban. Because the information provided to
the Indian Secretary of Agriculture was substantially true, it provides
Pioneer with an absolute defense against Sawheny's libel claim. Hovey, 372
N.W.2d at 256.
C. Sawheny's Other Claims
Sawheny also challenges the district court's order denying his motion
to modify its findings of fact, make additional findings of fact, and amend
its final judgment accordingly. See Fed. R. Civ. P. 52(b). We agree with
the district court that Sawheny's Rule 52(b) motion was meritless. Lastly,
we have also reviewed Sawheny's RICO argument and find it to be without
merit.
III. CONCLUSION
Sawheny essentially urges us to ignore or reject the district court's
findings of fact. Sawheny has failed, however, to meet his substantial
burden in demonstrating that the district court's findings were clearly
erroneous. Accordingly we affirm the district court's orders and overrule
any pending motions.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
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