Noonan v. Staples

Citation: Noonan v. Staples, Inc., 2009 WL 350815 (1st Cir. Feb. 13, 2009).

Factual Background
Staples’ investigation team determined that their employee, Noonan, was in violation of the company’s travel expense policy, because he regularly submitting expenses admittedly different than the actual amount spent. In response to this investigation, Staples fired Noonan and denied his severance benefits and refused to allow him to exercise his stock options. An email was also sent by a Staples executive to about 1,500 employees regarding Noonan’s termination for violating company policy.

Trial Court Proceedings
Noonan filed suit in Massachusetts state court for libel and two counts of breach and Staples removed to federal court. The U.S. District Court for the District of Massachusetts granted Staples’ motion for summary judgment.

Libel Claim
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.

A defendant may assert the statement’s truth as an absolute defense to a libel claim since a statement must also be false to give rise to a cause of action. However, there exists an exception to the defense where a plaintiff can show that the defendant acted with “actual malice;” the standard for making this showing is the focus of this court’s decision. The district court held, and the Court of Appeals agreed, that the evidence clearly established that Noonan violated the company’s travel and expense policy and that the e-mail regarding his termination was true leaving no triable issue of fact on the question of truth. Noonan did not dispute this finding but instead offered an argument that the court must examine the statement given the totality of the circumstances and surrounding context. He proposed that statements not false on their face may taken on that character if viewed contextually and that a jury could reasonably find that the imputed statement of the email was that he had committed a crime, which was false. The court quickly dismissed this argument as an improper application of case law dealing with determinations of whether a given statement is defamatory, not whether it is false, and stated that:

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.

Noonan then attempted to show that the Staples executive had published the e-mail with “actual malice” to allow his claim to proceed even though the court held the statements to be true. While the relevant Massachusetts statute does not define the term Noonan argued that “actual malice” “refers to actual malevolent intent or ill will.” While initially unsuccessful the court accepted this definition on appeal. The court acknowledged that the term “actual malice” has taken on specialized meaning in defamation cases involving public figures (specifically knowledge that a statement was false or made with reckless disregard for truth or falsity) but that this definition is different than the “common-law malice” or “ill will” sometimes required under state law. The use of an “ill will” definition was more appropriate in this case because the statute deals with defenses under traditional tort law rather than public figures and because application of the public figure definition “would produce the odd result that there would only be liability for true statements where the speaker acted with knowledge or recklessness as to the statement’s falsity.” The court also noted that unlike cases dealing with public figures, Noonan’s case did not relate to a matter of public concern. The application of “actual malice” as “ill will” allows the court to find malice so as to defeat a defense of truth where a plaintiff makes statements with intent to injure the defendant. In the present case the court concluded that a jury could reasonably conclude the Staples executive had this intent because (1) in his twelve years with the company he had never referred to a fired employee by name in an e-mail, leading to a conclusion that Noonan was being “singled out. . . in order to humiliate him;” (2) the executive did not send out such an e-mail regarding an employee that was discovered to have engaged in similar conduct to Noonan; and (3) the e-mail was sent to a list of 1,500 employees such that a jury could conclude that the “excessive publication” evidenced the executive’s intent towards Noonan.

Breach of Stock Option Agreement
Under the agreement between the parties Staples was entitled to terminate Noonan’s option to purchase stock if Staples determined he had been terminated “for cause,” Noonan argued that allowing Staples to make that determination was a violation of public policy and that Staples should not be allowed to be the judge in its own case. Analogizing Staples’ decision to an agency decision, the court determined that it is reviewable only for whether it was “arbitrary, fraudulent, or made in bad faith.” Finding that the investigation was thorough and reasonable there existed no triable issue of material fact with respect to Staples’ decision and Noonan was therefore ineligible to purchase stock under the agreement.

Breach of Severance Agreement
The severance agreement provided that Noonan would not receive his benefits if he was terminated for cause. “Cause” in the agreement included violations of the Code of Ethics, which contained a provision regarding “keep[ing] accurate records and reports.” By his own admission Noonan violated at least this provision and was therefore fired for cause and not entitled to receive his severance.

The grant of summary judgment in favor of Staples was affirmed in part and reversed in part, and remanded for a determination of the defamation issue.