Oct. 25, 2016 – A former Wisconsin health care clinic manager alleging that colleagues defamed him and tortiously interfered with his at-will employment recently lost at the U.S. Court of Appeals for the Seventh Circuit, which applied Wisconsin tort law.
Stephen Wesbrook, Ph.D., was a deputy director of the Marshfield Clinic’s Research Foundation for about six years, but his employment was terminated in 2012.
Wesbrook sued several former colleagues, including the research center’s director, Dr. Edward Belongia, M.D., and Marshfield Clinic CEO Karl Ulrich, M.D. He claimed that Belongia, Ulrich, and other former colleagues tortiously interfered with his employment by disclosing defamatory statements to Marshfield Clinic’s board of directors.
A judge for the U.S. District Court for the Western District of Wisconsin granted summary judgment to the defendants, concluding the statements were substantially true. In Wesbrook v. Ulrich, (Oct. 20, 2016), a three-judge panel for the Seventh Circuit Court of Appeals affirmed, noting the facts did not support a tortious interference claim.
The panel, in an opinion by Judge David Hamilton, noted that under Wisconsin law, “an at-will employee cannot recover from former co-workers and supervisors for tortious interference on the basis of their substantially truthful statements made within the enterprise, no matter the motives underlying those statements.”
The clinic’s board had voted 13-2 to support Ulrich’s decision to fire Wesbrook after reviewing documents and other information that related to Wesbrook’s employment.
Ulrich had supplied the board with information that Wesbrook was a coercive manager of employees, many of whom complained about Wesbrook or quit their jobs.
Among the information was a letter from Belongia, who wrote that Wesbrook used “coercion and intimidation in his interactions with scientists and administrators.”
One research administrator had told Belongia that Wesbrook was “key factor” in her decision to leave the clinic. Others complained in confidence to human resources.
Ulrich and the board tried to address Wesbrook’s management style through a performance improvement plan after a human resources investigation revealed that several former employees who quit found Wesbrook to be hostile and confrontational.
Some former scientists used words like “toxic,” “vindictive,” “militaristic,” “retaliatory,” “abusive,” ”negative,” and “threatening” to describe Wesbrook as a manager.
Wesbrook responded to the proposed performance improvement plan with a memorandum that Ulrich and the human resources manager found to be inappropriate. Ulrich placed Wesbrook on administrative leave pending the board’s review.
Ulrich then drafted a nine-page “chronology” that outlined Wesbrook’s troubled history, including the letter that Belongia had written. The board voted for termination.
The panel noted that to be successful on a claim of tortious interference, the plaintiff must prove that the defendant intentionally interfered with a contractual relationship, causing damages, and that the defendant was not justified or privileged to interfere.
The fact-sensitive inquiry on privilege requires courts to examine whether interference was driven by improper motives or self-interest, the panel noted, among other factors. Wesbrook argued that statements provided to the board were not privileged.
But the panel noted the problem with this argument.
“Wisconsin law recognizes an important exception to the ordinary multifactor inquiry about privilege,” wrote Judge Hamilton. “If a claim for tortious interference is based on statements that are true, the claim must fail as a matter of law.”
Substantial Truth is Enough
The panel also noted “substantial truth,” despite gray areas on the literal truth of a statement, can still be privileged and used as a defense to tortious interference.
“We are aware of no precedential Wisconsin decisions that have explicitly extended substantial truthfulness as a defense to tortious interference,” Hamilton wrote.
“We see no principled reason, though, why the defense would not apply with equal force in this context. In the absence of contrary authority, we predict that the Wisconsin Supreme Court would apply it.”
The panel ruled that the statements at issue were true or at least substantially true. For one, Wesbrook admitted that he may have intimidated employees but argued that “intimidation” is not the same as “coercion,” which requires an overt act.
“Tort law does not demand such artificial precision in ordinary use of language,” wrote Hamilton. “Belongia’s statement that Wesbrook used ‘coercion and intimidation’ was at least substantially true, so the statement was privileged as a matter of law.”
Wesbrook also argued that Belongia’s letter said complaints were “filed” against Wesbrook but in reality, employees had only “complained” to human resources.
“Wesbrook offers no authority, linguistic or otherwise, suggesting that tort liability should depend on his proposed distinction between ‘complaining’ to human resources and ‘filing’ a complaint with human resources,” Judge Hamilton explained.
The panel also rejected Wesbrook’s claim that Ulrich falsely alleged that Wesbrook did not comply with a performance improvement plan. Ulrich never asserted that Wesbrook failed to comply, only that Wesbrook’s response to the plan triggered the termination.
Wesbrook also challenged a letter that Ulrich included in his memo to the board: a letter from a prominent clinic supporter, former Congressman and Defense Secretary Melvin Laird, to Wesbrook’s direct supervisor. It noted problems with Wesbrook.
Wesbrook said Ulrich should not have included that letter without verifying the contents. The panel noted that Laird confirmed the letter as factually true in a deposition.
“Wesbrook has failed to offer any evidence that any material statement in the Laird letter is untrue,” Hamilton wrote. “The letter is therefore privileged as a matter of law.”
Preston Not Overruled
Finally, the panel declined to overrule a prior case – Preston v. Wisconsin Health Fund, 397 F.3d 539 (7th Cir. 2005) – which also addressed tortious interference in the employment context. Wesbrook said the Preston decision “improperly modified the elements of a tortious interference claim under Wisconsin law.” But the panel disagreed.
The panel noted that Preston was decided 12 years ago, and the “Wisconsin judiciary has given no indication that it disagrees with Preston.”
“The state courts are quite capable of signaling when they disagree with a federal court’s interpretation of state law,” Judge Hamilton explained.
In addition, the panel noted that Preston was correctly decided.
“If Preston had allowed the plaintiff’s tortious interference claims to proceed to trial, it would have opened a rather broad avenue under tort law to bypass well-established limits on contract remedies for at-will employees,” Judge Hamilton wrote.