Foster v. GE CV-96-151-SD 09/02/98 UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW HAMPSHIRE

Walter H. Foster III; Foster Steam Turbine Consultants, Ltd.

_____ v. Civil No. 96-151-SD

General Electric Co.; John Welch; Robert Nardelli

O R D E R

Foster Steam Turbine Consultants, Ltd. (FSTC) and Walter H.

Foster III allege that defendants General Electric Company (GE)

and its corporate executives interfered with their business

relationships. Plaintiffs filed claims for defamation; civil

conspiracy; tortious interference with business relationships;

interference with the right to work; negligence; respondeat

superior; negligent hiring, training and supervision; and breach

of contract. Presently before the court are four motions:

defendants' motion for summary judgment; a motion for summary

judgment filed by defendants Nardelli and Welch; defendants'

motion to strike the affidavit of Walter Foster; and plaintiffs'

assented-to motion to exceed page limit. Objections have been filed to the first three motions; the motion to exceed page limit

is herewith granted.

Background

Walter H. Foster (Foster) was employed at GE for a period

in excess of twenty-five years. On May 1, 1995, Foster was

permanently laid off as part of GE's reduction in its workforce.

Under GE policy, laid-off employees had to submit for inspection

and approval any property or personal effects they wanted to

remove from the plant. Before leaving, Foster submitted several

boxes of papers to a GE inspector. He was denied approval to

remove some of the papers, which were seized by the inspector.

Shortly after Foster left GE, he began his own business,

Foster Steam Turbine Consultants, and began representing GE

customers as an inspector, consultant, and auditor. Foster was

permitted unescorted access to several GE plants to conduct his

business as an inspecting agent for his customers. In the fall

1995, GE officials decided to terminate Foster's access to GE

facilities, citing as the reason his attempted removal of

proprietary information when he was laid off.

2 Discussion

1. Standard for Suramary Judgment

Summary judgment is appropriate when there is no genuine

issue of material fact and the moving party is entitled to

judgment as a matter of law. Rule 56 (c), Fed. R. Civ. P.;

Lehman v. Prudential Ins. Co. of A m . ,

, 327 (1st Cir.

1996). The court's function at this stage is not to "'weigh the

evidence and determine the truth of the matter but to determine

whether there is a genuine issue for trial.'" Stone & Michaud

Ins, v. Bank Five for Savinas,

(D.N.H.

1992) (quoting Anderson v. Liberty Lobby, Inc.,

(1986)).

The moving party has the burden of establishing the lack of

a genuine issue of material fact. Finn v. Consolidated Rail

Corp.,

(1st Cir. 1986). The court views the

record in the light most favorable to the nonmoving party,

granting all inferences in favor of the nonmoving party. Caputo

v. Boston Edison Co.,

(1st Cir. 1991). To

survive summary judgment, the nonmoving party must make a

"showing sufficient to establish the existence of [each] element

essential to that party's case," Celotex Corp. v. Catrett,

(1986), and cannot merely rely on allegations or

denials within the pleadings. LeBlanc v. Great Am. Ins. Co., 6

(1st Cir. 1993), cert, denied,

(1994);

. When reviewing a

summary judgment motion, [t]he question is not whether there is

literally no evidence favoring the non-movant, but whether there

is any upon which a jury could properly proceed to find a verdict

in that party's favor.'"

(quoting

De Arteaga v. Pall Ultrafine Filtration Corp.,

(1st Cir. 1988)).

2. Defendants' Motion for Summary Judgment

a. Defamation

GE seeks summary judgment on Foster's defamation claim. To

establish defamation, a plaintiff must show that the "defendant

failed to exercise reasonable care in publishing, without a valid

privilege, a false and defamatory statement of fact about the

plaintiff to a third party." Independent Mechanical Contractors,

Inc. v . Gordon T . Burke & Sons, Inc.,

,

(1993) (citing R e s t a t e m e n t (S e c o n d ) of T orts § 558 (1977); 8

R ichard B. M c N a m a r a , N e w H a m p s h i r e Pr ac ti c e, Personal In j u r y , T ort and

In su r a n c e Practice § 2 (1988) ) . A statement is defamatory if "it

tends so to harm the reputation of another as to lower him in the

estimation of the community or to deter third persons from

associating or dealing with him." Restatement, supra, § 559. The

4 court must "consider all the words used, not merely a particular

phrase or sentence." Information Control Corp. v. Genesis One

Computer Corp.,

(1st Cir. 1980).

The first defamatory statement alleged by Foster was made by

Donald Leger, a product director at GE. Leger wrote one of

plaintiff's clients, Phil Bader of the Dresser Rand Corporation,

in essence, that GE prohibited Foster from entering GE

facilities. Leger wrote, "Your customer has engaged an agency,

Foster Steam Turbine Consultants, Ltd., . . . with whom we will

no longer do business. And, as a result, their privilege to

enter into or work at our facilities has been revoked."

Plaintiffs' Exhibits in Support of Their Opposition to

Defendants' Motion for Summary Judgment, Exhibit 29. Later,

Leger explained further to Bader, "please be assured our reasons

deal with his prior employment with us and not his performance as

an auditor."

Exhibit 30.

Similarly, Charles Beck, a GE Power Systems employee, made

the following statement to ICI Purchasing and Supply Company, a

potential client of plaintiff. "In principal Seller has no

objection to inspection of progress by Buyer or Buyer's

designated agent, however Mr. W. Foster is not acceptable to

witness any inspections or witness points in G E 's facilities."

Exhibit 27, at 2. To explain the reasons for excluding

5 Foster from GE facilities, Leger wrote, "the decision to ban Walt

Foster or any of his associates from GE facilities was primarily

due to events prior to his involvement on the Pertamina project."

Exhibit 36.

A reasonable interpretation of these statements is that

Foster committed wrongful acts against GE that justified banning

him from GE facilities. Such allegations of wrongdoing would

tend to harm Foster's reputation, and, if untrue, would

constitute defamation.

The next defamatory statement alleged by Foster was made in

February 1996 by Grace Matthews, in-house counsel for GE, who

spoke with Wayne Webber, an attorney with VICO, Foster's

customer, concerning the reasons for G E 's lock-out of Foster.

Webber asked Matthews if Foster had done anything "illegal." In

response, Matthews read to Webber the following sentence from a

letter previously written by Foster to GE personnel: "I then

boxed personal items and items that I considered non-proprietary

for removal from the plant."

Exhibit 36, at 68 (Matthews

Deposition). It is a reasonable inference that Matthews was

implying, without directly asserting, that Foster had wrongfully

taken proprietary information from GE.

First, GE argues that Matthews merely repeated Foster's own

words to Webber, which cannot constitute defamation. However,

6 G E 's position is incorrect. It is axiomatic that the meaning of

words varies with context. Foster's words carried a different

meaning when repeated by Matthews in the context of a

conversation with Webber. Second, GE argues that Foster had

already told VICO personnel that GE locked him out because of a

dispute over the document removal incident. Without authority,

GE asserts that " [a]s a matter of law, it cannot constitute

defamation for a party to convey information to a third party

that has already been conveyed to that third party by the

plaintiff himself." Defendants' Memorandum in Support of Motion

for Summary Judgment at 21. Once again, G E 's position is

incorrect. If a plaintiff tells a third party that the defendant

has made derogatory allegations against plaintiff, it does not

give the defendant license to make those derogatory allegations

directly to the third party.

The next defamatory statement alleged by plaintiff was made

by George Gunderson, a GE employee, who allegedly told some of

Foster's clients that Foster had stolen GE documents. However,

plaintiff has submitted no evidence that Gunderson made such

statements. Plaintiff's memorandum claims that Foster's students

in Indonesia told him that Gunderson called Foster a thief. The

memo erroneously cites Foster's affidavit, which does not allege

such a conversation between Foster and his Indonesian students.

7 Furthermore, there is absolutely no evidence of when or where

Gunderson allegedly told the Indonesian students that Foster was

a thief. There is a "well-established rule that defamation

claims must clearly identify the time and place of the alleged

defamatory statements." Mesiti v. Microdot,

(D.N.H. 1990). Defendant's motion for summary judgment must be

granted as to the alleged defamatory statements by Gunderson to

the Indonesian students.

The next defamatory statements alleged by plaintiff are

certain intra-corporate statements accusing Foster of stealing

proprietary information. Defendants claim these statements were

privileged under Chagnon v. Union Leader Corp.,

,

(1961), cert, denied.

(1962),

which provides, "A conditional privilege . . . is established if

the facts, although untrue, were published on a lawful occasion,

in good faith, for a justifiable purpose, and with a belief,

founded on reasonable grounds of its truth." Defendants claim

the intra-corporate statements were made in good faith to protect

G E 's interest in proprietary information, while plaintiff claims

the statements were made in bad faith solely to tarnish his

reputation.

This court has previously ruled that "the determination of

the existence of . . . a conditional privilege must be made by

8 the trier of fact." Chamberlain v. 101 Realty Inc.,

(D.N.H. 1985) (citing Pickering v. Frink,

,

(1983)). Thus it is a jury question

whether GE employees published the allegedly defamatory

statements in good faith.

The next defamatory statement alleged by plaintiff was made

in February 1996 at a meeting in Jakarta, Indonesia, when

Gunderson, a GE employee, publicly called plaintiff a "liar" and

"incompetent." Defendant argues that these statements merely

express opinion, and are protected under Gertz v. Robert Welch,

Inc.,

(1974) ("Under the First Amendment there

is no such thing as a false idea."). However, the Court has

rejected an "artificial dichotomy between 'opinion' and fact,"

Milkovich v. Lorain Journal Co.,

(1990), because

expressions of "opinion" may nonetheless imply an underlying

objective evaluation that is "susceptible of being proved true or

false."

. Summary judgment on the grounds that the

statement constitutes protected opinion is only appropriate if no

reasonable person could conclude that the communication implies a

defamatory statement of fact. See White v. Fraternal Order of

Police,

(D.C. Cir. 1990).

A reasonable person could conclude that Gunderson's opinion

of Foster's competency and probity nonetheless implies an

9 underlying factual basis for the opinion that Foster performed

incompetently and that he lied. Thus it is a jury question

whether the statements constitute expressions of opinion.

Defendants claim that Foster admitted in deposition that he

never heard Gunderson call him a liar. The assertion that the

word "liar" was used comes from Foster's wife. See Plaintiffs'

Opposition, supra, Exhibit 37, Deposition of JoAnn Quinn-Foster,

at 58. Defendants claim that plaintiff cannot create an issue of

material fact by contradicting himself. See Colantuoni v. Alfred

Calgagni & Sons, Inc.,

(1st Cir. 1994) ("When an

interested witness has given clear answers to unambiguous

questions, he cannot create a conflict and resist summary

judgment with an affidavit that is clearly contradictory, but

does not give a satisfactory explanation of why the testimony is

changed."). However, there is obviously no contradiction here.

Simply because Foster did not himself hear Gunderson call him a

liar does not mean that Foster's wife did not hear that.

b. Civil Conspiracy

Plaintiff alleges that defendants conspired to put Foster

out of business by defaming him and interfering with his

contractual relations. The elements of civil conspiracy are:

(1) two or more persons (including corporations); (2) an object to be accomplished (i.e., an 10 unlawful object to be achieved by lawful or unlawful means or a lawful object to be achieved by unlawful means); (3) an agreement on the object or course of action; (4) one or more unlawful overt acts; and (5) damages as the proximate result thereof.

Edwards v. Baker,

,

(1987).

Foster has provided absolutely no evidence of an agreement or

concerted action to defame Foster or interfere with his business

relations. Thus defendants' motion for summary judgment on the

civil conspiracy claim is granted.

c. Tortious Interference With Business Relationships

Plaintiffs contend that defendants wrongfully interfered

with contracts between plaintiffs and three companies, ICJV, ICI,

and PT Badak. The elements of a prima facie case of tortious

interference with business relationships are: "(1) a business

relationship or contemplated contract of economic benefit; (2)

the defendant's knowledge of such relationship; (3) the

defendant's interference with it through improper motive or

means; and (4) the plaintiff's loss of advantage directly

resulting from the defendant's conduct." American Private Line

Services v. Eastern Microwave,

(1st Cir. 1992)

(footnote omitted).

GE claims that the interference with Foster's contractual

relations was privileged because the means of interference was 11 GE's assertion of its right to exclude Foster from its property.

GE claims that its property rights are absolute. Let it be

settled once and for all, ownership rights never have been, are

not now, and never will be absolute. It would be impossible,

except for the most static uses of property. With dynamic

property uses, irreconcilable conflict between property owners is

unavoidable. Owner A wants to operate a smoke-billowing factory,

and Owner B wants his quiet family home to be smoke free. Both

of their property rights cannot be absolute, and one of them must

be subject to legal limitations. Defendant's correctly point out

that "[t]he power to exclude has traditionally been considered

one of the most treasured strands in an owner's bundle of

property rights." Loretto v. Teleprompter Manhattan CATV Corp.,

(1982). However, even the right to exclude

must be subject to limitations. As one court has noted, "The

privilege of a property owner to arbitrarily exclude others . . .

may be qualified when its exercise is seen to interfere with

other interests the protection of which is deemed to be

paramount." Posa v. Miller Brewing Co.,

(E.D.N.Y. 1986). For instance, under the privilege of necessity,

a person may trespass upon the property of another to save

himself or his own property, or even a third person or his

property from a harm greater than that caused by the trespass.

12 Prosser and K eeton on T orts 147 (5th ed. 1984) . Furthermore,

"society's interest in a free and competitive marketplace,"

, may trump an owner's right to

exclude. As an extension of this principle, protecting

contractual relations may be deemed paramount to the right to

exclude. The R e s t a t e m e n t (S e c o n d ) of T orts § 767 (1977) lists the

following factors as relevant to whether interference with

contracts is wrongful:

(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.

The nature of the actor's conduct, even the admittedly

important prerogative of excluding from property, is simply a

factor, but is not dispositive. In sum, it is always a balance

of interests, and it is entirely unhelpful to speak in terms of

absolute privileges.

One of the important factors that must be balanced is the

motive that animated GE's assertion of its right to exclude. GE

claims it barred Foster from GE facilities because Foster

attempted to remove proprietary information. Memorandum of Law 13 in Support of Motion of Defendants John Welch and Robert Nardelli

for Summary Judgment, Exhibit G. Foster claims GE barred him for

more sinister motives; namely, to interfere with his business.

Plaintiffs' Objection to Motion of Welch and Nardelli, Affidavit

of Walter H. Foster 5 4. Since GE's state of mind is contested,

there remains a genuine issue of material fact to be determined

by a jury. Flesner v. Technical Communications Corporation,

,

(1991); Pederson v. Time,

,

(1989) (generally

accepted rule disfavors granting summary judgment where party's

state of mind constitutes essential element of cause of action);

Mitchell v. Aldrich,

,

(1960)

("Whether an occasion exists which justifies the invasion of

another's contract or business relationships by the defendant is

generally a question for the jury."). Defendants' motion for

summary judgment on the tortious interference claim is therefore

denied.

d. Intentional Interference with the Right To Work

Plaintiff's compliant alleges intentional interference with

the right to work, citing the century-old case Smyth v. Ames,

, modified on other grounds,

(1898).

However, Ames dealt with citizens' property rights against

14 interfering state regulation. That case has no application to

commercial disputes between private actors, and Foster's contrary

assertion is entirely unreasonable. Thus defendants' motion for

summary judgment on the claim of intentional interference with

the right to work is granted.

e. Negligence

GE seeks summary judgment on Foster's claim for negligence

and negligent supervision. Foster's memorandum contains only a

cursory and cryptic defense of the negligence claims. Plaintiffs'

Memorandum in Opposition at 45, which fails to point to even one

shred of evidence. The court is left without any clue as to the

plaintiff's theory of negligence. To the extent Foster expects

this court to do his lawyering for him in constructing his

negligence claims, he is incorrect. Thus summary judgment is

granted as to Foster's negligence and negligent supervision

claims.

f. Respondeat Superior

GE moves for summary judgment on the respondeat superior

claims on the ground that GE is entitled to summary judgment on

the underlying torts for which GE is allegedly vicariously

liable. GE does not dispute that the employee tortfeasors were

15 acting within the scope of their employment. As the court has

not granted summary judgment on the underlying torts, neither

will the court grant summary judgment on the respondeat superior

claim.

q. Breach of Contract

GE moves for summary judgment on Foster's claim for breach

of contract. Foster alleges that he is a third-party beneficiary

of contracts between GE and GE's customers, under which the

customers had the right to inspect GE's facilities. The

customers hired Foster to conduct the inspection, and by denying

Foster access to GE facilities, GE has breached the contract with

its customers. To qualify as a third-party beneficiary, the

contract must give the promisor reason to know that the promisee

has entered into the agreement, at least in part, in order to

benefit a third party. Arlington Trust Co. v. Estate of Wood,

,

(1983). Foster has

pointed to no evidence indicating that GE knew its customers

entered into the contracts, in part, to benefit Foster. Indeed,

none of Foster's memoranda even address the breach of contract

issue. Parties must assert only causes of action founded upon

good faith. Once a good faith basis for a claim disappears, it

is incumbent upon the party affirmatively to withdraw the claim.

16 Defendants' motion for summary judgment is granted for Foster's

breach of contract claim.

9. Motion of Nardelli and Welch for Summary Judgment

Nardelli and Welch move for summary judgment on grounds of

(1) lack of personal jurisdiction in New Hampshire and (2) lack

of evidence of their involvement in the tortious conduct alleged

by Foster. Foster argues that ruling on this summary judgment

motion would be premature because discovery is not yet complete.

Foster served interrogatories on the defendants, which have not

been answered because defendants filed motions for protective

orders. Those protective orders have been denied, but it is

unclear to the court whether the interrogatories have been

answered. The court will deny Nardelli and Welch's motion for

summary judgment under Rule 56(f), which is appropriate when the

requesting party "'(1) articulate[s] a plausible basis for the

belief that discoverable materials exist which would raise a

[genuine issue of material fact] and (2) "demonstrates good cause

for failure to have conducted the discovery earlier."'" Fennell

v. First Step Designs,

(1st Cir. 1996) (quoting

Price v. General Motors Corp.,

(1st Cir. 1991)

(quoting Paterson-Leitch Co. v. Massachusetts Mun. Wholesale

Elec. Co.,

(1st Cir. 1988))). Foster has meet

17 both requirements. When all relevant discovery is completed,

defendants may renew their motion for summary judgment.

10. Defendants' Motion to Strike Supplemental Affidavit of

Walter H. Foster III

Defendants ask the court to strike paragraphs 4 and 5 of

Foster's supplemental affidavit (filed May 22, 1998) because they

contradict Foster's deposition testimony. However, Foster did

testify in deposition that Gunderson called him a "liar". Foster

Deposition at 368 (attached to plaintiff's objection to motion to

strike). Therefore, Foster's affidavit stating that Gunderson

called him a liar is not inconsistent with Foster's deposition.

Defendants also ask the court to strike paragraphs 7, 8, 9,

and 10, which relate to Gunderson's allegedly defamatory

statements to others. As the court has granted summary judgment

on the defamation claim as it pertains to those statements, that

portion of the motion to strike is moot.

____________________________ Conclusion

For the abovementioned reasons, the motion for summary

judgment filed by all defendants (document 66) is granted as to

the defamation claim (Count 1) regarding the statements from

Gunderson to the Indonesian students, the civil conspiracy claim

18 (Count 2), the claims of intentional interference with the right

to work (Count 4), negligence (Count 5), negligent hiring,

training, and supervision (Count 7), and breach of contract

(Count 8). Summary judgment is denied on the rest of the

defamation claims in Count 1, on the claim of tortious

interference with contractual relations (Count 3), and on the

respondeat superior claim (Count 7).

The motion for summary judgment filed by defendants Nardelli

and Welch (document 52) is denied.

Defendants' Motion to Strike Supplemental Affidavit of

Walter H. Foster III (document 86) as regards 55 4 and 5 is

denied; as to 55 7-10, the motion is moot.

Plaintiffs' Assented-To Motion to Exceed Page Limit

(document 76) is granted.

SO ORDERED.

Shane Devine, Senior Judge United States District Court

September 2, 1998

cc: Joseph S. Hoppock, Esq. Ellen M. Bach, Esq. James K. Brown, Esq. Steven M. Gordon, Esq.

19