may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
IN COURT OF APPEALS
Hennepin County District Court
File No. EM0012307
Patrick M. Connor, Connor, Satre & Schaff, LLP, 925 Lumber Exchange Building, 10 South Fifth Street, Minneapolis, MN 55402 (for appellant)
Tracy J. Van Steenburgh, Tracey L. Galinson, Halleland Lewis Nilan Sipkins & Johnson, P.A., Pillsbury Center South, Suite 600, 220 South Sixth Street, Minneapolis, MN 55402-4501 (for respondent)
Considered and decided by Schumacher, Presiding Judge, Toussaint, Chief Judge, and Peterson, Judge.
U N P U B L I S H E D O P I N I O N
After being fired from his job for insubordination, appellant sued respondent, his former supervisor, for tortious interference with a contract and defamation. The district court granted summary judgment to respondent, determining that (1) respondent acted solely within the scope of her duties and there was no evidence of malice and (2) the allegedly defamatory statement was privileged. Appellant contends there are disputed questions of fact. We affirm.
Appellant David J. Fahrmann held various sales positions with Sprint from 1990 until he was terminated for insubordination in July 1998. In 1996, Fahrmann was promoted from major sales account manager to investment national account manager (INAM). Major and national are sales categories at Sprint. Major refers to accounts with companies generating several hundred thousand dollars per year in long distance and data services sales. National refers to accounts with companies generating several hundred thousand to millions of dollars per month in long distance and data services sales. National is the highest level of sales category at Sprint and includes companies like 3M and Target.
There were three types of national account manager (NAM) positions at Sprint: INAMs, high-growth NAMs, and maintenance NAMs. An INAM was assigned prospective accounts to solicit business from, paid a base salary, and eligible for quarterly bonuses if management objectives were met. A high-growth NAM referred to a salesperson who had recently made or was about to close a sale and was paid a salary plus commissions. Maintenance NAMs were expected to increase revenue from existing national accounts.
When Fahrmann was promoted to the position of INAM, Sprint assigned him six prospective customers: Deluxe Corporation, Dayton-Hudson Corporation, United Healthcare Corporation, General Mills, Comdisco, and Honeywell. His supervisor advised him that it would take at least two years to secure a contract with a customer. The objective for Fahrmann, as an INAM, was to eventually become a high-growth NAM.
In its Minneapolis office, Sprint employed two INAMs, including Fahrmann, one high-growth NAM, and one maintenance NAM. The NAMs were supervised by a branch manager, who in turn was supervised by a regional director. Joseph Braden was the branch manager until respondent Marjorie Fredd took over that position in June 1997. The regional director was Tom McGrath, who was based in Denver.
Fahrmann described Braden’s management style as “hands off,” meaning that Braden let NAMs determine their own methods for obtaining business. Fahrmann believed that McGrath forced Braden to leave his branch-manager position because the region was doing poorly and McGrath adhered to a stricter management style, holding employees accountable for meeting management expectations. Fredd’s management style was more demanding than Braden’s.
Fahrmann, who disagreed with Fredd’s management style, testified that she applied stricter requirements to him than to other NAMs. But the NAM he used as an example, Archie Smith, was employed as a high-growth NAM, not an INAM. Fahrmann testified that Fredd questioned him frequently and at length, sometimes for hours, until she found a question that he could not answer. But Fahrmann assumed that Fredd asked similar questions of other NAMs. Fredd criticized Fahrmann’s job performance. Fahrmann characterized Fredd’s criticism as a personal attack and an effort to harass him into leaving his job. But he admitted that the criticism was job related and also testified that he believed that Fredd was being pressured by McGrath to force him into leaving his job. Fahrmann alleges that Fredd called him a liar and accused him of being money hungry and sitting at his desk all day long doing nothing.
Fredd required Fahrmann to develop written action plans and use the Holden format, a fill-in-the-blanks sales format, for making presentations. Fahrmann did not like using the Holden format. He believed it had little value. He missed the initial training program about using the Holden format because he was on vacation. In November 1997, Fredd conducted meetings with the NAMs on using the Holden format. Fahrmann attended one of the meetings but left after ten minutes. He testified that the meeting had started 20 minutes late and that he had to attend an important meeting. On December 3, 1997, Fahrmann failed to use the Holden format in an account-review presentation to McGrath. Fahrmann testified that he had previously received a voice-mail message from McGrath stating that the presentation did not have to be in the Holden format. Fahrmann testified that he confirmed with Fredd that his presentation did not have to be in the Holden format and that it would be a rather brief overview. Shortly after Fahrmann began his presentation, McGrath demanded to know why it was not in the Holden format and left the presentation. Fahrmann believed that Fredd should have defended him to McGrath.
On December 9, 1997, Fredd issued the following written warning to Fahrmann:
Over the past several months we have had numerous conversations regarding how you communicate with me and your associates within the Sprint organization, your attitude about your position, and the actions that you have failed to take to complete your account plans. These conversations were designed to assist you with improving your performance.
Significant performance improvement is still needed. The account plans and review which you prepared and presented on December 3, 1997 did not meet the expectations that I specifically outlined on October 10, 1997, November 6, 1997 and November 18, 1997. Therefore, I am giving you a written warning of the need for you to address these performance issues and to ensure that you understand the seriousness of your behavior.
As we agreed on December 3, 1997, you will prepare revised account plans using the Holden format (including strategy, sales incentive and action plans) for UHC and Deluxe. You will present them to me in our meeting at 1:30 p.m. on December 12, 1997.
From December 16-18, 1997, Fredd, Fahrmann, and McGrath attended a conference in Breckenridge, Colorado. During that time, Fredd and McGrath learned that Fahrmann had told an agent for Deluxe that Fredd “was trying to get rid of [him].” McGrath met with Fahrmann on December 17 and 18 to discuss the comment to the Deluxe agent. McGrath also addressed Fahrmann’s failure to follow instructions to use the Holden format and his approach to accounts. McGrath accused Fahrmann of being insubordinate and told him that he needed to follow instructions and be a team player and that decision-making was not his role. McGrath advised Fahrmann that if he learned of any further incidents of insubordination, it was not “going to be pretty”; Fahrmann needed “to think real hard about modifying his behavior”; and McGrath was comfortable with the idea of Fahrmann quitting or being fired although McGrath did not enjoy firing employees. Fahrmann testified that McGrath and Fredd advised him that he would be written up. Fahrmann also testified that McGrath and Fredd advised him that he “was unprofessional and insubordinate and * * * was going to lose his job.”
The record contains a copy of a “Final Written Warning” dated December 31, 1997, documenting the conversation between McGrath, Fredd, and Fahrmann on December 18, 1997. The warning states, “As we discussed, this is the final written warning. Any insubordinate behavior or failure to meet a deadline may result in immediate termination.”
Although Fahrmann denies receiving a copy of the December 31 written warning, he admits receiving an oral warning in Breckenridge:
Q. So is it fair to say the primary discussion was about your comments to [the Deluxe agent]?
A. No, actually it was a fairly small portion of the extensive talk.
The written, the final written warning, by the way, was never produced, because they realized it was false. At least that’s my guess as to why they never produced it and never gave me a final written warning. However, they still did use it against me as a threat to terminate me at any time.
* * * *
Q. Okay. So if the Deluxe issue is a small portion of your meeting with Mr. McGrath and Ms. Fredd, is there something that comprised the major portion of your discussion?
A. It was kind of a rehash of everything that [Fredd] had been accusing me of over the course of the last six months or so, or I guess it would be three, four months. * * *
In February 1998, Fredd met with Fahrmann to discuss his performance evaluation. The evaluation gave Fahrmann a poor rating for failing to meet management objectives for generating revenue and noted that Fahrmann was deficient for not yet having his account plans in the Holden format. Fahrmann does not dispute that he failed to meet management objectives, but he testified that he believed he deserved credit for potential revenue he stood to generate in 1998. As to his account plans, he testified that he had the majority of them in the Holden format by the end of 1997, but he does not dispute that he was supposed to have all of them in the Holden format by the end of 1997.
Sprint frequently conducted fire drills, which involved handling requests for immediate information from upper-echelon executives. On about July 10, 1998, Jeannine Urick communicated to Fredd a request from Sprint president Michael Franz for immediate information about Deluxe Corporation. Urick explained that Franz wanted the information because he intended to contact a Deluxe executive in an effort to facilitate a sale and that Deluxe had been selected because it was one of Sprint’s top-25 customers. Because Fredd was scheduled to be out of town in Chicago, she directed Fahrmann to get the requested information and provide it to Urick.
Fahrmann provided the information to Urick and also sent a copy of the information directly to Sprint senior vice president David Berry. Linda Conner, who had temporarily replaced McGrath, contacted Fredd and advised her that Berry was furious about receiving the direct communication from Fahrmann. The direct communication violated Sprint’s protocol for passing communications along the chain of command.
Conner was attending the same seminar as Fredd in Chicago. The two of them together telephoned Fahrmann to discuss the inappropriate direct communication to Berry. Conner submitted an affidavit regarding the phone call and the subsequent series of events resulting in Fahrmann’s termination. Conner stated:
6. I was present when Ms. Fredd called Mr. Fahrmann. When told that Mr. Berry was extremely angry about having received the e-mail, Mr. Fahrmann became defensive and accused Ms. Fredd of setting him up and lying to him. He was disrespectful of Ms. Fredd and threatened her if she “wrote him up” for his transgression. He accused Ms. Fredd of having harassed him over the past few months and demanded a face-to-face meeting with someone from Sprint’s human resources department.
7. I was surprised and concerned about Mr. Fahrmann’s irrational behavior and obvious animosity toward Ms. Fredd. I thought contact with Sprint’s human resources group would be a good idea. Thus, after the telephone call, I contacted Shirley Fox, director of human resources. She, Ms. Fredd and I agreed to hold a conference call with Mr. Fahrmann on July 20, 1998 at 4:00 p.m. Ms. Fredd was to inform Mr. Fahrmann of the conference call.
8. In response to Ms. Fredd’s e-mail, Mr. Fahrmann sent an e-mail to Ms. Fredd, with a copy to me, in which he informed Ms. Fredd that he intended on taking Monday, July 20 as a vacation day. Ms. Fredd, Ms. Fox and I discussed Mr. Fahrmann’s e-mail and agreed that the request for a vacation day on July 20 should be denied and the conference call should proceed as scheduled.
9. In the meantime, because of the rude and disrespectful conduct in which Mr. Fahrmann engaged on the telephone on July 15, 1998, I prepared a written warning that I intended to read to Mr. Fahrmann on July 20.
10. Ms. Fredd, Ms. Fox and I dialed in for a conference call at the appointed time on July 20. When Mr. Fahrmann did not join us, Ms. Fredd, Ms. Fox and I agreed to reschedule the conference call for July 22 at 8:30 a.m. Ms. Fredd was instructed to notify Mr. Fahrmann of the date, time and participant code number.
11. On July 22, 1998, Mr. Fahrmann, Ms. Fredd, Ms. Nebeta, another human resources employee (Ms. Fox was traveling and unavailable for the call), and I participated in a conference call at or about 8:30 a.m. Mr. Fahrmann was again rude and disrespectful toward Ms. Fredd. I read the warning I had prepared previously to Mr. Fahrmann.
12. Given Mr. Fahrmann’s failure to appear for the July 20 telephone conference, the absence of any reasonable explanation for his absence, and his behavior and demeanor on the telephone conference call on July 22, I determined that a further warning was warranted. I prepared a warning and also explored the option of terminating his employment for insubordination. Mr. Fahrmann’s language and conduct on July 22 was discourteous, unprofessional, and threatening, all of which constitute insubordination under Sprint’s policies.
13. Based on Mr. Fahrmann’s comments and conduct during the telephone conference, I believed that Mr. Fahrmann’s insubordinate behavior and attitude was not in Sprint’s best interests and that termination was appropriate. I followed up with Ms. Nebeta on the procedures for termination. I participated in the decision to terminate Mr. Fahrmann based upon my personal knowledge and observations of his conduct, behavior and attitude.
Fahrmann alleges that there was no request from Franz for information about Deluxe and that Fredd fabricated the fire drill to ruin his weekend. To support his fabrication claim, Fahrmann testified about a conversation he had with Pete Waters, Berry’s secretary. Fahrmann testified that Waters stated that she was not aware of a request for information about Deluxe by Franz and that any such request would have been processed through her. Fahrmann also cites a July 15, 1998, e-mail to him from Urick that asked, “Were you given confirmation that Michael Franz was to call Mr. Mosner [of Deluxe] this week?”
When reviewing a grant of summary judgment, an appellate court must determine whether any genuine issues of material fact exist and whether the district court erred in applying the law. Cummings v. Koehnen, 568 N.W.2d 418, 420 (Minn. 1997). This court views the evidence in the light most favorable to the nonmoving party. Id. But
summary judgment on a claim is mandatory against a party who fails to establish an essential element of that claim, if that party has the burden of proof, because this failure renders all other facts immaterial.
Lloyd v. In Home Health, Inc., 523 N.W.2d 2, 3 (Minn. App. 1994) (citation omitted). To defeat a summary judgment motion, a party cannot rely on denials or general averments, but must offer specific facts to show that there is a genuine issue of material fact for trial. Minn. R. Civ. P. 56.05; DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997).
[T]here is no genuine issue of material fact for trial when the nonmoving party presents evidence which merely creates a metaphysical doubt as to a factual issue and which is not sufficiently probative with respect to an essential element of the nonmoving party’s case to permit reasonable persons to draw different conclusions.
Id. at 71.
1. Tortious interference with a contract
To raise a successful claim for tortious interference with a contract, a plaintiff must establish all essential elements of the claim. St. Jude Med., Inc. v. Medtronic, Inc., 536 N.W.2d 24, 30 n.6 (Minn. App. 1995), review denied (Minn. Oct. 27, 1995). Summary judgment is appropriate when the plaintiff fails to establish one element of the claim. Sterling Capital Advisors, Inc. v. Herzog, 575 N.W.2d 121, 127 (Minn. App. 1998).
In Nordling v. N. States Power Co., 478 N.W.2d 498 (Minn. 1991), the supreme court held that an at-will employment agreement can support a claim for tortious interference with contract by an employee against a supervisor if the supervisor’s actions were predominantly motivated by malice. The court explained:
[A] corporate officer or agent may be liable for tortious contract interference if he or she acts outside the scope of his or her duties.
It is not always easy to determine when a corporate officer or agent’s actions are outside the scope of his company responsibilities, i.e., when he is engaged in a personal vendetta or excursion. Particularly is this true in a job termination case where the officer’s duties include the evaluation and supervision of the plaintiff employee’s performance or the power to participate in the corporate decision to terminate or otherwise discipline the plaintiff.
* * * *
* * * [W]e conclude that a company officer, agent or employee is privileged to interfere with or cause a breach of another employee’s employment contract with the company, if that person acts in good faith, whether competently or not, believing that his actions are in furtherance of the company’s business. This privilege may be lost, however, if the defendant’s actions are predominantly motivated by malice and bad faith, that is, by personal ill-will, spite, hostility, or a deliberate intent to harm the plaintiff employee.
Id. at 506-07 (citation omitted). The employee has the burden of proving actual malice. Id. at 506.
Fredd was not furthering any company business when she concocted the late Friday afternoon fire drill. When Sprint management threatened her position as a consequence of her ill-advised action, she acted with bad faith by failing to explain her misdeed. She deceived her bosses and blamed Mr. Fahrmann for her own misconduct.
The evidence is insufficient to establish a fact question whether Fredd fabricated the fire drill. Fahrmann’s testimony about his conversation with Waters is hearsay, and Fahrmann cites no exception to the hearsay rule under which his testimony about the conversation would be admissible. The district court must disregard inadmissible hearsay evidence on a motion for summary judgment. Murphy v. Country House, Inc., 307 Minn. 344, 349, 240 N.W.2d 507, 511 (1976) (citing Minn. R. Civ. P. 56.05). The other evidence relied on by Fahrmann to support his fabrication claim is the e-mail from Urick inquiring whether he had received confirmation of Franz’s intent to contact Deluxe. The inquiry about confirmation does not indicate that Franz did not request information about Deluxe. Fahrmann cites no evidence supporting his contention that management threatened Fredd’s job.
Fahrmann argues that Fredd’s admission that she was untruthful supports an inference of malice. Fredd stated that she adhered to the philosophy, “There is no such thing as truth or lies, merely perception.” The statement was made during a discussion in which Fahrmann accused Fredd of lying. Read in context, the statement does not suggest that Fredd was an untruthful person. Fredd did make negative comments about Fahrmann’s attitude and job performance. But in light of the undisputed evidence that Fahrmann disagreed with Fredd’s management style and failed to follow management instructions, Fredd’s negative comments do not indicate personal ill will or hostility.
Fahrmann next asserts that Fredd manufactured false documents, specifically, written warnings that were not issued. Fahrmann did not receive a copy of the December 31, 1997, written warning. But Fahrmann had previously received a written warning, on December 9, 1997, giving him notice that his performance was unsatisfactory. Then, in mid-December in Breckenridge, Fredd and McGrath orally warned Fahrmann that his performance continued to be unsatisfactory; management was dissatisfied with his insubordinate attitude and he needed to follow management directives; and if he did not show improvement in those areas, he could lose his job. Fahrmann admitted that he received an oral warning in Breckenridge and that the warning addressed all of the problems that Fredd had with his performance during the previous three or four months.
The oral warning in Breckenridge conveyed the substance of the final written warning that Fahrmann did not receive. The record contains no evidence that a written warning could have had any effect that the oral warning could not. Therefore, the allegedly false December 31, 1997, written warning is not probative on the issue of whether Fredd was motivated by malice.
The July 20, 1998, written warning prepared by Conner refers to a written warning issued on July 15, 1998. Fredd gave Fahrmann an oral, not written, warning on July 15, 1998. But the document referring to the nonexistent written warning was drafted by Conner, not Fredd, and no evidence in the record indicates that Fredd misrepresented that she had issued a written warning on July 15, 1998.
Fahrmann also contends that Fredd falsely represented to him that his December 3, 1997, presentation to McGrath did not have to be in the Holden format. Fahrmann’s testimony does support a finding that Fredd told him that the December 3 presentation did not have to be in the Holden format and then issued a written warning based in part on his failure to use the Holden format. The record shows an apparent misunderstanding regarding the requirements for the December 3, 1997, presentation. Fahrmann, however, was not disciplined for his failure to use the Holden format for the December 3 presentation and was afforded another opportunity to make the presentation using the Holden format on December 12, 1997. Moreover, the warning also resulted from Fahrmann’s performance during the several months preceding the warning, including his attitude about his job, his way of communicating with Fredd, and his failure to complete his account plans.
The admissible evidence produced by Fahrmann is insufficient to establish a fact question whether Fredd fabricated the fire drill, lied about Fahrmann, or created false documents that could have resulted in negative consequences to Fahrmann beyond the potential consequences from the oral and written warnings that he did receive. The evidence shows that Fahrmann disagreed with Fredd’s management style and perceived her criticism of his job performance and attitude as unfair. But such evidence is insufficient to prove that Fredd’s actions were predominantly motivated by malice. See Piekarski v. Home Owners Sav. Bank, F.S.B., 956 F.2d 1484, 1495 (8th Cir. 1992) (holding that under Minnesota law, evidence of a personality conflict between the employee and management and a perception by the employee that management unfairly criticized his performance was insufficient to prove malice in a tortious-interference-with-contract claim against a supervisor). Because Fahrmann failed to present sufficient evidence to establish an essential element of his tortious-interference claim, the district court properly granted summary judgment for Fredd.
The elements of a defamation claim are (1) a false statement; (2) communication to a third party; and (3) resulting harm to the plaintiff’s reputation and standing in the community. Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 255 (Minn. 1980). Minnesota law recognizes a qualified privilege for statements “made upon a proper occasion, from a proper motive, and * * * based upon reasonable or probable cause.” Id. at 256-57. A qualified privilege can be lost if it is abused, and the plaintiff has the burden to prove malice. Stuempges, 297 N.W.2d at 257. Malice is actual ill will, or a design causelessly and wantonly to injure plaintiff. McBride v. Sears, Roebuck Co., 306 Minn. 93, 98, 235 N.W.2d 371, 375 (1975). The initial determination whether a statement is privileged is a question of law for the district court to determine and is subject to de novo review. Lewis v. Equitable Life Assurance Soc’y, 389 N.W.2d 876, 890 (Minn. 1986). Although the issue of malice is usually a jury question, in some circumstances, it may be subject to summary judgment. E.g., Michaelson v. Minn. Mining & Mfg. Co., 474 N.W.2d 174, 182 (Minn. App. 1991) (affirming summary judgment because employer’s letter to a plaintiff’s supervisors enumerating deficiencies in his job performance and discussing reassignment did not establish actual malice sufficient to create a cause of action), aff’d mem., 479 N.W.2d 58 (Minn. 1992).
Fahrmann argues that the district court erred in dismissing his defamation claim based on Fredd calling him insubordinate. Even if the statements that Fahrmann was insubordinate were false, as the district court found, “[t]hey were made in the context of guiding, disciplining or terminating [Fahrmann].” Thus, the statements were subject to a qualified privilege, and the question is whether the evidence is sufficient to prove malice.
Malice cannot be implied from the statement itself or from the fact that the statement was false. Malice may be proved by extrinsic evidence of personal ill feeling, or by intrinsic evidence such as the exaggerated language of the libel, the character of the language used, the mode and extent of publication, and other matters in excess of the privilege.
Buchanan v. Minn. State Dep’t of Health, 573 N.W.2d 733, 738 (Minn. App. 1998) (quotations omitted), review denied (Minn. Apr. 30, 1998).
The analysis applied to the extrinsic evidence of malice in the tortious-interference context also applies to the defamation claim. Regarding intrinsic evidence, calling an employee insubordinate, when the employee has previously disagreed with and failed to follow management instructions and the employee has behaved rudely and disrespectfully towards a supervisor, is not so egregious as to indicate malice. There is no evidence that Fredd published the statements regarding insubordination to anyone not involved in supervising and terminating Fahrmann. The district court properly granted summary judgment for Fredd on Fahrmann’s defamation claim.
 The attorney questioning Fahrmann began the questions about the performance evaluation by noting that it covered the period from January 1997 through December 1997, and Fahrmann testified that he first saw it in February 1998. A few pages later, the attorney began referring to a February 1997 performance evaluation. The context of the questions indicates that the topic was the February 1998 performance evaluation and that the references to a February 1997 evaluation are incorrect.