Sunday, September 2, 2012

Well I Never!

Shaddy v. Brattleboro Retreat, 2012 VT 67

Most of us do not make it through elementary school without getting caught, at least once, with our hand in the cookie jar. Whether we are busted with the cookie firmly in our grasp or with only the aroma of freshly-baked, chocolate chips emanating from our breath, our reprieve will often depend more on what we say and how we say it—even more than the evidence mom can clearly perceive.

Blame it on a mother’s unconditional love, classic denial, or that second glass of wine she chugged just before you hopped off the bus, but if there is any rational explanation for your otherwise indisputable wrongdoing, she will want to accept it as true.

Today’s case demonstrates that, indeed, what you say (or don’t say) and exactly how you say it can make all the difference in the outcome of your case. It also proves that your mother was right when she said “if you don’t have anything nice to say about someone, it is better to say nothing at all.”

Here are the facts.  From September 2007 until January 2008, Plaintiff worked for Defendant as a nurse. During that time, Defendant discovered that someone with access to its medication room was tampering with packets of Adderall XR, a regulated drug. Thereafter, Defendant reviewed its employees’ work schedules, and observing a pattern, targeted Plaintiff as the culprit. 

To prove Plaintiff was the wrongdoer, Defendant organized a sting operation, which left him solely in charge of the medication room.  In what can only be described as something well short of a covert operation, Defendant instructed all the other nurses not to enter the medication room during Plaintiff’s shift unless they were directly supervised by another nurse. Not surprisingly, when Plaintiff’s shift was over, Defendant determined that the Adderall XR had once again been tampered with consistent with earlier incidents.  Since it was beyond the realm of human possibility that two nurses, who had been advised in advance about Defendant’s sting operation, would conspire to protect their own prior wrong-doing (wink, wink, nudge, nudge), Plaintiff was fired for tampering with the drugs.

Shortly thereafter, Plaintiff sought unemployment-compensation benefits from the Department of Labor. The Employment Security Board initially denied Plaintiff’s request for unemployment benefits, finding that he was fired for gross misconduct. Plaintiff successfully appealed the Board’s denial to the SCOV. Following a remand, the Board once again found Plaintiff was not eligible for benefits given his gross misconduct. Plaintiff renewed his appeal, but the SCOV affirmed the Board’s denial, finding sufficient evidence to support the Board’s decision.

In addition to being fired, Plaintiff was criminally charged in the Windham Criminal Division and subject to disciplinary proceedings before the Board of Nursing. Plaintiff’s criminal trial ended with a hung jury. He subsequently pled no contest to an amended possession charge. The Board of Nursing proceedings were resolved by a Stipulation and Consent Order—signed by Plaintiff—that asserted he had engaged in wrongdoing, which “included, but was not limited to, diverting supplies, equipment, or drugs for personal or other unauthorized use.” The Consent Order also contained a provision which stated that the Plaintiff neither admitted liability nor disputed that the State could prove its charges by a preponderance of the evidence. That might have been the end of it, except . . . .

In January 2011, Plaintiff sued Defendant and several of its employees for defamation, obstruction of justice, intentional infliction of emotional distress and intentional interference with a contract. Plaintiff’s defamation claim alleged that Defendant, through several employees and on multiple occasions, falsely asserted that Plaintiff was the only person who could have diverted, and, therefore, did wrongly divert Adderall XR.

Defendants sought to dismiss Plaintiff’s complaint on multiple grounds, but primarily through the doctrine of res judicata, which prohibits parties who have already fought the good fight from getting a second bite at the cookie. Defendants claimed that each of Plaintiff’s allegations either were or could have been litigated in the prior administrative proceedings or at his criminal trial.

The trial court granted Defendants’ motions and dismissed Plaintiff’s complaint, concluding, among other things, that Plaintiff’s claims were based on the same conspiracy theory and false assertions that he had previously alleged in his defense in the other proceedings.

On appeal, Plaintiff challenges only the trial court’s application of the doctrine of res judicata to bar his defamation claim. In particular, Plaintiff claimed that Rule 410(2) of the Vermont Rules of Evidence and 21 V.S.A. § 1353 expressly bar the subsequent use of his prior criminal plea and administrative settlements against him in a civil suit. Plaintiff also asserted that since Defendant was not a party to the prior administrative proceedings or in privity with the Attorney General’s office, his defamation claim was not barred.  

The SCOV holds that Plaintiff’s no contest plea to the amended charge of possession of a stimulant cannot operate as a bar to his defamation suit since Rule 410(2) of the Vermont Rules of Evidence prohibits the use of a nolo contendere plea against a defendant in any civil proceeding.  

Likewise, the SCOV holds that the Employment Security Board’s prior determinations cannot preclude Plaintiff’s defamation claims given that 21 V.S.A. § 1353 expressly states that the Board’s decisions are neither conclusive nor admissible in separate or subsequent actions between the former employee and his or her former employer.  In effect, what happens at the Board stays at the Board.

This leaves the stipulation with the Board of Nursing on which the ultimate outcome of Plaintiff’s appeal turns.

As an initial matter, while the trial court employed the doctrine of res judicata as a bar to Plaintiff’s suit, the SCOV points out that the operative doctrine is actually collateral estoppel (also known as issue preclusion) rather than res judicata. This is really a minor distinction.  Res judicata concerns larger claims while collateral estoppel focuses on facts or specific issues. But the test for each is slightly different.

Nevertheless, the SCOV agrees with the trial court that Plaintiff had a full and fair opportunity in the earlier proceedings to contest the allegations against him.  Thus, it would be unfair for Plaintiff to now contest those charges. While it would be reasonable for one to assume that this signals the death knell for Plaintiff’s defamation claim, the SCOV finds that the prior Consent Order nevertheless fails to establish the truth of Defendant’s accusations.

Huh? I know what you are thinking. Didn’t we just establish that Plaintiff diverted the cookie from the cookie jar and had his bite?

Remember, sometimes what you say and exactly how you say it makes all the difference.  Regardless of whether a stipulated administrative judgment can, in fact, preclude some future issue or action—an issue the SCOV reserves for another day—the stipulation must, at a minimum, precisely set forth the legal and factual issues it purports to resolve.    

Let’s look closer.  While it is undisputed that Plaintiff admitted to wrongdoing in the stipulation, he never actually admitted that he wrongfully diverted drugs on three separate occasions as Defendant’s and its employee’s defamatory statements specifically alleged. As such, the SCOV concludes that the prior Consent Order lacks the requisite specificity and does not bar Plaintiff’s defamation suit.

Case is reversed and remanded to the trial court for additional litigation.

Stay tuned everyone. Shaddy v. Brattleboro Retreat, episode 4, is likely coming to the SCOV near you in summer 2013.  In the meantime, it is probably safe to assume that the importance of what you say and exactly how you say it applies to the accuser just as much as to the accused. 

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