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Homer Ratcliff v. Pancho Redfern et al

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION TWO


December 29, 2010

HOMER RATCLIFF, PLAINTIFF AND APPELLANT,
v.
PANCHO REDFERN ET AL., DEFENDANTS AND RESPONDENTS.

Solano County Super. Ct. No. FCSO29613

The opinion of the court was delivered by: Haerle, J.

Ratcliff v. Redfern CA1/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

I. INTRODUCTION

Homer Ratcliff, chief executive officer (CEO) and sole owner of Car Credit Network (CCN), brought this action, as an individual, for slander per se and negligent and intentional infliction of emotional distress against Thornton Redfern (sued as Pancho Redfern), Warren Richardson, and White Auto Sales, Inc. (sued as White Motor Corp.), doing business as Fairfield Toyota (hereafter Fairfield Toyota). He appeals a judgment for defendants after the court granted them summary judgment based on the "common-interest privilege" (Civ. Code, § 47, subd. (c) (hereafter § 47(c))).*fn1 We affirm.

II. FACTUAL AND PROCEDURAL BACKGROUND

At all pertinent times (all unspecified dates are in 2007), Fairfield Toyota was an automobile dealership in Fairfield, California. Robert Armstrong, general manager for the parent corporation, Thomason Auto Group, Inc. (Thomason Auto), was in charge of all sales and service departments, and worked as general sales manager on the Fairfield Toyota premises. His responsibilities included ensuring that company policies and procedures were followed.

Kathleen Maschal, another Thomason Auto employee working at Fairfield Toyota, was corporate director of human resources. Her responsibilities included safety, hiring screening, employee relations and counseling, disciplinary actions, and sexual harassment and discrimination training. On the latter front, Fairfield Toyota had a "zero tolerance policy," meaning that no acts of harassment or discrimination were tolerated. Armstrong relied on her for counsel on such matters, and all managers in the company were required to report incidents of discrimination in any form, or hostile work environments.

Maschal's immediate supervisor was defendant Thornton Redfern, president of Thomason Auto, and defendant Warren Richardson was general sales manager of Fairfield Toyota, in charge of the sales department, including training, loan approvals, and customer negotiations. Redfern and Richardson each also worked at the dealership.

On April 1, plaintiff Ratcliff executed for CCN a special finance agreement (the agreement) with Fairfield Toyota. He personally negotiated the agreement; Armstrong was the other signatory. The agreement was that CCN, as an independent contractor with sole responsibility for paying its employees' wages, was to help credit-impaired buyers obtain financing for the purchase of vehicles from Fairfield Toyota. It was agreed that CCN would have an office on the dealership premises, have access to the sales building there, and have contact with the dealership sales employees and customers. Ratcliff also signed a lease agreement to that end. Ratcliff was president, CEO and sole owner/shareholder of CCN, and CCN employees initially were himself, his assistant, and another manager from a previous location.

In preparation for the new relationship, Ratcliff was required by Armstrong to complete a one-to two-hour online course on harassment. He did so and received copies, in booklet form, of the Fairfield Toyota harassment policy. Ratcliff hired two finance assistants, Natasha Piper and Nydia Hernandez, for CCN. Their job was to assist him in his role as CCN finance director.

On April 12, each assistant turned in to Fairfield Toyota's human services department a written statement complaining of harassment by Ratcliff, adding that his harassment had occurred in front of customers. Piper related the compensation terms of her contract, and that she was hired on March 19, worked 12 to 15 hours every day until April 8 (Easter), was told on April 11 not to come back, and was not paid any salary or commissions. Evidently alluding to herself and Hernandez, she wrote: "Ratcliff would talk to us condescendingly in front of customers, tell me I was doing nothing for him and that he could replace me at any time. . . . He would make statements saying 'Why do you stick your butt out; I'll give you a chance to make the boss happy later.' 'No one fucks my assistant but me.' "

Hernandez related similar contract terms. She stated that she had been hired on March 29, worked 12 to 15 hours a day with no days off except Easter, and was paid only $500, less than what was due, even though she did most of the appointments, sales, and paper work. Also alluding apparently to her fellow assistant, she wrote: "[Ratcliff] constantly was putting us down and yelling at us telling us that we didn't do any work and that we were replaceable. He would tell us remarks of that sort in front of customers. He constantly cusses at us and basically tells us we don[']t do 'shit.' I just don't think that this is an environment anyone should be working in."

Maschal testified in deposition that written statements about harassment were an appropriate "format" for Fairfield Toyota employees to use. Piper and Hernandez were employees of CCN and should have complained to "their boss," Ratcliff. As far as she knew, they did not make formal complaints to him.

At some point, Piper also orally informed Richardson of the harassment, adding that Ratcliff referred to himself as the "HNIC."*fn2 Richardson recalled this conversation being perhaps a month before the April meetings that form the basis for Ratcliff's defamation claims. Piper said in deposition that she did not recall when but recalled telling various people at Fairfield Toyota about Ratcliff's harassment and use of the HNIC term.

Richardson, referencing the duty of Fairfield Toyota managers to report all harassment, testified that he met with Redfern sometime and related Piper's claims to him. That exchange about Ratcliff's HNIC self-reference is one of two bases for Ratcliff's defamation cause of action, the other being a meeting on April 17 between Armstrong, Redfern, Maschal, and Ratcliff.*fn3

There were actually two meetings of the same foursome on April 17th, a day or two after Ratcliff had been advised by the sales manager (apparently Richardson) that his assistants had filed the written statements. In the first meeting, Ratcliff was advised that the contract was being suspended pending investigation of the assistant's claims. This was evidently a brief meeting where, accordingly to Ratcliff, Redfern did most of the talking, gave him copies of the assistants' statements and, when Ratcliff suggested bringing in counsel, told him that it would not be necessary. No apparent defamatory statements were made at that first meeting, and Redfern indicated then that there would be a follow-up meeting.

The second meeting took place later that day in Redfern's office and lasted an hour, most of the hour consumed with discussing the written harassment claims by Piper and Hernandez. That part, Ratcliff testified, did not upset him and was expected. What surprised and upset him, he testified, was when the subject turned to the HNIC reference Piper reported, not in her written statement, but orally. In what Ratcliff described in deposition as a loud and threatening tone of voice, Redfern asked if Ratcliff had referred to himself as an HNIC. Ratcliff responded, "What does HNIC mean?" or "What's the HNIC?" Redfern replied, "I don't use the N-word," and Ratcliff accused, "So basically you're using--you're calling me an N-word." Redfern then said he was repeating what Richardson told him. That was the extent of the conversation about the term, but Ratcliff took offense and, as he would later relate in deposition, "I mean, I pretty much said, 'This meeting is over.' " The meeting ended, and Ratcliff was informed at some point before it ended that his contract was terminated.*fn4

In deposition testimony, Ratcliff stressed that he asked Redfern what HNIC meant because he did not know, but he backtracked in a later-filed declaration, first stating, "Immediately shocked [by the question], I asked Redfern for clarification by asking him, 'What is a HNIC?' " Later in the declaration, Ratcliff completely reversed his claim of ignorance, explaining that he "always understood" the term to be a racial slur with a derogatory meaning, learned about it "[i]n school," and always regarded the term as insensitive and demeaning (fn. 2, ante).*fn5

At oral argument on a tentative ruling for defendants, the parties raised many of the same arguments raised now on appeal, and the court took the matter under submission, including evidentiary objections filed on both sides.

The court thereafter issued formal rulings, overruling all objections on both sides, and granting summary judgment for defendants based on the common-interest privilege (fn. 1, ante). It ruled that the parties shared a common interest in the reported matters of harassment in their mutual workplace, and that the qualified privilege was undefeated by malice. No evidence showed that defendants did not believe, or had a reasonable basis to not believe, the reports of misconduct, or that the publications were made for an improper purpose; and the causes of action for intentional and negligent infliction of emotional distress failed as well because the privilege applied.

This appeal by Ratcliff follows formal entry of judgment for all defendants.

III. DISCUSSION

A. Summary Judgment Review

On review of a grant of summary judgment (Code Civ. Proc., § 437c), "we independently examine the record in order to determine whether triable issues of fact exist to reinstate the action. [Citation.]" (Wiener v. Southcoast Childcare Centers, Inc. (2004) 32 Cal.4th 1138, 1142.) We view the evidence in the light most favorable to plaintiff as the losing party, liberally construe plaintiff's evidentiary submissions, and strictly scrutinize defendants' own evidence, in order to resolve any evidentiary doubts or ambiguities in plaintiff's favor. (Ibid.) Construction of a contract, where not based on the credibility of extrinsic evidence, is also independently reviewed. (Culligan v. State Comp. Ins. Fund (2000) 81 Cal.App.4th 429, 434.)

The trial court ruled on all evidentiary objections, as it was bound to do (Reid v. Google, Inc. (2010) 50 Cal.4th 512, 531-532), and overruled them all. This leaves us to consider all of the evidence (id. at p. 534), unless persuaded otherwise by argument on appeal, and neither party offers such argument.

B. Slander and the Common-Interest Privilege

"The tort of defamation 'involves (a) a publication that is (b) false, (c) defamatory, and (d) unprivileged, and that (e) has a natural tendency to injure or that causes special damage.' [Citation.]" (Taus v. Loftus (2007) 40 Cal.4th 683, 720 (Taus).) By pleading "slander per se," Ratcliff connotes not only an oral publication, but one having a natural tendency to injure, as opposed to one requiring innuendo and proof of special damages. (See 5 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, §§ 540, 550-555, pp. 793-799, 806-814; § 46.) The dispositive issues concern privilege, and slander, by statutory definition, includes an "unprivileged publication" (italics added) (§ 46; Lundquist v. Reusser (1994) 7 Cal.4th 1193, 1205 (Lundquist)). We therefore assume for sake of argument that a cause of action is otherwise stated, and proceed to the issues of privilege.

"Section 47(c) establishes that certain communications made between persons on a matter of common interest are privileged if the statements are made 'without malice.' Section 48, in turn, provides that with respect to statements falling within section 47(c), 'malice is not inferred from the communication.' For purposes of this statutory privilege, malice has been defined as ' "a state of mind arising from hatred or ill will, evidencing a willingness to vex, annoy or injure another person." ' [Citations.] . . . '[I]f section [47(c), formerly § 47, subd. 3)] applies to the occasion on which a communication is made and if it was made without malice, it is privileged and cannot constitute a defamation under California law.' [Citation.]" (Lundquist, supra, 7 Cal.4th at pp. 1203-1204, fn. omitted.)

A shifting burden generally applies to the common-interest privilege. Upon the defendant showing an occasion of common interest, it becomes the plaintiff's burden to show malice. (Lundquist, supra, 7 Cal.4th at p. 1208.) This applies to pleading (id, at p. 1210), a motion to strike a complaint under the anti-SLAPP statute (Taus, supra, 40 Cal.4th at pp. 690, 720-721; Code Civ. Proc. § 425.16) and, as here, summary judgment or adjudication (e.g., Cruey v. Gannett Co. (1998) 64 Cal.App.4th 356, 361, 369-370 (Cruey)).

Ratcliff contends that triable issues of fact existed as to (1) whether the statements were made on a privileged occasion of common interest, and (2) whether they were made with malice. We address the arguments in that order.

1. Occasion of Common Interest. Ratcliff argues against protected occasions for reasons that: he was not defendants' employee, but an independent contractor; the business relationship was between Fairfield Toyota and CCN, not Fairfield Toyota and himself individually; the harassment was reported by employees of CCN, not Fairfield Toyota; and he submitted evidence disputing that he ever used the term "HNIC," creating a triable issue of credibility. We reject each point.

First, the services agreement did identify CCN as an independent contractor, specifying that CCN was responsible for the control and direction of "the work" and its methods of performance and functions, and responsible for employee-related benefits. That is boilerplate language describing a relationship of independent contractor, but it did not reasonably mean that Ratcliff's harassment of CCN employees in front of Fairfield Toyota customers on the premises was outside the common interest of the business relationship. The agreement itself recognized this, specifying further, "The sole interest and responsibility of Dealer is to assure that the services covered by this Agreement are performed in a competent, efficient, and satisfactory manner." (Italics added.) Undisputed facts also show that Ratcliff was aware of, required to complete, and did complete, Fairfield Toyota's online harassment training program, which shows the parties' own view of the mutual importance to a satisfactory relationship.

An employee-employer relationship, moreover, is not the only one protected by section 47(c). Established examples of common interests beyond employment include church members speaking to church matters (Brewer v. Second Baptist Church (1948) 32 Cal.2d 791, 796-797 [expelled members against minister and council] (Brewer)), those of a psychology professor/author and his audience at a professional conference of fellow mental health professionals (Taus, supra, 40 Cal.4th at pp. 690, 720-721), and those of seminar speakers and attendees on a common interest in horse breeding (Lundquist, supra, 7 Cal.4th at p. 1204). On the other hand, section 47(c) does not shield news media for publishing matters of general public interest about a private person. (Brown v. Kelly Broadcasting Co. (1989) 48 Cal.3d 711, 738.)

Courts facing novel, unsettled situations are guided by policy. " 'The word "interested" as used in the statute refers to a . . . direct and immediate concern. That concern is something other than mere general or idle curiosity of the general readership of newspapers and magazines. One authority explains . . . : (1) The "interest" applies to a defendant who "is protecting his own pecuniary or proprietary interest." (2) The required "relation" between the parties to the communication is a contractual, business or similar relationship, such as "between partners, corporate officers and members of incorporated associations," or between "union members [and] union officers." (3) The "request" referred to [(see § 47(c), fn. 1, ante)] must have been in the course of a business or professional relationship. [Citation.]' [Citation.]" (Kashian v. Harriman (2002) 98 Cal.App.4th 892, 914 (Kashian).) "This definition is not exclusive, however, and the cases have taken an 'eclectic approach' toward interpreting the statute. [Citation.] 'The lesson we deduce from these cases is that the scope of the privilege . . . is not capable of precise or categorical definition, and that its application in a particular case depends upon an evaluation of the competing interests which defamation law and the privilege are designed to serve.' [Citation.]" (Ibid.)

The reported misconduct here affected a symbiotic relationship of two business entities working together by contract, on the same premises and with the same customers. Defendants sold motor vehicles to the public, and CCN arranged customer financing. This supports a common interest, for the parties' mutual pecuniary and propriety interests were at stake, with harassment of CCN employees reportedly done in front of customers. This was a clear common interest.

Further supporting privileged occasions is a strong public policy for preventing and reporting illegal harassment in the workplace. Courts have uniformly found common interest in this situation. "[C]complaints to employers about workplace harassment should be privileged. To hold otherwise would have a chilling effect on an employee's right to be free from sexual harassment or discrimination in the workplace by exposing the employee to the risk of litigation as a consequence to seeking enforcement of this right." (Crue, supra, 64 Cal.App.4th at p. 369; see other cases noted and followed in Bierbower v. FHP, Inc. (1999) 70 Cal.App.4th 1, 3.) This was, of course, an unusual instance of reports by CCN employees, not to their own employer, but to the dealership management where their financing company operated, but we rely on the harassment reporting policy as an added reason, not the sole reason. The symbiotic business relationship was itself reason to apply the privilege, and since the reporting CCN employees are not themselves defendants in this action, there is no reason to analyze what personal protection they might have had. We do, however, factor in the policy reason that they had little practical choice but to resort to management at Fairfield Toyota. Their own superior and head company representative, was their claimed abuser.

Case law holds that an otherwise privileged occasion may be lost if the scope of the publication is "abused" or "excessive" (Brewer, supra, 32 Cal.2d 791), but here, the two occasions on which the alleged defamation occurred were discrete meetings limited to directly interested persons. The first was a brief exchange between a general sales manager (Richardson) and a higher-up (company president Redfern) to whom he had a duty to report any reported misconduct. The second occasion was when Fairfield Toyota managers Armstrong, Redfern and Maschal, each having a direct job-related interest (general manager, sales manager, and human resources) met discretely, in Redfern's office, with just Ratcliff, to ask him about the claimed harassment. Neither occasion was excessive or abused. The second occasion was an hour long, but only the last few minutes involved the defamation of which Ratcliff complains.

We also find no triable issue of fact as to the credibility of the CCN employees. Yes, Ratcliff denied their claims, but that factual dispute would have been more material had he sued the two employees. He did not, and they are not defendants. Their actual truthfulness is not directly material in reviewing the grant of summary judgment to the defendants here, and it is the sueddefendants' basis for belief that matters. We address that separately in section III.B.2 (post).

Finally, Ratcliff cites nothing to support his peculiar view that, since he had no warning about "HNIC" remarks arising during the second meeting, he somehow attended the meeting only in his individual capacity--as an "employee" of CCN rather than its CEO, president and sole owner. His premise is stunningly odd on these facts, since he was evidently the sole managerial representative of CCN on the premises and these were concededly business meetings. But in any event, his failure to cite any legal authority for his attempted role distinction renders further discussion of it unnecessary. (People v. Hardy (1992) 2 Cal.4th 86, 150; Horowitz v. Noble (1978) 79 Cal.App.3d 120, 139.)

2. Malice. Urging that triable issues exist as to whether defendants made their defamatory statements with malice, Ratcliff argues that defendants had no reasonable basis for believing the truth of the employees' harassment claims, that they could have no such basis without first conducting a "complete investigation," and that the heated tone of the second meeting suggested malice and that the harassment claims were manufactured by defendants as an excuse to terminate the relationship with CCN. We find insufficient record support for those arguments.

First, to elaborate on the law: Section 47(c)'s conditional privilege "extends to false statements of fact, although the occasion may be abused and the protection of the privilege lost, by the publisher's lack of belief, or of reasonable grounds for belief, in the truth of the defamatory matter, by excessive publication, by a publication of defamatory matter for an improper purpose, or if the defamation goes beyond the group interest. Thus the privilege is lost if the publication is motivated by hatred or ill will toward plaintiff [citations], or by any cause other than the desire to protect the interest for the protection of which the privilege is given. [Citations.] Although there are situations where the protection of the interest involved may make it reasonable to report rumors or statements that the publisher may even know are false [citations], ordinarily the privilege is lost if defendant has no reasonable grounds for believing his statement to be true. [Citations.] (Brewer, supra, 32 Cal.2d at p. 797.) "However, negligence is not malice. [Citation.] 'It is not sufficient to show that the statements . . . were inaccurate, or even unreasonable. Only willful falsity or recklessness will suffice. "It is only when the negligence amounts to a reckless or wanton disregard for the truth, so as to reasonably imply a wil[l]ful disregard for or avoidance of accuracy, that malice is shown." ' [Citations.]" (Kashian, supra, 98 Cal.App.4th at p. 931.)

As for the truth of the claims, we see no evidence of a prior history that should have alerted defendants that the employees would lie about him, nor evidence to support his suggestion on appeal that they did not in fact make the reports. The issue, then, is whether defendants were reckless in passing along the reports internally, mentioning them to Ratcliff, and asking him about them. Ratcliff cites no authority for his view that a "complete investigation" had to be done first, and the reasonable-grounds-for-belief standard obviously rules out a need for high likelihood or certainty. These were reports of serious misconduct of interest to the success of the ongoing business relationship, and Ratcliff concedes in his briefing that defendants "had a genuine interest in determining the validity of charges of wrongdoing."

Ratcliff's insistence on a "complete investigation," moreover, conflicts with his attempt to compartmentalize employer-employee relationships of CCN from those of Fairfield Toyota. We suspect that, had defendants conducted follow-up interviews with the CCN employees and tried to corroborate their claims, before directly approaching Ratcliff about them, he would be arguing malice for going behind his back. We see no reasonable inference of actual malice from defendants going to Ratcliff directly on April 17, to announce they were looking into the claims and then meeting with him to ask him about the claims. Indeed, the second meeting that day, where Ratcliff was asked about the claims, has to be viewed as an investigation by defendants.

Investigation into the HNIC self-reference, moreover, was met with not a straight answer, but a taunting attempt by Ratcliff to have Redfern say the N-word, an attempt that Redfern deflected by saying he did not use the word and that he was only repeating what he heard from Richardson. In a typical summary judgment record, it would be difficult or impossible to draw such a factual inference as the only reasonable one, but not here. To begin, one could not reasonably take offense at the acronym HNIC as a racial slur unless one knew what it stood for. However, Ratcliff stated in deposition that he asked Redfern, "What's the HNIC?" because he truly did not know what it meant. If one accepts Ratcliff's ignorance, one can hypothesize that Redfern's response, "I don't use the N-word," provided the nexis by which Ratcliff connected the acronym to a racial slur, and this might support a triable issue of fact as to the claimed ignorance. What clinches the matter in defendants' favor, however, is Ratcliff's later declaration, in which he refutes any notion that he was ignorant of the acronym's meaning. He had "always understood [the acronym] to be a racial slur with a derogatory meaning"; and he learned about the term "[i]n school," he said, and gave his understanding of the term's historical evolution.

Thus the record conclusively establishes that Ratcliff did know the meaning of the acronym, and the only reasonable inference to draw from his question to Redfern, "What does HNIC mean?" is that he was feigning ignorance in order to taunt Redfern into using "the N-word." And when Redfern declined to take the bait, Ratcliff accused him of it anyway. No malice reasonably appears, at least on Redfern's or any other defendant's part. Another point also bears mention. Contrary to Ratcliff's deposition below and his brief on appeal, the record establishes that no defendant ever called him an HNIC or a "nigger;" they only asked if, as his own employees claimed, he had referred to himself as an HNIC. This difference is profound for purposes of discerning ill will or hatred.

As for the claimed threatening tone and demeanor of Redfern at the close of the second meeting, this is not enough in the circumstances revealed. We do not know, first, the particulars of any of the prior hour's worth of discussion, and therefore have no way of reading hatred or ill will into his tone at that point. The acronym was not repeated by Redfern in the ensuing exchange with Ratcliff, and any resentment by Redfern in being taunted into using the N-word surely justified some hostility in his tone. We find far too little evidence to reasonably support a claim of actual malice. (Cf. Taus, supra, 40 Cal.4th at p. 722.)

No triable fact existed as to the common-interest privilege, and the court properly granted summary judgment.

C. Intentional and Negligent Infliction of Emotional Distress

It follows from the existence of privilege for the slander cause of action that Ratcliff's second and third causes of action, respectively for intentional and negligent infliction of emotional distress, fail as well, for the alleged emotional distress is from the same conduct. Emotional distress caused by defamation is a compensable component of damages recoverable in a defamation action, but does not give rise to a separate cause of action on a separate tort theory. (Flynn v. Higham (1983) 149 Cal.App.3d 677.) To allow another tort cause of action for emotional distress " 'based on the same acts which would not support a defamation action, would allow plaintiffs to do indirectly what they could not do directly [and] render meaningless any defense of truth or privilege.' " (Fellows v. National Enquirer, Inc. (1986) 42 Cal.3d 234, 245, quoting with approval from Flynn v. Higham, supra, 149 Cal.App.3d at p. 682.) The second and third causes of action are therefore also barred. (Terry v. Davis Community Church (2005) 131 Cal.App.4th 1534, 1558; Grimes v. Carter (1966) 241 Cal.App.2d 694, 637.)

IV. DISPOSITION

The judgment is affirmed.

We concur:

Kline, P.J.

Lambden, J.


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