Opinion
Case No. C-3-01-488
January 22, 2003
ENTRY AND ORDER DENYING DEFENDANT NORTH AMERICAN BULK TRANSPORT, INCORPORATED'S MOTION FOR SUMMARY JUDGMENT AND ATTORNEYS' FEES. (DOC. 21).
This matter is before the Court for decision on Defendant North American Bulk Transport, Incorporated's Motion for Summary Judgment and Attorneys' Fees. (Doc. 21). The instant case is an action for defamation under state law between diverse parties for damages that may exceed $75,000. Defendant North American Bulk Transport transmitted false information concerning Plaintiff James Clanin's drug testing history to Yellow Freight, Inc., a company that was interested in hiring Clanin. In it's motion for summary judgment, North American Bulk claims that Clanin may not pursue his action because he expressly waived his right to sue in his application with Yellow Freight. Alternatively, North American Bulk contends that Clanin's action is barred by an Ohio statute that affords qualified immunity to employers providing references. North American Bulk further seeks attorney fees under an Ohio statute providing for such when a plaintiffs action for defamation against a former employer is frivolous.
I. Factual Background
James Clanin is a truck driver who was working part-time for the Fairborn, Ohio terminal of North American Bulk in late 1999. At the time, Clanin's primary employment was with the Richmond, Indiana terminal of Yellow Freight, although this employment was also part-time. The arrangement with North American Bulk was one where either Clanin would call the company on his off days to see if it needed a driver, or the company would call him to inquire as to his availability when it needed an extra driver. Clanin dep. at 14-15.
North American Bulk is required by federal law to maintain a drug and alcohol testing program of its employees. On October 25, 1999, North American Bulk's Fairborn Terminal Manager, Millie Still, selected Clanin to be tested in November. Doc. 21, Ex. A, 49 C.F.R. § 382.305. North American Bulk was forbidden by law from letting Clanin know in advance that he was to be tested, 49 C.F.R. § 382.305 (j), and Clanin, in fact, did not know. Clanin dep. 19. Each time North American Bulk subsequently invited Clanin to come to work, Clanin was unable to report because of his commitments to Yellow Freight in Richmond. Clanin dep. at 15-18. Thereafter, North American Bulk terminated Clanin's employment on December 1, 1999.
In terminating Clanin, North American Bulk's Fairborn Terminal Manager listed on an internal company document "Failed to go for a random drug test for Nov. 99" as the reason Clanin was terminated Clanin dep. Ex. J. This document was forwarded to North American Bulk's headquarters in Milwaukee, Wisconsin.
Shortly thereafter, Clanin ceased working for Yellow Freight in Richmond, as that company was reducing his hours. Clanin briefly worked part-time for another company, before learning that the Yellow Freight terminal in Dayton was looking to hire drivers full-time. Clanin dep. 23. Since Yellow Freight only hired full-time drivers from their part-time staff, Clanin began working for Yellow Freight in Dayton part-time. Id. Once he had served enough time to be known to the terminal manager as a reliable driver, Clanin completed an application for full-time employment with Yellow Freight in Dayton. Id. at 24, and Ex. N. As part of the application Clanin completed on February 18, 2000, Clanin was required to sign a waiver that read:
I farther understand that Yellow may contact my previous employers and I authorize those employers to disclose to Yellow all records and information pertinent to my employment with them. . . . I hereby waive any rights or claims I have or may have against my former employers, their employees and representatives, as well as other persons or firms who release or disclose information to Yellow and release them from any and all claims or damages that may directly or indirectly result from the use or disclosure of such information.
Clanin dep. at 86-88 and Ex. N.
Yellow Freight needed this authority from Clanin because Part 40 of the Code of Federal Regulations, Title 49, requires a prospective employer to obtain from previous Department of Transportation-regulated employers a history of the prospective employee's drug and alcohol tests, his refusals to take such tests, and any other DOT drug and alcohol violations. 49 C.F.R. § 40.25. Comporting with the requirements of Part 40, Yellow Freight utilized the services of a company named Van Ella and Associates to conduct a background investigation of Clanin.
Van Ella and Associates sent to North American Bulk's headquarters in Milwaukee a "Request for Release of DOT Drug / Alcohol Records" concerning Clanin, which North American Bulk received on February 28, 2000. Hill dep. ex. 2. Cindy Hill, a Human Resources Representative in North American Bulk's Milwaukee office, reviewed Clanin's file, and based upon the Fairborn Terminal Manager's termination report, checked a box that indicated Clanin had refused a drug test in the prior two-year period. Id.
In a letter dated March 2, 2000, Yellow Freight's Dayton terminal informed Clanin that he was no longer being considered for full-time employment, and that he was terminated from his part-time position. Clanin dep. Ex. B. Clanin thereafter contacted Yellow Freight's headquarters in Overland Park, Kansas to learn why he was not eligible to work for the company in Dayton when he had so recently worked for them in Richmond. Clanin dep. at 39, 43-44. Yellow Freight sent Clanin a copy of the background report upon which Yellow Freight's decision was based.
When Clanin received the background report, he telephoned North American Bulk's offices in Milwaukee to inform them of the inaccuracy in his background report. Clanin dep. 46, 51-53, 58. North American Bulk looked into the situation, and by March 7, 2000, North American Bulk officials in Milwaukee had asked its Fairborn Terminal Manager, Millie Still, to draft a new termination record to account for the cessation of Clanin's employment. Clanin dep. Ex. B F. The next day, North American Bulk sent a letter to Van Ella and Associates, with a copy to Yellow Freight in Dayton, explaining that the information they had previously provided was erroneous. Clanin dep. Ex. D. In spite of North American Bulk's efforts to remedy the situation, Clanin was unable to attain the position with Yellow Freight, as it had already been filled.
Clanin filed the instant action on February 28, 2001, in the Court of Common Pleas for Montgomery County, Ohio, charging North American Bulk with defamation under Ohio law. Doc. 1. Upon learning that the matter potentially involved more than $75,000, North American removed the action to federal court. Doc. 1. On October 3, 2002, North American Bulk filed its motion for summary judgment. Doc. 21. Clanin has filed a response, and North American Bulk a reply, therefore, the instant matter is ripe for resolution.
III. Standard of Review
The standard of review applicable to motions for summary judgment is established by Federal Rule of Civil Procedure 56 and associated case law. Rule 56 provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Alternatively, summary judgment is denied "[i]f there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Hancock v. Dodson, 958 F.2d 1367, 1374 (6th Cir. 1992) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505 (1986)). Thus, summary judgment must be entered "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548 (1986).
The party seeking summary judgment has the initial burden of informing the court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, admissions and affidavits which it believes demonstrate the absence of a genuine issue of material fact. Id., at 323. The burden then shifts to the nonmoving party who "must set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S., at 250, 106 S.Ct. 2505 (quoting Fed.R.Civ.P. 56(e)).
Once the burden of production has shifted, the party opposing summary judgment cannot rest on its pleadings or merely reassert its previous allegations. It is not sufficient to "simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 106 S.Ct. 1348 (1986). Rule 56 "requires the nonmoving party to go beyond the pleadings" and present some type of evidentiary material in support of its position. Celotex Corp., 477 U.S., at 324, 106 S.Ct. 2548.
In determining whether a genuine issue of material fact exists, a court must assume as true the evidence of the nonmoving party and draw all reasonable inferences in favor of that party. Anderson, 477 U.S., at 255, 106 S.Ct. 2505. If the parties present conflicting evidence, a court may not decide which evidence to believe by determining which parties' affiants are more credible. 10A Wright Miller, Federal Practice and Procedure, § 2726. Rather, credibility determinations must be left to the fact-finder. Id.
Finally, in ruling on a motion for summary judgment, "[a] district court is not . . . obligated to wade through and search the entire record for some specific facts that might support the nonmoving party's claim." InterRoyal Corp. v. Sponseller, 889 F.2d 108, 111 (6th Cir. 1989). Thus, in determining whether a genuine issue of material fact exists on a particular issue, the court is entitled to rely upon the Rule 56 evidence specifically called to its attention by the parties.
IV. Analysis
North American Bulk has proposed alternative bases that purportedly support a grant of summary judgment in its favor. The first that the Court will consider is an Ohio law granting an employer qualified immunity as to job performance information disclosures.
A. Ohio Revised Code § 4113.71
Under the Ohio law:
An employer who is requested by an employee or a prospective employer of an employee to disclose to a prospective employer of that employee information pertaining to the job performance of that employee for the employer and who discloses the requested information to the prospective employer is not liable in damages in a civil action to that employee, the prospective employer, or any other person for any harm sustained as a proximate result of making the disclosure or of any information disclosed, unless the plaintiff in a civil action establishes, either or both of the following:
(1) By a preponderance of the evidence that the employer disclosed particular information with the knowledge that it was false, with the deliberate intent to mislead the prospective employer or another person, in bad faith, or with malicious purpose;
Ohio Rev. Code § 4113.71. "`Employee' means an individual currently or formerly employed by an employer." Ohio Rev. Code § 4113.71(A)(1).
In the defamation context there is malicious purpose when a defendant makes a statement with knowledge that the statement is false or with reckless disregard of whether it was false. Smith v. Klein, 492 N.E.2d 852, 855 (Ohio App. 1985); Costanzo v. Gual, 403 N.E.2d 979, 983 (Ohio 1980). There must be sufficient evidence to permit the conclusion that the defendant had serious doubts as to the truth of his publication. A B Abell Elevator Co. v. Columbus/Central Ohio Bldg. Constr. Trades Council, 651 N.E.2d 1283 (Ohio 1995), Condit v. Clermont Co. Review, 638 N.E.2d 96, 101 (Ohio 1994). In the context of the instant case, North American Bulk is immune from Clanin's defamation claim, unless Clanin can show that North American Bulk reported that Clanin refused a drug test with reckless disregard for the veracity of this statement.
Arguably, Clanin never "refused" to take a drug test, as North American Bulk never asked him to do so. Since North American Bulk's Fairborn Terminal Manager possibly knew all along that she was terminating Clanin for lack of availability, her notation that Clanin failed to take a drug test, and that Clanin was terminated for this reason, was arguably made with reckless disregard for its veracity. If so, this recklessness is imputed to North American Bulk, as the Terminal Manager was acting within the scope of her employment. See 12 Oh. Jur.3d, Business Relationships § 544, 545. Likewise, the actions taken by North American Bulk's Human Resources Representative in Milwaukee were within the scope of her employment, and are also imputed to the Defendant. Because there is a genuine issue of material fact that may reasonably be resolved in favor of Clanin concerning whether or not North American Bulk disclosed a falsehood about Clanin with reckless disregard for its veracity, Ohio Revised Code § 4113.71, when applied to the facts of the instant case, does not warrant an entry of summary judgment for North American Bulk.
B. Waiver
North American Bulk additionally argues that Clanin waived any right to pursue the instant action when he signed the waiver contained in the grant of permission allowing former employers to reveal all records and information pertinent to his prior employment. Waivers are permissible under Ohio law. See, e.g., Pinger v. Behavioral Science Center, Inc., 556 N.E.2d 209 (Ohio App. 1988). However, the information Yellow Freight requested and the responses North American Bulk provided are regulated by 49 C.F.R. § 40. Part 40 informs truck companies that "as an employer, you must, after obtaining the employee's written consent, request the information about the employee listed in paragraph (b) of this section [concerning the employee's history of drug and alcohol testing and compliance with DOT drug and alcohol use regulations]." 49 C.F.R. § 40.25. The very next subpart of Part 40 relates that "as an employer, you must not require an employee to sign a consent, release, waiver of liability, or indemnification agreement with respect to any part of the drug or alcohol testing process covered by this part (including but not limited to, collections, laboratory testing, MRO and SAP services)." 49 C.F.R. § 40.27. The definition of "employee" in Part 40 "includes . . . applicants for employment subject to pre-employment testing." 49 C.F.R. § 40.3. Part 40 additionally mandates that a truck company release information when requested "[i]f you receive a specific, written consent from an employee authorizing the release of information about that employee's drug or alcohol tests to an identified person. . . ." 49 C.F.R. § 40.331 (a). The aforementioned regulations were intended by Congress to preempt state law. See 49 U.S.C. § 31306(g); Pickelman v. Michigan State Police, 31 Fed. Appx. 298, 302 (6th Cir. 2002).
While Clanin suggests that the waiver is void in light of 49 C.F.R. § 40.27, North American Bulk urges that the federal prohibition on waivers applies only to waivers of liability for causes of action arising out of the collection of samples, testing for drug and alcohol use and evaluation of test results. North American Bulk ignores that the ban on waivers applies to "any part of the drug or alcohol testing process covered by" Part 40 and is "not limited to, collections, laboratory testing" and evaluations related thereto. 49 C.F.R. § 40.27. The alcohol and drug testing process described in Part 40 contains requirements concerning record-keeping and verification of an employee's drug and alcohol testing history designed to make the tests effective in protecting the public. Waivers of liability for a company's actions and inactions related these aspects of the Part 40 testing process are void.
In the instant case, Yellow Freight requested Clanin's testing history in compliance with the process described in Part 40. Because Part 40 forbids companies from demanding waivers of liability with regard to any part of the drug and testing process, the waiver demanded of Clanin in connection with this process is void.
Even if Clanin's waiver was not forbidden by 49 C.F.R. § 40.27, it would not prevent Clanin from pursuing the instant action. While Ohio courts have upheld waivers of liability in certain circumstances, "Ohio law precludes a party from avoiding future liability on the basis of a release when liability is premised upon intentional, reckless, willful or wanton misconduct. . . ." Denlinger v. City of Columbus, 2000 WL 1803923, *7 (Ohio App. 2000) (citing Swartzentruber v. Wee-K Corp., 690 N.E.2d 941, 944 (Ohio App. 1997)). "[T]he case law in Ohio recognize the enforceability of such a provision only in cases where damages have been caused by negligence. . . ." Sanfillipo v. Rarden, 493 N.E.2d 991, 996 (Ohio App. 1985). Because North American Bulk's termination record and the report made based upon such is arguably reckless, Clanin's waiver would not bar the instant action.
As a final matter, Clanin urges that his waiver was not supported by consideration. While North American Bulk asserts that in return for the waiver, Yellow Freight processed Clanin's job application, Clanin counters that Yellow Freight was obligated by law to do a background check before hiring any drivers. Clanin's argument presumes that Yellow Freight was obliged to hire anyone at all. Yellow Freight is free to go out of business, or into an unregulated line of business, should it so please. Thus, Yellow Freight's processing of Clanin's application in return for the waiver constitutes consideration. If the waiver obtained by Yellow Freight were not void by virtue of 49 C.F.R. § 40.27, North American Bulk would be entitled to rely upon the waiver to the extent that any wrong visited upon Clanin as a result of North American's actions was merely negligent.
C. Attorney Fees
North American Bulk's motion for attorney fees is premised on the claim that Clanin's action is wholly lacking in merit. Having survived North American Bulk's motion for summary judgment, such is not the case. North American Bulk's motion for attorney fees is denied.
V. Conclusion
For reasons herein stated, the Court hereby DENIES Defendant North American Bulk Transport, Incorporated's Motion for Summary Judgment and Attorneys' Fees. (Doc. 21).