COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 67836 JAMES & MAUREEN RASCH : : JOURNAL ENTRY Plaintiffs : -vs- : and : ALLIED ELECTRONICS, ET AL. : OPINION : Defendants-appellees : : [Appeal by James Daniloff, : Defendant-Appellant] : DATE OF ANNOUNCEMENT OF DECISION: JANUARY 18, 1996 CHARACTER OF PROCEEDING: Civil appeal from Common Pleas Court Case No. CV-245973 JUDGMENT: Affirmed in part, reversed in part. DATE OF JOURNALIZATION: __________________________ APPEARANCES: For Plaintiffs: For Defendant-Appellant Daniloff: GEOFFREY L. EICHER, ESQ. WALTER J. McNAMARA, III, ESQ. Quaker Square, Suite 410 McNAMARA, LUCCI, 120 East Mill Street HANRAHAN & LOXTERMAN Akron, Ohio 44308 7200 Center Street, Suite 300 Mentor, Ohio 44060-4900 For Defendants-Appellees Allied Electronics, Inc. & Hall-Mark Electronics Corp.: T. MICHELE BAIRD, ESQ. RONALD GASWIRTH, ESQ. GARDERE & WYNNE, L.L.P. 1601 Elm Street, Suite 3000 Thanksgiving Tower Dallas, Texas 75201 KEITH A. ASHMUS, ESQ. MAURITIA G. KAMER, ESQ. THOMPSON, HINE AND FLORY 1100 National City Bank Bldg. 629 Euclid Avenue Cleveland, Ohio 44114-3070 - 2 - KARPINSKI, J.: This appeal arises from an employment based sexual harassment dispute involving multiple claims, counterclaims, and cross-claims against several parties. For simplicity, this opinion shall refer to the parties by their proper names. Plaintiff Maureen Rasch ("Rasch") ultimately filed a seven- count amended complaint on November 9, 1993, raising, inter alia, claims for sexual harassment against five defendants: (1) her former employer, Allied Electronics, Inc. ("Allied"); (2) its parent corporation, Hall-Mark Electronics Corp. ("Hall-Mark"); 1 (3) James Daniloff; (4) John Burgos; and (5) John Doe. Corporate defendants Allied and Hall-Mark conducted business from a shared facility. Allied employed Rasch; Hall-Mark employed individual defendants James Daniloff, as branch manager, and John Burgos. Corporate defendants Allied and Hall-Mark filed a joint answer denying the allegations in plaintiffs' complaint. Daniloff filed an answer to the Raschs' complaint, raised counter-claims against the Raschs for defamation and infliction of emotional distress, and raised cross-claims also against Allied and Hall-Mark for wrongful termination of his employment, defamation and infliction of emotional distress. The Raschs and corporate defendants denied the allegations in Daniloff's counterclaims and cross-claims. 1 Plaintiff James Rasch joined a claim in count seven for loss of consortium. - 3 - After settling with the Raschs', Allied and Hall-Mark filed a joint motion for summary judgment on Daniloff's cross-claims against them for wrongful termination, defamation and infliction of emotional distress. The corporate defendant's motion for summary judgment was supported by written employment documents and excerpts from the deposition testimony of Hall-Mark human resources director Foltz and Daniloff. In his brief in opposition to the corporate defendant's motion for summary judgment, Daniloff provided affidavits of Carol and James Daniloff and Hall-Mark customer/vendors Maria Rivera and David Vance, in addition to deposition testimony of Michael Foltz, Daniloff and four female employees deposed by the Raschs. The corporate defendants filed a reply brief making additional legal arguments. In an order journalized August 3, 1994, the trial court granted the corporate defendants' motion for summary judgment on Daniloff's claims against them. Daniloff filed a notice of appeal on September 1, 1994, from the trial court's journal entry granting summary judgment in favor of Allied and Hall-Mark. The parties dismissed with prejudice all remaining unadjudicated claims during the course of the appeal. Daniloff's first assignment of error follows: THE TRIAL COURT ERRED IN ENTERING SUMMARY JUDGMENT AGAINST APPELLANT ON HIS CLAIM FOR WRONGFUL DISCHARGE. Daniloff's first assignment of error lacks merit. - 4 - Daniloff argues the trial court improperly granted summary judgment on his wrongful discharge claim on the ground that he was an "at-will" employee. Daniloff contends that Hall-Mark could discharge him only for just cause in accordance with an employee manual, the Standard Hall-Mark Operating Policies and Procedures ("SHOPP") manual, as part of an implied agreement or under the doctrine of promissory estoppel. Daniloff does not dispute that he was hired by Hall-Mark on October 7, 1985, as an "at-will" employee. Daniloff executed a Terms of Employment agreement on that date which specifically stated that his employment could be terminated "at any time, with or without cause." Ohio law presumes that an employment contract terminable "at will" continues thereafter to be terminable "at will" unless the parties have clearly manifested their intent to bind each other in a different manner. Healey v. Republic Powdered Metals, Inc. (1992), 85 Ohio App.3d 281, 284. At-will employment relationships may be terminated by either party at any time for any reason not contrary to law. Phung v. Waste Management, Inc. (1986), 23 Ohio St.3d 100. The Ohio Supreme Court continues to recognize these principles, although the court has recently expanded an exception to the "at-will" employment doctrine when the discharge violates a "sufficiently clear public policy." Painter v. Graley (1994), 70 Ohio St.3d 377; Collins v. Rizkana (1995), 73 Ohio St.3d 65; see also Haynes v. Zoological Soc. of Cincinnati (1995), 73 Ohio St.3d 254, and Contrera v. Ferro Corp. (1995), 73 Ohio St.3d 244. - 5 - In the case at bar, however, Daniloff cites no public policy violation. Nor has he presented any evidence that the parties subsequently altered the "at-will" nature of his employment relationship. The record demonstrates that Daniloff signed the following document on October 8, 1985, the day after he was hired by Hall- Mark as a field sales manager: I have read the policies contained within the Standard Hall-Mark Operating Policies and Procedures manual and understand that they will be strictly enforced, and that the company will take appropriate disciplinary action (including, when appropriate, dismissal) should I violate these policies. Contrary to Daniloff's argument, this document does not indicate that the exclusive grounds for discharge were set forth in the SHOPP manual. Rather, the document merely states that violation of the SHOPP manual will result in some form of disciplinary action. Daniloff could still be discharged in accordance with the existing October 7, 1985, Terms of Employment "at any time, with or without cause." Daniloff subsequently signed another Terms of Employment agreement expressly reaffirming the at-will nature of his employment relationship the following year on November 10, 1986, when he was promoted to outside sales manager. The fact that Daniloff did not subsequently execute a third Terms of Employment agreement, to recite for a third time the at-will nature of his employment, when he was promoted to branch manager in 1988, does not alter this conclusion. - 6 - Daniloff's related argument that, under the doctrine of promissory estoppel, Hall-Mark was bound by the SHOPP manual to discharge him only for certain specified causes lacks merit. Daniloff contends that when he was promoted to branch manager he was informed orally that employees could be dismissed only on the grounds set forth in the SHOPP manual. However, claims of promissory estoppel by management employees may not be based on handbooks distributed to the management employees to inform them of the policies applying to their subordinates. Beamon v. Bennett Mgt. Corp. dba Burger King (May 19, 1989), Lucas App. No. L-88-334, unreported at pp. 5-6. Moreover, Daniloff has not presented any evidence that he reasonably relied to his detriment on any SHOPP manual provision in this case. Eagleye v. TRW, Inc. (Feb. 17, 1994), Cuyahoga App. No. 64662, unreported at p. 6 (citations omitted); Pyle v. Ledex, Inc. (1988), 49 Ohio App.3d 139, 145-146. Accordingly, Daniloff's first assignment of error is overruled. Daniloff's second assignment of error follows: THE TRIAL COURT ERRED IN ENTERING SUMMARY JUDGMENT AGAINST APPELLANT ON HIS CLAIM FOR DEFAMATION. Daniloff's second assignment of error is well taken. Daniloff argues the trial court improperly granted summary judgment against him on his slander claim, because he presented affidavits which indicated that the corporate defendants informed certain customers and vendors that Daniloff was fired for sexual harassment of an employee. Daniloff argues that, after viewing - 7 - the evidence in the light most favorable to him, he has raised a genuine issue of material fact as to whether these statements falsely disparaged him. Hall-Mark and Allied argued that the allegedly defamatory statements (1) were not made within the scope of employment of their respective employees, (2) were made within the scope of a qualified privilege, and (3) were true. However, based on our review of the record, Daniloff has presented sufficient evidence to raise a jury question concerning these issues. Scope of Employment The affidavits of Maria Rivera and David Vance indicate they made telephone calls to the corporate defendants' joint facility and were informed that Daniloff was terminated for sexual harassment of an employee. Hall-Mark and Allied argue that employees were instructed not to discuss the matter and, therefore, if any employee did, the statement was made outside the scope of employment. However, in the context of motions for summary judgment, courts are required to view the evidence and reasonable inferences drawn therefrom in the light most favorable to the non-moving party. Hall-Mark and Allied did not deny that their employees were authorized to answer telephone calls and communicate with customers and vendors. Authorizing employees to answer telephones involves granting some discretion to the employees concerning the substance of their communications. - 8 - Hall-Mark and Allied presented no evidence that they took any specific precautions or instructed their employees how to respond during such calls if a conversation concerning Daniloff's whereabouts or his termination arose. General claims that an employee lacks authority to do a particular act or to make a particular statement, such as raised by Hall-Mark and Allied, would preclude employer liability arising out of employee conduct in every case. Under the circumstances of this case, jurors could make a reasonable inference that the employees' statements were made in the scope of their employment. Questions concerning the exact scope of employees' duties and whether any employees deviated from the scope of their employment should be resolved by a jury. Qualified Privilege When the evidence and reasonable inferences are viewed in the light most favorable to Daniloff, reasonable jurors could likewise find that the statements were not privileged. It is well established that statements made to someone outside the scope of the qualified privilege or made with actual malice are not privileged. Stearns v. Ohio Savings Assn. (1984), 15 Ohio App.3d 18, 20; Akron-Canton Waste Oil, Inc. v. Safety-Kleen Oil Services, Inc. (1992), 81 Ohio App.3d 591, 601-603. Hall-Mark and Allied's reliance on case law recognizing a qualified privilege for statements made by a former employer to a prospective employer concerning the reasons for terminating an employee is misplaced in this context. Hall-Mark and Allied - 9 - presented no evidence that customers or vendors, unlike a prospective employer, had any legitimate interest in being informed that Daniloff was terminated for sexual harassment. Moreover, even if there were a sufficient common interest between the corporate defendants and their customers and vendors to give rise to a qualified privilege in this case, there is sufficient evidence to raise a jury question that the statements were made with "actual malice" to defeat the claim of privilege. When viewed in the light most favorable to Daniloff, a jury could find statements as to sexual harassment by Daniloff were made with a reckless disregard for the truth under the circumstances of this case. Moreover, the testimony of Michael Foltz, Hall-Mark's human resources director, is inconsistent and self-contradictory. The plant received by fax a sexually suggestive drawing that one employee personalized by adding Rasch's name and that another employee thereafter circulated. Neither Rasch's direct supervisor at Allied nor branch manager Daniloff prevented dissemination of the drawing. Foltz did not visit the facility until after Rasch filed a complaint with the EEOC. Foltz maintained that Rasch was not sexually harassed. However, approximately two months after her EEOC complaint, Daniloff was fired for committing sexual harassment by creating a hostile work environment based on events which occurred before - 10 - 2 the fax incident, about which there had been no complaint. Foltz originally stated, during his deposition the day the corporate defendants settled the Raschs' claims against them, that no hostile environment existed at Allied where Rasch was employed, but that Daniloff created a sexually hostile work environment at the portion of the joint facility occupied by Hall-Mark. Upon further questioning, Foltz abandoned this claim and changed his testimony by stating that the environment throughout the joint facility was hostile. Foltz's testimony contained other significant contradictions. Foltz subsequently stated that Daniloff's relationship with two female employees was an additional "component" of his decision to fire Daniloff, but later contradicted himself and stated the contrary. (Compare depo. at 3 pp. 111-112, with pp. 173-174). Under the circumstances, to support a finding of actual malice, a jury could find that Foltz entertained serious doubts concerning the truth of the statement that Daniloff committed sexual harassment. Truth 2 The six items identified by Foltz follow: failing to prohibit use of calendars with photographs of models of the opposite gender in employee restrooms, placing a barbie doll next to a note stating "I've fallen and I can't get up", posting National Enquirer articles on a billboard, writing comments on two office birthday cards, and failing to prohibit improper language by employees in the office. 3 The record further demonstrates that the trial court did not examine the deposition testimony of four female witnesses deposed by the Raschs to determine whether Foltz's account of their statements to him conflicted with their testimony. Murphy v. Reynoldsburg (1992), 65 Ohio St.3d 356. - 11 - Finally, contrary to Allied and Hall-Mark's argument, there is a genuine issue of material fact concerning whether the statement that Daniloff committed sexual harassment is true. Akron-Canton Waste Oil, Inc. v. Safety-Kleen Oil Services, Inc., supra. Daniloff presented evidence from which the jury could infer that Foltz's investigation, conclusions, and recommendations may have been "unworthy of credence" and based on factors other than the truth. In the context of a defamation claim, the corporate defendants bear the burden of proving this affirmative defense, and this issue should be resolved by a jury because the evidence in this case is conflicting. Accordingly, Daniloff's second assignment of error is well taken. Daniloff's third assignment of error follows: THE TRIAL COURT ERRED IN ENTERING SUMMARY JUDGMENT AGAINST APPELLANT ON HIS CLAIM FOR NEGLIGENCE [SIC] AND/OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS. Daniloff's third assignment of error lacks merit. Daniloff argues the trial court improperly granted summary judgment on his claim for infliction of emotional distress. Daniloff generally reiterates the same arguments made above. However, the record demonstrates that Daniloff failed to show the requisite serious and debilitating emotional distress to support a jury finding in his favor. Paugh v. Hanks (1983), 6 Ohio St.3d 72, 78; Akron-Canton Waste Oil, Inc. v. Safety-Kleen Oil Services, Inc., supra at 605-606. - 12 - Accordingly, Daniloff's third assignment of error is overruled. The judgment of the trial court is affirmed in part and reversed in part. Judgment accordingly. - 13 - It is ordered that the parties shall bear their own costs. The court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this court directing the common pleas court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. PATTON, C.J., CONCURS; DYKE, J., CONCURS IN JUDGMENT ONLY. DIANE KARPINSKI JUDGE N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announcement of decision (see Rule 26). Ten (10) days from the date hereof this document will be stamped to indicate journalization, at which time it will become the judgment and .