Powell v. XO SERVICES, INC.
2011 U.S. Dist. LEXIS 35396
N.D. Ill.2011Background
- Powell sued XO Services and three employees in state court for defamation and breach of contract; defendants removed and moved to dismiss.
- Outage in 2007 led XO to ship a Candeo Plant to Chicago, which was stored unused; Powell later disposed of it per Schreck's instruction.
- In 2009-2010 an internal investigation concluded Powell disposed of the Plant; Gentles added harsher comments in the report.
- Powell received a written reprimand; Edwards then terminated Powell the following day after further management discussions.
- Powell alleges the statements in the investigation report damaged his reputation; he also asserts a contractual entitlement to disciplinary procedures before termination.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Defamation per se vs per quod viability | Powell alleges statements imply dishonesty and misconduct. | Statements do not necessarily impugn integrity; may be innocently construed. | Defamation per se not established for Nash/Edwards; Gentles may sustain defamation under dual intent; overall implied defamation survives against Gentles and XO. |
| Respondeat superior viability | Gentles acted within scope to further XO's interests. | Genuine animus and personal vendetta negate scope. | Respondeat superior viable as to Gentles; acts alleged within scope and for XO's interests. |
| Personal jurisdiction over Gentles | Gentles had Illinois-focused contacts; Calder v. Jones applies. | Contacts were insufficient or too attenuated. | Gentles subject to Illinois personal jurisdiction; Calder-based analysis supports jurisdiction. |
| Breach of contract claim - at-will employment | Handbook and reprimand created contractual disciplinary procedures before termination. | At-will status cannot be modified by handbook or statements; condonation not present. | Breach claim dismissed; handbook does not modify at-will status; no contractual obligation to specific procedures. |
| Defamation liability of XO as to Powell | XO could be liable under respondeat superior for statements by executives. | Privilege defenses apply and some statements lack publication to third parties. | Count I viable against Gentles and XO; dismissed against Nash and Edwards; qualified privilege discussed and applied to Gentles with caveats. |
Key Cases Cited
- Wynne v. Loyola Univ. of Chicago, 318 Ill.App.3d 443 (Ill. App. 2000) (defamation elements and per se considerations in Illinois)
- Patlovich v. Rudd, 949 F. Supp. 585 (N.D.Ill.1996) (innocent construction rule for defamation per se)
- Skolnick v. Correctional Medical Services, Inc., 132 F. Supp. 2d 1116 (N.D.Ill.2001) (limits of innocent construction in defamation)
- Anderson v. Vanden Dorpel, 172 Ill. 2d 399 (Ill. 1996) (innocent construction and employer-employee context)
- Marczak v. Drexel Nat. Bank, 186 Ill.App.3d 640 (Ill. App. 1989) (defamation and credibility implications in employment)
- Kakuris v. Klein, 88 Ill.App.3d 597 (Ill. App. 1980) (defamation and qualifications re plaintiff's standing)
- Rice v. Nova Biomedical Corp., 38 F.3d 909 (7th Cir. 1994) (fiduciary shield and when it does not apply)
- Calder v. Jones, 465 U.S. 783 (1984) (purposeful availment and effects test for jurisdiction)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (minimum contacts and purposeful availment standard)