140 F. Supp. 3d 722
N.D. Ill.2015Background
- Plaintiffs (Rivera, Kensinger, Meacock, Scheuneman) were equity-portfolio employees at Allstate; Rivera was managing director. They were paid bonuses under a "pay-for-performance" plan.
- Allstate investigated possible "Dietz method" trade timing to inflate reported returns and bonuses; outside counsel Steptoe & Johnson and consultant NERA conducted analyses.
- In December 2009 Allstate terminated Plaintiffs for cause (no severance) and later disclosed in its Form 10-K that an investigation estimated about $91 million potential adverse impact to pension plans and ~$1.2 million in excess compensation to affected employees; Greffin circulated a memorandum reiterating the 10-K.
- Plaintiffs sued for defamation and FCRA violations (among other claims later dismissed or withdrawn); remaining claims against Allstate are defamation (per se and per quod theories) and a § 1681b(b)(2) FCRA claim based on investigative communications under § 1681a(y).
- At summary judgment, the court assumed Plaintiffs’ version of facts but excluded two unsigned/undated declarations (Rivera, Scheuneman) as inadmissible; trial was set for January 2016.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Defamation per se (10-K and Greffin memo) — whether statements referenced Plaintiffs sufficiently on their face | 10-K and memo, together with contextual facts (membership in Equity Division, immediate disconnection of Plaintiffs’ accounts, transfer of their portfolios), would identify Plaintiffs; per se category (imputing inability/integrity to perform) applies | Statements did not name Plaintiffs; Illinois law requires naming or sufficient indications; federal notice pleading allows reliance on documents not verbatim in complaint | Summary judgment for Allstate on per se theory: Plaintiffs lacked admissible evidence (key declarations inadmissible) to show reasonable readers would identify them; per se claim dismissed |
| Defamation per quod — falsity / substantial truth of 10-K and memo | Allstate overstated or knowingly inflated the $91M and $1.2M figures and omitted material qualifying facts from public statements, creating a false impression damaging Plaintiffs | 10-K accurately reported that numbers were modeled estimates by NERA using assumptions; substantial truth defense applies because report disclosed modeling and uncertainty | Denied summary judgment: triable fact issues exist whether publication omitted material qualifying facts and created misleading impression; plaintiff can proceed on per quod theory |
| Qualified privilege (abuse) — whether Allstate’s communications were privileged and, if so, abused | Plaintiffs: privilege overcome because investigation was reckless and Allstate may have intentionally exaggerated results; Greffin expressed surprise at 10-K detail | Allstate: communications fall within qualified privileges (employer interest/public interest/reporting investigation findings) | Denied summary judgment: genuine issues whether Allstate abused any privilege (reckless investigation, overly broad/public disclosures) |
| FCRA (§1681a(y)/§1681b) — whether Allstate satisfied post-adverse-action "summary" disclosure requirement so investigative communication is excluded from consumer-report protections | Plaintiffs: Winchell’s termination statements were vague; Allstate did not provide a post-adverse-action "summary containing the nature and substance" of Steptoe’s communication as required by §1681a(y)(2) | Allstate: Winchell followed a prepared script informing Plaintiffs they were terminated for cause based on the Dietz/pay-for-performance investigation, which satisfies the statutory summary requirement | Denied summary judgment: material fact dispute about what was communicated post-termination and whether it met the statutory "summary" standard — reasonable view that mere topics or vague cause is insufficient |
Key Cases Cited
- Green v. Rogers, 234 Ill.2d 478 (Ill. 2009) (elements of defamation under Illinois law)
- Republic Tobacco Co. v. N. Atl. Trading Co., 381 F.3d 717 (7th Cir. 2004) (defamatory per se categories and innocent construction rule)
- Tuite v. Corbitt, 224 Ill.2d 490 (Ill. 2006) (distinction between defamation per quod and per se)
- Muzikowski v. Paramount Pictures Corp., 322 F.3d 918 (7th Cir. 2003) (federal notice pleading governs defamation complaints; no verbatim pleading requirement)
- Global Relief Found., Inc. v. New York Times Co., 390 F.3d 973 (7th Cir. 2004) (substantial truth defense to defamation reporting of investigations)
- Kuwik v. Starmark Star Mktg. & Admin., Inc., 156 Ill.2d 16 (Ill. 1993) (qualified privilege and abuse standard under Illinois law)
- Pope v. Chronicle Publ’g Co., 95 F.3d 607 (7th Cir. 1996) (substantial-truth standard — gist or sting controls)
- Giant Screen Sports v. Canadian Imperial Bank of Commerce, 553 F.3d 527 (7th Cir. 2009) (abuse-of-privilege and genuine issue where defendant may have acted in reckless disregard)