Case Information
*1 Before BLACK, RONEY and COX, Circuit Judges.
BLACK, Circuit Judge:
Aрpellants, the plaintiffs and counterclaim defendants, are United States Steel, LLC (USX) and its subsidiary the Heatherwood Golf Club (Heatherwood). Appellees, the defendants and counterclaim plaintiffs, are Fletcher Yielding and two of his corporate entities, TIECO, Inc. (TIECO) and ATOZ Management, Inc. (ATOZ). TIECO is a vendor of golf course maintenance equipment, light industrial equipment, and irrigation equipment. ATOZ is the management arm of TIECO. USX operates a tractor shop, and Heatherwood operates a golf course. Prior to this litigation, USX's tractor shop and Heatherwood's golf course were customers of TIECO.
Appellants sued Appellees alleging liability under the federal RICO statutes and state law. Appellees filed several counterclaims, alleging violations of 42 U.S.C. § 1983 and state law. The district court granted Appellee Yielding summary judgment on all of Appellants' claims. The case proceeded to a jury trial. Before submitting the case to the jury, the district court granted Appellees TIECO and ATOZ judgment as matter of law on Appellant Heatherwood's claims. During jury deliberations, the district court dismissed Appellant USX's claims as a sanction for discovery violations. The jury rendered a verdict in favor of Appellees on the counterclaims, awarding $6.8 million to TIECO and $375,000 to Mr. Yielding, and the district court entered judgment accordingly. Subsequently, regarding Appellees' counterclaims, the district court denied Appellants' renewed motion for judgment as matter of law and motion for remittitur. With respect to Appellants' claims, the court denied Appellants' motion for a new trial and to vacate judgment of dismissal. At the time of trial, United States Steel LLC was constituted as the USX Corporation. *2 Lastly, the district court awarded attorney's fees and costs to Appellees in the total amount of $1,442,769.27.
Appellants contend the following rulings from the district court were erroneous: (1) the grant of judgment as a matter оf law to TIECO and ATOZ on Heatherwood's claims and the denial of Appellants' motion for a new trial on Heatherwood's claims, (2) the dismissal of USX's claims as a discovery sanction and the denial of Appellants' motion for a new trial on USX's claims, (3) the judgment awarding $6.8 million to TIECO and $375,000 to Mr. Yielding, (4) the denial of Appellants' renewed motion for judgment as matter of law on Appellees' counterclaims or, in the alternative, the denial of Appellants' motion for remittitur, and (5) the judgment awarding $1,442,769.27 in attorney's fees and costs to Appellees. [2]
The first two errors claimed by Appellants do not warrant discussion, and we affirm without opinion pursuant to 11th Cir. R. 36-1. [3] In Part I of this opinion, we address the third and fourth errors claimed by Appellants, both of which concern Appellees' counterclaims. In Part II, we address the fifth alleged error, concerning the award of attorney's fees and costs.
I. APPELLEES' COUNTERCLAIMS
Appellees' counterclaims rest on USX's cooperation with the Alabаma Attorney General's Office (AG) [4] during a criminal investigation and prosecution of Appellees. According to Appellees, the manner in which USX cooperated with the AG violated federal and Alabama law. The jury agreed. It found USX liable, under federal law, for a violation of 42 U.S.C. § 1983, and, under Alabama law, for the torts of malicious prosecution, abuse of process, interference with business relationships, civil conspiracy, and defamation. Except for the defamation tort, TIECO was the sole counterclaimant. Both TIECO and Mr. Yielding won damages under the defamation counterclaim. Appellants contend USX was entitled to judgment as matter of law on Appellees' counterclaims. In addition, Appellants challenge the judgment on the ground the district court made numerous errors at trial.
In subpart A, we set forth the admissible evidence in the record in the light most favorable to 2 Appellants raise the first four alleged errors in apрeal number 00-11309. Appellants raise the fifth alleged error in appeal number 00-12842. The two appeals have been consolidated. An affirmance pursuant to Rule 36-1 has no precedential value. See Va. Props., Inc. v. Home Ins.
Co.,
Alabama Attorney General's Office. We are not referring to the particular person who held the office of Attorney General.
Appellees. Our review of the evidence, however, does not include any evidence derived from a state judicial opinion which was erroneously entered into evidence. In subpart B, we explain why the district court's admission of the state judicial opinion constituted reversible error. In subpart C, we examine, as to each of Appellees' counterclaims, whether USX was entitled to judgment as a matter of law.
A. Background Initial Stages
The genesis of the USX-AG cooperation was a disclosure by a formеr TIECO employee, Marty Colby. By May 1995, Mr. Colby had communicated to his attorney, Victor Hayslip, that TIECO's accounting practices with respect to USX were questionable. Essentially, Mr. Colby alleged that TIECO used bogus invoices and disloyal USX employees to bill USX for materials purchased but never received. Mr. Colby admitted misappropriating goods himself. Ironically, Mr. Hayslip was an attorney with a firm, Burr & Foreman, which had been serving as USX's outside counsel for many years. Mr. Hayslip informed the AG and USX about Mr. Colby's allegations and arranged a meeting in his office on June 13, 1995.
Prior to the June 13th meeting, the AG and USX discussed Mr. Colby's allegations. At the meeting, the AG and USX interviewed Mr. Colby separately. Mr. Colby repeated his allegations about TIECO's accounting practices. USX's assistant general counsel questioned Mr. Colby's credibility. Nonetheless, both USX and the AG effectively acceded to Mr. Colby's request (made by Mr. Hayslip) that they not pursue any criminal or civil remedies against him.
Although the AG and USX interviewеd Mr. Colby separately, they jointly conferred at the June 13th meeting. When USX signaled its intention to conduct an internal audit, the AG requested that USX abstain from any actions which would alert TIECO. Accordingly, USX agreed not to interview any suspected USX employees or pursue any remedy against TIECO.
On June 27, 1995, the AG sent a letter to USX requesting any information possessed by USX about vendors, other than TIECO, who similarly defrauded USX. USX provided the requested information and indicated it was "very interested" in cooperating with the AG's investigation of TIECO and other vendors. Additionally, USX interviewed former TIECO employees, and, on July 18, 1995, forwarded summaries of the interviews to the AG. Lastly, in the summer of 1995, Mr. Hayslip called the AG on behalf of USX, Mr. Hayslip had represented Mr. Colby and Turfcare Products (TIECO's main competitor) in an unrelated lawsuit brought by TIECO over a non-compete agreement.
inquiring repeatedly about the status of the investigation.
2. The AG's Seizure of TIECO's Records
On August 30, 1995, the AG applied in state court for a warrant to seize specific documents and materials from TIECO's place of business. The affidаvit accompanying the warrant was signed and prepared by the AG's chief investigator, and it was reviewed by one of the AG's criminal prosecutors. According to the chief investigator, the information in the affidavit was gained from interviews conducted by the AG of Mr. Colby and four other former TIECO employees. Finding probable cause, the state court issued the warrant. On August 31, 1995, led by the chief investigator, the AG seized numerous TIECO documents and computer tapes.
No USX official was present during either the issuance or execution of the warrant. Moreover, the chief investigator, as well as USX, denied that USX was involved in, or even had knowledge of, the AG's efforts to procure the search warrant. No evidence in the record rebuts this denial by the chief investigator, indicates he had a motive to lie, or in any way impeaches his credibility. USX's Cooperation with the AG after the Seizure of TIECO's Records
By the time of the seizure, the AG realized it did not have the expеrtise or the resources to fully investigate the seized records and to pursue a criminal prosecution of TIECO. Accordingly, after the seizure, the AG requested auditors from victim companies, including USX. In particular, the auditors were asked to compare their own company's records with those seized from TIECO. The AG planned, with USX's cooperation, to have the auditors serve as expert witnesses in any criminal proceeding.
On three separate occasions (October 11-12, 1995, November 7-9, 1995, and January 31-February 1, 1996), USX auditors visited the AG's office to review the seized TIECO records. One of these reviews occurred after USX had filed the instant lawsuit. The auditors examined all documents related to any USX- TIECO transaction. The AG did not permit the auditors to photocopy or remove the records. Instead, the auditors took copious notes, entered data on USX computers, and created spreadsheets from the data. USX kept the AG apprized of the information gained from the audit.
Two of TIECO's suppliers were also present during portions of these reviews. At times, USX auditors reviewed documents with TIECO's suppliers. On at least one occasion, a USX auditor provided an invoice to one of TIECO's suppliers.
In addition to examining records, USX auditors assisted the AG in deciphering computer tapes seized from TIECO. Duplicate tapes were sent for reformatting to a California company, which returned the tapes *5 directly to USX along with software to read the tapes. Although the AG paid the California company for this service, it intended to seek reimbursement from USX and the other victim companies. Moreover, because the AG did not have a computer capable of reading the tapes, USX auditors analyzed the tapes on their own computer. USX and the AG exchanged results of these analyses and other information gleaned from the tapes. Once the analyses were complete, USX maintained some of the data, both on its own computers and in computer printouts.
The cooperation between USX and the AG extended to other areas. For instance, six days after the AG's seizure of TIECO's records, USX transmitted to the AG printouts of accounts payable information concerning USX-TIECO transactions; in the letter accompanying the printouts, USX stated, "[I]f we have additional ideas on how you might approach the TIECO documents now in your possession, we will be in touch." In October 1995, the AG provided USX information from its interview with a representative of a TIECO supplier. In November 1995, USX mailed to the AG photographs of property owned by a USX employee suspected of wrongdoing. In December 1995, the AG faxed to USX inventories of the seized records and copies of some seized records. In mid-December 1995, Mr. Hayslip, acting on USX's behalf, sent the AG a summary of TIECO's accounts receivable, invоices, pick tickets, and other documents relating to TIECO-USX and TIECO-Heatherwood transactions.
The highest level of the AG-USX cooperation occurred with the interviews of USX employees from the tractor shop and golf course. In November 1995, to prepare for the interviews, USX auditors drafted a lengthy memorandum to inform the AG about the allegations USX had unearthed. The memorandum detailed specifically how each USX employee had participated in the alleged scheme and provided personal information about each employee. Separately, USX provided to the AG social security numbers of the suspected employees. USX's assistant general counsel circulated a memorandum, dated December 19, 1995, which set forth the ground rules for interviewing USX employees. The memorandum called for each employee, without prior warning, to be interviewed twice—once by a team from the AG and FBI and again by a team from USX. On December 20, 1995, the AG, USX, and FBI met to prepare for the employee interviews; over the next two days, they conducted interviews of nearly every employee in accordance with the December 19th memorandum. USX threatened disciplinary action and criminal prosecutions unless the employees cooperated in the investigation. Appellants' Lawsuit
Shortly before the employee interviews, Mr. Hayslip filed the instant lawsuit on December 15, 1995, *6 on behalf of Appellants. Before filing the suit, USX had sent Mr. Hayslip information gained from its review of TIECO's seized records. Also prior to the lawsuit, Appellants made a settlement demand, giving Appellees just three days to respond. Among other things, Appellants demanded cooperation in the AG's and USX's parallel investigations and a payment of $555,977.52. That dollar figure was derived from information in TIECO's seized records. [6]
During the first half of 1996, the cooperation between the AG and USX mostly involved lеgal matters and proceedings. For example, the AG and USX conferred after the district court in this case ordered Appellants to produce "a copy of all of [TIECO's] data, computer tapes, and documents in its possession which were seized by the [AG]." In March 1996, USX's counsel, Burr & Foreman, shared legal research with the AG.
5. Mr. Yielding's Ethics Complaint Against the AG
In May 1996, attention shifted from the investigation of TIECO to an ethics complaint filed by Mr. Yielding, on behalf of himself, TIECO, and ATOZ. The complaint, filed with the Alabama State Ethics Commission (Commission), alleged the AG seized TIECO's property and then shared, with USX and Burr & Foreman, information gained from that seizure. Mr. Yielding stated he never authorized such a disclosure.
At the Commission's proceedings, appearances were made by USX's assistant general counsel, Mr. Hayslip, and James Wager, who was USX's lead auditor. The presentation given to the Commission by Mr. Wager was crucial to the AG's defense: he asserted it was probable TIECO was bribing local USX managers. However, although USX was aware that Mr. Colby had stolen some items from TIECO, Mr. Wager did not mention this fact. On July 10, 1996, the Commission concluded there were insufficient facts to find the AG had violated Alabama ethics laws. In a letter to USX, the AG expressed gratitude for USX's assistance, stating it went "beyond the call of duty." Mr. Hayslip's Statement to the Press
During the pendency of the ethics complaint, Mr. Hayslip made some derogatory comments related to the ethics complaint. One newspaper reported the following:
Victor Hayslip ... said Tieco's complaints ring hollow. "What they're doing is the equivalent of Jeffrey Dahmer complaining his victims got blood on the carpet," Hayslip said. "It's without merit." ... Hayslip said the complaints were an attempt to embarrass [the Alabama Attorney General] for political reasons.
Appellants argue that evidence of the settlement demand should not have been admitted pursuant to Fed.R.Evid. 408. We need not address this argument to resolve this case.
Similar comments were printed in multiple Alabama newspapers. Grand Jury Indictments
Another event that occurred during the pendency of the ethics complaint was a state grand jury investigation led by the AG. In June 1996, the grand jury returned seven indictments containing 125 counts alleging wrongdoing by TIECO. Twenty-one counts pertained to USX-TIECO transactions.
In his testimony before the grand jury, Mr. Hayslip misrepresented the extent of Mr. Colby's personal involvement in the scheme. [7] At the trial in this case, USX's assistant general counsel acknowledged that he was aware of Mr. Hayslip's misrepresentations. Nonetheless, USX never informed the AG, the grand jury, or the state court about the misleading aspects of Mr. Hayslip's testimony.
Besides Mr. Hayslip, the other USX representative to provide significant grand jury testimony was Mr. Wager, the lead auditor. Mr. Wager accused TIECO of billing USX for items it had never received. By the time of the grand jury proceeding, however, USX's audit team had failed to search the golf course or the tractor shop. [8] Just as he had done before the Commission, Mr. Wager failed to inform the grand jury that Mr. Colby, in participating in the alleged scheme, had stolen some items from TIECO.
The core of Mr. Wager's testimony was an explanation of TIECO's accounting system and how TIECO was billing USX for items never delivered to USX. According to Mr. Wager, TIECO would create an invoice for a certain item. The invoice would show the item was shipped to USX's tractor shop in Alabama. To bill USX, the invoice would be sent to USX's headquarters in Pittsburgh, Pennsylvania. Initially, TIECO's inventory would be debited to reflect the loss of the item. In Mr. Wager's view, all of the foregoing practices were acceptable, but the insidious aspect of TIECO's system was a so-called "adjustment account." Under this account, TIECO would credit its inventory for an item which, according to the invoice, already had been shipped to the tractor shop and for which USX had been billed. Put simply, from TIECO's accounting records, it appeared TIECO was billing USX Pittsburgh for items which were never delivered to To reiterate, we are not finding that Mr. Hayslip made misrepresentations before the grand jury. We are merely portraying the facts in the light most favorable to Appellees. Mr. Hayslip and Burr & Foreman are not parties to this appeal, and they have not been heard on this allegation. Appellees assert that, subsequent to the indictments, USX found several of the alleged missing items
at the tractor shop. However, the record citations provided by Appellees do not support this assertion. One citation is the cross-examination of Mr. Wager, but Mr. Wager stated he had no knowledge about the subsequent search. The other citation is to a state judicial opinion, which was not admissible for reasons discussed below. See infra Part I.B. Regardless, even if Appellees' assertion is true, it would not alter our legal analysis.
USX.
TIECO's explanation of its accounting system conformed, to a large extent, with the explanation given by Mr. Wager. At trial, Appellees called Pam Hackbarth, a TIECO employee who knew more than anyone about TIECO's accounting system and the adjustment account. She testified as follows:
[T]he branch secretary [for TIECO] generate[s] an invoice, and the invoice is mailed to USX in Pittsburgh for payment. USX pays. And TIECO shows the invoice paid, and credits the [a]djustment [a]ccount, and credits the account with the payment.
....
[W]hen we would bill [USX], that would be relieving our inventory of that item. And we would put a credit into the [a]djustment [a]ccount, bringing it back into inventory so it would be available.
Ms. Hackbarth admitted the adjustment account was used when TIECO was invoicing a customer for items not delivered. She further conceded that USX in Pittsburgh was not informed about the adjustment account.
Contrary to Mr. Wager's suggestion, however, the purpose of the adjustment account was not to commit fraud on USX. Rather, Ms. Hackbarth explained:
[T]he customer would want one product, and maybe because of budget reasons could not buy that product. And so [TIECO] would bill for parts.... Then [TIECO] would create the account for those parts, and that would create a credit balance. And then [the customer] ... would build a credit, and then he could buy what he needed. And it was to be items that the customer used in doing his job or taking care of the facility ....
By referring to "customer," Ms. Hackbarth was not referring to USX's headquarters in Pittsburgh, but rather to USX employees in Alabama at the tractor shop and the golf course. These Alabama employees would use TIECO's adjustment account as a means to procure items they could not otherwise obtain through the normal USX budgetary process. This fact became evident, not only from Ms. Hackbarth's testimony, but also from the testimony of former USX and TIECO employees. In any event, the Alabama employees were procuring items for use at USX's facilities, not for personal use.
The grand jury indictments against TIECO went nowhere. In April 1997, the AG voluntarily dismissed all counts related to USX. In July 1997, Judge Jаmes S. Garrett of the Circuit Court of Jefferson County dismissed the remaining counts for prosecutorial misconduct.
As part of his opinion dismissing the indictments, Judge Garrett incorporated a statement of facts prepared by TIECO in connection with its motion to dismiss the indictment. Not surprisingly, the statement of facts is quite favorable to Appellees and relied upon heavily by Appellees in their brief to this Court. As The employees worked for USX's subsidiary, Heatherwood, but their testimony was that all budgetary decisions were made by the parent corporation, USX.
we discuss immediately below, the admission of Judge Garrett's opinion was improper, see infra Part I.B, and we do not consider the evidence contained therein.
B. Admissibility of State Judicial Opinion
1. Background
The AG and TIECO were parties in the state criminal proceeding before Judge Garrett. Burr & Foreman represented USX in the proceeding, but USX was not a party. In dismissing the indictments, Judge Garrett issued an opinion which adopted in toto a memorandum of facts prepared by TIECO in connection with its motion to dismiss the indictment.
Over Appellants' objection, the district court admitted the opinion, including the memorandum of facts. The memorandum was an exhaustive account that neatly conformed to Appellees' allegations, especially with respect to the malicious prosecution, abuse of process, and civil conspiracy counterclaims. As is set forth in the margin, the memorandum depicted in great detail Appellees' view about the nature of USX's involvement in the AG's investigation of TIECO. Furthermore, Judge Garrett did not mince words, as he found, "[T]he misconduct of the [AG] in this case far surpasses in both extensiveness and measure the totality of any prosecutorial misconduct ever previously presented to or witnessed by this Court."
Judge Garrett's opinion was a significant portion of Appellees' case (as well as their brief on appeal). During the examination of witnesses, Appellees' сounsel repeatedly referred to the proceedings before Judge Garrett, and on at least one occasion, counsel read verbatim an extensive portion of the opinion. In closing argument, Appellees' counsel told the jurors if they had any question about the credibility of Appellants' witnesses, they should read Judge Garrett's opinion.
Prior to trial, Appellants filed a motion in limine objecting to Judge Garrett's opinion, and they raised the objection again at trial. Appellants argued the opinion should be excluded pursuant to Fed.R.Evid. 401 and Fed.R.Evid. 403. We address solely the Rule 403 argument. Fed.R.Evid. 403
The memorandum of fact described, inter alia: (1) cooperation between the AG and USX in reviewing TIECO's seized documents, (2) a meeting on November 8, 1995, where USX informed the AG that it intended to sue TIECO and would be providing the AG with copies of charts; (3) the coordination between the AG and USX in having TIECO's computer tapes reformatted and read; (4) USX's agreement to repay the AG for reformatting the tapes; (5) an implication that either USX's lead auditor, Mr. Wager, or the AG's investigator, John Mulligan, had lied about the repayment agreement; (6) legal advice given to the AG and USX that "USX should not be used as quasi government agency"; (7) cooperation between the AG and USX in conducting interviews of USX's employees; and (8) the AG's sending TIECO's records to USX in preparation for the interviews.
Rulings on the admission of evidence are reviewed for abuse of discretion.
See, e.g., United States
v. Adair,
As a preliminary matter, had Appellants lodged an objection pursuant to Fed.R.Evid. 801(c), the
admissibility of Judge Garrett's opinion could be easily resolved.
See United States v. Jones,
Despite not being raised, the conclusion that Judge Garrett's opinion was inadmissible hearsay is not
inconsequential to our analysis under Rule 403.
[11]
Rule 403 involves balancing, on the one side, the evidence's
probative value and, on the other side, the evidence's dangers, including its unfairly prejudicial and
misleading nature. By comparison, hearsay is disfavored because it is not subjected to the oath, the rigors
of cross-examination, or the first-hand scrutiny of the jury.
See United States v. Parry,
11 Rule 403 provides, "Although relevant, evidence may be excluded if its probative value is
substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the
jury, or by consideration of unduе delay, waste of time, and needless presentation of cumulative
evidence."
In
Bonner v. City of Prichard,
binding precedent all decisions of the former Fifth Circuit handed down prior to the close of business on September 30, 1981. Of course, the Confrontation Clause is not applicable to civil cases, but we refer to its jurisprudence
to illustrate hearsay's unreliability.
The hearsay in Judge Garrett's opinion—which does not satisfy a firmly-rooted exception —was
particularly unreliable and misleading. Although the statement of facts was presented to the jury as Judge
Garrett's finding, it was prepared entirely by Appellees' counsel. In effect, the admission of the statement of
facts permitted counsel to testify on his client's behalf, without being cross-examined. Further, the statement
of facts was intended to exculpate TIECO, and thus, it was self-serving and unreliable.
Cf. United States v.
Reme,
Of course, Judge Garrett accepted the statement of facts by incorporating it into his opinion. But this
made the hearsay contained therein even more unfairly prejudicial and misleading. As the Fourth Circuit has
stated, "[J]udicial findings of fact present a rare case where, by virtue of their having been made by a judge,
they would likely be given undue weight by the jury, thus creating a serious danger of unfair prejudice."
Nipper,
The Fourth Circuit's
Nipper
decision is particularly pertinent to the instant case. When we ruled in
Jones
that a judicial finding was inadmissible hearsay, we relied heavily on
Nipper. See Jones,
The district court abused its discretion in admitting Judge Garrett's opinion. The jury, not Judge Garrett, was charged with making factual findings on Appellees' allegations in this case. Moreover, Appellants have shown they were substantially prejudiced by the admission of Judgе Garrett's opinion, as Appellees relied on the opinion throughout the trial. Most notably, during closing argument, Appellees' counsel told the jury to use the opinion to make credibility determinations. Therefore, the district court's admission of the opinion constituted reversible error.
As we noted in
Jones,
the common law did not permit the admission of a judgment from another
case.
C. Judgment as a Matter of Law
A party is entitled to judgment as a matter of law "[i]f during a trial by jury [the opposing] party has
been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find
for [the opposing] party on that issue." Fed.R.Civ.P. 50(a)(1). We review de novo the denial of a Rule 50
motion and apply the same standard as the district court.
See, e.g., Bogle v. Orange County Bd. of County
Comm'rs,
Under Rule 50, a court considers the evidence in the light most favorable to the non-movant and
grants all reasonable inferences in favor of the non-movant.
See, e.g., Bogle,
To violate 42 U.S.C. § 1983, a party must be acting "under color of state law."
Id.; e.g., Willis v.
Univ. Health Servs., Inc.,
993 F.2d 837, 840 (11th Cir.1993). Although USX is a private corporation,
Appellees contend USX nonetheless violated § 1983 because it acted in concert with the AG, an arm of the
state of Alabama. Even if this assertion is true, it doеs not, by itself, establish liability under § 1983. To state
a claim under § 1983, a party must also prove a violation of a particular constitutional or federal statutory
provision.
See id.; Whiting v. Traylor,
As a preliminary matter, the district court's jury instruction on the Due Process Clause and the Fourth Amendment was inadequate. The charge merely stated the following:
Under the Fourth Amendment ..., every person ... has the right to be free from an unreasonable search and seizure. Under the Fourteenth Amendment ..., no state may deny to any of its citizens "due process of law." Notice of contemplated action and an opportunity to be heard are the two rights guaranteed by the due process clause of the Constitution.
This instruction was empty of any substance, as it does little more than restate the cоnstitutional text. Like all causes of action, constitutional claims have elements which the claimant must prove. See, e.g., Eleventh Circuit Pattern Jury Instructions (Civil Cases) § 2.2, at 198 (1999) (describing elements of Fourth Amendment claim). The hollow instruction in this case, however, effectively permitted the jury to usurp the district court's role as interpreter of the Constitution.
Nevertheless, even if the jury had been properly instructed, it could not have reasonably found a
constitutional violation. In arguing the Due Process Clause was violated, Appellees point to much of the
same evidence they rely on for the state law malicious prosecution claim.
[15]
But TIECO has no right under
the substantive component of the Due Process Clause to be free from criminal prosecution without probable
clause.
See Albright v. Oliver,
Whether a malicious prosecution claim can be brought via the procedural component of the Due
Process Clause is an open question in this circuit.
[16]
See Whiting,
Amendment. For instance, we observed in Whiting:
Labeling ... a section 1983 claim as one for a "malicious prosecution" can be a shorthand way of describing a kind of legitimate section 1983 claim: the kind of claim where the plaintiff, as part of the commencement of a criminal proceeding, has been unlawfully and forcibly restrained in violation of the Fourth Amendment and injuries, due to that seizure, follow as the prosecution goes ahead.
85 F.3d at 584 ; accord Uboh v. Reno,141 F.3d 1000 , 1002-03 (11th Cir.1998). But, in this case, TIECO, a corporation, was never arrested, detained, or seized in any way. Thus, the Fourth Amendment violation envisioned by Whiting could not have occurred in this case.
Clause is violated whenever prosecution is not predicated on probable cause). As discussed below, probable cause existed to prosecute TIECO, and thus Appellees have not established the common-law tort. See infra Part I.C.2. Thus, no violation of procedural due process could have occurred. [17]
Finally, we address Appellеes' allegations concerning the search and seizure of TIECO's records.
Appellees must rely on the Fourth Amendment, the explicit constitutional text that protects citizens from
searches and seizures.
See Albright,
In sum, there is no evidence in the record to support a finding that Appellees' federal constitutional rights were violated. The district court should have granted USX judgment as a matter of law on the § 1983 counterclaim. Malicious Prosecution
Under Alabama law, to prevail on a malicious prosecution claim, a plaintiff (in this case, TIECO) must show: (1) a prior judicial proceeding was instituted by the defendant (in this case, USX); (2) the defendant acted without probable cause in the prior proceeding; (3) the defendant acted with malice in Appellees also argue that TIECO's procedural due process right was violated because the AG and USX conspired to violate Alabama's ethics laws. This contention lacks merit.
instituting the prior proceeding; (4) the рrior proceeding ended in favor of the plaintiff; and (5) the plaintiff
was damaged.
See Poff v. Hayes,
Probable cause is "a reasonable ground for suspicion, supported by circumstances sufficiently strong
in themselves to warrant a cautious man in the belief that the person accused is guilty of the offense charged."
Simpson v. Life Ins. Co. of Ga.,
In this case, undisputed facts establish that, at the time of the grand jury's investigation, USX
reasonably suspected TIECO of criminal activity. As mentioned previously, TIECO's description of its
accounting system essentially comported with the description given by USX to the grand jury. Mr. Wager,
USX's lead auditor, told the grand jury that TIECO billed USX in Pittsburgh for items not delivered to USX's
tractor shop or golf course. Similarly, Ms. Hackbarth, TIECO's employee in charge of accounting, testified
at trial that TIECO was billing USX in Pittsburgh for one item while delivering a different item to the tractor
shop and golf course. In other words, the item being billed was not being delivered. Although TIECO may
have had an innocent explanation for this accounting system, the system, on its face, gave USX a reasonable
ground for suspecting TIECO of fraud. Furthermore, even though USX may have had reason to question the
credibility of TIECO's principal accuser (Mr. Colby), that did not denigrate the probable cause created by
Grаnd jury indictments are prima facie evidence of probable cause under Alabama law.
See, e.g.,
Simpson v. Life Ins. Co. of Ga.,
To state an abuse of process claim, one must allege the abuse of a judicial process.
See
W. Page
Keeton,
Prosser and Keeton on Torts
§ 121, at 898 (5th ed.1984) (cited in
Drill Parts and Serv. Co. v. Joy
Mfg. Co.,
The plaintiffs in Drill Parts, like Appellees here, alleged that the defendants had used a criminal search warrant to gather information for a civil suit against the plaintiffs. See id. at 1282, 1286. Noting that malice was an element of an abuse of process claim, [19] the Supreme Court of Alabama held, "[T]o establish malice in this case[,] the plaintiffs must show that the defendants willfully caused a criminal search warrant to issue for the wrongful purpose of obtaining discovery for a civil action against the plaintiffs." Id. at 1289 (emphasis added); accord Keeton, supra, § 121, at 898 (stating an essential element is "a wilful act in the use of the process not proper in the regular conduct of the proceeding"). In the instant case, the evidence is insufficient to show that USX "willfully caused" the search warrant for TIECO's premises.
Granted, USX was cooperating with the AG both before and after the issuance of the search warrant,
and USX used information from the seized records to prepare its settlement demand. To reiterate, however,
the challenged process must be a judicial one, that is the search warrant—not the AG's investigation.
[20]
Nothing in the record indicates that USX controlled or influenced, or even participated in, the decision to seek
and execute the warrant. No USX representative was present for either the procurement or execution of the
warrant. Further, according to the AG's chief investigator (who sought and executed the warrant), all the
information in the affidavit accompanying the warrant application was gained from the AG's own interviews
of former TIECO employees. Most importantly, the chief investigator unequivocally denied that USX was
The other elements for an abuse of process claim under Alabama law are ulterior purpose and
wrongful use of process.
See, e.g., Caldwell v. City of Tallassee,
involved in, or had knowledge of, procurement of the search warrant, and Appellees presented no evidence to rebut or impeach this sworn testimony. Therefore, the district court should have granted USX judgment as a matter of law on the abuse of process counterclaim.
4. Tortious Interference With Business Relations
To prove tortious interference with business relations in Alabama, a plaintiff must show: (1) the
existence of a contract or business relation, (2) defendant's knowledge of the contract or business relation,
(3) intentional interference by the defendant with the contract or business relation, (4) absence of justification
for the defendant's interference, and (5) damage to the plaintiff as the result of the defendant's interference.
See Mut. Savs. Life Ins. Co. v. James River Corp. of Va.,
TIECO's claim under this tort hinges on interactions between USX and TIECO's suppliers. Specifically, while USX was reviewing TIECO's seized records, two of TIECO's suppliers were also present and reviewing the documents; on one occasion, USX provided an invoice to a supplier. These minimal interactions, as a matter of law, did not constitute tortious interference with business relations. Appellees have presented no evidence that USX intentionally interfered with a contract or business relation between TIECO and its suppliers. Furthermore, Appellees have not pointed to any evidence indicating the use of fraud, force, or coercion by USX. The district court should have granted USX judgment as a matter of law on the counterclaim for tortious interference with business relations. Defamation
As previously noted, unlike the other counterclaims, the defamation action sought relief fоr both Mr. Yielding and TIECO. Appellees contend that USX is liable for defamation because its outside counsel, Mr. Hayslip, compared TIECO and Mr. Yielding to Jeffrey Dahmer, the convicted mass murderer. [21]
Under Alabama law,
[22]
whether a statement is reasonably capable of defamatory meaning is a
The allegedly defamatory statement is fully set forth above.
See supra
Part I.A.6.
To state a defamation claim in Alabama, a plaintiff must allege: (1) a false and defamatory
statement concerning the plaintiff; (2) an unprivileged communication of that statement to a third party;
(3) fault amounting at least to negligence on the part of the defendant; and (4) either actionability of the
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question of law for the court.
See Blevins v. W.F. Barnes Corp.,
Equally well established is the rule that once a plaintiff has alleged that the statement defamed him
in a certain manner, the plaintiff is thereafter bound by that construction of the statement.
See Smith Bros.
& Co. v. W.C. Agee & Co.,
In light of the circumstances and context of Mr. Hayslip's statement, no reasonable person could have construed it to be defamatory as alleged by Appellees. The context was USX's allegations concerning fraud by TIECO and Appellees' allegations concerning an unethical and illegal investigation by the AG and USX. Under these circumstances, any reasonable person who heard or read Mr. Hayslip's statement would have inferred the following: USX was strongly implying, through a distasteful metaphor, that Appellees were guilty of fraud and that Appellees' ethics complaint was without merit.
Such an implication was capable of having defamatory meaning in that Appellees' reputation could
statement irrespective of special harm or the existence of special harm caused by the publication of the
statement.
McCaig v. Talladega Pub'g Co.,
have been diminished if the community believed Appellees were committing fraud and filing frivolous complaints. But Appellees did not argue this construction оf the statement to the jury. Rather, Appellees averred that their reputation was diminished because the community, after hearing Mr. Hayslip's statement, would believe they were comparable, in some fashion, to a convicted mass murderer. Considering the circumstances surrounding Mr. Hayslip's statement, no reasonable person could have thought Appellees were similar to a mass murderer. Therefore, the district court erred by not granting judgment as a matter of law to USX on the defamation counterclaim. Civil Conspiracy
Under Alabama law, civil conspiracy is not an independent action; rather, a plaintiff must have a
viable underlying cause of action.
See Drill Parts,
II. ATTORNEY'S FEES AND COSTS
Pursuant to 42 U.S.C. § 1988(b), Appellees were awarded $1,332,024.86 in attorney's fees. Section 1988(b) permits attorney's fees to the "prevailing party" for actions brought under various civil rights provisions, including 42 U.S.C. § 1983. As is evident from Part I.C.1 of our opinion, Appellees did not prevail on the § 1983 claim. Therefore, insofar as it awarded attorney's fees, the judgment must be vacated.
Appellees were also awarded $110,744.4 in costs. Fed.R.Civ.P. 54(d) permits a court to award costs,
other than attorney's fees, to the prevailing party. In light of our holdings, further proceedings are required
in the district court, as it is no longer clear which party should be considered the prevailing party.
Cf. Terry
Props., Inc. v. Standard Oil Co.,
III. CONCLUSION
We hold as follows: (1) We AFFIRM the judgment as a matter of law in favor of Appellees on Appellant Heatherwood's claims. (2) We AFFIRM the dismissal of Appellant USX's claims. (3) We REVERSE the denial of Appellants' motion for judgment as matter of law on Appellees' counterclaims for a violation of 42 U.S.C. § 1983, malicious prosecution, abuse of process, tortious interference with business relations, defamation, and civil conspiracy. (4) We REVERSE the judgment of the district court awarding $6.8 million to Appellee TIECO and $375,000 to Appellee Yielding. (5) We VACATE the judgment awarding $1,442,769.27 in attorney's fees and costs to Appellees and REMAND for further proceedings consistent with this opinion.
AFFIRMED in part, REVERSED in part, VACATED and REMANDED in part.