Lloyd Flanner v. Chase Investment Svcs Corp. , 600 F. App'x 914 ( 2015 )

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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 13-31132
FILED
February 2, 2015
Lyle W. Cayce
LLOYD FLANNER, Clerk
Plaintiff–Appellant
v.
CHASE INVESTMENT SERVICES CORP.,
doing business as JP MORGAN SECURITIES, L.L.C.
Defendant–Appellee
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 3:11-CV-940
Before STEWART, Chief Judge, OWEN, Circuit Judge, and MORGAN,
District Judge. *
PER CURIAM: **
Lloyd Flanner brought suit against his former employer Chase
Investment Services Corp., doing business as JP Morgan Securities, L.L.C.
(JPMS), asserting claims under the Age Discrimination in Employment Act
* District Judge of the Eastern District of Louisiana, sitting by designation.
** Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should
not be published and is not precedent except under the limited circumstances set forth in
5TH CIR. R. 47.5.4.
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(ADEA), Family and Medical Leave Act (FMLA), Americans with Disabilities
Act (ADA), and the Louisiana law of defamation. The district court granted
summary judgment in favor of JPMS with respect to all claims. We AFFIRM
IN PART and REVERSE AND REMAND IN PART.
I.
Flanner was employed by JPMS as a financial advisor from August
2003 until August 9, 2010 and was assigned to the Northside and Fourth
Street branches in Monroe, Louisiana. During December 2009, Flanner was
diagnosed with a heart condition. He requested and was granted medical
leave under the FMLA to undergo surgery. Flanner returned to his position
as a financial advisor on April 5, 2010; he was 59 years old at the time. Upon
his return, he was soon back to his pre-surgery productivity and was told by
his supervisors that he was “doing great.”
Around the beginning of June, Flanner’s attorney, Todd Newman, sent
an assistant to the Northside branch to purchase a $25 money order. When
the assistant was unable to do so, Newman called Flanner for help. In
response, Flanner withdrew $25 from his personal bank account, purchased
the money order, and gave it to Newman’s assistant. Newman repaid Flanner
the $25 the following day.
In late July, JPMS management learned of this incident and began an
investigation. Flanner’s immediate supervisor, Daniel Nowak, confirmed that
Flanner had gone behind the teller line to purchase the $25 money order for a
bank customer. Flanner was suspended during the investigation and later
terminated on August 9, 2010. Flanner was replaced by the 53-year-old
Howard Johnson at the Fourth Street branch and by the 32-year-old Jason
Tiser at the Northside branch.
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Flanner’s written termination notice stated he was terminated because
he violated section 6.2 of the JPMS Code of Conduct, which prohibits
employees from “borrow[ing] money (other than nominal amounts) from or
lend[ing] money to other employees, customers or suppliers.” On September
2, 2010, JPMS filed a Form U5 with the Financial Industry Regulatory
Authority (FINRA) regarding Flanner’s termination. On the form, JPMS
stated Flanner was discharged for “violating investment-related statutes,
regulations, rules, or industry standards of conduct” and further described
the incident saying “Registered rep used his personal funds to purchase a
money order in the amount of $25 for the convenience of a bank customer.”
Flanner maintains the reason given on his written termination notice was
merely pretext for JPMS’s discriminatory termination and that the statement
made on the Form U5 was defamatory.
On June 22, 2011, Flanner filed suit in the Middle District of Louisiana
alleging discrimination claims under the ADEA, FMLA, ADA, and a claim for
defamation under Louisiana law. The district court granted summary
judgment in favor of JPMS on all claims. Flanner timely appealed.
II.
This Court reviews the grant of summary judgment de novo, applying
the same standards as the district court. 1 Summary judgment is appropriate
where “the movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” 2 A fact is
“material” if it would affect the outcome of the action, and a dispute is
“genuine” if the evidence is such that a reasonable jury could return a verdict
1 Bryan v. McKinsey & Co., Inc., 375 F.3d 358, 360 (5th Cir. 2004).
2 Fed. R. Civ. P. 56(a). See also Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986).
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in favor of the nonmoving party. 3 The Court must “view the evidence and all
factual inferences from that evidence in the light most favorable to the party
opposing the motion and all reasonable doubts about the facts are resolved in
favor of the nonmoving litigant.” 4
III.
Age Discrimination Claim
“Under the ADEA, it is unlawful for an employer ‘to fail or refuse to
hire or to discharge any individual or otherwise discriminate against any
individual with respect to his compensation, terms, conditions, or privileges
of employment, because of such individual’s age.’” 5 To establish an age
discrimination claim, an employee must prove by a preponderance of the
evidence, which may be direct or circumstantial, that age was the “but for”
cause of the employer’s adverse decision. 6
Under the McDonnell Douglas Corp. v. Green burden-shifting
framework, the employee must first establish a prima facie case of age
discrimination by showing that “(1) he was discharged; (2) he was qualified
for the position; (3) he was within the protected class at the time of discharge;
and (4) he was either i) replaced by someone outside the protected class, ii)
replaced by someone younger, or iii) otherwise discharged because of his
age.” 7 The Supreme Court has clarified that “the prima facie case requires
‘evidence adequate to create an inference that an employment decision was
based on a[n] [illegal] discriminatory criterion . . . .’ In the age-discrimination
3 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
4 Bryan, 375 F.3d at 360.
5 Machinchick v. PB Power, Inc., 398 F.3d 345, 349–50 (5th Cir. 2005) (quoting 29
U.S.C. § 623(a)(1)).
6 Gross v. FBL Fin. Servs., Inc., 557 U.S. 167, 177–78 (2009).
7 Jackson v. Cal–Western Packaging Corp., 602 F.3d 374, 378 (5th Cir. 2010)
(internal quotation marks and citation omitted).
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context, such an inference cannot be drawn from the replacement of one
worker with another worker insignificantly younger.” 8 Thus, a plaintiff’s
replacement must be “substantially younger” to create an inference of
discrimination. 9
If the employee establishes a prima facie case, “the burden shifts to the
employer to provide a legitimate, nondiscriminatory reason for terminating
employment.” 10 “If the employer satisfies this burden, the burden shifts back
to the employee to prove either that the employer’s proffered reason was not
true—but was instead a pretext for age discrimination—or that, even if the
employer’s reason is true, he was terminated because of his age.” 11 An
employee “may show pretext either through evidence of disparate treatment
or by showing that the employer’s proffered explanation is false or unworthy
of credence.” 12 “But a reason cannot be proved to be ‘a pretext for
discrimination’ unless it is shown both that the reason was false, and that
discrimination was the real reason.” 13
Ordinarily, we assume arguendo that an employee established his
prima facie case and limit our inquiry to whether the legitimate non-
discriminatory reasons given, if any, were a pretext for age discrimination. 14
In this case, however, the district court found Flanner failed to establish a
prima facie case of age discrimination. The first three elements required for a
8 O’Connor v. Consol. Coin Caterers Corp., 517 U.S. 308, 312–13 (1996) (alterations
in original) (emphasis omitted) (quoting Teamsters v. United States, 431 U.S. 324, 358
(1977)).
9 See id.10 Miller v. Raytheon Co., 716 F.3d 138, 144 (5th Cir. 2013).
11 Id. (citing Gross, 557 U.S. at 180).
12 Jackson, 602 F.3d at 378–79 (internal quotation marks and citation omitted).
13 St. Mary’s Honor Ctr. v. Hicks, 509 U.S. 502, 515 (1993).
14 See, e.g., Kean v. Jack Henry & Assocs., Inc., 577 F. App’x 342, 350 (5th Cir. 2014)
(unpublished); Golbert v. Saitech, Inc., 439 F. App’x 304, 306 (5th Cir. 2011) (unpublished);
Patel v. Midland Mem’l Hosp. & Med. Ctr., 298 F.3d 333, 342 (5th Cir. 2002).
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prima facie case of age discrimination are undisputed, but the district court
found Flanner did not establish the fourth element. In so finding, the court
reasoned that because Flanner was replaced by a worker who was
insignificantly younger than he, no inference of age discrimination was
created, and Flanner had no other evidence of age discrimination. The
district court stated:
Flanner relies solely on the fact that the two individuals who
replaced him were younger than him as a basis for establishing a
prima facie case. Flanner has presented no evidence of any
disparaging comments based on his age and notably, the
difference in Flanner’s age (59) and that of Mr. Johnson (53) was
not so disparaging to create an inference of age discrimination.
There is absolutely no evidence to validate Flanner’s claim of age
discrimination.
This Court disagrees and finds that at least one, and maybe both, of
Flanner’s replacements was young enough to create an inference of age
discrimination. The Supreme Court has stated that “[b]ecause the ADEA
prohibits discrimination on the basis of age and not class membership, the
fact that a replacement is substantially younger than the plaintiff is a far
more reliable indicator of age discrimination than is the fact that the plaintiff
was replaced by someone outside the protected class.” 15 Thus, to create an
inference of age discrimination, at least one of Flanner’s replacements must
be substantially younger than Flanner.
Unlike some of our sister circuits, 16 this Court has not settled on a
standard for what age difference qualifies as “substantially younger” such
that an inference of age discrimination may be made to establish a prima
15 O’Connor v. Consol. Coin Caterers Corp., 517 U.S. 308, 313 (1996).
16 See Grosjean v. First Energy Corp., 349 F.3d 332, 340 (6th Cir. 2003), for an
analysis of cases from various circuits finding certain age differences, without more, either
sufficient or insufficient to create an inference of age discrimination.
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facie case. 17 This Court has stated: “[t]he ADEA does not lend itself to a
bright-line age rule . . . in which replacement by a worker outside the
protected category is a convenient proof guideline.” 18 Without citation or
further elaboration, the district court found the six-year difference between
Flanner’s age and that of Johnson, his replacement at the Fourth Street
branch, “was not so disparaging to create an inference of age discrimination.”
Yet, this Court has stated twice that it is a “close question” whether a five-
year age difference, without more, is sufficient to support an inference of age
discrimination. 19 If five years is a close call, so too is six years. In close calls
such as this, this Court has considered the relative ages of the plaintiff and
the replacement employee as evidence on the ultimate issue of proving “but
for” causation rather than as a basis for finding that the employee has failed
to make a prima facie case. 20
More importantly, the district court failed to consider the fact that
Flanner was replaced by two employees: it merely addressed the age
difference between Flanner and Johnson and found the six-year age
difference was not substantial enough to support an inference of
discrimination. But Flanner’s replacement at the Northside branch, Tiser,
was twenty-seven years Flanner’s junior, and there is no doubt he was
17 See Rachid v. Jack In The Box, Inc., 376 F.3d 305, 313 (5th Cir. 2004); Bienkowski,
851 F.2d at 1506.
18 See Bienkowski, 851 F.2d at 1506 (citing McCorstin v. United States Steel Corp.,
621 F.2d 749, 754 (5th Cir. 1980)).
19 The Court decided these cases on other grounds, without deciding whether five
years is sufficiently younger to support an inference of discrimination. See Rachid, 376 F.3d
at 313 (noting that a plaintiff’s replacement being five years younger is a “close question,”
but the Court “need not reach it because [the plaintiff’s] other evidence easily establishes a
prima facie case”); Bienkowski, 851 F.2d at 1506 (noting, pre-O’Connor, that a five year age
difference “does not legally preclude the possibility of discrimination” and that “it is a close
question whether he established a prima facie case”).
20 See Bienkowski, 851 F.2d at 1506 (citing U.S. Postal Serv. Bd. of Governors v.
Aikens, 460 U.S. 711, 714 (1983)).
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“substantially younger.” Thus, the evidence presented, without more,
supports an inference of age discrimination because Flanner also was
replaced by Tiser, a substantially younger employee. Flanner has made a
prima facie case of age discrimination.
Although the district court found Flanner failed to make a prima facie
showing of age discrimination, it did perform the burden-shifting analysis
and found JPMS articulated a non-discriminatory reason for Flanner’s
termination, his violation of Section 6.2 of JPMS’s Code of Conduct, but that
Flanner did not prove the proffered reason was a pretext. The district court
stated that “[s]imply disputing JPMS’s business judgment is not enough to
prove pretext without producing evidence that the reasons stated were false
and pretextual.” For that reason, the district court found “Flanner ha[d]
failed to establish that JPMS’ [sic] reason was either false or unworthy of
credence.”
This Court agrees JPMS articulated a non-discriminatory reason for
Flanner’s termination, which shifts the burden back to Flanner to show
pretext, “either through evidence of disparate treatment or by showing that
the employer’s proffered explanation is false or unworthy of credence.” 21
Unlike the district court, we find the evidence in the record creates a factual
dispute as to whether JPMS’s proffered reason for Flanner’s termination was
pretextual. Flanner points to evidence he contends creates a factual dispute
as to whether the reason given was pretextual: (1) co-workers routinely lent
similar amounts of money to other co-workers, who also were customers of
Chase, and either such actions were not considered violations of the Code of
Conduct or those persons were not punished for violating JPMS’s policies;
21 Jackson v. Cal-Western Packaging Corp., 602 F.3d 374, 378–79 (5th Cir. 2010)
(internal quotation marks and citations omitted).
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and (2) the proffered reason was not the original reason cited for Flanner’s
termination as he was initially cited for violations of the Registered
Representatives’ Manual.
“[A] plaintiff's prima facie case, combined with sufficient evidence to
find that the employer’s asserted justification is false, may permit the trier of
fact to conclude that the employer unlawfully discriminated.” 22 In this case,
viewing the evidence in the light most favorable to Flanner, there is a
genuine dispute of material fact as to whether the proffered reason was false
and actually a pretext for discrimination. Accordingly, JPMS was not entitled
to summary judgment, and the district court’s ruling with respect to
Flanner’s ADEA claim is reversed.
FMLA Retaliation Claim
To establish a prima facie case of retaliatory discharge under the
FMLA, “the employee must show that (1) she engaged in a protected activity,
(2) the employer discharged her, and (3) there is a causal link between the
protected activity and the discharge.” 23 “Protected activity” includes both
exercising rights under the FMLA, such as taking leave, as well as opposing
practices made unlawful under the Act. 24
This Court has discussed the analysis to be used when, as here, there is
no direct evidence of discriminatory intent:
When there is no direct evidence of discriminatory intent, . . . the
familiar McDonnell–Douglas burden shifting framework [is used]
to determine whether an employer discharged an employee in
retaliation for participating in FMLA-protected activities.
Specifically, once the employee establishes a prima facie case of
retaliation, the burden shifts to the employer to articulate a
22 Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 148 (2000).
23 Richardson v. Monitronics Int’l, Inc., 434 F.3d 327, 332 (5th Cir. 2005).
24 See id.9
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legitimate, nondiscriminatory reason for the adverse employment
action. If the employer succeeds in doing so, the burden shifts
back to the employee to show by a preponderance of the evidence
that the employer’s articulated reason is a pretext for
discrimination. 25
The district court concluded Flanner failed to make a prima facie case
of retaliation because he did not establish a causal connection between the
adverse employment action and his taking FMLA leave. The court found “the
temporal element of an adverse employment action four months after
returning from taking FMLA leave is insufficient to establish a causal
connection.”
Flanner clearly was protected under the FMLA because he exercised
his right to take FMLA leave and suffered an adverse employment action
when he was terminated from his position. With respect to the third element,
proving a causal link, Flanner relies on Evans v. City of Houston, in which
this Court noted that a Texas district court found “‘a time lapse of up to four
months . . . sufficient to satisfy the causal connection for summary judgment
purposes.’” 26 But the actual time gap this Court found in Evans to be
sufficiently close was only five days. 27 JPMS cites Amsel v. Texas Water
Development Board, an unpublished opinion in which this Court affirmed
summary judgment finding a two-month gap, while “short, []is not, by itself,
enough to show a causal connection based upon temporal proximity alone.” 28
The Supreme Court has stated that “[t]he cases that accept mere
temporal proximity between an employer’s knowledge of protected activity
25 Id. at 332–33.
26 246 F.3d 344, 354 (5th Cir. 2001) (quoting Weeks v. NationsBank, N.A., No. 98-
1352, 2000 WL 341257, at *3 (N.D. Tex. 2000)).
27 Id.28 464 F. App’x 395, 402 (5th Cir. 2012) (unpublished) (citing Clark Cnty. Sch. Dist.
v. Breeden, 532 U.S. 268 (2001)).
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and an adverse employment action as sufficient evidence of causality to
establish a prima facie case uniformly hold that the temporal proximity must
be ‘very close.’” 29 Additionally, this Court’s case law, although largely
unpublished, “fits with the Supreme Court’s requirement that the temporal
proximity be ‘very close’ to show causation,” and our previous decisions that a
“four-month gap in time, standing alone, is insufficient to establish prima
facie evidence of causation.” 30
The Court is mindful the requirement of showing “causation . . . at the
prima facie stage is much less stringent than a ‘but for’ standard,” 31 and the
Court must draw all reasonable inferences in Plaintiff’s favor on this motion
for summary judgment. However, after careful review of the record, the Court
finds Flanner failed to prove his prima facie case. The four-month time lapse,
without more, is insufficient evidence to establish the causal link required to
make a prima facie case of FMLA retaliation. The district court’s ruling with
respect to Flanner’s FMLA retaliation claim is affirmed.
ADA Claim
To establish a prima facie case for violation of the ADA, a plaintiff must
show “that (a) she is disabled, has a record of having of having a disability, or
is regarded as disabled, (b) she is qualified for her job, (c) she was subjected
29 Breeden, 532 U.S. at 273–74 (quoting O’Neal v. Ferguson Constr. Co., 237 F.3d
1248, 1253 (10th Cir. 2001); citing Richmond v. ONEOK, Inc., 120 F.3d 205, 209 (10th Cir.
1997) (3–month period insufficient); Hughes v. Derwinski, 967 F.2d 1168, 1174–75 (7th Cir.
1992) (4–month period insufficient)).
30 Barkley v. Singing River Elec. Power Ass’n, 433 F. App’x 254, 260 (5th Cir. 2011)
(unpublished) (citing Ajao v. Bed Bath & Beyond, Inc., 265 F. App’x. 258, 265 (5th Cir.
2008) (per curiam) (finding temporal proximity of four months “not close enough”); Myers v.
Crestone Int’l, LLC, 121 F. App’x. 25, 28 (5th Cir. 2005) (per curiam) (three-month gap did
not, by itself, create causal link); Raggs v. Miss. Power & Light Co., 278 F.3d 463, 471–72
(5th Cir. 2002) (five-month lapse, same)). See also Everett v. Cent. Mississippi, Inc. Head
Start Program, 444 F. App’x 38, 47 (5th Cir. 2011) (unpublished) (finding temporal
proximity of five months not close enough).
31 Montemayor v. City of San Antonio, 276 F.3d 687, 692 (5th Cir. 2001).
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to an adverse employment action on account of her disability or the
perception of her disability, and (d) she was replaced by or treated less
favorably than non-disabled employees.” 32 Disability refers to “a physical or
mental impairment that substantially limits one or more of the major life
activities of such individual” and also “being regarded as having such an
impairment.” 33 “An individual meets the requirement of ‘being regarded as
having such an impairment’ if the individual establishes that he or she has
been subjected to an action prohibited under this chapter [Equal Opportunity
for Individuals with Disabilities] because of an actual or perceived physical or
mental impairment whether or not the impairment limits or is perceived to
limit a major life activity.” 34
The district court concluded Flanner failed to establish a prima facie
case under the ADA because he offered no evidence of a disability or
perceived disability. Flanner argues on appeal that it may be implied that
JPMS perceived him as disabled because JPMS was aware of his heart
surgery. In response, JPMS cites district court opinions rejecting a plaintiff’s
subjective belief and conclusory allegations as establishing a prima facie case
of having been regarded as disabled. JPMS also argues there is no basis for
an inference of perception of any impairment because Flanner testified at his
deposition that he was able to do the same work at the same production level
after returning from leave.
This Court agrees with the district court that Flanner failed to make a
prima facie case for an ADA violation because he points to no evidence
indicating JPMS perceived him as disabled. In this case, the Court finds that
32 E.E.O.C. v. Chevron Phillips Chem. Co., LP, 570 F.3d 606, 615 (5th Cir. 2009).
33 42 U.S.C. § 12102(1). See also Griffin v. United States Parcel Serv., Inc., 661 F.3d
216, 222 (5th Cir. 2011).
34 42 U.S.C. § 12102(3)(A).
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JPMS’s mere knowledge of Flanner’s heart surgery alone does not support an
inference that JPMS regarded him as disabled. Further, Flanner testified his
production level was about the same before and after surgery, so there is no
evidence Flanner was actually disabled. Because Flanner points to no
competent summary judgment evidence showing JPMS perceived him to be
disabled because of his heart condition or that he actually was disabled, the
district court’s ruling with respect to Flanner’s ADA claim is affirmed.
Defamation
Flanner’s complaint alleges JPMS defamed him by reporting a false
statement on the Form U5. Flanner contends it was false to say he violated
an investment-related industry standard of conduct when he loaned money to
a bank customer. Flanner maintains he did not violate § 6.2 of JPMS’s Code
of Conduct, but even if he did, the statement on the Form U5 was still false
because § 6.2 of JPMS’s Code of Conduct is not an investment-related
industry standard. Because this statement was injurious to Flanner’s
professional reputation, he argues the statement was defamatory per se, and
it was made with knowledge and/or reckless disregard of falsity.
The Louisiana Supreme Court in Kennedy v. Sheriff of East Baton
Rouge held that in an action by a private individual allegedly injured by a
defamatory communication by a non-media defendant, the fault required on
the part of the publisher is negligence, regardless of whether the statement is
on a matter of public or private concern. 35 Negligence in this context “is a
lack of reasonable belief in the truth of the statement giving rise to the
35 935 So. 2d 669, 680–81 (La. 2006) (holding that “the standard of negligence . . . is
to be applied in cases . . . involving a private individual allegedly injured by a defamatory
falsehood in a matter of public concern,” which is the same “negligence standard of liability
in actions by private individuals involving matters of private concern”).
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defamation.” 36 Thus, to prevail in his defamation claim, Flanner “bears the
burden of affirmatively proving (1) a false and defamatory statement; (2) an
unprivileged publication to a third party; (3) negligence (as set forth in the
Restatement (Second) of Torts § 580B) on the part of [JPMS]; and (4)
resulting injury. If even one of these required elements is found lacking, the
cause of action fails.” 37
A plaintiff’s “recovery may be precluded if the defendant shows either
that the statement was true, or that it was protected by a privilege, absolute
or qualified.” 38 JPMS asserts both defenses: (1) the statement made on the
form was true, so it was not defamatory, and (2) even if the statement is
found to be defamatory, it was privileged and made in good faith.
The Court first must examine whether Flanner pointed to competent
summary judgment evidence creating a factual dispute as to whether JPMS’s
statement on the Form U5 was false and defamatory. Flanner argues the
36 Id. at 680.
37 Id. at 681 (citation omitted). Flanner argued JPMS’s statement was defamatory
per se and that this changed his burden of proof at the prima facie stage. Traditionally,
Louisiana courts divided defamatory words into two categories: words defamatory per se,
and words susceptible of a defamatory meaning. If words were defamatory per se, the
elements of falsity, fault, and injury were presumed. However, in Kennedy, the Louisiana
Supreme Court recognized that “the protections afforded by the First Amendment
super[s]ede the common law presumptions of fault, falsity, and damages with respect to
speech involving matters of public concern, at least insofar as media defendants are
concerned.” Id. at 677. Because the Louisiana Supreme Court in Kennedy found there is no
reason to distinguish between media and non-media defendants when a matter of public
concern is involved, the presumptions of falsity, malice, and injury available in the past
when words were found to be defamatory per se no longer apply in defamation actions
involving an issue of public concern. See id. at 677–78; Starr v. Boudreaux, 978 So.2d 384,
390 (La. App. 1 Cir. 2007). In this case, the statement in the Form U5 is a matter of public
concern because the public has an interest in the regulation of the financial industry and its
employees. See Branton v. City of Dallas, 272 F.3d 730, 739 (5th Cir. 2001). Thus, because
this is a matter of public concern, the designation of defamatory per se and the attendant
presumptions of falsity, malice, and injury do not apply, and Flanner must prove all
elements of his defamation claim without the benefit of any presumptions.
38 Costello v. Hardy, 864 So. 2d 129, 141 (La. 2004) (citations omitted).
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district court erred in determining that he violated § 6.2 of JPMS’s Code of
Conduct. This Court agrees. Reasonable minds could differ on whether
Flanner, in fact, violated JPMS’s Code of Conduct. Flanner asserts his co-
workers routinely lent similar amounts of money to other co-workers, who
also were customers of Chase, without consequence. This raises a question as
to what conduct JPMS considered to be a violation of § 6.2. Additionally,
Flanner points to JPMS’s revised Code of Conduct, which provides an
example explaining that JPMS does not consider a $10.00 loan to be a
violation of its rules because $10.00 is a nominal amount. If $10.00 is a
nominal amount, a reasonable person might conclude $25.00 is nominal as
well. JPMS admitted that the addition of this example to the Code of Conduct
did not reflect a change in how it interprets § 6.2. Thus, this Court finds there
is a fact question as to whether Flanner violated § 6.2. Even if Flanner
violated § 6.2 of the JPMS Code of Conduct, a genuine factual dispute exists
as to whether this rule is an investment-related industry standard of conduct,
as indicated on the Form U5, or is merely JPMS’s internal standard of
conduct. Accordingly, JPMS is not entitled to summary judgment on the basis
that the statement was true and thus a complete defense to Flanner’s
defamation claim.
Even if JPMS’s statement on the Form U5 was false and defamatory,
the Court must determine whether JPMS nevertheless is entitled to
summary judgment because it had a conditional privilege and it did not know
the falsity of the statement or have reckless disregard for the truth or falsity
of the statement. None of the limited circumstances in which an absolute
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privilege arises is applicable in this case. 39 Thus, to be privileged, JPMS must
be entitled to a conditional, also called a qualified, privilege. The analysis for
determining whether such a privilege exists requires two steps: “First, it
must be determined whether the attending circumstances of a
communication occasion a qualified privilege. The second step of the analysis
is a determination of whether the privilege was abused, which requires that
the grounds for abuse—malice or lack of good faith—be examined.” 40 “The
practical effect of the assertion of the conditional or qualified privilege is to
rebut the plaintiff’s . . . allegations of malice (or fault, which in this case
amounts to negligence) and to place the burden of proof on the plaintiff to
establish abuse of the privilege.” 41 A conditional privilege is abused if the
defendant “(a) knows the matter to be false, or (b) acts in reckless disregard
as to its truth or falsity,” meaning “the defendant was highly aware that the
statements were probably false.” 42
Flanner concedes that JPMS is entitled to a conditional privilege but
maintains the privilege was lost because the statement was not made in good
faith. The Court agrees JPMS is entitled to a conditional privilege. FINRA
39 See Kennedy, 935 So. 2d at 681 (“An absolute privilege exists in a limited number
of situations, such as statements by judges and legislators in judicial and legislative
proceedings.”).
40 Id. at 682 (citations omitted).
41 Id. at 683 (citing Smith v. Our Lady of the Lake Hospital, Inc., 639 So.2d 730, 746
(La. 1994)). The Louisiana Supreme Court has stated:
[I]n a case such as this one, where a conditional privilege is found to
exist, the negligence standard that is part of plaintiff’s prima facie
case is logically subsumed in the higher standard for proving knowing
falsity or reckless disregard as to truth or falsity. Therefore, the
negligence analysis drops out of the case, for if the plaintiff is
incapable of proving the knowing falsity or reckless disregard as to
truth or falsity necessary to overcome the privilege, it is of no
consequence that he or she might be able to prove the lesser standard
of negligence.
Id. at 687 n.19.
42 Id. at 683–84, 88.
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requires JPMS to complete the Form U5, and the statement in the Form U5
affects a sufficiently important public interest—the regulation of the financial
industry and its employees. 43 Thus, to survive summary judgment Flanner
must point to evidence creating a genuine dispute of material fact as to
whether JPMS abused its conditional privilege. “[I]n a case such as this one,
. . . the negligence standard that is part of [Flanner’s] prima facie case is
logically subsumed in the higher standard for proving knowing falsity or
reckless disregard as to truth or falsity.” 44
The Louisiana Supreme Court has stated: “[D]etermining abuse of a
conditional privilege or malice is generally a fact question for the jury unless
only one conclusion can be drawn from the evidence.” 45 This Court finds that
more than one conclusion could be drawn from the evidence. Flanner raised
genuine disputes of material fact as to how JPMS interpreted § 6.2 of its
Code of Conduct and whether JPMS knew Flanner’s actions did not violate
an investment-related industry standard of conduct. Flanner also points out
the reason for his termination given on the Form U5 was not the original
reason cited by JPMS. 46 A reasonable trier of fact could conclude JPMS
abused its conditional privilege by either knowing its statement that Flanner
43 See id. at 682 (quoting Restatement (Second) of Torts) (“‘An occasion makes a
publication conditionally privileged if the circumstances induce a correct or reasonable
belief that a) there is information that affects a sufficiently important public interest, and
(b) the public interest requires the communication of the defamatory matter to a public
officer or a private citizen who is authorized or privileged to take action if the defamatory
matter is true.’”).
44 Id. at 687 n.19 (emphasis added).
45 Id. at 682 (internal quotation marks and citation omitted).
46 Flanner points to an email sent by a JPMS employee regarding his conduct and
the appropriate disciplinary action. The email states: “It appears that [Flanner] violated
[three] policies in the [Registered Representatives’] Manual.”
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violated an investment-related industry standard of conduct was false or
acting in reckless disregard as to the statement’s truth. 47
Because there are material facts in genuine dispute both as to whether
the statement was false and, if so, whether JPMS abused its conditional
privilege, summary judgment is reversed as to Flanner’s defamation claim.
IV.
For the foregoing reasons, the judgment of the district court is
AFFIRMED as to Flanner’s FMLA and ADA claims, and REVERSED AND
REMANDED for further proceedings consistent with this opinion as to
Flanner’s ADEA and defamation claims.
47 See id.
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