Fiber Systems International, Inc. v. Roehrs , 470 F.3d 1150 ( 2006 )

United States Court of Appeals
Fifth Circuit
REVISED DECEMBER 14, 2006
IN THE UNITED STATES COURT OF APPEALS FILED
FOR THE FIFTH CIRCUIT November 22, 2006
Charles R. Fulbruge III
Clerk
No. 05-41213
FIBER SYSTEMS INTERNATIONAL INC
Plaintiff - Counter Defendant - Appellant - Cross-
Appellee
v.
DANIEL ROEHRS; MICHAEL FLOWER; THOMAS HAZELTON; RICK HOBBS;
KIERAN MCGRATH; APPLIED OPTICAL SYSTEMS, INC., OPTECONN G.P.,
INC., AND OPTECONN, L.P., D/B/A OPTICAL CABLING SYSTEMS
Defendants - Counter Claimants - Appellees -
Cross-Appellants
Appeal from the United States District Court
for the Eastern District of Texas, Sherman
Before KING, GARWOOD, and JOLLY, Circuit Judges.
KING, Circuit Judge:
Fiber Systems International, Inc. appeals (1) the district
court’s entry of a take-nothing judgment on the company’s claim
for damages under the Computer Fraud and Abuse Act, 18 U.S.C.
§ 1030, (2) the district court’s grant of partial summary
judgment dismissing the company’s claim for injunctive relief
under the Act, and (3) the district court’s denial of judgment as
a matter of law and a new trial on the defamation counterclaim
1
raised by Daniel Roehrs, Michael Flower, Thomas Hazelton, Rick
Hobbs, and Kieran McGrath (collectively, the “individual
defendants”). Defendants conditionally cross-appeal (1) the
district court’s grant of partial summary judgment dismissing
defendants’ counterclaim for defamation of Applied Optical
Systems, Inc., Opteconn G.P., Inc., and Opteconn, L.P., d/b/a
Optical Cabling Systems (collectively, the “corporate
defendants”) and (2) the district court’s judgment as a matter of
law denying defendants’ claim that Fiber Systems International
defamed the individual defendants through statements in e-mails
and letters. For the reasons that follow, we AFFIRM in part,
REVERSE in part, VACATE in part, and REMAND for further
proceedings.
I. FACTUAL AND PROCEDURAL BACKGROUND
The claims at issue in this appeal arose from the final days
of the struggle for control over Fiber Systems International,
Inc. (“FSI”), a company that manufactures harsh-environment
fiber-optic connectors for military use. The principal opponents
in this conflict are brothers--Michael Roehrs, who was at that
time part of the group that had a majority ownership of FSI, and
defendant Daniel Roehrs, who was part of the minority group of
shareholders. Daniel Roehrs and the other individual defendants,
all of whom served as officers and directors of FSI, initiated
litigation in 2001 to determine ownership of the company. The
2
lawsuit settled in August 2003 with an agreement allowing Michael
Roehrs to buy out the minority owners’ stake in the company.
When the transaction closed on December 8-9, 2003, the individual
defendants’ employment was terminated and Michael Roehrs took
control as Executive Chairman.
In the 2004 suit on appeal here, FSI alleged that defendants
violated the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C.
§ 1030, as they left the company. Specifically, FSI asserted
that during their departure the defendants “knowingly and
intentionally accessed, deleted, downloaded, copied, took, and
stole FSI’s confidential business and proprietary information and
trade secrets, without authorization, from FSI’s computers,”
misappropriated and stole FSI’s computer equipment, and used and
disseminated the wrongfully obtained information through the new
companies that they formed: Daniel Roehrs, Thomas Hazelton, and
Michael Flower through Applied Optical Systems, Inc. (“AOS”) and
Rick Hobbs and Kieran McGrath through Opteconn G.P., Inc.
(“Opteconn”) and Opteconn, L.P., d/b/a Optical Cabling Systems
(“OCS”). FSI sought damages and injunctive relief under
§ 1030(a)(4), (a)(5), and (g) of the CFAA to compensate for the
cost of data recovery and to prevent the defendants from
continuing to use and disseminate FSI’s trade secrets.
Defendants filed a defamation counterclaim alleging that FSI
falsely accused them of being thieves. They relied on several
documents in which FSI allegedly accused the defendants of, inter
3
alia, stealing its intellectual property, as well as deposition
testimony showing that FSI accused the individual defendants of
being thieves or stealing FSI’s intellectual property.
Defendants later moved for partial summary judgment on FSI’s
claim for injunctive relief, arguing that FSI failed to establish
the prerequisites for such relief because there was no evidence
that any of the defendants were currently accessing FSI’s
computers or threatening access in the future.1 FSI moved for
partial summary judgment on the corporate defendants’
counterclaim, arguing that the evidence was insufficient to show
that the corporate defendants were defamed. The district court
granted both motions.
In March 2005, the case proceeded to a jury trial on the
remaining claims. At the conclusion of the evidence, the
district court submitted FSI’s claims under § 1030(a)(4) and
(a)(5) of the CFAA to the jury, but submitted only three
statements to the jury on defendants’ defamation counterclaim: a
police report filed by FSI alleging that defendants had committed
theft and statements made by FSI to two companies accusing
defendants of being thieves.
With regard to FSI’s claims, the jury found that none of the
individual defendants violated § 1030(a)(5) but that three
defendants--Daniel Roehrs, Thomas Hazelton, and Rick Hobbs--
1
Defendants also moved for summary judgment on FSI’s
entire CFAA claim, which the district court denied.
4
violated § 1030(a)(4), entitling FSI to $36,000 in total damages.
However, the district court entered a take-nothing judgment,
holding that § 1030 does not create a civil cause of action for
violations of subsection (a)(4).
As to defendants’ counterclaims, the jury found that FSI
maliciously accused all five individual defendants of being
thieves in its statements to the two companies but that the
police report was not filed with actual malice. Based on the two
defamatory statements, the jury awarded the individual defendants
$100,000 each in compensatory damages and $1,000,000 each in
punitive damages. Because Texas law places a cap on punitive
damage awards, the district court reduced the punitive damages to
$200,000 for each defendant.
After the jury verdict, FSI filed a renewed motion for
judgment as a matter of law and, in the alternative, for a new
trial. The district court denied this motion, and FSI timely
filed a notice of appeal.
II. DISCUSSION
In this appeal, FSI challenges the district court’s holding
that § 1030 of the CFAA does not create a civil cause of action
for subsection (a)(4), as well as the court’s grant of summary
judgment dismissing FSI’s CFAA claims for injunctive relief. FSI
also contends that the district court erred in denying judgment
as a matter of law because the jury’s defamation verdict was
5
based on evidence that was never admitted for substantive use and
the statements allegedly made by FSI were nondefamatory.
Finally, FSI argues that the district court erred in denying a
new trial because the jury verdict contained inconsistencies and
the district court improperly admitted evidence of nondefamatory
statements, which prejudiced the jury’s defamation findings.
Defendants conditionally cross-appeal the district court’s
grant of summary judgment dismissing the defamation claims that
were based on statements against the corporate defendants,
arguing that the statements should have been submitted to the
jury as substantive evidence of defamation. Defendants also
conditionally cross-appeal the district court’s decision not to
submit those statements to the jury as additional instances in
which FSI defamed the individual defendants.2
In the analysis that follows, questions of law are reviewed
de novo. See Af-Cap, Inc. v. Republic of Congo, 462 F.3d 417,
423 (5th Cir. 2006).
A. FSI’s CFAA Claims
1. Civil Liability Under § 1030(a)(4)
Despite the jury’s finding that Daniel Roehrs, Thomas
Hazelton, and Rick Hobbs violated § 1030(a)(4) of the CFAA,
2
Defendants stated that they only wished to pursue these
cross-appeals in the event that this court does not affirm the
district court’s final judgment. Because we do not, the cross-
appeals are considered in this discussion.
6
entitling FSI to damages totaling $36,000, the district court
held that the CFAA does not create a civil cause of action for
violations of § 1030(a)(4), and it entered a take-nothing
judgment on the claim. FSI appeals, alleging that civil claims
for violations of § 1030(a)(4) can be brought under § 1030(g) and
that the jury found the elements necessary for entry of judgment
on FSI’s behalf. We agree.
The CFAA criminalizes various fraudulent or damaging
activities related to the use of computers. Two of its
provisions were before the jury in this case. Section 1030(a)(4)
prohibits the “knowing[] . . . access[ of] a protected computer
without authorization,” with intent to defraud, if “such conduct
furthers the intended fraud and [the violator] obtains anything
of value.” 18 U.S.C. § 1030(a)(4). Section 1030(a)(5) punishes
those who cause damage to a protected computer, either through
the knowing transmission of a program, information, code, or
command, or through intentional, unauthorized computer access.
Civil actions are authorized for some, but not all,
violations of § 1030's substantive provisions. Section 1030(g)
provides:
Any person who suffers damage or loss by
reason of a violation of this section may
maintain a civil action against the violator
to obtain compensatory damages and injunctive
relief or other equitable relief. A civil
action for a violation of this section may be
brought only if the conduct involves 1 of the
factors set forth in clause (i), (ii), (iii),
(iv), or (v) of subsection (a)(5)(B) . . . .
7
Based on its reading of § 1030(g), the district court held that
the section does not create a civil action for violations of
§ 1030(a)(4). Similarly, defendants argue that the explicit
terms of § 1030(g) only authorize civil actions for violations of
§ 1030(a)(5).
However, this interpretation is at odds with the language of
the statute, which plainly allows such an action to proceed.3
Section 1030(g) extends the ability to bring a civil action to
any person suffering damage or loss under “this section,” which
refers to § 1030 as a whole, as subsection (g) does not proscribe
any conduct itself. And although § 1030(g) refers to subsection
(a)(5)(B), the statute does not limit civil suits to violations
of § 1030(a)(5). Indeed, if Congress intended to limit civil
actions in this manner, it could have simply provided that civil
actions may only be brought for violations of subsection (a)(5).
Instead, the statute provides that a claim brought under any
of the subsections of § 1030 must involve one of the factors
listed in the numbered clauses of subsection (a)(5)(B). These
factors are:
(i) loss to 1 or more persons during any
1-year period (and, for purposes of an
investigation, prosecution, or other
proceeding brought by the United States only,
3
In cases involving statutory construction, the plain
language of the statute is conclusive unless Congress clearly
expressed a contrary intent. Burlington N. & Santa Fe Ry. Co. v.
Poole Chem. Co., 419 F.3d 355, 362 (5th Cir. 2005).
8
loss resulting from a related course of
conduct affecting 1 or more other protected
computers) aggregating at least $5,000 in
value;
(ii) the modification or impairment, or
potential modification or impairment, of the
medical examination, diagnosis, treatment, or
care of 1 or more individuals;
(iii) physical injury to any person;
(iv) a threat to public health or safety; or
(v) damage affecting a computer system used by
or for a government entity in furtherance of
the administration of justice, national
defense, or national security . . . .
18 U.S.C. § 1030(a)(5)(B). Accordingly, a civil action may be
maintained under § 1030(a)(4) of the CFAA if the violative
conduct involves any one of these factors.4 Our interpretation
is consistent with that of other circuits that have addressed
this question. See P.C. Yonkers, Inc. v. Celebrations the Party
& Seasonal Superstore, LLC, 428 F.3d 504, 512 (3d Cir. 2005) (“We
do not read section 1030(g)'s language that the claim must
involve one or more of the numbered subsections of subsection
(a)(5)(B) as limiting relief to claims that are entirely based
only on subsection (a)(5), but, rather, as requiring that claims
brought under other sections must meet, in addition, one of the
five numbered (a)(5)(B) ‘tests.’”); Theofel v. Farey-Jones, 359
F.3d 1066, 1078 n.5 (9th Cir. 2004) (“[S]ubsection (g) applies to
4
Thus, for a civil action involving a violation of
subsection (a)(4), the requirements of subsection (a)(5)(A) need
not be met.
9
any violation of ‘this section’ and, while the offense must
involve one of the five factors in (a)(5)(B), it need not be one
of the three offenses in (a)(5)(A).”).
Nonetheless, defendants argue that even if a civil cause of
action may be maintained under § 1030(a)(4) when one of the
§ 1030(a)(5)(B) factors is established, the jury instructions for
FSI’s § 1030(a)(4) claim do not mention any of those factors.
Only the first factor from § 1030(a)(5)(B) is at issue here,
requiring loss during any 1-year period that aggregates to at
least $5,000 in value.
We review jury instructions for abuse of discretion when the
instructions were properly objected to in the district court.
See United States v. Freeman, 434 F.3d 369, 377 (5th Cir. 2005).
But when the challenging party failed to preserve the error
below, the instructions are reviewed for plain error. Positive
Black Talk Inc. v. Cash Money Records Inc., 394 F.3d 357, 368
(5th Cir. 2004). To avoid plain error review, a specific
objection must have been made on the ground raised on appeal,
rather than a general objection to the instructions as a whole or
an objection on a different ground. See id.; United States v.
Fuchs, 467 F.3d 889, 500 (5th Cir. 2006). Defendants objected to
the § 1030(a)(4) instructions on the ground that “there is no
civil cause of action under (a)(4) of the CFAA,” but did not
object on the ground that the jury was not instructed on the loss
element, and accordingly this challenge is subject to plain error
10
review.
“In reviewing jury instructions for plain error, we are
exceedingly deferential to the trial court.” Tompkins v. Cyr,
202 F.3d 770, 784 (5th Cir. 2000). For defendants to prevail
under the plain error standard, they must show that (1) an error
occurred; (2) the error was plain, which means clear or obvious;
(3) the plain error affects substantial rights; and (4) failing
to correct the error would seriously impact the fairness,
integrity, or public reputation of judicial proceedings.
Septimus v. Univ. of Houston, 399 F.3d 601, 607 (5th Cir. 2005).
In determining whether a particular jury instruction was
erroneous, we must consider the instructions as a whole. Russell
v. Plano Bank & Trust, 130 F.3d 715, 721 (5th Cir. 1997).
Although the jury charge failed to specifically instruct the jury
to find one of the § 1030(a)(5)(B) factors as a prerequisite to
civil liability under § 1030(a)(4), the damages instruction
required the jury to determine the amount of loss caused by the
CFAA violation. Following this instruction, the jury found that
the three defendants’ violations of § 1030(a)(4) caused FSI loss
totaling $36,000, which far exceeds the $5,000 loss requirement.
Despite defendants’ argument that the “loss” found in the damages
instruction is somehow different from the substantive element of
“loss” within § 1030(a)(5)(B)(i), the damages instruction defined
11
“loss” exactly as defined in § 1030.5 The damages instruction
also required the jury to find that the loss was “proximately
caused by the conduct” that violated § 1030(a)(4), which was more
than enough to satisfy the § 1030(g) requirement that the
violative conduct “involve” one of the § 1030(a)(5)(B) factors.
And even if this aspect of the instructions was erroneous, the
jury’s damages finding shows that no substantial rights were
affected, as the jury would have found the $5,000 minimum met if
instructed properly.
Further, although the damages instruction erroneously failed
to require a finding that the $5,000 minimum loss occurred during
a one-year period, the time element was inherent in the jury’s
finding, demonstrating that no substantial rights were affected.
Of the damages alleged by FSI, defendants only identify $26,000,
incurred by the efforts of a data recovery expert, as including
some charges that derived from more than a year after the time of
the CFAA violation. But § 1030(a)(5)(B)(i) does not require that
the loss only occur within a year of the CFAA violation; rather,
it requires that the loss aggregate to $5,000 “during any 1-year
period.” 18 U.S.C. § 1030(a)(5)(B)(i) (emphasis added). As
5
As the jury instructions and § 1030 provide, “the term
‘loss’ means any reasonable cost to any victim, including the
cost of responding to an offense, conducting a damage assessment,
and restoring the data, program, system, or information to its
condition prior to the offense, and any revenue lost, cost
incurred, or other consequential damages incurred because of
interruption of service.” 18 U.S.C. § 1030(e)(11).
12
defendants acknowledge, the data recovery expert first became
involved in November 2004, and his $26,000 fee included work
through January 2005, all of which took place well within a one-
year span. Regardless, the jury found $36,000 in loss, which at
a minimum must have included $10,000 in loss associated with
FSI’s original data recovery efforts, all of which took place
within a one-year span itself. Accordingly, the district court’s
failure to instruct the jury that it must find a loss of $5,000
during a one-year period was inconsequential.
2. Injunctive Relief
FSI also appeals the district court’s summary judgment
dismissal of FSI’s claim for injunctive relief under the CFAA.
The district court held that injunctive relief was unavailable to
FSI because the CFAA only allows an injunction to prevent ongoing
or future unauthorized access to FSI’s computers, neither of
which is shown here. FSI responds that it is threatened with
present and future harm from defendants’ possession and use of
trade secrets stolen by defendants through the acts that violated
§ 1030(a)(4) and that an injunction should be available under the
CFAA to remedy such a harm.
We need not address the question of whether an injunction
may issue against the use of the information obtained through a
past violation of § 1030(a)(4). Although the jury found that
defendants violated § 1030(a)(4), which required a finding that
13
the defendants obtained something of value through their unlawful
computer access, the jury also found that FSI falsely accused
defendants of being thieves. Thus, the value obtained by
defendants could not have included stolen trade secrets.
“[T]he scope of injunctive relief is dictated by the extent
of the violation established,” and an injunction must be narrowly
tailored to remedy the specific action necessitating the
injunction. John Doe #1 v. Veneman, 380 F.3d 807, 818 (5th Cir.
2004) (citing Califano v. Yamasaki, 442 U.S. 682, 702 (1979));
Valley v. Rapides Parish Sch. Bd., 646 F.2d 925, 942 (5th Cir.
May 1981). Because the jury determined that defendants did not
steal trade secrets through the acts that violated § 1030(a)(4),
the requested injunction would be improper under the CFAA.6
B. FSI’s Motion for Judgment as a Matter of Law
FSI also appeals the district court’s denial of judgment as
a matter of law, arguing that the evidence upon which the jury’s
defamation verdict was based could not be considered as
substantive evidence of defamation. FSI further contends that
even if the evidence is considered substantively, it was
insufficient to support a claim of defamation per se.
6
FSI has also failed to show any other irreparable harm
that would result from a failure to grant an injunction. To
obtain an injunction, FSI must establish “(1) success on the
merits; (2) that a failure to grant the injunction will result in
irreparable injury; (3) that said injury outweighs any damage
that the injunction will cause the opposing party; and (4) that
the injunction will not disserve the public interest.” VRC LLC
v. City of Dallas, 460 F.3d 607, 611 (5th Cir. 2006).
14
We review a district court’s ruling on a motion for judgment
as a matter of law de novo. Delano-Pyle v. Victoria County, 302
F.3d 567, 572 (5th Cir. 2002). Under this standard, all evidence
is viewed “in the light and with all reasonable inferences most
favorable to the party opposed to the motion.” Id. (quoting
Resolution Trust Corp. v. Cramer, 6 F.3d 1102, 1109 (5th Cir.
1993)). This court will not reverse the district court’s denial
of the motion “unless a party has been fully heard on an issue
and there is no legally sufficient evidentiary basis for a
reasonable jury to find for that party on that issue.” Id.
(quoting Ellis v. Weasler Eng’g, Inc., 258 F.3d 326, 337 (5th
Cir. 2001)).
1. Substantive Evidence
Under the Federal Rules of Civil Procedure, depositions may
be used to “contradict[] or impeach[] the testimony of deponent
as a witness, or for any other purpose permitted by the Federal
Rules of Evidence.” FED. R. CIV. P. 32(a)(1). One of these other
purposes is the use of a witness’s prior inconsistent statements
from a deposition as substantive evidence. FED. R. EVID.
801(d)(1)(A); Gower v. Cohn, 643 F.2d 1146, 1153 n.11 (5th Cir.
May 1981). Conceding that Michael Roehrs’s video deposition was
admissible under these rules for both substantive and impeachment
purposes, FSI contends that the defendants only actually used the
deposition to impeach Michael Roehrs during cross-examination,
15
not as substantive evidence. According to FSI, this rendered the
jury unable to consider the deposition as evidence of defamation
under Gower v. Cohn, 643 F.2d at 1153 n.11.
Gower recognized that “materials once admitted for
impeachment [do not necessarily] also become substantive
evidence” and held that the deposition evidence of prior
inconsistent statements in that case was only offered to impeach.
Id. at 1153 n.11. However, Gower involved a situation in which
both the district judge and the offering party clearly believed
that the evidence was being used only to impeach, and in which
the relevant jury charge “only instructed the jury that [the]
statements could be used as impeachment tools.” Id. Unlike
Gower, the district judge in this case believed that “defendants
used the prior inconsistent statements not merely to impeach, but
also to prove that FSI had in fact defamed them,” and the jury
instructions provided that “[i]n determining whether any fact has
been proved . . . [the jury] may, unless otherwise instructed,
consider the testimony of all witnesses,” which includes a
witness’s video deposition testimony.7
7
This instruction was not tempered, as FSI claims, by a
subsequent provision in the jury instructions that, “[i]n
determining the weight to give to the testimony of a witness,”
the jury should consider “whether there was evidence that at some
other time the witness said or did something . . . that was
different from the testimony the witness gave” during trial.
This latter instruction merely provides that the jury may
consider prior inconsistent statements for the purpose of
impeachment, not that the jury may consider such statements only
for that purpose. In contrast, the instruction in Gower “only
16
Because the deposition testimony was accepted as both
impeachment and substantive evidence by the district judge and
submitted to the jury for both purposes, FSI can only challenge
the propriety of that decision. Yet, as discussed above, the
testimony was admissible as substantive evidence under Rule
801(d)(1)(A). Further, FSI failed to object to the jury
instructions or request an instruction limiting the jury’s
consideration of the testimony to impeachment purposes. FSI had
the burden of requesting such an instruction, and its undisputed
failure to do so renders the jury instructions susceptible only
to a challenge for plain error. See FED. R. EVID. 105; Savoie v.
Otto Candies, Inc., 692 F.2d 363, 370 (5th Cir. 1982); United
States v. Booty, 621 F.2d 1291, 1298-99 (5th Cir. 1980). As the
deposition testimony was actually admissible for substantive use,
no plain error exists. See Booty, 621 F.2d at 1299; United
States v. Leslie, 542 F.2d 285, 289 (5th Cir. 1976).
2. Defamation Per Se
Defamation is a false statement about a person, published to
a third party, without legal excuse, which damages the person’s
reputation. Moore v. Waldrop, 166 S.W.3d 380, 384 (Tex. App.--
instructed the jury that [prior inconsistent] statements could be
used as impeachment tools,” preventing the consideration of those
statements as substantive evidence. Gower, 643 F.2d at 1153
n.11. Gower’s reliance on United States v. Dennis, 625 F.2d 782,
796 n.7 (8th Cir. 1980), which denied substantive status for
statements that jury instructions deemed “were to be used for
impeachment only,” confirms that Gower’s holding on this point
was based on a more limited instruction than is present here.
17
Waco 2005, no pet.). In a claim for defamation per se, “[t]he
words are so obviously hurtful that they require no proof that
they caused injury in order for them to be actionable.”8
Columbia Valley Reg’l Med. Ctr. v. Bannert, 112 S.W.3d 193, 199
(Tex. App.--Corpus Christi 2003, no pet.). “For a defamatory
oral statement to constitute slander per se, it must fall within
one of four categories: (1) imputation of a crime, (2)
imputation of a loathsome disease, (3) injury to a person’s
office, business, profession, or calling, and (4) imputation of
sexual misconduct.” Gray v. HEB Food Store No. 4, 941 S.W.2d
327, 329 (Tex. App.--Corpus Christi 1997, writ denied). The
first category, which is at issue here, is met by a statement
that “unambiguously and falsely imputes criminal conduct to” a
party. Id. FSI argues that its allegedly defamatory statements
did not unambiguously impute criminal conduct and were not false.
The evidence of FSI’s defamatory remarks was provided by the
testimony of Michael Roehrs, who spoke of statements that he made
on FSI’s behalf to Neil Wilkin at Optical Cable Corporation and
statements that FSI employee Mike Dabrowski made to Lockheed
Martin. On cross-examination, after Michael Roehrs was asked
whether he had told Neil Wilkin that the defendants were thieves
or had stolen property, Roehrs answered that he told Neil Wilkin
“that there has been misappropriation . . . of intellectual
8
In contrast, a claim for defamation per quod requires
proof of actual damages. Moore, 166 S.W.3d at 384.
18
property” but denied calling them thieves. Defendants’ counsel
then played the following video deposition testimony from Michael
Roehrs:
Q. Any other customers or vendors you know of
that Fiber Systems has said to them the
defendants [are] thieves or have stolen
property?
A. Ne[i]l Wilkin with Optical Cable
Corporation.
Q. All right. Who told him that?
A. I did.
Also, after Michael Roehrs denied that Mike Dabrowski told a
Lockheed Martin employee that defendants were thieves,
defendants’ counsel played the following video deposition
testimony from Roehrs:
Q. Has FSI told anybody at Lockheed Martin
that the defendants are thieves?
A. I think Mike Dabrowski, moreover, has let
them know that there has been a
misappropriation of intellectual property.
Q. By these defendants?
A. Yes.
. . . .
Q. And he was authorized to make these
comments by Fiber Systems?
A. Absolutely.
FSI first argues that this testimony does not show
statements that are defamatory per se because they do not impute
a crime. FSI acknowledges the extensive precedent holding that a
19
false accusation of theft is defamatory per se, but argues that
the recent Texas Court of Appeals decision in Moore v. Waldrop
establishes that statements like those made here are
nondefamatory because they merely involve terms of general
disparagement.
Moore dealt with the defamatory nature of the statement,
“You don’t want to hire him, he’s a crook.” 166 S.W.3d at 383.
The court held that standing alone, the word “crook” was merely a
term of general disparagement, and did not impute a specific
crime. Id. at 384; see also Billington v. Houston Fire & Cas.
Ins. Co., 226 S.W.2d 494, 496 (Tex. Civ. App.--Fort Worth 1950,
no writ)) (holding that the use of the words “liar” and “crook”
were nondefamatory because they were used only as opprobrious
terms). The district court here distinguished Moore by observing
that the word “crook” differs from “thief” because the latter
“much more directly imputes a crime than the word ‘crook,’” and
the court illustrated the point by quoting multiple,
nondefamatory dictionary definitions for the word “crook.” FSI
challenges this conclusion by pointing to an alternative
definition of “crook” as “a person who steals or cheats, swindler
or thief,” WEBSTER’S NEW WORLD DICTIONARY 330 (3d college ed. 1991),
and by quoting several arcane, nondefamatory definitions of the
word “thief,” including its meanings as a “kind of wild bee said
to rob hives” and an “excrescence in the snuff of a candle.” See
17 THE OXFORD ENGLISH DICTIONARY 934-35 (J.A. Simpson & E.S.C. Weiner
20
eds., 2d ed. 1989). Accordingly, FSI argues that the word
“crook” is no different than the word “thief,” and the outcome
here should be the same as in Moore.
We need not resolve a battle of dictionary definitions in
this appeal. Texas case law firmly establishes that falsely
accusing someone of stealing or calling someone a “thief”
constitutes defamation per se. See, e.g., Bennett v. Computer
Assocs. Int’l, Inc., 932 S.W.2d 197, 200 (Tex. App.--Amarillo
1996, writ denied) (“One who falsely imputes to another the crime
of theft commits slander per se. . . . Falsely calling someone a
‘crook’ or ‘thief’ or falsely accusing him of stealing property
falls within the parameters of slander per se . . . .”); see also
Glenn v. Gidel, 496 S.W.2d 692, 697-98 (Tex. Civ. App.--Amarillo
1973, no writ); Anderson v. Alcus, 42 S.W.2d 294, 296 (Tex. Civ.
App.--Beaumont 1931, no writ). In contrast, as recognized in
Moore, Texas courts have determined that the term “crook” does
not inherently have the same defamatory content. See, e.g.,
Moore, 166 S.W.3d at 384; Billington, 226 S.W.2d at 496; Arant v.
Jaffe, 436 S.W.2d 169, 177-78 (Tex. Civ. App.--Dallas 1968, no
writ). But when the word “crook” is used in a context imputing
theft, it is also defamatory per se. See Bennett, 932 S.W.2d at
200 (holding that “[f]alsely calling someone a ‘crook’” was
defamatory per se where the defendant called the plaintiff “a
‘thief’ and a ‘crook’ who had stolen . . . computer software”).
While it is similarly possible that a false allegation of
21
theft could be made in a context that renders it nondefamatory,
such a situation is not presented here. To affirm the district
court’s decision, it is sufficient that “the words used [were]
reasonably capable of a defamatory meaning.” Musser v. Smith
Protective Servs., Inc., 723 S.W.2d 653, 654-55 (Tex. 1987). “In
answering this question, the court must construe [each] statement
as a whole in light of surrounding circumstances based upon how a
person of ordinary intelligence would perceive the entire
statement.”9 Gray, 941 S.W.2d at 329. “The surrounding
circumstances are the setting in which the alleged slanderous
statement is spoken, consisting of the context of the statement
and the common meaning attached to the statement.” Moore, 166
S.W.3d at 386. “Only when the court determines the language is
ambiguous or of doubtful import should the jury then determine
the statement’s meaning and the effect the statement’s
9
Although FSI agrees that courts must look to the
surrounding circumstances in determining whether a statement is
defamatory per se, FSI also argues that courts cannot look to the
factual context of statements without turning such a claim into
one for defamation per quod, which requires proof of actual
damages, because courts cannot consider innuendo in a defamation
per se claim. Innuendo refers to “extrinsic evidence used to
prove a statement’s defamatory nature” and “includes the aid of
inducements, colloquialisms, and explanatory circumstances.”
Moore, 166 S.W.3d at 385.
However, Moore also points out that “[c]onsidering the
surrounding circumstances does not necessarily require the use of
extrinsic evidence,” as courts must consider the context in which
the statement was made and the common meaning of the statement.
Id. As discussed above, FSI’s statements were defamatory per se
under these considerations, and extrinsic evidence need not be
considered.
22
publication has on an ordinary reader.” Musser, 723 S.W.2d at
655.
Here, deposition evidence showed that Michael Roehrs told
Neil Wilkin that defendants were thieves or had stolen
property,10 which directly imputes specific crimes under Texas
law.11 See TEX. PEN. CODE ANN. § 31.03 (Vernon 2005) (punishing
theft of property); Id. § 31.05 (Vernon 2005) (punishing theft of
trade secrets); see also Gray, 941 S.W.2d at 329 (determining
that an accusation of shoplifting was slanderous per se because
shoplifting was punishable under the Texas Penal Code). As the
defamation cases discussed above illustrate, the common meaning
of FSI’s statements imputed the crime of theft. And the
surrounding circumstances present no factors that would alter the
meaning of the statements, particularly considering the evidence
in the light most favorable to the defendants. In fact, Michael
Roehrs described in his live testimony that the statement to Neil
Wilkin was made in the context of a discussion about the
10
FSI contends that Michael Roehrs’s deposition statement
was insufficient evidence of defamation because he responded to
the ambiguous question of whether FSI had communicated that
“defendants [are] thieves or have stolen property.” However,
both alternatives are equally defamatory, in that they both
impute the commission of the crime of theft.
11
FSI’s briefs only focus on whether the word “thief” is
defamatory after Moore, leaving unaddressed whether Mike
Dabrowski’s statement that defendants “misappropriat[ed] . . .
intellectual property” constituted defamation. We note, however,
that Texas law defines a thief as, in part, someone who
“unlawfully appropriates property.” TEX. PEN. CODE ANN § 31.03
(Vernon 2005).
23
misappropriation of FSI’s property by defendants, which supports
the conclusion that the accusation of theft imputed that crime.
Nonetheless, FSI argues that from the context of the
ongoing, heated controversy between FSI and the defendants, no
person of ordinary intelligence could believe that FSI’s
statements were anything more than rhetorical outbursts of an
angry and frustrated business owner, much less a real accusation
of theft. FSI relies on the Supreme Court’s opinion in Greenbelt
Co-Op Publishing Association v. Bresler, 398 U.S. 6, 13-14
(1970), which held that an accusation of blackmail during a
heated city council debate was mere rhetorical hyperbole because
the word, in context, clearly referred to the unreasonableness of
legal negotiating proposals discussed at the debate rather than
the actual crime of blackmail.12 But unlike Greenbelt, the
circumstances here only bolster the conclusion that Michael
12
FSI also cites state court cases from California,
Georgia, and Connecticut to support this argument, but all
involved a context that made the theft accusation nondefamatory.
See Rosenauer v. Scherer, 88 Cal. App. 4th 260, 280 (Cal. App. 3d
Dist. 2001) (involving a context that showed that the defendant
was criticizing the plaintiff’s political position rather than
accusing the plaintiff of the crime of theft); Mathis v. Cannon,
573 S.E.2d 376, 382-83 (Ga. 2002) (holding that a theft
accusation, in context, referred only to the “ongoing debate
about [a] garbage disposal dispute,” rather than an actual
criminal act); Yakavicke v. Valentukevicius, 80 A. 94, 96 (Conn.
1911) (holding from the context of the theft accusation that the
statement would be interpreted as conveying “that the plaintiff
had cheated the club,” not that the plaintiff had actually stolen
from the club). Unlike these cases, the context of FSI’s theft
allegations does not reveal anything from which a person of
ordinary intelligence would derive a noncriminal implication.
24
Roehrs was referring to the commission of a crime. The
accusation of theft, in context, did not refer to activities
readily identifiable to the listener as innocuous, as in
Greenbelt, but instead referred to the defendants’ alleged
misappropriation of FSI’s intellectual property. The mere fact
that an accusation arose from a heated controversy does not strip
the statement of its defamatory content where a person of
ordinary intelligence would nonetheless interpret the statement
to impute a crime.
Finally, FSI argues that the statements made by FSI were
true. “The truth of a statement is a defense to a claim for
defamation.” Gustafson v. City of Austin, 110 S.W.3d 652, 656
(Tex. App.--Austin 2003, pet. denied). This defense “does not
require proof that the alleged defamatory statement is literally
true in every detail; substantial truth is sufficient.” Id. FSI
argues that its statements were substantially true because the
jury found that three of the defendants violated 18 U.S.C. §
1030(a)(4) and that FSI’s report to the Allen Police Department
was made without actual malice.
However, the jury specifically found that FSI’s theft
allegations were not substantially true. At most, the jury
findings would be inconsistent, requiring a new trial. Willard
v. The John Hayward, 577 F.2d 1009, 1011 (5th Cir. 1978). Thus,
FSI’s argument is properly addressed in connection with its
argument that the district court should have granted a new trial
25
based on inconsistent jury findings, which is discussed later in
this opinion. For purposes of the district court’s denial of
FSI’s motion for judgment as a matter of law, the only question
is whether the jury had a legally sufficient basis for finding
that the allegations were not substantially true, and we are
satisfied that defendants’ testimony provided such a basis.
C. Defendants’ Cross-Appeal
Defendants raise in their cross-appeal two issues related to
the district court’s treatment of several documents that
allegedly show additional defamatory statements by FSI. First,
defendants argue that the district court incorrectly granted
summary judgment dismissing their claims that FSI defamed the
corporate defendants in the documents. Second, defendants
contend that the district court erred by failing to submit those
documents to the jury as additional instances of defamation
against the individual defendants, which was equivalent to
judgment as a matter of law for FSI on those issues. See
Turlington v. Phillips Petroleum Co., 795 F.2d 434, 444 (5th Cir.
1986) (“The district court below failed to submit this issue to
the jury, in effect granting [the opposing party] a directed
verdict on that theory of recovery.”).
The documents at issue are e-mails and letters sent by FSI
employees or agents to various parties. Exhibit 34 is a February
2004 e-mail from Michael Roehrs accusing either his mother or
26
Daniel Roehrs of “supporting child molesters.” Exhibit 60, which
is a January 2004 letter from the new FSI management team to
business associates after the transition in power, notified the
recipients of the change and asked for their assurance that they
“will not manufacture any proprietary FSI parts or utilize FSI
design features for any non-FSI personnel or former FSI
employees.” The letter also asked the recipients to let FSI know
immediately if contacted by former FSI employees. Exhibit 61 is
an October 2004 letter from FSI’s attorneys to the Defense Supply
Center in Columbus, Ohio (the “DSCC”), which said that “certain
confidential and proprietary information and trade secrets . . .
of FSI have been misappropriated and stolen by Applied Optical
Systems.” The letter then asked that the DSCC “refrain from
releasing any information submitted by AOS . . . in order to
protect FSI’s trade secrets and confidential proprietary
information which have been wrongfully taken by certain
individuals at AOS and unlawfully distributed.”
In Exhibit 74, an October 2004 e-mail to officials of the
DSCC, Michael Roehrs wrote that “The Minority Group (Now known as
Applied Optical Systems and/or Optical Cabling Systems) have
begun using our intellectual property and trade secrets and are
entering the market.” The e-mail also stated that “they have
provided stolen proprietary information to” the DSCC and that
“they are using the government as a tool to launder our
proprietary information and trade secrets.” Finally, Exhibits
27
90-92 were letters from FSI’s lawyers to three companies stating
that “FSI asserts and has reason to believe that these companies
are in possession of and/or have acquired FSI’s confidential
proprietary and business information and trade secrets. FSI also
believes that one or more of these companies are using,
benefiting from, and/or disseminating FSI’s confidential
proprietary and business information and trade secrets.”
The district court held that the documents were not capable
of defamatory meaning because they did not “make[] any specific
allegations that the entities stole FSI proprietary information
or knew it to be stolen, or directly accuse[] the corporate
defendants of wrongdoing.” The court determined that only
Exhibit 74 was even arguably defamatory, but that the e-mail “was
intended to update the [DSCC] on a good-faith dispute between FSI
and the corporate defendants about whether the information the
corporate defendants were submitting was FSI proprietary
information.” Accordingly, the court determined that Exhibit 74
was mere “hyperbolic language” alerting the DSCC “that the
information the corporate defendants submitted was the subject of
litigation between the two parties and stat[ing] FSI’s theory of
the case, albeit in somewhat stronger terms than its pleadings.”
As we discussed previously, the district court’s role was to
construe each statement in light of the surrounding circumstances
to determine how the statement would be perceived by a person of
ordinary intelligence. Gray, 941 S.W.2d at 329. If this inquiry
28
shows that a statement falsely and unambiguously imputes criminal
conduct, it is defamatory per se. Gray, 941 S.W.2d at 329. If
the statement is ambiguous or cannot be fully understood without
the use of extrinsic evidence, the statement is not defamatory
per se, and extrinsic evidence can be considered only under a
defamation per quod theory. Moore, 166 S.W.3d at 386.
Here, the district court properly held that two of the
documents were not capable of defamatory meaning towards the
corporate defendants. Exhibit 34, in which Michael Roehrs
accuses his mother or Daniel Roehrs of “supporting child
molesters,” does not mention the corporate defendants at all.
Exhibit 60, in which FSI notified business associates of the
change in management, contains no statements that could impute
any crime, merely asking the recipients not to manufacture FSI
parts or use FSI features for former employees.
However, Exhibits 61 and 74 are reasonably capable of
defamatory meaning, and in some respects are almost identical to
the defamatory statements that the district court ultimately
submitted to the jury. Exhibit 61, sent by FSI’s attorneys to
the DSCC, stated that AOS “misappropriated and stole[]” FSI’s
trade secrets, and that FSI’s trade secrets were “unlawfully
distributed” by AOS to the DSCC. These statements plainly impute
a crime, and their context, which encourages the letter’s
recipient to refrain from releasing information submitted to them
by AOS, supports the defamatory nature of the statements.
29
Further, Exhibit 74, an e-mail from Michael Roehrs to the DSCC,
accused AOS and OCS of “provid[ing] stolen proprietary
information” to the DSCC, and stated that these acts were done to
“launder [FSI’s] proprietary information and trade secrets.”
Texas law criminalizes the knowing and unconsented
“communicat[ion] or transmi[ssion of] a trade secret,” TEX. PEN.
CODE ANN. § 31.05(b), and despite the district court’s belief that
the e-mail was merely intended to update the DSCC as to the
litigation at issue here, the statements alleging transmission of
stolen trade secrets went beyond such a purpose.
Accordingly, the district court erred in granting summary
judgment on the corporate defendants’ defamation claims based on
Exhibits 61 and 74. The allegedly defamatory statements in
Exhibits 90-92 present a closer question, and the district court
should reconsider its decision on those exhibits in light of this
opinion.13
However, the district court properly refused to submit any
of these documents to the jury as substantive evidence of
defamation of the individual defendants. “For a defamatory
statement to be actionable, it must refer to an ascertainable
person.” Robertson v. Sw. Bell Yellow Pages, Inc., 190 S.W.3d
13
In its order on the summary judgment motions, the
district court noted that the doctrine of absolute privilege
“very likely applies to the attorney letters here,” and that a
fact issue remained as to whether the privilege was available for
the e-mails sent by Michael Roehrs. This issue was not raised on
appeal, and we express no opinion on the matter.
30
899, 902 (Tex. App.--Dallas 2006, no pet.). A person is
ascertainable “if he is named in the statement or if those who
know the person would understand that the statement was referring
to the person.” Ledig v. Duke Energy Corp., 193 S.W.3d 167, 180
(Tex. App.--Houston [1st Dist.] 2006, no pet.). Further, “a
member of a group has no cause of action for a defamatory
statement directed to some or less than all of the group when
there is nothing to single out the plaintiff.” Eskew v.
Plantation Foods, Inc., 905 S.W.2d 461, 462 (Tex. App.--Waco
1995, no writ). Whether a party is ascertainable is a question
of law for the court, but is submitted to the jury if the
language is ambiguous or of doubtful import. Ledig, 193 S.W.3d
at 180.
Defendants first argue that Exhibit 61 was directed not only
at AOS, but the individual defendants as well. However, the
language of the letter attributes criminal action to AOS, not to
the individuals who work for AOS, and is incapable of defamatory
meaning against the individual defendants. See Ledig, 193 S.W.3d
at 180 (holding that statements about a company’s actions did not
defame a member of the company’s senior management). The letter
does refer to information “wrongfully taken by certain
individuals at AOS,” but nothing identifies any particular
individual defendant.14 Similarly, Exhibit 74 refers to “[t]he
14
The defendants argue that Michael Roehrs’s testimony
admits that the references to the corporate defendants in several
31
Minority Group (Now known as Applied Optical Systems and/or
Optical Cabling Systems)” and alleges current criminal behavior.
Although the letter references a past designation of the
individuals as a group of minority owners in FSI, the context of
the letter--which refers to that group’s present status as AOS
and OCS and alleges present crimes--shows that the crimes are
only attributed to the named companies. Further, Exhibits 90-92
make no reference at all to any of the individual defendants,
mentioning only the acts of the corporate defendants.
Defendants also point to Exhibit 57, which alleges that
“[c]ertain individuals have admitted under oath that they
violated” the CFAA, but the exhibit does not identify any
particular individuals. Finally, Exhibit 34 may accuse Daniel
Roehrs of “supporting child molesters,” but defendants fail to
identify any crime that such an allegation imputes.
D. FSI’s Motion for a New Trial
Accompanying FSI’s post-verdict motion for judgment as a
matter of law, the company moved in the alternative for a new
trial. In this appeal, FSI challenges the district court’s
denial of a new trial, alleging that the jury verdict contained
inconsistent answers to the special interrogatories and that the
jury finding on defamation was improperly influenced by the
of the documents were intended to encompass all defendants.
However, the question is not whether the speaker intended to
identify a person, but rather whether the words would be
understood in such a way by those who know the person.
32
spillover prejudice of inadmissible evidence. “We review a
district court’s ruling on a motion for new trial for abuse of
discretion.” Int’l Ins. Co. v. RSR Corp., 426 F.3d 281, 300 (5th
Cir. 2005). This court also gives “great deference to the
district court ruling when it has denied the new trial motion and
upheld the jury’s verdict.” Id.
1. Inconsistent Jury Findings
“If the jury gives inconsistent answers to special
interrogatories, the case must be remanded for a new trial.”
Willard v. The John Hayward, 577 F.2d 1009, 1011 (5th Cir. 1978).
In determining whether answers are inconsistent, we look to
“whether the answers may fairly be said to represent a logical
and probable decision on the relevant issues as submitted.” FDIC
v. Fid. & Deposit Co., 45 F.3d 969, 977 (5th Cir. 1995) (citation
omitted). A jury’s answers “should be considered inconsistent,
however, only if there is no way to reconcile them.” Willard,
577 F.2d at 1011. This court makes “a concerted effort to
reconcile apparent inconsistencies in answers to special verdicts
if at all possible.” Ellis v. Weasler Eng’g Inc., 258 F.3d 326,
343 (5th Cir. 2001).
FSI argues that two different jury findings contradict the
jury determination that FSI falsely and maliciously accused
defendants of being thieves. First, FSI contends that the jury
finding that three of the defendants violated 18 U.S.C.
33
§ 1030(a)(4) is equivalent to a finding that those defendants
were thieves. Second, FSI argues that the jury’s determination
that FSI filed the police report of computer theft without malice
establishes that FSI’s accusations that defendants stole the
intellectual property on those computers were made without malice
as well.
However, each of these findings can be reconciled. First,
the finding that three defendants violated § 1030(a)(4) did not
necessarily establish that the defendants were thieves. Section
1030(a)(4) deals with unlawful access of computer systems to
further fraud. 18 U.S.C. § 1030(a)(4). Although the jury found
that three defendants violated this section, and that their
unlawful access caused a loss to FSI totaling $36,000, the
determination did not require a finding that the defendants stole
trade secrets or anything else. Section 1030(a)(4) does require
a finding that the violator obtained something of value by means
of the unlawful access, but the value need not be a trade secret
or even something that was stolen. The jury could have found
that the value obtained by defendants inhered in the temporary
use or possession of computer hardware,15 as FSI suggested in its
15
Section 1030(a)(4) provides an exception where there is
no liability if “the object of the fraud and the thing obtained
consists only of the use of the computer and the value of such
use is not more than $5,000 in any 1-year period.” Here, the
jury could have found an object of fraud beyond the use of the
computer.
34
closing arguments,16 or some other value that was obtained
without theft.
Additionally, the finding that FSI did not act with actual
malice in filing the police report of computer theft does not
establish, as FSI claims, that the report of theft was true or
that later statements were made without malice as well. As the
jury was instructed, “actual malice means that the party making
the publication acted with actual knowledge that it was false or
with reckless disregard of whether it was false or not.”
Accordingly, the jury finding on the police report does not mean
that the jury believed that the allegations of theft were
actually true, but merely that FSI believed it was true to the
extent necessary to avoid liability. Further, the jury could
have determined that FSI sincerely believed when the police
report was filed that the defendants stole computer equipment,
but recklessly disregarded the truth when FSI accused defendants
of stealing the company’s intellectual property in statements
made two months later. The statements are therefore easily
reconcilable.
2. Spillover Prejudice
16
On the element that the defendants “intended to obtain
something of value,” FSI’s counsel argued in part that defendants
“took hardware worth more than $5,000.” Although FSI was
suggesting that defendants stole the hardware, the jury could
have believed the three defendants’ testimony that any hardware
in their possession was intended to be, and was in fact, returned
to FSI.
35
In United States v. Edwards, 303 F.3d 606, 639 (5th Cir.
2002), this court considered whether evidentiary “spillover from
invalid claims can be a basis for granting a new trial.” We
stated that to make such a claim, a party must “[a]t a minimum .
. . show that [it has] experienced some prejudice as a result of
the joinder of invalid . . . claims, i.e., that otherwise
inadmissible evidence was admitted to prove the invalid
claims.”17 Id. at 640. FSI argues in this appeal that the
jury’s defamation findings were improperly prejudiced by other
allegedly defamatory statements that were admitted by the
district court and submitted to the jury even though the court
held that they were nondefamatory as a matter of law.
Defendants, in addition to arguing that the evidence was not
prejudicial, contend that FSI did not properly preserve a
spillover prejudice argument, only raising relevance objections
to the evidence when introduced at trial.
Unlike Edwards and similar spillover prejudice cases from
other circuits, this is not a situation where one of several
claims was held invalid and the reviewing court must determine
whether evidence properly admitted for the invalid claim had a
prejudicial effect on the jury’s determination of the other
17
Noting that such an argument had never been addressed by
this court, the Edwards court acknowledged only “that perhaps a
grant of a new trial might be appropriate in some cases of
‘retroactive misjoinder’” before rejecting the spillover
argument.
36
claims.18 Rather, this appeal involves evidence that was
admitted by the district court, over FSI’s objections, for the
valid defamation claims discussed in the previous section, and
there is no need to discuss cases that apply a standard prejudice
inquiry to unique procedural circumstances.19 The relatively
straightforward question here--preserved for appeal by FSI’s
relevance objections--is whether the district court abused its
discretion in admitting the evidence as relevant.20 See United
18
Cases in other circuits discussing “spillover prejudice”
have involved evidence that was properly admitted for a claim
that was later held to be invalid. See, e.g., United States v.
Cross, 308 F.3d 308, 317 (3d Cir. 2002) (“[P]rejudicial spillover
may occur . . . [w]hen a defendant is convicted on two counts
involving different offenses at a single trial and an appellate
court reverses his conviction on one of them . . . .”); United
States v. Rooney, 37 F.3d 847, 855 (2d Cir. 1994) (“When an
appellate court reverses some but not all counts of a multicount
conviction, the court must determine if prejudicial spillover
from evidence introduced in support of the reversed count
requires the remaining convictions to be upset.”). This court in
Edwards similarly acknowledged that “spillover from invalid
claims” might be a viable basis for granting a new trial when
that spillover would be inadmissible to establish the remaining
claims and where prejudice exists. Edwards, 303 F.3d at 641.
19
It is irrelevant whether, as FSI contends, the evidence
was also intended by defendants to serve as substantive evidence
of independent acts of defamation. The record does not reflect
that the district court ever limited the jury’s consideration of
the evidence to these independent acts, and the district court
confirmed in its denial of FSI’s motion for a new trial that the
evidence was admitted as relevant to show malice for the three
allegedly defamatory statements submitted to the jury.
20
Under Federal Rule of Evidence 403, “evidence may be
excluded if its probative value is substantially outweighed by
the danger of unfair prejudice.” The district court has “broad
discretion to weigh the relevance, probative value, and prejudice
of the evidence in determining its admissibility under Rule 403,”
which will not be disturbed without abuse of discretion. United
37
States v. Hicks, 389 F.3d 514, 522 (5th Cir. 2004). Even if the
district court improperly admitted the evidence, we will not
reverse if the error was harmless.21 Id.
The evidence at issue here consists of the same documents
involved in defendants’ cross-appeal. The district court
determined in its order on the motion for a new trial that the
statements in the e-mails and letters, “while perhaps not
defamatory on their face, were relevant to the question of
whether FSI defamed the defendants,” specifically on the question
of malice because “much of this evidence illustrated the
States v. Allard, 464 F.3d 529, 534 (5th Cir. 2006). The only
document that FSI objected to on this ground, as opposed to
relevance, is Exhibit 34, the e-mail in which Michael Roehrs
stated that Daniel Roehrs or his mother were “supporting child
molesters.” However, we find no reason to believe that the
prejudice of this or any of the documents outweighed their
probative nature with regard to actual malice.
21
This inquiry involves considerations similar to those
that courts have undertaken in spillover prejudice cases. In
Cross, for example, the Third Circuit first looked to “whether
any of the evidence used to prove the reversed count would have
been inadmissible to prove the remaining count.” 308 F.3d at
317. If the evidence would have been admissible, there was no
prejudice, and a new trial was not warranted. Id. at 318. If
the evidence would not have been admissible, the court then
determined whether the error was harmless or highly prejudicial.
Id.; see also Edwards, 303 F.3d at 640 (recognizing that at a
minimum, such a claim must establish that the evidence was
inadmissible and prejudicial). In Rooney, the Second Circuit
looked to several factors bearing on prejudice, including whether
the evidence would tend to have affected the jury’s decision,
whether the evidence was admissible on the remaining count,
whether the two counts were so dissimilar as to permit the
inference that the jurors kept the evidence separate in their
minds, and whether the admissible evidence on the remaining count
was strong enough that the chance of spillover prejudice was
minimized. 37 F.3d at 855-56.
38
circumstances surrounding the parties’ dispute, as well as FSI’s
recklessness about the truth of its allegations.”
FSI’s sole argument against this holding is to suggest the
unsupported proposition that nondefamatory statements cannot be
probative of actual malice in a defamation per se case. However,
this court has established that “a court or jury may infer actual
malice from objective circumstantial evidence.” Brown v.
Petrolite Corp., 965 F.2d 38, 47 (5th Cir. 1992); see also Harte-
Hanks Commc’ns, Inc. v. Connaughton, 491 U.S 657, 668 (1989);
Zerangue v. TSP Newspapers, Inc., 814 F.2d 1066, 1070 (5th Cir.
1987). The evidence can show “negligence, motive, and intent
such that an accumulation of the evidence and appropriate
inferences supports the existence of actual malice.” Brown, 965
F.2d at 47 (quoting Bose Corp. v. Consumers Union of United
States, Inc., 692 F.3d 189, 196 (1st Cir. 1982)).
Accordingly, the district court did not abuse its discretion
in admitting the statements at issue as evidence relevant to the
malice inquiry.22 All of the statements were consistent with
defendants’ malice argument that the defamation claims were part
of “an unbelievable smear campaign” involving “a calculated and
relentless attempt by [FSI] that will go to any lengths to
22
This holding is unaffected by our determination for
defendants’ cross-appeal that the documents did not defame the
individual defendants, as the documents remain relevant to
determining FSI’s motive and intent underlying the statements
submitted for jury evaluation.
39
destroy [defendants] completely.” Although not admitted as
substantive evidence of defamation, the documents illustrated the
circumstances in which the defamatory statements were made and
the state of mind of the FSI employees who made them, and were
thus relevant evidence from which actual malice could be
inferred. Finally, the jury instructions limited the jury’s
purview to three specific statements, and there is little
likelihood that the jury was confused by the additional evidence.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s
denial of FSI’s motion for judgment as a matter of law and, in
the alternative, for a new trial, as well as the district court’s
grant of judgment as a matter of law on defendants’ claim that
the individual defendants were defamed in e-mails and letters,
REVERSE the district court’s grant of partial summary judgment on
defendants’ defamation counterclaim with regard to the corporate
defendants, VACATE the district court’s entry of a take-nothing
judgment on FSI’s § 1030(a)(4) claim, and REMAND this case for
entry of judgment on the jury’s § 1030(a)(4) verdict and for
further proceedings consistent with this opinion. Each party
shall bear its own costs.
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