Peterson v. XPO Logistics

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT May 4, 2020
_________________________________
Christopher M. Wolpert
Clerk of Court
AARON PETERSON,
Plaintiff - Appellant,
v. No. 17-4189
(D.C. No. 2:17-CV-00307-DAK)
XPO LOGISTICS, INC., (D. Utah)
Defendant - Appellee.
_________________________________
ORDER AND JUDGMENT *
_________________________________
Before BRISCOE, MORITZ, and EID, Circuit Judges.
_________________________________
This case concerns Utah’s judicial proceedings privilege—specifically,
whether an exception to the privilege applies to allegedly fabricated emails that form
the basis of a plaintiff’s complaint. Plaintiff-Appellant Aaron Peterson was an
employee of Defendant-Appellee XPO Logistics, Inc. After Peterson left XPO to
work at a competitor, XPO sued both him and the competitor. During the course of
the underlying litigation, XPO transmitted emails to the competitor that purported to
prove Peterson’s breach of his employment contract. After receiving the emails, the
competitor fired Peterson.
*
This order and judgment is not binding precedent, except under the doctrines
of law of the case, res judicata, and collateral estoppel. It may be cited, however, for
its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Peterson then sued XPO for defamation, tortious interference, false light,
injurious falsehood, and statutory identity theft. The emails transmitted from XPO to
the competitor form the basis of Peterson’s complaint: he alleges the emails were
fabricated and were sent by XPO to the competitor in an attempt to secure a better
settlement position. XPO moved to dismiss Peterson’s complaint, and the district
court granted the motion. It found that Utah’s judicial proceedings privilege
protected the emails sent during the course of settlement discussions and that
Peterson failed to state a claim. Though the district court acknowledged that an
exception to the privilege exists for fraud, it declined to apply the exception to the
allegedly fabricated emails.
Exercising jurisdiction under 28 U.S.C. § 1291, we reverse and remand.
I.
Peterson was an employee of XPO until June 2015. He left XPO to work at
Leeway Global Logistics, LLC, a competitor of XPO in the third-party logistics
industry. On September 29, 2015, XPO sued both Leeway and Peterson in the
District of Utah in a diversity action, alleging that Peterson breached the
confidentiality, non-solicitation, and non-competition covenants of his employment
agreement with XPO. XPO also alleged that both Peterson and Leeway
misappropriated XPO’s trade secrets and that Leeway tortiously interfered with
Peterson’s employment agreement with XPO.
In the underlying litigation, Leeway moved to dismiss the complaint. After a
hearing on the motion, Leeway and XPO began settlement negotiations. During the
2
course of those negotiations, XPO sent allegedly fabricated emails to Leeway.
Peterson asserts that the emails “suggest that [Peterson] had violated the restrictive
covenants in his employment agreement with XPO by recruiting XPO customers and
employees and also suggest [Peterson] had conspired with XPO employees to
damage XPO.” Aplt. Br. at 4.
The emails contain several alleged discrepancies suggesting they were
fabricated. First, the date on one of the emails states “Monday, April 19, 2016” when
in fact April 19, 2016 was a Tuesday. App’x at 10. Further, the email address listed
for Peterson is inconsistent between the original email and the reply, though
presumably any email program should have automatically generated an identical
address for the reply. Finally, based on the email timestamp, the reply email appears
to have been sent several hours before the original email. Leeway relied on the
representations in these emails and believed them to be evidence of Peterson’s breach
of his XPO employment agreement. After receiving the emails through XPO’s
attorneys, Leeway terminated Peterson’s employment.
Peterson filed the instant case against XPO in the District of Utah—where the
underlying lawsuit was heard—alleging defamation, tortious interference, false light,
injurious falsehood, and identity theft in connection with the publication of the
emails by XPO’s attorneys. XPO filed a Motion to Dismiss pursuant to Rule
12(b)(6). The district court granted the motion and “dismisse[d] Peterson’s entire
3
[c]omplaint based 1 on the judicial proceedings privilege,” finding that the allegedly
fabricated emails satisfied all three criteria for the privilege under Utah law. App’x
at 150–51. And though the court acknowledged a “bad faith fraud exception to the”
privilege, it declined to apply this exception because “Peterson d[id] not assert a
fraud claim.” Id. at 150.
II.
This court reviews the district court’s grant of a Rule 12(b)(6) motion to
dismiss de novo. Teigen v. Renfrow, 511 F.3d 1072, 1078 (10th Cir. 2007). In
reviewing a motion to dismiss, we must accept all well-pleaded facts, as opposed to
conclusory allegations, as true and view them in the light most favorable to the
nonmoving party. Beedle v. Wilson, 422 F.3d 1059, 1063 (10th Cir. 2005). To
affirm the district court’s grant, we must determine that the complaint at issue fails to
include “enough facts to state a claim to relief that is plausible on its face.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007).
The Utah judicial proceedings privilege is “intended to promote the integrity
of the adjudicatory proceeding and its truth finding processes.” Moss v. Parr
Waddoups Brown Gee & Loveless, 285 P.3d 1157, 1165 (Utah 2012) (quoting Pratt
v. Nelson, 164 P.3d 366, 381 (Utah 2007)). It protects participants in the judicial
1
Though the district court “based [its dismissal] on the judicial proceedings
privilege,” it separately concluded that “Peterson’s defamation claim also fail[ed] as
a matter of law because he [did] not . . . allege that one or more of the email
statements relating to him were actually defamatory.” App’x at 151. Peterson does
not appeal the district court’s dismissal of his defamation claim.
4
process from liability for statements made during an official proceeding. See Krouse
v. Bower, 20 P.3d 895, 898 (Utah 2001). To be protected by the privilege, statements
at issue must be (1) “made during or in the course of a judicial proceeding”; (2)
“have some reference to the subject matter of the proceeding”; and (3) be “made by
someone acting in the capacity of judge, juror, witness, litigant, or counsel.” DeBry
v. Godbe, 992 P.2d 979, 983 (Utah 1999) (quoting Price v. Armour, 949 P.2d 1251,
1256 (Utah 1997)).
The privilege protects not only judicial participants’ statements, but also their
conduct. See Moss, 285 P.3d at 1168. In Moss, after an attorney entered an
individual’s home while executing a discovery order, the individual subsequently
sued the attorney for abuse of process, invasion of privacy, and trespass. Id. at 1161–
62. Affirming the lower court, the Utah Supreme Court found that the attorney’s
actions were protected from suit, holding that “the judicial proceedings privilege in
Utah extends to attorneys’ conduct, as well as statements.” Id. at 1168 (emphasis
added).
In addition to extending the privilege to protect conduct, the Moss court noted
an exception to the judicial proceedings privilege, the scope of which is at issue in
the case before us. The exception is that “where an attorney has committed fraud or
otherwise acted in bad faith . . . the privilege will not shield an attorney from civil
liability.” Id. at 1166.
Peterson claims that the Moss exception applies here to remove XPO’s
allegedly fabricated emails from the privilege’s protection. The district court
5
disagreed, reasoning that because Peterson did not bring a specific fraud claim, the
Moss exception did not apply. Separately, XPO argues that even if Peterson did
bring a fraud claim, the emails would still be protected by the privilege because the
“fraud or bad faith” exception in Moss applies only to attorneys, and not to parties. 2
The treatment of Moss—by the district court in its judgment and by XPO in its
arguments—raises two questions about the scope of the “fraud or bad faith”
exception to the Utah judicial proceedings privilege. First, does Moss require the
complaining party to specifically assert a fraud claim to trigger the exception to the
privilege? And second, does the exception for “fraud or bad faith” in Moss apply to
parties in addition to attorneys?
III.
Based on past rulings from the Utah Supreme Court, 3 we conclude that the
Utah judicial proceedings privilege does not protect the allegedly fabricated emails.
2
XPO did not raise this issue below but instead argued only that Peterson
failed to sufficiently plead a fraud claim. While we have discretion to affirm on any
ground supported by the record, we disfavor affirming on grounds not considered by
the district court. Rimbert v. Eli Lilly and Co., 647 F.3d 1247, 1256 (10th Cir. 2011)
(“Although this court may affirm on any ground apparent in the record, affirming on
legal grounds not considered by the trial court is disfavored.”). The dissent suggests
that the district court did consider the “party vs. attorney” issue because it stated in
its order granting XPO’s motion to dismiss that “[t]he privilege does not shield a
party from civil liability if it committed fraud or acted in bad faith.” App’x at 149
(emphasis added). But we do not think this sentence shows that the lower court
considered the “party vs. attorney” issue. We instead think it merely shows that the
court acknowledged that there was a general fraud exception to the privilege.
3
“When the federal courts are called upon to interpret state law, the federal
court must look to the rulings of the highest state court, and, if no such rulings exist,
must endeavor to predict how that high court would rule.” Nelson v. United States,
6
We find that complaining parties need only allege facts showing bad faith to trigger
the Moss exception to the Utah judicial proceedings privilege. We also conclude that
the Moss exception applies to parties in addition to attorneys.
A.
The Moss exception to the Utah judicial proceedings privilege does not require
the complaining party to formally claim fraud or bad faith. In Moss, the Utah
Supreme Court stated that “where an attorney has committed fraud or otherwise acted
in bad faith, . . . the privilege will not shield an attorney from civil liability.” 285
P.3d at 1166 (emphasis added). The Moss court did not require complaining parties
to file specific claims of fraud or bad faith in order to trigger the exception, but
instead inferred that parties need only “ple[ad] sufficient facts” demonstrating
fraudulent or bad faith conduct. See id. at 1167 (noting that to determine if the
plaintiff’s tort claims triggered an exception to the Utah judicial proceedings
privilege, the court must “examine whether [the plaintiffs] have ple[aded] sufficient
facts”).
And here, Peterson pleaded facts 4 suggesting that the opposing party either
“committed fraud or otherwise acted in bad faith.” Id. at 1166. He points to several
indicators showing that emails sent from XPO to Leeway were either fabricated or
915 F.3d 1243, 1248 (10th Cir. 2019) (internal quotation marks omitted) (quoting
Johnson v. Riddle, 305 F.3d 1107, 1118 (10th Cir. 2002)).
4
When reviewing the lower court’s granting of a motion to dismiss, we must
accept all well-pleaded facts as true and view them in the light most favorable to the
nonmoving party. Beedle, 422 F.3d at 1063.
7
falsified. Such falsification of evidence, if proven, would surely amount to bad faith
and would thus be sufficient to trigger the Moss exception.
XPO argues that Peterson failed to include facts necessary to satisfy a key
element of fraud: that the party damaged by the fraudulent misrepresentation must be
the same party that relied on the misrepresentation. Aple. Br. at 22 (citing Dugan v.
Jones, 615 P.2d 1239, 1246 (Utah 1980)). XPO argues that the facts in Peterson’s
complaint fail to satisfy this element because Peterson was the person damaged by
the allegedly fabricated emails, while Leeway was the party that relied on them.
Indeed, Peterson’s alleged facts might suggest that XPO or its counsel committed
third-party fraud (where the damaged party is different from the relying party), but
Utah courts have not yet recognized such claims. Resolving this issue would
therefore require our court to rule on another issue of Utah law.
However, because we conclude that Peterson pleaded facts sufficient to show
bad faith, we need not determine whether the facts also sufficiently showed fraud.
Again, the Moss exception can be triggered not only if someone “committed fraud,”
but also if they “otherwise acted in bad faith.” Moss, 285 P.3d at 1166. Because we
conclude that the allegedly fabricated or falsified emails demonstrate bad faith, the
Moss exception would apply regardless of whether the emails also constitute fraud.
B.
Additionally, we find that the Moss “fraud or bad faith” exception to the Utah
judicial proceedings privilege applies not only to attorneys, but also to parties. XPO
argues that the exception is narrow because the Moss court mentioned only
8
“attorneys” in its opinion. Id. (“[W]here an attorney has committed fraud or
otherwise acted in bad faith . . . the privilege will not shield [them].” (emphasis
added)). But we do not read the Moss exception to be so limited.
The Utah Supreme Court has found that the judicial proceedings privilege
applies to all participants in the judicial process. See Krouse, 20 P.3d at 898; DeBry,
992 P.2d at 983; Price, 949 P.2d at 1256 (citing different sections of the Restatement
of Torts to show that the privilege applied to each type of judicial participant); Allen
v. Ortez, 802 P.2d 1307, 1311 (Utah 1990). In Allen v. Ortez, the Utah Supreme
Court recognized that the privilege applied to “judges, jurors, witnesses, litigants,
and counsel in judicial proceedings” because “the judicial system requires that there
be free and open expression by all participants.” 802 P.2d at 1311 (emphasis added)
(citing 50 Am. Jur. 2d Libel & Slander § 231 (1970)).
Because the judicial proceedings privilege applies to all participants of the
litigation, it follows that the “fraud or bad faith” exception to the privilege should
also apply to all participants. It is true that the Utah Supreme Court in Moss only
mentioned “attorneys” when articulating the “fraud or bad faith” exception. Moss,
285 P.3d at 1166. But the court did not provide any reasoning as to why the
exception would not apply to other types of judicial participants. Indeed, the entire
9
discussion in Moss at that point revolved around attorneys because the party asserting
the privilege there was an attorney. 5
Our conclusion that the “fraud or bad faith” exception applies to all judicial
participants is further supported by XPO’s interpretation of a separate issue in Moss.
XPO relies on Moss to assert that the judicial proceedings privilege protects not only
a party’s statements during a proceeding, but also a party’s conduct. Aple. Br. at 8.
But just like it did with the “fraud or bad faith” exception, the Moss court only
referenced “attorneys” when finding that the scope of the privilege protected conduct
in addition to statements. Moss, 285 P.3d at 1168 (“We . . . hold that the judicial
proceedings privilege in Utah extends to attorneys’ conduct, as well as statements.”
(emphasis added)). Despite this, XPO claims that the “conduct vs. statement”
holding in Moss also applies to parties, and not just to attorneys. See Aple. Br. at 8.
5
The dissent contends that Moss applies only to attorneys because “[a]n
attorney’s duties to his client and to the court differ vastly from the duties of a party,
and Moss provides no analysis of a party’s duties or the ways in which a party could
act outside of its capacity as a litigant.” Dissent at 4. But while it is true that
litigants do not have the same responsibilities as attorneys do, Utah recognizes that
litigants who initiate and maintain lawsuits for abusive, “ulterior purpose[s]” can be
liable in tort for abuse-of-process claims. See Crease v. Pleasant Grove City, 519
P.2d 888, 890 (Utah 1974). And Utah law also sanctions litigants who act in bad
faith during litigation. See Utah Ann. Code § 78B-5-825. The dissent disagrees, and
contends that Cline v. State—where the court found that the judicial proceedings
privilege barred a fraud claim against a witness based on her in-court testimony—
suggests that Utah would not expand exceptions to the judicial proceedings privilege.
Dissent at 5 (citing 142 P.3d 127, 138 (Utah Ct. App. 2005), cert. denied, 133 P.3d
437 (Utah 2006)). But Cline does not discuss any exception to the judicial
proceedings privilege. 142 P.3d at 138–39. Moreover, Cline was decided seven
years before Utah articulated the bad-faith exception in Moss. Accordingly, the Utah
Court of Appeals’ decision in Cline provides little insight as to how the Utah
Supreme Court would interpret this case in light of Moss.
10
But we do not see why the Moss court’s “conduct vs. statement” holding should be
applied broadly while its similarly-worded “fraud or bad faith” exception should be
applied narrowly.
We disagree with the dissent’s suggestion that Peterson failed to make a
sufficient showing that the “fraud or bad faith” exception should also apply to
parties. Dissent at 1–2. The dissent relies on SCO Group., Inc. v. IBM, 879 F.3d 1062
(10th Cir. 2018) for the proposition that Peterson “must, at a minimum, cite a
controlling case on point” to justify expanding the exception. Id. at 2 (citing SCO
Group, 879 F.3d at 1083). According to the dissent, the only controlling case on
point here would be a Utah case that analyzes the “precise issue before us.” See id. at
3. But we do not interpret SCO Group’s dicta so narrowly. SCO Group does not
explain 6 what a “controlling case on point” would entail, but it does cite Belnap v.
Iasis Healthcare, 844 F.3d 1272 (10th Cir. 2017) for support. And significantly,
Belnap does not require a controlling case on point. While Belnap acknowledges that
we are “reticent to expand state law without clear guidance from [the state’s] highest
court,” it nonetheless asserts that, “when an appeal presents an unsettled question of state
law, we must ordinarily ‘attempt to predict how [the] highest court would interpret [the
issue].’” Belnap, 844 F.3d at 1295 (quoting Schrock v. Wyeth, Inc., 727 F.3d 1273, 1284
6
A “controlling case on point” could simply mean any “indication” that the
Utah Supreme Court would rule a certain way on the issue at hand. Immediately
before noting that the plaintiff had not cited a “controlling case on point,” this court
in SCO Group stated that it found “no indication in Utah case law that the state
supreme court would accept . . . an expansive interpretation” of the tort law at issue.
SCO Group, 879 F.3d at 1083 (emphasis added).
11
(10th Cir. 2013) then Cornhusker Cas. Co. v. Skaj, 786 F.3d 842, 852 (10th Cir. 2015)).
Indeed, if a precise, on point case were required—as the dissent seems to suggest—there
would be no occasion for us ever to have to attempt to predict how the state’s highest
court would interpret the issue. 7
Here, then, we attempt to predict what the Utah Supreme Court would do in this
instance by looking at the closest case, Moss. And here, Moss provides guidance—by
describing its approach to enforcing the judicial proceedings privilege—indicating
that it would apply the “fraud or bad faith” exception to parties as well as attorneys.
When examining the scope of the judicial proceedings privilege, the Utah Supreme
Court “look[s] to the policies underlying” the privilege. Moss, 285 P.3d at 1165.
These policies are to “promote the integrity of the adjudicatory proceeding and its
truth finding processes,” id. (quoting Pratt, 164 P.3d at 381), and to encourage
“candid, forthright settlement communications.” Krouse, 20 P.3d at 899. 8 It would
surely frustrate these policies to protect fabricated documents simply because they
were generated by parties, rather than by attorneys. To conclude otherwise would
7
To be clear, we are not choosing to ignore SCO and instead follow earlier
Tenth Circuit precedent from Belnap. We simply think that SCO is not clear on what
a “controlling case” means and does not explicitly assert that a controlling case is
required. Moreover, Belnap, the published opinion that is the basis for SCO, is much
clearer on the parameters of our inquiry—and those parameters do not require a
controlling case.
8
We understand that the privilege is designed to “alleviat[e] any and all fear
that [judicial] participation will subject [participants] to the risk of subsequent legal
actions.” Price, 949 P.2d at 1258. However, the privilege is “not without limits.”
Moss, 285 P.3d at 1166.
12
allow litigants like XPO to avoid allegations of fraud or bad faith merely because the
allegedly fabricated material was transmitted as part of settlement negotiations.
Accordingly, we find that the emails underlying Peterson’s claims against
XPO are not privileged.
IV.
For the reasons stated above, we REVERSE the district court’s grant of XPO’s
motion to dismiss and REMAND to the district court with instructions to conduct
further proceedings consistent with this opinion.
Entered for the Court
Allison H. Eid
Circuit Judge
13
No. 17-4189, Peterson v. XPO Logistics, Inc.
BRISCOE, Circuit Judge, dissenting.
I respectfully dissent. In my view, Peterson has failed to make a strong showing
that the Utah Supreme Court would extend the fraud or bad faith exception to the judicial
proceedings privilege to also apply to parties. 1 I would therefore affirm the district
court’s grant of XPO’s motion to dismiss, without reaching the question of whether Utah
law requires Peterson to assert a fraud claim to trigger the exception.
In this case, Peterson asks a federal court to apply a new legal principle under state
law. The Utah Supreme Court has held that an attorney’s fraud or bad faith falls outside
of the protection of the judicial proceedings privilege. Moss v. Parr Waddoups Brown
Gee & Loveless, 285 P.3d 1157, 1166 (Utah 2012). But Peterson acknowledges that
“[t]he question here” is one that the Utah Supreme Court has not specifically addressed:
“whether the same rule that excludes attorney bad faith from the privilege also applies to
parties.” Aplt. Rep. Br. at 4.
1
The majority states that this issue was not considered by the district court, Maj.
O&J at 6 n.2, even though the district court explicitly held that the exception to the
judicial proceedings privilege extends to apply to parties. See Aplt. App. at 149 (the
district court citing Moss for the proposition that “[t]he privilege does not shield a party
from civil liability if it committed fraud or acted in bad faith”) (emphasis added). To the
extent that the district court did not fully consider this issue, “we have discretion to affirm
on any ground adequately supported by the record, so long as the parties have had a fair
opportunity to address that ground.” Champagne Metals v. Ken-Mac Metals, Inc., 458
F.3d 1073, 1088 (10th Cir. 2006) (quotations omitted). Whether the Moss exception
applies to parties is the central question presented by this appeal, as indicated by the
parties’ extensive briefing of the issue. See, e.g., Aplt. Br. at 9–10; Aple. Br. at 11–13;
Aplt. Rep. Br. at 4–7.
“[W]hen an appeal presents an unsettled question of state law, we must ordinarily
‘attempt to predict how the highest court would interpret the issue.’” Belnap v. Iasis
Healthcare, 844 F.3d 1272, 1295 (10th Cir. 2017) (alterations omitted) (quoting
Cornhusker Cas. Co. v. Skaj, 786 F.3d 842, 852 (10th Cir. 2015)). Further, “we are
generally reticent to expand state law without clear guidance from its highest court.” Id.
(quotations omitted). When, as in this case, “a party encourag[es] a federal court to apply
a new legal principle under state law,” the party “must make a ‘strong showing’ that the
highest court of that state would adopt that principle if presented with the question.”
SCO Grp., Inc. v. Int’l Bus. Machs. Corp., 879 F.3d 1062, 1082 (10th Cir. 2018) (quoting
Belnap, 844 F.3d at 1295). To make a “strong showing” that the Utah Supreme Court
would adopt his theory, Peterson must, at a minimum, cite a controlling case on point.
See id. at 1083 (“At the very least, because [the plaintiff] has not cited any controlling
case on point, it has failed to make a ‘strong showing’ that the Utah Supreme Court
would validate this theory if presented with the issue.”). 2 Despite acknowledging that
2
The majority criticizes SCO Group’s requirement that a party seeking to expand
state law must cite a controlling case on point. See Maj. O&J at 12 (stating that we
would have no occasion to predict how a state’s highest court would rule if an “on point
case were required”). Regardless of whether the majority agrees with SCO Group’s
holding, this panel is bound by it. See In re Smith, 10 F.3d 723, 724 (10th Cir. 1993) (per
curiam). Further, unlike the majority, I cannot read SCO Group’s controlling case
requirement to mean that Peterson must show only an “indication” that the Utah Supreme
Court would adopt his theory. Maj. O&J at 11 n.6. To be sure, the plaintiff in SCO
Group failed to cite a controlling case on point, and there was no indication that the Utah
Supreme Court would adopt the plaintiff’s theory. 879 F.3d at 1083. But just because
both were true does not mean that the terms are synonymous. Regardless, Peterson has
presented neither.
2
Moss did not address the precise issue before us, the majority concludes that Moss
controls. I respectfully disagree.
In Moss, the Utah Supreme Court noted that “the judicial proceedings privilege is
not without limits.” 285 P.3d at 1166. In discussing how “the privilege can be lost,”
Moss analyzed only attorney conduct. Id. The court held, first, that “[w]here a plaintiff
pleads that an attorney has engaged in independent acts, that is to say acts outside the
scope of his representation of his client’s interests, or has acted solely for his own
interests and not his client’s, the privilege can be lost.” Id. (emphasis added, quotations
omitted). Second, it held that “where an attorney has committed fraud or otherwise acted
in bad faith, which is inherently acting in a manner foreign to his duties as an attorney,
the privilege will not shield an attorney from civil liability.” Id. (emphasis added,
quotations omitted). Moss said nothing about whether, or how, the exception would
apply to other participants in the litigation, such as parties, witnesses, or jurors.
Yet Peterson argues, and the majority concludes, that XPO’s argument limiting
Moss’s holding to attorneys “rests on a distinction that makes no difference.” Aplt. Rep.
Br. at 6. In my view, Moss suggests otherwise. To be protected by the judicial
proceedings privilege, an individual must be “acting in the capacity of judge, juror,
witness, litigant, or counsel.” Krouse v. Bower, 20 P.3d 895, 898 (Utah 2001) (emphasis
added, quotations omitted). Moss explained that an attorney committing fraud or bad
faith no longer acts in his capacity as an attorney, and therefore falls outside of the scope
of the privilege, because he is “acting in a manner foreign to his duties as an attorney.”
285 P.3d at 1166 (quotations omitted). Moss’s narrow analysis of an exception to the
3
privilege therefore cannot apply to all participants in the litigation, as the majority
suggests. An attorney’s duties to his client and to the court differ vastly from the duties
of a party, and Moss provides no analysis of a party’s duties or the ways in which a party
could act outside of its capacity as a litigant. Thus, Moss does not control the issue
before us. 3
Despite Moss’s narrow holding, the majority concludes that the Moss exception is
not “so limited.” Maj. O&J at 9. The majority points out that the Utah Supreme Court
has held that the privilege applies to all participants in the litigation. Id. (citing Allen v.
Ortez, 802 P.2d 1307, 1311 (Utah 1990)). 4 From this proposition, the majority makes a
leap. The majority states, without citation to any authority, that “it follows” that the fraud
or bad faith exception to the privilege should also apply to all participants. Id. Utah
courts, however, have held the opposite: that fraud claims against certain participants in
litigation are, indeed, barred by the judicial proceedings privilege.
3
It may be true, as the majority reasons, that the discussion in Moss centered on
attorneys because the party asserting the privilege in that case was an attorney. But I do
not see how that fact should result in our extending the Moss exception to also apply to a
party.
4
While the Utah Supreme Court has held that the privilege applies to all
participants in the litigation, it has never held that the privilege applies equally to each
participant. The Utah Supreme Court has analyzed, in separate cases: (1) how the
“privilege . . . pertained to participants who were witnesses in judicial proceedings”;
(2) “the scope of an attorney’s absolute privilege”; and (3) “the scope of a litigant’s
absolute privilege.” Price v. Armour, 949 P.2d 1251, 1256 (Utah 1997) (emphasis in
original) (noting that a different section of the Restatement of Torts applied to each type
of participant). What follows, therefore, is that the scope of the fraud or bad faith
exception likewise depends on a participant’s role in the litigation.
4
For instance, in Cline v. State, 142 P.3d 127, 138 (Utah Ct. App. 2005), cert.
denied, 133 P.3d 437 (Utah 2006), the Utah Court of Appeals held that the privilege
barred a plaintiff’s claim for fraud against a witness who allegedly perjured herself. 5 In
Cline, the plaintiff alleged that the defendant, an investigator with the Division of Child
and Family Services, “provided false testimony while under oath during several
hearings.” Id. at 131. The plaintiff sued the defendant “for fraud, libel, and slander.” Id.
at 138 (emphasis added). The trial court dismissed the plaintiff’s claims as barred by the
judicial proceedings privilege, and the Utah Court of Appeals affirmed. Id. (holding that
“[t]he trial court correctly concluded that [the defendant] was absolutely immune from
[the plaintiff’s] claims for fraud, libel, and slander . . . based on her in-court testimony”
under the judicial proceedings privilege). Because Utah has held that the privilege bars
fraud claims against witnesses (Cline), but that it does not bar fraud claims against
attorneys (Moss), the majority errs in concluding that Peterson has made a strong
showing that the fraud or bad faith exception applies to all participants in the litigation.
5
“[W]hen we apply state law, we follow the opinions of an intermediate state
appellate court unless convinced by other persuasive data that the highest court of the
state would decide otherwise.” Evanston Ins. Co. v. Law Office of Michael P. Medved,
P.C., 890 F.3d 1195, 1200 (10th Cir. 2018) (quotations omitted). Given that the Utah
Supreme Court denied certiorari in Cline, and that Moss involved only attorney
misconduct, I see no indication that the Utah Supreme Court would decide otherwise.
Although it is true that Cline was decided before Moss, the majority fails to explain how
Moss indicates that the Utah Supreme Court would disagree with Cline’s holding. And if
the majority is correct that Cline provides “little insight” as to what the Utah Supreme
Court would do in this case, Maj. O&J at 10 n.5, then we are left “without clear guidance
from [Utah’s] highest court.” Belnap, 844 F.3d at 1295 (quotations omitted).
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Finally, the majority concludes that various policy justifications support an
extension of the fraud or bad faith exception. See Maj. O&J at 12. While I do not
disagree with the majority that the Utah Supreme Court could conclude that certain
policy arguments justify an extension of the fraud or bad faith exception to apply to all
participants in the litigation, that is not enough for this court to expand state law. When,
as here, a party “encourag[es] a federal court to apply a new legal principle under state
law,” SCO Grp., 879 F.3d at 1082, the party must, at a minimum, cite a controlling case
on point, id. at 1083. The majority also overlooks the “whole purpose” of the privilege:
“to ensure free and open expression by all participants in judicial proceedings by
alleviating any and all fear that participation will subject them to the risk of subsequent
legal actions.” Price, 949 P.2d at 1258 (emphasis added). The majority’s expansion of
the fraud or bad faith exception to the privilege opens the door to a host of derivative
lawsuits against parties and other participants in litigation. If the exception applies to all
participants, little remains of the privilege.
Utah’s judicial proceedings privilege is of “extraordinary scope.” Moss, 285 P.3d
at 1167 (quotations omitted). As a federal court sitting in diversity, we should be
“reticent to expand state law” to create an exception to the privilege “without clear
guidance from [Utah’s] highest court.” Belnap, 844 F.3d at 1295 (quotations omitted).
The majority extends Utah’s fraud or bad faith exception to the judicial proceedings
privilege to apply to all participants despite a lack of clear guidance from the Utah
Supreme Court, and despite contrary authority from the Utah Court of Appeals. I would
affirm the district court’s grant of XPO’s motion to dismiss.
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