Sirq v. The Layton Companies

This opinion is subject to revision before final
publication in the Pacific Reporter.
2016 UT 30IN THE
SUPREME COURT OF THE STATE OF UTAH
SIRQ, INC., a Utah Corporation, and ALAN J. PETERSON,
Appellees,
v.
THE LAYTON COMPANIES, INC., a Utah Corporation, and LAYTON
CONSTRUCTION CO., a Utah Corporation,
Appellants.
No. 20140136
Filed July 1, 2016
On Direct Appeal
Third District, Salt Lake
The Honorable Todd M. Shaughnessy
No. 070908853
Attorneys:
Maralyn M. English, D. Jason Hawkins,
Salt Lake City, for appellees
Robert S. Clark, Jeffrey J. Hunt, James L. Ahlstrom,
David C. Reymann, Austin J. Riter Salt Lake City, for appellants
ASSOCIATE CHIEF JUSTICE LEE authored the opinion of the Court,
in which JUSTICE PEARCE, JUDGE VOROS, JUDGE ORME, and
JUDGE ROTH joined.
Having recused themselves, CHIEF JUSTICE DURRANT,
JUSTICE DURHAM, and JUSTICE HIMONAS did not participate herein;
JUDGE J. FREDERIC VOROS, JUDGE GREGORY K. ORME, and JUDGE
STEPHEN ROTH of the Utah Court of Appeals sat.
SIRQ, INC. v. LAYTON COS.
Opinion of the Court
ASSOCIATE CHIEF JUSTICE LEE, opinion of the Court:
¶1 This is a business tort suit between a large construction
company and a break-off company founded by a former president
of the larger entity. The claimants in the suit are Alan Peterson
and SIRQ, Inc. Peterson is a former president of The Layton
Companies, Inc. and Layton Construction Co. (Layton). He had a
falling out with Layton management in 2002 and later founded
SIRQ, a competing construction company.
¶2 Layton’s relationship with SIRQ and Peterson quickly
soured. Layton eventually asked applicants for management
positions to sign an agreement not to enter into business with
SIRQ or Peterson. It also circulated a memorandum explaining its
basis for requesting signatures on that agreement, which made
statements that SIRQ and Peterson found objectionable. In time
SIRQ and Peterson each sued Layton for intentional interference
with economic relations and “false light” invasion of privacy.
¶3 A theme at trial on these claims was the allegation by
Peterson and SIRQ that Layton exhibited a malicious, wrongful
intent in its interactions with its former president and the
company he founded. That allegation formed a key basis of the
claims for tortious interference. Understandably so. At the time of
trial in this case, our law of intentional interference recognized
two separate branches of a claim for intentional interference—one
based on a showing of improper means and another based on
proof of improper purpose. See Leigh Furniture & Carpet Co. v. Isom,
657 P.2d 293, 304 (Utah 1982).
¶4 SIRQ and Peterson emphasized the allegation of improper
purpose throughout trial. From opening statements to direct- and
cross-examination of most of the witnesses, counsel drew the
jury’s attention to Layton’s alleged animosity toward Peterson
and SIRQ and to its motive of driving them out of business. The
point was likewise emphasized in closing argument. And the jury
was instructed that it could base a determination of tortious
interference on a showing of either improper means or improper
purpose.
¶5 That instruction was correct when it was given. But in the
interim, while this case was pending on appeal, we revised the
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common law of intentional interference with economic relations.
In Eldridge v. Johndrow we eliminated the improper purpose
branch of the tort of intentional interference with economic
relations. 2015 UT 21, ¶¶ 46–64, 345 P.3d 553. In so doing we
noted the imprecision and unworkability of a test that opened the
door to tort liability for “every angry or malicious action” by a
business competitor. Id. ¶ 46. And we emphasized the difficulty
that improper purpose liability introduced for those who seek to
organize their business activities in a manner aimed at
minimizing their exposure under tort law. Id. ¶ 51 (noting that
because “improper-purpose findings are so dependent on fact-
finders’ personal sympathies, and so insulated from appellate
review,” it is “impossible for private parties to understand their
rights and duties under tortious interference law”). With these
and other concerns in mind we conclusively held in Eldridge that
“in the absence of any improper means, an improper purpose is
not grounds for tortious interference liability” under Utah law. Id.
¶ 70.
¶6 We have long followed the presumption that an alteration
of the common law in one of our opinions applies retroactively to
the parties who seek it. See Malan v. Lewis, 693 P.2d 661, 676 (Utah
1984). And that principle leads to a strong corollary—that parties
to other cases pending on appeal are also entitled to the benefit of
such a change in the law. See Labrum v. Utah State Bd. of Pardons,
870 P.2d 902, 914 (Utah 1993). Appellees have not challenged the
applicability of this corollary here. We accordingly apply it—
proceeding on the premise that the Eldridge standard governs
even though that decision was not handed down until after trial.
And we reverse and remand for a new trial on the tortious
interference claim.
¶7 We also reverse and remand on the “false light” invasion of
privacy claim. Where such claims are predicated on defamatory
speech, the judge plays an important gatekeeping role—assuring
that the jury considers only statements that are capable of
defamatory meaning and avoiding the risk of a party being
punished for speech that is unpopular but not actionable. We
conclude that the judge failed to fulfill this role adequately in this
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SIRQ, INC. v. LAYTON COS.
Opinion of the Court
case, and we reverse and remand for a new trial on this claim as
well.
I
¶8 Layton is one of the largest construction companies in
Utah. Until Peterson was promoted to the office of president in
2000, only members of the Layton family had run the company. In
time Peterson began to clash with members of the Layton family.
The clash came to a head in late 2002. At that time Peterson had
an “emotional, highly charged, and personal” falling out with the
leadership of Layton. He left and then formed his own rival
construction company, SIRQ.
¶9 Peterson asked some members of the Layton management
team to work for SIRQ. And he used forms and documents he
acquired while working at Layton.
¶10 In response, in mid-2007 Layton began to ask its
management level employees and prospective employees to sign
a noncompetition agreement. The agreement forbade Layton
employees from working for SIRQ or contracting with SIRQ
within two years after leaving Layton. But it had no application to
any other construction companies. Employees were free to work
for any rival company except SIRQ.
¶11 The noncompetition agreement was presented to all
prospective management-level employees. Signing it was a
condition of employment. This practice continued from 2007 until
the time of trial, almost six years later.
¶12 When Layton presented the noncompetition agreement to
prospective employees, it also provided a memorandum asserting
its grounds for requiring its workers to sign the document. The
memorandum included statements allegedly placing SIRQ and
Peterson in a defamatory, false light. Layton accused SIRQ and
Peterson of engaging in various unsavory practices, for example,
and claimed that these practices, “if permitted to continue, would
threaten our very existence.”
¶13 Layton also made several other remarks that were critical
of SIRQ and Peterson. Layton’s president commented, for
example, that SIRQ’s approach to valuing stock was
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“inappropriate” and a “farce,” and accused SIRQ investors of
having “SIRQ blindness.” Other Layton officials criticized SIRQ
for “using documents and procedures taken from Layton,” and
said that SIRQ’s stock plan was “not a good plan.” And another
Layton official told the owner of a local car wash (who had
employed SIRQ on a construction job) that SIRQ “wasn’t
trustworthy,” was “dishonest,” and “didn’t do quality work.”
¶14 Layton also undertook other actions that SIRQ challenged
as improper. It filed this lawsuit, which SIRQ challenged as
malicious and unfounded. It also successfully urged SIRQ’s
bonding agent to drop SIRQ as a client. And it defaulted on a
promissory note to Peterson in an alleged attempt to reduce
SIRQ’s available capital.
¶15 Layton filed this suit in 2007. It asserted claims for breach
of fiduciary duty, breach of contract, misappropriation of trade
secrets, unjust enrichment, and intentional interference with
contractual relations. SIRQ and Peterson each asserted
counterclaims for intentional interference with economic relations,
defamation, false light invasion of privacy, and breach of the
covenant of good faith and fair dealing. SIRQ’s intentional
interference claims were predicated on both an allegation of
improper means (principally Layton’s purportedly defamatory
statements) and an assertion of improper purpose (Layton’s
allegedly malicious motive of destroying SIRQ’s and Peterson’s
reputation and business). SIRQ claimed that it had lost significant
revenue due to Layton’s actions. It also alleged harm to its
reputation and the loss of its bonding agent at a critical stage of
development.
¶16 After a period of discovery the parties filed motions for
summary judgment. Several of Layton’s claims were dismissed on
summary judgment. Layton also voluntarily dismissed some of its
claims. Only Layton’s breach of contract claim against Peterson
and its intentional interference claim against both SIRQ and
Peterson remained for trial.
¶17 Layton also moved for summary judgment on SIRQ’s and
Peterson’s claims. The district court denied those motions, but it
also required SIRQ to identify specific statements it alleged to be
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SIRQ, INC. v. LAYTON COS.
Opinion of the Court
actionable under its false light and defamation theories. SIRQ
initially identified twenty-four statements. But Layton
successfully argued, both during the summary judgment stage
and before the case was submitted to the jury, that several of those
statements were not capable of defamatory meaning or lacked
evidentiary foundation in the record. So the court seemed to
conclude that these statements were not actionable. Yet it made no
formal ruling excluding them from trial. It does not appear that
the jury was told to ignore these statements or that any other
consequences flowed from the determination that several of the
statements in question were not actionable.
¶18 The parties’ claims proceeded to trial in 2013. Before trial
Layton proposed a special verdict form requiring the jury to
identify which specific statements, if any, it found actionable
under either the defamation or false light claims. SIRQ opposed
this form as unnecessary. The district court declined to require the
form. So the jury was not asked to identify which statements it
deemed defamatory. Nor was it given a list of purportedly
defamatory statements to consider. It was left to consider all of the
statements presented over the course of a five-week trial.
¶19 The jury returned a verdict in favor of SIRQ and Peterson
on the intentional interference, defamation, and false light claims.
It awarded SIRQ $7.2 million in compensatory damages and $5
million in punitive damages on the intentional interference claim,
but no damages on the other claims. As for Peterson, the jury
awarded no damages on the intentional interference and
defamation claims, but did award $1 million on the false light
claim. The jury ruled against Layton on its claims.
¶20 Layton filed a motion for a judgment notwithstanding the
verdict, or in the alternative for a new trial. In its motion, Layton
challenged the tortious interference verdict on the ground that
improper purpose should not be an independent basis for
liability, citing the “grave doubts” about the “vitality” of the
improper purpose branch of the intentional interference tort
expressed by Justice Zimmerman in Pratt v. Prodata, 885 P.2d 786,
789 n.3 (Utah 1994) (Zimmerman, J., majority opinion in part and
plurality opinion in part). Layton also challenged the false light
verdict. It claimed error in the district court’s failure to perform a
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“gatekeeper” role regarding statements that SIRQ and Peterson
alleged to be defamatory—by precluding the jury’s consideration
of statements that in Layton’s view were not capable of
defamatory meaning, or by using a special verdict form asking the
jury to identify which statements it deemed defamatory.
¶21 The district court denied Layton’s motion and upheld the
jury verdict in all respects. It first affirmed the viability of the
intentional interference verdict. Citing Leigh Furniture & Carpet Co.
v. Isom, 657 P.2d 293 (Utah 1982), and the majority opinion in
Pratt, 885 P.2d at 790, the district court concluded that an
intentional interference verdict could stand on proof of improper
purpose without any proof of improper means. As to the false
light claim, the court acknowledged that several nondefamatory
statements had been erroneously submitted to the jury. But it
upheld the verdict on the ground that the jury still had sufficient
evidence to sustain its false light verdict, noting that the Layton
memorandum included some statements that were capable of
defamatory meaning.
¶22 Layton filed this appeal. It challenges the district court’s
refusal to grant a new trial on the tortious interference and false
light claims, but it does not contest the verdict on its own claims. 1
¶23 Layton charges threshold legal error in the standards
applied by the district court in denying its motion for new trial on
the intentional interference and false light claims. Thus, Layton
asks us to reverse and remand for a new trial on these claims. We
review Layton’s allegations of legal error for correctness. And we
will order a new trial if we determine that any legal error
undermines our confidence in the jury verdict. See ASC Utah, Inc.
v. Wolf Mountain Resorts, L.C., 2013 UT 24, ¶ 21, 309 P.3d 201.
__________________________________________________________
1 Layton does not expressly challenge the denial of its motion for
judgment notwithstanding the verdict. But it does urge us to reject
the false light claim if we find that none of the statements were
capable of a defamatory meaning.
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SIRQ, INC. v. LAYTON COS.
Opinion of the Court
II
¶24 Layton challenges the legal standards applied by the
district court in denying the motion for new trial on both the
intentional interference and false light claims. The alleged error on
the intentional interference claim is based on our recent decision
in Eldridge v. Johndrow, 2015 UT 21, 345 P.3d 553. In Eldridge we
repudiated the improper purpose branch of the tort of intentional
interference—overruling our prior decisions on that point and
holding that this tort now requires proof of some form of
improper means by the defendant and cannot stand on proof of
improper purpose alone. Id. ¶¶ 46–64. Layton claims the right to
the benefit of the Eldridge standard on this appeal. We agree. The
district court’s analysis was consistent with our caselaw as it
stood at the time of the denial of the motion for new trial; but
parties are presumptively entitled to the benefit of changes in the
common law while their case is still pending on appeal. See
Labrum v. Utah State Bd. of Pardons, 870 P.2d 902, 914 (Utah 1993)
(noting that “considerations of judicial integrity require us to
extend the benefit of our decision to petitioner and any [party]
who currently has a claim pending in the district court or on
appeal”).
¶25 And under Eldridge there was legal error in the district
court’s decision denying the motion for new trial on SIRQ’s
intentional interference claim. For reasons explained below we
reverse the decision denying the motion for new trial on this
claim, concluding that the court’s legal error undermines our
confidence in the jury’s verdict and thus entitles Layton to a new
trial.
¶26 We also reverse and remand for a new trial on the false
light claim. On this claim we again find a threshold legal error.
The error here, as explained below, is in the district court’s failure
to perform the gatekeeping function of assuring that the jury
considered only statements by Layton that are capable of
defamatory meaning. We conclude that this error undermines our
confidence in the jury verdict. And we accordingly reverse and
remand for a new trial.
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A
¶27 We first recognized the tort of intentional interference with
economic relations in Leigh Furniture & Carpet Co. v. Isom, 657 P.2d
293, 302 (Utah 1982). In that case we held that a plaintiff has a
right to recover in tort upon a showing “(1) that the defendant
intentionally interfered with the plaintiff’s existing or potential
economic relations, (2) for an improper purpose or by improper
means, (3) causing injury to the plaintiff.” Id. at 304. We also
expressly stated that an “improper purpose (or motive, intent, or
objective) will support a cause of action for intentional
interference with prospective economic relations even where the
defendant’s means were proper.” Id. at 307.
¶28 In so doing, we acknowledged that “[i]n the rough and
tumble of the marketplace, competitors inevitably damage one
another in the struggle for personal advantage.” Id. And we
highlighted the need to protect the “inevitable byproduct of
competition” from an imposition of liability. Id. To do so, we
required proof that a competitor’s improper purpose
predominated over any legitimate motivations. Id. Yet we
conceded the existence of “[p]roblems inherent in proving
motivation or purpose” and cautioned against over-use in this
branch of the tort. Id.¶29 Over time the downsides of the improper purpose branch
of the tort of intentional interference became ever more apparent.
In Pratt v. Prodata, 885 P.2d 786 (Utah 1994), Justice Zimmerman
expressed “grave doubts about the future vitality of Leigh’s
improper-purpose prong.” Id. at 789 n.3 (Zimmerman, J., majority
opinion in part and plurality opinion in part). He highlighted the
unpredictability of the inquiry into purpose and hence the
unavailability of any “meaningful appellate review.” Id. And he
accordingly urged the abandonment of this branch of the tort. Id.¶30 This court took up that invitation in Eldridge v. Johndrow,
2015 UT 21, 345 P.3d 553. In Eldridge we unanimously repudiated
the improper purpose branch of the tort of intentional interference
and overruled Leigh Furniture and Pratt on that point. Id. ¶ 70. We
held that “a person who violates no legal duties, infringes no
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SIRQ, INC. v. LAYTON COS.
Opinion of the Court
one’s rights, and commits no wrongful action can never be held
liable for malice alone.” Id. ¶ 69.
¶31 Layton claims the benefit of the Eldridge decision on this
appeal. And SIRQ concedes the point; it does not refute Layton’s
right to challenge the district court’s denial of its motion for new
trial under the law as it stands today (under Eldridge). Thus,
although Eldridge was not the law at the time of the actual
decision on the motion in the district court, both parties assess the
propriety of the district court’s decision under the Eldridge
standard, not the Leigh Furniture standard.
¶32 We proceed on that premise. In so doing we consider
whether a “reasonable likelihood exists that the error affected the
outcome of the proceedings.” Jones v. Cyprus Plateau Mining Corp.,
944 P.2d 357, 360 (Utah 1997). We should reverse and remand for
a new trial, in other words, if “the likelihood of a different
outcome” is “sufficiently high to undermine [our] confidence in
the verdict.” State v. Knight, 734 P.2d 913, 920 (Utah 1987).
¶33 SIRQ urges affirmance under this standard. It cites record
evidence that the jury could have relied on in reaching a verdict in
its favor without relying on evidence of improper purpose.
Specifically, SIRQ cites evidence of Layton’s alleged improper
means—in interfering with SIRQ’s relationship with its bonding
agent, in making tortious statements, in defaulting on the
promissory note, and in filing this litigation. And because SIRQ
views that evidence as substantial, it claims that the verdict
should be affirmed even assuming error in the failure to anticipate
and adopt the Eldridge standard in the instructions given to the
jury.
¶34 We see the matter differently. SIRQ’s allegations and
evidence of improper purpose were a central feature of the trial.
SIRQ highlighted the theme of Layton’s bad motive in opening
statements. It emphasized this theme throughout the presentation
of its evidence and the rebuttal of Layton’s defense. And it
hammered the point home in closing arguments, inviting the jury
to find against Layton on the tortious interference count on the
ground that Layton’s “purpose and intent was to stick it to SIRQ
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and Mr. Peterson, to inflict harm on SIRQ and Mr. Peterson,” and
to do so “intentionally. . . and with malice.”
¶35 SIRQ’s recurring emphasis on Layton’s improper purpose
undermines our confidence in the jury’s verdict. Perhaps it’s
possible that a jury instructed in accordance with Eldridge would
still have entered a verdict against Layton. But we conclude that
there is at least a “reasonable likelihood” that the failure to apply
the Eldridge standard “affected the outcome of the proceedings.”
Jones, 944 P.2d at 360. And we reverse and remand for a new trial
on that basis. 2
¶36 As we noted in Eldridge, the “outcome” of an intentional
interference case “becomes unpredictable as soon as any evidence
of improper purpose is introduced.” 2015 UT 21, ¶ 51. “[O]nce a
plaintiff presents evidence of an improper purpose, no legal
standard exists to guide fact-finders’ determination of whether
that purpose or the defendant’s legitimate purposes
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2 In so concluding, we acknowledge the general rule that a
verdict should stand on appeal if there is substantial evidence to
support any one of several alternative theories of liability. Billings
v. Union Bankers Ins. Co., 918 P.2d 461, 468–69 (Utah 1996). Under
this principle, an intentional interference verdict that rests on a
faulty premise (improper purpose) could still stand if it is
nonetheless sustained by a valid premise (improper means).
Yet the above-cited rule is limited. It “is essentially a refined
version of the harmless error rule.” Id. at 467 n.3. So the mere
existence of an alternative basis for a verdict does not always lead
to an affirmance. The question is one of harmlessness. In a case
like this one we cannot affirm if “we conclude that ‘the likelihood
of a different outcome [absent the error] is sufficiently high as to
undermine our confidence in the verdict.’” Id. (alteration in
original) (citation omitted). And for reasons explained above, we
find such a likelihood here. We reverse because we conclude that
there is a likelihood that SIRQ’s pervasive reliance on improper
purpose affected the outcome at trial, and thus that our
confidence in the verdict is shaken to a degree that we cannot
affirm on the alternative basis (improper means) advanced at trial
and urged on appeal.
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Opinion of the Court
predominated.” Id. ¶ 48. Pre-Eldridge, “[j]uries [were] required to
look into the defendant’s soul and discern which of her mixed
motives was the real cause of her action.” Id. This indeterminate
inquiry meant that “any significant evidence of improper purpose
would allow juries to find even the most commonplace
commercial conduct tortious, no matter how much evidence could
be presented of legitimate motivations.” Id. ¶ 50. And that
prospect meant that “[t]he outcome of improper-purpose claims
would . . . depend more on jurors’ personal sympathies for one
party or the other than on any generally applied legal rule.” Id.
¶37 This was a substantial basis for our abandonment of the
improper purpose branch of the intentional interference tort in
Eldridge. And it is also a ground for our decision to reverse and
remand for a new trial in this case. We cannot rule out the
possibility that the verdict in this case may have been based on
sympathy for SIRQ or animosity toward Layton based on the
allegations and evidence that Layton had a bad intent toward
SIRQ. And that possibility undermines our confidence in the
verdict and requires that we remand for a new trial. 3
B
¶38 Our law has long recognized a right to sue for harm caused
by speech that casts a claimant in a highly offensive “false light.”
See Jensen v. Sawyers, 2005 UT 81, ¶ 45, 130 P.3d 325. This right of
action has deep roots in English common law. It can be traced
back to the time of Lord Byron, who was granted a right to sue to
stay the publication of a “spurious and inferior poem” that was
falsely attributed to him. Id. (quoting William L. Prosser, Privacy,
48 CAL. L. REV. 382, 398 (1960)).
¶39 Many false light claims are “predicated on publication of a
defamatory statement.” Russell v. Thomson Newspapers, Inc., 842
P.2d 896, 907 (Utah 1992). And such claims “reside in the shadow
__________________________________________________________
3 Because we reverse on this point, we do not reach the question
whether any of the purportedly improper means identified by
SIRQ and Peterson were sufficient to sustain an intentional
interference verdict under Eldridge.
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of the First Amendment.” Jensen, 2005 UT 81, ¶ 50. For these
claims the interest in protecting a claimant’s privacy must be
“[c]ounterbalanced against . . . the overriding importance to
society, as a whole, of maintaining the free flow of public
information.” Cox v. Hatch, 761 P.2d 556, 563 (Utah 1988).
¶40 To strike this balance, the district court must conduct “an
initial inquiry” aimed at assuring that only statements capable of
defamatory meaning are considered by the jury in entering its
verdict. West v. Thomson Newspapers, 872 P.2d 999, 1008 (Utah
1994). Courts have generally identified two means by which the
district court may perform this gatekeeping function. One
approach is to screen statements in advance of trial on a motion
for summary judgment or motion in limine—identifying specific
statements or categories of statements that are capable of
defamatory meaning, and directing the jury to consider only those
statements in assessing the viability of a false light or defamation
claim. 4 Another approach is to give the jury a special verdict form
requiring the jury to identify specific statements it finds false or
defamatory;5 such a form facilitates judicial review of a
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4 See, e.g., W. v. Media Gen. Operations, Inc., 120 F. App’x 601, 618
(6th Cir. 2005) (remanding for a new trial because the lack of a
“definite list of alleged defamatory statements” gave the jury “a
carte blanche invitation to pick” from a wide range of
nondefamatory remarks).
5 See, e.g., Levinsky's, Inc. v. Wal-Mart Stores, Inc., 127 F.3d 122,
136 (1st Cir. 1997) (using only a general verdict form “poisons the
general verdict” when a non-defamatory statement is erroneously
submitted to the jury); Avins v. White, 627 F.2d 637, 646 (3d Cir.
1980) (reversing a jury verdict because “[n]o special
interrogatories or verdict form” were used and “it is therefore
impossible to determine” which statements the jury based its
verdict on); Pharmacists Mut. Ins. Co. v. Myer, 993 A.2d 413, 417
(Vt. 2010) (noting that “the jury was directed to
consider separately the two categories of statements, to
apply separate standards of liability to each, and to
return separate verdicts on each” (emphasis in original)).
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Opinion of the Court
defamation or false light verdict—allowing the trial judge or an
appellate court to consider whether the verdict is in fact based on
a statement capable of defamatory meaning.
¶41 Neither approach was followed in this case despite
Layton’s efforts to require the jury to state on a statement-by-
statement basis which remarks it found to be defamatory. See infra
¶¶ 49–53. The district court performed no pretrial narrowing of
the pool of statements in order to limit the jury’s consideration to
only specific statements or categories of statements capable of
defamatory meaning. And there was no special verdict form
allowing the jury to identify the statements it relied on.
¶42 We reverse and remand for a new trial on that basis. The
jury in this case was allowed to consider a wide range of garden-
variety comments made by one business competitor about
another. Many such statements were sharp and even acerbic, but
not ultimately capable of defamatory meaning. And for that
reason we are left with a lack of confidence in the jury’s verdict.
¶43 We accordingly reverse and remand for a new trial. In so
doing we reject SIRQ’s arguments (1) that Layton failed to
preserve its position on this issue, and (2) that the existence of at
least some potentially defamatory statements is sufficient to
sustain the verdict.
1
¶44 SIRQ claims that Layton failed to preserve its challenge to
the submission of nondefamatory statements on SIRQ’s false light
claim. It notes that Layton made no objection when these
statements came into evidence at trial. And it contends that such
an objection was essential to preserving the right to challenge the
admission of such statements on appeal.
¶45 An objection, to be sure, is the prototypical means of
preserving a challenge to the admissibility of evidence at trial.
And ordinarily we would require an objection as a precursor to an
appellate challenge to the admissibility of evidence. But here we
conclude that Layton did all that was necessary to preserve its
position on appeal.
¶46 Layton asked the district court to fulfill both of the
gatekeeping functions we identified above. It filed a motion for
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summary judgment seeking to bar SIRQ’s reliance on
nondefamatory statements at trial. And it requested a special
verdict form that would have required the jury to identify the
statements it found to be defamatory (and supportive of the false
light claim). SIRQ opposed both requests, and the district court
sided with SIRQ.
¶47 Layton asked the district court to follow the course we
outline above—to limit the statements submitted to the jury to
those deemed capable of defamatory meaning and to submit a
special verdict form requiring the jury to identify specific
statements it relied on in entering its verdict. In so doing it
preserved the very claim it asserts on appeal.
¶48 Our preservation rules are premised on principles of
fairness. They allow an appellant to advance a position on appeal
only if that position was presented in a manner allowing the
district court to avoid the error complained of on appeal. See
Weiser v. Union Pac. R.R. Co., 2010 UT 4, ¶ 14, 247 P.3d 357. Layton
did that here: It asked the district court to do the very things we
think the court should have done in fulfillment of its gatekeeper
role.
2
¶49 The district court conceded error in allowing some
nondefamatory statements to go to the jury. It noted, for example,
that the jury heard evidence of statements regarding SIRQ’s stock
and business plan, which could not have been understood as
defamatory. And it also acknowledged the “possibility . . . that the
jury’s finding of defamation [was] erroneously based on
statements for which there can be no liability.” For that reason the
district court conceded that a new trial might be warranted on the
defamation claim. As to the false light claim, however, the court
concluded that the First Amendment “limitations and privileges”
applicable to defamation claims would not extend to a false light
claim.
¶50 We disagree. There are “substantial areas of overlap”
between these two torts. Jensen v. Sawyers, 2005 UT 81, ¶ 48, 130
P.3d 325. The differences between them are mostly “at their
margins.” Id. ¶ 49. “[V]irtually any defamation claim may be
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SIRQ, INC. v. LAYTON COS.
Opinion of the Court
recast as an action for false light invasion of privacy.” Id. ¶ 54. For
that reason false light claims that arise from defamatory speech
raise the same First Amendment concerns as are implicated by
defamation claims. And here all of SIRQ’s false light claims arise
out of the same defamatory remarks that its defamation claims
were based on. 6
¶51 SIRQ nonetheless defends the jury verdict. It does so based
on the general verdict rule, under which we “exercise[] every
reasonable presumption in favor of the validity” of a jury verdict
and affirm if there is even one valid basis upon which the jury
could have reached its conclusion. See Barson ex rel. Barson v. E.R.
Squibb & Sons, Inc., 682 P.2d 832, 835 (Utah 1984). And because
there was at least one statement capable of defamatory meaning
that was submitted to the jury, SIRQ seeks affirmance of the false
light verdict under this rule.
¶52 We reject this argument in light of the First Amendment
dimensions of the district court’s failure to fulfill its gatekeeping
role. When nondefamatory statements are submitted for the jury’s
consideration, we may affirm only if we are confident that the jury
would have reached the same outcome without considering the
erroneously submitted remarks. See Jones v. Cyprus Plateau Mining
__________________________________________________________
6 Our cases have also recognized a distinct branch of false light
liability for speech that is technically true but places someone in a
highly offensive and misleading light. Jensen v. Sawyers, 2005 UT
81, ¶ 49, 130 P.3d 323. But SIRQ has not advanced such a claim
here. It has not asserted that any of the Layton statements at issue
were true but misleading. So SIRQ’s false light claims overlap
completely with its defamation claims. For that reason we look to
defamation cases in identifying the First Amendment overlay of
relevance to this case. In so doing, we do not imply that the First
Amendment has no impact in a false light case based on true (but
highly offensive and misleading) statements. If anything, the First
Amendment overlay may be stronger in such cases. See United
States v. Alvarez, 132 S. Ct. 2537, 2545 (2012) (discussing cases that
suggest that in certain contexts false speech is accorded less
protection under the First Amendment).
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Corp., 944 P.2d 357, 360 (Utah 1997); see also supra ¶¶ 22, 37. In this
case we lack such confidence and reverse and remand for a new
trial on that basis.
¶53 Like the trial judge, we agree that some statements in the
memorandum accompanying the noncompete agreement were at
least arguably capable of defamatory meaning. 7 Yet the jury was
also exposed to numerous other statements that could not have
been viewed as defamatory. And, as noted above, the district
court neither limited the jury’s consideration to only specific
statements it found potentially defamatory, nor asked the jury to
identify the defamatory statements it relied on in entering its
verdict. So on this record we are unable to make an independent
assessment of the likelihood of the jury reaching the same verdict
in the absence of the district court’s gatekeeping error. Because so
many nondefamatory statements were admitted, and because on
this record we cannot reliably assess which statements formed the
basis of the verdict, we find no basis for confidence in the jury’s
verdict.
¶54 Our confidence is further shaken by SIRQ’s above-noted
trial strategy—of highlighting Layton’s hostility toward SIRQ and
Peterson, and emphasizing the heated rhetoric directed at them by
Layton. That strategy exacerbates the difficulty of assessing the
basis for the false light verdict on appeal. Layton’s rhetoric may
have been “vehement, caustic, and sometimes unpleasantly
sharp.” New York Times Co. v. Sullivan, 376 U.S. 254, 270 (1964).
But if it was not potentially defamatory it cannot form the proper
basis of a false light claim. And on this record we are unable to
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7 Examples include statements by Layton that SIRQ “wasn’t
trustworthy,” was “dishonest,” and “didn’t do quality work,” and
Layton’s accusation that SIRQ “engag[ed] in a pattern of
behavior” that “if permitted to continue, would threaten
[Layton’s] very existence.” The latter statement could be
understood as opinion or hyperbole; but it also could potentially
be viewed as defamatory when read in the context of industry
practice and standards of behavior.
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SIRQ, INC. v. LAYTON COS.
Opinion of the Court
exclude the likelihood that such rhetoric may have tainted the
jury’s decision.
¶55 Absent specific jury instructions or a special verdict form, it
is possible that scores of nondefamatory remarks were improperly
considered by the jury. In light of this pervasive error, we cannot
confidently conclude that the jury did not base its verdict on
nonactionable speech. And we remand for a new trial on that
basis.
III
¶56 The trial in this matter highlighted the perils of the
improper purpose branch of the tort of intentional interference
with contractual relations. Because we have now repudiated that
branch of the tort, and because appellees have not challenged
Layton’s entitlement to the benefit of our recent decision in
Eldridge v. Johndrow, we reverse and remand for a new trial under
the law set forth in that decision. We also reverse the false light
verdict because the trial court failed to exercise its gatekeeping
function to prevent the jury from considering remarks that were
not capable of putting SIRQ and Peterson in a false light.
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