Montgomery Investigative Services, Ltd. v. Horne

CHARLES E. MOYLAJSf, JR., Judge (retired, specially assigned). The rule is that a defendant may not, without liability, publish defamatory information about a plaintiff. An exception to the rule is that sometimes a defendant enjoys a qualified privilege to publish defamatory information in order to serve some greater need. The exception to that exception is that the qualified privilege may be lost if it is abused.

This case involves a couple of exceptions to the exception. On April 11, 2003, the appellee and cross-appellant, Robert T. Horne, filed a complaint in the Circuit Court for Montgomery County. The complaint charged defamation 1 against, inter alia, three defendants. Two of those defendants are the appellants, Montgomery County Investigative Services, LTD.

(“MIS”) and Tammy White, an employee of MIS. The third defendant whose case still concerns us is the cross-appellee, AA Southern Services, Inc. (“Southern Services”). Horne’s claim against these three defendants was tried before a jury on December 19 through December 22, 2005. At the close of the plaintiffs case, judgment was granted in favor of the defendant Southern Services.

Horne’s cross-appeal is from that grant of judgment. A similar motion for judgment by the appellants, MIS and White, was denied both at that time and at the end of the entire case. The jury rendered a verdict in favor of Horne against both appellants. In appealing the judgment against them, the appellants raise the two contentions 1. that the trial judge erroneously failed to grant their motion for judgment on the ground that Horne had failed to produce sufficient evidence of actual malice to overcome their qualified privilege, and ¹⁹⁷ 2. that the court erroneously instructed the jury on the definition of actual malice.

The Factual Background In the Spring of 2002, Southern Services was in the business of providing termite and pest control to residential homeowners. The technicians for Southern Services would frequently have access to private homes at times when the homeowners were not present or at times when only a minor child was present. In order to protect its residential customers and to reduce the risk of harm, Southern Services requested criminal background checks on all of its technicians who would have access to residential homes. The criminal background checks were performed both during the initial hiring process and annually thereafter.

MIS was and is in the business of conducting various types of background checks for its clients. It conducts criminal, civil, traffic, and social security inquiries, as well as hospital record checks. MIS will conduct a simple computerized search through court databases for a fee of $18 per inquiry, and will provide the client with a processed summary along with matching printouts. It will also conduct more thorough investigations, such as going to a courthouse to obtain copies of original documents from the court records.

The client is charged a higher hourly rate for the more thorough investigations. The Initial Hiring of Home In early March of 2002, Horne applied for a job at the Silver Spring office of Southern Services. Horne was interviewed by James Lambert, the manager of the Silver Spring office. Lambert informed Horne that Southern Services would be performing a background check on him.

In the course of that interview, Horne informed Lambert about one brush that he had with the law. He had been arrested and charged with transporting a handgun and with impersonating a police officer. The charge of impersonating ¹⁹⁸ an officer resulted in a verdict of not guilty. In the Circuit Court for Montgomery County, Horne pleaded guilty to the charge of transporting a handgun, and the disposition of the case was probation before judgment, with one year of supervised probation.

These charges had all been filed in the District Court on February 28, 1997. The cases were transferred to the Circuit Court and were disposed of by Judge Martha Kavanaugh on May 6, 1997. On March 12, 2002, Lambert hired Horne as a residential, pest-control technician. The Criminal Background Check The routine background check on Horne was initiated on March 29, 2002, by Southern Services’ district manager’s office located in Manassas, Virginia.

The district manager in Manassas was David Clayborn. The person initiating the request for a background check was Penny Clayborn, who also worked at the Manassas office. The request was for both a criminal records check and a civil records check, both for the State of Maryland. The subject of the requested background check was listed as “Robert Horne,” with no middle initial being given.

Horne’s address was given, however, as well as his social security number and his birthdate of “5-23-73.” The Background Check Report This case hinges entirely on the results of that background check as forwarded from MIS to Southern Services on April 2, 2002. When MIS received the request for the background check on March 29, 2002, the request was turned over to the appellant Tammy White, a background investigator for MIS. The report of April 2, 2002, was faxed from Tammy White of MIS to Penny Clayborn of Southern Services. The report had been prepared by Tammy White.

The singular subject of the investigation in that report was designated simply as “Robert Horne.” The bottom of the single page report summary showed an “Investigative Fee” of $54.00, reflecting “3 MD SEARCHES ¹⁹⁹ @ $18.00 EACH.” The result of the first of these searches was unremarkable: DISTRICT COURT OF MARYLAND, CRIMINAL CASE NUMBER: 4D00042046 CHARGE: 1: DEADLY WEAPON-CONCEAL DISP: FORWARD TO CC CHARGE: 2: HANDGUN ON PERSON DISP: FORWARD TO CC CHARGE: 3: PERSONATE POLICE OFFICER DISP: FORWARD TO CC Although no dates were given, those three charges were the charges filed against Horne in the District Court on February 28, 1997. They were all forwarded to the Circuit Court for ultimate disposition. These were the charges that Horne had described to James Lambert in his job interview. The result of the second of the three searches was also unremarkable.

DISTRICT COURT OF MARYLAND, CIVIL SEVERAL RECORDS MATCHING FIRST AND LAST NAME Simply on the basis of the first and last names, the computerized records indicated sixteen different civil cases involving a “Robert Horne,” with various middle initials, titles, and suffixes. If nothing else, the list was enough to alert the reader that “Robert Horne” was a common enough name to apply readily to more than one individual. It was the third of the searches, that of the criminal records of the Montgomery County Circuit Court, that is critical to this appeal. Two Criminal Court Case Numbers were reported on and summarized, # 35690 and # 79341.

The second of these, though again undated, purported to reflect Judge Kavanaugh’s disposition of several charges on May 6,1997. CASE NUMBER: 79341 CHARGE: 1: TRANSPORTING A HANDGUN BY VEHICLE DISP: GUILTY ONE YEAR SUPERVISED PROBATION [ 2 ] CHARGE 2: PERSONATING POLICE OFFICE DISP: NOT GUILTY ²⁰⁰ That Criminal Case Number clearly referred to the Robert Horne who was the subject of the requested background check. The record sheets that accompanied the report showed, as part of the antecedent District Court records, that the subject of the charges had, indeed, the date of birth of “5-23-73,” precisely the date of birth of the subject of the requested background check. What the April 2, 2002 report on the results of the background check on Robert Horne also included, however, was the following ostensible record from the “Montgomery County Circuit Court.” The first of the criminal cases reported on was Criminal Case # 35690.

With no dates being shown, the report simply recorded: MONTGOMERY COUNTY CIRCUIT COURT: CASE NUMBER: 35690 CHARGE: 1: THEFT DISP: GUILTY 6 MONTHS JAIL CHARGE: 2: CONSPIRACY DISP: NOLLE PROSEQUI No date of birth and no social security number connected the Robert Horne who was sentenced to serve six months for theft to the Robert Horne on whom Southern Services sought a background check and whom Southern Services had identified far more precisely. The Robert Horne who was convicted of theft was not the Robert Horne who is the appellee and cross-appellant in this case. The report of April 2, 2002 from MIS nonetheless communicated to Southern Services the unmistakable message that the subject of Southern Services’s inquiry had been convicted and incarcerated for theft. There was no alert about the possibility of a misidentification based on nothing more than a common name.

To accuse someone falsely of theft, of course, is defamatory per se. It remains only to be seen whether that publication was somehow privileged. The Age Discrepancy The Robert Horne who was convicted of theft had been sentenced for that crime by Judge John J. Mitchell on May 14, ²⁰¹ 1986, when the Robert Horne on whom the background check was sought was only twelve years old (still nine days shy of his thirteenth birthday even as of the date of sentencing). Tammy White was questioned about the age discrepancy between the Robert Horne of the theft conviction and the Robert Horne who was the subject of the background check.

Her response was, at the very least, insensitive to the damage that a misleading report might cause. Q. AVhat’s the date of the disposition for the theft charge in the Circuit Court for Montgomery County? A. May 14th, 1986. Q. All right.

Now, you were provided with the date of birth of Mr. Home ? A. That’s correct. Q. All right. Did you compare the date of birth with the date of disposition?

A. No, I did not. Q. Why not? A. I printed out — as I was requested, I printed out the information and faxed it back. No one asked me to analyze it for them.

Q. AVhen you faxed this cover sheet and the accompanying data sheets to Southern Pest Control on April 2nd, 2002, did you know that the individual mentioned in the theft disposition would have been 13 years old or so if he was the age that Mr. Horne was reported to on the transmittal sheet you got? A. No. (Emphasis supplied). Tammy Wfiiite had been given very specific identifying data about the Robert Horne on whom she was requested to do a background check. A glance at the information on which she relied, and whieh she included in her report, would have revealed that the Robert Home who had been sentenced for theft in 1986 could not have been the Robert Horne whom she had been asked to investigate. ²⁰² Tammy White’s testimony was also critical in pointing out the significance of the summary or cover sheet as opposed to the copies of the computer printouts that were her source material.

The latter is a collection of raw data. The former is processed intelligence. Ms. White first referred to the cover sheet. Q When you completed your search, you prepared a summary of the results of your investigation for your client, in this case, AA Southern Services, correct?

A I prepared my cover sheet, yes. Q Which is a summary. It is your summary of the information, correct? A Well, it’s a guideline to guide them through the information that I sent them.

(Emphasis supplied). She acknowledged that the computer printouts themselves may be difficult for a layman to interpret. Q You prepared that because you recognize these printouts may be difficult for the client to read? A I use it as a tool to assist them in reading the printouts that I send to them, yes.

Q And you recognize that for people who are not trained in the reading of those printouts, that you need to provide them guidance? A Yes. (Emphasis supplied). Ms. White also acknowledged that her summary with respect to the civil records affirmatively alerted the recipient that “there may be more than one person reflected in those records.” No such alert, however, was made in the case of the criminal records.

Q And you made a point of indicating with respect to the civil records that there may be more than one person reflected in those records, correct? A Correct. ²⁰³ Q Now, when it came to the District Court of Maryland, Criminal, everything was under one case number, correct? A That’s correct. Q And when it came under the Montgomery County Circuit Court, everything was under that section, correct?

A That’s correct. Q You made no such representations to AA Southern Services that, in the Montgomery County Circuit Court records, there may be several individuals involved, did you? A No, I did not. Q And in that section, you reported two different sets of convictions, didn’t you?

A Yes, I did. (Emphasis supplied). Consequences of the False Report When the results of the background check were received by Penny Clayborn at the Manassas office, David Clayborn, the district manager, immediately forwarded to Robert MeMiehael, the president of Southern Services in Virginia Beach, Virginia, the report that the criminal background check on Horne had revealed a theft conviction resulting in six months of incarceration. McMichael decided to terminate Horne’s employment and directed David Clayborn to direct James Lambert in Silver Spring to take action to that end.

On April 12, 2002, Lambert fired Horne from his job, notwithstanding Horne’s protests that he had never been convicted of or incarcerated for theft and he was not the “Robert Horne” who had been so convicted. It was established unequivocally that Horne would not have been fired from his employment with Southern Services if the report from MIS had not indicated that he had been convicted of and served a sentence of six months for theft. We shall defer our factual summary of the circumstances surrounding Lambert’s firing of Horne until we address directly Horne’s cross-appeal against Southern Services. ²⁰⁴ Qualified Privilege And the Proof of Malice At the end of the plaintiffs case, the trial judge ruled that all three of the defendants still in the case — MIS, Tammy White, and Southern Services — -were entitled to a qualified privilege and that Horne, therefore, had to prove actual malice in order to overcome that privilege. With respect to MIS and Tammy Wfiiite, the judge ruled that Horne had produced a prima facie case that those two defendants had communicated the erroneous criminal background report to Southern Services with actual malice.

The motion for judgment was, therefore, denied as to those two defendants, as it was again at the end of the entire case. The jury found actual malice and returned its verdict in favor of Horne on the claim of defamation. Both of the appellants’ contentions focus on that element of malice. With respect to Southern Services, on the other hand, the trial judge ruled that Horne had failed to produce legally sufficient evidence to generate an issue as to actual malice.

The judge, therefore, granted the motion of Southern Services for a judgment in its favor. That is one of the two rulings that Horne challenges on his cross-appeal. The other challenge is to the judge’s ruling that MIS and Tammy Wfiiite enjoyed a qualified privilege in the first place. Horne does not argue that Southern Services was not entitled to a qualified privilege, only that Southern Services abused the privilege.

The entitlement of Southern Services to the qualified or conditional privilege is clear. Judge Karwacki wrote for this Court in Happy 40, Inc. v. Miller, 63 Md.App. 24, 31 , 491 A.2d 1210 (1985): The conditional privilege accorded the defamatory remarks published to the fellow employees of the appellee was grounded upon the well settled privilege accorded to statements made within the context of the employer-employee relationship. In Stevenson v. Baltimore Baseball Club, 250 Md. 482, 486 , 243 A.2d 533 (1968), Judge Singley had similarly stated for the Court of Appeals: ²⁰⁵ Communications arising out of the employer-employee relationship clearly enjoy a qualified privilege. See also McDermott v. Hughley, 317 Md. 12, 28 , 561 A.2d 1038 (1989); Henthom v. Western Maryland R.R. Co., 226 Md. 499 , 174 A.2d 175 (1961) (railroad employee accused of theft and fired — charge granted qualified privilege); Beeler v. Jackson, 64 Md. 589 , 2 A. 916 (1886) (statements by employer accusing railroad employee of theft were qualifiedly privileged); Darvish v. Gohari, 130 Md.App. 265, 274 , 745 A.2d 1134 (2000) (“Communications arising out of the employer-employee relationship clearly enjoy a qualified privilege.”); Shapiro v. Massengill, 105 Md.App. 743 , 661 A.2d 202 (1995).

The Reciprocity of the Qualified Privilege At this juncture, it is convenient to consider the second contention raised by Horne on his cross-appeal. He argues that the trial judge committed error in extending the qualified privilege enjoyed by Southern Services to MIS and Tammy White derivatively. We have no difficulty in affirming the trial judge’s decision that MIS and Tammy White enjoyed a qualified privilege. Factually the situation before us is indistinguishable from that which was before the Court of Appeals in Wetherby v. Retail Credit Co., 235 Md. 237 , 201 A.2d 344 (1964).

In that case, the defendant Retail Credit Co. had been hired by various insurance companies to make background checks on applicants for insurance. The plaintiffs in that case sued Retail Credit for including in its report erroneous information about the plaintiffs that was defamatory. Although it was stipulated at the trial that Retail Credit was entitled to a qualified privilege, we find the approving dicta of Judge Hammond to be highly persuasive and we are persuaded. At the trial it was stipulated (a) that the credit company, as a mercantile rating agency, had a qualified or conditional privilege to fairly publish to its own legitimately interested business customers the information it received in the course of its investigations, without being liable for defamatory matter therein, provided it did not exceed or abuse the ²⁰⁶ privilege; (there appears to be a sound basis for this concession by the appellants; see Trussell v. Scarlett, 18 F. 214 (Cir.Ct.D. of Md.[1883], Morris, J.); Petition of Retailers Commercial Agency, Inc., 342 Mass. 515 , 174 N.E.2d 376 [(1961)]; Annotation 30 A.L.R.2d 776 ; Fresh v. Cutter, 73 Md. 87 , 20 A. 774 ; Simon v. Robinson, 221 Md. 200 , 154 A.2d 911 ). 235 Md. at 239 , 201 A.2d 344 (emphasis supplied).

The Wetherby v. Retail Credit dictum is now a holding. Self-evidently in the present case, the legitimate business interest that Southern Services had in checking up on the criminal background of its employee paralleled the reciprocal interest that MIS had in providing, for a fee, such background information to Southern Services. Marchesi v. Franchino, 283 Md. 131, 135 , 387 A.2d 1129 (1978), explained the general legal principle whereby conditional or qualified privileges rest upon the notion that a defendant may escape liability for an otherwise actionable defamatory statement, if publication of the utterance advances social policies of greater importance than the vindication of a plaintiffs reputational interest ... [TJhe common law recognized that a person ought to be shielded against civil liability for defamation where, in good faith, he publishes a statement in the furtherance of his own legitimate interests, or those shared in common with the recipient or third parties ... (Emphasis supplied).

In Darvish v. Gohari, 130 Md.App. 265, 275 , 745 A.2d 1134 (2000), Chief Judge Murphy held that a qualified privilege existed “where the speaker and the recipient have a common interest in the subject matter.” One factor to be considered in determining whether the publication falls within the standards of decent conduct is whether the publication was made “in response to a request.” In this case, appellee expressly authorized CATD to seek information about his “character, general reputation and credit history” and to “obtain and share information ²⁰⁷ from and with any of its affiliated entities.” Pursuant to that grant of authority, CATD approached appellant and solicited information about appellee. Because appellant’s offending publication was made “in response to an [authorized] inquiry and not volunteered, ” we are persuaded that he enjoyed “greater latitude about what he may say about [appellee] without incurring liability.” (Emphasis supplied). That opinion went on to state: The Court of Appeals has “recognized that qualified privilege arising by reason of common interest in the subject matter can inhere in business dealings between the publisher and the recipient.” 130 Md.App. at 276 , 745 A.2d 1134 (quoting Hanrahan v. Kelly, 269 Md. 21, 28 , 305 A.2d 151 (1973)). In this case, there was indisputably a “business dealing” between the publisher (MIS) and the recipient (Southern Services) of the information revealed by the records check.

In Carter v. Aramark, 153 Md.App. 210 , 835 A.2d 262 (2003), the plaintiff had been an usher employed by the Baltimore Orioles. The defendant, Aramark, supplied concession services at Oriole Park. Aramark reported to the Orioles that the plaintiff was involved, along with one of Aramark’s own employees, in acts of theft. At her criminal trial for theft, the plaintiff, however, was acquitted of that charge and then sued Aramark for defamation.

Judge Thieme’s opinion made it clear that Aramark enjoyed a qualified privilege. A defendant in a defamation action may interpose the defense of a qualified, or conditional, privilege. Gohari [v. Darvish] 363 Md. [42] at 55, 767 A.2d 321 [(2001)]. The Court there observed that a defendant would not face liability for an otherwise defamatory statement “where, in good faith, he publishes a statement in furtherance of his awn legitimate interests, or those shared in common with the recipient or third parties.... ” The alleged defamatory communications made by Ara-mark to the Orioles, and to employees of each organization, ²⁰⁸ are defended on the basis of the “shared interest” or “common interest” conditional privilege ....

It is clear that information held by Aramark, that Ms. Carter and Ms. Brunson might have been engaged in the activities in question here, would be important to the Baltimore Orioles. 153 Md.App. at 238-39 , 835 A.2d 262 (emphasis supplied). Southern Services obviously had an important business-related interest in knowing the criminal record, if any, of its employees or prospective employees. Montgomery Investigative Services, as its name asserted, was in the business of investigating such criminal records. Southern Services hired MIS to conduct such an investigation and to report back its findings.

The business-related need to obtain such information was reciprocal to the business-related job to report such information. The two are obviously flip sides of the same coin, and the privilege that the communication itself enjoys necessarily covers the communicator and the communicatee alike. Accordingly, MIS and Tammy White enjoyed, just as Southern Services did, a qualified privilege. In order for Home to prevail in his defamation suit against any of the three, it would have been necessary for him to have shown sufficient actual malice to overcome the privilege.

Actual Malice On the Part of MIS and Tammy White The trial judge, at the end of the entire case, denied the motion for judgment by MIS and Tammy White based on their argument that there was insufficient evidence of actual malice to permit the case against them to go to the jury. The jury then found that there was actual malice on their parts and returned verdicts against them. The appellants’ first contention is that there was, as a matter of law, insufficient evidence of actual malice to generate a genuine jury issue in that regard. Their second contention is that the judge erroneously instructed the jury on the subject of actual malice. ²⁰⁹ Jury Instruction on Actual Malice It will be convenient to dispose of that second contention first.

On the privilege enjoyed by MIS and Tammy White and on the actual malice that must be found to defeat the privilege, the total instruction was as follows: The Court has determined, as a matter of law, that the Defendants are entitled to a qualified privilege. In other words, the law recognizes that the publication of statements in certain situations advances social policies of greater importance than the vindication of a plaintiffs reputational interest, and thus, the law gives a certain amount of protection to those persons making the statements. The Defendants’ qualified privilege, unless overcome, protects them from any liability to the Plaintiff for claims of defamation. Upon the request of an employer, a person or corporation that communicates an employee’s criminal background to the employer is provided with a qualified privilege.

The qualified privilege may protect the person making the statement from liability even if the statement is false. The qualified privilege given to the Defendants may only be overcome if a Plaintiff can prove, by clear 'and convincing evidence, that the Defendant abused the privilege by making the statements with actual malice. ACTUAL MALICE EXISTS WHEN THE PERSON MAKING THE FALSE STATEMENT KNEW EITHER THAT THE STATEMENT WAS FALSE, OR THAT IT WAS ALMOST CERTAINLY FALSE, OR HAD OBVIOUS REASONS TO DISTRUST THE ACCURACY OF THE STATEMENT. (Emphasis supplied).

We have printed in bold capitals that part of the larger instruction dealing exclusively with actual malice. That is verbatim Maryland Pattern Jury Instruction-Civil 12:5 (4th ed. 2004): Actual malice exists when the person making the false statement knew either that the statement was false, or that ²¹⁰ it was almost certainly false, or had obvious reasons to distrust the accuracy of the statement. That instruction is, moreover, completely consistent with the definition of actual malice employed by the Court of Appeals in Capital-Gazette Newspapers, Inc. v. Stack, 293 Md. 528, 540-41 , 445 A.2d 1038 (1982): Accordingly, the New York Times Co. “actual malice” standard