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Jones v. Scripps Media, Inc.

United States District Court, E.D. Michigan, Southern Division

April 4, 2017

ODIS JONES et al, Plaintiffs,
v.
SCRIPPS MEDIA, INC. Defendant.

          OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S RENEWED MOTION TO DISMISS (ECF #24)

          MATTHEW F. LEITMAN, UNITED STATES DISTRICT JUDGE

         Between April 28, 2016, and May 9, 2016, Detroit television station WXYZ[1] broadcast three investigative reports about the Detroit Public Lighting Authority (the "PL A"). The reports asserted that several PL A employees, including the PLA's former Chief Executive Officer Odis Jones ("Jones"), received lucrative severance payments that were hidden from the public. In this action, Jones claims that the reports defamed him and cost his business (co-Plaintiff MVP Capital Ventures, LLC ("MVP")) a multi-million dollar housing contract with Wayne State University. (See First Am. Compl., ECF #20.) WXYZ has now filed a motion to dismiss. (See ECF #24.) For the reasons set forth below, WXYZ's motion is GRANTED IN PART AND DENIED IN PART

         I[2]

         A

         In 2013, the City of Detroit formed the PLA in order to "improve, modernize, and maintain the City's street light infrastructure." (First Am. Compl. at ¶¶ 9-10, ECF #20 at Pg. ID 253.) Shortly after its formation, the PLA hired Jones as its first Chief Executive Officer. (See Id. at ¶¶ 13-15, ECF #20 at Pg. ID 254.) Among other things, Jones "led the City of Detroit's efforts" to install over 60, 000 street lights throughout the City. (Id. at ¶¶ 17-18, ECF #20 at Pg. ID 254.)

         "During his tenure with the [] PLA, [] Jones became aware of some opportunities for his private sector businesses." (Id. at ¶27, ECF #20 at Pg. ID 257.) Jones says that before he pursued any of these outside business opportunities, he sought and received clearance from "the Detroit PLA Board of Directors, [the] General Counsel and Ethics Officer for the City of Detroit PLA, the City of Detroit Inspector General[, ]" and others. (Id. at ¶29, ECF #20 at Pg. ID 257.) Despite these approvals, at least two PLA employees, Sandra Hughes O'Brien ("O'Brien") and Dana Harvey ("Harvey") objected to Jones' outside business activities. (See Id. at ¶30, ECF #20 at Pg. ID 257.) They thereafter became "openly hostile to [] Jones." (Id. at ¶31, ECF #20 at Pg. ID 258.)

         In September 2015, the PLA fired both O'Brien and Harvey. (See First Am. Compl. at ¶32, ECF #20 at Pg. ID 258.) After their firing, O'Brien and Harvey prepared draft whistleblower lawsuits in which they alleged that the PLA fired them because they had "knowledge that [] Jones was conducting illegal activities" at the PLA and were about to "expose" his behavior. (ECF #20-1 at 14, Pg. ID 308; see also First Am. Compl. at ¶¶ 33-34, ECF #20 at Pg. ID 258.) Among other things, O'Brien and Harvey alleged that Jones had "engineered" a severance payment to the PLA's former Chief Operating Officer Adam Troy ("Troy") "as payment for a business debt owned by Jones to Troy."[3] (First Am. Compl. at ¶35, ECF #20 at Pg. ID 258.)

         O'Brien and Harvey sent drafts of their lawsuits to the PLA, and the PLA's general counsel Tiffany Sadek ("Sadek") began investigating their claims. Sadek ultimately concluded in a written report (the "Sadek Report") that neither the PLA Board of Directors (the "PLA Board") nor Jones committed "any wrongdoing or ethical violations." (Id. at ¶¶ 41-42, ECF #20 at Pg. ID 259; see also the Sadek Report at ECF #20-1.) The PLA then settled its dispute with Harvey and O'Brien. (See Id. at ¶44, ECF #20 at Pg. ID 260.) As part of their settlement, "[b]oth O'Brien and Harvey received severance payments from the Detroit PLA. They also each signed severance agreements and releases in which they [] pledged to keep the details of their settlement and dispute confidential." (Id. at ¶46, ECF #20 at Pg. ID 260.) The First Amended Complaint does not allege that the PLA ever publicly discussed or disclosed Harvey's and O'Brien's termination, the settlement of their potential legal action, or the terms and conditions of their severance packages.

         B

         At around this same time, Troy also resigned. (See ECF #20-1 at 12, Pg. ID 306.) In connection with his resignation, Troy entered in a severance agreement with the PLA (the "Troy Severance Agreement").[4] (See Id. at 66, Pg. ID 360.) Under the Troy Severance Agreement, the PLA agreed to pay Troy $58, 000 in severance pay, including "accrued vacation, personal, and sick time for which he was entitled to receive as compensation." (ECF id. at 13, Pg. ID 307; see also Id. at 66, Pg. ID 360.)

         Jones signed the Troy Severance Agreement on behalf of the PLA. (See Id. at 66, Pg. ID 360.) Jones alleges that the PLA Board was "aware of the "precise terms" of the Troy Severance Agreement before he signed it and that the board "agreed" with those terms. (First Am. Compl. at ¶¶ 38, 106, ECF #20 at Pg. ID 259, 276.) But Jones does not allege that he ever presented the Troy Severance Agreement to the PLA Board for formal approval, that the agreement was ever on an agenda at a board meeting, that the board ever publicly discussed Troy's separation from the PLA or disclosed the terms of the agreement, or that the board ever took a formal vote on the agreement.

         After Troy left the PLA, he worked as Jones' "business partner" in co-Plaintiff MVP.[5] (See, e.g., Id. at ¶131(1), ECF #20 at Pg. ID 285.)

         C

         Jones decided to leave the PLA in February 2016. (See Id. at ¶48, ECF #20 at Pg. ID 260.) Jones and the PLA then negotiated an agreement to end his employment (the "Jones Separation Agreement"). (See Id. at ¶49, ECF #20 at Pg. ID 261.) As part of the Jones Separation Agreement, the PLA agreed to make a "severance" payment to Jones. (Id.) Jones maintains "he was entitled to receive [such a payment] upon termination of his Detroit PLA employment under his amended employment agreement." (Id.) The Jones Separation Agreement also required Jones and the PLA Board to keep the "terms and conditions" of the agreement confidential. (Id. at ¶54, ECF 20 at Pg. ID 262.)

         After Jones and the PLA completed their negotiations of the Jones Separation Agreement, "[t]he Detroit PLA sent out an advance public meeting notice and conducted a Public Meeting in accordance with the Michigan Open Meetings Act concerning the departure of [] Jones as the Detroit PLA CEO." (Id. at ¶52, ECF #20 at Pg. ID 261.) Jones has not alleged that the meeting notice contained any details about the terms of the Jones Separation Agreement nor that it identified the amount of his severance payment. A PLA press release that announced Jones' resignation likewise did not include any details about the terms of his separation. (See ECF #8- v.)

         On February 3, 2016, the PLA Board held the meeting that it had earlier announced in the public notice. (See First Am. Compl. at ¶52, ECF #20 at Pg. ID 261; see also Meeting Minutes, ECF #8-8.) The minutes of that meeting indicate that the PLA Board discussed the terms of Jones' separation from the PLA during a "closed session" that was not open to the public. (See Meeting Minutes, ECF #8-8.) After the PLA Board concluded its "closed" session, it returned to open session and "approve[d]" both Jones' resignation and the terms of the Jones Separation Agreement. (Id.) Jones has not alleged, and the public minutes of the PLA Board meeting do not reflect, that the board publicly discussed or disclosed either the terms of the Jones Separation Agreement or the specific amount of Jones' severance. (See id.)

         D

         In March 2016, soon after Jones left the PLA, WXYZ investigative reporter Ronnie Dahl ("Dahl") began working on a series of television reports about severance payments the PLA made to its former employees, including Jones, O'Brien, Harvey, and Troy.[6] (See First Am. Compl. at ¶62, ECF #20 at Pg. ID 264.) As part of her investigation, Dahl spoke with Jones and filed a Freedom of Information Act request seeking records related to severance payments the PLA had made. (See Id. at ¶55, ECF #20 at Pg. ID 262.) The PLA produced 46 pages of documents to Dahl, including certain press releases, the public notice of Jones' departure from the PLA, Jones' employment agreement, and "various other documents evidencing the departure of a variety of Detroit PLA employees from their employment with that entity." (Id. at ¶57, ECF #20 at Pg. ID 262-63.) The PLA also produced the Jones Separation Agreement to Dahl. (See Id. at ¶58, ECF #20 at Pg. ID 263.) After Dahl received those documents, she "confronted [] Jones at a Detroit bar. In hostile tones, she angrily accused [] Jones of Tying to her', got 'in his face' and wagged her finger at him while making these accusations." (Id. at ¶64, ECF #20 at Pg. ID 264.)

         E

         WXYZ aired Dahl's reports on April 28, 2016, April 29, 2016, and May 9, 2016. (See Id. at ¶64, ECF #20 at Pg. ID 264.) WXYZ also published the reports on its website. (See Id. at ¶65, ECF #20 at Pg. ID 264.) The reports raised serious questions about Jones' tenure as PL A CEO and the PLA's use of public funds to pay severance packages. The reports repeatedly referred to these payments, both in onscreen graphics and spoken words, as "secret severances." (See Id. at ¶¶ 62, 74, ECF #20 at Pg. ID 264, 266.) The Court summarizes the three reports below.[7]

         1

         The initial report aired on April 28, 2016. Dahl first introduced the PLA and extolled its work for the City of Detroit. She called the PLA one of City's "brightest" stars and credited the organization with "replacing street lights at a blistering pace." Dahl then explained that the PLA financed its operations through a sale of public bonds, and she said that the bonds are to be paid back with funds that were originally earmarked for police and safety. The report then showed Detroit Mayor Mike Duggan ("Mayor Duggan") describing the PL A as "a huge public trust." Duggan explained that the PLA was using "public safety money" and therefore had an obligation to "make sure [its funds were] being used to the maximum benefit."

         Dahl then began to question whether the PLA was, in fact, using its funds "to the maximum benefit." She informed viewers that WXYZ investigators had "uncovered documents" that raised "disturbing questions" about the PLA's use of public funds. Specifically, Dahl said that "the PLA dished out more than a half million dollars of severance payments" to five former employees - Jones, Troy, O'Brien, Harvey, and Crawley - "who got the cash on one condition: go away, don't sue, and never talk." Dahl later specified how much each employee received in severance and told viewers that when WXYZ contacted some of the employees for comment, the employees told the station that "confidentiality agreements prevented them from talking."

         Dahl then introduced "noted labor lawyer" Deborah Gordon ("Gordon"). Dahl said that Gordon had "reviewed Jones' contract and everything about his departure" from the PLA. Gordon then appeared on camera and said that "[t]he statements being made publicly are very clear that he [Jones] has resigned. Under his [employment] agreement, if [he] resigned, he doesn't get any severance pay." Dahl then said that Jones nonetheless "incredibly" did get a severance payment - a "goodbye present" of a "quarter-million tax-payer dollars and health care for a year." Dahl also said that Jones and the PLA Board agreed to keep the Jones Separation Agreement a "secret." Later in the report, Dahl told the audience that Jones and Troy are now "business partners, " and MVP's logo was shown on screen at that time.

         The report concluded with Dahl interviewing PLA Board President Dr. Lorna Thomas ("Dr. Thomas"). Dahl asked Dr. Thomas about the severance payments to Jones and the other employees, where the money came from, and whether the severance payments were an appropriate use of public funds. Dr. Thomas generally refused to comment. She said only that the payments and severance agreements were "personnel matter[s]."

         2

         The second report aired on April 29, 2016. Early in the report, Dahl reminded viewers that Jones received a $250, 000 payment "after resigning to pursue new opportunities." At this same moment, the report displayed an image of MVP's logo. Dahl also identified the severance payments that O'Brien, Troy, Harvey, and Crawley received.

         Dahl told viewers that Dr. Thomas refused to discuss why the payments were made, and the report showed Dr. Thomas refusing to answer Dahl's questions on this issue. Shortly thereafter, 1:20 into the report, Dahl said that "noted employment lawyer Deb Gordon, who reviewed the documents for [WXYZ], has a theory" about the payments. Gordon appeared on camera and said that the departing employees received the payments in "exchange for giving up [their] rights to file a lawsuit" and for "remain[ing] quiet."

         Dahl then provided support for Gordon's "theory." She explained that before O'Brien and Harvey left the PLA, they "threatened [to bring] whistleblower lawsuits" in which they would have claimed that "they witnessed illegal activities at the PLA." The report did not identify those "illegal activities." Dahl then asked Dr. Thomas on camera whether O'Brien and Harvey were "paid to keep their mouths shut, " and Dr. Thomas again responded that this was a "personnel matter" on which she would not comment.

         The report then cut back to Gordon and depicted her as saying "he [Jones] violated the law, and other people got caught in the crossfire, bring those people back, get rid of him, turn it over to the AG, and don't waste any taxpayer money."[8]This depiction appears almost exactly one minute after the earlier reference to Gordon having a "theory."

         Following Gordon's statement, Dahl said that "more mystery" surrounded the $58, 000 severance payment that Troy received "after less than a year on the job." Dahl remarked that the payment was "signed by [Troy's] boss, Odis Jones" and that "months later, the two became partners in a company called MVP Capital." The MVP logo was again shown on the screen at that point. Dahl then said that "curiously, the company was registered with the state one day before Jones signed Troy's severance deal." The report concludes with Mayor Duggan saying that he believed based on WXYZ's reporting that "there was a lot else going on" at the PLA.

         3

         The third and final report aired on May 9, 2016. It was a "follow-up" to the reports that aired in late April. Dahl informed viewers that "there's been plenty of outrage since we broke the story of how the Public Lighting Authority handed out more than $500, 000 to five top execs to buy their silence." And the report included interviews with various politicians criticizing the payments.

         The report further indicated that Dahl attempted to find public records of the severance payments. It explained that Dahl reviewed all of the available minutes from PLA Board meetings and found only one reference to the resignation of Jones and nothing with respect to Troy, Crawley, O'Brien, or Harvey.

         Dahl also told viewers that the PLA had undertaken a "secret investigation ... into its executives as it was paying them to stay quiet." That investigation was the one described in the Sadek Report. Dahl said that Sadek's investigation was triggered by allegations that Jones "use[d] authority resources to get business for his side company, MVP. [Sadek] also investigated Adam Troy ... Jones' now partner at MVP." After Dahl asked rhetorically "how did Troy get his gig at PLA, " the report displayed a graphic of falling $100 bills and the figure "$58, 000" in large red letters, and Dahl asked: "why did Jones give [Troy] $58, 000 severance after less than a year on the job?"

         Dahl did acknowledge Sadek's conclusion that "Jones and Troy did nothing wrong."[9] But Dahl then questioned Sadek's impartiality and noted that "Troy and MVP [had] been [Sadek's] client when she was in private practice" and that they were "paying her" before she joined the PLA. Dahl concluded the final report by informing viewers that lawmakers were looking into how they could stop similar severance payments in the future.

         F

         In the First Amended Complaint, Jones specifically identifies four classes of statements from the televised reports that he alleges defamed him:

• "He Broke the Law." First, Jones says that the manner in which WXYZ used the footage of its interview with Gordon during the April 29, 2016, broadcast defamed him. The report depicted Gordon as saying that "he violated the law" and that the case should be "turn[ed] [] over to the AG [Attorney General]." (See First Am. Compl. at ¶¶ 66-78, ECF #20 at Pg. ID 265-68.)[10] Jones contends that Gordon never actually said that he violated the law, but instead suggested only that "if" he had violated the law, then there should be consequences for those actions. (See Id. at ¶69, ECF #20 at Pg. ID 265.) Jones insists that Dahl and WXYZ "obscure[ed]" the word "if and "deceptive[ly] edit[ed]" Gordon's statement "to give the impression ... that [it was] a flat declaration ... without any context or clarification." (Id. at ¶¶ 66, 72, ECF #20 at Pg. ID 265-66.) Jones says that the "editing" was "undertaken with the malicious intent to create the false impression[]" that he was a "lawbreaker." (Id. at ¶75, ECF #20 at Pg. ID 267.)
• "Secret Severances." Next, Jones says that the reports falsely portrayed him as participating in a "shadowy and illegal scheme" to keep "secret" the severance payments he and other PLA employees received. (Id. at ¶¶ 83-89, ECF #20 at Pg. ID 269-72.) Jones contends that the severances were not "secret" and that he was not involved in any effort to hide anything from the public.
• "Buying Silence." Third, Jones alleges that the reports made "repeated slanderous assertions that [he] is a corrupt man who can be bought." (Id. at ¶90, ECF #20 at Pg. ID 272.) Specifically, Jones complains that the reports implied that the PLA "purchased" his "silence" and "secrecy" through his severance payment. (Id. at ΒΆΒΆ 91, 99, ECF #20 at Pg. ID 272-73, 275.) Jones insists that his silence was not "purchased" and that his ...

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