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Davidson v. Baird

Court of Appeals of Utah

January 10, 2019

Rebecca Davidson, Tara Smelt, and Tayo, Inc., Appellants,
v.
Chris Baird, Connie McMillan, Jim Stiles, and The Canyon Country Zephyr, Appellees.

          Seventh District Court, Moab Department The Honorable Lyle R. Anderson No. 160700036

          Gregory W. Stevens, Attorney for Appellants

          Russell C. Fericks, Barry Scholl, and Kendall Moriarty, Attorneys for Appellees

          Judge Ryan M. Harris authored this Opinion, in which Judges Kate Appleby and Diana Hagen concurred.

          OPINION

          HARRIS, JUDGE

         ¶1 A free democracy is often messy and, in our country, those willing to serve in public positions and who are entrusted with appropriately spending the public's money must be "[individuals] of fortitude, able to thrive in a hardy climate," and willing to put up with robust, even sharp, criticism of their actions by members of the public whom they represent. See New York Times Co. v. Sullivan, 376 U.S. 254, 273 (1964) (quotation simplified). The First Amendment to the United States Constitution affords a level of protection even for "vehement, caustic, and sometimes unpleasantly sharp attacks on government and public officials." Id. at 270.

         ¶2 In this case, we are called upon to consider the legality, under state defamation law, of certain comments-made by a citizen, a reporter, and another public official-expressing criticism of actions taken by Rebecca Davidson while she was employed as the City Manager of Moab, Utah. Faced with the choice of suffering her critics' slings and arrows in silence, or taking action against her sea of troubles, [1] Davidson (and two other related plaintiffs) chose the latter course, and filed a lawsuit accusing her critics of defamation and other torts. The district court dismissed the lawsuit on summary judgment, and Plaintiffs appeal. We affirm.

         BACKGROUND

         ¶3 Davidson came to Moab with some experience-and some experience with controversy-in municipal government. Prior to accepting employment in Moab, Davidson worked in the city governments of Kemmerer, Wyoming and Timnath, Colorado. Timnath is a small town, and while the record contains little information about Davidson's duties there, it appears she worked as an "engineer" or as "town manager." Davidson acknowledges that, during her time in Timnath, criticism was leveled against her related to her work, but she characterizes those allegations as "false" and claims that the Timnath Town Council cleared her "of any wrongdoing . . . [and] issued a press release expressing that fact."

         ¶4 Following her departure from Timnath, Davidson next took a job as the City Administrator of Kemmerer, Wyoming. While working there, Davidson became acquainted with plaintiff Tara Smelt, who had been hired as Kemmerer's Director of Communications and Events, as well as another individual (Consultant) who had been hired by the city as an IT consultant. Among other things, Smelt's duties included serving as a "channel of communication" with Consultant. While Davidson worked for Kemmerer, a concern apparently arose that the town's IT system was not sufficiently secure and might become a target for foreign hackers, and the town hired Consultant to investigate and address these issues.

         ¶5 While in Kemmerer, Davidson also became acquainted with defendant Connie McMillan, a Kemmerer resident who came to believe that Davidson was "creating a horrible work environment" for city employees and was thereby causing good employees to leave. McMillan acted on this conviction by repeatedly voicing her concerns at city council meetings, and by organizing like-minded citizens of Kemmerer into vocal public opposition to Davidson.

         ¶6 In April 2015, Davidson left Kemmerer to take the City Manager position in Moab. Smelt had already relocated to Moab, and Smelt moved into Davidson's house in Moab soon after Davidson arrived. The City of Moab assigned Davidson goals for 2015 and 2016, including evaluating city employees and departments to ensure they were accountable and productive. In response, Davidson devised and implemented a reorganization plan that included the firing, in September 2015, of two popular longtime city employees.

         ¶7 Also early in her tenure in Moab, Davidson asked her assistant city manager (Assistant) to hire someone to assess the city's IT system and determine the extent of its cybersecurity issues. Davidson suggested that Assistant speak with Consultant, with whom she had worked in Kemmerer, and the city eventually hired Consultant. In May and June 2015, Consultant conducted a "security assessment" of the city's computer system and determined that it was not sufficiently secure, and that significant work was required in order to secure it. Soon thereafter, Davidson, Assistant, and Moab's mayor (Mayor) met in an executive session with the Moab City Council and determined that, because of the "danger" presented by the IT system's vulnerability, there was "no time to present the work for competitive bidding," and concluded that the city should retain Consultant to perform the necessary work without following the usual competitive bidding process. Ultimately, the city agreed to pay Consultant more than $40, 000 for this work. In late June 2015, shortly after the city hired Consultant, Smelt and Consultant formed a company called Tayo, Inc. (Tayo), which received the balance of the money owed to Consultant for the work he performed for the city. At the time, Davidson informed Mayor and the city attorney that Smelt lived at her house and was involved with Tayo, but did not at that time disclose those facts to the Moab City Council.

         ¶8 A few months later, certain individuals-including each of the defendants in this case-began making public statements questioning the propriety of some of Davidson's actions in Moab. The first of these occurred in late October 2015, when an independent online newspaper known as The Canyon Country Zephyr (the Zephyr) published an article written by reporter (and defendant here) Jim Stiles, entitled "Upheaval at Moab City Hall: For its new City Manager, REBECCA DAVIDSON, 'It's DÉJÀ VU all OVER again.'" In this article, Stiles stated that "Moab/Grand County citizens" were upset by Davidson's decision to terminate two city employees as part of her restructuring plan. Stiles also stated that "upheaval . . . seems to be a pattern for Ms. Davidson. Wherever she goes, dissension and turmoil follow." Stiles then discussed Davidson's previous employment in Timnath and Kemmerer. With regard to Kemmerer, Stiles stated that Davidson had fired employees there in a manner similar to the two terminations in Moab, and that these firings had prompted several Kemmerer residents, including McMillan, to speak out in opposition to Davidson. With regard to Timnath, Stiles reported that Davidson had clashed with public officials and had been suspended and eventually resigned from her position as part of a settlement. Stiles noted that "Timnath officials would not publicly discuss the matter," and quoted another news report on the subject as stating that "'both sides [of the Timnath settlement] signed a non-disparagement clause.'" Stiles concluded the article by stating that "[t]he Moab City Council must have been aware of Davidson's background at both Timnath and Kemmerer before they selected her" to be Moab's city manager, and that it must have "expected . . . that kind of baggage" when it made the decision to hire her.

         ¶9 According to an affidavit he submitted before the district court, Stiles based his assertions regarding Davidson's experience in Timnath on news reports and other sources. According to the news reports upon which Stiles relied, Davidson was employed by Timnath as its "town manager," a role which gave her some influence over construction and engineering projects occurring in the town. The reports also indicated that while serving as "town manager" Davidson simultaneously ran an engineering firm that was paid "hundreds of thousands of dollars a year" by Timnath. Those same reports indicate that during Davidson's tenure Timnath was sued twice regarding conduct that the complainants attributed at least in part to Davidson. Eventually, according to the same news sources, the town council began an investigation of Davidson's involvement with the town's "contracting processes," and suspended Davidson while the investigation was conducted. Ultimately, per the news reports, Timnath reached a settlement with Davidson in which she agreed to resign and each side agreed to sign non-disparagement agreements. The news reports quote Timnath town officials as stating publicly, after the settlement, that there was no evidence of "intentional wrongdoing" on Davidson's part.

         ¶10 Soon after the article was published, in November 2015, McMillan posted a comment on the Zephyr's online comments page, stating that "[t]he citizen[s] of Moab need to demand the removal of Rebecca Davidson as city administrator. What is happening will be just the beginning you have no idea what the person is capable of."

         ¶11 In February 2016, Stiles wrote a follow-up article for the Zephyr entitled "'What's Past is Prologue': Three Small Towns & Their Common Bond-City Manager Rebecca Davidson." In a preface, Stiles asserted that the article was based on information gathered from many sources, including government records he obtained from the City of Kemmerer, the Wyoming Division of Criminal Investigation, and the City of Moab, as well as interviews conducted with individuals who were aware of Davidson's activities in Timnath, Kemmerer, and Moab. In the article, among other things, Stiles discussed Davidson's termination of the two longtime Moab city employees, explored whether Davidson acted improperly with respect to Consultant's hiring, and examined Davidson's previous work for Timnath and Kemmerer, concluding that her previous employment had been "marked by heated controversy, angry public debate, and even litigation."

         ¶12 More specifically, in the article Stiles reported on the details of Davidson's departure from Timnath, and stated that "Davidson could not have been 'cleared' of anything" with respect to her actions in Timnath "because the non-disparagement agreement banned anyone involved in the litigation from expressing any opinion at all." While Stiles noted that a member of Moab city government had claimed an audit conducted by Timnath cleared Davidson of any wrongdoing, Stiles noted that he made a governmental records request for any such audit and was unable to even confirm its existence, let alone review a copy of it. Stiles also reported that "a priority for Davidson in Kemmerer was to dramatically 'restructure' its government, a process that led to the departure of more than 20 of its employees in just three years," and that "Davidson . . . made criminal allegations against two of Kemmerer's staff, forcing an investigation," which, "in both cases, the county attorney declined to prosecute." He further stated that no competitive procurement process had been implemented in Moab with respect to Consultant's hiring or the eventual payment to Tayo, and that the City of Moab had "paid Tayo almost $30, 000, four times the maximum allowed by the city" without conducting a competitive bid process.

         ¶13 Mayor publicly responded to Stiles's second article, which spurred Stiles to pen an op-ed piece in the Moab Sun News. In the op-ed, Stiles stated that his article "What's Past is Prologue" was the result of an "exhaustive, thoroughly researched investigation" into both Davidson's history and her performance as city manager of Moab. He reiterated his assertion that Davidson's employment in both Timnath and Kemmerer had been characterized by controversy, and opined that Moab was "watching history repeat itself."

         ¶14 Meanwhile, during this same time period, Chris Baird, a member of the Grand County Council, had also begun developing concerns about some of Davidson's actions. Baird first began expressing his concerns in posts to a Facebook group called "Citizens for Transparency in Local Government" that was geared towards Moab/Grand County residents. Eventually Baird crystallized those concerns in an op-ed written for the Moab Sun News that was published in June 2016. In that op-ed, Baird stated that in October 2015 he became aware of "a serious financial impropriety concerning the city's procurement of IT services." Baird went on to explain that Smelt lived with Davidson and registered Tayo "immediately prior to the city paying [Tayo] several thousand dollars . . . for IT services." This, Baird argued, presented "a clear conflict of interest" because Davidson and Smelt lived together when Smelt's company was enriched by a city contract. Baird went on to state that "State law requires that such conflicts [of interest] be declared" through a formal process and that, "[as] far as I know, no such declaration was made." Baird also expressed that he felt "dismay" at Davidson's termination of city employees, and indicated he wanted to "see a greater level of accountability in finance" from the city government and for the city to "rethink their callous new management practices."

         ¶15 After publishing this op-ed, Baird made several additional postings to the "Citizens for Transparency in Local Government" Facebook group. In those posts, Baird defended his op-ed, and stated that he was concerned that the City of Moab had hired Smelt's company without Davidson properly disclosing her relationship with Smelt, which Baird opined was "in violation of all kinds of ethical laws." He also argued that Davidson's actions constituted a violation of legal or ethical standards governing her position. In addition to these online comments, Baird also made oral and written statements to members of the Moab City Council, and written statements to auditors investigating the situation, repeating his view that Davidson had violated legal or ethical standards.

         ¶16 Also, during the same time period, McMillan posted several online comments to stories on the "Citizens for Transparency in Local Government" Facebook page. In these comments, McMillan noted that she was a Kemmerer resident and stated that Davidson had "destroyed our community" and urged Moab's citizens to avoid letting Davidson "do to Moab what she did to Kemmerer." McMillan also referenced the events in Kemmerer concerning the suspected foreign cyberhacking that Consultant was paid to address, and compared those events to the cybersecurity issues Consultant identified and Tayo was paid for in Moab, stating that she "would question how almost the exact same situation [that] was reported in Kemmerer" could have presented itself again in Moab. She stated that she found it "highly unlikely that a foreign threat would happen in both Kemmerer and Moab that resulted in the amount of money being spent by both communities to a company partially owned by" Smelt. McMillan also reiterated her belief that Davidson had been difficult to work with in Kemmerer, stating that "approximately 25 [city] employees left or were fired" during Davidson's tenure, and asserting in a separate post that "more than 28 employees left the city of Kemmerer" because of a hostile work environment during that period.

         ¶17 In June 2016, after the publication of Baird's op-ed, the city conducted an independent audit of "transactions and actions [from 2013 to 2016] involving engineering services, IT services[, ] and other areas . . . to ensure that all those processes were performed correctly." The audit was completed by the end of June, and the auditor determined that "the City had followed its existing policies and procedures when it hired Tayo."

         ¶18 After he reviewed the auditor's findings, Baird sent a letter to the Mayor and to the Moab City Council indicating that he had "reviewed the independent audit findings" and had discussed further questions with the auditor, and that these new developments had prompted him to conclude that Davidson had not actually violated the letter of the law or of the City's ethics regulations. Nonetheless, Baird continued to express his displeasure with Davidson, stated that he and the auditor agreed that, "in princip[le]," Davidson's conduct should have been prohibited, and characterized Davidson as having taken advantage of a "loophole" to violate "the spirit of the laws and policies" governing her position. Baird advocated that the loophole be closed and that greater care be taken in future expenditures of public funds.

         ¶19 On September 13, 2016, the city placed Davidson on administrative leave for reasons not appearing in the record. However, around the time Davidson was placed on leave, the city council held meetings that included an agenda item for discussion of a proposed ordinance that would heighten city employees' disclosure requirements regarding potential conflicts of interest pertaining to city transactions. On September 30, 2016, Davidson was terminated from her position as city manager for proffered reasons that do not appear in the record, but which Davidson contends were not related to the facts at issue here.

         ¶20 On September 16, 2016, three days after she was placed on administrative leave, Davidson initiated this lawsuit, accusing the Zephyr, Stiles, Baird and McMillan (Defendants) of defaming her and intentionally causing her to suffer emotional distress. Smelt and Tayo joined in the lawsuit, [2] with Smelt asserting that Defendants had defamed her and intentionally inflicted emotional distress upon her, and with both Smelt and Tayo claiming that the defendants intentionally interfered with their economic relations.

         ¶21 Defendants moved for judgment on the pleadings or, in the alternative, for summary judgment. Both sides attached affidavits to their memoranda, and the district court ended up considering those affidavits and deciding the motion pursuant to rule 56 of the Utah Rules of Civil Procedure. In their motion, Defendants argued that Davidson's and Smelt's defamation claims failed because Defendants' statements were either true or substantially true, were pure statements of opinion, or fell under the "public interest exception" protecting speech concerning governmental bodies, officials, and matters involving the expenditure of public funds. Specifically, Defendants asserted that Plaintiffs could not prevail on their defamation claims without proving "actual malice," which Defendants asserted required Plaintiffs to prove that Defendants had "published the allegedly defamatory material with knowledge that it was false, or with reckless disregard for the truth." Defendants further argued that Plaintiffs' claims for intentional infliction of emotional distress and intentional interference with economic relations depended on a finding of defamation, and would fail if the defamation claims did.

         ¶22 Plaintiffs opposed Defendants' motion, with affidavits, but did not ask for additional discovery pursuant to rule 56(d) of the Utah Rules of Civil Procedure. After a hearing, the district court granted summary judgment to Defendants, agreeing that the allegedly defamatory statements were all either true or "in essence, true," were pure statements of opinion, or were protected under the "public interest privilege." The court further found that Plaintiffs had not presented evidence sufficient to demonstrate that Defendants acted with "actual malice," which the court identified as the standard of fault for a defamation claim under the facts of this case. The court also agreed with Defendants that the claim for intentional interference with economic relations depended on the success of their defamation claims, and failed because the defamation claims did. The court further determined that the claim for intentional infliction of emotional distress failed because Defendants' statements were not outrageous or intolerable as a matter of law.

         ISSUES AND STANDARDS OF REVIEW

         ¶23 Plaintiffs appeal, and ask us to consider three issues. First, they contend that the district court erred when it determined that Defendants were entitled to summary judgment with respect to Plaintiffs' defamation claims. Second, Smelt and Tayo contend that the district court erred when it determined that Defendants were entitled to summary judgment on their claims for intentional interference with economic relations. Third, Davidson and Smelt contend that the district court erred when it awarded summary judgment to Defendants with respect to their claims for intentional infliction of emotional distress.

         ¶24 "Summary judgment is appropriate where 'there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law.'" Gardiner v. Anderson, 2018 UT App 167, ¶ 14 (quoting Utah R. Civ. P. 56(a)). "We review the district court's grant of summary judgment for correctness and accord no deference to its conclusions of law." Id. (quotation simplified). In addition, "we may affirm the result reached by the district court if it is sustainable on any legal ground or theory apparent on the record, ...


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