Lloyd Flanner v. Chase Investment Svcs Corp.

Case: 13-31132 Document: 00512922637 Page: 1 Date Filed: 02/02/2015

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

United States Court of Appeals

Fifth Circuit

No. 13-31132

FILED

February 2, 2015

Lyle W. Cayce

LLOYD FLANNER, Clerk

Plaintiff–Appellant

v.

CHASE INVESTMENT SERVICES CORP.,

doing business as JP MORGAN SECURITIES, L.L.C.

Defendant–Appellee

Appeal from the United States District Court

for the Western District of Louisiana

USDC No. 3:11-CV-940

Before STEWART, Chief Judge, OWEN, Circuit Judge, and MORGAN,

District Judge. *

PER CURIAM: **

Lloyd Flanner brought suit against his former employer Chase

Investment Services Corp., doing business as JP Morgan Securities, L.L.C.

(JPMS), asserting claims under the Age Discrimination in Employment Act

* District Judge of the Eastern District of Louisiana, sitting by designation.

** Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should

not be published and is not precedent except under the limited circumstances set forth in

5TH CIR. R. 47.5.4.

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(ADEA), Family and Medical Leave Act (FMLA), Americans with Disabilities

Act (ADA), and the Louisiana law of defamation. The district court granted

summary judgment in favor of JPMS with respect to all claims. We AFFIRM

IN PART and REVERSE AND REMAND IN PART.

I.

Flanner was employed by JPMS as a financial advisor from August

2003 until August 9, 2010 and was assigned to the Northside and Fourth

Street branches in Monroe, Louisiana. During December 2009, Flanner was

diagnosed with a heart condition. He requested and was granted medical

leave under the FMLA to undergo surgery. Flanner returned to his position

as a financial advisor on April 5, 2010; he was 59 years old at the time. Upon

his return, he was soon back to his pre-surgery productivity and was told by

his supervisors that he was “doing great.”

Around the beginning of June, Flanner’s attorney, Todd Newman, sent

an assistant to the Northside branch to purchase a $25 money order. When

the assistant was unable to do so, Newman called Flanner for help. In

response, Flanner withdrew $25 from his personal bank account, purchased

the money order, and gave it to Newman’s assistant. Newman repaid Flanner

the $25 the following day.

In late July, JPMS management learned of this incident and began an

investigation. Flanner’s immediate supervisor, Daniel Nowak, confirmed that

Flanner had gone behind the teller line to purchase the $25 money order for a

bank customer. Flanner was suspended during the investigation and later

terminated on August 9, 2010. Flanner was replaced by the 53-year-old

Howard Johnson at the Fourth Street branch and by the 32-year-old Jason

Tiser at the Northside branch.

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Flanner’s written termination notice stated he was terminated because

he violated section 6.2 of the JPMS Code of Conduct, which prohibits

employees from “borrow[ing] money (other than nominal amounts) from or

lend[ing] money to other employees, customers or suppliers.” On September

2, 2010, JPMS filed a Form U5 with the Financial Industry Regulatory

Authority (FINRA) regarding Flanner’s termination. On the form, JPMS

stated Flanner was discharged for “violating investment-related statutes,

regulations, rules, or industry standards of conduct” and further described

the incident saying “Registered rep used his personal funds to purchase a

money order in the amount of $25 for the convenience of a bank customer.”

Flanner maintains the reason given on his written termination notice was

merely pretext for JPMS’s discriminatory termination and that the statement

made on the Form U5 was defamatory.

On June 22, 2011, Flanner filed suit in the Middle District of Louisiana

alleging discrimination claims under the ADEA, FMLA, ADA, and a claim for

defamation under Louisiana law. The district court granted summary

judgment in favor of JPMS on all claims. Flanner timely appealed.

II.

This Court reviews the grant of summary judgment de novo, applying

the same standards as the district court. 1 Summary judgment is appropriate

where “the movant shows that there is no genuine dispute as to any material

fact and the movant is entitled to judgment as a matter of law.” 2 A fact is

“material” if it would affect the outcome of the action, and a dispute is

“genuine” if the evidence is such that a reasonable jury could return a verdict

1 Bryan v. McKinsey & Co., Inc., 375 F.3d 358, 360 (5th Cir. 2004).

2 Fed. R. Civ. P. 56(a). See also Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986).

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in favor of the nonmoving party. 3 The Court must “view the evidence and all

factual inferences from that evidence in the light most favorable to the party

opposing the motion and all reasonable doubts about the facts are resolved in

favor of the nonmoving litigant.” 4

III.

Age Discrimination Claim

“Under the ADEA, it is unlawful for an employer ‘to fail or refuse to

hire or to discharge any individual or otherwise discriminate against any

individual with respect to his compensation, terms, conditions, or privileges

of employment, because of such individual’s age.’” 5 To establish an age

discrimination claim, an employee must prove by a preponderance of the

evidence, which may be direct or circumstantial, that age was the “but for”

cause of the employer’s adverse decision. 6

Under the McDonnell Douglas Corp. v. Green burden-shifting

framework, the employee must first establish a prima facie case of age

discrimination by showing that “(1) he was discharged; (2) he was qualified

for the position; (3) he was within the protected class at the time of discharge;

and (4) he was either i) replaced by someone outside the protected class, ii)

replaced by someone younger, or iii) otherwise discharged because of his

age.” 7 The Supreme Court has clarified that “the prima facie case requires

‘evidence adequate to create an inference that an employment decision was

based on a[n] [illegal] discriminatory criterion . . . .’ In the age-discrimination

3 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

4 Bryan, 375 F.3d at 360.

5 Machinchick v. PB Power, Inc., 398 F.3d 345, 349–50 (5th Cir. 2005) (quoting 29

U.S.C. § 623(a)(1)).

6 Gross v. FBL Fin. Servs., Inc., 557 U.S. 167, 177–78 (2009).

7 Jackson v. Cal–Western Packaging Corp., 602 F.3d 374, 378 (5th Cir. 2010)

(internal quotation marks and citation omitted).

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context, such an inference cannot be drawn from the replacement of one

worker with another worker insignificantly younger.” 8 Thus, a plaintiff’s

replacement must be “substantially younger” to create an inference of

discrimination. 9

If the employee establishes a prima facie case, “the burden shifts to the

employer to provide a legitimate, nondiscriminatory reason for terminating

employment.” 10 “If the employer satisfies this burden, the burden shifts back

to the employee to prove either that the employer’s proffered reason was not

true—but was instead a pretext for age discrimination—or that, even if the

employer’s reason is true, he was terminated because of his age.” 11 An

employee “may show pretext either through evidence of disparate treatment

or by showing that the employer’s proffered explanation is false or unworthy

of credence.” 12 “But a reason cannot be proved to be ‘a pretext for

discrimination’ unless it is shown both that the reason was false, and that

discrimination was the real reason.” 13

Ordinarily, we assume arguendo that an employee established his

prima facie case and limit our inquiry to whether the legitimate non-

discriminatory reasons given, if any, were a pretext for age discrimination. 14

In this case, however, the district court found Flanner failed to establish a

prima facie case of age discrimination. The first three elements required for a

8 O’Connor v. Consol. Coin Caterers Corp., 517 U.S. 308, 312–13 (1996) (alterations

in original) (emphasis omitted) (quoting Teamsters v. United States, 431 U.S. 324, 358

(1977)).

9 See id.

10 Miller v. Raytheon Co., 716 F.3d 138, 144 (5th Cir. 2013).

11 Id. (citing Gross, 557 U.S. at 180).

12 Jackson, 602 F.3d at 378–79 (internal quotation marks and citation omitted).

13 St. Mary’s Honor Ctr. v. Hicks, 509 U.S. 502, 515 (1993).

14 See, e.g., Kean v. Jack Henry & Assocs., Inc., 577 F. App’x 342, 350 (5th Cir. 2014)

(unpublished); Golbert v. Saitech, Inc., 439 F. App’x 304, 306 (5th Cir. 2011) (unpublished);

Patel v. Midland Mem’l Hosp. & Med. Ctr., 298 F.3d 333, 342 (5th Cir. 2002).

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prima facie case of age discrimination are undisputed, but the district court

found Flanner did not establish the fourth element. In so finding, the court

reasoned that because Flanner was replaced by a worker who was

insignificantly younger than he, no inference of age discrimination was

created, and Flanner had no other evidence of age discrimination. The

district court stated:

Flanner relies solely on the fact that the two individuals who

replaced him were younger than him as a basis for establishing a

prima facie case. Flanner has presented no evidence of any

disparaging comments based on his age and notably, the

difference in Flanner’s age (59) and that of Mr. Johnson (53) was

not so disparaging to create an inference of age discrimination.

There is absolutely no evidence to validate Flanner’s claim of age

discrimination.

This Court disagrees and finds that at least one, and maybe both, of

Flanner’s replacements was young enough to create an inference of age

discrimination. The Supreme Court has stated that “[b]ecause the ADEA

prohibits discrimination on the basis of age and not class membership, the

fact that a replacement is substantially younger than the plaintiff is a far

more reliable indicator of age discrimination than is the fact that the plaintiff

was replaced by someone outside the protected class.” 15 Thus, to create an

inference of age discrimination, at least one of Flanner’s replacements must

be substantially younger than Flanner.

Unlike some of our sister circuits, 16 this Court has not settled on a

standard for what age difference qualifies as “substantially younger” such

that an inference of age discrimination may be made to establish a prima

15 O’Connor v. Consol. Coin Caterers Corp., 517 U.S. 308, 313 (1996).

16 See Grosjean v. First Energy Corp., 349 F.3d 332, 340 (6th Cir. 2003), for an

analysis of cases from various circuits finding certain age differences, without more, either

sufficient or insufficient to create an inference of age discrimination.

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facie case. 17 This Court has stated: “[t]he ADEA does not lend itself to a

bright-line age rule . . . in which replacement by a worker outside the

protected category is a convenient proof guideline.” 18 Without citation or

further elaboration, the district court found the six-year difference between

Flanner’s age and that of Johnson, his replacement at the Fourth Street

branch, “was not so disparaging to create an inference of age discrimination.”

Yet, this Court has stated twice that it is a “close question” whether a five-

year age difference, without more, is sufficient to support an inference of age

discrimination. 19 If five years is a close call, so too is six years. In close calls

such as this, this Court has considered the relative ages of the plaintiff and

the replacement employee as evidence on the ultimate issue of proving “but

for” causation rather than as a basis for finding that the employee has failed

to make a prima facie case. 20

More importantly, the district court failed to consider the fact that

Flanner was replaced by two employees: it merely addressed the age

difference between Flanner and Johnson and found the six-year age

difference was not substantial enough to support an inference of

discrimination. But Flanner’s replacement at the Northside branch, Tiser,

was twenty-seven years Flanner’s junior, and there is no doubt he was

17 See Rachid v. Jack In The Box, Inc., 376 F.3d 305, 313 (5th Cir. 2004); Bienkowski,

851 F.2d at 1506.

18 See Bienkowski, 851 F.2d at 1506 (citing McCorstin v. United States Steel Corp.,

621 F.2d 749, 754 (5th Cir. 1980)).

19 The Court decided these cases on other grounds, without deciding whether five

years is sufficiently younger to support an inference of discrimination. See Rachid, 376 F.3d

at 313 (noting that a plaintiff’s replacement being five years younger is a “close question,”

but the Court “need not reach it because [the plaintiff’s] other evidence easily establishes a

prima facie case”); Bienkowski, 851 F.2d at 1506 (noting, pre-O’Connor, that a five year age

difference “does not legally preclude the possibility of discrimination” and that “it is a close

question whether he established a prima facie case”).

20 See Bienkowski, 851 F.2d at 1506 (citing U.S. Postal Serv. Bd. of Governors v.

Aikens, 460 U.S. 711, 714 (1983)).

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“substantially younger.” Thus, the evidence presented, without more,

supports an inference of age discrimination because Flanner also was

replaced by Tiser, a substantially younger employee. Flanner has made a

prima facie case of age discrimination.

Although the district court found Flanner failed to make a prima facie

showing of age discrimination, it did perform the burden-shifting analysis

and found JPMS articulated a non-discriminatory reason for Flanner’s

termination, his violation of Section 6.2 of JPMS’s Code of Conduct, but that

Flanner did not prove the proffered reason was a pretext. The district court

stated that “[s]imply disputing JPMS’s business judgment is not enough to

prove pretext without producing evidence that the reasons stated were false

and pretextual.” For that reason, the district court found “Flanner ha[d]

failed to establish that JPMS’ [sic] reason was either false or unworthy of

credence.”

This Court agrees JPMS articulated a non-discriminatory reason for

Flanner’s termination, which shifts the burden back to Flanner to show

pretext, “either through evidence of disparate treatment or by showing that

the employer’s proffered explanation is false or unworthy of credence.” 21

Unlike the district court, we find the evidence in the record creates a factual

dispute as to whether JPMS’s proffered reason for Flanner’s termination was

pretextual. Flanner points to evidence he contends creates a factual dispute

as to whether the reason given was pretextual: (1) co-workers routinely lent

similar amounts of money to other co-workers, who also were customers of

Chase, and either such actions were not considered violations of the Code of

Conduct or those persons were not punished for violating JPMS’s policies;

21 Jackson v. Cal-Western Packaging Corp., 602 F.3d 374, 378–79 (5th Cir. 2010)

(internal quotation marks and citations omitted).

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and (2) the proffered reason was not the original reason cited for Flanner’s

termination as he was initially cited for violations of the Registered

Representatives’ Manual.

“[A] plaintiff's prima facie case, combined with sufficient evidence to

find that the employer’s asserted justification is false, may permit the trier of

fact to conclude that the employer unlawfully discriminated.” 22 In this case,

viewing the evidence in the light most favorable to Flanner, there is a

genuine dispute of material fact as to whether the proffered reason was false

and actually a pretext for discrimination. Accordingly, JPMS was not entitled

to summary judgment, and the district court’s ruling with respect to

Flanner’s ADEA claim is reversed.

FMLA Retaliation Claim

To establish a prima facie case of retaliatory discharge under the

FMLA, “the employee must show that (1) she engaged in a protected activity,

(2) the employer discharged her, and (3) there is a causal link between the

protected activity and the discharge.” 23 “Protected activity” includes both

exercising rights under the FMLA, such as taking leave, as well as opposing

practices made unlawful under the Act. 24

This Court has discussed the analysis to be used when, as here, there is

no direct evidence of discriminatory intent:

When there is no direct evidence of discriminatory intent, . . . the

familiar McDonnell–Douglas burden shifting framework [is used]

to determine whether an employer discharged an employee in

retaliation for participating in FMLA-protected activities.

Specifically, once the employee establishes a prima facie case of

retaliation, the burden shifts to the employer to articulate a

22 Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 148 (2000).

23 Richardson v. Monitronics Int’l, Inc., 434 F.3d 327, 332 (5th Cir. 2005).

24 See id.

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legitimate, nondiscriminatory reason for the adverse employment

action. If the employer succeeds in doing so, the burden shifts

back to the employee to show by a preponderance of the evidence

that the employer’s articulated reason is a pretext for

discrimination. 25

The district court concluded Flanner failed to make a prima facie case

of retaliation because he did not establish a causal connection between the

adverse employment action and his taking FMLA leave. The court found “the

temporal element of an adverse employment action four months after

returning from taking FMLA leave is insufficient to establish a causal

connection.”

Flanner clearly was protected under the FMLA because he exercised

his right to take FMLA leave and suffered an adverse employment action

when he was terminated from his position. With respect to the third element,

proving a causal link, Flanner relies on Evans v. City of Houston, in which

this Court noted that a Texas district court found “‘a time lapse of up to four

months . . . sufficient to satisfy the causal connection for summary judgment

purposes.’” 26 But the actual time gap this Court found in Evans to be

sufficiently close was only five days. 27 JPMS cites Amsel v. Texas Water

Development Board, an unpublished opinion in which this Court affirmed

summary judgment finding a two-month gap, while “short, []is not, by itself,

enough to show a causal connection based upon temporal proximity alone.” 28

The Supreme Court has stated that “[t]he cases that accept mere

temporal proximity between an employer’s knowledge of protected activity

25 Id. at 332–33.

26 246 F.3d 344, 354 (5th Cir. 2001) (quoting Weeks v. NationsBank, N.A., No. 98-

1352, 2000 WL 341257, at *3 (N.D. Tex. 2000)).

27 Id.

28 464 F. App’x 395, 402 (5th Cir. 2012) (unpublished) (citing Clark Cnty. Sch. Dist.

v. Breeden, 532 U.S. 268 (2001)).

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and an adverse employment action as sufficient evidence of causality to

establish a prima facie case uniformly hold that the temporal proximity must

be ‘very close.’” 29 Additionally, this Court’s case law, although largely

unpublished, “fits with the Supreme Court’s requirement that the temporal

proximity be ‘very close’ to show causation,” and our previous decisions that a

“four-month gap in time, standing alone, is insufficient to establish prima

facie evidence of causation.” 30

The Court is mindful the requirement of showing “causation . . . at the

prima facie stage is much less stringent than a ‘but for’ standard,” 31 and the

Court must draw all reasonable inferences in Plaintiff’s favor on this motion

for summary judgment. However, after careful review of the record, the Court

finds Flanner failed to prove his prima facie case. The four-month time lapse,

without more, is insufficient evidence to establish the causal link required to

make a prima facie case of FMLA retaliation. The district court’s ruling with

respect to Flanner’s FMLA retaliation claim is affirmed.

ADA Claim

To establish a prima facie case for violation of the ADA, a plaintiff must

show “that (a) she is disabled, has a record of having of having a disability, or

is regarded as disabled, (b) she is qualified for her job, (c) she was subjected

29 Breeden, 532 U.S. at 273–74 (quoting O’Neal v. Ferguson Constr. Co., 237 F.3d

1248, 1253 (10th Cir. 2001); citing Richmond v. ONEOK, Inc., 120 F.3d 205, 209 (10th Cir.

1997) (3–month period insufficient); Hughes v. Derwinski, 967 F.2d 1168, 1174–75 (7th Cir.

1992) (4–month period insufficient)).

30 Barkley v. Singing River Elec. Power Ass’n, 433 F. App’x 254, 260 (5th Cir. 2011)

(unpublished) (citing Ajao v. Bed Bath & Beyond, Inc., 265 F. App’x. 258, 265 (5th Cir.

2008) (per curiam) (finding temporal proximity of four months “not close enough”); Myers v.

Crestone Int’l, LLC, 121 F. App’x. 25, 28 (5th Cir. 2005) (per curiam) (three-month gap did

not, by itself, create causal link); Raggs v. Miss. Power & Light Co., 278 F.3d 463, 471–72

(5th Cir. 2002) (five-month lapse, same)). See also Everett v. Cent. Mississippi, Inc. Head

Start Program, 444 F. App’x 38, 47 (5th Cir. 2011) (unpublished) (finding temporal

proximity of five months not close enough).

31 Montemayor v. City of San Antonio, 276 F.3d 687, 692 (5th Cir. 2001).

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to an adverse employment action on account of her disability or the

perception of her disability, and (d) she was replaced by or treated less

favorably than non-disabled employees.” 32 Disability refers to “a physical or

mental impairment that substantially limits one or more of the major life

activities of such individual” and also “being regarded as having such an

impairment.” 33 “An individual meets the requirement of ‘being regarded as

having such an impairment’ if the individual establishes that he or she has

been subjected to an action prohibited under this chapter [Equal Opportunity

for Individuals with Disabilities] because of an actual or perceived physical or

mental impairment whether or not the impairment limits or is perceived to

limit a major life activity.” 34

The district court concluded Flanner failed to establish a prima facie

case under the ADA because he offered no evidence of a disability or

perceived disability. Flanner argues on appeal that it may be implied that

JPMS perceived him as disabled because JPMS was aware of his heart

surgery. In response, JPMS cites district court opinions rejecting a plaintiff’s

subjective belief and conclusory allegations as establishing a prima facie case

of having been regarded as disabled. JPMS also argues there is no basis for

an inference of perception of any impairment because Flanner testified at his

deposition that he was able to do the same work at the same production level

after returning from leave.

This Court agrees with the district court that Flanner failed to make a

prima facie case for an ADA violation because he points to no evidence

indicating JPMS perceived him as disabled. In this case, the Court finds that

32 E.E.O.C. v. Chevron Phillips Chem. Co., LP, 570 F.3d 606, 615 (5th Cir. 2009).

33 42 U.S.C. § 12102(1). See also Griffin v. United States Parcel Serv., Inc., 661 F.3d

216, 222 (5th Cir. 2011).

34 42 U.S.C. § 12102(3)(A).

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JPMS’s mere knowledge of Flanner’s heart surgery alone does not support an

inference that JPMS regarded him as disabled. Further, Flanner testified his

production level was about the same before and after surgery, so there is no

evidence Flanner was actually disabled. Because Flanner points to no

competent summary judgment evidence showing JPMS perceived him to be

disabled because of his heart condition or that he actually was disabled, the

district court’s ruling with respect to Flanner’s ADA claim is affirmed.

Defamation

Flanner’s complaint alleges JPMS defamed him by reporting a false

statement on the Form U5. Flanner contends it was false to say he violated

an investment-related industry standard of conduct when he loaned money to

a bank customer. Flanner maintains he did not violate § 6.2 of JPMS’s Code

of Conduct, but even if he did, the statement on the Form U5 was still false

because § 6.2 of JPMS’s Code of Conduct is not an investment-related

industry standard. Because this statement was injurious to Flanner’s

professional reputation, he argues the statement was defamatory per se, and

it was made with knowledge and/or reckless disregard of falsity.

The Louisiana Supreme Court in Kennedy v. Sheriff of East Baton

Rouge held that in an action by a private individual allegedly injured by a

defamatory communication by a non-media defendant, the fault required on

the part of the publisher is negligence, regardless of whether the statement is

on a matter of public or private concern. 35 Negligence in this context “is a

lack of reasonable belief in the truth of the statement giving rise to the

35 935 So. 2d 669, 680–81 (La. 2006) (holding that “the standard of negligence . . . is

to be applied in cases . . . involving a private individual allegedly injured by a defamatory

falsehood in a matter of public concern,” which is the same “negligence standard of liability

in actions by private individuals involving matters of private concern”).

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defamation.” 36 Thus, to prevail in his defamation claim, Flanner “bears the

burden of affirmatively proving (1) a false and defamatory statement; (2) an

unprivileged publication to a third party; (3) negligence (as set forth in the

Restatement (Second) of Torts § 580B) on the part of [JPMS]; and (4)

resulting injury. If even one of these required elements is found lacking, the

cause of action fails.” 37

A plaintiff’s “recovery may be precluded if the defendant shows either

that the statement was true, or that it was protected by a privilege, absolute

or qualified.” 38 JPMS asserts both defenses: (1) the statement made on the

form was true, so it was not defamatory, and (2) even if the statement is

found to be defamatory, it was privileged and made in good faith.

The Court first must examine whether Flanner pointed to competent

summary judgment evidence creating a factual dispute as to whether JPMS’s

statement on the Form U5 was false and defamatory. Flanner argues the

36 Id. at 680.

37 Id. at 681 (citation omitted). Flanner argued JPMS’s statement was defamatory

per se and that this changed his burden of proof at the prima facie stage. Traditionally,

Louisiana courts divided defamatory words into two categories: words defamatory per se,

and words susceptible of a defamatory meaning. If words were defamatory per se, the

elements of falsity, fault, and injury were presumed. However, in Kennedy, the Louisiana

Supreme Court recognized that “the protections afforded by the First Amendment

super[s]ede the common law presumptions of fault, falsity, and damages with respect to

speech involving matters of public concern, at least insofar as media defendants are

concerned.” Id. at 677. Because the Louisiana Supreme Court in Kennedy found there is no

reason to distinguish between media and non-media defendants when a matter of public

concern is involved, the presumptions of falsity, malice, and injury available in the past

when words were found to be defamatory per se no longer apply in defamation actions

involving an issue of public concern. See id. at 677–78; Starr v. Boudreaux, 978 So.2d 384,

390 (La. App. 1 Cir. 2007). In this case, the statement in the Form U5 is a matter of public

concern because the public has an interest in the regulation of the financial industry and its

employees. See Branton v. City of Dallas, 272 F.3d 730, 739 (5th Cir. 2001). Thus, because

this is a matter of public concern, the designation of defamatory per se and the attendant

presumptions of falsity, malice, and injury do not apply, and Flanner must prove all

elements of his defamation claim without the benefit of any presumptions.

38 Costello v. Hardy, 864 So. 2d 129, 141 (La. 2004) (citations omitted).

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district court erred in determining that he violated § 6.2 of JPMS’s Code of

Conduct. This Court agrees. Reasonable minds could differ on whether

Flanner, in fact, violated JPMS’s Code of Conduct. Flanner asserts his co-

workers routinely lent similar amounts of money to other co-workers, who

also were customers of Chase, without consequence. This raises a question as

to what conduct JPMS considered to be a violation of § 6.2. Additionally,

Flanner points to JPMS’s revised Code of Conduct, which provides an

example explaining that JPMS does not consider a $10.00 loan to be a

violation of its rules because $10.00 is a nominal amount. If $10.00 is a

nominal amount, a reasonable person might conclude $25.00 is nominal as

well. JPMS admitted that the addition of this example to the Code of Conduct

did not reflect a change in how it interprets § 6.2. Thus, this Court finds there

is a fact question as to whether Flanner violated § 6.2. Even if Flanner

violated § 6.2 of the JPMS Code of Conduct, a genuine factual dispute exists

as to whether this rule is an investment-related industry standard of conduct,

as indicated on the Form U5, or is merely JPMS’s internal standard of

conduct. Accordingly, JPMS is not entitled to summary judgment on the basis

that the statement was true and thus a complete defense to Flanner’s

defamation claim.

Even if JPMS’s statement on the Form U5 was false and defamatory,

the Court must determine whether JPMS nevertheless is entitled to

summary judgment because it had a conditional privilege and it did not know

the falsity of the statement or have reckless disregard for the truth or falsity

of the statement. None of the limited circumstances in which an absolute

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privilege arises is applicable in this case. 39 Thus, to be privileged, JPMS must

be entitled to a conditional, also called a qualified, privilege. The analysis for

determining whether such a privilege exists requires two steps: “First, it

must be determined whether the attending circumstances of a

communication occasion a qualified privilege. The second step of the analysis

is a determination of whether the privilege was abused, which requires that

the grounds for abuse—malice or lack of good faith—be examined.” 40 “The

practical effect of the assertion of the conditional or qualified privilege is to

rebut the plaintiff’s . . . allegations of malice (or fault, which in this case

amounts to negligence) and to place the burden of proof on the plaintiff to

establish abuse of the privilege.” 41 A conditional privilege is abused if the

defendant “(a) knows the matter to be false, or (b) acts in reckless disregard

as to its truth or falsity,” meaning “the defendant was highly aware that the

statements were probably false.” 42

Flanner concedes that JPMS is entitled to a conditional privilege but

maintains the privilege was lost because the statement was not made in good

faith. The Court agrees JPMS is entitled to a conditional privilege. FINRA

39 See Kennedy, 935 So. 2d at 681 (“An absolute privilege exists in a limited number

of situations, such as statements by judges and legislators in judicial and legislative

proceedings.”).

40 Id. at 682 (citations omitted).

41 Id. at 683 (citing Smith v. Our Lady of the Lake Hospital, Inc., 639 So.2d 730, 746

(La. 1994)). The Louisiana Supreme Court has stated:

[I]n a case such as this one, where a conditional privilege is found to

exist, the negligence standard that is part of plaintiff’s prima facie

case is logically subsumed in the higher standard for proving knowing

falsity or reckless disregard as to truth or falsity. Therefore, the

negligence analysis drops out of the case, for if the plaintiff is

incapable of proving the knowing falsity or reckless disregard as to

truth or falsity necessary to overcome the privilege, it is of no

consequence that he or she might be able to prove the lesser standard

of negligence.

Id. at 687 n.19.

42 Id. at 683–84, 88.

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requires JPMS to complete the Form U5, and the statement in the Form U5

affects a sufficiently important public interest—the regulation of the financial

industry and its employees. 43 Thus, to survive summary judgment Flanner

must point to evidence creating a genuine dispute of material fact as to

whether JPMS abused its conditional privilege. “[I]n a case such as this one,

. . . the negligence standard that is part of [Flanner’s] prima facie case is

logically subsumed in the higher standard for proving knowing falsity or

reckless disregard as to truth or falsity.” 44

The Louisiana Supreme Court has stated: “[D]etermining abuse of a

conditional privilege or malice is generally a fact question for the jury unless

only one conclusion can be drawn from the evidence.” 45 This Court finds that

more than one conclusion could be drawn from the evidence. Flanner raised

genuine disputes of material fact as to how JPMS interpreted § 6.2 of its

Code of Conduct and whether JPMS knew Flanner’s actions did not violate

an investment-related industry standard of conduct. Flanner also points out

the reason for his termination given on the Form U5 was not the original

reason cited by JPMS. 46 A reasonable trier of fact could conclude JPMS

abused its conditional privilege by either knowing its statement that Flanner

43 See id. at 682 (quoting Restatement (Second) of Torts) (“‘An occasion makes a

publication conditionally privileged if the circumstances induce a correct or reasonable

belief that a) there is information that affects a sufficiently important public interest, and

(b) the public interest requires the communication of the defamatory matter to a public

officer or a private citizen who is authorized or privileged to take action if the defamatory

matter is true.’”).

44 Id. at 687 n.19 (emphasis added).

45 Id. at 682 (internal quotation marks and citation omitted).

46 Flanner points to an email sent by a JPMS employee regarding his conduct and

the appropriate disciplinary action. The email states: “It appears that [Flanner] violated

[three] policies in the [Registered Representatives’] Manual.”

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violated an investment-related industry standard of conduct was false or

acting in reckless disregard as to the statement’s truth. 47

Because there are material facts in genuine dispute both as to whether

the statement was false and, if so, whether JPMS abused its conditional

privilege, summary judgment is reversed as to Flanner’s defamation claim.

IV.

For the foregoing reasons, the judgment of the district court is

AFFIRMED as to Flanner’s FMLA and ADA claims, and REVERSED AND

REMANDED for further proceedings consistent with this opinion as to

Flanner’s ADEA and defamation claims.

47 See id.

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