Petition — Clark Oil & Refining Corp. v. Alderson

, AQ * Office - Supreme Court, U.S.

82-38 i FILED

DEC 48 1982

No.

ALEXANDER L. STEVAS,

CLERK

ENE wesc

In the Supreme Court of the United States

October Term, 1982

CLARK OIL & REFINING CORPORATION,

Petitioner,

VS.

HAROLD ALDERSON,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

MISSOURI COURT OF APPEALS

WESTERN DISTRICT

RussELu D. JACOBSON

(Counsel of Record)

Tuomas B, SuLtivay, III

WILLIAM R. WILLIAMS

2546 Holmes

Kansas City, Missouri 64108

(816) 474-0400

Counsel for Petitioner

December 10, 1982

E. L., MENDENHALL, INc., 926 Cherry Street, Kansas City, Mo. 64106, (816) 421-3030

QUESTIONS PRESENTED FOR REVIEW

When a verdict for nominal damage and substantial

punitive damages returned against petitioner corporate

employer and in favor of respondent employee, was based

upon petitioner’s alleged failure to write a letter required

by a penal statute which must truly state for what cause

the employee had left the employment and where the

employer was subject to absolute civil liability for any

alleged untrue or erroneous statements in the letter:

I. Can such liability be imposed against petitioner

and other corporate employers under the statute which cre-

ated liability by the use of general terms (ie., “truly

stating for what cause”), but failed to contain any specific

standards or criteria by which to determine that liability,

without violating the requirement of the Due Process

Clause of the Fourteenth Amendment prohibiting the im-

position of liability where the law fixing the same fails

to give the employer fair warning or notice of what con-

stitutes a true cause for a dismissal from employment or

other required statements, and where the employer was

exercising First Amendment rights in expressing its views

about the employee?

II. Can punitive damages be recovered from the peti-

tioner and other corporate employers under a generalized

liability-creating statute which commanded that a letter

issue, without requiring the jury to find actual malice,

particularly where only an award of nominal damage was

assessed, where the defenses of good faith or negligence

in writing the letter were denied to petitioner, and where

the cause arose out of the exercise of First Amendment

rights of free expression by petitioner in setting forth

its views as to the termination of the employee's service,

Il

or does such a recovery under these circumstances violate

the protections of the Due Process Clause of the Four-

teenth Amendment and those of the First Amendment?

III. Does an award of damages against petitioner

and other corporate employers under the absolute liability

imposed by this statute violate the Equal Protection Clause

of the Fourteenth Amendment by singling out only cor-

porate employers for liability where there is no showing

that the statute requiring or compelling this communica-

tion can be presently justified either under the traditional

“rationality” test or the more strict “substantial govern-

mental interest” test where fundamental rights such as

freedom of expression are involved?

PARTIES TO THE PROCEEDINGS

This suit was filed originally by Harold Alderson

against Clark Oil & Refining Corporation and Charles

Palmquist in the Jackson County (Missouri) Circuit

Court; at the time the case was submitted to the jury,

Alderson had dropped his claims against Palmquist, and

proceeded only against Clark. Palmquist was not a party

to the appeals.

Petitioner is a privately held corporation, and has no

public stock ownership.

Ill

TABLE OF CONTENTS

Questions Presented for Review ................... ; I

Parties to the Proceedings ...........-ccccccscsesescsoscorersseceeereresecesee 8

Ne Be icici Rncconispatcvotepsentchdennstotonnesectebhiockabioe IV

SINE MII iittala cd cphcichiinstccoceanctitbecnsaisbibbucabacebanesoedgdoosuliaes 1

I Siac biisnicia pes note ctrcevalgteniinasanticsenenibcsoscbseetialebeesiteer 1

Constitutional and Statutory Provisions Involved ........ 2

IS Gr CO I passed scicbdaschnccicsccbcctas a diabcnsditidamvisciincncess 2

IE: CIO inindesosaitirctnistcsshadeccebariédensvoainasiopesonbenct 2

SPIN SU SUD SAID? circsncsicnscsvnnintiniscbiniccdicehdiditepandisincesiacapces 5

Presentation of Federal Questidms .......0..0..0..cccc0000- 10

Reasons for Granting the Wit ...0.0....0.....2...c.ccccccoceseeeeeeeeeeee 12

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Appendix—

Appendix A—Unreported Opinion of the Jackson

County (Missouri) Circuit Court ....0.000000.00000202.2.- Al

Appendix B—Unreported Order by Missouri Su-

preme Court Denying Petitioner’s Application

Oe IIE TS piscidcictvncccttosaccceenhinisdtanortbicsntaaniondon A5

Appendix C—Opinion of the Missouri Court of Ap-

peals, Western District, Officially Reported at

FE Se OP I ciiesdoanctinessipanegsonmneniaiipeeonsaddanlecalaisioosss A6

Appendix D—Constitutional and Statutory Provi-

I UNION wrlti ce cick eo selgs dante t Glades Gpidihnnchiencontcos Al5

Appendix E—Partial Transcript of Oral Argument

by Petitioner’s Counsel Before Missouri Court

OE IID i ivccscteieeveshabcintacpetabektbinaittadiocsidccnast Madea) Al7

Appendix F—Missouri Approved Instructions

Given by Respondent Alderson to the Jury in

Missouri Circuit Court on the Question of Puni-

SE I icsccdacitinnincinneysieasienieiahonienesigeiionidictntas A20

Iv

TABLE OF AUTHORITIES

Cases

Cheek v. Prudential Insurance Co., (Mo. 1916) 192

SULT AIT, snlciadiveenbsiadsopihibdnmneneinigeseiinpeocsnibdlighiniennececésteiows 3, 13, 14

Cumby v. Farmland Industries, (Mo.App. 1975) 524

S.W.2d 132 21-22

Curtis Publishing Co. v. Butts, (1967) 388 U.S. 130 ........ 21

First National Bank of Boston v. Bellotti, (1978) 435

U.S. 765 17, 21, 24

Gertz v. Robert Welch, Inc., (1974) 418 U.S. 323 ....17, 20, 21

Giaccio v. Pennsylvania, (1966) 382 U.S. 399 ............ 12, 14, 15

Givhan v. Western Line Consol. School District, (1979)

439 U.S. 410 17, 21

Grosjean v. American Press, (1935) 297 U.S. 233 ........ 17

Hanch v. K.F.C. Nat. Management Corp., (Mo. en banc

BORE) Bb Ba We OW ertibcisentininitonstentidaiscoenssonintc 15, 18, 19, 20

Herberholt v. DePaul Community Health Center, (Mo.

en banc 1981) 625 S.W.2d 617 19

Heuer v. John R. Thompson Co., (Mo.App. 1952) 251

S.W.2d 980 * 24

Horstman v. General Elec. Co., (Mo.App. 1969) 438

S.W.2d 18 16

Hynes v. Mayor of Oradell, (1976) 425 U.S. 610 ............ 12

Lanzetta v. New Jersey, (1939) 306 U.S. 451 0.000000... 12

New York Times v. Sullivan, (1964) 376 U.S. 254

16, 17, 21

Police Dept. v. Moxley, (1972) 408 U.S. 92 oe 22

Potter v. Milbank Mfg. Co., (Mo. 1972) 489 S.W.2d 197

adi 13, 16, 20, 24

Prudential Insurance Co. v. Cheek, (1922) 259 USS.

530 ENCE RD a thegk COMER 24

Vv

Rimmer v. Colt Industries, (C.A. Mo. 1981) 656 F.2d

BR bi insta eracedt hoaicchlaadasaealegtid cies celacmepacebidiutceaese 14, 18, 19, 20

Roberts v. Emerson Elec. Mfg. Co., (Mo. 1960) 338

SU MIPRMIIIEIE sks isale aicinstacepreinipntialdnnbaaiioasancceubagibvasiieawbosesienn 13, 16, 20

Stanton v. Stanton, (1975) 421 U.S. 7 202. 22

Thornhill v. Alabama, (1940) 310 U.S. 88 ..000000.... 12, 15

Vaca v. Sipes, (1967) 386 U.S. 171 on. eee eeceeceeeeee 16, 23

Walker v. Modern Realty of Missouri, Inc. (Docket No.

TIE ciate ceshcresienvniescoocehsteeebinvebiienespiiiocimebudénnnsitie 18

Other Authorities

U. S. Constitution, First Amendment ............ 2, 11, 16, 17, 20

U. S. Constitution, Fourteenth Amendment ............. 2,11, 16

I IIE SD. sscicsdacsascniceoeistiscseapentdiabeeddesabinastslacs ndasibiseblins 2

I IL DI I 5. i, «. oanaceuendetsipernmeadinovenabdatapacsecbovsininanctscailla 23

I 52 cnc rasastnsactsinbacecsaiatindeibtontastesnaioniobeniaigatie 23

NE TIMI, css ncjavinsncpncninesevonvasied sovaivcaindesaamangs titieoaniee ibe 23

I IIL, s-alcrnccnsssendoniiog] dpeeneshinsdannchiausiibiacandyooninmnsiiientis 23

I III ins sin clnrinesnsidsbeniauudalinesbinsinasotaacodemica 2, 10, 13, 22

EN INI, 1. siasrcsnnshiwociicnsontsidnnnbelodsoalghhbursiivebenecweestisies 21

SINE III sciceuinesiviiacteddipioeucnnjesvice tec heinatsennititiesaiibianiona 19

RN I id licnacshesinistenigibbonibhinataecegeciomcbe 19, 24

Sai ARIE i saapesomsisisdcdenpensbsohosadabesinpasentiahbsocoonisastuscsncckchapnoncioiels 24

No.

In the Supreme Court of the United States

October Term, 1982

CLARK OIL & REFINING CORPORATION,

Petitioner,

vs.

HAROLD ALDERSON,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

MISSOURI COURT OF APPEALS

WESTERN DISTRICT

OPINIONS BELOW

The Circuit Court of Jackson County issued a short

unreported written opinion, which is set forth in Appendix

A to this petition. The opinion of the Missouri Court of

Appeals, Western District is officially reported at 637

S.W.2d 84, and is set forth in Appendix C to this petition.

The order of the Missouri Supreme Court denying trans-

fer of the appeal from the Court of Appeals is unreported,

and is set forth in Appendix B to this petition.

JURISDICTION

The judgment and opinion of the Missouri Court of

Appeals, Western District, was filed on May 4, 1982. A

timely petition for rehearing was filed with the Court

of Appeals on May 19, 1982, along with an alternative

2

motion for transfer to the Missouri Supreme Court, which

the Court of Appeals denied on June 23, 1982. A timely

application to transfer the appeal was filed with the

Missouri Supreme Court, which that Court denied on

September 13, 1982. This Court’s jurisdiction is invoked

under 28 U.S.C. §1257 (3).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

This case involves: Par. I, Amendment XIV and

Amendment I of the Constitution of the United States;

and Section 290.140, Revised Statutes of Missouri (1978).

The pertinent provisions thereof are set forth in full in

Appendix D to this petition.

STATEMENT OF THE CASE

Proceedings Below

Petitioner is a corporation engaged in retail gasoline

sales through service stations operated within the State

of Missouri by its employees. At the time of the events

giving rise to this litigation, Missouri had a penal statute

(§290.140, Revised Statutes of Missouri), applying to such

corporate employers only, requiring it to furnish a letter

upon request of a “laboring man quitting service of [a]

corporation”, signed by the entity’s superintendent or

manager, and setting forth: the nature and character

of service rendered by the employee, the duration thereof,

and the true cause why the employee quit such service.

This law (colloquially known as the “Service Letter

Statute”), further provided that if any superintendent or

manager failed or refused to issue the letter when re-

3

quested, they “shall be deemed guilty of a misdemeanor,”

and fixed the punishment by fine or by imprisonment

in jail, or both. (The statute’s text is at App. D). The

statute, enacted in 1905, made no provision for a private

cause of action for damages against the corporation, but

in 1916 the Missouri Supreme Court held that such a

cause could be maintained by a former employee, whose

officials had failed to provide a letter, which truly stated

the reason, if any, for the employee’s departure from the

corporation’s service. Cheek v. Prudential Insurance Co.,

(Mo. 1916) 192 S.W. 387, 391.

This cause originated in December 1976, when Re-

spondent employee, Harold Alderson, left his employment

as a station manager for Clark. He thereafter, through

his attorney, requested a service letter from Petitioner,

which was sent him, and read as follows:

“December 22, 1976

Mr. Harold Alderson

554 Oxford .

Independence, Missouri 64053

Dear Mr. Alderson:

This is in response to your letter of December 15,

1976. Be advised that you were employed by Clark

Oil & Refining Corporation as a manager of one of

our stations. In such capacity, your responsibilities

included the general management of our station located

at 202 West 23rd Street, Independence, Missouri. I

have enclosed a copy of a job description for a further

amplification of your duties as manager. You were

employed from July 2, 1975, until December 17, 1976,

and the reason you were terminated was that your

performance simply was not satisfactory to Clark.

That is, the station and its facilities were not main-

4

tained to Clark’s standards, you did not furnish your

Master Reports in a timely fashion to Clark, and on

December 7, 1976, an audit uncovered a loss of almost

$400.00 at the station you were managing.

Very truly yours,

Clark Oil & Refining Corporation

David W. DeNeff

District Manager”

Thereafter, Alderson filed suit for damages against

Clark and one Charles Palmquist (who worked for Clark

in a supervisory capacity at the time of Alderson’s depar-

ture from Clark) in the Missouri Circuit Court. The

cause was tried to a jury in October 1980 for a second

time (an earlier verdict had been set aside and a new

trial ordered), resulting in a verdict against Clark for

one dollar nominal damage and one hundred thousand

dollars punitive damages. Alderson did not submit against

Palmquist.

Upon Clark’s motion for judgment N.O.V. or new

trial, the trial court set aside the punitive damages award

but left intact the nominal damage verdict. The trial

court determined that the evidence failed to support the

punitive damages submission, but overruled petitioner’s

constitutional challenges to the statute and the nominal

damage verdict. The court also granted the alternative

new trial motion as to punitive damages. (See App. A).

Thereafter both petitioner and respondent appealed the

trial court’s judgment to the Missouri Court of Appeals,

Western District.

The Court of Appeals, on May 4, 1982, reversed that

part of the trial court’s judgment which set aside the

punitive damages award, and likewise reversed the new

5

trial award and reinstated the verdict against petitioner.

The Court of Appeals also sustained the trial court’s judg-

ment denying petitioner relief against the nominal damage

verdict. See 637 S.W.2d 84. (A copy of the Court of

Appeals’ decision is set out at App. C). Clark’s motion

for rehearing or, alternatively, for transfer to the Missouri

Supreme Court was overruled by the Court of Appeals

on June 23, 1982, and an application to the Supreme Court

was unavailing, being denied on September 13, 1982.

Details of the Case

Alderson had been employed by Clark since July 1975,

and was promoted to service station manager in May 1976.

He continued to manage a Clark station until he left

Clark’s employment in December 1976. His immediate

supervisor was the retail sales representative, Charles

Palmquist, who in turn was supervised by the district

manager, David DeNeff.

On December 7, 1976 Alderson was on his way home

after work and stopped at another Clark station to see a

Bob Thompson, its manager. There Alderson met Charles

Palmquist, his supervisor, who suggested that the three

of them go out for a drink. Thompson declined, but

Alderson and Palmquist left for a nearby lounge, where

they remained for several hours. During the evening,

Palmquist asked Alderson for his opinion of Thompson’s

potential for advancement, and Alderson indicated his

lack of confidence in Thompson’s ability because of alleged

shortages at his station. This statement apparently upset

Palmquist who suggested that Alderson was probably the

one whose station was short. Alderson offered him the

keys to the station and invited Palmquist to conduct an

immediate audit. Palmquist declined.

After the two had parted company, Alderson returned

to his station. Palmquist preceded him, and appeared to

be intoxicated Alderson summoned the police who asked

Palmquist to leave, which Palmquist did, but before leav-

ing the station he attempted to call the district manager,

DeNeff, to inform him of what was going on. (Transcript,

hereafter “T.”, 62) Alderson said that he himself did not

attempt to talk to DeNeff nor try to reach him that

evening. (T. 62) He testified that he had been fired by

Palmquist that night (T. 67), although DeNeff said it

was on December 8 (T. 184). Rather than lock the sta-

tion and leave after Palmquist left, he destroyed the com-

pany safe, holding money collected at the station, by

drilling the cast iron steel for approximately 114 hours

until he got the money out. He testified that he destroyed

the safe, even though no one else including Palmquist could

have opened it that evening, by use of a drill from his car.

(T. 64) In response to a question of whether or not the

drilling of the safe took place after Palmquist had fired

him, Alderson indicated that it had. (T. 58)

In direct examination Alderson maintained that he

had Clark’s authority to take the money from the station,

without any mention of Palmquist firing him. (T. 33) He

testified that the following morning Palmquist was in-

terested in forgetting the whole incident but apparently

Alderson was not interested in continuing with his em-

ployment. (T. 34-35)

DeNeff testified that Palmquist had contacted him

the evening of December 7, and informed him to some

extent of what was occurring. (T. 126-127) Next morning

DeNeff went to the station where Palmquist only was

present conducting an audit. (T. 128) DeNeff noticed

that the safe had been drilled out, and the money missing.

(T. 128) DeNeff called Alderson and asked him what

7

had happened, and asked where the money and the reports

were. (T. 129) Alderson at that time informed DeNeff

that the reports and money were at his lawyer’s office.

(T. 129) DeNeff told Alderson that unless he turned over

the money and reports, that he would have to go to the

prosecutor (T. 129) DeNeff and Alderson agreed to meet

and Alderson agreed to turn over the money and reports.

(T. 129)

At the meeting on December 8, according to Alderson,

DeNeff indicated that he would reprimand Palmquist, or -

lay him off, and would consequently think of some reason

for terminating Palmquist. (T. 26) Alderson said that at

that time the possibility of his staying with Clark was

not discussed. (T. 36)

On December 9 DeNeff met Alderson at a bank,

where Alderson returned the money. Alderson made no

mention of any discussion at the bank regarding his future

employment with Clark. (T. 40)

Alderson’s first, and only mention in direct examina-

tion, of an alleged statement by DeNeff to make up a

reason to fire Alderson rather than Palmquist, came in

a description of what Alderson did after he left the bank.

Alderson testified that he contacted his attorney, and he

responded as follows to a question by his lawyer:

“Q. Alright and what was your concern at that time

Mr. Alderson?

A. Mr. DeNeff had told me he would have to fab-

ricate some reasons for termination because they

were doing it, and I didn’t understand why he

would have to fabricate a reason for terminating,

so I contacted you to find out what I should do.”

(T. 40)

There is no testimony which fixes a date upon which

DeNeff allegedly made this statement, nor in what context

the alleged statement was made, or precisely what was

said, Alderson contradicted his own testimony on this

issue when he later testified that it was on December 8,

not on the 9th, that he first contacted his attorneys (T.

68, 82), while DeNeff testified that Alderson told him on

the 8th that he already contacted his lawyers. (T. 130)

The only other mention of the alleged statement about

making up a reason to fire Alderson came in cross-

examination where Alderson indicated that the only ex-

planation that he could give why DeNeff would have told

him that he would have to make up a reason to terminate

him. (T. 69-70) DeNeff testified that nothing in his per-

sonal dealings with Alderson would have affected his judg-

ment in sending Alderson the letter (T. 138), which was

not contradicted by Alderson.

On Decernber 15, Alderson requested the service letter.

The letter recited that Alderson had been employed by

Clark from July 2, 1975 until December 17, 1976, when he

was terminated due to poor maintenance of the station,

untimely filing of master reports and a shortage of $400.00

uncovered in an audit on December 7, 1976. DeNeff

said the audit revealed a shortage of $696.55, including

$78.00 in employee ioans (T. 162), and employee shortages

of $200.00 to $300.00 (T. 133-134), both of which were un-

collectable. (T. 168) He testified that a further difference

between the two audit figures was a damaged merchandise

figure of $84.87. (T. 171) As far as DeNeff was con-

cerned on December 8th, Alderson was $2300.00 short, be-

cause that was the amount needed to be accounted for by

the audit conducted on that day. (T. 173-182)

DeNeff signed the service letter, which was sent out

about December 22 upon the request of Alderson and his

lawyers, and was based upon information given by DeNeff.

The letter gave Alderson’s dates of employment as July

2, 1975 to December 17, 1976, the latter date admittedly a

typographical error. As reasons for leaving the employ-

ment, the letter recited that Alderson had failed to satis-

factorily maintain the station and its facilities; had failed

to furnish master reports in a timely fashion; and that on

December 7, 1976, an audit uncovered a loss of almost

$400.00 at the station. Evidence given by DeNeff at the

trial was that he based the letter upon his views that

Alderson had failed to keep the station up to the stan-

dards that Clark required (e.g. see T. 123-124, 184-185);

that Alderson had failed to send in his daily master

reports on time (e.g. see T, 121-122, 125-126, 184-185); and

that the audit run on December 8 demonstrated a short-

age at the station of about $400.00 (e.g. see T. 131-135, 184-

185), shortages about which DeNeff was aware when

he wrote the service letter in issue (T. 146, 184-187).

DeNeff also testified that December 7 was the last day

that Alderson had worked, but that he was fired the

next day (T. 185), 8 December.

No one, other than Alderson ever requested or in-

quired of Clark to see the letter. (T. 142) Alderson of-

fered no examples of any employers receiving any infor-

mation from Clark, directly or indirectly, regarding the

letter or its contents, nor did any prospective employer

ever indicate that Clark had given Alderson a negative

reference.

Alderson presented only one example of a prospective

employer to whom he had allegedly shown the letter, a

credit union in May or June 1980. (T. 50-51, 79) How-

ever, the union's collection manager, to whom Alderson

10

applied, testified that he did not know what a service let-

ter was (T. 191); that he did not recall the contents of

any such letter (T. 194); and that Alderson lacked the

experience and qualifications for the job without regard

to any letter. (T. 193) Furthermore, the manager testified

that Alderson did not really seem interested in the credit

union job, because of his other interests pertaining to this

lawsuit which was then pending against his former em-

ployer, Clark. (T. 194)

In setting aside the punitive damages award, the trial

court found that:

“There was no evidence upon which the jury

could have found defendant had an ulterior motive,

that the purported reasons defendant stated in its

service letter were other than mistakes of fact or that

defendant’s conduct in writing its service letter in the

manner in which it did was either willful, wanton, or

malicious, that is, intentionally wrongfully written

without just cause or excuse and that, therefore, the

Court erred in submitting such issue and the jury’s

verdict, therefor and judgment thereon is and was

erroneous and, as stated, not supported by competent

and substantial evidence.” (App. A).

Presentation of Federal Questions

Petitioner Clark challenged the constitutionality of the

statute (§290.140, R.S.Mo.) and its application in an

amended answer filed in March, 1980 (Record, Legal File,

49-51), and in August 1980 by way of a summary judg-

ment motion filed in the trial court (Record, Supple-

mental Legal File, 30-33), which trial court overruled on

September 2, 1980, without setting forth any reasons.

Petitioner renewed the challenges at trial (T. 8-9, 117),

11

and again urged the constitutional claims in its motion for

judgment N.O.V. (R., L.F., 72-86; also R., Supp. L.F. 1 et

seq.), all of which the trial court overruled without stating

reasons. (R., L.F., 87-89) Petitioner had challenged the stat-

ute on a number of federal grounds under the Due Process

and Equal Protection Clauses of the Fourteenth Amend-

ment and the freedom of speech proviso of the First Amend-

ment, and included such claims as unconstitutional im-

position of punitive damages without the necessity of find-

ing actual damages, denial to petitioner of such defenses

as good faith and so on, failure of the statute and its con-

structions to give petitioner corporate employer fair notice

of what constituted a proper response to a service letter

request, particularly as to what constituted a “true” reason

for discharge; the law’s application only to corporate em-

ployers, without the showing required by the Equal Pro-

tection Clause as to why it so discriminated, particularly

when viewed in the light of its restrictions upon the peti-

tioner’s rights of corporate free speech; and other rea-

sons. (R., Supp. L.F., 30 et seq.)

Petitioner appealed the trial court judgment denying

the constitutional objections. (R., L.F.) The Court of

Appeals rejected Petitioner’s constitutional claims for the

reason that “[aJll the constitutional arguments advanced

in Clark’s brief have been considered by our Supreme

Court (since Clark’s brief was filed) and rejected. Hanch

v. KFC National Management Corp., 615 S.W.2d 28 (Mo.

banc 1981); Accord: Rimmer v. Colt Industries Operating

Corp., 656 F.2d 323 (8th Cir. 1981).” (See C.A. Opinion,

App. C, 637 S.W.2d at 85). While the Court of Appeals

offered the observation that Clark in oral argument ac-

knowledged the statute’s constitutionality was “not now a

viable issue” (App. A, 637 S.W.2d at 85-86), that char-

acterization was inaccurate in that Clark’s counsel pre-

12

served the constitutional challenges as demonstrated in the

transcript of oral argument. (See App. E). Petitioner

renewed the constitutional issues on May 19, 1982 in its

motion for rehearing or alternatively for transfer to the

Missouri Supreme Court, which the Court of Appeals de-

nied without comment on June 23, 1982. Clark then filed

its motion in the Missouri Supreme Court, asking that

tribunal to transfer the case to examine the constitutional

issues, along with other matters decided in the Court of

Appeals’ opinion, but which that Court denied without

reasons on September 13, 1982. (See App. B).

REASONS FOR GRANTING THE WRIT

This Court has repeatedly recognized that under the

Due Process Clause no one may be required at peril of life,

liberty or property to speculate as to the meaning of penal

statutes; and that the terms of a penal statute creating an

offense unknown to the law must be sufficiently explicit to

inform those who are subject to it what conduct on their

part will render them liable to its penalties, a requirement

consonant with the ordinary notions of fair play and the

settled rules of law. See Giaccio v. Pennsylvania, (1966)

382 U.S. 399, 400-405; Thornhill v. Alabama, (1940) 310

U.S. 88, 100; Lanzetta v. New Jersey, (1939) 306 U.S. 451,

453; and Hynes v. Mayor of Oradell, (1976) 425 U.S. 610,

620; to cite just a few examples,

The penal statute in this case, which forms the only

basis for the cause of action agsinst corporate employ-

ers, commands that such an employer truly state for

what cause an employee has quit the employer’s service

and certain other information, but beyond this general

13

liability-creating charge it is completely devoid of specific

guidelines or criteria by which to advise the employer of

what constitutes a response sufficient to protect itself from

liability when responding to the request for such a letter.

Then by way of compounding the difficulty, the courts

have in effect stripped the employer of any defenses such

as good faith in writing the response or negligence in doing

so, Roberts v. Emerson Elec. Mfg. Co., (Mo. 1960) 338

S.W.2d 62, 72; Potter v. Milbank Mfg. Co., (Mo. 1972) 489

S.W.2d 197, 206. And because the statute requires the

corporation to affirmatively respond by a proper letter

such is an intrusion or restriction upon the right of cor-

porate speech, thereby raising a question of First Amend-

ment rights.

There is no civil cause of action for damages at common

law for a service letter such as this. Although the cause of

action is solely based upon a state statute, § 290.140, R.S.Mo.

(1978), it does not provide for any such action, rather

the cause was implied by the courts from the statute, Cheek

v. Prudential Ins. Co., (Mo. 1916) 192 S.W. 387. When

Cheek reached this Court in 1922 (see 259 U.S. 530), the

issues raised were not the ones presented here, for example

the Court never discussed nor decided the question of

constitutional vagueness of the statutory language, nor

the imposition of substantial punitive damages with re-

quiring a finding of actual malice, nor was the equal pro-

tection ruling based upon the considerations that have been

asserted here, rather it was upon 1922 considerations

which reflected a much different economic, social and con-

stitutional fabric than exists some 60 years later, as

illustrated by the developments in the field of corporate

free speech, and the extension of many, if not most, of

the basic constitutional guarantees to the corporate form

of business entity. Cheek was decided in a far different

14

era, when corporations were still a main point of regulatory

focus, and when many forms of economic and social

legislation were confined solely to them, having not yet

been extended to cover other forms of business entities, as

is now the case (see the discussion under Point III here).

In fact much of the equal protection/due process deter-

minations in Cheek were concerned with allegations of a

conspiracy between insurance carriers (see 259 U.S. at

546-548) to deprive plaintiff of his right to sell insurance,

as opposed to the issues raised here.

Over the years the courts have interpreted the statute

in a confusing, contradictory and uncertain manner, a fact

which has not escaped unnoticed by some courts, e.g. Rim-

mer v. Colt Industries, (C.A. Mo. 1981) 656 F.2d 323. The

Court of Appeals noted that they would read certain state

court decisions construing the law “more narrowly” than

certain later state court rulings, Id. at 326, while another

judge specifically noted (Id. at 331) the unevenness and

lack of clarity in the holdings.

Against this background, petitioner contends that the

application of this statute raises serious constitutional ques-

tions, both from a facial standpoint and that of application,

particularly where it penalizes by imposing absolute li-

ability under general and vague language without contain-

ing ascertainable standards, guidelines or conditions what-

soever as to what is meant by “truly stating” the cause for

an employee’s termination or with regard to the other

items in the statute, so as to allow an employer to respond

in a manner so as to protect itself and to allow a judge or

jury to intelligently consider the liability issue. In this

regard the vague language of the statute raises a question of

deficiency such as was held violative of due process in

such cases as Giaccio, where the employment of gen-

eral abstract charges as “misconduct” and “represensible

15

conduct” was condemned, or in Thornhill, where the phrase

“without just cause or legal exercise” failed to pass con-

stitutional muster.

What is meant by “truly stating the cause”? Does it

mean “just”, or “correct”, or “substantially true”, or “hon-

est” or “sincere”? What happens if there are multiple

grounds as set forth which is the case here? If one ground

is erroneous, and the others correct, does one erroneous

ground by itself establish liability? Is an employer liable

if there was an “honest” or “sincere” or good faith belief

that the reasons or any part thereof are true, even though

subsequent events may prove them incorrect? Is the

employer liable where reasons given in a letter are believed

correct, but the jury believes that other or additional rea-

sons should have been included? Is an employer liable for

honest though negligent mistakes? The fact is, the stat-

ute is so vague and standardless it leaves judges and

jurors free to decide, without any legally fixed standards,

what is prohibited and what is not in each particular case,

see Giaccio v. Pennsylvania, supra at 402-403.

The Missouri courts have consistently failed to specifi-

cally address this constitutional objection or have delib-

erately avoided doing so, not only in this case, but in other

recent cases where they have evaded ruling or failed to

specifically rule on federal constitutional objections. A

good example is Hanch v. K.F.C. Nat. Management Corp.,

(Mo. en banc 1981) 615 S.W.2d 28, 34, where by a one vote

majority, the Missouri Supreme Court upheld the stat-

ute’s constitutionality, yet, failed to specifically address

the due process claim that the law provided no guidance as

to what type of response constituted a proper service let-

ter, choosing instead to avoid by means of conclusory as-

sertions that carefully avoided federally-predicated objec-

tions.

16

Where a statute fails to provide required guidelines

or standards, it allows the triers of fact to treat these

cases as wrongful discharge actions, instead of actions un-

der the Service Letter Statute, a situation analogous to that

of Vaca v. Sipes, (1967) 386 U.S. 171, 188-195, where this

Court ruled that a verdict was erroneously sustained where

the case had actually been tried on the theory that an

employee had been wrongfully terminated, when in fact the

real issue should have been whether a labor organization

had fairly and in good faith processed the employee’s griev-

ance as to the termination.

Lack of Defenses. As stated earlier, the difficulty in

constitutionally applying the statute is compounded by de-

cisional law, which refuses to allow the corporate employer

to instruct the jury on its good faith in writing the letter

or where it may have negligently drawn a response, as

defenses, see Potter v. Milbank Mfg. Co., supra, and Roberts

v. Emerson Elec. Mfg. Co., supra, or where it may have

mingled some true statements as to termination with in-

correct statements, or where the reasons that it gave in the

letter may all have been correct, but the employer forgot or

overlooked including another one. Yet nowhere in the stat-

utory language are such defensive matters prohibited. Like

the creation of the cause of action itself, such defenses are

excluded only by judicial creation, and not by any express

exclusion in the language of the statute. To make mat-

ters worse, the decisions hold on the one hand that the

penal law is to be strictly interpreted in favor of the em-

ployer and against the employee’s claim, see Horstman v.

General Elec. Co., (Mo.App. 1969) 438 S.W.2d 18, but

then likewise refuse to recognize defenses such as good

faith, etc., although this Court in New York Times v. Sul-

livan, (1964) 376 U.S. 254, 279-283, has recognized a qual-

ified privilege of honest mistake of fact under the First

and Fourteenth Amendments as a legitimate defense.

17

Impingement on the Exercise of First Amendment

Rights. First of all, corporations are persons within the

meaning of the Due Process Clause, which prohibits a state

from depriving them of property without due proess of

law. Grosjean v. American Press, (1935), 297 U.S. 233,

244. Secondly, when a statute also impinges upon First

Amendment guaranties of the exercise of free speech, the

constitutional vices of the law working a deprivation of

property are enhanced. This Court in First National Bank

of Boston v. Bellotti, (1978) 435 U.S. 765, has clearly recog-

nized the application of the free speech guaranties to

corporations, and under the New York Times, supra; Gertz

v. Robert Welch, Inc., (1974) 418 U.S. 323, 350; and Givhan

v. Western Line Consol. School District, (1979) 439 U.S.

410, 413, line of decisions has increasingly recognized rights

of free expression, in areas of public and private communi-

cations, and has restricted statutory interference in these

areas. Here the application of a statute directed only

against corporate employers which is vague and uncertain

in its liability-creating terms, which in the total absence of

statutory authority to do so denies the employer defenses

by way of judicial decision, which permits unlimited puni-

tive damages based upon a nominal damage award but

without a finding of actual malice, and which interferes

with the exercise of corporate rights of free speech raises

what petitioner believes are serious constitutional ques-

tions that this Court should resolve.

There is a conflict between the federal and state courts

in Missouri over whether punitive damages can be assessed

without first finding actual malice. Federal district courts,

at least in the Western District of Missouri, instruct their

juries in service letter cases that actual malice must be

18

found first before punitive damages can be imposed, e.g.

Walker v. Modern Realty of Missouri, Inc. (Docket No.

80-0077-CV-W-1). The U. S, Eighth Circuit Court of Ap-

peals considered constitutional challenges to the statute

in Rimmer v. Colt Industries, (C.A. Mo, 1981) 656 F.2d

323, reversing 495 F.Supp. 1217 (W.D, Mo. 1980), and

expressed the view that:

“We do not decide the issue whether the service

letter statute would be constitutional if it imposed

liability without fault or permitted the recovery of

punitive damages without a showing of actual malice.

We can decide that question when it is properly before

us. Moreover, we do not necessarily agree with the

district court’s view that the Missouri Supreme Court

has decided these issues in the way the district court

determined it has. We read Potter v. Milbank Mfg.

Co., 489 S.W.2d 197 (Mo. 1972) and Roberts v, Emer-

son Electric Mfg. Co., 338 S.W.2d 62 (Mo. 1960) more

narrowly than the district court, particularly in light

of the recent Missouri Court of Appeals’ decision in

Newman v, Greater Kansas City Baptist Hosp, Ass'n,

604 S.W.2d 619 (Mo.App. 1980). [Other Missouri cita-

tions omitted].” (Emphasis supplied),

Rimmer raises the implication that the statute could not

be constitutionally applied to allow punitive damages with-

out finding actual malice, but does so by reading state

court decisions more narrowly than do the state courts

themselves, e.g. see Hanch v, K.F.C, Nat, Management

Corp., (Mo, en banc 1981) 615 S.W.2d 28 A concurring

opinion in Rimmer stated:

“The majority opinion assumes that Rimmer can

recover punitive damages only by proving that ‘the

reasons stated in the letter for the discharge were

19

false, that Colt knew they were false, and nonetheless

wantonly and maliciously issued the letter.’ Based

on this assumption, I believe that the majority's stan-

dard for imposing punitive damages represents the

minimum requirements for upholding the statute

against attack on first amendment grounds.” (656 F.2d

at 331).

The federal courts of the Western District of Missouri

have so interpreted Rimmer, and their instructions require

a finding of actual malice. Yet for reasons yet to be

articulated, legal malice continues to be used by state

courts without explanation or reason for doing so.

Nevertheless in spite of the federal court decisions,

which appear to be reading the state decisions in a more

restrictive fashion because of the constitutional implica-

tions, the decisions of the state appellate courts have not

hesitated to expansively read the penal statute to allow

the imposition of substantial punitive damages without

requiring juries to find actual malice, Hanch v. K.F.C.

Nat, Management Corp., supra; Herberholt v, DePaul Com-

munity Health Center, (Mo, en banc 1981) 625 S.W.2d 617,

624, Under the pattern instructions (Missouri Approved

Instructions or M.A.I.) which the state supreme court re-

quires be used to instruct a jury in these cases, the jury

is instructed that punitive damages may be awarded if

you believe that the defendant's conduct was malicious

(M.A.I, No, 10.01, see App. F), which term is defined

for the jury as legal rather than actual malice as follows:

“malicious as used in these instructions does not

mean hatred, spite or ill will, as commonly understood,

but means the doing of a wrongful act intentionally

without just cause or excuse.” (M.A.I. No, 16.01, see

App. F).

There are no defensive M.A.I.s available to the corporate

employers because, as already noted under Point I here,

the courts have determined, without advancing any justifi-

cation therefor, that the employers are not entitled to

raise defenses such as good faith or negligence. E.g. Pot-

ter v. Milbank Mfg. Co., (Mo, 1972) 489 S.W.2d 197, 206;

Roberts v. Emerson Elec, Mfg. Co., (Mo. 1960) 338 S.W.2d

62, 72.

It is readily apparent from a reading of decisions

such as Rimmer, that the federal courts are concerned

with the imposition of punitive damages on the basis of

a finding of legal malice only, notwithstanding a contrary

view held by the state courts. The clear concern of the

federal courts is with an impairment of the corporate

employer’s First Amendment rights of free expression

as outlined, for example, in the Rimmer case (especially

see 495 F.Supp, at 1222-1223; and 656 F.2d at 326-327,

331 (concurring opinion)), wherein a concurring judge

held that the district court analysis of the First Amendment

rights was correct, and therefore under the standard laid

down by this Court in Gertz v. Robert Welch, Inc., (1974)

418 U.S, 323, 349, as applied to the service letter cases,

a plaintiff, to recover punitive damages, must prove by

a preponderance of the evidence that an employer made

a false statement, knowing it to be false or with reckless

disregard for its truth, 656 F.2d at 331. However, as stated

under Point I of this petition, this is not the rule as set

forth by state court decisions such as Hanch which in ef-

fect reject the concept of corporate free speech by simply

replying that a corporate employer is only being required

to speak truthfully, 615 S.W.2d at 35, but glossing over

the infirmities in the statute which prevent such com-

pliance.

21

Without unduly rehearsing the past, this Court has de-

veloped its line of authority on the media cases, such as

Gertz, New York Times v. Sullivan, (1964) 376 U.S, 254,

279-80; Curtis Publishing Co. v. Butts, (1967) 388 U.S. 130,

to confer free speech protection to various classes of pri-

vate expression, e.g. Givhan v. Western Line Consol, School

Dist., (1979) 439 U.S. 410, 413, and in First Nat, Bank of

Boston v. Bellotti, (1978) 435 U.S. 765 to corporate persons.

The difficulty with punitive awards under the statute

such as the one challenged here runs deep because the

statute’s language fails to provide the corporate employer

with fair notice of what constitutes a proper response

to a request for a service letter, and then exacerbates

the employer's position by denying it defenses such as

good faith or negligence in responding, which has the

effect of making the employer strictly liable for these

damages regardless of how insignificant an error in the

response may have been and despite the fact that the

statutory language nowhere outlaws such defenses,

In light of the rules developed by this court for assess-

ing punitive damages in the media cases such as Gertz, and

where the mode of creating liability is viewed within the

constitutionally vague context of the Due Process Clause,

there is a serious unresolved issue of how far legislatures

and courts may go in imposing such punitive damage lia-

bility under the guise of regulation,

The statute applies to corporate employers only

without any discernible justification which satisfies either

of the tests developed to examine legislation under the

Equal Protection clause. The statute was enacted as an

adjunct to the state anti-blacklisting law, §559.390, R.S.Mo.

(1969); Cumby v, Farmland Industries, (Mo.App. 1975)

22

524 S.W.2d 132, 135, but that statute was repealed in 1977

when the new Missouri criminal code was enacted by the

legislature, and is therefore no longer a viable argument

to support the Service Letter Statute. If the statute was

designed to protect the reputations of employees it is

underinclusive because it covers only those who work

for corporations, and ignores the many persons employed

by employer entities not covered by the law. As presently

applied, it protects not only the reputations of employees

who may actually have sustained actual injury to reputa-

tion, which is not the case here because the proof clearly

established that Alderson did not use the letter, but also

employees whose reputations have not sustained any actual

injury, as is the case here, so that the §290.140 is over-

inclusive as well,

There has been no rational distinction developed in

the case law (state or federal) construing the statute that

demonstrates a present justification for the law, either

under the “substantial interest” test applied when fun-

damental rights such as free speech are involved, e.g.

Police Dept. v. Moxley, (1972) 408 U.S. 92, 95, or under the

more traditional “rationality” test, prohibiting arbitrary

statutory classification, which classification to be valid

must rest upon some ground of difference having a

fair and substantial relation to the object of the legisla-

tion so that all persons similarly circumstanced shall be

treated alike. Stanton v. Stanton, (1975) 421 U.S. 7, 14.

Yet here there is no rational basis to distinguish between

corporations on the one hand and other types of employers

entities such as partnerships or individuals on the other.

In today’s world is an employer n,ore suspect because it

takes a corporate form than another type, or does the com-

mon experience give rise to judicial notice or established

fact that corporations are more of a problem than other

forms of business entities?

23

If corporations are generally such a special regulatory

problem, in Missouri, or elsewhere, then why are most of

the laws affecting the employment rights of individuals

usually made applicable to broad categories of employers

that include persons, individuals, partnerships, associa-

tions, corporations, trustees, receivers, and so forth, e.g.

workers’ compensation, §287.030; unemployment benefits,

$288.030 (14); limitations upon working hours, §290.020;

payment due a discharged employee, §290.110, all in the

Revised Statutes of Missouri (1978)? Nor in the case of

injury to reputation, does the law appear to distinguish be-

tween corporations and other persons in imposing liability

for such injuries, e.g, 53 C.J.S., Libel & Slander, §148, And,

of course, as noted earlier, the state anti-blacklisting stat-

ute was repealed in 1977 by the legislature.

The question arises as to why out of such a background

corporate entities are singled out for special treatment?

We submit that there is no rule of law which holds that

corporate employers are more or are less truthful in their

dealing with their employees than other classes of em-

ployer.

Or is the reason for the survival of this discriminatory

and arbitrary classification a more subtle one, namely a

way to impose liability for an alleged wrongful discharge

under the guise of an allegedly untruthful service letter,

which poses the same essential problem faced by this

court in Vaca v, Sipes, (1967) 386 U.S. 171, 193-195 (there

the jury verdict was found to be based not upon the issue

of good faith, or more particularly the lack thereof, of the

union in handling the employee’s grievance, but rather

upon the merits of the grievance itself, and in effect a form

of action for wrongful discharge).

The denial of equal protection is enhanced by such

additional factors as the decisional law which allows un-

24

limited punitive damages based upon a nominal award of

actual damages, without a showing of actual malice in

these cases, Heuer v. John R. Thompson Co., (Mo.App.

1952) 251 S.W.2d 980, 985; also Missouri Approved In-

structions (M.A.I.) 23.08 and 16.01; the refusal of the Mis-

souri courts to recognize good faith or negligence as a de-

fense in these cases, e.g. Potter v, Milbank Mfg. Co., (Mo.

1972) 489 S.W.2d 197, 206, also see M.A.I. 23.08, although

the Service Letter Statute does not contain any lan-

guage which excludes such defenses; and the vague and un-

certain vice of the statute, which is urged here as a reason

for review by petitioner under Point I of these reasons.

Additionally, and of equal importance, is the question of

First Amendment rights of free expression which petitioner

corporation urges have been infringed upon by the appli-

cation of the Service Letter Statute requiring the

petitioner to speak without allowing petitioner and other

corporate employers the same constitutional safeguards

extended to others and by imposing absolute liability upon

corporate employers only for the slightest infraction, no

matter how innocently or unimportant the infraction may

have been.

It is urged that the same rationale present in the

arguments advanced under Points I and II here, as to the

conflict between the decisions of this Court on Due Process

and First Amendment grounds are equally applicable under

this point. Furthermore, it is also strongly urged that

since the decision of this Court in Prudential Insurance Co.

v, Cheek, (1922) 259 U.S. 530, the law regarding the scope

of economic regulation and its relationship to the rights

of persons, including corporations, has undergone radical

revision, e.g. witness First National Bank of Boston v.

Bellotti, (1978) 435 U.S. 765, and to whatever extent the

Cheek decision may still have application is deserving of

reexamination.

CONCLUSION

For the reasons stated, the petition for a writ of cer-

tiorari should be granted.

Respectfully submitted,

Russe.tt D. JACOBSON

(Counsel of Record)

Tuomas B. SULLIVAN, III

WituiaM R. WILLIAMS

2546 Holmes

Kansas City, Missouri 64108

(816) 474-0400

Attorneys for Petitioner

December 10, 1982