Phelan v. May Dept. Stores Co.

Michael Phelan (plaintiff) was a supervisor at Filene’s, a department store that was a division of May Department Stores Company (May) (defendant). Filene’s had a practice of assessing charges on vendors who failed to follow Filene’s policies regarding shipping or purchase orders. However, vendors could submit requests for refunds by submitting documentation addressing why the fines were not justified. One day, Phelan learned that Gregory Meade, one of Phelan’s subordinates, had allowed a backlog of vendor requests for refunds to accumulate without Phelan’s knowledge. When Meade finally alerted Phelan to the backlog, Meade told Phelan that the amount Filene’s owed on these outstanding refund requests was $200,000. Phelan then reported the backlog and this amount to his supervisor, Michael Basler. However, Meade had not been truthful in disclosing the scope of the backlog to Phelan. Meade then reported to Basler that the outstanding balance was actually $491,995. Filene’s chief financial officer, Michael Geraghty, and its controller, Donald Lane (defendants), decided to conduct an investigation into whether Phelan had attempted to conceal discrepancies in accounting. On the day that Phelan and his subordinates were being interviewed, Lane instructed one of Filene’s security officers to guard Phelan. All day, the guard relocated Phelan to different offices and accompanied him everywhere he went, even to the restroom and to the cafeteria. Phelan felt humiliated, and he felt as if his coworkers were fixated on him. Phelan was suspended, escorted from the property, and later terminated. Phelan filed suit for defamation and false imprisonment, for which a jury found in his favor. May sought a judgment notwithstanding the verdict on the defamation claim, alleging Phelan had not provided evidence that would have enabled a reasonable jury to determine that Phelan had established one of the elements of a defamation claim. Specifically, May alleged that Phelan did not show the alleged defamatory conduct was perceived as defamatory by the coworkers who witnessed it. At trial, Phelan did not present witnesses to testify that they perceived the security guard’s actions as defamatory.