Summary
This Seventh Circuit opinion addresses a defamation per se claim brought by Dr. Padma Rao against J.P. Morgan Chase Bank and its employee after the bank representative allegedly informed an estate administrator that Rao improperly used her power of attorney to designate herself as a beneficiary. The court first exercises supplemental jurisdiction by dismissing the in-state co-defendant to restore complete diversity. On the merits, the court reverses the district court's grant of summary judgment for the defendants, holding that the bank employee's statements are not reasonably capable of an innocent construction and that genuine issues of material fact exist regarding whether the defendant abused a qualified privilege. The court also addresses evidentiary rulings concerning hearsay exceptions for party-opponent admissions.
Topics
Practice areas
Questions Presented
- Whether the Seventh Circuit could retain subject-matter jurisdiction by dismissing the nondiverse defendant Krause during the appeal.
- Whether the district court violated the law-of-the-case doctrine by reconsidering the innocent-construction issue at summary judgment after an earlier judge declined to apply the defense at the pleading stage.
- Whether Krause's statements about Rao were capable of an innocent construction under Illinois defamation law.
- Whether qualified privilege barred Rao's defamation per se claim or whether evidence created a genuine issue of fact regarding abuse of the privilege.
- Whether the district court improperly excluded Rao's affidavit as hearsay evidence relevant to abuse of qualified privilege.
- Whether Rao adequately pleaded that Chase gave the estate administrator unauthorized access to personal information in violation of PIPA and ICFA.
Holdings
- The court could retain jurisdiction over the remaining claim against Chase by dismissing Krause, the nondiverse defendant, because his presence was unnecessary to resolution of the controversy, the dismissal was unopposed, and no harm would result.
- The district court did not violate the law-of-the-case doctrine by considering the innocent-construction defense at summary judgment after an earlier judge declined to apply it at the dismissal stage.
- Krause's statements that Rao established the payable-on-death beneficiary designation through use of her power of attorney were not reasonably capable of an innocent construction.
- Summary judgment was improper because evidence created genuine issues of material fact as to whether Krause recklessly abused any qualified privilege applicable to his communications with Singler.
- Rao's affidavit recounting statements by Chase employees was admissible as nonhearsay party-opponent admissions for purposes of showing that Krause acted recklessly, rather than as a hearsay version of what Krause had said.
- Rao failed to state an ICFA claim predicated on a PIPA violation because she did not allege that Chase gave Midland Trust unauthorized access to personal information.
Key quotations
“The innocent construction rule applies when a defamatory statement “may reasonably be innocently interpreted.”” (at 13)
“The only natural, reasonable reading of what Krause conveyed to Singler is that Rao, using her POA, designated herself as POD beneficiary.” (at 15)
“Evidence of Chase’s policy, the substance of which Chase does not contest, and the availability of the correct documents showing the POD designation create genuine, material issues of fact as to Krause’s recklessness.” (at 19)
“This case must go before a jury to determine whether Krause’s statements were understood to be defamatory.” (at 24)
Factual background
B.K. Rao added her daughter, Padma Rao, as the payable-on-death beneficiary of two Chase accounts in 2012. After Midland Trust became administrator of B.K. Rao's estate, its attorney Mark Singler asked Chase to identify the account beneficiary. Chase employee Kiefer Krause repeatedly stated that 2013 signature cards established the beneficiary designation through Rao's power of attorney, leading Singler to report in probate court that Rao had used the power of attorney to name herself beneficiary and had committed a fraudulent breach of fiduciary duty. Later review showed that B.K. Rao herself had executed the relevant beneficiary designation in 2012.
Procedural history
Rao filed suit in Illinois state court against Chase, Krause, and Chase's parent company, asserting defamation, false-light invasion of privacy, public-disclosure invasion of privacy, and an ICFA claim based on an alleged violation of PIPA. Chase removed the case before any defendant was served. The district court dismissed all claims except defamation per se, later granted summary judgment to the defendants on that claim, and entered final judgment. The Seventh Circuit affirmed dismissal of the ICFA/PIPA claim, reversed summary judgment on defamation per se, dismissed Krause as a party, and remanded for further proceedings.
Remand instructions
The case is remanded for further proceedings on Rao's defamation per se claim. A jury must determine whether Krause's statements were understood to be defamatory. The court declined Rao's request for reassignment to a new judge.