Meehan v. Am. Media Int'l Llc

712 S.E.2d 904

Brian W. MEEHAN, Plaintiff,

v.AMERICAN MEDIA INTERNATIONAL, LLC; DNA Security, Inc.; and Richard Clark, Defendants.

No. COA10–1091.

Court of Appeals of North Carolina.

Aug. 2, 2011.

OPINION TEXT STARTS HERE

Appeal by Plaintiff from an Order entered 26 March 2010 by Judge J.B. Allen, Jr., in Alamance County Superior Court. Heard in the Court of Appeals 10 March 2011.

Elliot Pishko Morgan, P.A., Winston–Salem, by Robert M. Elliot, for Plaintiff-appellant.

Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Raleigh, by Robert A. Sar, Gretchen W. Ewalt, and Phillip J. Strach, for Defendants-appellee.

HUNTER, JR., ROBERT N., Judge.

Brian W. Meehan (“Plaintiff”) appeals from an Order granting Defendants' Motion for Summary Judgment pursuant to Rule 56 of the North Carolina Rules of Civil Procedure. We affirm in part, and vacate and remand in part.

I. Facts and Procedural History

This case arises from a dispute between Plaintiff and his former employer, DNA Security, Inc. (“DSI”). In 2006, Plaintiff prepared a report analyzing DNA samples in connection with the Durham Police Department's investigation of 46 Duke University lacrosse players on sexual assault allegations (the “Duke Lacrosse Case”). The report obscured findings that exculpated the charged players, and in the controversy that followed, DSI terminated Plaintiff's employment. Plaintiff contends DSI did not have just cause for termination and filed the underlying action against DSI, American Media International, LLC (“AMI”), and Richard Clark (“Clark”) (collectively “Defendants”).

Plaintiff, who has a Ph.D. in Marine Science, is a scientist specializing in DNA analysis and testing. In 1998, Plaintiff established and incorporated DSI as a company providing DNA forensic analysis in North Carolina and began marketing its services to sheriffs, police departments, and district attorneys. In order to be recognized by police and prosecutorial authorities as a qualified testing lab, DSI had to obtain the “gold standard” of accreditation from the American Society of Crime Laboratory Directors (“ASCLD/LAB”). To meet ASCLD/LAB accrediting standards, DSI had to prepare and submit its procedures and protocols to ASCLD/LAB to assure ASCLD/LAB that DSI test results and reports would meet required standards of accuracy and reliability. DSI obtained ASCLD/LAB certification in 2003.

On 27 October 2004, Plaintiff, then the sole director, officer, and shareholder of DSI, and Clark, President of AMI, executed a stock purchase agreement under which AMI would purchase all the stock of DSI and Plaintiff would remain employed by DSI for seven years pursuant to a term sheet appended to the stock purchase agreement (“Employment Agreement”).

The Employment Agreement contained four sections relevant to this appeal as follows:

5. Initial Salary: One Hundred Twenty Five Thousand Dollars ($125,000.00) per year payable in equal monthly installments.

6. Salary Adjustments: The salary shall be adjusted annually to, at least, reflect any percentage increase in the Consumer Price Index (all items) as calculated by the United States Bureau of Labor Statistics. There shall be no salary adjustment downward in any year in which the Consumer Price Index might decrease from the previous year.

7. Employment Position and Responsibilities: Employer shall engage and hire Employee for the position of Executive Director and Employee shall perform such duties as are customary by one holding such a position in a similar business or enterprise.

....

11. Termination of Employment:

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b. Employment shall terminate for just cause, including any violation of policies and procedures listed in the [DSI] employee handbook, or any terms of this agreement, or in the event the employee is convicted of a crime of moral turpitude or dishonesty. In any of these events of termination, [DSI] shall be obligated to pay Employee only such compensation as is due and payable through the date of termination.

At the time of the agreement, DSI had an employee handbook, referenced in Section 11(b) of the Employment Agreement, which provided standards of conduct that Defendants assert support a contractual basis for Plaintiff's termination. The relevant portion of this employee handbook reads as follows:

5.2 Rules of Conduct: ... Although not all-inclusive, any of the following types of misconduct are considered unacceptable behavior and will result in disciplinary action up to and including immediate discharge.

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(17) Substandard performance on the job.

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The absence of any misconduct not listed above does not prevent its being considered a breach of our rules of conduct. If your appearance, performance, work habits, overall attitude, conduct, or demeanor become unsatisfactory in the judgment of the Company, based on violations either of the above or any other Company policies, rules or regulations, you may be subject to disciplinary action, up to and including dismissal.

From the execution of the stock purchase agreement until the time of the events described hereinafter, the parties' relationship appeared to be harmonious.

In the spring of 2006, the Durham Police Department requested DSI to conduct DNA analysis in connection with the Duke Lacrosse Case. After Plaintiff agreed to conduct the testing, the State obtained a Court Order dated 5 April 2006 from Judge Ronald L. Stephens ordering:

the oral, anal, vaginal and underwear swabs taken from the victim's rape kit in this case, along with the 46 cheek swabbings taken from the group containing the suspects, be delivered to [DSI] ... for the purpose of Y STR DNA analysis, and if any male positive results are found among the victim's swabs, to compare the DNA to the 46 cheek swabbings to determine if an identification can be made.

Over the next two months, DSI staff, supervised by Plaintiff, completed the requested analysis. The test results supported two conclusions: (1) there was no match between any of the specimens provided by the lacrosse players and the alleged victim; and (2) the alleged victim had recent sexual contact with multiple men who were not among the specimens provided.

Plaintiff, by affidavit, testified that in April 2006 he verbally conveyed both conclusions of the test results to District Attorney Mike Nifong (“Nifong”) and subsequently authored and signed a written report to Nifong dated 12 May 2006 providing the results of the analysis (the “12 May 2006 Report”). Plaintiff admits he is responsible for the creation of the 12 May 2006 Report and the report was his work product.

While the 12 May 2006 Report can, in theory, be read to support the first conclusion of the analysis (that there was no match between any of the specimens provided by the accused and the accuser), the language used to convey both of Plaintiff's conclusions is vague. Instead of explicitly stating both conclusions, Plaintiff used the following opaque language in the 12 May 2006 Report: “ Results of DNA analysis: Individual DNA profiles for non-probative evidence specimens and suspect reference specimens are being retained at DSI pending notification of the client. Three of the reference specimens are consistent with DNA profiles obtained from some evidence items and the analysis of these specimens is below.” Specifically, Plaintiff's use of the phrase “non-probative” in the 12 May 2006 Report obscured the actual test results. Although the test results exonerate the lacrosse players, subsequent to the State's receipt of the 12 May 2006 Report, three of the 46 lacrosse players, Collin Finnerty, Reade Seligmann, and David Evans (collectively “the charged players”), were indicted by the State for first degree forcible rape, first degree sexual offense, and kidnapping.

In response to discovery motions, the State provided the results of the lab tests to the attorneys representing the charged players in October 2006. On 14 December 2006, Nifong informed Plaintiff that the attorneys representing the charged players made a motion that Plaintiff be tendered as a witness at a hearing scheduled for 15 December 2006. As the author of the 12 May 2006 Report, Plaintiff was encouraged by Nifong and Clark, then President of DSI, to testify as to the report's findings. Plaintiff was reluctant to testify at the hearing and cited that he would not be able to review the “volume of documents” needed for adequate trial preparation in time for his testimony.

Through Plaintiff's testimony at the 15 December 2006 hearing, it became clear that the 12 May 2006 Report was flawed. The following exchange between Plaintiff and an attorney for one of the charged players illustrates the central flaw of the report:

Q. Let me direct your attention to what is exhibit Attachment No. l5 of Defendants' Exhibit No. 1. The bottom number is 3883.

A. I'm there.

Q. Does that appear to be the protocols for your lab—

A. Yes.

Q.—on how you run your lab?

A. Yes.

Q. Do you rely on those protocols routinely to maintain your accreditation with ASCLD/LAB?

A. Yes.

Q. I'd like to direct your attention to standards for reports. It says, No. 4, item reports shall include ...

A. I'm there.

Q. Doesn't it say, Results for each DNA test?

A. Yes.

Q. You didn't include the results for each DNA test in your report dated May 12; is that correct?

A. That's correct.

Q. So you violated this protocol of your own lab?

A. That's correct.

Q. And you violated this protocol of your own lab because the district attorney told you to; is that correct?

A. No. It's not just because the district attorney told me to. And, you know, I don't know a better way to say this. You know, we, we legitimately—and it may not hold any weight in your legal arena, but we were legitimately concerned about a report that could become explosive if it had overly detailed all those profiles from all those players in it, okay.

Now, so we agreed with Mr. Nifong that we would report just the stuff that matched so that it would, so the report was limited in its scope....