There was no evidence suggesting Toray suffered any harm as a result of the book

Judge William E. Smith said, "some passages referred to “flagrant” safety violations, increased physical accidents, intentional destruction of company equipment to undermine other employees, and illegal behavior by managers or executives of a certain company.  Other passages suggested that executives of a particular company colluded with or ignored troubling behavior by a certain manager while employees who reported such behavior suffered retaliation."

Such statements, “if false and concerning Toray, could be capable of defamatory meaning,” Smith wrote. "However, there was no evidence in the summary judgment record suggesting that Toray lost profits, suffered reputational harm with clients or in the business community at large, or lost employees as a result of the book." Smith said.

Paknis' attorney, John Mangones emphasized that the non-disparagement clause did not prohibit Paknis from sourcing any material from his experience at Toray; it simply prohibited him from writing anything that could reasonably be interpreted as derogatory.

 

Former employee can be sued over workplace bullying book 

By: Eric T. Berkman August 26, 2022

North Kingstown, RI’s Toray Plastics, which is suing a former employee over a book he wrote, ‘Successful Leaders Aren’t Bullies’

A U.S. District Court judge has found that a company could bring nondisparagement and defamation claims against a former employee who wrote a book on workplace bullying even though the book never referenced the employer by name.

Defendant Matthew Paknis, a veteran management and leadership consultant who briefly worked in the HR department of Toray Plastics, authored a book entitled “Successful Leaders Aren’t Bullies.” 

During a dispute following Paknis’ departure, Toray learned about the book, which had not yet gone to print, and had Paknis sign an agreement that he would make no derogatory oral or written statements about the global manufacturing company.

Once the book was published, Toray sued Paknis, asserting that several current and former employees believed the book — which did not name Toray or any of its employees directly — contained derogatory information about the company.

Paknis argued in a motion for summary judgment that no reader could construe any statements in the book to be about Toray, given that he had scrubbed all identifying information while blending the facts of several events.

But Judge William E. Smith denied the motion.

“It is undisputed that the Book does not identify Toray or its employees by name [but] a breach may still occur if the reference in the Book is clear enough that a reader could reasonably construe the passage to be about Toray,” Smith wrote. “This dispute about whether Paknis referred to Toray in the Book such that a reader could reasonably construe the statements as disparaging to the company is better suited for resolution by a factfinder at trial.”

Smith went on, however, to grant summary judgment to Paknis on multiple counts of Toray’s defamation claims while allowing other counts to proceed. The judge also expressed skepticism as to whether a liquidated damages provision in the nondisparagement agreement could be enforced, given a paucity of evidence that Toray suffered any harm from the book.

The 22-page decision is Toray Plastics (America), Inc. v. Paknis, Lawyers Weekly No. 52-060-22. The full text of the ruling can be found here.

‘Completely at odds’

Paknis’ attorney, John A. Mangones of Boston, said he believed the record warranted summary judgment on all Toray’s claims but was confident his client would prevail at trial on those that survived.

In particular, Mangones emphasized that the non-disparagement clause did not prohibit Paknis from sourcing any material from his experience at Toray; it simply prohibited him from writing anything that could reasonably be interpreted as derogatory.

Meanwhile, he said, the book does not mention the company or any of its individuals by name. And while Toray contends that passages describing a “multinational conglomerate” where managers “drive fancy cars and live lavish lifestyles” referred to Toray, Mangones said such descriptors could apply to any large international corporation.

“There are simply no details in the book that would lead a reader to reasonably believe that a statement is referring to Toray,” he said.

At the same time, Mangones called the breach-of-nondisparagement claim “completely at odds” with Toray’s defamation claim.

“Because the book scrubs any identifying information, Toray seeks to prove that certain passages in the book refer to Toray because the events or circumstances described in those passages actually occurred or exist,” he said. “Simultaneously, Toray claims the exact same passages are defamatory, which requires that the statements be false. Toray cannot have it both ways.”

Toray’s counsel, Anthony D. Rizzotti of Providence, could not be reached for comment prior to deadline.

Nondisparagement clause

In 2005, Toray engaged Paknis, who had operated a leadership and consulting business for years, to develop a three-day seminar for its entry-level managers, which he delivered until 2015. Paknis apparently also consulted for hundreds of other institutional clients during that time.

In 2016, Paknis joined Toray, which has an office in North Kingstown, as a full-time member of its HR department.

Issues soon arose between Paknis and management that resulted in him being placed on administrative leave with an opportunity to resign.

Paknis elected to stay with the company but was terminated months later.

In June 2018, Paknis and Toray went to mediation to resolve potential claims arising from his termination.

At that time, Toray learned that Paknis had signed a contract to write “Successful Leaders Aren’t Bullies” during his leave.

In an agreement to release each other from liability, Toray and Paknis included a nondisparagement clause specifically addressing the book.

They also agreed that Paknis would pay Toray $55,000 for each violation of the clause.

In his book, which went on sale in September 2018, Paknis wrote about dysfunctional corporate cultures, describing examples of workplace bullying that he took from his years as a consultant.

According to Paknis, the examples represented compilations of his experiences and blended together details from different companies so as to remove any identifying information.

Toray, on the other hand, claimed that several current and former employees thought the book contained information about the company.

On Dec. 12, 2018, Toray sued Paknis in U.S. District Court for breach of contract and defamation.

In the complaint, Toray asserted 14 separate violations of the nondisparagement clause, adding up to $770,000 in liquidated damages. 

Both parties moved for summary judgment on all claims.

Questions for the jury

Smith found that neither party was entitled to summary judgment on the nondisparagement claim.

“A breach occurs if Paknis made statements which ‘reasonably could be construed to be derogatory or disparaging to Toray,’” the judge said. “Thus, while it is perhaps unnecessary that a reader with no knowledge of Toray or its operations recognize the company, there must be some identifiable connection between the statement and the company; or, in other words, it must be reasonable to construe the statement to be about Toray. On this point, the Court finds that there are genuine issues of material fact which preclude summary judgment for either party.”

Still, Smith said, even if Toray were to succeed on that claim, “serious questions remain regarding the enforceability of the liquidated damages clause.”

Specifically, there was no evidence in the summary judgment record suggesting that Toray lost profits, suffered reputational harm with clients or in the business community at large, or lost employees as a result of the book, Smith said.

“To be sure, and in line with the reason for such clauses, Toray’s injury here is likely difficult to quantify,” Smith continued. “But it is also plausible that a jury will find that Toray has suffered no damages resulting from the publication of the Book, and in that case, the liquidated damages clause may well be unenforceable as a matter of law.”

Turning to Toray’s defamation claims, Smith observed that three of the allegedly defamatory statements in the book either expressed Paknis’ subjective views about “bully” managers and bullying culture or contained factual assertions that could not be construed as injuries to Toray’s reputation, even if false and about Toray.

“[T]hose statements are not actionable,” Smith wrote, granting summary judgment with respect to the statements.

At the same time, Smith said, some passages referred to “flagrant” safety violations, increased physical accidents, intentional destruction of company equipment to undermine other employees, and illegal behavior by managers or executives of a certain company.

Similarly, other passages suggested that executives of a particular company colluded with or ignored troubling behavior by a certain manager while employees who reported such behavior suffered retaliation, Smith said.

Such statements, “if false and concerning Toray, could be capable of defamatory meaning,” Smith wrote. 

“For this latter group, there are material issues of fact as to two critical elements: (1) falsity; and (2) whether the ordinary reader understands the statements to ‘concern’ Toray,” the judge said. “Consequently, these questions are for a jury to decide.”

Addressing Paknis’ assertion that the defamation claim was not viable because Toray had not provided evidence of harm, Smith reemphasized that, according to the record, some Toray employees read the book and believed certain passages could have referred to the company.

“While evidence in the record on purported damages perhaps barely scrapes by a summary judgment challenge, whether this evidence amounts to harm to Toray’s reputation is another question better suited for a fact finder,” he said.