The following is a post-arbitration memorandum I wrote for my Arbitration class. I represented the Defendant, Herbert L. “Peaches” Pitts. The case material can be found here.
| General Food Corporation Plaintiff v. Herbert L. “Peaches” Pitts Defendant | In Arbitration Before Nick Herman On the 9th Day of April, 2024 Via Zoom |
Defendant’s Post-Arbitration Memorandum
Index
A. Ana-Harm players did not violate the World Wide Dodgeball Federation (WWDF) drug policies 4
B. Pitts did not violate the World Wide Dodgeball Federation (WWDF) drug policies. 6
A. Mr. Pitts is not a public figure for the purpose of this controversy. 14
C. The controversy is not a matter of public concern. 16
A. General Food should be barred from recovery due to unclean hands. 17
Statement of Facts
Defendant Herbert “Peaches” Pitts is a renowned and highly successful dodgeball coach, best known for leading the underdog U.S. Exhibition Dodgeball Team to an improbable victory over heavily favored teams like Romania in the CY-3 Olympics. In fall CY-3, Pitts signed a lucrative endorsement deal with Plaintiff General Food Corporation to be the celebrity face of their Oaties cereal brand. The relationship was mutually beneficial for over a year.
However, in the summer CY-1, allegations surfaced that some players on Pitts’ professional team Ana-Harm, as well as the Olympic team, were using banned performance-enhancing drugs like EPO. A drug testing firm called Weetabix Labs conducted pilot tests that appeared to show EPO use by some unnamed Ana-Harm players.
General Food sent Pitts a letter on August 6th accusing him of moral turpitude and threatening to terminate his contract unless he disproved the doping allegations. This letter was leaked to the media.
On August 16th, Pitts appeared on a late-night comedy show, making jokes about the situation while denying he ever encouraged steroid use. A few days later, General Food terminated Pitts’ contract citing his failure to address their concerns and his comments on TV.
Around the same time, General Food’s CEO Melvin Killhogg made statements about Pitts being “guilty as hell of pushing dope” while speaking at an event. Subsequent official drug testing in March CY-1 by a firm called Mueslix Labs found no Ana-Harm players tested positive for EPO use under the league’s standards.
Argument
I. Pitts did not breach the contract because there was no moral turpitude alleged by General Foods.
In their August 6, CY-1, letter, Plaintiff General Food accused Defendant Herbert Pitts of “moral turpitude.” Ex. J-3. Specifically, General Food alleges that Mr. Pitts “encourage[d] of the use of illegal performance-enhancing substances by [his] players.” They cited allegations made by Ilsa Chockula and results from a low-sample anonymous pilot test by Weetabix Labs as the basis for their allegations. Ex. J-3.
On August 18, CY-1, General Food sent a follow-up letter accusing Pitts of breaching Sections (b), (c), and (d) of the Termination provision of the contract. Ex. J-4. The relevant sections provide that General Foods may terminate the contract if Pitts“(b) disparage[es] General Food, its officers, employees or representatives; (c) bring[s] discredit to the company through the [his] acts and/or omissions; (d) violat[es] drug policies established by pertinent sports regulatory organizations.” Ex. J-1.
A. Ana-Harm players did not violate the World Wide Dodgeball Federation (WWDF) drug policies
In their August 18, CY-1, letter, General Food alleged that Pitts violated the WWDF drug policy when results from a test by Wheetabix Labs displayed that two anonymous players from the Ana-Harm team tested over the allowable limit for EPO. Ex J-4. The WWDF’s drug policy states that for Synthetic EPO (erythropoietin), a minimum of two blood samples must be taken and that if HCT is over 60% the league automatically suspends the players; when HCT is above 50%, but below 60%, the suspension is at the discretion of the team. Ex. J-5.
It should be noted that the science regarding EPO testing is still being debated and is not conclusive. Even Wheetabix Labs’ memorandum, which was the foundation for General Food’s wrongful termination of the contract, states that there is a disagreement in the medical community regarding at what HCT level indicates potential synthetic EPO use. Exhibit G-1 (“Most anti-doping experts view readings in excess of 50% to indicate EPO use.” Most does not mean all).
Among the three anonymously tested players mentioned in the Wheetabix Labs’ memorandum, only one player’s test results barely reached the level eligible for an automatic league suspension. Exhibit G-1 (Player A). The other two anonymously tested players did not violate the league’s rules. Exhibit G-1 (Players B and C).
Even though one player barely tested above the league’s limits, these tests were not official WWDF or World Anti-Doping Agency (WADA) tests. Wheetabix Labs’ memorandum “was intended to be a pilot for the pre-playoff testing process of all players in the league.” Exhibit G-1.
The Wheetabix Labs’ memorandum was also not intended to be released to WADA, the WWDF, Ana-Harm, Pitts, General Food, or the public. The document clearly states that it is “Confidential” and was addressed to Wheetabix Labs’ files, not an outside recipient. Exhibit G-1.
In contrast, the official tests conducted by Mueslix Laboratories found that no Ana-Harm players tested above the league’s 60% threshold. Ex. P-2. The Mueslix tests were not confidential: the memorandum was not marked confidential; the results were submitted to the WWDF; and, the results were submitted to Ana-Harm. Ex. P-2. However, it should be noted that even the official test results were not sent to General Food nor released to the public.
As such, General Food’s August 18, CY-1, letter claiming that Pitts, via his team, violated section (d) of the termination provision of their contract is false. See Attachment D. Mueslix Laboratories tests indicate that no Ana-Harm player violated WWDF drug policies and thus, General Food is in breach of the contract for improper termination.
B. Pitts did not violate the World Wide Dodgeball Federation (WWDF) drug policies
In their August 6, CY-1, letter, General Food alleges that Pitts encouraged his players to take synthetic EPO. Ex. J-3. During discovery and at the arbitration hearing, General Food failed to provide any evidence showing that Pitts either directly or implicitly directed or encouraged his players to take synthetic EPO. The only evidence General Food offered to support their allegation is the testimony of Ms. Ilsa Chockula.
Ilsa Chockula has demonstrated a clear personal bias and grudge against Mr. Pitts stemming from his Olympic victory over her Romanian team. Her allegations that Pitts promoted doping to his players were purely speculative and lacked any evidence to substantiate them. Chockula admitted she had no firsthand knowledge of Pitts actually encouraging steroid use. Her claims appear motivated by bitterness over the defeat and an attempt to disparage Pitts’ coaching accomplishments out of resentment. Moreover, Chockula has her own credibility issues given the allegations of doping against players on the Romanian team she coached. Her testimony should be given no weight as her comments were simply unproven accusations borne of animosity rather than facts. Her lack of impartiality and direct knowledge render her an unreliable witness.
It was improper and bad faith for General Food to blindly believe the unsubstantiated rumors spread by a vindictive rival of Pitts with no knowledge of the matter. General Food has failed to prove that Pitts encouraged his players to violate WWDF drug policies. Thus, their assertion that Pitts violated section (d) of the termination provision of their contract is false.
Even expanding the scope of section (d) of the termination provision to include a broader reading of the language, Ilsa Chockula’s unsubstantiated claims do not indict Pitts on any charges of “moral turpitude” as General Food’s August 6, CY-1, letter claims.
“[Moral turpitude] includes anything done contrary to justice, honest, modesty, or good morals. Generally speaking, moral turpitude involves an act of inherent baseness in the private, social, or public duties which one owes to his fellowmen or to society, or to his country, her institutions and her government.”
State v. Mann, 317 N.C. 164, 169, 345 S.E.2d 365, 368 (1986).
Even if Ilsa Chockula’s unsubstantiated claims were true, which they aren’t, General Food has failed to demonstrate how they were in violation of his private, social, or public duties and how such violations cost Pitt’s “fellowmen[,] society, or to his country, her institutions and her government.” Id.Such false allegations are bad faith and are “ground for an action of slander.” Jones v. Brinkley, 174 N.C. 23, 25, 93 S.E. 372, 373 (1917).
1. Pitts did not disparage or discredit General Food, its officers, employees, or representatives through his acts and/or omissions
In their August 18, CY-1, letter, General Food asserted that Pitts violated sections (b) and (c) of the termination provision due to his comments on the Conan Barbarian Late Show. They also seek damages stemming from those comments. Specifically, General Food took issue with Pitts’ statement that he “never was much on breakfast cereal anyway. [He] kinda prefer[ed] cardboard” and how he referred to General Food’s President, Melvin Killhogg, as “the grand pooh-bah of Oatieville.” Ex. G-2. These comments did not disparage or discredit General Food, its officers, employees, or representatives and even if they did, they are protected by the First Amendment.
Whether a statement is disparaging “would depend upon [the statement’s] nature and the occasions upon which [it was] uttered.” Jenkins v. Hall, 52 N.C. 295, 299 (1859); see also Restatement (Second) of Torts § 563 (1977). Common sense requires that courts shall understand allegedly disparaging and discrediting statements as other people would. Kingsdown, Inc. v. Hinshaw, 2016 NCBC 16, 85.
Common sense makes it abundantly clear that Pitt’s statements on Late Night with Conan Babbarian were not meant to disparage or discredit General Food, its officers, employees, or representatives. As is clear to any viewer of the show, Late Night with Conan Babbarian is a comedy talk show. As was highlighted during the arbitration hearing, Mr. Pitts has a joking and comedic public personality. The comments made by Mr. Pitts were intended to be and were received by the audience as jokes as evidenced by the prolonged laughter. See, Ex. G-2.
Alternatively, if Pitts’ comments are not considered comedic, they are still protected under the Freedom of Speech clause of the First Amendment of the U.S. Constitution and Article 1, Section 14 of the North Carolina Constitution.
The North Carolina Constitution proclaims that freedom of speech and of the press are two of the great bulwarks of liberty and therefore shall never be restrained. N.C. Const. art. I, § 14. The state supreme court has deemed the foregoing section a direct personal guarantee of each citizen’s right of freedom of speech. . . . For a freedom of speech claim to be properly advanced, the speech at issue first must involve a matter of public concern. Second, such protected speech or activity must have been the motivating or but for cause for the plaintiff’s discharge or demotion. Resolution of these issues is a matter of law for the court.
Evans v. Cowan, 132 N.C. App. 1, 8-9, 510 S.E.2d 170, 175 (1999) (internal citations omitted) (listing the elements for a claim of freedom of speech violation in an employment termination case). “The causal nexus between the protected activity and retaliatory discharge must be something more than speculation.” Id. at 11, 510 S.E.2d 177.
In Evans v. Cowan, Plaintiff Gloria Evans alleged that she was fired from UN-Chapel Hill Student Health Services in regard to comments she made. Id. at 10, 510 S.E.2d 176. The Court of Appeals upheld the trial court’s granting of summary judgment against the Plaintiff. Id. at 11, 510 S.E.2d 177. However, distinguishing Evans from the case at hand, the Court of Appeals ruled against Evans for two reasons: the first is that she was considered to be an at-will employee and had no property interest in the contract, id. at 8, 510 S.E.2d 175; the second is that Evans’ speech that she claimed caused her to be fired was not a “matter[] of public concern”. Id. at 9, 510 S.E.2d 176.
The first reason from Evans is easy to distinguish; neither General Food nor Pitts asserted that the contract was an at-will contract. Pitts’ contract was for a stated duration and thus entitled him to a property interest in said contract. Attachment D. The second Evans factor is a catch-22 for General Food; if the false doping allegations are found by this arbitration to be a matter of public interest, then Pitts has a constitutional right to comment on the matter, but if not, then General Food’s President’s comments regarding Pitts are slanderous (more on the defamation claim below).
If determined that the false allegation of doping by the Ana-Harm team is a matter of public concern, coupled with the Pitts’ property interest in the contract, this arbitration should find that Pitts’ comments were protected by the Freedom of Speech clause of the First Amendment of the United States Constitution and Article 1, Section 14 of the North Carolina Constitution and that his termination was improper and a breach of the contract.
2. General Food’s CEO, Melvin Killhogg, intentionally and maliciously slandered Herbert Pitts with his comments at the Q & A Session at the Society of Chief Executives.
After General Food’s letter to Pitts had been leaked to the media, Killhogg attended a panel at the Society of Chief Executives. During a question and answering panel, Killhogg made comments that insinuated that Herbert Pitts was dishonest and untrustworthy. See, Ex. P-1. Killhogg bluntly stated that he wished he had never signed on Pitts, Ex P-1 (“If I had known what I know now . . . I would never have taken on Pitts or anyone else in an endorsement deal.”), and that Pitts is “guilty as hell of pushing dope.” Ex P-1. These comments are not only improper, they are defamatory and slanderous.
“In order to recover for defamation, a plaintiff must allege that the defendant caused injury to the plaintiff by making false, defamatory statements of or concerning the plaintiff, which were published to a third person.” Boyce & Isley v. Cooper, 153 N.C. App. 25, 29, 568 S.E.2d 893, 897 (2002). In North Carolina, “[t]he term defamation covers two distinct torts, libel and slander. In general, libel is written while slander is oral.” Kingsdown, Inc. v. Hinshaw, 2016 NCBC 16, 53.
In order to recover for defamation, a plaintiff generally must show that the defendant caused injury to the plaintiff by making false, defamatory statements of or concerning the plaintiff, which were published to a third person. This statement must be a statement of fact, not opinion, but an individual cannot preface an otherwise defamatory statement with “in my opinion” and claim immunity from liability.
Desmond v. News & Observer Publ’g Co., 241 N.C. App. 10, 16, 772 S.E.2d 128, 134 (2015). The statements must also cause injury to the Plaintiff (in this case Pitts). Dunn Holdings I, Inc. v. Confluent Health L.L.C., No. 17 CVS 9321, 2018 NCBC LEXIS 215, at *26 (Dec. 10, 2018). “Publications or statements which are susceptible of but one meaning, when considered alone without innuendo, colloquium, or explanatory circumstances, and that tend to disgrace and degrade the party or hold him up to public hatred, contempt, or ridicule, or cause him to be shunned and avoided are defamatory per se.” Id.Defamatory words must be “of such nature that the court can presume as a matter of law that they tend to disgrace and degrade the party or hold him up to public hatred, contempt or ridicule, or cause him to be shunned and avoided.” Flake v. Greensboro News Co., 212 N.C. 780, 786, 195 S.E. 55, 60 (1938).
II. General Food’s CEO, Melvin Killhogg’s, statements at the Q & A Session at the Society of Chief Executives are slanderous.
Melvin Killhogg’s statements were slanderous because they accused Pitts of “pushing dope” and not being an honest person. See, Ex P-1.
In Kingsdown, Inc. v. Hinshaw, Defendant Anne Ray brought a counterclaim asserting that co-defendant Eric Hinshaw defamed her in an interview where he stated that the claims against him, including but not mentioning by name, Ms. Ray’s, were “reckless.” Hinshaw, at 58. Ray, who had worked for Hinshaw and Kingsdown, Inc. claimed that Hinshaw’s statements were detrimental to her future employment. Id., at 64. Ultimately, the court ruled against Ms. Ray, finding that there was no defamation because Hinshaw’s statements did not name her specifically and because she could not prove that his statements were detrimental to her future employment. Id.; see Taube v. Hooper, 270 N.C. App. 604, 609, 840 S.E.2d 313, 318 (2020) (“In order for defamatory words to be actionable, they must refer to some ascertained or ascertainable person and that person must be the plaintiff. If the words used contain no reflection on any particular individual, no averment can make them defamatory.”); see also Lewis v. Rapp, 220 N.C. App. 299, 301, 725 S.E.2d 597, 600 (2012) (“In order to recover for defamation, a plaintiff must allege that the defendant caused injury to the plaintiff by making false, defamatory statements of or concerning the plaintiff, which were published to a third person.”).
The case at bar is distinguishable from Hinshaw because the two reasons the court ruled against Ms. Ray are inverse in the present facts. First, Mr. Killhogg specifically mentions Pitts by name in his comments. Ex. P-1 (“If I had known what I know now . . . I would never have taken on Pitts . . .”). Second, Pitts is able to prove that Mr. Killhogg’s statements were detrimental to his future employment. Melvin Graipnutz, President of Avivas Inc., stated in his deposition that Mr. Killhogg’s comments prompted him to reevaluate his company’s contract with Pitts; a process which ultimately led to that contract’s cancellation. Ex. J-2 (“Well, I made a phone call back to headquarters [after hearing Mr. Killhogg speak] and asked our Executive VP for Marketing to take a hard look at Mr. Pitts and the allegations against him . . . To the best of my recollection, I said that we have some cause for concern because of all the negative coverage of Pitts and we need to exercise caution before. committing to him.”). Furthermore, Mr. Killhogg falsely asserted and presented as fact that Pitts was guilty of encouraging his team to use synthetic EPO. Id.(“[Mr. Killhogg] basically said that had he known what he now knew about Pitts’ doping involvement he never would have signed him to do endorsements and put his picture on the Oaties box.”). As stated by Mervin Graipnutz in his deposition, he and the audience interpreted and believed Mr. Killhogg’s statements as truthful facts. Id.
Because Pitts can demonstrate that Mr. Killhogg’s statements were aimed directly at him and because he can demonstrate that he suffered injury from them, this arbitration should find that his statements were slanderous.
A. Mr. Pitts is not a public figure for the purpose of this controversy.
It should be noted that counsel for General Food failed to proffer a defense prior to the arbitration hearing that Herbert Pitts was a public figure and that Melvin Killhogg’s statements were thus protected by the First Amendment. Despite this, this arbitration should not sua sponte consider such a defense because while Pitts is the public face of Oaties, he is a private citizen in regard to this controversy.
“Under North Carolina law, an individual may become a limited purpose public figure by his purposeful activity amounting to a thrusting of his personality into the vortex of an important public controversy.” Boyce & Isley, P.L.L.C. v. Cooper, 211 N.C. App. 469, 479, 710 S.E.2d 309, 318 (2011); see also Gertz v. Robert Welch, 418 U.S. 323, 351 (1974). However, the key factor was whether or not the controversy was a matter of public concern. Neill Grading & Constr. Co. v. Lingafelt, 168 N.C. App. 36, 44-45, 606 S.E.2d 734, 740 (2005). “A matter is of public concern if when fairly considered it relates to any matter of political, social, or other concern to the community.” Mitchell v. Univ. of N.C. Bd. of Governors, 288 N.C. App. 232, 233, 886 S.E.2d 523, 525 (2023) “Individuals found to be limited-purpose public figures bear the burden of proving that alleged defamatory statements against them were published with actual malice in order to recover damages.” Gaunt v. Pittaway, 135 N.C. App. 442, 448, 520 S.E.2d 603, 608 (1999).
B. Pitts did not “purposeful[ly] . . . thrust[] his personality into the vortex of an important public controversy”
Pitts did not ask to have his contract improperly terminated; he did not ask to go from the face of Oaties to the face of the debate regarding Synthetic EPO use in the WWDF; nor did he ask to have the Wheetabix confidential memo, that he did not have access to or knowledge of, leaked to General Food. As established during the arbitration hearing, Pitts did not take any active or affirmative steps to initiate or engage in the controversy he found himself in. In fact, he been thrown under the spotlight when General Food’s letter mysteriously leaked to the press.
Pitts’s only willing action after being embroiled in this controversy was to defend his name on the Conan Barbarian Late Show. His public comments were only acknowledging that he did receive the leaked letter and stating that he “intend[ed] to fight these charges and defend [his] name.” Ex. G-2.
Such comments made, after the controversy had already embroiled him, could hardly be considered “purposeful activity amounting to a thrusting of his personality into the vortex of an important public controversy.” Boyce & Isley, PLLC, at 479, 710 S.E.2d 318.
C. The controversy is not a matter of public concern.
First, it should be noted that both the WWDF and General Food are private business enterprises; neither are government agencies. Internal controversies and inter-organizational discussions are generally not “of public concern.” See, Mitchell at 242, 886 S.E.2d 531 (finding that a letter to a fellow colleague intentionally made public by the author criticizing the recipient for racial bias did not deal with a matter of public concern); Holland v. Harrison, 254 N.C. App. 636, 646, 804 S.E.2d 205, 214 (2017) (an internal dispute among medical professionals about how to properly perform their job was not a matter of public concern); Merrill v. Winston-Salem Forsyth Cnty. Bd. of Educ., 250 N.C. App. 183, 791 S.E.2d 540 (2016) (a dispute concerning conditions of employment was not a public concern).
In Mathis v. Daly, 205 N.C. App. 200, 695 S.E.2d 807 (2010), the Court of Appeals held that the defendant’s bare statement that “speech [which] relates to issues that still are actively before the public eye, in the public dialogue and in the public courts” is “insufficient to establish that the alleged defamatory statements . . . addressed matters of public concern.” Id. at 205, 695 S.E.2d 811.
Throughout the arbitration hearing, General Food failed to demonstrate how Pitts’ involvement in the alleged doping incident was a matter of public concern. If they proved anything, it was that controversy was an internal affair. They failed to demonstrate how Pitts’ alleged breach of the termination clause affected the public as opposed to an internal dispute between the two parties. They failed to show how the leaked confidential trial tests performed by Wheetabix labs affected the public as opposed to being preliminary internal testing of procedures; they also failed to show how the internal policies of a private sports enterprise and the alleged violation of such internal procedures affect the public at large. In fact, all General Food offered was “bare statements” concerning “issues that still are actively before the public eye [and] in the public dialogue[.]” See Id. Such broad statements are “insufficient to establish that the alleged defamatory statements . . . addressed matters of public concern.” Id.
Therefore, this arbitration should find that Pitts was not a public figure for the purpose of this controversy and should be treated as a private citizen. Being treated as a private citizen, thus does not need to prove malice, injury, or damages as they are presumed under North Carolina law. Zagaroli v. Neill, No. 15 CVS 2635, 2017 NCBC LEXIS 103, at *47 (Nov. 7, 2017) (“When statements are slanderous per se, both malice and damages are presumed as a matter of law.”); rFactr, Inc. v. McDowell, No. 18 CVS 12299, 2020 NCBC LEXIS 144, at *18 (Dec. 8, 2020) (“In an action for slander per se, malice and damages are deemed presumed by proof of publication, with no further evidence required as to any resulting injury.”).
III. Damages
A. General Food should be barred from recovery due to unclean hands.
“The doctrine of clean hands is an equitable defense which prevents recovery where the party seeking relief comes into court with unclean hands.” Collier v. Bryant, 216 N.C. App. 419, 430, 719 S.E.2d 70, 79 (2011). In order to have clean hands, the party seeking relief must not have had a role in causing the dispute. Avery v. Walker, 8 N.C. 140, 159 (1820) (“A Complainant must come here with clean hands, and the Court will never, for him, separate the foul from the fair part of his case, for the sake of giving him relief.”) (finding that the Plaintiff’s actions could have prevented the dispute, but instead caused the dispute in question and thus did not entitle him to relief); see also Beam v. Wright, 224 N.C. 677, 688, 32 S.E.2d 213, 220 (1944) (“No polluted hand shall touch the pure fountain of justice; and those so entering the temple will be expelled with the anathema ‘Procul, O procul este, profani.”) (quoting Rock v. Mathews, 35 W. Va. 531, 534, 14 S.E. 137, 138 (1891)). The doctrine of clean hands does not require that the party’s conduct rise to the level of fraud; only that it was in bad faith. Brissett v. First Mt. Vernon Indus. Loan Ass’n, 233 N.C. App. 241, 256, 756 S.E.2d 798, 809 (2014) (reversing the trial court’s directed verdict on the issue of unclean hands because the doctrine of unclean hands is broader in scope than fraud); see also Bd. of Trs. v. Unknown & Unascertained Heirs of Prince, 64 N.C. App. 61, 67, 306 S.E.2d 838, 842 (1983) (Philips, J., dissenting) (arguing that the plaintiff appellee, in bad faith, incorrectly interpreted the intent of the charitable trust thus constituting unclean hands). However, “[t]he maxim applies to the conduct of a party with regard to a specific matter before the court as to which the party seeks relief and does not extend to that party’s general character” or unrelated acts. Creech v. Melnik, 347 N.C. 520, 529, 495 S.E.2d 907, 913 (1998).
A case that best illustrates this doctrine is Shaw v. Gee, No. 16 CVS 3878, 2018 NCBC LEXIS 109 (Oct. 19, 2018). In the case, Plaintiff Shaw and Defendant Gee were business partners but decided to separate. The two parties entered into a business separation agreement. After the parties had split, Shaw made a business decision that he knew would have a negative impact on Gee’s ability to perform pursuant to their Separation Agreement. Later, Shaw sued Gee for violating the Separation Agreement and for damages resulting from the breach. Shaw, 2018 NCBC LEXIS 109, at *1-7. The court upheld the jury’s verdict that Shaw’s hands were unclean and that he was not entitled to relief. Id. at *27.
As was established during the arbitration hearing, General Food was actively looking for reasons to terminate its contract with Pitts. First, they relied on unsubstantiated rumors peddled by a known rival of Pitts and someone known in the field as having an intense grudge against him. Second, they cited a confidential medical memorandum that in short fashion briefly and hurriedly discussed anonymous unofficial trial tests that were merely conducted to test developing procedures. Ex. G-1. Additionally, the August 6, CY-1 letter from General Foods to Pitts, outlining their grievances and citing the aforementioned material, was somehow leaked to the press.
In their August 16, CY-1 letter, General Food stated that Pitts “disparage[ed] General Food, its officers, employees or representatives; [brought] discredit to the company through [his] acts and/or omissions; [and] violat[ed] drug policies established by pertinent sports regulatory organizations.” Ex. J-4; Attachment D. All of the allegations in this dispute could have been avoided were it not for General Food’s unclean hands.
The alleged “violat[ion of] drug policies established by pertinent sports regulatory organizations” never materialized and was disproven. Compare Ex. G-1 to Ex. P-2. As stated by Wheetabix Labs in the confidential memo, their tests were not official, binding, or conclusive; rather, they were “a pilot test in accordance with newly established regulations of the WWDF.” Ex. G-1. However, the Mueslix Laboratories tests were official, binding, conclusive, and showed “no members of the [Ana-Harm] team tested positive for EPO.” Ex. P-2. This dispute could have been avoided if General Food had not relied on unofficial, confidential, and unprivileged memoranda as the basis for their rash decisions.
Therefore, if General Food had not sent their August 6, CY-1 letter to Pitts, and if that letter had not been leaked to the press, Pitts would not have appeared on the Late Show with Conan Barbarian and made those comments. Although the comments did not violate the termination clause, as discussed earlier, Pitts would not have felt compelled to defend himself and make those comments if General Food had not leveled accusations against him.
This dispute could have been avoided, or at best, never materialized, if General Food had exercised even the slightest due diligence or refrained from relying on unprivileged confidential memoranda and rumors spread by one of Pitts’ vindictive rival. Consequently, since General Food played a significant and preventable role in creating this dispute, they should be barred from recovery under the doctrine of unclean hands. Alternatively, General Food should be limited to recover only nominal damages. Sports Quest, Inc. v. Dale Earnhardt, Inc., 2004 NCBC 3, P53 (“Breach of contract alone does not entitle a plaintiff to damages beyond nominal or what the plaintiff incurred.”).
B. Herbert Pitts is entitled to compensatory damages for General Food’s breach of contract, defamation, and punitive damages
As has been shown in the previous section and above, Pitts did not breach his contract with General Food; rather, General Food breached the contract by terminating it with ten (10) days’ notice as opposed to the agreed upon 240 days’ notice. See Attachment D.
In a suit for damages for breach of contract, proof of the breach would entitle a plaintiff to nominal damages at least. But to entitle him to substantial compensatory damages he must both allege and offer evidence sufficient to satisfy the jury by the greater weight thereof that he has suffered substantial damage, naturally and proximately caused by the breach.
Bowen v. Fid. Bank, 209 N.C. 140, 144, 183 S.E. 266, 268 (1936). While “[p]unitive damages are generally not recoverable by a plaintiff in a breach of contract case”, Hilb Rogal & Hobbs Co. v. Sellars, No. 07 CVS 19339, 2010 NCBC LEXIS 76, at *22 (May 10, 2010),
[Defamation] requires proof of malice, and, if proven, may support an award of punitive damages. N.C. Gen. Stat. § 1D-15 lists malice as an aggravating factor. In addition, plaintiffs may in proper cases elect to recover either punitive damages under a common law claim or treble damages under N.C. Gen. Stat. § 75-16, but they may not recover both.
Kingsdown, Inc. v. Hinshaw, 2016 NCBC 16, 112.
Mr. Pitts has sustained damages stemming from this dispute. Quantifiably, Pitts was deprived of $600,000 (the compensation provision of the contract between General Food and Pitts provided that he would receive $75,000 a month) when General Food improperly terminated the contract on 10 days’ notice instead of the contractually agreed upon 240 days’ notice. See Attachment D.
However, Pitts has also suffered numerous unquantifiable damages. The leaked letter, Mr. Killhogg’s statements, and the platforming of Ilsa Chokula’s unsubstantiated rumors “induce[d] an evil or unsavory opinion of [Pitts] in the minds of a substantial number in the community . . . [that] tends to disparage [Pitts] in the way of his office, profession or trade.” Matthews, Cremins, McLean, Inc. v. Nichter, 42 N.C. App. 184, 188, 256 S.E.2d 261, 264 (1979). This, coupled with the pecuniary loss of both his contracts with General Food and Avivas, entitles Pitts to “special damages; [] damages for physical pain and inconvenience; [] damages for mental suffering; and []damages for injury to reputation.” Nguyen v. Taylor, 219 N.C. App. 1, 10, 723 S.E.2d 551, 559 (2012); see Tallent v. Blake, 57 N.C. App. 249, 254, 291 S.E.2d 336, 340 (1982) (“In the law of defamation, special damage means pecuniary loss . . . Furthermore, where it is essential that some special damage must occur before a claim is actionable, at least some special damage must have occurred by the time the action is instituted.”).
Conclusion
In order “to restore [Mr. Pitts] to his original condition, to give back to him that which was lost as far as it may be done by compensation in money”, Poor v. Hill, 138 N.C. App. 19, 35, 530 S.E.2d 838, 848 (2000), this arbitration should find that General Food breached its contracts with Pitts; that General Food’s CEO, Melvin Killhogg, defamed Pitts with his comments; and, that Pitts suffered special damages stemming from the loss of his contract with Avivas and from the damage to his reputation. Pitts requests compensatory damages in the amount of $600,000; special damages as the arbitrator deems just; punitive damages in accordance with either N.C. Gen. Stat. § 1D-15 or N.C. Gen. Stat. § 75-16, whichever is greater; reasonable attorney’s fees; and that the cost of this litigation be taxed to General Food.
We thank you for your time and consideration in this arbitration.
Jackson A. Lanier
Attorney for Herbert L. “Peaches” Pitts
640 Nelson Street
Durham, NC, 27707