Res judicata; vague use of disjunctive in stipulated administrative order means plaintiff can relitigate in defamation suit the truth of accusation that plaintiff diverted a regulated drug.

Shaddy v. Brattleboro Retreat, 2012 VT 67 (Burgess, J.)  

There were three prior proceedings: in the Windham Criminal Division, the Department of Labor and the Board of Nursing. The criminal charge was resovlved by a plea of nolo contendere, which “is not, in any civil or criminal proceeding, admissible against the defendant.”  V.R.E. 410(2).  Similarly, 21 V.S.A. § 1353, addressing the collateral import of unemployment compensation claims proceedings, provides that a determination of the employment security board "is not binding, conclusive or admissible in any separate or subsequent action between an individual and his or her present or former employer brought before [a] . . . court or judge of this state . . ."   We hold that under Rule 410(2) and § 1353, respectively, neither plaintiff’s criminal plea, nor the result of his unemployment compensation proceeding, can bar his defamation claim. 

Plaintiff  appeals the  dismissal of his complaint against the Brattleboro Retreat and certain employees of the Retreat.  Plaintiff, a former Retreat employee, brought claims of defamation, obstruction of justice, intentional infliction of emotional distress (IIED), and intentional interference with a contract, arising from the Retreat’s allegation that he unlawfully diverted regulated drugs from the medication room at its facility.  The only issue raised on appeal is  whether the court properly dismissed the defamation claim against the Retreat as res judicata, a question of law we consider de novo.    We reverse.  

We further hold that, under our decision in Trepanier v. Getting Organized, Inc., 155 Vt. 259, 583 A.2d 583 (1990), the order settling plaintiff’s Board of Nursing proceeding is too vague to constitute a final judgment on the merits and therefore  does not preclude plaintiff’s claim.  The crux of the issue is whether the truth of the Retreat’s accusation against plaintif was “fully litigated and resolved in favor of the Retreat." Assuming, without deciding, that a stipulated administrative judgment could have preclusive effect as argued by the Retreat, it must at least describe the factual and legal issues being resolved with enough specificity so as to precisely identify what those issues are.   

In this case, the stipulated order was too vague to resolve the issue of whether the Retreat’s allegedly defamatory statements are true.  Pursuant to the order, plaintiff agreed that the State could prove by a preponderance of the evidence that he “engage[d] in conduct of a character likely to deceive, defraud or harm the public which include[d], but [was] not limited to, diverting supplies, equipment, or drugs for personal or other unauthorized use” in violation of 26 V.S.A. § 1582(7).  (Emphasis added.)  This charge reads in the disjunctive and fails to specify plaintiff’s misconduct, so that plaintiff can be understood to admit to preponderant proof of diversion of “supplies” or “equipment” to the public detriment, but not necessarily to diversion of drugs.  Plaintiff's admission that the State could prove misconduct which just possibly included drug diversion does not establish the truth of the Retreat’s specific defamatory allegation that plaintiff thrice diverted a regulated drug.  In short, for want of specificity the order does not establish the truth of the Retreat’s allegations and thus does not preclude plaintiff’s defamation suit.  Accordingly, we reverse the trial court’s dismissal of plaintiff’s defamation suit against the Retreat and remand this matter for proceedings consistent with this opinion.