Before You Accuse Me Dep’t: Alleging Wrong Employee Stole Computers Costs Company ‎Over $2M In Malicious Prosecution Damages

| William A. Schreiner, Jr.

So maybe Clyde Bennett’s story isn’t quite as compelling as “The Fugitive” – the 1960s- era TV show and 1993 movie about a doctor wrongfully accused of killing his wife who has to go on a manhunt for the real killer, all the while being pursued by police. 

But a jury in federal court in Virginia found the wrongful allegation that Bennett had stolen computers from his employer pretty compelling.  Compelling enough to award him $1.7 million in compensatory and $350,000 in punitive damages when Bennett sued his employer for malicious prosecution.  And just last week, the Fourth Circuit Court of Appeals affirmed the jury’s decision.  My colleague Andrew Torrez noted the decision last week, primarily because the verdict is unusually high for a case like this.  But it bears some more in-depth review. 

Plaintiff Clyde Bennett’s story gives rise to the malicious prosecution award.  Bennett worked in R&L’s warehouse.  R&L, as a freight forwarder, basically offloaded trucks filled with goods of all types and reloaded the goods onto other trucks.  In one month in 2006, thirteen laptops and three desktop computers went missing from all of these shipments.  R&L called in its chief internal investigator: McGinnis, a former police-officer-turned-truck-driver (who also became a defendant in Bennett’s suit). 

At this point, the Fourth Circuit’s opinion reads like the script from the worst episode of “Dragnet” you’ve ever seen.  McGinnis essentially decides he’s going to get one of the warehouse employees for the computer theft, and isn’t too concerned about which employee, or how he does it.  He interviews Bennett – who denies knowing anything about the thefts – but McGinnis notes he “had a bad feeling” Bennett wasn’t being truthful.  McGinnis browbeats other employees – threatening several with arrest and telling one that McGinnis would “pursue the matter until I could prove his involvement and have [the employee] placed in jail.”  Under the pressure, several employees start pointing figures at others – including Bennett.  McGinnis feeds on this finger-pointing, telling two of the employees stories that implicate Bennett – and then using their affirmations of these stories as further evidence (curiously, one of these employees just happened to have one of the stolen computers at his house – and produced it to McGinnis – but claimed he bought it from Bennett).  Ignoring the criminal backgrounds of several of these employees, the disputes in their varying accounts about how the theft of the computers worked, as well as their motives to pin the theft on others, McGinnis ultimately called for the arrest and dismissal of Bennett and another employee, Lowrey. 

Both were indicted on grand theft charges.  When Lowrey failed to show up for his own trial, and to be a witness at Bennett’s trial, the charges against Bennett were dropped.  Despite all of McGinnis’ “detective work,” Lowrey was the only witness the prosecution could rely on in its case against Bennett – the others’ stories or backgrounds were too compromised to make their testimony useful evidence.

Bennett sued R&L and McGinnis for wrongful prosecution.  The jury sided with Bennett after a trial, and the judge denied the defendants’ motions to throw out the verdict, writing essentially that when McGinnis called for Bennett’s arrest, he was relying on the testimony of one lying employee and a lie that McGinnis had fed to another lying employee.  This meant, in the court’s view, that at the time of his arrest, “there was a lack of probable cause to believe that Bennett had committed a crime.”  This lack of belief supported the jury’s substantial award to Bennett.

The Fourth Circuit agreed, relying substantially on the trial court’s findings.  It added that the award – totaling over $2 million – was not excessive given the “grievous pecuniary and dignitary” harm inflicted on Bennett, who suffered trying to find work after the arrest and had to wipe out his retirement savings. 

The opinion tells a great story of a vigorous investigator pursuing the wrong path at almost every turn – and of ultimate redemption in the justice system.  The moral of the story, though, for companies and executives that have to deal with allegations of theft on the workplace is this: cross all your t’s and dot all your i’s before having an employee arrested.