Contel verdict reversed judge orders new trial


A federal judge has reversed an $8.5 million jury verdict against Contel Corp. and a subsidiary, and has ordered a new trial on defamation claims by two former company officials who were fired in 1987.

The decision, issued Monday by Judge Paul V. Niemeyer, became available yesterday in U.S. District Court in Baltimore.

Niemeyer, now a 4th U.S. Circuit Court of Appeals judge, wrote the opinion because he presided over the four-week trial last spring. Senior Judge Herbert F. Murray has been assigned to handle the retrial.

The case stems from remarks made by top Contel officers in two speeches to company officials, and in articles in Business Week and Communications Week magazines, about the time that William P. Kamachaitis, president of Contel Federal Systems Inc., and Thomas M. Hasse, a Contel Federal Systems vice president, were fired.

Kamachaitis and Hasse, both of Montgomery County, claimed in now-consolidated lawsuits that Contel Corp.'s founder and chairman, Charles Wohlstetter, defamed them in a speech to company officials in Virginia by saying the two were fired because they "did not fit the [company] pattern . . . [of] honesty and decency."

The plaintiffs also claimed that other Contel officials destroyed their professional reputations by blaming them for a $14 million loss to the company, low employee morale and the exodus of some 400 employees in one eight-month period.

That claim is partly based on remarks made by Don Weber, Contel's president and chief executive, in the magazine articles and at a meeting of high-level Contel officials in New York.

Weber said Kamachaitis had "lost his troops" because he was an ineffective manager, and said he was fired because of the high employee turnover and "reported drinking."

Contel claimed that the officers' remarks were merely opinion, that Kamachaitis and Hasse failed to prove they suffered actual injury from the remarks, and that the jury awards exceeded damage cap limits set by state law in Maryland and Virginia.

Niemeyer, in his wide-ranging decision:

* Reversed the trial jury's $4.5 million damage award to Kamachaitis and reversed the jury's $560,000 breach of contract award tied to the company's refusal to pay him a pension.

* Reversed the jury's $3.5 million damage award to Hasse for the defamation.

* Left intact the jury verdict in favor of Contel on Hasse's wrongful termination claim. Hasse alleged that he was fired for refusing to participate in bribery and contract fraud demanded by other company officials.

* Said he erred on jury instructions regarding defamation damages and granted Contel's motion for a new trial on the plaintiffs' defamation claims.

But the judge noted that Wohlstetter was "unnecessarily insulting," and may have acted with malice, in his Virginia speech, which could lead another jury to award defamation damages.

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