Articles Posted in Workplace Defamation

A former bank teller’s defamation and wrongful termination action against Wells Fargo, filed in the Western District of Virginia, has been decided in Wells Fargo’s favor. Judge Samuel G. Wilson granted the bank’s motion for summary judgment due to the failure of the teller to make a coherent, factual showing that the bank was at fault, or that the alleged defamatory statements were false.

The teller, Adrienne Sewell, was terminated for violating the bank’s policies and procedures. Wells Fargo rules limited the amount of cash tellers could retain in their cash drawers. To stay below the maximum, sellers would “sell” cash to a second teller, record the transaction electronically then deliver the cash in person. On several occasions, teller Adrienne Sewell and others failed to physically move the cash, thereby misstating their balance sheets and having too much cash in their bank drawers. At the end of the day, they would “buy back” the cash, thereby righting the balances, but the practice violated bank rules. The bank investigated her activities, gathered documents, and obtained admissions from Sewell and others that they had violated bank policy and procedure.

Sewell sued Wells Fargo for defamation, breach of contract, and wrongful termination. She argued the bank defamed her by telling others she had falsified documents and had violated bank procedures.

Defamation claims arise frequently in the employment context. Your boss and your co-workers are subject to the same libel and slander laws that apply outside the workplace, and they need to be careful not to exceed the boundaries of fair criticism. The employment relationship, however, does present special challenges to a contemplated defamation lawsuit. As any good defamation lawyer will tell you, a primary obstacle in establishing defamation liability in the employment context is the existence of qualified privilege.

Workplace defamation suits often involve statements made during performance evaluations, tenure review, or employee terminations. These statements will often be deemed privileged, as a limited privilege applies to communications made in good faith on any subject matter in which the person communicating has an interest, or with reference to which he has a duty if made to another person having a corresponding interest or duty. Performance evaluations, tenure reviews, and employee terminations all typically involve situations where it is necessary or expected to make statements about another individual that could potentially affect another’s professional standing or reputation.

The protection offered by qualified privilege can be lost, however, if it is abused. If statements are made to a third party having no business hearing the information, they lack the requisite “corresponding interest or duty” and the privilege may be lost. Similarly, the qualified “interest or duty” privilege can be defeated if the plaintiff shows the defamatory statements were made with malice.

Judge Jane Marum Roush of the Fairfax Circuit Court has allowed Dr. Adel Kebaish to amend his complaint against Inova Fairfax Hospital to include four additional statements claimed to be defamatory. Judge Roush had previously found the alleged statements non-actionable but was persuaded by the plaintiff’s attorneys to partially reconsider her earlier ruling.

Dr. Kebaish was an orthopedic and spine trauma surgeon at Inova Fairfax Hospital. Dr. Kebaish claims that Inova and several of its doctors and physician assistants defamed him and that Inova terminated him for objecting to substandard care and fraudulent billing practices. He filed a complaint against Inova, one of its administrators and ten of its doctors and physician assistants alleging causes of action for defamation per se as well as other business torts. The defendants demurred on various grounds.

The court reviewed each of the allegedly defamatory statements in the complaint and agreed with Inova that most of the statements were either statements of opinion, not actionable as defamation, or made by persons who were not named as defendants. To successfully state a claim for defamation in Virginia, a plaintiff must show that the ER.jpgdefendant published a false factual statement that harms the plaintiff or the plaintiff’s reputation. Expressions of opinion are constitutionally protected and are not actionable as defamation.

Employment reviews often lead to libel allegations due to the fact they often contain harmful statements perceived by the employee to be false and defamatory. In most cases, however, even if the performance review contains a false statement, no defamation claim will lie because (1) statements of opinion are not actionable under Virginia law (or the United States Constitution); and (2) communications between people on a subject in which they both have an “interest or duty” are deemed privileged.

The Fourth Circuit Court of Appeals recently considered–and rejected–the defamation claims of Claudine Nigro, a former medical resident at the Shenandoah Valley Family Residency Program. After a semiannual performance review in 2009, Nigro was notified that she would not be renewed for another year of residency with the program. measuring_tape.jpg Nigro appealed this decision, but then resigned a few months later. She brought an action against the residency program’s director and the hospital itself, claiming that she was defamed during the appeals process by the director of the program, who discussed her perceived shortcomings with the faculty appeals committee, and by employees of the hospital, who reported Nigro for allegedly recording her conversations with physicians.

Nigro alleged the Program Director defamed her with statements he made in various meetings and notices, including “There has been no evidence of improvement or intention to improve in weak areas,” “There is no change in apathetic/disinterested approach or demonstrated interest in learning despite 3-4 months of discussion and coaching,” and “There is faculty consensus that [Nigro] may be suffering from depression or poor career choice.” The court found that all the alleged statements were either opinion, factually true, not defamatory, or were protected by the qualified privilege applicable to statements made to another with a corresponding interest or duty.

When several law firm clients were vocally unhappy about the firm’s work product and billing practices, and expressed their views to a Virginia legal newspaper, the firm slapped them with a defamation suit in Richmond federal court. However, finding the allegedly defamatory statements to be subjective statements of opinion, the court dismissed the claim.

The Virginia law firm of Cook, Heyward, Lee, Hopper & Feehan, P.C. (“Cook Heyward”) entered into a contract for legal services with Trump Virginia Acquisitions LLC, Trump Vineyard Estates, LLC, and The Trump Organization, Inc. Cook Heyward provided the Trump Entities with invoices itemizing fees and costs over the course of the representation. The Trump Entities requested Cook Heyward to reformat the invoice but did not object to the amount billed, and they continued to request legal services from Cook Heyward.

After a second updated invoice, the Trump Entities indicated that they had no problem with the quality of the legal work, but thought the bills were “too high” and suggested Cook Heyward reduce its fees by approximately seventy percent. Cook Heyward informed the Trump Entities that they intended to file a motion to withdraw as counsel. trump.jpgThe Trump Entities asked Cook Heyward to reconsider, then informed them that they “should expect very bad publicity” regarding their withdrawal as counsel. After repeated requests for payment, Cook Heyward filed a motion to withdraw which the court granted.

The elements of a defamation claim in Virginia are (1) publication, (2) of an actionable statement and (3) the requisite level of intent. A statement regarding a person’s professionalism may constitute defamation per se (meaning the plaintiff need not prove actual damage to reputation) if it implies that the person is unfit to perform the duties of his job, lacks integrity in performing those duties, or if it would tend to “prejudice” the plaintiff in his profession. Fairfax Judge Robert J. Smith, in a detailed opinion, recently made clear that to survive demurrer, a plaintiff must also state the exact words alleged to be defamatory, and must show that the defamation occurred in a non-privileged setting.

In Tomlin v. IBM, three former IBM employees brought defamation claims against IBM and five individuals. IBM received an anonymous letter alleging that Ms. Tomlin acted unethically by hiring her brother, Mr. Tomlin. After an investigation, IBM terminated the employees. Plaintiffs claimed that IBM and the individual defendants made the following false and defamatory statements to IBM colleagues: that Ms. Tomlin acted unethically in hiring her brother and that she and Mr. Tomlin and plaintiff Williams conspired to cover up the unethical hiring; that Mr. Tomlin falsely claimed to have certain skills in his job application and did not meet the minimum qualifications for his consulting position; and that Mr. Williams submitted a fraudulent hiring form regarding Mr. Tomlin. Plaintiffs alleged that defendant Ms. Minton-Package told IBM employees that Ms. Tomlin was fired because she had hired her brother and tried to “cover it up.”

Although a plaintiff does not need to plead specifics such as the identity of the speaker and other details surrounding purportedly defamatory statements, the complaint must contain the exact words spoken or written. Tomlin’s complaint, however, merely alleged the general nature of the defamatory statements; only the statements imputed to Ms. Minton-IBM_mouse.jpgPackage contained exact words. The court found that the plaintiffs failed to plead the defamatory statements with sufficient particularity except as to Ms. Minton-Package, and it proceeded to examine publication only as to her.

Workplace defamation suits can result in high damages awards. A former pilot and federal flight deck officer (FFDO), William Hoeper, successfully sued his former employer, Air Wisconsin, for defamation after one of its managers, Patrick Doyle, reported Hoeper to the Transportation Security Administration (TSA) as a potential threat to airline security. Last month, the Supreme Court of Colorado, applying Virginia law, upheld a $1.4 million jury verdict against Air Wisconsin.

Hoeper had been taking a test to fly a new plane. According to test administrators, Hoeper ended the test abruptly, raised his voice at the administrator, and used profanity. Afterwards, while Hoeper was waiting for his flight home, Doyle called TSA to report that Hoeper may be carrying his government-issued FFDO firearm and that he was concerned about Hoeper’s mental stability because Hoeper had been terminated that day.

When a plaintiff alleges defamation involving a “matter of public concern,” the defendant is entitled to First Amendment free speech protection unless the plaintiff can demonstrate that the statement was false and made with actual malice. Actual malice is present if the statement was made by the defendant with (1) knowledge of the statement’s falsity or (2) reckless disregard as to the AW plane.jpgstatement’s falsity. However, even before the plaintiff presents his case, an airline defendant may be able to avoid liability altogether under the Aviation and Transportation Security Act (ATSA), which provides immunity from civil suits to “an air carrier who voluntarily discloses any suspicious transaction relevant to certain aircraft security statutes.” If the disclosures are made with actual knowledge or reckless disregard as to the statement’s falsity, however, ATSA immunity is lost and the plaintiff can proceed to demonstrating that a statement was defamatory.

Getting fired or laid off is hard enough without your boss trashing your reputation to your co-workers. I receive many calls from prospective clients interested in pursuing their former employer for defamation. Virginia employers, however, have a lot of leeway in what they can say about an employee being considered for termination before they will be liable for slander or libel. Virginia recognizes a qualified privilege against defamation claims where statements by an employer are made in connection with discharging that employee. To overcome that privilege, a plaintiff must prove common law malice by clear and convincing evidence.

Consider the recent Hanover County case of Koegler v. Green, decided on September 1, 2009. Carl Koegler sued his former employer, the Richmond-East Moose Lodge, as well as several of his former co-workers and employers, for defamation. The defendants demurred (i.e., moved to dismiss the case), citing the qualified privilege, and the court agreed with them and dismissed the case. The court emphasized that defamation claims against employers in Virginia will not be permitted to go forward absent strong evidence of malice.

The facts, according to the allegations in the complaint, were as follows: Mr. Koegler was employed by the Lodge in various positions over the years. An audit conducted by the international parent company resulted in Mr. Koegler’s termination in 2008. Some of Walkaway.jpghis former coworkers and managers talked to other employees about the firing. The acting Governor of the Lodge, for example, held a staff meeting and discussed what had been said in board meetings about Mr. Koegler and that Mr. Koegler had been suspended for stealing money. Another officer of the Lodge sent emails describing Mr Koegler as having “questionable character.” Mr. Koegler sued for defamation and harm to his reputation.

Most Virginia employers these days are careful to avoid using defamatory language when terminating employees. They know that defamation actions (i.e., lawsuits alleging libel and/or slander) are best avoided by responding to inquiries from other employers by identifying an ex-employee’s dates of employment and position held, but little else.  Although “truth is a defense” (statements about an employee will not be defamatory if they are true) and an employer usually has a qualified privilege to make statements that arise out of an employment relationship, no employer wants to get sued by a disgruntled ex-employee and employment lawyers are constantly thinking up new theories of employer liability.

One recent theory that has gained a following in certain states is based on the so-called “compelled self-publication” doctrine.  Virginia, however, is not one of those states, according to a memorandum opinion issued on May 6, 2009, by a federal court sitting in Richmond.

Here’s how the theory works.  First, to bring a claim for defamation in Virginia as well as in most other states, a plaintiff must allege not only a defamatory statement made with theDefamation.jpg requisite intent, but that the statement was “published” (i.e., made) by the defendant to a third party.  The idea behind “compelled self-publication” is that even if a careful employer does not publish the reasons for an employee’s termination to a third party, merely having a false, pretextual justification for the termination in the employee’s personnel file should make the employer liable for defamation because it somehow compels the discharged employee to tell prospective employers the reasons he or she was fired.  

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