Plaintiff worked as a pain management physician at defendant Comprehensive Pain Management Center, Inc. (“CPMC”).  Plaintiff went on a military leave when his employment agreement with CPMC expired, and CPMC held his position open for him during his military service.  Upon his return to work, plaintiff was fired less than one month later when plaintiff was involved in an argument that resulted in plaintiff stating an expletive.  Plaintiff alleged that after his termination, CPMC told patients that he “was fired for ‘ethical reasons,’” “had low integrity,” and “had broken his contract by going on military leave.”  CPMC also allegedly made comments that inferred plaintiff had abandoned his patients.  Plaintiff filed suit against CPMC alleging, among other claims, that CPMC breached his employment agreement by failing to pay him an appropriate bonus, defamed him in connection with his employment, and violated the Uniformed Services Employment and Reemployment Rights Act (“USERRA”) for terminating his employment due to his military service. 

CPMC moved for summary judgment as to each cause of action by plaintiff.  The district court’s magistrate judge held that factual issues existed as to the interpretation of term “total receipts generated by the Employee” in the employment agreement, and therefore, summary judgment was not appropriate as to plaintiff’s breach of contract claims.  The court further held that plaintiff had set forth with sufficient specificity his defamation allegations and the court refused to find as a matter of law that CPMC’s alleged statements and abandonment inferences were not defamatory.  Additionally, the court concluded that whether plaintiff’s termination was discriminatory due to his military service was a question of fact for the jury to decide. 

To read the entire Memorandum Opinion, click here.

The plaintiff, James Suarez, was a former employee of the defendant Loomis Armored US, LLC (“Loomis”), an armored vehicle company that provides services to banks.  Suarez had been employed as a driver responsible for picking up and transporting money.  Loomis terminated Suarez’s employment on May 28, 2009, in a termination letter that listed various monetary shortages Suarez was allegedly responsible for, stating that “[t]he sole common denominator with access to the cash in each loss was James Suarez.” 

Suarez alleged that Loomis accused him of theft in order to terminate him for testifying at a coworker’s unemployment hearing.  Suarez also alleged that on September 1, 2009, one of his former coworkers told a Walgreen’s employee during a service stop that Suarez “stole a bunch of money” according to Loomis employees.  Suarez subsequently filed suit, alleging that a Loomis employee had made defamatory statements about him.  Loomis filed a motion to dismiss the complaint.

The court began its analysis by setting forth the standard for ruling on a motion to dismiss.  The court stated that if the complaint alleges, either directly or indirectly, each of the elements of a claim, it is sufficient to survive a motion to dismiss.  The court held that to state a defamation claim under Virginia law, a plaintiff must allege sufficient facts “to raise beyond a speculative level: (1) the publication of (2) an actionable statement with (3) the requisite intent.”  Suarez argued that the statement made by the Loomis employee was defamation per se because it imputed to him the commission of a crime and unfitness to perform his job duties, and was made with malice.  Loomis argued that the statement was subject to a qualified privilege because it was made to a person with a common interest in the subject of Suarez’s termination.  The court rejected this argument, stating that Loomis had not shown that the Walgreen employee’s job duties included discussing the termination of a Loomis driver.  Therefore, the court concluded that Suarez had properly pled a defamation claim and denied Loomis’s motion to dismiss.

A copy of the opinion can be found here.

Ms. Wynn was an employee and customer of Wachovia Bank.  In February 2008, she experienced problems withdrawing funds from her account.  A flag was placed on her account because a counterfeit check was cashed at a Wachovia branch in May 2007 using her driver’s license number.  A bank manager referred Wynn to a telephone representative, who then advised her to repay the money, face termination, or resign her position.  Wynn then contacted her supervisor, Dorothy Camp, but there are different accounts of what they discussed.  However, it is undisputed that Wynn used 47.5 hours of her annual paid time off (PTO), took additional PTO from February 1 to February 13, and remained absent from work on February 14^th, 19^th, 20^th, 21^st, and 25^th.

The Court quoted and relied on Wachovia policy signed by Wynn upon commencement of her employment with the bank.  These included documents titled: “Acknowledgment of At-Will Employment,” “Deposit Agreement and Disclosures for Personal Accounts,” as well as attendance and PTO policies.  These documents that Wynn read and signed proved relevant for the first two claims of wrongful termination and conversion of funds.

In addressing the termination claim, the court granted the defendants’ motion because plaintiff failed to assert that her termination violated Virginia’s public policy exception to at-will employment.  To have successfully pled a wrongful termination claim, plaintiff needed to argue for a public policy exception within the scope of race and gender.  However, plaintiff erroneously asserted that her employment was not at-will, but in practice “she was treated as an employee for whom cause was required to justify her termination.”  The court noted that plaintiff read and understood many employment documents stating that she was an at-will employee.

The conversion claim also went to the defendants due to the signed policies detailing attendance requirements.  Wachovia required that if employees took paid time off in excess of that which they previously accrued, the bank will debit the equivalent sum of money from their accounts.  The court reasoned that even as plaintiff was aware of this, assuming her supervisor’s statements were false, plaintiff’s reliance on them was still unreasonable.  Wynn alleged that her supervisor asked her to continue to take PTO until a decision was reached as to the counterfeit check.  Wachovia deposited $873.35 into Wynn’s checking account on February 28, 2008.  Then on March 6, 2008, the bank debited $844.97 from Wynn’s account to recoup a portion of the PTO that was taken, but not yet accrued.

On the third and final claim, the court sided with the plaintiff regarding defamation.  Plaintiff alleged that Wachovia defamed her based on two statements made by her supervisor: that she was terminated for “job abandonment” and she took unauthorized PTO from Wachovia.  Looking to three elements, the court noted that the absence of a physical copy of the email did not render Wynn’s claim a non-issue.  Furthermore, saying plaintiff “abandoned her job” had negative connotations.  The court added:

“Stating that Wynn abandoned her job is unlike stating a person resigned or quit, an act an individual has a right to do; rather, job abandonment asserts a person left ones employment without notice or following proper procedures.  This phrase, therefore, has a negative connotation on an employee as it portrays them as irresponsible and unprofessional.”

The court held the alleged statement was “necessarily hurtful” in its effect upon plaintiff’s business or trade because it negatively described the skills or character inherent to her customer service work.  Therefore, the defendants’ motion for summary judgment on the defamation claim was denied, while those for wrongful termination and conversion were granted.

Contributed by K.C. Osuji

The case involved statements made in a performance review that Hyland contended were defamatory.  In the first trial, a jury returned a verdict in favor or Hyland in the amount of $1,850,000.  On appeal, the Supreme Court of Virginia reversed because three of the five statements submitted to the jury were statements of opinion that could not be proved true or false. 

The first statement that the court found actionable was:

Cynthia lead [sic] [Raytheon] in the protest of the FAA’s evaluation selection process for the TSSC contract and through a difficult procurement for the TSA, both of which demanded her constant attention.  These visible losses created significant gaps in our strategic plans and in her business unit financial performance. 

The court concluded that this statement was actionable because it was subject to empirical proof.  The second statement that the court found actionable was:

Cynthia and her team met their cash goals, but were significantly off plan on all other financial targets including Bookings by 25%, Sales by 15.5%, and profit by 24%. 

The court noted that “whether the business unit missed its goals by the stated percentages is a fact that maybe proved true or false.”

On remand, the circuit court dismissed the case on a motion for summary judgment finding that the two statements were true.  The court, in its opinion, first set forth an excellent summary of defamation law in Virginia.  It then noted that in determining whether a statement is one of fact or opinion, a court may not isolate one portion of the statement at issue from another portion of the statement.  Reviewing the entire defamatory statement as a whole is important because, under Virginia law, defamatory statements may be made by implication, inference, or insinuation.

In its critical holding, the court stated that “only if a plaintiff unequivocally has admitted the trust of an allegedly defamatory statement, including the fair inferences, implications, and insinuations that can be drawn from that statement, may the trial judge award summary judgment to the defendant on the basis that the statement is true.”  It therefore remanded the case for a jury trial before the circuit court. 

This case is a very clear message to employers that accuracy is important in performance reviews and performance counseling.

The plaintiff presented an old $100 bill for payment at Target.  The store questioned the bill as counterfeit and the plaintiff left the store.  The next day, one of Target’s asset protection employees emailed a picture of the plaintiff from the store’s security camera to a loss prevention employee at another retailer.  The email stated that the person in the picture had attempted to pass a counterfeit $100 bill.  He intended that the recipient would forward the email onto a network of loss prevention specialists in South Carolina.  The email was so forwarded.

One of the recipients of the email was the plaintiff’s employer, who contacted the Secret Service.  The Secret Service interviewed the plaintiff, inspected the $100 bill, and affirmed that it was legitimate.

The plaintiff subsequently filed a lawsuit against Target alleging defamation and negligence in failing to properly train its employees and exercise reasonable care.  As noted above, the jury awarded the plaintiff $100,000 in compensatory damages and $3 million in punitive damages.

What is the lesson for employers here?  When making potentially derogatory communications about employees (or former employees), the people receiving the communication should be those who have a business “need to know” the information and the subject matter of the communication should be limited to information that is necessary and relevant to that “need to know”.  Failure to put constraints on the communication may result in the employee’s defamation claim going to a jury.

In this case, Target asserted a “qualified privilege” to the defamation claim.  They claimed that the person sending the email had an interest or duty in reporting the issue.  Assuming the situation fell within the privilege, the plaintiff would then have to present evidence to show that the privilege was abused.  This inquiry would look at whether the defendant acted in good faith in making the statement, whether the statement was properly limited in its scope, and whether the statement was sent only to the proper parties.  (These are the factors under South Carolina law.  They may be different in other jurisdictions, but the general privilege analysis tends to be the same.)  In ruling on Target’s motion for summary judgment to dismiss the claims before trial, the court concluded that a reasonable jury could find that the language of the email was not properly limited in its scope and that the distribution of the email to the entire loss prevention group was beyond the scope of people with a legitimate need to know the information.

This is relevant to employers because the same issues come up in defamation claims brought by employees.  For example, an employee is fired for stealing.  An email is sent around the company advising everyone of that fact.  In a subsequent defamation lawsuit, the employer will argue that the email was subject to the qualified privilege, and the employee will argue that the employer abused the privilege.  Therefore, as noted above, when making potentially derogatory communications about an employee (or former employee) be sure to act in good faith in making the statement (certainly try to avoid language suggesting ill will towards the person), keep the statement properly limited in its scope, and make the communication only to the proper parties with a business “need to know” the information.

A news story about the verdict is here.  The judge’s opinion denying Target’s pretrial motion for summary judgment can be found here.

Hat tip to Overlawyered.com for a post on the case.

The VLW Blog reports:

“Cynthia Hyland had been with defense contractor Raytheon Corporation for 21 years and served as a senior vice president prior to being fired in 2003 after the business unit she led lost money. In 2005, a Fairfax County jury awarded Hyland $3.5 million in a suit alleging the company president made defamatory remarks in Hyland’s performance evaluation.

Fairfax Circuit Court Judge Arthur Vieregg reduced the $2 million punitive damage award to the statutory cap of $350,000, and the case went up on appeal.

In March 2007, the Supreme Court of Virginia reversed Hyland’s $1.85 million award, saying that only two of the five allegedly defamatory statements cited by Hyland could support the jury verdict. The justices sent the case back for another look at the factual accuracy of statements relating to Hyland’s role in the bidding process for two government contacts and her team’s being “off plan” on their financial targets.

Last month, Vieregg granted summary judgment for Raytheon and its president in Hyland v. Raytheon Technical Services, saying Hyland admitted that she oversaw or was the project manager for the two government contracts at issue and was responsible for identified financial losses.”

One lesson for employers to take from this case is to be sure that supervisors understand that performance evaluations need to be truthful.  While Raytheon ultimately escaped liability for defamation here, untruthful statements made in a performance evaluation with actual malice can result in liability for defamation.

The district court dismissed the defamation claim on summary judgment and the court of appeals affirmed.  Citing North Dakota law, which makes communications regarding proposed or threatened judicial proceedings privileged from defamation claims, the court found that the in-house attorney’s letter was privileged because it was in response to a letter referring to things such as a “prima facie case,” “remedies,” and “actions against KEM.”

Although escaping a defamation claim based on a privilege is certainly the preferred route, this decision is a reminder to all who document employee terminations that the documentation must be truthful.