Sticks and stones may break my bones, but words can destroy my reputation

An overview of defamation claims, especially defamation by employers against employees

2014 June

“The worst thing that can happen to a man is to lose his money, the next worst is his health, the next worst his reputation.”

— Samuel Butler

For employees, having false, negative statements made about them can be as damaging as losing their job. In California, a body of defamation law exists to protect an employee’s reputation and to provide civil liability for the publication of false, negative statements.

Defamation may consist of either libel or slander. (Civ.Code, § 44.) Libel is “a false and unprivileged publication by writing, printing, picture, effigy, or other fixed representation to the eye, which exposes any person to hatred, contempt, ridicule or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation.” (Civ. Code, § 45.) Slander involves “a false and unprivileged publication, orally uttered,” which either charges a person with a crime, loathsome disease or want of chastity, or “[t]ends directly to injure [any person] in respect to his office, profession, trade, or business, either by imputing to him general disqualification in those respects which the …occupation peculiarly requires, or by imputing something with reference to his… profession, trade or business that has a natural tendency to lessen its profits.” (Civ. Code, § 46(3).)

Where the defamation is clear without the need of any explanation, it is considered defamation per se, and damages are presumed. (Contento v. Mitchell (1972) 28 Cal.App.3d 356, 358 [“in an action for damages based on language defamatory per se, damage to the plaintiff’s reputation is conclusively presumed and he need not introduce any evidence of actual damages in order to obtain or sustain an award of damages.”].) Where the defamation is not per se, and some explanation is needed to show why the statement was defamatory, the plaintiff is required to allege and prove that he or she suffered special damages, such as harm to reputation, shame or economic damages. (Civ. Code, §§ 45, 48a(4).)

Pleading defamation

In pleading defamation, a plaintiff should allege (a) a publication, (b) that the published statement is false, (c) that the published statement is defamatory, (d) that the published statement is not privileged or was motivated by malice and (e) that the statement has a natural tendency to injure, or caused special damage. (Taus v. Loftus (2007) 40 Cal.4th 683, 720; Lundquist v. Reusser (1994) 7 Cal.4th 1193, 1202; CACI 1700-1705.) Note that it is the defendant’s burden to prove that a particular statement is privileged, but the plaintiff’s burden to prove the statement was made with malice, in order to overcome a claimed conditional privilege. (Lundquist v. Reusser, supra, 7 Cal.4th at 1203.) Privileges and malice are discussed in greater detail later in this article.

One question that often arises is the level of specificity needed to plead a defamation claim. It is not uncommon for a defendant to demur where a plaintiff has not specified the name of the individual to whom the defamatory statement was published. In opposing such a demurrer, the plaintiff should point out to the court that the defendant has “confused the rules of pleading with the rules of evidence.” (Semple v. Andrews (1938) 27 Cal. App.2d 228, 233 [drawing a distinction between what facts are necessary to plead a cause of action for defamation and what facts the plaintiff would ultimately need to prove at trial].)

Several courts have rejected the argument that a complaint for slander must specify the persons who heard the defamatory statements. For example, in Schessler v. Keck, the court of appeal held that the trial court had erred in sustaining a demurrer to a cause of action for defamation where the complaint did not specifically identify the individual who heard the defamatory statements, but rather pled that the statements were made “at various times and places to numerous persons.” (Schessler v. Keck (1959) 125 Cal.App.2d 827, 835-836.) The court explained that “less particularity is required in the allegations of the complaint where, from the nature of the matters alleged, the adverse party has a knowledge of the facts superior to the party pleading them.” (Id. at 835-836; Okun v. Superior Court (1981) 29 Cal.3d 442, 458.)

Thus, while it is best to put as much specificity as possible in the complaint, the failure to do so should not be fatal. Defendants will have the opportunity during discovery to obtain greater detail about what was said, by whom and to whom.

It should also be noted that different standards apply depending on whether the plaintiff is a private figure or a public figure, whether the published statements involve matters of public concern or matters of private concern, and whether the defendant is a media defendant or a non-media defendant. The types of differences include who bears the burden of proving whether the statement at issue is true or false, and whether and how much malice must be proven. For example, in matters involving private plaintiffs and matters of private concern, it is the defendant’s burden to prove that the statement at issue is false. In such cases, truth is a defense. (Moyer v. Amador Valley Joint Union High School District (1990) 225 Cal.App.3d 720, 724, n. 2; CACI 1720.) However, where the plaintiff is a public figure or where the published statement involves matters of public concern, it is the plaintiff’s burden to prove that the statement was false. (Nizam-Aldine v. City of Oakland (1996) 47 Cal.App.4th 364, 373; Brown v. Kelly Broadcasting Co. (1989) 48 Cal.3d 711, 747.)

Defamation per se in the employment context

In connection with employment cases, the defamatory statements are often tied to employment issues, such as false statements about an employee’s work performance or ethics.

The definitions set forth in Civil Code section 46 “have been held to include almost any language which, upon its face, has a natural tendency to injure a person’s reputation, either generally, or with respect to his occupation . . .” (Washer v. Bank of America (1943) 21 Cal.2d 822, 827, disapproved on other grounds in MacLeod v. Tribune Publishing Co., Inc. (1959) 52 Cal.2d 536, 551.)

Thus, criticism of work performance or ethics can be defamation per se. Examples of statements about employees relating to their work performance or ethics abound in the case law. Following are the types of statements that have been found by the courts to be defamatory:

• An employer’s statement that an employee made a $100,000 mistake in estimating a bid was found to be defamatory, since it tended to impute to the employee incompetence in his trade. (Gould v. Maryland Sounds Ind., Inc. (1995) 31 Cal.App.4th 1137, 1154.)• Statements that conveyed that an employee was “dishonest,” an “unsatisfactory” worker, “inefficient” and “insubordinate” were also found to be defamatory per se as they related to the plaintiff’s qualifications as an employee. (Washer v. Bank of America, supra, 21 Cal.2d at 828-829.)• Similarly, the statement that a businessman was “out for a fast buck” in describing a businessman of questionable ethics was held to constitute slander per se. (Cameron v. Wernick (1967) 251 Cal.App.2d 890, 894.)• A corporate officer who was accused of being “a black sheep,” “unscrupulous,” “proud, snobbish and vain” and “irresponsible” and using “lies and hypocrisies,” was also able to state a claim for defamation per se. (Correia v. Santos (1961) 191 Cal.App.2d 844, 854.)• Statements that an employee was fired “for not doing things properly and for not following office rules” and that other employees had also had trouble with the plaintiff impugned the plaintiff’s vocational capacity and was found to be slanderous per se. (Mercado v. Hoefler (1961) 190 Cal.App.2d 12, 21.)• Publications that an engineer lacked job knowledge and failed to cooperate have also been held to support a defamation claim. (Agarwal v. Johnson (1979) 25 Cal.3d 932, 944-945, disapproved on other grounds in White v. Ultramar (1999) 21 Cal.4th 563, 574 n. 4.)

Notably, internal publications within a company are actionable. Employers may try to argue that since the defamatory statements were internally published within the company, there was no publication. That argument would be legally inaccurate. Publication of defamation can be completely internal, that is, published and received solely by other employees of the employer. (Kelly v. General Telephone Co. (1982) 136 Cal.App.3d 278, 284-285 [publication applies to an employee’s statement to a fellow employee].) See also, Agarwal v. Johnson, supra, 25 Cal.3d at 944 [recognizing that wholly internal company statements can be deemed publications].) In fact, even false criticisms in a performance review can form the basis of a defamation claim if they accuse the employee of “criminal conduct, dishonesty, incompetence or reprehensible personal characteristics or behavior.” (Jensen v. Hewlett-Packard Co. (1993) 14 Cal.App.4th 958, 965.) Thus, the fact that the defamatory statements may have been made by one employee of the employer to another does not bar the plaintiff’s defamation claim.

Moreover, it is important to note that the employer is liable for statements made by its employees in the scope of employment. This is true even if the statement was not made for the employer’s benefit, and even if the employer was unaware that the statement was made. (Sanborn v. Chronicle Publishing Co. (1976) 18 Cal.3d 406, 411; Kelly v. General Telephone Co., supra, 136 Cal.App.3d at 284; Rivera v. Nat’l Railroad Passsenger Corp. (9th Cir. 2003) 331 F.3d 1074, 1080.)

To be actionable, the statement must not be privileged

If the statement at issue was privileged, then a defamation claim cannot survive. Thus, in response to a defamation claim, the employer will inevitably argue that the slanderous statements are privileged.

A publication may be absolutely privileged, meaning there can be no liability for the publication, regardless of the harm caused and regardless of whether the publisher knew the statement to be false. The types of statements that are absolutely privileged are set forth in Civil Code section 47. These include statements made in the proper discharge of an official duty or in a legislative, judicial, or other official proceeding. (Civ. Code, § 47.)

Other types of publications may be conditionally privileged. A publication is privileged where made:

In a communication, without malice, to a person interested therein, (1) by one who is also interested, or (2) by one who stands in such a relation to the person interested as to afford a reasonable ground for supposing the motive for the communication to be innocent, or (3) who is requested by the person interested to give the information.

(Civ. Code, § 47(c) (emphasis added).)

With respect to defamation in the workplace, the employer will inevitably argue that the defamatory statements were published within the company among managers or employees who had a reason to be given the information, and that the publications are therefore non-actionable because of the “common interest” privilege. However, the privilege afforded by Civil Code section 47(c) is a conditional privilege which is lost if the privilege is abused, or if the publication was motivated by malice. (Deaile v. General Tel. Co. of Calif. (1974) 40 Cal.App.3d 841, 847; McMann v. Wadler (1961) 189 Cal.App.2d 124, 129.) Thus, in order to overcome or eliminate any conditional privilege, a plaintiff need only show some evidence of either malice or abuse of privilege. (Ibid.)

The existence or nonexistence of malice is a question of fact for the jury. (Agarwal v.Johnson, supra, 25 Cal.3d at 944-945 (factual issue whether publication was motivated by hatred or ill will towards the plaintiff); Larrick v. Gilloon (1959) 176 Cal.App.2d 408, 416, disapproved on other grounds by Field Research Corp. v. Superior Court (1969) 71 Cal.2d 110, 114 [“the question of whether a publication was inspired by actual malice is essentially and peculiarly a question of fact.”]) Malice may be evidenced by showing such things as:

That the defendant bore a long-standing grudge against the plaintiff, that there were former disputes between them, that defendant had formerly been in the plaintiff’s employ, and was dismissed for misconduct. Any previous quarrel, rivalry or ill-feeling between plaintiff and defendant – in short, almost everything defendant has ever said or done with reference to the plaintiff – may be urged as evidence of malice.

(Larrick v. Gilloon, supra, 176 Cal.App.2d at 416.)

The key to establishing malice is demonstrating that the publication was “motivated by hatred or ill will toward plaintiff or by any cause other than the desire to protect the interest for the protection of which the privilege is given.” (Mamou v. Trendwest Resorts, Inc. (2008) 165 Cal.App.4th 686, 729.) Malice sufficient to defeat the conditional privilege has been found in the following situations:

• Where there has been a failure to investigate thoroughly and verify the facts stated. (Widener v. Pacific Gas & Electric Co. (1977) 75 Cal.App.3d 415, 434-35, disapproved on other grounds by McCoy v. Hearst Corp. (1986) 42 Cal.3d 835, 846 n. 9.)• Where the investigation was grossly inadequate under the circumstances. (Fisher v. Larsen (1982) 138 Cal.App.3d 627, 640.)• Where there has been purposeful avoidance of the truth or a deliberate decision not to investigate facts. (Antonovich v. Superior Court (1991) 234 Cal.App.3d 1041, 1048.)• Where the employer has failed to interview obvious witnesses who could have confirmed or disproved the allegations. (Khawar v. Globe Intern., Inc. (1998) 19 Cal.4th 254, 276.)• Where the facts stated are “exaggerated, overdrawn, or colored to the detriment of plaintiff, or are not stated fully and fairly.” (Shumate v. Johnson Publishing Co. (1956) 139 Cal.App.2d 121, 138.)• Where the statement is made despite the publisher having serious doubts of the truthfulness of the statement he or she is publishing. (Reader’s Digest Ass’n v. Superior Court (1984) 37 Cal.3d 244, 256.)• Where the statement is made despite the knowledge of its falsity. (Roemer v. Retail Credit Co. (1970) 3 Cal.App.3d 368, 371.)

If the employer is merely negligent in its investigation of facts, by inadvertently overlooking something or making an unintentional error, that alone does not establish malice. (Bierbower v. FHP, Inc. (1999) 70 Cal.App.4th 1, 9.) How-ever, if the “negligence amounts to a reckless or wanton disregard for the truth, so as to reasonably imply a willful disregard for or an avoidance of accuracy, then malice is shown.” (Roemer v. Retail Credit Co., supra, 3 Cal.App.3d at 372.)

Not much specificity is required to plead malice. In Kelly v. General Telephone, the Court of Appeal reversed the grant of a demurrer on a slander cause of action, finding that the plaintiff’s bare allegations that the statements were made by the defendant with malice because he bore ill will and hatred toward the plaintiff was sufficient to overcome a demurrer. (Kelly v. General Telephone Co., supra, 136 Cal.App.3d at 285.) Nevertheless, it is best for counsel to plead in the complaint specific facts demonstrating malice.

It is important to note that the conditional privilege only applies where the defaming party admits making the statement at issue, and believed it to be true at the time it was uttered. The conditional privilege is lost if the defaming party denies having made the statements at all, or did not believe the statements to be true at the time they were made. (Russell v. Geis (1967) 251 Cal.App.2d 560, 566-567.)

Opinion versus fact

Another argument employers may use to try to defeat a defamation claim is that the defamatory statements published about the employee were statements of opinion, rather than fact. In order to constitute actionable defamation, the offensive publication must consist of statements of fact, rather than opinion. (CACI 1707.) The statements at issue should be carefully examined to determine if they are statements of fact or opinion. Often, apparent expressions of opinion imply an assertion of fact and are therefore actionable. (Weller v. American Broadcasting Companies, Inc. (1991) 232 Cal.App.3d 991, 999.) Thus, a statement in the form of an opinion may be actionable if it is implied that it is based on some undisclosed defamatory facts. (Baker v. L.A. Herald Examiner (1986) 42 Cal.3d 254, 266; Okun v. Superior Court, supra, 29 Cal.3d at 451-452.) The issue of whether the statement is fact or opinion is then one for the jury. (Slaughter v. Friedman (1982) 32 Cal.3d 149, 154.) The dispositive question for the court is whether a reasonable fact finder could conclude that the published statements imply a provably false assertion of fact. (Moyer v. Amador Valley Joint Union High School District, supra, 225 Cal.App.3d at 724.)

To answer this question, the court applies a “totality of the circumstances” test, pursuant to which the court reviews the meaning of the language in the total context in which the statement was made. Depending on the status of the defamer, apparent expressions of opinion may imply an assertion of fact where the defamer’s expertise lends authority to his or her statements that would cause the average reader to assume they were asserting facts and “carry a ring of authenticity that reasonably might be understood as being based on fact.” (Slaughter v. Friedman, supra, 32 Cal.3d at 154). In Slaughter, accusations were made that a dentist charged excessive fees or performed unnecessary work. The Court explained that such accusations by laymen might constitute mere opinion, but such accusations by professional dental plan administrators carry a ring of authenticity and reasonably might be understood as being based on fact. Similarly, where the defamer is a managerial employee, his or her expertise regarding the plaintiff’s competence or performance in executing his or her job duties may reasonably be understood as being based on facts. In such a situation, where the person to whom the statement was published could have understood it in either sense, it is for the jury to decide whether the statement is fact or opinion. (Id. at 154.) See also Good Government Group of Seal Beach, Inc. v. Superior Court (1978) 22 Cal.3d 672, 682.

Publication

Another argument employers often make in response to a defamation claim is that the statement was not published. The first line of attack often is that the statement was only made internally, and therefore there was no publication. As discussed more thoroughly above, that is simply inaccurate. Publication of defamation can be completely internal; that is, published and received solely by other employees of the employer. (Kelly v. General Telephone Co., supra 136 Cal.App.3d at 284-285; Agarwal v. Johnson, supra, 25 Cal.3d at 944.)

Moreover, even where the statements were published only to the employee and not to any third party, the defamation may be actionable under the theory of self-compelled publication, i.e., that the employer had reason to know that the person defamed would be under a strong compulsion to disclose the defamatory statement to a third person. (Schneider v. United Airlines, Inc. (1989) 208 Cal.App.3d 71, 75.)

The seminal California case dealing with compelled self publication in the employment context is McKinney v. County of Santa Clara (1980) 110 Cal.App.3d 787. In McKinney, the Court of Appeal held that the originator of the defamatory statement regarding the reasons for the plaintiff’s termination could be held liable for re-publication by the employee to prospective employers, where it was foreseeable that the plaintiff would have a strong compulsion to republish wrongful grounds stated for his termination to prospective employers. (Id. at 797-798.) See also, Live Oak Publishing Co. v. Cohagan (1991) 234 Cal.App.3d 1277, 1285 [Theory of compelled self publication applies where an employee must explain a derogatory statement in his or her personnel file to subsequent employers who will surely learn of it if they investigate his or her past employment].)

Thus, in addition to determining whether the employer published defamatory statements to third parties, counsel should also determine whether the employee felt compelled to relay defamatory reasons for his or her termination to a prospective employer in the course of responding to direct questions in a job interview.

Defamation claims are not subject to workers’ compensation exclusivity

A claim for defamation is not barred by the exclusivity provisions of the Workers’ Compensation Act. (Howland v. Balma (1983) 143 Cal.App.3d 899, 904-905.) In Howland, the court explained that injury to reputation is not the type of injury contemplated by the Workers’ Compensation Act. Slander of an employee by his employer is not a risk of employment or in any manner compensable under the Act.

The conclusion reached by the Howland court was cited with approval by the California Supreme Court, confirming that actions for defamation, even when occurring in the workplace, are not preempted by the Workers’ Compensation Act. (Shoemaker v. Myers (1990) 52 Cal.3d 1, 16.) See also, Davaris v. Cubaleski (1993) 12 Cal.App.4th 1583, 1591 (“Patently, however, defamatory statements which have no other purpose than to damage an employee’s reputation are neither a ‘normal part of the employment relationship’ nor a risk of employment within the exclusivity provision of the Workers’ Compensation Act.”)

Statute of limitations

An action based on defamation must be brought within one year. (Code Civ. Proc., § 340(c).) However, the one-year period begins to run on the date the plaintiff discovers the defamation. (Manguso v. Oceanside Unified School District (1979) 88 Cal.App.3d 725, 731.)

Notably, each publication of the defamatory statement is a separate tort, which triggers the running of the statute of limitations and which entitles the plaintiff to separate damages. (Schneider v. United Airlines (1980) 208 Cal.App.3d 71, 77-78; Neal v. Gatlin (1973) 35 Cal.App.3d 871, 877 n. 4.)

Conclusion

There are several benefits to a defamation claim. First, juries take harm to reputation seriously and even conservative juries who may have difficulty awarding a plaintiff damages for wrongful termination or discrimination may have an easier time awarding damages for harm to reputation. Second, defamation can be asserted against the individual who published the statement, thus allowing a local individual defendant to be named to prevent diversity of citizenship. Finally, inclusion of a defamation claim may trigger insurance coverage. Thus, in appropriate cases, counsel should consider including a defamation claim in employment lawsuits.