Employment Law: The Truth About Defamation

by John Gause, Esq.
Published: Maine LAWYERS REVIEW, January 5, 2000

It is surprising that defamation claims do not show up more often in employment cases. Negative performance evaluations, defamatory intra-office communications, false reasons for termination, and inaccurate post-employment recommendations all offer fertile ground for defamation claims. There are no caps on damages and juries are receptive to cases where someone’s professional standing is attacked.

The elements of a defamation claim generally are (i) a false and defamatory statement concerning the employee; (ii) an unprivileged publication of the statement to a third party; (iii) fault on the part of the person publishing the statement that amounts to at least negligence; (iv) and special damages.

One reason we may be hesitant to bring a defamation claim is the difficulty in showing special damages. In most cases it is impossible to show a tangible loss flowing from a false statement. Comments made to coworkers usually do not translate into a monetary loss. Even a negative recommendation to prospective employers may not yield provable special damages because the prospective employers are reluctant to voluntarily implicate their business colleagues by admitting that the negative evaluation was the basis for the job denial.

There is no requirement that plaintiff show special damages, however, in cases where the statement tends to diminish a person’s standing in her profession, trade or business. In these cases, injury to reputation and emotional distress damages are presumed. The Law Court has upheld substantial verdicts where there was no showing of pecuniary loss. In Marston v. Newavom, for example, the Court upheld a $50,000 verdict for the plaintiff after her former employer told the plaintiff’s coworkers that she did not attend her going away party because she was embarrassed about making unauthorized purchases on the company credit card. The evidence on damages was limited to the plaintiff’s testimony that she feared the potential impact the statement could have on her future employment prospects and that she was distressed when she learned of the statement.

We may also wrongly believe that there is little sense in bringing the claim when only an individual employee can be held liable. Why bring a case to trial and recover a sizable award only to find out that the individual is unable to sustain the verdict? If a supervisor makes a false statement about an employee that ends in the employee’s termination, it would be easy to conclude that the only cause of action rests against the supervisor in her individual capacity.

In fact, an employer in Maine is liable for the defamatory statements made by its agents about its own employees. In Staples v. Bangor Hydro-Electric Co., the plaintiff was a microcomputer specialist who was on bad terms with his manager. The manager became convinced that the plaintiff had erased some of the defendant’s computer files. The manager told the director of personnel that he had reason to believe that the plaintiff had sabotaged the computer, and the plaintiff was terminated.

The jury returned a verdict for the plaintiff on his defamation claim against Bangor Hydro and the Law Court affirmed that aspect of the award. Bangor Hydro argued that statements made among its own employees could not be considered statements made to “third parties” for purposes of the defamation action. The manager was not named as an individual defendant. The Law Court acknowledged that the majority of jurisdictions recognize a rule that an employer “acting through one of its agents to send a defamatory communication to another of its agents is simply communicating with itself.” Nevertheless, the Court adopted the view that “a communication within the scope of his employment by one agent to another agent of the same principal is a publication not only by the first agent but also by the principal.”

Another deterrent to bringing a defamation claim may be that the statement appears to be merely an expression of opinion. Only false statements of fact are actionable, and statements of opinion cannot sustain a defamation action. The Law Court has held that “a comment is an opinion if it is clear from the surrounding circumstances that the maker of the statement did not intend to state an objective fact but intended rather to make a personal observation on the facts.” Many negative performance evaluations and employment recommendations appear to be merely the personal opinion of the publisher and do not contain expressions of fact about the employee.

Expressions of opinion are nevertheless actionable if they contain undisclosed statements of fact. In Staples, the Law Court found that the statement that the manager had reason to believe that the plaintiff had sabotaged the computer contained “undisclosed defamatory facts.” Similarly, in True v. Ladner, the defendant told the plaintiff’s prospective employer for a teaching position that “1) True was a good mathematician, but not a good mathematics teacher; 2) True was ‘more concerned with living up to the terms of his contract rather than going the extra mile’; and 3) Ladner ‘did not feel True turned the students on.’” The Law Court found that these statements were defamatory because they contained undisclosed false representations of fact, such as that the speaker was directly familiar with the plaintiff’s job performance.

As might be expected, there are significant limitations to defamation claims that must be recognized. Statements made among management about an employee’s job performance are subject to a conditional or qualified privilege, immunizing the defendant from liability unless the privilege is violated. The conditional privilege can be lost if the statement is made with malice or with knowledge of its falsity or reckless disregard of whether it is true or false. The Law Court recognizes that reckless disregard is established if the publisher of the statement had “a high degree of awareness of probable falsity or serious doubt as to the truth of the statement.”

In addition, although the Law Court has not decided the issue, the United States District Court for the District of Maine treats defamation the same as other intentional torts, such as assault and intentional infliction of emotional distress, for purposes of the workers’ compensation bar. Accordingly, all causes of action for defamation that occur during and in the course of employment will be barred in the federal district court by the exclusivity provisions of Maine’s Workers’ Compensation Act. Of course, this rule will only come into play if the employer is subject to the Workers’ Compensation Act. There also may be other ways of avoiding the application of the bar.

It is also worth noting that slander and libel claims have a two-year statute of limitations. This is the same amount of time the plaintiff has to file her Maine Human Rights Act claim. The time limit can take the plaintiff by surprise, however, if she is pursuing her claim primarily under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, or the Americans with Disabilities Act, all of which have a six-year statute of limitations.

A lot of the work to prove defamation will be done during the course of establishing unlawful class-based discrimination in employment cases. In nearly every employment discrimination case where plaintiff alleges an adverse employment action based on a protected classification, the employer will offer a reason for the adverse employment action that is arguably false. Most statutory employment discrimination cases are proven, using McDonnell Douglas, by showing that this reason for the adverse action is false and the real reason is discriminatory. In most cases, the reason for termination will be shared during the termination process or thereafter with people other than the plaintiff. This may give rise to a separate claim for defamation.

We tend to think of Maine’s employment-at-will doctrine as immunizing employers from wrongful employment actions that are not covered by state or federal anti-discrimination laws. It is generally the case that an employer can terminate an employee for a bad reason or no reason at all, so long as the reason for the adverse action does not run afoul of state of federal anti-discrimination statutes. The employer’s discretion is not completely unbridled, however, and it cannot give reasons with impunity that are false.