Defamation by Action May “Speak as Loudly as Words”

Have you placed your company at risk of a lawsuit? Possibly. The recent case of Bolton v. Department of Human Services should serve as a warning that an employer's actions, as well as words, may create liability for defamation. When presented with the scenario above, the Minnesota Court of Appeals held that the mere act of escorting an employee, if it communicated an untrue "statement" to a third party of the reasons for the person's discharge, could constitute defamation. While most human resource professionals are familiar with the tort of defamation in the context of performance appraisals, employment references, and other situations involving written or verbal statements, many are unaware that liability may also arise from an employer's conduct as well as words. Should HR professionals rush to change their company's termination procedures to prohibit escorting of terminated employees? No. On December 15, 1995, the Minnesota Supreme Court reversed the decision of the Court of Appeals in Bolton, holding that simply escorting an employee to the exit upon termination was insufficient as a matter of law to create liability for defamation. While employers can breathe a bit easier after the reversal by Minnesota's highest court, the disagreement between the courts is itself disturbing to many who advise employers. Managers and supervisors must be made aware of the potential liability for "defamation by action" and the precautions that can be taken to protect their companies from such liability. In order to better understand the differences of opinion expressed by the Minnesota courts on the subject of defamation by action, a brief review of the law of defamation is presented below. This is then followed by a discussion of the Bolton case, as well as several decisions from other jurisdictions that help to enlighten the shadowy specter of "defamation by action." Finally, although the high courts' decisions in Bolton do not expressly create any safe harbors nor provide explicit guidelines to employers, some general conclusions are drawn regarding the actions that can be taken to minimize a company's exposure to such liability. What is Defamation? Defamation is a form of civil wrong which the law classifies as a "tort." The essence of the tort of defamation is the injury to a person's reputation suffered as a result of an untrue statement made by another to a third party. Slander and libel, terms perhaps more familiar to many, are simply historical categorizations of the broader concept of defamation. In general, slander consists of defamatory oral communications or transitory gestures, while libel is a defamatory communication that has been reduced to a written or other more permanent form. Under the law of most states, in order for an employee to prove an employer is guilty of defamation, the employee is required to prove the existence of three elements. First, it must be proven that the employer made an untrue "statement" regarding the employee. Historically, the common law imposed strict liability on a person for any untrue statements made. However, since the mid-1970s courts have begun to require that plaintiffs prove the defendant was negligent or reckless in assessing the truth or falsity of the statement as a prerequisite for any recovery. Further, because the First Amendment jealously protects an individual's right to freedom of expression, a statement which consists solely of an expression of one's opinion such as, "I think XYZ's services are over-rated" (as opposed to "XYZ over bills clients") will generally not be actionable as defamation. Second, the untrue statement has to be intentionally or negligently "published" (i.e., communicated) to someone other than the employee. If an untrue statement is communicated only to the individual employee there generally will be no liability for defamation. While some courts have adopted a theory that communications made wholly within the corporate collectivity are not "published," the majority apply instead a more narrow "privilege" for certain communications made within the corporation if they are made to someone with a "common interest" in the information. …